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What's Next? Nothing... Maybe Lean Logistics

Leading manufacturers have suggested they get "brilliant results from average people managing brilliant processes," while others endure lackluster results derived from employing brilliant people to manage mediocre processes. It's common knowledge that building efficient processes are central to success. But the required visibility of these processes is often diminished in today's global context. How can leaders counter their diminished ability to see what's central to their success?

by Robert Martichenko

Back to Basics

A Lean Summit took place in May at Sao Paulo, Brazil. The event attracted one thousand delegates, with each participant craving knowledge of how to eliminate organizational waste through the use of Lean principles. There were several workshops on Lean Logistics, which were extremely well attended by people from all functional disciplines. This is a true testament to the growing awareness of logistics and supply chain importance.

Delegates were in very good company. Sitting in the front row of a very large and crowed conference room were Dan Jones, Jim Womack, and John Shook. These three personalities represent the who's who in Lean Thinking. In fact, Dan Jones and Jim Womack authored the The Machine that Changed the World, Lean Thinking and most recently, Lean Solutions. John Shook co-authored Learning to See, a highly regarded workbook that is often used by organizations beginning their Lean journey.

During a plenary talk led by Dan and Jim, they informed the audience that a very frequent question they are asked is "What's next, what's after Lean?" Their answer was, in a word, "nothing". Nothing is next,they told the audience. Successful organizations will retrench and focus on the basics, and maintain a relentless, all consuming drive to eliminate organizational waste. The basics are described as:

  1. Customer Focus;
  2. Vision Deployment and Constancy of Purpose;
  3. Process Management;
  4. Teamwork;
  5. Quality at the Source; and
  6. Continuous Improvement.

Several minutes later, after the anti-climatic feeling of disappointment had worn off from their non-prophetic answer, they flipped to their next slide. It revealed what might be called a true pivot point for logisticians. Dan Jones and Jim Womack, the thought leaders in Lean Manufacturing and Beyond, had a slide that told all delegates to "Implement Lean Logistics and Lean Supply Chain Management".

They argue that the future will be owned by organizations that focus on the customer experience and strive to reduce all waste from the customer experience. Successful companies will be those who sincerely attempt and succeed in not wasting the customer's time and money. (Note: they told two stories of horrific, personal customer experiences, one buying a computer on line and the other getting a vehicle repaired at a dealership. We have all been there!)

By eliminating waste in the customer experience, we will in fact become closer to the customer. As we become closer to the customer, we will understand customer expectations and true demand patterns. As we better understand expectations and demand patterns, we can in turn better plan our production capacity to meet customer demand in a leveled environment. This will result in further waste elimination (waste in the form of excessive inventories and excessive lead times) and will continue to enhance customer experiences and provide profitable growth for all parties.

Are We Missing the Big Picture?

At the beginning of the millennium, Toyota Motor Manufacturing announced that they expect to be number one in automotive manufacturing by 2010. All leading indicators suggest this will happen well before their targeted date. While their competitors close plants and espouse survival strategies based upon innovation and global outsourcing, Toyota is building plants in Canada and the United States. Further, they are asking major suppliers to build their plants directly beside or extremely close to the new Toyota facilities. And through it all, Toyota stays focused on the basics: Eliminating waste through disciplined process management. The following quote by Toyota senior leadership exemplifies their focus.

"Brilliant process management is our strategy. We get brilliant results from average people managing brilliant processes. We observe that our competitors often get average (or worse) results from brilliant people managing broken processes".

Toyota Motor Manufacturing Process management is the future of Supply Chain Management. As Dan Jones and Jim Womack now teach, supply chain management is the future of the customer experience. Using the cumulative addition laws of mathematics, this would suggest that process management is the future of the customer experience. This makes perfect sense, as the customer experiences the combined effects of all business processes being consolidated and executed in an attempt to meet customer needs. The more effective the processes, the better the customer experience.

The conclusion about the future therefore is that there is nothing new under the sun. It is now time to get back to basics and focus on how we do our work. How can we ensure that we are always doing the right things right? Additionally, we need to collectively face some brutal realities about process management:

  1. Outsourcing a broken process will not get to the root problems that caused the process to be broken in the first place;
  2. Automating broken processes will not result in a better process. In most cases, automating broken processes generate results that are worse than the ineffective manual process;
  3. Process effectiveness has a direct and proportional relationship with process line-of-sight visibility. Process line-of-site visibility has a negative relationship with supply chain lead time.

Process Line-of-Site Visibility

Developing and sustaining effective and efficient process requires disciplined use of the Plan Do Check Act (PDCA) cycle as taught to us a half a century ago by Shewart and Deming. Our ability to execute PDCA is a function of our ability to see the process. The more visibility we have to a process, the more effective the PDCA will be, resulting in continuous improvement of the process. In logistics and supply chain management, this line of site visibility to our processes is a function of supply chain lead time. The longer the lead time, the less our line-of-site visibility. For example, if we have a supplier who is next door to our facility, we will have the ability for a high level of process management. All supply chain processes, from forecasting through to transportation, can be better managed for no other reason than the short lead time from the supplier to our facility. In contrast, if we resource this supply to a supplier offshore, lead times will increase significantly as will our inability to have line-of-site visibility of process. As visibility of process diminishes, PDCA will become extremely difficult to execute and therefore continuous improvement will stagnate.

Drawing conclusions from the above arguments, our findings are:

  1. The future will be handed to organizations that focus on the basics;
  2. Fundamental to practicing the basics is effective process management. How do we do our work to ensure we are doing the right things right?;
  3. Process management relies on our ability to execute the PDCA continuous improvement cycle;
  4. Effective PDCA requires process line-of-site visibility; and
  5. Process line-of-site visibility increases as we reduce lead times.

What Does the Future Hold?

A most interesting question for the logistics and supply chain professional today is whether the current feverish trend of globalization will ever reverse itself. Will we wake up one morning and decide that extended lead times, variability of quality and service, increased inventory levels and an inability to manage and improve process will simply cost us more then building and sourcing in local markets? If Dan Jones and Jim Womack are correct, then we will see this day, perhaps sooner then we think. In the mean time, organizations currently fighting for survival need to take a hard look at how they manage fundamental business processes. It's time to get back to basics.

And for some, time may be running out.