A robust designed, smoothly operated, and error free chain of supply function with the lowest possible cost is termed as a lean supply chain. A lean supply chain process has to be streamlined to reduce and eliminate waste or non-value added activities to the total supply chain flow and to the products moving within the supply chain. Waste can be measured in time, inventory and unnecessary costs.

What must be done to be Lean
The ideal approach is to design a complete supply chain in order to fit your company's operation onto it. Supply chain management is basically meant to reduce excess inventory in the supply chain. A supply chain should be demand driven and it is built on the pull approach of customers pulling inventory, not with suppliers pushing inventory.

Mr. D.M.A. Kulasooriya

What Lean Supply Management is
Lean and supply chain management have much in common in recognizing the customer, being based on pull, requiring flow, assessing the waste of inventory, and creating value with growth and not just reducing costs. Companies with a lean supply chain, the inbound from suppliers and the outbound to stores or to customers, have identified the value of the supply chain and the waste that exists and are removing the waste.

By being lean, companies are efficient at lower volumes / lower size lots, have greater flexibility; gain higher productivity, increase product mix diversity, improve rapidity of product development cycle, and have higher quality of performance.

Different types of waste that can be identified in a typical supply chain are highlighted below.
1. Over Supply. This is supplying product at a faster rate than customer requires, having it ahead of demand. Bringing in large quantities of products without matching demand creates excess inventory.
2. Transportation. Unnecessary or slow movement of product adds no value. This can include movement of inventory between company facilities.

3. Inventory. Firms have more finished product, raw materials, or work in process than the absolute minimum. This includes inventory in transit, regardless of whether it is treated as inventory when it is delivered or not.

4. Waiting. Delays in previous supply chain steps cause unnecessary waiting of people or equipment. Inventory at warehouses reflect waiting.

5. Movement. Any unnecessary movement of people during their work is to be avoided. This may be seen in warehouses.

6. Defective Service or Product. Poor quality, rework, or scrap because it does not meet the customer requirements adds no value.

7. Over processing. This is doing more than is necessary.

These waste activities occur in different ways for both Make to Order and Make to Stock companies. Compressing cycle time and increasing inventory velocity are the preferred results for lean supply chain management. The first requirement to becoming lean is to be able to identify waste. If you are not able to see waste, you cannot begin to remove it and become lean. Waste impacts time required, inventory investment and turns, capital tied up and not earning an adequate return. Lean is about removing or eliminating waste, not just reducing it.