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03.03.06
Sharper Focus For The Global Chain
 By
Thomas Craig
Lean is about flow and the elimination of waste. Waste can be defined as anything that does not add value to the product - anything that the customer would not want to pay for.
Waste in logistics can be defined as unnecessary activities that result in excess inventories, increased leadtime and increased cost.
To date, much of the focus of lean logistics has been on manufacturing in domestic markets. However, the logistics industry is changing rapidly. We now face global supply chains with the inherent challenge of a complex network of suppliers and logistics service providers. From China to India and throughout the world, lead times have been significantly extended. But these changes to global supply bases may not have received the attention they deserve from lean practitioners.
Global supply chain management contains three key segments:
• Demand planning and management;
• Supplier performance and management;
• Logistics service providers (both internal and external) performance and management.
Visual Description
The current condition of a supply chain can be described visually using "value stream mapping". The value stream comprises all the steps necessary to bring a product from its raw materials through production to delivery to the customer. With value stream mapping, all the steps in the supply chain process are identified and assessed as to whether they add value or create waste. Typically, there are two streams or flows to be described and analysed. These are the flow of product and the flow of information.
This technique works well with the "pull" or Kanban basic approach of supply chain management. Inventory is pulled, not pushed, through the supply chain from customer back through to suppliers. With the pull, excess inventory should be removed from the supply chain.
Mapping is a tool to visualise what goes on. The picture is a way to see the non-value, waste-creating actions for both the product and the information flows. The two flows should be integrated. Otherwise opportunities for non-value added activities and for inconsistent actions are created.
Value stream mapping looks at a key product(s) that have high volume and/or high profit margins. The logistics process for each product is mapped, analysed, waste is identified and a new process for the future is defined and implemented.
Data Collection
The mapping involves gathering customer or store information, depending on whether you are a wholesaler/distributor, manufacturer or retailer. Draw the process - from what triggers the purchase order, back through the suppliers and logistics providers, to delivery.
There can be 15 or more parties involved with the movement of product and information, and both the product and financial chains, so the supply chain can be complex to visualize. And the size means collaboration and co-operation are needed between and among all the parties involved for proper mapping and for identifying waste. A supplier in Shanghai whose key component comes from Thailand must participate actively in the mapping since all this is part of the process. This is not an option.
Or look at a customs broker who does not directly touch the product or the shipping container. He acts with the information and documentation to facilitate the movement of the product. But the linkage among the importer, customs broker, ocean carrier/air forwarder and delivering rail or trucker can create waste, by adding times and by stopping product flow.
Value stream mapping is a picture of the process or what is used as a process. The lack of a real process can create waste, or non-value-added activity. Global supply chain waste occurs as unneeded cycle time, inventory and cost. The cost waste often appears in the transportation and warehousing activities.
Current Value Stream Map
A company with no viable global supply chain process often has gaps in the "process" activities. In turn, redundancies occur at various points to compensate for gaps. These redundancies, with their extra and unnecessary work, are islands of waste in the flow. An example of a waste that can arise because of flaws and gaps in a process is expediting.
What also makes lean international supply chain management more complex and unique is that so much activity occurs outside the company. With lean manufacturing and domestic lean logistics, much of the activity occurs within the company.
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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