Why you should implement lean techniques into your warehouse

lean philosophy

After learning about the “human side of lean” aka. Training within industry as a leadership program, we would love to take a closer look into the lean approach in general. The following article looks to dive deeply into not only the who, what, where, when, why, and how of Lean manufacturing, but also sluice out and make more easily digestible the benefits of this management philosophy as compared to its oft-confused cousins Six Sigma (a methodology versus a philosophy) and Theory of Constraints (again, a theory, not a philosophy). Read on to learn more about the past, present, and future of this principles-based approach in operations management and how it can help your warehouse achieve a Zen-like state starting today!

Introduction

Henry Ford, when questioned about why his innovative manufacturing process would only ever produce one type of Model T, was believed to have quipped, “Any customer can have a car painted any color that he wants so long as it is black.”

While the debate whether or not the father of modern-day assembly line manufacturing actually said those words is still a point of contention, little has changed in the way most production facilities, warehouses, and logistics companies organize their operations, or with the aim and intent of pushing as many items through their doors as fast as possible in order to generate a profit based on volume sales alone.

In other words?  Quantity over quality.

But a quick look at the increasingly bespoke automotive industry (as well as scores of others) dispels this belief, especially as more and more consumers demand customized vehicles. This, in turn, drives (sorry for the bad pun!) operations managers to rethink how to not only meet volume- and variety-based demands, but also do so within the confines of extremely sensitive supply chains.

The ability and willingness of a warehousing firm to respond positively to such dynamic market shifts, however, is what ultimately spells success or failure for that company quarter after quarter, year after year.

 

But when a warehouse’s very survival is on the line, or it merely wants to get out of the business of chasing down fires all day, where does the GM or AGM turn?

Lean, that’s where.

And here’s why.

What is Lean?

Unlike the cold, hard manufacturing process of Ford circa 1913, Lean manufacturing and warehousing, at its core, is all about infusing an operation with the philosophy of continuous process improvement based on constant waste reduction efforts.

Put differently, and as a point of comparison with its oft-confused counterparts Six Sigma and Theory of Constraints, consider that while Six Sigma is all about mathematical equations, methodologies, and tools-based analysis (cue flashback to your last class in statistics here), Lean is all about philosophy. This is only slightly different from the continuous process improvement sought vis-a-vis Theory of Constraints, which is, er, a theory! Think of them this way:

  • Six Sigma:  customer centric with a goal of near defect-free operations day in, day out; methodologies, tools, techniques, tactics, and procedures
  • Lean:  add value to the customer through internal processes that reduce waste; a philosophy in which all workers see the warehouse as world that needs to be as efficient as possible 
  • Theory of Constraints:  increasing throughput by removing any bottleneck; a theory of how to interact with the most common issue in warehousing and supply chain management

Now, back to Lean, waste, and Zen Buddhism!

Right, ok, got it, but so what?

Great. Lean is a philosophy, but so what?

Well, in returning to the car manufacturing, storage, and delivery example, think of Henry Ford’s production assembly line as Buddhism, or:  an overall awakening into how production, in any field, could achieve greater output and, consequently, maximize profits.

Taken one step further, then, think of the Toyota of the 1980s along with present-day Tesla as Zen Buddhism wherein warehouses and supply chains are stripped of all their accoutrements to be made as simple, effective, and efficient as possible. 

Lean, then, builds on these foundations of maximizing output and profit by optimizing a process through input reduction. What’s more, Lean looks to first define value as seen in the eye of the customer, map the entire length of the supply chain or value stream, improve velocity at every step within that chain, avoid pushing products in favor of pulling only what is needed based on real-time customer demands, and, of course, seek perfection (Zen!).

Many of the updated or current elements of Lean do, oddly enough, come from Japan by way of Toyota, which made famous a line of cars that generated little scrap metal, economized based on consumers that needed fuel-efficient transport, and that empowered employees to stop an assembly process without first requesting permission based on the belief that they were the expert within that step of the system.

Thus, it should come as no surprise that waste reduction targets muda, mura, and muri, which are traditional Japanese terms for non-value, unevenness, and variation.

Now, before you sign up for a Japanese language or cultural immersion course, let’s first delve into how you can make your warehousing operations Lean starting right now.

But how?

Lean warehousing first demands a clear understanding of the entire value chain, taking into account upstream providers as well as downstream delivery or distribution mechanisms. As the middle-man between the product creators and end users, then, it is crucial that a warehouse have in stock those items associates will likely need to pull for a customer. Thus, Lean is reducing any and all inventory that might eventually need to be pushed (here, read:  liquidated) to a customer at a loss in order to make space for more valuable products.

There will always be a need for some amount of safety stock or a network in which to pull one-off, in-demand items, but, overall, warehouses need to operate with a just-in-time mentality that can only be achieved through open and honest communication.

Some ways to get there include, but are not limited, the following:

  • Andons
  • Waste reduction (i.e., targeting defects, overproduction, waiting, unused talent, transportation, inventory, motion, and over-processing)
  • Cell manufacturing
  • Just-in-Time (JIT)
  • Kaizen
  • Kanban
  • Poka-yoke
  • Value Stream Mapping
  • Takt Time Studies 

In order to truly achieve a state of Zen within warehousing, however, it is important to accept that continuously focusing on how to reduce steps or add value elsewhere within the process is a nonstop (here, read:  continuous) activity that requires persistence, patience, and perseverance.

Final thoughts and a quick (get it?) case study on cars!

Lean manufacturing went from Henry Ford to Toyota and, from there, everywhere. 

There is truly no industry that has not, since at least the 1980s, tried to adopt a waste-reduction strategy, empower its employees to call foul on any unnecessary steps within a value stream, or make more resilient a supply chain against unanticipated stock outs, overages, and other inventory-related issues.

And if you’re still on the fence whether Lean is a good strategy or if you are still feeling skeptical about giving drivers, warehouse associates, and the like power in stopping a process in order to make a long-term, money-saving correction, well, then consider how Tesla is leaning (no pun intended!) on best practices from the past in order to make a much better future.

FROM TOYOTA TO TESLA:

Toyota remains, for many, the epitome of Lean manufacturing with close runner-up position going to Dell. Besides aircraft, however, few items are as tricky to assembly, stock, store, and delivery than cars with both industries also under heavy scrutiny to remain affordable and ensure clean safety records.

So, what could Elon Musk of Tesla and SpaceX really contribute to a discussion on Lean, what, with his millions and billions of dollars?

Quite a lot actually.

Like automotive manufacturers before him, he was still at the mercy of backlogs, customer orders, unreliable supply chains, and assembly line production processes. What he did differently, however, was innovative in the following ways:

  • When factory footprints constrained output, he simply took output outside
  • He ran time studies and reduce assembly to fewer than 50 total steps
  • Tesla began to hold all upstream partners accountable for defect injection rates

Quite a strategy to get lean...

As you can see, lean philosophy is worth a try. Whatever, however, wherever – lean has no limits. We took the time to bring lean thinking into training, by deleting as much from the work instructions as possible to get a deeper understanding of the real essential facts. We promise, this journey is not over yet …. there is more lean thinking yet to come…

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