by OMS Admin

Lean logistics is a practice, methodology, strategy, philosophy, and concept. It looks to increase efficiency by identifying customer value and eliminating waste and inefficiencies. The five lean principles were born almost fifty years ago, in Toyota Corporation, for perfecting car manufacturing in Japan. It has since been adapted and tweaked for use in many other industries, including healthcare, engineering, and logistics.

The lean principles can be effectively leveraged in businesses and organisations of all sizes, including warehouses, transportation companies, and last mile delivery. It is incredibly valuable for a company that wants to compete against and beat its competition, and it ultimately leads to improved profit and customer satisfaction.

In logistics, you do not want to move parts and products further than needed. Transportation takes time and creates delays, whether that movement occurs on a pedestrian-picker, forklift truck, or last mile delivery level. With lean logistics, you will offer the best quality service in the shortest amount of time and with the least number of resources.

So, what are the five principles of lean logistics?

1. Identify Customer Value

The first step in lean logistics is to determine what is the value in terms of your customer’s needs. There will likely be several values that you can specify, such as the length of the delivery timeline and service price.

You can only begin to meet your customer’s expectations once you have created a value definition. Many lean logistics experts and transportation strategists suggest you consider if you have the right materials, quantity, time, price, service, place, quality, and source.

2. Map Out The Logistics Value Stream

Your next task is mapping out the value stream. The value stream is every step and process, from accepting materials, goods, or equipment through their entire journey towards final delivery to the customer.

Once you have your value stream mapped on paper, you can begin to identify waste and look for ways to eliminate it. Suppose the process or action does not contribute to a customer value or is not essential to the operation, such as quality assurance. In that case, you should be motivated to remove it. It would help if you aimed to remove all transportation waste and ‘empty’ transportation.

3. Create A Transportation Product Flow

Now that you have a value stream map that is free of wasteful activities, you want to create the most efficient product flow through your logistics operation. The aim here is to eliminate delays, bottlenecks, and interruptions.

The sequencing should result in steps that occur in a tight sequence with a smooth flow. The product flow needs to be viewed on a cross-functional department level, which can be a challenge, but research indicates that efficiency and productivity can be improved by as much as 50% or more.

You may need to work with your strategic partners and build trustful relationships with them and across teams and departments. Lean logistics only occurs when all of these are dependable, committed, and stable. The best results are found when you refrain from assessing individuals and instead focus on productivity, routines, waiting/standing times, miles run, and capacity utilisation.

4. Introduce A Just-In-Time System

With an improved flow and the basis of lean logistics in place, you should now have reduced the transition and travel time of products moving through your operation. However, the lean logistics process is not complete, and there are more gains on offer. It is at this stage that you can move towards a just-in-time system.

A just-in-time system might mean reducing the number of products that are stockpiled in a warehouse, which can essentially be dead inventory and tied-up cash. Cracking this part of the lean logistics formula will directly lower your operating costs.

5. Pursue Logistics Perfection

Lean logistics is not a static methodology that ends and is forgotten once steps one to four have been completed. Few things remain the same, and you are unlikely to have tackled, solved, and perfected every process and action across your logistics business.

Lean logistics should become part of your corporate culture, eventually touching all employees from top management to last mile delivery drivers. Embarking on this journey will evolve the thinking of your workforce and require collaboration across people and departments. As collaboration, problem-solving, and lean skills develop, your customers will begin to notice the improvement in your service. As a result profits and customer satisfaction will increase.

Experts in lean principles admit that they are unlikely to find true leanness until the process (steps one to four) have been run through five or six times. Each journey through the lean logistics process will help you create more value for customers with fewer resources.

Problem-Solving Techniques For Logistics Companies

Methodologies that help with problem-solving include DMAIC; define, measure, analyse, improve, and control, and PDCA; plan, do, check, act.

The five whys is another technique that logistics companies will find helpful. Once again, it comes from Toyota, and the basic principle is to ask five ‘why’ questions to get to the root cause of a problem. The answer to the first question becomes part of the next question. 

To find success with the five whys technique, you need to separate and recognise the differences between symptoms and causes. Again, you should look to assess the process and not the person and establish the cause-and-effect relationship. You must not jump to conclusions and should spend time looking to make the answers more precise.

Another valuable and productive technique is the Five S’s of Lean. These S’s are Sort, Straighten, Shine, Standardise, and Sustain. The process looks something like this:

  1. Sort: Distinguish unneeded tools and actions from needed tools and eliminate the unneeded ones
  2. Straighten: Are things in the right place and order to allow processes to flow freely?
  3. Shine: Keep the environment neat and tidy
  4. Standardise: Make the first three steps systemic in your organisation
  5. Sustain: Maintain the procedures you establish and substitute problems with solutions

The five lean principles may have been developed five decades ago, yet they remain highly effective.