Lean Supply Chain and Logistics Management
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/).
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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.