Lean Supply Chain and Logistics Management, page 22
The Future
Today, the robotic distribution system handles 100 percent of tire volume from the Fayetteville plant. The Goodyear Supply Chain Team confirms that, with a few modifications, the system is well suited to cope with any future production increases.
“I’m amazed at how well the technology is embraced,” said Fledderjohann, referring to the pushback that sometimes occurs with the introduction of new technology. “This investment is good for the plant as well as for our customers.”
Goodyear also recognizes the benefits to the supply chain that links customers with the Goodyear facility in Fayetteville. Now, with a fully automated system that also offers timely, accurate information on every tire regardless of where it is in the warehouse and deployment cycle, it’s a real competitive advantage.
Goodyear’s NAT Supply Chain is confident the new Automated Warehouse Facility will make it more attractive for customers to receive tires from Goodyear. This technology allows Goodyear to fully integrate production related systems to supply chain systems. That means better customer fill rates, better deployment of product, and ultimately the ability to offer more attractive solutions.
It’s the kind of payback that Goodyear is counting on, and it’s also a ringing endorsement for RMT Robotics. “It’s been a good company to work with,” said Fledderjohann. “They’ve delivered on what they promised.”
“From the beginning, Goodyear and RMT Robotics have shared a common vision for the future of tire distribution,” says Douglas Pickard, President, RMT Robotics. “It has benefited both companies, and the pioneering spirit of the relationship has resulted in solutions that fundamentally re-define the tire distribution model.”
DELIVER
Lean Case Study: Lean Logistics—Want to Manufacture More Savings in Logistics?*
Just as fishermen learn how to go to where the fish are, savvy business executives go to where the ideas are.
That’s just what happened at the nation’s leading frozen seafood brand, Gorton’s. In 1998 executives at this Gloucester, Mass., company read the book, Lean Thinking, by James Womack and Daniel Jones. With Vice President of Operations David Weber championing the cause, Gorton’s began applying Lean concepts to its seafood processing practices. The goal: eliminate waste and wasteful practices while adding value to the process.
And although manufacturing would be the first area to learn about Lean, Gorton’s plan was to adopt the practice everywhere.
“We adopted a culture of Lean throughout our entire business and that also meant spreading the message beyond our four walls,” says Jeff Whiteacre, operations value stream manager. “Logistics was intentionally integrated from the very beginning. However, there was need to start internally and achieve success within Gorton’s before we rolled out the plan to our suppliers and service providers.”
With that, Gorton’s developed and implemented training, and went to work. Soon, Whiteacre says, the results were dramatic. From 1998 to 2001 Gorton’s reduced raw and finished material inventories by 50 percent, reduced its raw materials warehouse space and dramatically reduced operations time and handling by replacing individual bags of ingredients with truckloads of ingredients more directly fed into line operations.
By coordinating the efforts of logistics, purchasing, operations and sales, Whiteacre notes that one Gorton’s plant was able to ship more than 90 percent of what it produced within 24 hours. Another plant increased its changeovers from 100 to 1,000 and reduced the amount of time to change the line from 1 to 2 hours to only minutes.
Results in hand, Gorton’s was ready to spread the news. Moreover, it had the perfect forum for doing so. For years the company has hosted an annual operations conference for suppliers and service providers. The idea has been update these partners on Gorton’s objectives and to foster a proactive dialogue.
Lean Thinking has been the conference theme for each of the past 3 years with Gorton’s encouraging participation and offering support for training. This year’s fall conference will go one step further with Gorton’s honoring a supplier or service provider for their work with Lean (see sidebar, “And the winner is…”).
Meanwhile, there is ample evidence that two of Gorton’s logistics providers—AmeriCold Logistics and United States Cold Storage (USCS)—are applying Lean Thinking approaches to warehousing practices.
Like a Good Neighbor…
AmeriCold, Atlanta, operates a dedicated warehouse attached to Gorton’s processing facility in Gloucester. After training with Gorton’s personnel, Gloucester General Manager Gene Gallant led AmeriCold employees in a value stream mapping process to identify and scrutinize every warehouse activity. Next came a review of the Gloucester plant’s practices and then, final discussions about where the two sides could jointly improve.
“We discovered—and since eliminated—a number of steps in our processes for handling product from the plant to the warehouse,” says Kirk Hoover, AmeriCold vice president for lead logistics services. “When we looked at how we receive a pallet and acknowledge it, we found that there were duplicated steps and unnecessary administrative paperwork.”
This year finds AmeriCold extending Lean practices to several of its distribution centers nationwide. Hoover notes, meanwhile, that DC improvements target more physical activities such as order picking and pallet handling on the dock and in the freezer.
Back in Atlanta, Hoover says AmeriCold has been applying Lean concepts internally and talking about the program with other processor-customers.
As far as AmeriCold’s relationship with Gorton’s is concerned, Hal Justice, executive vice president of lead logistics services, says Lean Thinking has its applications for public warehouses but fits even better in a dedicated warehouse strategy.
“To get the most from Lean the two facility managers—and the two companies—need an open and frank relationship. It requires a willingness to trust, share confidential information and talk about where costs are. It will become a win-win relationship only when the two facility managers realize that the object is to reduce total supply chain costs, not to reduce costs on one side by pushing it to the other.”
Coast-to-Coast Coverage
USCS, Cherry Hill, N.J., has worked with Gorton’s since the mid-1980s. USCS’s Union City, Calif., warehouse first provided West Coast storage and distribution services for Gorton’s. Over time, USCS’s Fort Worth, Texas, site also has become a major partner in supplying the Southwest.
Notes Jerome Scherer, vice president of sales, marketing and government affairs, “Gorton’s began speaking of Lean Thinking about four years ago at their annual conference. Then they started to promote Lean as an efficiency improvement tool for their suppliers and logistics partners. USCS began to employ Lean Thinking ideas in 2001.”
Where better to try out a big idea than in a state known for big things. USCS Fort Worth took the lead role for value stream mapping to eliminate wasted effort and time in company practices.
Says Plant Manager Frank Monroe, “I’d recommend that any company dive into Lean. With representatives from every facet of operations involved you can better identify what’s happening and map out strategies to eliminate waste. It’s been an interesting and worthwhile effort. Any time you can drive out cost, it’s good to do so.”
Like AmeriCold, USCS has found ways to reduce administrative paperwork and increase productivity.
“We’ve moved away from paper by converting to radio frequency technologies,” Monroe says. “That’s eliminated redundant paperwork including, for example, pick slips and manual cases per man hour reports. Even the way we move around the facility has changed. A forklift does not move empty anymore. If it heads out to the dock to deliver a pallet, we make sure it returns with another pallet for storage.
“From my standpoint, we’re just scratching the surface of what we can do and—while we’re rolling out RF technologies to other USCS locations—we’re also looking at more improvements everywhere from the dock to our offices.”
Mike Goulart, Gorton’s director of distribution, concurs.
“Each logistics partner brings its own creative approach to implement Lean techniques. There is no one right or wrong way to eliminate waste and provide value for the customer. Provided that our partners are looking at the entire value stream and seeing the whole picture, the results can be dramatic.”
DELIVER
Lean Case Study: Warehousing Gets Lean*
While lean is long a fact in manufacturing, innovative managers at warehouses and DCs are now asking what lean can do for them.
Several years ago, OPW Fueling Components, a leading manufacturer of fueling products for gas stations and convenience stores, implemented lean manufacturing at its facilities in Cincinnati, Ohio.
With results like a 79 percent reduction in cycle time, OPW began to look at ways to apply lean concepts across the enterprise, including the finished goods warehouse.
“The lean concept has value, whether it’s in the plant or the warehouse,” explains Tom Ciepichal, vice president of operations. “We’re going to identify and optimize those processes that add value for our customer. Then we’ll reduce the processes that are non-value added or create unnecessary waste.”
Just as in the factory, OPW is mapping out the processes associated with storing, picking and shipping finished goods, defining the steps that workers currently take to execute those processes, and analyzing how things are stored. They are also turning to technology, such as bar codes and supply chain management software (Glovia International), to provide better visibility into processes.
“To implement lean in the warehouse you need to look at how you can improve the visualization of the facility, set the stage for standard work, and look at the simple movement of goods,” Ciepichal says. “For instance, we recently looked at how the layout of the warehouse impacts the smooth flow from picking and packing to shipping to optimize travel time.”
Lean Warehousing?
Projects like the one at OPW beg the question: Is there such a thing as lean warehousing?
It’s a good question. After nearly 50 years, lean manufacturing is a recognized discipline with well-defined best practices and many practitioners. Lean warehousing is nowhere near that stage.
“Lean warehousing is not yet a discipline,” says Bruce Strahan, a partner with The Progress Group. “But people are asking what lessons from lean manufacturing we can apply to the warehouse.”
For now, lean warehousing is a concept being embraced by manufacturers like OPW. These pioneers are exploring ways to translate their success on the shop floor into the other reaches of their businesses.
The state of lean warehousing might best be summed up by a recent logistics conference. There, an educational track was led by a plant manager who never once mentioned his warehouse. “That tells me that people are interested in the lean warehousing conference, but they haven’t made much progress yet,” says Jim Apple, another partner at The Progress Group.
There are some fundamental differences between the warehouse and factory that need to be taken into account. The most important of those, Apple believes, is variability and predictability. Even in a build-to-order environment, a plant manager knows what’s going to run on the assembly lines for some period in advance. That allows for the synchronization of processes inside a facility, and ultimately across the supply chain in a lean operation. “As we’ve concentrated on shipping product on the same or next day, our ability to control demand and predict the mix of products that’s going to be filled in the warehouse is low,” says Apple. “Variability is what causes waste, excess labor and excess materials.”
Still, Apple and others believe that while lean warehousing might still be in gestation, there are lessons to be learned from lean manufacturing that can be applied inside and outside the distribution center.
Inside the Four Walls
When it comes to warehousing, most talk about getting lean infers cutting back on personnel and inventory in order to do more with less.
But for lean manufacturing, as well as lean warehousing, that is only half the answer. The other half is getting agile.
“What is often missed is that leanness without agility is worthless,” argues Stephen Parsley, principal engineer, Daifuku America. “To be lean simply means you’ve reduced the fat. To be agile means that your processes are flexible, scaleable, and above all, understood by all who are working with them so you can react to a change in plans.”
Translation: lean is really about taking waste out of operations.
In fact, the original Toyota Production System identified “seven deadly wastes” that interfere with operations. The seven are overproduction, waiting, downtime, unnecessary product movement, excess inventory, unnecessary motion and defective products. The best practices that have come to define lean manufacturing, like faster setups and error-proofing, are designed to reduce the amount of non-value-added activity.
One of the initiatives at OPW illustrates that point. “In addition to the product we produce, we also purchase some finished product from other manufacturers,” says Ciepichal. “We were storing, picking, and staging that product, combining it with our products, then shipping it to the customer. That was a lot of staging and sitting in queues.”
Through better layout, design and storage, OPW created a plan to locate purchased product closer to the shipping dock. That reduces the amount of handling it takes to combine and ship it with products the company manufactures.
Another approach is to optimize those areas in the warehouse where there is predictability. “The variability in order mixes means we can’t quite set up an assembly line for all of the warehouse,” says Apple. “But we can identify those processes that have some stability.”
Apple and Strahan recently worked with a leather goods manufacturer. One of the company’s biggest problems is gift-wrapping during the holiday season, when 97 percent of their orders have just one item.
“What we realized is that even though each order might have a different item, we have a common category that will have a common processing requirement single-line orders that need to be gift-wrapped,” says Apple. “That allowed us to develop an assembly line that will process those orders with half the labor of last season.”
Warehouses can also apply the “touch-once” principle to their operations to reduce wasted motion. “The idea is that any time you touch a product just to move it, you’re increasing your costs,” says Ed Romaine, director of marketing for Remstar International. Creating buffer storage at the receiving dock to briefly hold inventory before it goes to a work area or is combined with other products to go out the door is one example of touch once, says Romaine. Another is to have vendors supply the product in finished shipping form with inner-packs, boxes and cartons that can be placed directly into the picking system. Picking to the shipping container to reduce the work at packing stations is another example.
Postponement is yet another best practice in the warehouse that enables Lean principles. “With postponement, you’re not storing finished goods,” says John Pulling, COO, Provia Software. “You’re warehousing raw inventory in a work-in-process state, and then finishing it according to a customer’s order. That especially makes sense if you have a lot of product variability.”
Synchronization
Lean manufacturers are relying more and more on technology to synchronize the delivery of raw materials, parts, and components from suppliers with the product coming down the manufacturing line. That, in turn, is synchronized with the outbound transportation processes.
Manufacturers call this in-line sequencing, which means the parts that show up at the line are matched to specific product coming down the line. At the end of the process, they ideally go into the back of an outbound truck.
The emerging area of warehouse optimization software is one example of how in-line sequencing might translate to the warehouse.
“Lean is really about flow,” says Pulling. “In a traditional warehouse, you pick orders and stage them on the dock until trailers show up. Optimization software allows you to schedule the arrival of trailers based on delivery dates, and then synchronize the release of orders to match the trailers arriving at the dock. By releasing orders in the proper sequence, you minimize intermediate storage and the labor associated with it.”
There are other strategies to optimize the flow of product. Just as OPW reconfigured its warehouse to better deploy product, some companies are reconfiguring their supply chains to provide better customer service.
“We’re working with one 3PL that is managing 350 stocking locations around the world to forward deploy spare parts for their clients,” says Rob Sweeney, vice president of solutions engineering for Yantra, a provider of WMS and other supply chain execution solutions. “The other thing we’re seeing is that end users are putting less emphasis on traditional WMS [warehouse management system] functionality like putaway and location control. They want functionality to manage flow-through centers, cross-docking, and merge-in-transit operations. They really want us to be able to synchronize their inbound and outbound activities.”
At the end of the day, the most important Lean principle may have nothing to do with handling or configuration.
“The most important lean best practice is not a technique but an attitude,” says Parsley of Daifuku America. “It’s a total commitment to continuous improvement, with a never-wavering focus on the elimination of non-value-adding activities.”
