By Clifford F. Lynch
DC Velocity, March 2006
We’ve all heard the term "lean and
mean." Indeed, many of us consider our own organizations to be just that.
Unfortunately, what that usually means is that our "downsized" staffs
are scrambling to do more with less and that no one’s paying much attention to
improving processes (they’re too busy fighting fires).
Until recently, "lean" principles have mostly been applied to
manufacturing processes. Only a handful of companies, most notably Toyota, have
applied the concept to their supply chains. According to the SCM Research
Center, 50 percent of all U.S. manufacturers report that they’re using some
lean manufacturing techniques, while only 10 percent have expanded the concept
beyond the production line.
But it can be done – though perhaps not easily. For openers,
"lean" is difficult to define. Ask five people for a definition, and
you’ll receive five different answers. One of the better definitions I’ve
seen comes from Jamie Flinchbaugh of the Lean Learning Center, who has written
that "[L]ean systems give people at all levels of the organization the
skills and a shared way of thinking to systematically drive out waste through
designing and improving … activities, connections, and flows." What I
like about this definition is that it acknowledges that going lean involves more
than tools, that creating a lean supply chain requires a new mindset throughout
In fact, the decision to go lean requires mindset adjustments for parties
well beyond the company’s walls. Toyota, for example, has raised
"lean" to an art form not only for itself, but also for most of its
suppliers. Volumes have been written about Toyota’s lean philosophy, but
essentially, it’s a quest to determine what customers really want and then
work with customers, suppliers and associates to eliminate waste and
With the right leadership, those principles can unquestionably be applied to
the supply chain. For example, the first step would be to abandon your
"push" inventory replenishment strategy and convert to the
"pull" method. Under the "pull" system, product shipments
are triggered – or "pulled" – by customer demand, not
"pushed" on a DC at the manufacturing plant’s convenience.
Obviously, you’ll have to involve your own suppliers because they will need
to receive that demand signal. A great deal of collaboration and cooperation
will be required. Fuji Cho, CEO of Toyota, said, "We are only as strong as
our weakest supplier."
The second step, although admittedly tedious, is to map your entire supply
chain process and eliminate any activities that don’t add value. This
so-called "value-stream mapping" is not something we’ve done a lot
of in logistics, but a skilled mapper can find a surprising amount of waste in
almost any system. The next step, of course, will be to eliminate as much of
that waste as possible.
The potential payoffs are tantalizing. By eliminating waste, a company can
boost value for the customer, cut costs, reduce errors, increase productivity,
reduce space requirements, and more. But that’s no reason to stop! There’s
always room for improvement.
The journey to lean supply chain management is an endless one. The must be an
ongoing process, which implies rigorous adherence to a continuous improvement
program. Encourage your employees to constantly work toward rooting out waste.
The overall goal of your supply chain should be to achieve perfection. In the
words of one of my personal heroes, Vince Lombardi, "Perfection is not
attainable. But if we chase perfection, we can catch excellence."