Lean Logistics is a focus on maintaining inventories at the most cost effective levels and improving supply chain, logistics and transportation operations. The term lean means a lack of wasteful elements within the many facets of inventory control and distribution. With numerous different handlers in some cases, streamlining the process of shipping from door to door is vital to any company with a physical inventory. By optimizing teamwork and collaboration, productive management, and cross-functional communications companies can help their operations move faster, smoother, and cheaper. Lean logistics are achieved through critical problem solving and a focus on the total logistics cost as well as the individual processes.
Conceptual fundamentals of lean logistics planning
To become familiar with lean logistics it is important to define the driving characteristics of the methodology. The three fundamentals of lean philosophy include:
- Total logistics cost
- Value added by applying the methodology
- Identification and removal of waste
The total logistics cost is the main focus for logisticians, and it incorporates every aspect of the inventory and distribution processes. Logisticians examine each process of the operation for gaps in communication, areas of crumbling collaborations, or other impediments that all work to harm the efficiency of the whole. Lean analysts will apply a thorough microscope to the individual links in the supply chain, but it is always with the intention of improving the effect they have on the whole. The mind of the lean logistician is always focused on the overall number, or total logistics cost.
The philosophy of creating lean logistics operations begins with identifying waste or slack in the overall process. The most commonly known waste that is found in companies is excess inventory. These may be classified as anything non-essential to the operation of the company and should be eliminated, similar to removing a kink from a water hose, and there will be an immediate increase in the overall flow and speed of the enterprise. The benefits of applying lean principles are a reduction in ready-to-ship and works-in-progress inventories, as well as in warehousing and distribution costs.
The effect of variations that led to the Six Sigma methodology
Understanding the effects of variations within the different processes is an important aspect of slimming down the total logistics cost. To better grasp these concepts consider that a company creates averages based on accumulated data, and while the average may be acceptable it does not accurately reflect each scenario. For example, if shipping a product takes 30 days on average it is safe to assume that some arrive in 15 while others take 45 days. While the average that these figures create is acceptable, the variations are not. The Six Sigma methodology was based on this understanding of variations and how to effectively reduce them. A consistent process is much more effective than the doubting, shoot-from-the-hip style business associated with ineffective logistical planning.
The achievement of Lean Six Sigma Logistics, as Lean as it gets
When the concept of lean logistics was teamed with six sigma’s standards of variation reduction, a new level of lean logistics was born. Removal of waste and the filling of gaps produce a well-oiled inventory machine while variations are identified and controlled using Six Sigma principles. With lean operating principles companies are able to better control their total logistics cost and improve their bottom line.
Companies that wish to get the most out of their inventory and transportation dollars look to lean logistics for cost-cutting solutions. By eliminating non-essential inventory, solidifying communication channels across functions, fostering teamwork initiatives, and reducing variations businesses can help the various processes operate at their full potential. The concept of lean logistics is revolutionizing the logistics industry with innovative solutions for businesses of every size.