Using Continuous Improvement to Build Strong Supply Chains

Successful organizations aren’t satisfied with the status quo. In fact, they’re constantly looking for new ways to improve their performance, gain efficiencies, enhance their bottom lines, and serve their customers better. The same energy can be applied in the supply chain, where over 10 years of economic growth pushed a lot of companies into “set it and forget it mode” when it comes to supply chain, logistics, and transportation management.

The global pandemic changed all of that and forced any organization stuck in “status quo” mode to quickly retool, reimagine, and ramp up their supply chain management approaches. For some, that meant quickly spinning up new manufacturing capabilities in order to meet demand for essential goods. For others, it meant taking a harder look at how their supply chain partners operate, where they’re located, and how financially-viable their organizations are.

What is Continuous Improvement?

Regardless of how an individual company has been impacted by COVID-19 and the subsequent economic downturn, the need for continuous supply chain improvement remains strong across all industries—and for companies of all sizes. A supply chain that’s continually reviewed, finessed, and updated will stay relevant and useful for its stakeholders. One that’s left to languish on its own will only falter the next time a major or minor disruption emerges. 

According to McKinsey, continuous improvement is an ongoing effort to improve all elements of an organization—processes, tools, products, services, etc. “Sometimes those improvements are big, often they are small. But what’s most important is they’re frequent,” it says. Companies that excel at continuous improvement start with the belief that success comes from: 

• Innovating “how” they do what they do (big and small).
• Engaging all employees in sharing knowledge and generating improvement ideas.
• Exploring better ways to deliver to customers and respond to changes in the external environment.

“Core to a continuous improvement mindset,” McKinsey adds, “is the belief that a steady stream of improvements, diligently executed, will have transformational results.” Within the supply chain, continuous improvement helps companies create (and, continually improve upon) cost-effective, efficient, responsive supply chains. 

Dealing with Disruption

Anytime a major disruptive event occurs, companies have the unique opportunity to take a step back and look at the immediate impacts, shore up their operations, learn from their mistakes, and find ways to avoid such calamities in the future. And while COVID-19 was a far-reaching, unexpected event that most companies couldn’t have planned for, this “new normal” operating environment that we’re all working in is pushing many to rethink how they approach continuous improvement.

As part of this introspective exercise, companies are examining their supply chain design and technology investments, knowing that both of these elements play a crucial role in the success of their global supply networks.

In talking to Vikram Mehta, Maersk’s head of continuous improvement, Process Excellence Network highlights the importance of continuous improvement and shows how organizations can adopt this mindset. Mehta sees continuous improvement as a “must” because it facilitates innovation and helps organizations transform and become more efficient. 

“Ultimately, it leads to improvements in customer satisfaction and employee engagement,” Mehta told PEN, “as well as helping organizations grow organically which is important in today’s economic climate.” Continuous improvement also helps organizations gain first-mover advantage and adapt to new elements in the market (i.e., the latest global technology or a looming crisis). “It allows organizations to move fast and make changes quickly.”

Tips for Success

For continuous improvement to succeed, Mehta says companies should view it as an investment versus a cost. Be ready to put some time into nailing down the strategy and the basics behind this initiative, and to put the technology tools in place to support it.

“The technology we have now, the minimum viable product approach, [artificial intelligence], machine learning, and data science are relevant today, but they will become commonly known terminologies in the future,” Mehta predicts. “I see organizations increasing their investment on digital products and services in order to stay relevant with the continuous improvement team having an important role to play in this transformation.”