Art van Bodegraven was, among other roles, chief design officer for the DES Leadership Academy. He passed away on June 18, 2017. He will be greatly missed.
When the subject of "lean" principles comes up, more often than not, Japanese auto makers—particularly, Toyota—come to mind. But it's not entirely accurate to characterize lean as a modern Japanese innovation: The foundation elements of lean actually date back to business principles implemented by Henry Ford in the first part of the last century, principles he outlined in his classic 1926 book on management, Today and Tomorrow.
Nor is lean just about auto manufacturing—or manufacturing in general, for that matter. In recent years, the gospel of lean has spread beyond the production line to broader applications. We are convinced, for example, that the principles of lean can—and should—be applied throughout the supply chain. Implemented with focus and purpose, they have the potential to elevate—to transform— performance in sustainable ways.
But be warned. It's not easy being lean; the journey requires discipline, leadership, and buy-in from management and workers alike. If implemented inconsistently, or without a sense of direction or objective, a lean supply chain initiative is almost certain to fail.
What a muda
At its essence, "lean" homes in on eliminating waste, which in Japanese is called muda. Lean manufacturing programs, for example, target eight specific types of waste: unused creativity, defective parts, waiting, overproduction, overprocessing, unnecessary movement of products, unnecessary movement of people, and ineffective inventory control.
Though the list was created with manufacturing in mind, it is easily adaptable to other areas. Some of the types of waste, in fact, can be problems almost anywhere. Take unused creativity, the failure to capitalize on the ingenuity of both workers and managers. That is a near-criminal waste in any function, from sourcing/procurement to physical distribution.
Others have clear counterparts in supply chain processes. Defective parts, for example, translates to supply chain errors of all kinds—from picking errors to incorrect order quantities. It also includes shipping by the wrong carrier or the wrong mode. Those errors consume resources—time, people, and materials—to no useful end. Worse yet, additional resources are usually needed to correct the original error.
Waiting, too, has clear applications to supply chain operations. Think of trucks sitting idle awaiting their turn at the dock, or DC workers or machines standing by waiting for tools, products, or materials to arrive or to be taken away. Waiting constitutes an abuse of people, time, and physical assets.
Overproduction has counterparts in over-ordering at both the macro and micro levels of supply chain operations. Either way, an oversupply of product, often simultaneously at different points in the supply chain, represents a horrible waste. Think about the consequences when retailers, wholesalers, distributors, and manufacturers generate "just in case" inventories as a hedge against unexpected demand. Money, physical assets, time, people, and material have all been consumed for something that is not needed.
Overprocessing is a risk in any activity. Quality inspections, redundant approvals, and order reviews at the conclusion of pick/pack are some examples. It negates the value contribution of the original activity by adding unnecessary time and effort to the process.
Another example of overprocessing is the failure to rationalize the supply base and concentrate on a few top-tier suppliers. Yet another is the failure to rationalize the carrier base. Both result in inefficient duplication of resources, decisions, and communications.
Like overproduction, the unnecessary movement of products can occur at both the macro and micro levels—within a warehouse, within a factory, or with too many steps and too many stops through a distribution network. Unnecessary movement from suppliers—say, through master DCs to regional DCs for further deployment to customers (or into customers' distribution networks)—can be deadly from the standpoints of cost and time as well as the consumption of critical resources like labor and space.
It's easy enough to see how the unnecessary movement of people can create waste in the supply chain. In warehousing, an enormous percentage of people's time is devoted to movement, such as picking, putaway, and replenishment. If a facility is not well laid out with easy access to "A" items, the unnecessary movement and associated time can reach staggering levels. If goods are not where they're supposed to be, the movement to get them has been wasted, and even more time and effort will be spent in finding them.
Ineffective inventory control creates waste at several levels. Excess inventory based on bad inventory data diverts precious capital into the creation and maintenance of waste. And an overabundance of material results in the assignment of valuable space to hold unnecessary stock. A scarcity of items, on the other hand, results in stockouts or lost orders. Having too little also means time spent in trying to find the items and frequently results in expedited purchasing and transportation—more waste.
Manifestations of waste can be found throughout the supply chain. Examples include a fragmented supply base, inefficient ordering processes, tolerance for less-than-optimum incoming products and materials, empty backhauls, inefficient load creation, inaccurate forecasting, and ineffective information systems— and the list goes on and on.
The role of the Five Ss
The key to addressing the problem of waste lies in what have been called the Five Ss. They are:
Sortation—separating needed tools and materials from the unneeded, and removing the unneeded
Straightening—arranging items in easiest-to-use order
Shining—cleanup; good housekeeping
Standardization—systems and procedures to accomplish and monitor the first three Ss
Sustaining—maintaining and continuously improving the operation.
It is admittedly easier to think about sortation and straightening in the context of manufacturing and warehousing than in the supply chain, but when you extend their definitions to include the development of good processes and procedures, their relevance becomes clear. Likewise, the need for shining, or good housekeeping, is evident across the board—in facilities, in rolling stock, in offices. It also applies to systems, files, and databases—every aspect of physical and information infrastructure.
Standardization, then, refers to the institutionalization of the processes and policies developed for lean operations. Sustaining means that the lean workplace never stops getting leaner. If it's to last, "lean" must become a way of life.
The end game
What's the ultimate objective? It's perfection: No waste. No errors. Absolutely accurate records. Perfect orders. You get the idea.
Is perfection achievable? Not exactly. But a lean initiative can bring an organization significantly closer to it. And with continuous improvement, it will come even closer to that goal with each passing year. One day—a day perhaps not too far off—a lean organization might awaken to discover that its performance looks like perfection indeed to those who have yet to start down the lean path.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.