This article is being provided to NAHAD members as part of a partnership with Modern Distribution Management. It was originally published in MDM Premium.
A lot of the talk around lean in distribution has revolved around determining how a concept used primarily in manufacturing can be applied elsewhere in the supply chain. But the reality, according to lean expert Chuck Emery, is that lean has always worked with distribution in mind. In a recent MDM webcast, Emery provided a practical approach to implementing and measuring the returns of lean in distribution.
This is an exclusive summary of the webcast, Lean for Distributors: Improve Process, Eliminate Waste.
Lean is not about manufacturing more efficiently; lean is about making the supply chain work more effectively, according to lean expert Chuck Emery. “It’s always been about distribution,” he says in a recent MDM webcast.
Emery spent 16 years working with Toyota – the generally accepted leader in lean – before founding Lean Quest, a consulting firm focused on lean.
“If you think about distribution, it really is a factory spread across a whole chain,” Emery says. “But it’s more difficult because you don’t have control over the whole thing.”
But by working to create efficiencies at every level, you improve efficiencies everywhere along that chain, even the areas where you may not have complete control. “When we talk about customers, we talk about both internal and external customers,” Emery says. “… By serving your internal customers and making them efficient, it will allow you to serve the external customers [those further down the chain] in the best way.”
Here are four capabilities to develop to implement lean.
Capability 1: Design and operate to reveal problems
“As you operate your work every day, the purpose of that design and the way you operate your work is not only to complete that work, but also to reveal problems as you go through it,” Emery says.
This starts by knowing what your system output is. “You have to know how much needs to go to whom by when.”
Start by clearly documenting the requirements of the customer and make those requirements visual if possible. The best way to do this? “Ask the customer,” Emery says. “Way too often people tell me ‘I know what the requirements of the customer are.’ But when you actually go and ask them … and have the conversation, they don’t actually know at the detail level.”
Distributors have several options for developing the necessary documentation to build out this capability, Emery says. COPIS diagrams, Operations diagrams and Process Control Boards can be used to determine and measure your system outputs.
Once the output capability of your organization is understood, define the pathway of your operation: the flow of material, information and services … and who does what for whom. Process flow charts can help illustrate the physical pathway through your organization, Emery says. Also, establish visual markers, such as aisle signs and floor markings, to provide a path in the workplace, and not just on paper.
Defining the connections between each step along that path is also essential for creating an effective organization. If work starts to pile up in one area, that’s a sign that the connection is broken, Emery says. Tools that may be used for this stage include pull systems, standard in-process stock or kanbans.
Clearly setting up triggers and exchanges for the flow will allow weaknesses to be identified and corrected when and where they occur, rather than going back two weeks later and saying, “Do you remember when you did this?” Emery says. “Odds are, they won’t remember.”
The design and operation also must include a clear explanation of how the tasks are done. Without knowing the process that is supposed to occur, it’s difficult to assess the problems in the process.
“It’s all about revealing problems,” Emery says. A problem usually is a discrepancy between a standard and an expectation, and 95 percent of the time, that problem is in the process.
Capability 2: Solve problems close in person, place and time
“As soon as you see a problem, no matter how small it is, you will need to have the capability to contain it so it doesn’t pollute down the chain and disrupt the customer,” Emery says. “And then solve it, so it doesn’t happen again. Don’t wait for small problems to become catastrophes before you deal with them.”
People, place and time are important when working to contain the problem, because the context of the problem lies with the people, place and time.
Emery recommends starting with the Deming Wheel – Plan, Do, Act, Check – but adds a few steps to the process. “What we’ve found is that when people jump into the plan phase, they immediately go to solutions,” he says.
People forget to define the problem. And then they wonder why the problem returns, Emery says. “If the problem keeps coming back, you know you’re not getting to the root of the problem.”
Define the problem by identifying the standard that is not being met and why it is important to resolve. Get a grasp on the situation by establishing a cause and effect relationship and documenting the root causes of the problem.
When those two steps are complete, you can start planning how you will resolve the problem. Check the results and if targets are achieved, standardize those results across your organization. If the targets are not achieved, go back to the plan and reevaluate what needs to be done.
And make sure you document the results for repeatability throughout the organization.
Capability 3: Accumulate and share knowledge
“Knowledge and learning go hand-in-hand,” Emery says. Knowledge is the understanding gained through experience, and learning is improving the organization and process to continuously improve that knowledge base.
Knowledge can be a huge competitive asset if it is managed properly, Emery says.
And just like physical assets, it is up the leadership to manage knowledge assets and make sure it is being used in the most effective way. And just like other processes, the process for accumulating and sharing knowledge needs to be standardized, controlled and improved.
Job instruction training is an effective method that has been used by Toyota since World War II to train inexperienced workers as efficiently as possible – and it can be an effective tool for sharing knowledge across the organization. There are four steps:
- 1. Prepare yourself and the worker for the knowledge
- 2. Present the operation
- 3. Have the worker try the operation
- 4. Follow-up with the worker to make sure the process is understood.
“Telling someone how to do something just isn’t enough,” Emery says.
Capability 4: Leaders coach and develop the previous capabilities
Leaders train people to use the first three capabilities, Emery says. It’s the leaders’ job to ensure that everyone else in the organization knows how to resolve issues as they arise.
Workers pay attention to what leaders pay attention to, what they measure and what they control. The leaders’ actions embed culture in an organization.
In a traditional organization, leaders focus attention on managing people and results. To become high-performing, that attention needs to shift to managing processes.
“Superior processes are what create superior results,” Emery says.
Implementing lean culture is not “all-or-nothing.” When starting, it is best to take small steps, Emery says.
“The key is you have to have the leadership vision to carry it through the long run,” he says. “Not to look for the quick win and stop.”
