©LeanCor 2008

Building the Lean Fulfillment Stream

Lean Logistics SummitJune 22, 2010

©LeanCor 2008Slide: 2

Process and the Supply Chain

“Brilliant Process Management is our Strategy”

“We get brilliant results from average people managing brilliant processes”

“We observe that our competitors often get average (or worse) results from brilliant people managing broken processes”

Toyota Motor Manufacturing

Oh No ! What happened !

©LeanCor 20083

Is Anything For Certain These Days ?

©LeanCor 2008

Certainty # 1

Process

Value Added

Adds value to the output and

customer is willing to pay

for.

Optimize

Non-Value Added

Does not add value to the output, and

customer isn’t willing to pay

for.

Eliminate

Business-Value Added

Does not add value to output, customer will not pay for, but

is necessary.(Legal, Safety, Etc.)

Minimize

©LeanCor 2008

Certainty # 2Processes Want to Fall Apart

In a system, a process that occurs will tend to increase the total entropy of the universe.

Second law of thermodynamics

System: A group of interacting, interrelated, or interdependent elements forming a complex whole.

Entropy

A measure of the disorder or randomness in a closed systemA measure of the loss of information in a transmitted messageInevitable and steady deterioration of a system or society

©LeanCor 2008

Right Part ? Right Quantity ? Right Time ? Right Place ? Right Price ? Right Quality ? Right Source ? Right Service

CustomerManagement

Distribution CentreManagement

InternationalTransportation

Inter CompanyTransportation

Domestic Transportation

InboundCross Docking

Trailer YardManagement

LeanManufacturing

OutboundTransportation

SupplierManagement

PullStabilityVisibilityStandardizationFlow - JITQuality at SourceProblem SolvingCollaboration

Certainty # 3

Overproduction is the King of waste…Make to order is utopia

Supply LT MLT + OL+ < Customer LT = MTO Supply LT MLT + OL+

<

Customer LT = Forecast

©LeanCor 2008

Slide: 7

©LeanCor 2008

©LeanCor 20089

Principles of the Lean Supply Chain

•Manufacturer to cadence of customer demand

Make customer consumption visible

• As lead time is full of waste

Reduce lead time

• Avoid overproduction and excess inventories

Use pull systems

• Create problem solving culture

Create velocity and reduce variation

• Move smaller lots more frequently

Collaborate and focus on process discipline

•Optimize the System

Measure and manage Total Cost of Fulfillment

©LeanCor 2008

Lean - & Systems Thinking

The defining characteristic of a system is that it cannot be understood as a function of its isolated components. First, the behavior of the system doesn't depend on what each part is doing but on how each part is interacting with the rest ...

Kofman and Senge, 1993

What we need are more sales promotions !

I love it when a plan comes together…did it ?

All New Products every year with 100% new components… You’re a fool if

you don’t focus on BOM costs

©LeanCor 2008

©LeanCor 200812

Supply Chain & Logistics ManagementA Practical Viewpoint

LogisticsSupply Chain Management

©LeanCor 2008

Do we see the flow (or lack of flow )

©LeanCor 2008

©LeanCor 2008

Thank You

Robert@leancor.com