A lean supply chain defines how a well-designed supply chain should operate, delivering products quickly to the end customer, with minimum waste. A lean supply chain is a great enabler for any organization that strives to become more lean and efficient. Organizations within a lean supply chain are able to leverage their own lean journey more easily, delivering better customer value by responding more efficiently, quickly, and predictably to customer needs. That, in turn, facilitates the operation of the lean supply chain, creating a virtuous cycle that ultimately translates to superior financial performance for these organizations.

Thus organizations striving to become lean would benefit from a systematic approach towards building and managing their supply chain. A recent study that analyzed the link between supply chain and financial performance revealed that virtually all winning business strategies have, at their core, supply chain strategies that provide a competitive advantage.

Seven Steps for Building Lean Supply Chains
The book, Streamlined, presents seven steps to help organizations develop lean supply chains, even as they proceed on their own lean journey.

These steps are :
1) Develop Systems Thinking
2)Understand Customer Value
3)Value Stream Mapping
4) Benchmark Best Practices
5)Design to Manage Demand Volatility
6)Create Flow
7)Performance Metrics

These seven steps have been recently applied by several organizations in their lean journey, to increase their competitive advantage and profitability, while at the same time enabling their supply chain partners become more efficient and productive. At the end of this article I present some results obtained by a Fortune 1000 organization that has applied these steps to gain significant improvements in its financial performance. Before I present these results I will briefly discuss some of these concepts/steps, referring the reader to the book for more details.

Develop a Systems Perspective
A vital first step is to develop a systems perspective. The systems perspective recognizes that if each element in the supply chain tries to optimize its own operations in isolation, everyone suffers in the long run. For instance, supply chain management requires long-term partnerships with key suppliers. Suppose management institutes a measurement system that rewards the Purchase department for obtaining products from its suppliers at low cost. No doubt, reduced material costs directly affect the profitability of the organization, but such a measurement system drives the Purchase department into an adversarial position with its suppliers, encouraging Purchase to play off potential suppliers against each other in an attempt to drive them to lower their prices. The lack of a systems perspective has now made it very difficult to establish long-term partnerships with the organization's suppliers. The Theory of Constraints (TOC) avoids the pitfalls of such local thinking by adopting a global perspective, with the objective of maximizing the organization's profit. Application of TOC principles provides a number of levers for systems thinking and supply chain coordination.

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