Lean Six Sigma Inventory Practices

March 3, 2018 at 1:43 pm Leave a comment


shutterstock_524020273The advantages underlying a Lean environment involve optimizing the supply chain while reducing costs and becoming more flexible to meet the customer’s needs. But we must remember that a transition to a Lean environment affects all functional areas within a company, including all major logistics functions. However, not all functional areas or logistics functions may realize cost reductions individually, as Lean relies on the premise of optimizing an entire process and not simply micro-managing a particular department.

This need to look across the business unit as a whole unit is the number one adjustment for companies when going to a Lean logistics strategy. Simply stated, most companies today still have functional barriers that do not allow them to properly optimize costs across intra-company departments. To do this, and to understand the benefits of implementing a Lean system within the context of logistics functions specifically, one must understand the activity and cost drivers behind specific logistics activities.

Once this information is available, an analysis can be performed summarizing the individual cost drivers so it can be compared with the optimal cost that would result if the activity drivers were integrated with a Lean network.

After basic logistics fundamentals are taken into consideration, we must then look at inbound logistics systems relative to Lean logistics principles. These include many of the parameters such as:

  • Delivery frequency per supplier to the plant,
  • Lot size per part number,
  • Returnable packaging,
  • Leveled flow of each part number into the plant,
  • Pipeline visibility and contingency planning,
  • Logistics measurement systems and continuous improvements

From a Lean manufacturer’s point of view, inbound logistics cost drivers are seen in the following areas:

  • Inventory control
  • Demand forecasting
  • Cost of expediting, shortages, etc.
  • Obsolescence
  • Quality
  • Warehousing and storage
  • Transportation
  • Packaging
  • Order processing
  • Material handling

In order to have a world-class inbound logistics system, a company must take these Lean logistics principles and build its logistics networks using the Lean principles as the foundation of the network.

Does your company use Lean Logistics in the development of a World-Class organization?

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Entry filed under: Dan Trojacek.

The Lean Enterprise: What is it and Why is it essential to business survival in the new millennium? Lean Six Sigma Logistics: Inventories and the Cost of Production

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