It’s been a little over two years since the publication of Building a Lean Fulfillment Stream; this little workbook (111 pages) remains essential reading for anyone thinking about supply chain logistics. Published and sold by the Lean Enterprise Institute (LEI), the book is also readily available on amazon.com.
Authors Robert Martichenko and Kevin von Grabe detail a step-by-step, comprehensive implementation process for optimizing a fulfillment stream, from raw materials to customers. Particular emphasis is given to two critical concepts: calculating the total cost of fulfillment and collaborating across all functions and firms in the total fulfillment stream.
According to LEI, most companies calculate costs at different points within departments (e.g., the piece price paid by purchasing to a particular supplier). Few companies derive the total cost associated with each major function across its supply chain, despite the fact that calculating total cost allows for the measurement of how improvement efforts impact operations (i.e., performance) and bottom-line income.
They define guiding principles for lean fulfillment systems:
- Make consumption visible throughout the fulfillment stream.
- Reduce lead time to enable pull and reduce inventory.
- Create level flow to reduce variation and enable stability.
- Use pull systems to reduce complexity and overproduction.
- Collaborate, solve problems, and focus on process discipline.
- Increase velocity to drive flexibility for meeting customer demand.
- Lead and make decisions based on total cost of fulfillment.
Implementation of these principles is meant to eliminate all waste, so that only value remains.
Like any true system, lean fulfillment must be considered from a holistic perspective. According to a seminal study on how organizations learn, “The defining characteristic of a system is that it cannot be understood as a function of its isolated components. …The behavior of the system doesn’t depend on what each part is doing but how each part is interacting with the rest of the system.” When systemic thinking is abandoned for a focus on components, inventory accumulates, and functional silos within the organization proliferate.
It is important to note that lean manufacturing techniques, including lean fulfillment, are applicable not only within the enterprise but across suppliers and business partners. Customer demand is driving products to be produced at an ever-increasing pace with tighter lead times and lowered costs. The only way to get ahead of the pressures is through speed; in order to do this, everyone in the supply chain needs to react quickly and efficiently. As a result, manufacturers who traditionally have declined to implement lean principles may feel pressure from customers or suppliers to migrate to lean practices as a way to streamline overall operations for end products.
As lean manufacturing concepts have broadened, lean advocates have come to recognize that ERP and lean manufacturing work together very well. Each one supports and enables the most important objectives of the other. Lean purists point to several basic ideas as the foundation of lean manufacturing. The five lean principles of value definition and specification, value stream mapping, uninterrupted flow, customer pull, and the pursuit of perfection are all supported and enhanced by the comprehensive information control and management tools that an end-to-end enterprise software suite delivers. Click here to find out more about how Epicor can facilitate the building of lean fulfillment streams and the realization of the five lean manufacturing principles.
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