Distributors Seeking 'Lean' Supply Chain - Modern Distribution Management

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Distributors Seeking ‘Lean’ Supply Chain

This article is part of MDM's 2015 Distribution Trends Special Issue. It examines a return to the "lean" principles popularized by Toyota to streamline a supply chain.

The annual feature was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this issue.

The full special issue is available to download in PDF format to MDM Premium subscribers. Subscribe below for full access. Or log-in if you are already a subscriber.

Trends outlined in the 2015 report include:

  • Good & Bad News for U.S. Economy
  • Distributors Get Back to the Basics
  • ‘Doubling Down’ on Distributor Relationships
  • Distributors Embrace, Expand Online Customer Base
  • Distributors Seeking ‘Lean’ Supply Chain
  • Distributors Adapt to More Sophisticated Supply Chain
  • Distributors Combine Traditional, New Means for Recruiting
  • Distributors Change Tune on Generational Shift
  • Trend Snapshots for 13 Sectors

The report also includes the following case studies and interviews:

  • 2015 MDM Market Movers
    • AJ Adhesives Takes Service to New Level
    • Plumbers Supply’s “Win-Win-Win-Win”
  • MDM Market Leader Profiles
    • Culture Drives Success for ERIKS North America
    • TTI’s Strategic Approach to Global Growth

This is a part of the 2015 Distribution Trends Special Issue. The annual feature was researched and written by MDM editors based on interviews with dozens of distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this issue.

2015 Distribution Trends Special Issue

Business owners always look for an edge, something that will differentiate them from the competition. So it's not surprising that there's renewed interest from distributors in a time-tested method of eliminating waste within an organization – lean.

Developed by Toyota, the lean process historically has been more popular among manufacturers, especially in the automotive industry, but more distributors are looking to the concept's guiding principles as a way to shore up their businesses in 2015.

Randy Aardema, executive vice president, supply chain, US LBM Holdings LLC, Green Bay, WI, learned lean principles in his 30-year career with an automotive and aerospace manufacturer. He says those industries are ahead of distribution when it comes to lean, but any organization in the supply chain can apply it.

"Mistakes and variability happen throughout the supply chain, and our role in the supply chain to make that process faster," Aardema says. "If we can help builders build a house a lot more efficiently and effectively by eliminating variability and a lot of waste in the supply chain, that builder is going to get a lot more business. People are going to want to go to them because they can design their house and get them in it a lot faster than builders that have not gone through a lean process or don't use a lean distributor providing them the material."

Lean principles also are vital to the culture and business model at Field Fastener, a Machesney Park, IL-based fastener distributor.

"We think it’s the key to our growth," says President Jim Derry. "I’m not sure if the industry is doing it, but they should be. Because it just works. To look at the lean and value stream mapping of what happens in customers’ facilities, how they get material, how material gets from our suppliers to us, we’re a huge proponent of that."

Derry says Field Fastener, in conjunction with one of its largest suppliers and one of its largest customers, performed a collaborative value stream mapping, in which they detailed inefficiencies at each link in the chain, while working to understand how a product gets from the source to the customer through the distributor as smoothly as possible.

"That was powerful, because nobody saw all the different components of this before," Derry says. "The customer just used it; they didn't really know or care what we did. And the people that were producing it, they didn’t know what actually happened to it, so it was enlightening to get the three main players in the supply chain into a two-day value stream mapping event to see what happened."

Hydradyne LLC, Fort Worth, TX, recently began incorporating lean principles into the business for the same reasons listed above, and it has proven to be a wise decision for the distributor.

"Our goal is to go completely through the company in every aspect and use lean principles to improve our process," says Hydradyne President David Parks. "We're already having some really big success with it, and we're learning a lot more than we expected to learn."

Aardema says leadership is key for lean to work, requiring someone at the top to proclaim: "We're going to do this and we're going to make the commitment to make sure it happens."

Though sending employees through Lean Six Sigma certification requires an upfront investment, Aardema says the payoffs are huge – "just gigantic" – and encouraging employees to become the cornerstone of a company's success will improve workflow and, eventually, the bottom line.

"As soon as one distributor, one supply chain, one vendor and one builder get together and collaborate with Lean Six Sigma and drive waste from the process, others are going to have to do this because they're not going to be competitive," Aardema says. "They're going to go out of business unless they do it. As soon as you see a handful of these empowered, enlightened, builders and distributors partner together and start making this a focus, then it's going to take off."

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