Lean Supply Chain and Logistics Management Read online

  Praise for Lean Supply Chain and Logistics Management, by Paul Myerson

  “The Author has provided us with a comprehensive and thorough examination of Lean principles applied to improving the efficiency and effectiveness of supply chains and logistics. Managers who may have felt overwhelmed with the challenges and complexities of logistics and supply chain management in today’s global environment will benefit from Paul Myerson’s discussion of Lean. He has presented the material in an easy-to-understand style, and he addresses the basics as well as the advanced dimensions of Lean Management. He provides perspectives and insights which will add to the understanding of the power of Lean not only for those with limited exposure but also for those with experience in the area. His own experience and understanding is reflected in his discussion of Lean tools and the methodology for implementation of the Lean approach. The documented benchmarks for success and the many examples help explicate the complexities for the reader.

  The book is organized and written so that it will be useful as an introduction to the field and also as a reference when special challenges arise for the practicing manager. The chapter on metrics and measurements should be particularly useful, as well as the chapter discussing global supply chains. The book was written primarily for managers in the field, but it could be a valuable resource for a collegiate level course or a professional workshop. Paul Myerson’s book is a valuable contribution to Logistics and Supply Chain Management at an important time for companies facing the competitive challenges of the current global economy.”

  DR. JOHN J. COYLE

  Professor Emeritus of Logistics and Supply Chain Management

  Department of Supply Chain and Information Systems Smeal College of Business

  Pennsylvania State University

  University Park, Pennsylvania

  “Supply chain and logistics management are more and more a driving force in the marketplace. Paul Myerson’s 30+ years of experience as a manager, consultant, and teacher are very effectively put to use in his book that shows readers how to ‘make things happen’ instead of ‘wondering what happened.’

  Myerson provides readers with an orderly framework for achieving, maintaining, and improving a supply chain’s competitiveness. With the consumer in mind, the emphasis is on continually eliminating non-value adding activities in a supply chain so that the buyer gets true value for the price paid.

  To realize the benefits of a lean supply chain and logistics management takes the right frame of mind and organizational culture combined with the use of appropriate concepts, tools, and use of evolving information technologies as presented in Myerson’s book.”

  WILLIAM DEMPSEY

  “The book is a must read for all supply chain managers seeking to drive down costs and improve profits. Get copies for your controller and all senior managers before any investment is made in your supply chain. This book lays it all out. Whether new or senior to the management of a supply chain, I strongly recommend this book.”

  RICHARD LANCIONI

  Chair, Marketing & Supply Chain Management

  Fox School of Business

  Temple University

  Philadelphia, Pennsylvania

  About the Author

  Paul Myerson has been a successful change catalyst for a variety of clients and organizations of all sizes. He has more than 25 years of experience in supply chain strategies, systems, and operations that have resulted in bottom-line improvements for companies such as General Electric, Unilever, and Church and Dwight (Arm & Hammer). Myerson holds an MBA in Physical Distribution from Temple University and a BS in Logistics from The Pennsylvania State University. He is currently Managing Partner at Logistics Planning Associates, LLC, a supply chain planning software and consulting business (www.psiplanner.com). Myerson serves as an adjunct professor at several universities, including Kean University and New Jersey City University. He is the author of a Windows-based Supply Chain Planning software, and co-author of a new Lean supply chain and logistics management simulation training game by ENNA (www.enna.com/lean_supplychain/).

  Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

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  This book is dedicated to my brilliant and beautiful wife, Lynne, and wonderful son, Andrew. My wife always comforts and consoles, never complains or interferes, asks nothing, and endures all. She also writes my dedications.

  CONTENTS

  Foreword

  Preface

  CHAPTER 1 Introduction: Using Lean to Energize Your Supply Chain

  What Is Lean?

  Lean Failure

  Implementing Lean

  Supply Chain and Logistics Management Defined

  Why All the Interest in Lean Supply Chain Management?

  CHAPTER 2 Historical Perspective: From Lean Manufacturing to Lean Enterprise … the Need for Speed

  Evolution of Lean

  The Need for Speed

  Lean Office

  Lean Supply Chain and Logistics Management

  Lean Six Sigma

  Cycle Time versus Processing Time

  Takt Time

  Dock-to-Dock Time

  CHAPTER 3 The Eight Wastes: Waste Not, Want Not

  What Is “Waste”?

  The Eight Wastes

  Inventory Waste

  Transportation or Movement Waste

  Motion Waste

  Waiting Waste

  Overproduction Waste

  Overprocessing Waste

  Defect or Error Waste

  Behavioral Waste (or Underutilized Employees)

  Thinking Differently

  CHAPTER 4 Lean Opportunities in Supply Chain and Logistics: Forest for the Trees

  Plan

  Wastes in Forecasting

  Source

  Make

  Make to Order (MTO) versus Make to Stock (MTS)

  Distribution Requirements Planning

  Deliver

  Return

  CHAPTER 5 Basic Lean Tools: You Can’t Build a House without a Solid Foundation

  Standardized Work

  Visual Job Aids

  Visual Workplace

  Layout

  5S: Workplace Organization and Standardization

  Sort Out

  Set in Order

  Shine

  Standardize

  Sustain

  CHAPTER 6 Advanced Lean Tools: It’s Not Rocket Science

  Batch Size Reduction and Quick Changeover

  Batch Size Reduction

  Quick Changeover

  Kanbans

  Quality at the Source

  Work Cells

  Balancing a Work Cell

  Total Productive Maintenance

  Overall Equipment Effectiveness

  Lean Analytical Tools

  Tools for Gathering

  Tools for Organizing

  Tools for Identifying Problems

  CHAPTER 7 JIT in Supply Chain and Logistics: This JIT Is Good

  Areas of Focus

  Network Design

  Integration of Resources

  Walmart and Dell: Examples of JIT in the Supply Chain

  Visibility and Reliability

  Cross Docking

  CHAPTER 8 Lean Warehouse: Low-Hanging Fruit

  Lean Thinking in the Warehouse

  “Assembling” Orders

  Value Stream Mapping in the Warehouse

  Lean Tools in the Warehouse

  Lean Warehouse Examples

  CHAPTER 9 Lean Global Supply Chain and Logistics: The Long and Winding Road

  The Logistics of a Global Supply Chain

  Value Stream Mapping to Identify Waste

  Areas of Potential Waste in the Global Supply Chain and Logistics Network

  Areas to Reduce Waste

  Keys to Global Logistics Excellence

  Addressing Wastes in the Global Supply Chain

  CHAPTER 10 Keys to Success: The Patient Gardener

  Key Success Factors

  Lean Training

  Management Support

  Lean Structure

  Teamwork and Lean

  Making Teamwork Happen

  Sales and Operations Planning (S&OP)

  S&OP Defined

  Supply and Demand Options

  The S&OP Process

  S&OP and Lean

  Working Together

  CHAPTER 11 Getting Started: Lean Forward

  Lean Opportunity Assessment

  Value Stream Mapping

  Value Stream Mapping Defined

  Value Stream Mapping Benefits

  Value Stream and Product Family

  Takt Time

  Value Stream Manager

  Goals and Objectives

  Steps to Creating a Current State Value Stream Map

  Data Collection

  Future State Value Stream Map

  Where to Look

  Implementation Plan

  Lean Teams

  Team Charter

  The Team Makeup

  Kaizen Events

  Kaizen Event Management

  CHAPTER 12 Lean and Technology: Why Can’t We All Just Get Along?

  Lean and Technology: Background

  Best-in-Class Use of Technology with Lean

  Enterprise Resource Planning (ERP) Systems

  Demand Forecasting

  Trends Driving the Use of Technology to Reduce Waste

  Distribution Requirement Planning (DRP)

  DRP and Demand Pull

  Advanced Planning and Scheduling Systems

  Benefits of Advanced Planning and Scheduling Systems

  Warehouse Management System (WMS) Software and Radio Frequency Identification (RFID)

  Warehouse Management Systems in Waste Reduction

  Transportation Management Systems (TMS)

  Benefits of Transportation Management Systems

  CHAPTER 13 Beyond the Four Walls: I Can See Clearly Now

  Electronic Data Interchange (EDI)

  Web-Based EDI

  E-Commerce

  E-Commerce and Small- to Medium-Sized Enterprises

  QR, ECR, and CPFR

  Efficient Consumer Response

  Quick Response

  ECR versus QR

  Collaborative Planning, Forecasting, and Replenishment

  Vendor-Managed Inventory

  Value Stream Map for a VMI Program

  Other Potential Areas for Collaboration

  Future Opportunities and Roadblocks

  Supply Chain Flexibility Traits

  CHAPTER 14 Metrics and Measurement: How Are We Doing?

  Policies and Procedures

  Rationale for Considering Metrics

  Relevant Lean Supply Chain and Logistics Metrics

  Delivery Reliability

  Perfect Order Measure

  Responsiveness

  Flexibility

  Cost

  Asset Management

  Balanced Scorecard

  Finding the Right Metrics for Your Company

  Metrics Framework

  Financial Impact of Metrics

  Review Scorecard during S&OP

  Dashboards to Display and Control Metrics

  Indicators

  Application Areas of a Scorecard

  CHAPTER 15 Education and Training: All Aboard the Lean-Train

  Training Methods

  Traditional Methods

  Group-Building Methods

  Selecting the Training Delivery Method

  Training: Key Management Team (Seminars, Certifications, etc.)

  Training: General Workforce

  Training: Tools and Tips

  Games

  Handouts and Forms

  Language Barriers

  Measuring Success

  CHAPTER 16 Future Thoughts: Lean Times Ahead

  Lessons Learned

  Barriers to Supply Chain Integration

  Human Resources

  Structure

  Relationships

  Technology

  Alignment

  Trends in Lean Supply Chain

  Data Analytics

  Supply Chain Analytics and Lean

  Pot
ential Obstacles to Lean Thinking in the Supply Chain

  Lean Ahead

  APPENDIX A Real-World Examples of Lean Supply Chain and Logistics Management

  APPENDIX B Lean Opportunity Assessment

  References

  Index

  FOREWORD

  The world of costs and cost management has always been an Achilles heel for logistics managers. They pay a lot of attention to costs, as do other managers in a firm—especially the accountants and financial managers who put pressure on the logistics manager to cut, cut, and cut. Ironically, while the pressure is intense, the accuracy of the cost information is often low. For many years, beginning in 1970, there was the concept of logistics cost leverage that held that a “one penny reduction in logistics costs would result in a four to five times” revenue impact on the bottom line. The result of this idea was that most firms thought they were cutting costs, but in reality, their efforts were only partially successful. In Lean Supply Chain and Logistics Management, Paul Myerson provides a valuable approach that all logistics managers can use to identify important cost areas in the supply chain, and offers techniques for how to reduce these costs over time.

  In the first chapter, Myerson defines a “Lean supply chain” and explains why there is such an interest in Lean. In the second chapter, he discusses the “need for speed” and why reducing costs can impact a supply chain in a dramatic way. He points out that the Six Sigma approach can be very useful in transforming a modern supply chain into a Lean supply chain. In Chapter 3, he poses the question, “What is waste?” He goes on to discuss the different kinds of waste to look for in a supply chain. These include inventory, transportation, waiting, overproduction, over-processing, defect, and behavioral waste.

  In Chapter 4, Myerson points out that you can’t plan, source, deliver or return materials in a supply chain unless you have an accurate understanding of the system’s cost structure. He develops this concept further, emphasizing that “you can’t build a house without a solid foundation” and understanding of the work plan, the job layout and the workplace organization and standardization. Organizing for a Lean supply chain requires that a firm establish batch-size reduction, quick changeover, quality at the source, and work cells. In addition, Lean analytical tools are necessary for gathering, organizing and identifying problems in the supply chain.