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01.20.06


Lean Logistics-Understanding

By Thomas Craig

Supply chain management was designed to take waste out of supply chains-waste as to excess inventory, time and cost.

Supply chains are meant to pull, not push, inventory through the supply chain. This is exactly what lean logistics is also about-removing waste and variation from supply chains; it is what Kanban, Pull, is about with Lean Logistics.

Wholesalers, manufacturers, retailers, distributors, suppliers, 3PLs and every party involved in the supply chain feel the pressure to reduce and balance cost, time and inventory-to be lean. This is true with domestic supply chains; but it is especially true with global supply chains.

Articles titled "Japanese Automakers Taking Market Share from Big Three" or similar titles are misleading. The article would lead the average reader to think that the "Japanese" as a culture somehow have a secret that is allowing them to take over the automobile industry.

However, many in the automotive industry are aware of two critical points. The first is that it is not the "Japanese" who are building the cars that are winning the car wars, as these cars are being built by North Americans in Canada and the United States. The second key point is that it is not the "Japanese" that are reducing manufacturing costs and increasing quality, but rather it is the "Lean Manufacturers". With all of this in mind then, the newspaper article should headline "Lean Manufacturers Taking Automobile Market Share over Mass Producers". This headline would be more appropriate and more accurate.

Lean Logistics has many challenges. Global Lean Logistics especially has the challenge of the additional time required for shipments to move door-to-door over the long distance. In addition, there are many parties involved with each shipment. Some reports say that up to seventeen parties can be involved with one shipment-suppliers, truckers, freight forwarders, terminals, customs brokers, railroads, ocean/air carriers and more. Bringing lean across such an extended, multi-transactional supply chain is daunting. Often the parties are working together and at odds with each purchase order/shipping transaction.

As the competitive environment changes the way companies do business, companies are embracing Lean and Six Sigma initiatives to support cost reductions and quality improvements. Although Lean and Six Sigma programs were initially separate initiatives in most organizations, today's firms see that Lean and Six Sigma do not compete with each other, but rather the two complement each other and provide for dovetailing of continuous improvement activities.


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But what does this have to do with Logistics? The quick answer is "everything ". Once we are grounded in Lean and Six Sigma principles, the logistician will realize that Logistics, Lean and Six Sigma form a natural union. This union leverages the strengths and weaknesses of each discipline to create a cultural and operational model that will aid the logistician to solve age-old issues, while improving operations at all levels.

To truly understand Lean Six Sigma Logistics, the best place to start is to know about the Logistics, Lean and Six Sigma.

What is Logistics?

There are as many definitions of "Logistics" as there are logisticians. This is not a bad thing! Logistics is so far reaching, so integrated into businesses that it is hard for one definition to ever meet the challenge of summing up what we do in a few short sentences.

Although logistics does span the entire scope of any business, it is fair to say that any definition of logistics will need to involve the management of inventory. Whether inventory is in the form of hard goods (materials-people) or soft goods (information), logisticians manage it.

What is Lean?

Lean Logistics concepts are deeply rooted inside the lean manufacturing of Toyota Production System. Jim Womack summarizes the key principles of the Toyota Production System as Lean Manufacturing in his book "Lean Thinking". Lean Manufacturing has now been abbreviated to simply being called ‘Lean". Lean and Six Sigma joined forces in Michael George's book "Lean Six Sigma".

In its purest form, Lean is about the elimination of waste and the increase of speed and flow. Although this may be over-simplification, the ultimate objective of Lean is to eliminate waste
from all processes. At the top of the list of known wastes, according to Lean theory is the elimination of inventory. More simply, any inventory should be eliminated that is not required to support operations and the immediate need of the customer.

Lean and the Logistician

The impact of Lean on the logistician is significant, as the goal of Lean is eliminate waste (inventory) which will decrease work in process inventories which in turn will decrease process and cycle times and ultimately increase supply chain velocity and flow.

Read the rest of the article.

About the Author:
LTD provides logistics consulting for strategic and tactical needs. The scope of capabilities is broad--supply chain management, outsourcing, transportation, warehousing, inventory management, and more for both domestic and international needs. Clients include retailers, wholesalers/distributors, manufacturers, logistics service providers and 3PLs.

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