Are lean supply chains a myth? Examining resilience amidst disruptions

For Taiwan Semiconductor Manufacturing Company (TSMC), one of Asia’s largest chip manufacturers, embracing a lean supply chain has become critical. It manages and helps to respond to major disturbances that can change plans or interrupt events and processes. The company works closely with its suppliers. This creates an interconnected system where data of inventory is shared in real-time. As a result, it reduces the excess of inventory. It helps in increasing transparency and minimizing potential disruptions.South Korean tech company Samsung Electronics adopts a similar approach. Utilizing lean practices in their operations, Samsung decreases overstocking of inventory. This has also helped the company in reducing waste in production. As per reports of 2023 for the company, the strategy prevented major production delays and safeguarded against potential revenue drops of up to 15%. A growth of 7% was recorded in revenue year-over-year helping it to its market presence during global disruptions. Additionally, this model contributes to sustainability by reducing waste and emissions. Sustainable objectives as a result of a decrease of 12% in waste were achieved. Also, environmental benefits were achieved due to strong supply chain as indicated by the Samsung Sustainability Report 2023.Data analytics is an integral part of application Lean Six Sigma principles in manufacturing. It helps to identify inefficiencies and opportunities for improvement in the production process. For example, Toshiba Corporation used data analytics to enable predictive maintenance, which is a Lean principle. It aims to minimize downtime and reduce costs by identifying potential equipment failures before they occur. Another benefit of lean supply is that it decreases inventory and overproduction. For example, Toyota uses the Just-in-Time (JIT) inventory system. This model delivers materials only when needed, reducing the costs of holding excess stock.Toyota schedules its production according to customer demand so that there will be timely availability of the materials. Thus, it reduces the stockouts and inventory overstocking. Also, it helps to decrease the warehousing and insurance costs. However, during the COVID-19 pandemic, Toyota’s Just-In-Time (JIT) inventory system faced significant challenges due to semiconductor shortages. In response, Toyota doubled its raw material inventory in 2023. It was to achieve a record output of 10.7 million vehicles despite supply issues. This strategic move led to an 8% revenue increase, underscoring the benefits of pairing lean efficiency with inventory buffers. Through close collaboration with its suppliers and JIT processes, it responded efficiently to changes in markets and utilization of resources in the volatile market. In recent months, Toyota revised its fiscal year production target down by 1% after halting operations in Japan and the U.S. Investigations revealed fraudulent crash test data and incorrect airbag testing, prompting recalls and contributing to a 20% drop in second-quarter operating profits, the first such decline in two years.Toyota also faces increasing competition from Chinese automakers, particularly in China, where demand has softened. The company lowered its annual vehicle sales target, citing intensified market pressures.These cases demonstrate evolving lean supply chains through targeted inventory strategies and diversified suppliers. Companies that adopt resilient practices not only protect against disruptions but achieve consistent revenue growth and environmental benefits.

Lean supply chains aim to streamline available resources, eliminate waste, and operate with minimal stock. However, it falls in between efficiency and fragility.For example, the COVID-19 pandemic locked down all the major manufacturing hubs of the world, such as China and Southeast Asia. Disrupted supply chains and production made outputs come to a standstill. Similarly, U.S. and China trade tensions exposed the flaws behind lean models when tariffs, along with shipping delays affected production processes.Lean supply chains are essentially JIT inventory. Because the inventory is kept low to minimize costs, very little space is available in case of disruptions. For example, during the COVID-19 pandemic, the lack of inventory buffers caused shortages to persist for months in sectors ranging from automotive to healthcare. Companies could not source critical components quickly enough. McKinsey estimates that about 73% of companies faced supply issues early in the pandemic because of lean inventory strategies, causing many to question the model’s practicality​.Lean models tend to rely on a few specialized suppliers in an effort to reduce costs, which increases vulnerability when these sources are disrupted. This risk was highlighted through the semiconductor shortage, as tensions with Taiwan centralized its production, affecting industries worldwide. For example, the semiconductor shortage in 2020 exposed significant gaps within companies like Tesla and BYD. Low stock levels and the lack of backup inventory made electric vehicle (EV) companies face production delays. This challenged lean supply chains in high-tech manufacturing. The semiconductor shortage served as a wake-up call for lean-dependent industries. Bloomberg notes that up to 90% of high-performance chips come from Taiwan, causing a bottleneck that strikes various industries, including automotive, electronics, and defense when tensions rise​.The dependency of the EV industry on highly specific and often scarce components makes risks from lean supply chains worse. Substitutions might be possible in consumer goods, but EV production requires very specific parts, making lean supply chains particularly vulnerable when disruptions happen.

1. Diversification of Suppliers: Apple and Samsung diversify from using one single supplier to a set of suppliers. A diversified network reduces dependence on one source. In return, it decreases the vulnerabilities of the supply chain against disruptions. As an example, sourcing the components from different locations reduces the risk. As a delay by a single supplier might disrupt Apple’s entire production line. Therefore, supplier diversification has become an absolute need, particularly among those companies that are running very lean supply chains with many businesses where even slight delays turn into millions of dollars.2. Strategic Safety Stock: It is normally used in the lean model to avoid all kinds of inventory stockout. Safety stock proves crucial and helpful in times of disruptions. For example, firms with semiconductor reserves could run operations during times of shortage. While other firms will incur delays and costs. Safety stock has evolved rather than a cost center and has been seen as a productive investment. Strategic safety stock for key components always ensure continuity without relatively giving up on lean efficiency for high-tech industries.3. Predictive Technologies: Both Alibaba and JD.com embrace the implementation of predictive analytics in the supply chain through AI and machine learning. This provides an early warning system where proactive response can be developed to respond to the expected disturbance. Predictive analytics help quite a lot in lean supply chains as firms adjust before there is a disruption. In these technologies, the principles of being lean are balanced with being resilient because they predict the shifting demand and prepare for it.4. Hybrid Models: Like the hybrid supply chain models, companies are now embracing many of the traditional inventory management techniques but ones which are embedded with lean principles. Hybrid will create an agility and resilience system that brings together lean efficiency with some degree of flexibility. This enables companies to adapt quickly to global changes and ensure continuity without losing all lean and ideals.5. Local sourcing and nearshoring: With the supply chain risks happening worldwide, companies now turn to local sourcing or nearshoring so that they have fewer risks in a very distant geographic supplier. Indeed, a short supply chain can create a very strong sense of control. It will be well within lean principles and build resilience at the same time. U.S. companies source closer to home so they avoid long shipping delays from Asia. It is expensive but stable and is something lean supply chains globally lack to provide.

The pandemic and other black swan events have caused shipping disruptions. This caused undeniable revision to free trade practices that exposed vulnerabilities in relying on minimal inventory and a narrow supplier base. The lesson learnt is clear. Resilience must become the cornerstone of modern supply chains. Lean principles remain valuable but require transformation. This doesn’t mean leaving the approach entirely.Instead, it calls for an evolution—pairing efficiency with foresight, agility and adaptability. Strategies like supplier diversification, strategic inventory management and nearshoring are no longer optional—they are essential lifelines in an unpredictable global landscape. Supply chain professionals now face an important decision. The challenge is not just technical. It’s about delivering stability, sustainability, and trust to businesses and the communities they serve.