As discussed in the white paper Operational Guide to Implementing Lean in Distribution
, the concept of Lean
involves removing non-value-added wastes and increasing speed and efficiency. Lean is a journey in which an organization ascends to different Lean “maturity levels.” The initial focus should be on identifying waste and value in your business processes, from the time an order is received to the time the final payment is collected (or “from quote to cash”).
As your organization progresses and becomes more sophisticated in the use of Lean tools such as those described below, you can increase your time and efficiency gains. This striving toward perfection is a continuous process, with ongoing goals of delivering exactly what the customer wants, and repurposing your employees to deliver additional value to your customer. To succeed with Lean, you need to make it part of your culture.
A related concept, Six Sigma, refers to improving quality (as measured by customer expectations) to “near perfection” levels—reducing or eliminating variation. (“Sigma” is a statistical term that measures how far a given process deviates from perfection.) A highly disciplined philosophy and methodology, Six Sigma is broken down into the following phases, abbreviated as DMAIC:
- Define (the project charter, paying particular attention to the “Voice of the Customer”)
- Measure (the “as is”/current state of the targeted processes)
- Analyze (what the data is telling you)
- Improve (by piloting the proposed solutions in a small subset of the organization)
- Control (maintain the gains as you roll out the solutions more broadly).
7 Deadly Wastes
Many common tools exist between Six Sigma statistical analysis and Lean methodology; you can combine them to eliminate waste, which is is also called “Muda” in Japanese.
The first step in the lean journey is identifying what waste is, because once you know what waste looks like, you can try to reduce or eliminate it. The “seven deadly wastes” that can be seen in wholesale distribution are: Defects, Inventory, Over Production, Waiting, Motion, Transportation, and Over Processing. (An easy mnemonic for remembering these is: TIMWOOD.)
In distribution, Defects look like:
• Missed deliveries
• Shipping wrong parts
Inventory wastes include:
• Excess inventory
• Dead stock
• Not having the right inventory in stock
Over processing looks like:
• Double entry
• Filling out extra screens
• Double- and triple-checking items in every order
Waiting can look like:
• People waiting for unnecessary approvals
• Late shipments
• Customers waiting at your counter
• Taking more steps than needed in a warehouse or in the office
• Not having efficient truck routing
Overproduction can be thought of as:
• Not buying the right inventory to fulfill customers’ needs
• Putting too many features into a product (e.g., in kitting) that the customer did not want or need.
Some of the tools available to help you identify and eliminate as much waste as possible include:
This refers to creating controls for mistake- or error-proofing, leading to more predictable results and increased capacity. Mistake prevention must be a key business objective, but you can also readily see examples of this in your daily life; e.g.:
- Automated shut-offs on irons
- Ground fault circuit breakers for bathroom or outside electric circuits
- Childproof caps on medications
- ERP data fields that require input in a certain format
- Color-coded files
- Spell check in word processing
- Software questioning “Are you sure you want to delete?” after pressing the “Delete” button on your computer
- Dual Palm Buttons and other guards on machinery
- Bar Coding
- Fixtures, jigs, and templates
- Lock-Out / Tag-Out
“Go to Gemba” and “5 Why’s”
“Gemba” refers to the workplace, and the recommendation is to go where the work is actually happening, to visually identify what’s going on in a process. As part of this reality check, Lean Six Sigma advises using the “5 Why’s”: ask “Why” 3-5 times or more (or ask “What, Where, When, Who, How?” in addition to “Why?”) to drill down to root causes/issues, and get to something that’s actionable. Go after the biggest problems (as identified by employees) or biggest sources of revenue. Document the evidence/facts that led to the answer at each step, and then check the logic in reverse, from problem to cause. This leads to the development of effective and sustainable countermeasures or solutions.
Posted by Brent Gough, Sr. Business Process Consultant, Epicor Business Consulting Services