Lean Material Management

April 1, 2005
It's time to take a fresh look at how lean principles should guide material management.

During the past 20 years, lean has expanded well beyond manufacturing. Along this journey, much has been learned about the use, application and effectiveness of lean techniques. We can take these lessons and reapply them to some of the original areas of activity, such as material management.

Lean in material handling and control, from the shop floor and out into the extended supply chain, needs to be reexamined for two reasons. First, the majority of lean efforts to date have been based on tools and their deployment. Instead, lean should be about principles, or thinking, including the constant progress toward an image of the ideal state of the process. Many companies state this in training but in practice the focus is still on the tools.

The second reason is that lean in material management has always been an extension of lean in manufacturing. Just copying or extending lean manufacturing can be a mistake. Instead, material-handling managers need to take a fresh look at what lean material management is all about. Five key concepts must be integrated into any lean approach to material management.

Concept No. 1: Avoid the information blizzard
As computing power becomes a commodity and software solutions get more press coverage, the push for more " visibility" into every part of your system has grown. Phrases such as "real-time" and "unit-level data" appear more and more frequently in marketing material and magazine articles. The underlying theory: if you can get real-time information, you will be more capable of reacting to events faster and more effectively.

Reacting by another name is " firefighting." A true lean approach eliminates firefighting and instead designs systems that respond. Here's one analogy: Air traffic controllers know the speed, direction and location of every aircraft. They assess the situation constantly and tell each individual pilot when to turn, when to change elevation, and when to slow down or speed up. Imagine that there were traffic controllers for roads who would assess the location, direction, and speed of every car and truck. They would filter what is important and tell drivers when to speed up, brake and turn. If we were writing an advertisement for this system, it might read: "Make your organization respond rapidly to changing needs in the marketplace dynamically creating an efficient and controllable supply chain." Sounds good, right? Put into practice, however, and you can easily imagine the chaos and accidents that would result.

Most material management systems are similar in nature. People, companies and machines make many independent decisions. But each needs only a few critical pieces of information to make effective decisions, for example, when the person in front of them puts on their brakes.

Material managers should design systems that give people exactly what information they need to determine their next action and nothing more.

Concept No. 2: Eliminate white space
Every activity, whether it involves handling material or information, has both a beginning and an end. But the next person's activity often does not pick up exactly where the previous activity left off. There is white space in between. If you fill out section A of a form and send it to have section B completed, anywhere from one to 20 people may touch it in between. This is where the waste can be found.

Every process in every industry has five distinct steps: queue, setup, run, wait and move. For decades we have focused a great deal on the run part of the process: running the machine, building the forecast, unloading the truck. But this is only the value-added step. It's important but it is not the most wasteful because we have focused on it for so long, and because it lends itself most naturally to improvement. The other four steps, where we apply the least amount of attention into managing and improving, are where most of the waste lies.

Consider this example. You visit Disney World and go to the Pirates of the Caribbean ride. What's the first thing that you do? You wait in line (queue). When you get to the end of that line, you don't just hop on the boat. The operators have to get the other people off and get it ready for you (setup). Then you get on and experience the ride (run). When the ride is over you have to wait for other people to get off before you can exit. Finally, you pull together your family and move to the next ride. Now, imagine you wanted to improve your lead time through Disney World. Most managers and industrial engineers would focus on making the boat go twice as fast. But that's only the valueadded step, the run. To find real opportunity we must focus on the other areas: queue, setup, wait and move. Disney has in fact focused its operational improvements on exactly that, and visitors' valueadded time while going through the park has significantly increased.

Concept No. 3: Right-size everything
I hardly enter a warehouse or distribution operation without hearing someone say, "We need updated software, more space and more capable equipment." While life may be easier with all of these things, it doesn't make you any better if you improve expenses by 10 percent but add 300 percent to capital requirements.

Likewise, if someone buys a piece of software and only uses half of the features, that is waste. The person who bought the software will insist that they have to use more of the features. But if those features don't add value, they shouldn't be used and more importantly, they shouldn't be bought.

We tend to start with the solution (the "thing") and then go looking for a problem. Instead start with the problem (the "pain"). Only when you truly understand the root cause of the problem should you pull out or create the solution. Lean is about using creativity before capital.

For example, one company we worked with made syringes. At one corner of the plant they made the needles. At the other end, 100 yards away, they injection molded the housings. Although they used some automated assembly equipment located near the needle manufacturing operation, a massive amount of waste was generated getting the injected molded components—light but bulky—to assembly. This included boxing, packing, moving, and unpacking. Some of the parts would even become damaged during this transportation process. A team was tasked with finding a solution.

Their first idea: move injection molding next to machining. This solution wouldn't get rid a lot of the problems and would have cost a fortune because of the process and documentation requirements of medical device manufacturers. Their next inspiration: install elevators and overhead conveyors. This solution was dramatically cheaper but also didn't get rid of most of the waste.

Finally, on his lunch break one of the team members went to the bank and deposited his paycheck at the drive-through teller. The check got into the bank via a plastic cylinder sucked through a vacuum tube. He figured that if the bank could suck up an object as heavy as that cylinder, they should easily be able to vacuum up the light plastic components and dump them directly into the assembly equipment. That's exactly what they did at a cost of $3,100.

Concept No. 4: One inch is still transport
In the telecommunications industry tremendous bandwidth was created throughout the infrastructure except for one nagging link, "the last mile" into homes and businesses. While much of the infrastructure was there it wasn't well utilized because people could not get the data in or out very quickly. That problem has been mostly solved now, but a similar problem exists in material management.

A great deal of work has been done to move both material and information over thousands of miles, across multiple time zones and between companies smoothly and efficiently. Elegant and massive solutions have been generated, sometimes spawning entire industries. I once witnessed a fork truck driver put down a bin of parts and then watched as the operator had to move each part no less than eight times, each one less than a foot. In the same operation the multi-million dollar ERP system prints out a pick list for the warehouse that is then re-written by hand for a more efficient pick order. There are efforts to chip away at the "last mile" problem, via technology such as radio-frequency identification (RFID), but there is no one silver bullet.

One solution, while not new or unique to lean, is autounload, which is deployed more by successful lean companies by a factor of 10 or 20. Loading a machine of any kind requires articulation, manipulation and precision, which can be very expensive to automate. Unloading requires one thing: transport. Auto-unload relies mostly on the most efficient energy source available: gravity.

When designing a work cell industrial engineers should consider these alternatives. First, without auto-unload: Pick up part from Machine A, put it down next to Machine B, unload machine B, put down part next to machine B, pick up first part, load machine B, pick up other finished part, take to machine C. Now, with auto-unload: Pick up part from machine A, move to machine B, load part into machine B, pick up part from auto-unload tray, move to machine C. Often with little more than a kick-level, a chute and a tray, you can eliminate incredible amounts of wasteful handling.

Concept No. 5: Eliminate functional tunnel vision
Current reality is not always what it seems. I once asked a plant management team to describe what lean means to them. The quality manager said "error proofing and firsttime through capability." The industrial engineering manager responded "efficient job layout and standard work instructions." The maintenance manager mentioned "total productive maintenance" while the controller focused on cost reduction. The materials manager had an answer that was as narrowly focused: "it's about pulling material and reduction of inventory." None of these answers were wrong, they were simply incomplete.

While everyone has a role to play, we cannot approach these roles with a partial view of current reality or an incomplete view of what needs to be achieved. Don't just focus on good material management solutions, focus on the contribution material management can make towards the development of an effective and complete lean system that serves the customers with what they need when they need it without waste. This focus is the same for all functions, the ones mentioned above along with finance, sales and marketing and product development. But for material management it takes on greater importance because it is often the hub of information through which the majority of the rest of the organization is connected. If material managers don't approach a lean transformation from a holistic perspective, then none of the managers from other functional areas will.

Remember that lean was not invented one day and is not sitting someplace waiting to be discovered. Lean is continually invented and reinvented every day. Learn from the past, apply it quickly, then learn from those new experiences to get to the next level. Reexamine the path you are on, make your course corrections and then continue on your journey. Just remember to bring two things with you: a map and a compass. Lean, through it's underlying principles, should provide both. Happy travels!

Jamie Flinchbaugh is a co-founder and partner in the Lean Learning Center, Novi, Mich. (www. leanlearningcenter.com). He has led or coached lean transformation in a wide range of industries from manufacturing to utilities to healthcare.

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