Lean Logistics Article

1. BCaM
Lean Logistics Are You Ready?
We hear more and more buzz words all the time and lean logistics is no different. So
what is Lean logistics? Lean is a term that comes from manufacturing and relates to
reducing “process waste”
In its purest form, Lean is about the elimination of waste and the increase of speed
and flow. Although this may be over-simplification, the ultimate objective of Lean is to
eliminate waste from all processes. At the top of the list of known wastes, according
to Lean theory is the elimination of inventory. More simply, any inventory should be
eliminated that is not required to support operations and the immediate need of the
customer.
What are lean issues in Manufacturing?
From a manufactures perspective Lean means improving the “supply chain speed” of
the inbound and outbound supply, so that, little or no inventory is required at either
end of manufacturing and still customer service levels are met or exceeded.
This “supply chain speed” has often manifested itself in faster transport, but supply
chain speed is more than faster transport it is about the speed of the entire system
and the processes within that system.
What can be done?
Manufacturers will examine their internal process flows to identify the process waste
and reduce or eliminate it. This is achieved through an analysis process and
rectification of the process. This may be simply procedural or may involve physical
engineering to make the improvement. But it does not stop there; one of the keys to
successful Lean process is the trainer and development. If a company has now
developed some new machinery or process, they up-skill their workers technically
and philosophically to run the new process or equipment.
Applying Lean Principles to Logistics
Does this manufacturing principle apply to logistics? Logistics and the supply chain
will inevitably become impacted by Lean principles as manufacturing demand
logistics congruence with its policies. As such the impact of Lean on the logistician is
significant, as the goal of Lean is eliminate waste (inventory, processes) which will
decrease work in process inventories which in turn will decrease process and cycle
times and ultimately increase supply chain velocity and flow.
Lean also has a vital cultural element to it that is crucial to the logistician. This is the
concept of "Total Cost ". A low unit cost may not necessarily relate to a low total cost
Latus Business Solutions I Level 2, 710 Collins St., Docklands, Melbourne 3008
P +61 3 9097 1671 F +61 3 9346 7342 P 1300 00 8386
W www.latus.com.au E mike@latus.com.au

2. and in many cases it is the reverse due to re-work and additional process. Imagine
you setting up a top range vehicle workshop and then equipping it with the lowest
unit cost tools from a reject tool supplier. The unit rate is cheap for the tool kit but
how long will it last and what other factors will be impacted by that low unit cost?
Therefore the “total cost” is important.
Lean Maker or Lean Taker?
It is now clear that more and more organisation are adopting lean as a philosophy
and reaping the benefits. So what level of benefits are they getting, most companies
experience 20% to 30% improvements in their operation. As such it is unlikely that
companies will abandon lean management.
Will your organisation embrace lean logistics as a philosophy or will it be forced upon
you by your customers. If it is forced upon you will you reap the benefits or will your
customer.
As an organisation, look at how you can establish Lean Logistics for you and your
customer and be proactive in offering the outcomes to them. Do not get confused
with rates, this exercise is not about reducing rates or getting your component as
cheap as possible. It’s about taking unnecessary costs (waste) out of the process.
What are the benefits to you?
Your business processes will improve, customer service will improve the overall
business will improve, which means better returns. You never know your unit rate
could improve as the total cost of the supply chain reduces.
“LATUS Lean” division
LATUS has launched a new division of its business, “LATUS Lean”. The division
focuses on removing process waste from any business and putting the savings
generated back on the bottom line. LATUS has managed to include all the benefits
of other types of lean management and can map all process and redesign them to
take out the waste. However, the new LATUS system has one main difference;
measurement and mapping of people in the process. LATUS can now not only plot
and improve the physical process but can also plot and improve interpersonal
business relationships to reduce the waste from the humanistic component of the
business.
Lean management can often take out 5% to 20% of process waste and humanistic
improvements can often reap about the same, put the two together and business can
expect up to 40% improvements overall.
Call LATUS now for an obligation free review of your business will benefit from lean
and how much you might save. If you want to know more about “LATUS Lean” call
1300 00 8386 or www.latus.com.au
Latus Business Solutions I Level 2, 710 Collins St., Docklands, Melbourne 3008
P +61 3 9097 1671 F +61 3 9346 7342 P 1300 00 8386
W www.latus.com.au E mike@latus.com.au