Having posted about the Seven Deadly Sales Suppressors and the Seven Deadly Supply Chain Sins, it should be no surprise that the Supply Chain Management Review’s recent article on the Seven Deadly Supply Chain Wastes caught my attention. According to the article, the resources consumed in the process of delivering a product or service that do not add value — be they people, time, or equipment — should be eliminated.
The article, about the Toyota Production System (TPS), or Lean, went into detail on the seven wastes that keep supply chain management from achieving its full business potential and how TPS principles can be used to eliminate the wastes. TPS does this by applying five core ideas that lead to better processes and performance.
The five core ideas that underly TPS are:
That which is wasteful and doesn’t add value (should be eliminated).
- Process Focus
Work cross-organizationally to develop and sustain robust business processes.
- Genchi Genbutsu
Collect facts and data at the actual site of the work or problem.
Continuous and Incremental Process Improvement
- Mutual Respect
There should be a strong relationship between management, employees, and business partners.
- Overproduction (Build first, wait for orders)
Don’t deliver products before they are needed and avoid “created demand” where a quantity greater than what is needed is requested. This typically adds 40% to supply chain volume fluctuation at the part number level, which is very wasteful. Move to a “sell one, buy one” method with minimal lead times to prevent this waste.
- Delay / Waiting (between activities)
Any delay between the end of one activity and the start of the next activity, such as the time between the arrival of a truck for a pick-up and the loading of the trailer, and the delay between receiving the customer’s order information and beginning to work on fulfilling the order is wasteful. Coordinate production and shipping operations with cutoff times to maximize throughput and efficiency.
- Transportation / Conveyance (that is unnecessary)
Any kind of unnecessary transport. Out-of-route stops, excessive backhaul, locating fast-moving inventory to the back of the warehouse and other transport wastes cause unnecessary material handling distances to be incurred. This can be addressed by applying genchi genbutsu techniques to methodically identify specific lanes and the deadhead miles that are travelled within each account network. Then work collaboratively with other account teams to systematically combine multiple shipper networks into a single network.
- (Unnecessary) Motion
Any kind of unnecessary movement by people, such as walking, reaching and stretching. Motion waste also includes extra travel or reaching due to poor storage arrangement or poor ergonomic design of packaging work areas. Use lean storage, small batch processing, and kaizen to minimize the work required to produce the product.
- Inventory (Mismanagement)
Any logistics activity that results in more inventory being positioned than needed or in a location other than where needed. Examples include early deliveries, receipt of order for a quantity greater than needed, and inventory in the wrong distribution center (DC).
- Space (Mismanagement)
Use of space that is less than optimal, such as less than full/optimal trailer loads, cartons that are not filled to capacity, inefficient use of warehouse space, and even loads in excess of capacity. Figure out why the space is being misused, and then find better ways to package, store, and stack the product.
Any activity that causes rework, unnecessary adjustments or returns, such as billing errors, inventory discrepancies and adjustments, and damaged/defective/wrong/mislabeled product. One way to address this is to develop a comprehensive set of performance metrics that align overall execution with strategy and eliminate conflicting performance objectives by department.