Lean logistics at a distribution center

A common mistake is that lean is only applied there where products are made. We can use everywhere lean not only in production. for example, Administration and logistics can benefit from lean. Let's have a look at a logistics distribution center.

Your products are standing ready and customers are waiting to get it as quickly as possible. Now it has to be picked, packed, and shipped. Just as production is logistics an integral part of the value chain. Also here you have to decrease waste. Reducing picking time and optimizing packaging volume to ship more products are just two examples to get a cheaper better and faster logistics distribution center. In other words a lean logistics distribution center. Let's have a look at the video below before we continue.

Muda

Muda is a Japanese word that describes "waste" and is one of the basic tools of lean. There are 7 types of waste: Transport, Inventory, Motion, Waiting, Overproduction, Overprocessing, and Defect. In the video, the workers implement two big improvements. One to reduce the package size to optimize transport and another one to reduce the distance the people have to walk, thus reducing motion.

Lean logistics: Waste of transport

Let's start by having a look at the packing. The boxes are clearly too big which means a lot of air is transported. You will not only have more truck rides but also more hidden cost such as the administration that has to be done for each trip. Managers and team leaders often overlook these hidden costs, while they can have a big impact on the end result. Getting the right box size is an important quick win.

Lean logistics: Waste of motion

Another big improvement the workers apply is to reduce the distance the people have to walk, thus reducing motion. With this improvement, the people can stay at their workstation and focus on filling the box. Another person replenishes the products if the "fillers" are running out of products. Lean terminology calls this person a "spider".

Note that the workers look first where there is waste within the distribution process and then look at how this waste can be reduced. Afterward, the workers look at which equipment is needed to implement the solution. In this case, a manual conveyor belt. This is the right order to create a lean distribution. Too often an organization implements new hardware and/or software in the hope that it will reduce waste, without understanding where and why there is a waste. Remember, new hardware/software can be part of the final solution but should not be the start of your solution.

With the implemented solution they can pack more boxes at the same time and have not to sweat harder. This is an important keystone of lean. work smarter not harder. We can imagine that since they do not have to carry any more products over a long distance, they will probably have to sweat less. This reflects another principle of lean: Muri. Muri stand for the unreasonable burden on machines or people. In this case, not only the Muda but also the Muri will be reduced.

Spaghetti diagram

In the video, you see also an artistic impression of a spaghetti diagram. A spaghetti diagram visualizes the movement of people and/or products on a floor layout. Transport/motion causes waste. you get an idea of the waste by creating a spaghetti diagram. If you understand how the waste is generated you can create a future state of the layout and see how the movement will be reduced.

5 principles of lean

the 5 principles of lean are:

1. Know what is of value for your customer
2. Know where that value is created (value mapping)
3. Let the value flow
4. Use a pull-system to let the value flow
5. Strive for perfection

"improvement 2" in the video tackles Principle 3 explicitly. The boxes are rolling over the conveyor and are almost constantly in motion. Everybody now places some of the products in the box instead of all persons having their own box and running around from pallet to pallet to fill the box. Letting the boxes flow throughout the box filling process will reduce the waste (Muda) of people moving around. So implementing the 5 principles of lean will help you reducing waste.

Kaizen

Kaizen is Japanese and stands for changing for the better. It just means that you have to continuously improve. Or to says it with lean principle 5: Strive for perfection.

Improvements do not have to be always complex and expensive. In fact, the best improvement is a simple/cheap improvement. Most of the time the people who are standing close to the process have the best ideas. therefore it is so important to go and talk with them as much as possible (or as they say in lean "go to Gemba").

I like the example where the workers strap the wooden block with tie-straps at the end of the conveyor to stop the boxes which come out of the truck. The solution itself costs probably less than 5 dollars but has a major impact.

Do not forget to validate the solution, before finally implementing it.

conclusions: how to become a lean logistics distribution center

This logistics distribution center was not lean when the team arrived. There was quite some waste in this center, you can find similar looking packaging and distribution center in many companies. Products and tables are standing randomly on the floor and equipment like taping tools are laying unorganized around.

By applying the lean tools you create a center where you can work faster, better, and cheaper. With standardized work cells, you can create a continuous flow of boxes reducing the waste of motion. It is easy to exchange people between workstations and the ergonomics are getting improved. Which just some small changes you can get a big impact.

A lean packaging and distribution center is just as important as a lean production line. The same basic tools such as the 7 types of waste, the 5 lean principles, and Kaizen applies as much on the floor here as on the production floor. The key is to get the people in the right mindset so that they will use the lean tools correctly. When they do they will come to a good solution and only start afterwards looking which technology can be used to support the solution.