Lean Supply Chain and Logistics Management, page 24
Blue-Ribbon Standard
Norfolk Southern has already set the standard in rail transportation, and now it’s doing the same with Lean and kaizen. “During a visit to Norfolk Southern, a Union Pacific mechanical officer who sat in on a portion of our kaizen activities marveled at the progress we have achieved in such a short period,” says Smyre. And no one needs fear that the gains in efficiency have caused slippage in other areas: for 19 consecutives years Norfolk Southern has won the coveted Harriman Safety Award for having the safest employees in the railroad industry.
Lean has given the employees of Norfolk Southern a renewed pride in their work. Says Thelen, “I see the passion in our employees’ eyes as they display their kaizen improvements, and those teams are displaying a sense of urgency. That will not be easily matched by the competition.”
RETURN
Lean Case Study: Reverse Engineering—How to Gain Reverse Logistics Efficiency*
Here are three examples of how companies can rethink reverse logistics to gain greater supply chain efficiency and economy.
Forward thinking companies increasingly need to consider reverse. With so much attention, time, and capital spent on exploring ways to move the enterprise in new directions, what’s left behind is often overlooked and under-controlled. Reverse logistics covers a wide array of services—from inspection, repair, and remanufacturing to consumer returns and after-market recycling. It can reduce waste and ancillary costs, drive sustainable best practices, or generate new revenue streams. It may include using inbound routing guides and core carrier partners to manage returns or outsourcing product lifecycle management to a 3PL.
CHALLENGE #1: Following a series of acquisitions, a retailer is managing reverse logistics regionally. Recognizing that a fragmented approach is creating redundancies, inefficiencies, and cost bleeds, it decides to adopt a centralized returns strategy.
SOLUTION: The company uses a demand-supply planning model to substantially reduce inventory by postponing unneeded repairs and focusing repair activity on meeting projected requirements for specific units. Additionally, integrating returns processing and repair operations reduces the return/repair cycle. Leveraging these efficiencies, the company increases control and centralizes returns processing; enables visibility to all inventory throughout the return/repair cycle; and purges unnecessary investment in buildings and systems to manage reverse logistics.
CHALLENGE #2: An e-commerce company expands by selling into brick-and-mortar retail outlets. As its logistics requirements grow, it struggles to efficiently manage warehouse space and labor. Managing fulfillment and returns poses an additional challenge.
SOLUTION: The company sells its warehouse and materials handling equipment, and outsources inbound and outbound distribution to a third-party logistics provider. It reduces its warehouse footprint and labor need by 50 percent, automating processes while improving space utilization. The company then reinvests the capital it recovers from selling the warehouse into growing its business.
CHALLENGE #3: A manufacturer dealing with sensitive, high-value medical parts is hampered by a lack of field inventory visibility. Inexact and non-automated processes for returning parts into its pipeline also create inventory management challenges. Delivering critical service parts to, and managing returns from, more than 1,000 field service technicians is rife with inefficiency.
SOLUTION: The company opts to work with a logistics service provider to manage a national network that includes 20 parts depots and a central distribution hub. Together with its 3PL, the manufacturer identifies key elements of the returns process that need improvement. As a result of these business process changes, the company increases visibility to partson-hand for field service technicians, dramatically reduces inventory costs, and centralizes all returns to a single location for better control. Reverse logistics becomes even more important when the bottom line drops, budgets cinch, and sales grow sluggish—when economy and customer service become paramount. Manufacturers are challenged to maintain high cost structures without risking lost sales due to poor customer service. Retailers, too, must focus on outward-looking forecasts to match marketing and sales efforts with demand. Overstock and returns are often unavoidable and they account for considerable expense. Some companies may rewire their internal infrastructure and work with logistics partners to manage the returns process; others completely outsource reverse logistics to reduce fixed costs.
APPENDIX B
Lean Opportunity Assessment
Lean Opportunity Summary and Graph
REFERENCES
Chapter 1
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Schroeder, R., et al., Operations Management, 5th edition, McGraw-Hill, New York, 2010.
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Chapter 2
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Chapter 4
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Chapter 5
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Chapter 7
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Chapter 8
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Ryder Logistics, Five LEAN Guiding Principles, http://www.ryder.com (accessed 2011).
Chapter 9
Craig, T., International Lean Logistics—Beyond the Four Walls, http://www.ltdmgmt.com (accessed 2011).
Hexter, J., and Narayanan, A., S. McKinsey & Company and the U.S. Chamber of Commerce, The Challenges in Chinese Procurement survey, 2006, http://www.mckinseyquarterly.com (accessed 2011).
Sardar, D., Cross Country Consulting interview, http://www.crosscountryconsulting.biz (accessed 2011).
Supply Chain Digest white paper, The 10 Keys to Global Logistics Excellence, 2006, http://www.scdigest.com (accessed 2011).
Taylor, C., Five Reasons Why Global Logistics Is Moving from the Basement to the Boardroom, IBM Global Services white paper, 2006, 3–5, 14, http://www-995.ibm.com (accessed 2011).
Chapter 10
Dougherty, J., and Gray, C., Sales and Operations Planning—Best Practices, Trafford Publishing, 2006, http://www.grayresearch.com (accessed 2011).
Viswanthan, N., S&OP—Strategies for Managing Complexities with Global Supply Chains, http://www.aberdeen.com (accessed 2011).
Chapter 12
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Aberdeen Group, Lean Manufacturing: Five Tips for Reducing Waste in the Supply Chain, 2009, http://www.aberdeen.com (accessed 2011).
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Thomas, K., Senior Vice President Manufacturing at JDA Software Group, Inc. interview, 2011.
Chapter 13
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Sheffi, Y., The Value of CPFR, the MIT Center for Transportation and Logistics, 2002, http://web.mit.edu (accessed 2011).
Sheier, R. L., “Internet EDI Grows Up,” Computerworld, 2003, http://www.computerworld.com (accessed 2011).
Supply Chain Management Review survey of CSC clients, http://www.SCMR.com, 2007 (accessed 2011).
Chapter 14
Cook, M., Philippe Hauguel and Roman Zeller Shaping Up Your Supply Chain, March 1, 2002, http://www.bain.com/publications/articles/shaping-up-your-supply-chain.aspx (accessed 2011).
Cook, M., Why Companies Flunk Supply Chain 101, Bain & Company survey and report, http://www.bain.com (accessed 2011).
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Chapter 15
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Chapter 16
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Appendix A
A Lean-Six Sigma Duo for the Office, http://www.isixsigma.com; courtesy of Rath & Strong management consultants (accessed 2011).
Automotive Lean Supply Chain, http://www.georgia-associates.com (accessed 2011).
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Garrison, B., “Lean Logistics—Want to Manufacture More Savings in Logistics?,” Refrigerated & Frozen Foods Magazine, April 1 2003, http://www.refrigeratedfrozenfood.com (accessed 2011).
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“McKesson Moves Medicine,” Supply Chain Digest, January 17, 2008, http://www.scdigest.com (accessed 2011).
“Reverse Engineering—How to Gain Reverse Logistics Efficiency,” Inbound Logistics Magazine, November 2009, http://www.inboundlogistics.com (accessed 2011).
“The Organized Office, http://www.obviousoffice.com (accessed 2011).
Trebilcock, B., “Warehousing gets Lean,” Modern Materials Handling, 12/1/2004, (accessed 2011).
Vujosevic, R., Ramirez, J., A., Hausman-Cohen, L., and Venkataraman, S., Lean Kitting, http://www.optimalelectronics.com (accessed 2011).
INDEX
Please note that index links point to page beginnings from the print edition. Locations are approximate in e-readers, and you may need to page down one or more times after clicking a link to get to the indexed material.
ABC code, 28, 34, 111, 139
Aberdeen Group, 7–8, 136, 144–145, 180
Accuracy, 145
aggregate, 30
forecast, by Heinz, 194–195
forecasting, 112
inventory, 143
SKU, 30
targets, 28
Accurate order fulfillment, 159
Action learning, 168
Adjusting forecasts, 30
Advance ship notice (ASN), 102
Advanced planning and scheduling systems (APS), 136
benefits of, 142–143
as Lean technology, 142–143
S&OP relating to, 142
Aggregate accuracy, 30
Aggregate planning, 109
Aggregate production planning, 111
Alignment:
as barrier, 181–182
strategic, 156
Analysis:
chart, for quick changeover, 60, 61f
of major losses, 69, 71f
Analytical tools:
for gathering, 72
for identifying problems, 72–75
for organizing, 72
Apparel retailers, 151–152
Apple, Jim, 222–223
APS. See Advanced planning and scheduling systems
Area map, 49
Arm & Hammer, 151, 152
ASN. See Advance ship notice
Assembling orders:
through kitting, 206
in warehouse, 88–89
Assembly line, 12
kitting in, 206
Asset management, 160
Audit, 50
Automation, 101
Automotive Lean:
background on, 196
case study, 196–197
methodology of, 196–197
results of, 197
Bain & Company, 15, 157
Balanced flow, 242
Balanced scorecard, 160–161
Bar codes, 143–144
Barriers:
alignment, 181–182
human resources, 176–177
