For companies that want to reduce costs while at the same time improve performance, a supply chain processed called lean logistics is a perfect partner. Lean logistics increase efficiencies, which in turn, create positive customer experiences. By incorporating lean logistics principles or partnering with a 3PL with a foundation in lean logistics, you can grow your business while minimizing risk and expanding profit.
What is Lean Logistics?
Originating in Japanese industry, it can be described as, “a process to identify and eliminate waste of time, effort and material from the supply chain to increase efficiency. It is achieved by optimizing teamwork, productive management, and cross-functional operations to make their operations move faster and cheaper.” In short, it removes unnecessary touch points, wasteful processes, and wasteful packaging from the supply chain.
It is also centered on reducing delays in wait time, picking, and shipping. It helps companies achieve a fluid position with demand volatility because there are fewer steps to complete. This is especially beneficial as the Amazon Effect has raised consumer delivery expectations significantly.
Benefits of Lean Logistics
One of the primary benefits of lean logistics is inventory management. Excess inventory leads to waste, and too little inventory results in wait time and upset customers. By analyzing data, removing redundancies, and keeping your stock tight, you ensure production lines flow without a hiccup and without holding inventory for prolonged periods of time. Lean logistics is a great way to minimize inventory risk.
Lean logistics processes also remove wasteful processes from the supply chain, which shorten lifecycles. This increases efficiencies and profit. Also, you don’t need as much warehouse space if you are consistently turning product at a measured rate. This reduces costs and the amount of capital investment you need to run and maintain your business.
How to Implement Lean Logistics
When implementing lean logistics, you should start by identifying roles of those performing the key functions of the business like purchasing, product distribution, and client services. Bring those people together, and you can expect a 10-15% improvement in communication according to a Tim Horton’s model from several years back.
From there, create a detailed picture of all the processes that make up the supply chain as a group. Then map out a “future state,” which is what the supply chain would look like after eliminating processes that don’t contribute value. Next, determine how to remove the redundancies and there you have it—leaner logistics.
Employing lean logistics will increase efficiencies, profits, and time capital. It will also positively impact your clients as they will receive shipments faster and you have more time to spend creating the products they want for the future. If you want to work with logistics experts who already use lean logistics principles, please contact us.