A New Year’s Resolution for your Supply Chain: Get LEAN

Lean Guiding Principles, Retail, Supply Chain, Warehousing & Distribution Management
January 4, 2016

Lead Supply ChainEvery day, companies across a wide range of industries use LEAN in their supply chain operations, warehouses, distribution centers, finance departments, customer service centers, and many other areas. LEAN practices improve safety, quality, and productivity by extracting waste from all facets of an operation – from the procurement of raw materials to the shipment of finished goods.

LEAN is a component of enriching the culture and driving engagement, instilling a vested interest to reach a common goal. The roots of LEAN date back to Henry Ford’s manufacturing innovations in the early 20th century. However, LEAN manufacturing really had its start after World War II at the Toyota Motor Company due to the fact that post war resources were scarce, and manufacturing needed to be kick-started.

Through the implementation of LEAN, companies aim to identify eight types of muda, or waste, and eliminate them. The eight types are:

  1. Transport – moving people, products, and information
  2. Inventory – storing parts, pieces, and documentation ahead of requirements
  3. Motion – bending, turning, reaching, and lifting
  4. Waiting – for parts, information, instructions, and equipment
  5. Over production – making more than immediately required
  6. Over processing – tighter tolerances or higher grade materials than necessary
  7. Defects – rework, scrap, incorrect documentation
  8. Skills – underutilizing capabilities, delegating tasks with inadequate training

The process of eliminating these eight types of waste is the building block of LEAN. In the supply chain arena, creating a LEAN culture offers tremendous opportunities for companies seeking continuous, incremental gains in safety, quality, and efficiency. And while becoming LEAN does not mean re-engineering entire operations, it does require a significant commitment in time and people. This is apparent in Ryder’s partnership with FRAM, America’s top oil filter manufacturer.

Since FRAM partnered with Ryder to implement a LEAN culture in 2013, the company’s warehouse costs have seen a seven figure savings year-over-year; and its inventory shrinkage is well within the .03 percent target. Pick accuracy is at 99.8 percent, productivity has increased by 100 percent, and FRAM’s units per man hour (UPH) has averaged at about 68 over the past 12 to 18 months – up dramatically from where it was at 33 UPH in 2013. This has been accomplished with a decrease in staffing from 320 to 205 employees.

To combat waste, a LEAN organization such as FRAM, embraces the concept of Kaizen, or continuous improvement. Rather than implement ambitious programs to accomplish sweeping reforms, a LEAN operation makes incremental improvements consistently over time. These small changes add up to produce significant gains in both quality and operating performance.

Five guiding principles govern every activity of a LEAN environment. These include:

  1. People involvement: engaging every employee to root out waste, eliminate problems, and make improvements
  2. Built-in quality: preventing mistakes before they happen, engineering processes to make them “mistake proof”
  3. Standardization: documenting best practices and making sure they are followed
  4. Short lead time: continuous flow of people, materials, equipment, and process to ensure that customers receive defect-free products that are pulled through the supply chain at the right place, at the right time in the right quantity
  5. Continuous improvement: understanding that no matter how well a process works, there’s room to make it better

The LEAN journey is one that leads companies on a path to operational excellence safely and efficiently. LEAN has nothing to do with faster, cheaper, smaller; and everything to do with safer, smarter, and easier. It requires every single employee to be part of the culture. Directors and Managers lead by example, and value leadership and ideas of employees. Pain points on the floor are actions solved that day and celebrated the next.

A LEAN culture offers tremendous rewards for any company’s supply chain. It requires a strong, long-term commitment to a LEAN transformation strategy. Fortunately, the right third-party logistics partner can offer deep expertise on how to deploy a LEAN strategy to transform your supply chain operation with continuous, incremental gains in safety, quality, and efficiency.

Authored by Jimmy Fitzpatrick, Group Director of Operations at Ryder

Jimmy is a Lean Operations professional with over 15 years of experience in distribution management, manufacturing operations, and behavior-based Lean philosophy. Throughout his career, Jimmy has played an active role in leading network optimization, talent growth and operational excellence turnarounds for Ryder’s Retail and Consumer Brands customers.

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