Lots of Food For Thought on Lean

July 1, 2011
It’s not about austerity, but about knowing your richest sources of supply chain intelligence.

Welcome to our lean issue. I know, the way the economy has been lately, every magazine is a lean issue. But MH&L is really no different from its readers in trying to anticipate customer demand and supplying just the right information in the right amount at the right time. And if you look at all the content in this issue, I hope you’ll agree we were able to fit a lot of inventory into a pretty tight space with no waste.

One of the most important aspects of lean logistics practices is the ability to deal with the consequences of variability, and almost every article in this issue touches on that, whether it be variability in consumer tastes, energy prices, or even environmental or political climates. Lean strategies don’t eliminate variability, but they help you deal with it more effectively.

Failure to address variability results in waste, and every lean program worth its salt is dedicated to finding and eliminating waste. Our story on Lipari Foods (pg. 11) details this wholesaler’s campaign against waste, and it starts inside its own warehouse.

As a company that handles 10,000 SKUs, Lipari faces a dilemma. It wants to differentiate itself by offering the best customer service, and that means having a generous customer returns policy. At the same time, it knows that many returns are the result of mistakes, and mistakes mean waste—which is the enemy of lean. That’s why Lipari is dedicated to rooting waste out by getting logistics right on the forward end—inventory management and order selection.

Lean isn’t all about sophisticated software, either. For Lipari, something as simple as going from single- to double-pallet jacks cut warehouse travel in half and increased the number of cases pickers handled per hour.

Even a tech guy like Mike Watson can respect the power of that kind of simplicity. He works for IBM as their ILOG supply chain applications leader, but he’s also an adjunct professor at Northwestern University’s Kellogg School of Management. In speaking to him while researching lean for this issue, he told me lean doesn’t always require a big tech investment.

“We’re seeing companies collect good information on what customers want and what kind of demand patterns customers are going after,” he told me. “Of course another great way to reduce inventory in the warehouse is if product just skips the warehouse entirely. That requires determining which products should touch every warehouse, which should bypass the warehouses and which should be cross-docked.”

That’s more a matter of market knowledge and customer intimacy than technical sophistication. It’s the kind of knowledge you get by knowing everyone in your supply chain—including the people working in your warehouse who see what’s coming back into their building.

You may decide the best lean solution is to move to another building. As MH&L Advisory Board Member Thom MacLean says in his article on page 14, leaner factories require less space to do the same work. But this, again, is a people issue, and you’ll have to determine the costs associated with relocation and retraining. The fewer people who make the move, the greater the learning curve—therefore, the greater potential for inefficiency at the new site. “Plan on the loss of certain ‘tribal’ knowledge regardless of the extent of your documentation,” MacLean advises.

We hope this special lean edition of MH&L gives you a lot to chew on.

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