Tai Lieu Chat Luong LEAN SIX SIGMA LOGISTICS Strategic Development to Operational Success by Dr. Thomas Goldsby • Robert Martichenko Copyright ©2005 by J. Ross Publishing, Inc. ISBN 1-932159-36-3 Printed and bound in the U.
Printed on acid-free paper 10 9 8 7 6 5 4 3 2 1 Library of Congress Cataloging-in-Publication Data Goldsby, Thomas J. Lean Six Sigma logistics / by: Thomas Goldsby & Robert Martichenko. ISBN 1-932159-36-3 (hardback : alk. Business logistics—Management.4′013—dc22 2005011208 This publication contains information obtained from authentic and highly regarded sources.
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Ross Publishing, Inc., 6501 Park of Commerce Blvd., Suite 200, Boca Raton, Florida 33487. Phone: (561) 869-3900 Fax: (561) 892-0700 Web: www.com TABLE OF CONTENTS Preface. xiii About the Authors. xv Web Added Value™.
Lean Six Sigma Logistics: Why Bother? Chapter 1. What Is Lean Six Sigma Logistics?. 3 What Is Logistics?. 4 What Is Lean?.
4 Lean and the Logistician. 4 What Is Six Sigma?. 5 Six Sigma and the Logistician. 5 What Is Lean Six Sigma Logistics?.
6 The Logistics Bridge Model. The Importance of Logistics and Supply Chain Management. 9 Discovering the Dark Continent of Logistics. 9 This Thing Called “Supply Chain Management”.
11 The Logistics Wastes. The Logistics Wastes Chapter 3. The Waste of Inventory. 19 Logistics and Inventory Management.
19 The Temptation of Inventory. 20 The Costs of Holding Inventory. 22 iii iv Lean Six Sigma Logistics Chapter 4. The Waste of Transportation.
27 Logistics and Transportation Management. 27 Transportation and Logistics Trade-offs. 29 Transportation Carrier Relationships. 31 Minimizing the Day-to-Day Wastes in Transportation.
The Waste of Space and Facilities. 35 Logistics and Warehousing. 35 How Many Facilities? How Much Space?. 36 Are Advanced Technologies a Cure or Merely a Crutch?.
The Waste of Time. 39 Logistics and Time Wastes. 42 Order Staging and Verification. 43 Order Shipping and Delivery.
The Waste of Packaging. 47 Logistics and Product Packaging. 47 Packaging as a Source of Waste. 48 Packaging as a Waste.
49 Packaging as a Visual Control. The Waste of Administration. 51 Logistics and Administration. 51 Administration as Help and Hindrance.
52 Technology and Administration. The Waste of Knowledge. 55 Logistics and Knowledge. 56 Managing the Flow of Knowledge.
57 The River of Wastes. The Logistics Bridge Model Chapter 10. A Tour of the Bridge. 65 History of Lean Six Sigma Logistics.
66 Table of Contents v The Importance of the Logistics Bridge Model. 66 The CEO’s Perspective. 67 The Implementer’s Perspective. 69 The Logistics Bridge Model: Getting Started.
Logistics Flow: Asset Flow. 72 The People “Perfect Order”. 73 Bridging the People Gap. 75 Understanding Safety Stock.
77 Starting with the Systems Approach. 77 Inventory and Cause and Effect. 78 Inventory Management Fundamentals. 79 Fixed Resources Flow.
80 Identifying and Mapping Fixed Resources. 81 Questioning the Need. 82 Vision of Excellence and Fixed Resource Flow. Flow: Information Flow.
86 Event and Real-Time Data. 87 Future and Deterministic Data. 89 Continuous Improvement and Knowledge Flow. 90 Standardized Work and Knowledge Sharing.
91 Getting Knowledge to Flow. Flow: Financial Flow. 97 Income Statement Flow. 98 Logistics Activities and Hidden Operating Costs.
99 vi Lean Six Sigma Logistics Logistics Costs Flow Across the Organization. 100 Inventory Carrying Costs and the Income Statement. 101 Vision of Excellence and the Income Statement. 102 Balance Sheet Flow.
103 Inventory as a Current Asset. 104 Inventory Turns and the Balance Sheet. 105 The Balance Sheet and Business Strategy. 107 Cash Flow Drivers.
108 Accounts Payable and Cash. 108 Accounts Receivable and Cash. 110 Revenue Growth and Cash. 110 Gross Margin and Cash Flow.
111 Selling, General, and Administrative Expense and Cash Flow. 111 Capital Expenditure and Cash Flow. 112 Inventory and Cash Flow. 113 Vision of Excellence and Cash Flow.
116 Highlighting Waste and Creating Visibility. 117 Standardized Operations and Setting Priorities. 118 The Organized Workplace: Clutter, Complexity, and Quality. 119 Measurement and the Organized Workplace.
120 Coordination and Value Stream Mapping. 121 Coordination and Detailed Planning. 122 Coordination and Measurement. 124 Complexity of Products.
125 Complexity of Processes. 130 The Key Aspects of Standardization. 130 Standardization and Continuous Improvement. 132 Developing Flexibility and Back to Basics.
133 Table of Contents vii Flexibility and Lead Time. 134 Logistics Infrastructure Flexibility. 135 Planned Network Design and Visibility. 137 Today’s Capability Is the System’s Capability.
138 Common and Special Cause Variation. 142 Beginning to Understand. 143 Channel Partners and Their Important Role. 143 Opportunities and the Moment of Truth.
145 Voice of the Customer. 146 Creating Internal Measures of Meaning. 154 Processes and Knowing the Customer. 156 Complementary Skills and Opposing Views.
156 Natural Stages of Team Development. 158 Raw Material Suppliers. 159 Standardization, Complexity, and Dual Sourcing. 160 Beware the Term “Partnership”.
160 Collaboration and Logistics Services. 161 Third-Party Logistics. 162 Developing a Lean Third-Party Logistics Relationship. 165 Project Management: The Basics.
168 Failure Mode and Effects Analysis. Discipline: Systems Optimization. 174 Explicit and Implicit Costs. 174 viii Lean Six Sigma Logistics Horizontal Integration.
177 Perceived Difficulty and System Constraints. 179 Compensation and Incentive Programs. 179 Teamwork, Imperfection, and Defensive Behavior. 180 Breaking Down the Walls.
181 From Customer to Supplier. 182 Vertical Integration and Information. 182 Variability, Leveled Flow, and Vertical Integration. Discipline: Waste Elimination.
185 Quality at the Source. 186 The Benefits of Quality at the Source. 187 Logistics and Quality at the Source. 190 Continuous Improvement: The Bare Facts.
190 The Challenges of Continuous Improvement Implementation. 192 Bridging the Gap. 193 Getting People Trained. 195 Acting as Lean Six Sigma Logistics Leaders.
Building the Bridge: Lean Six Sigma Logistics Tools Chapter 20. Strategy and Planning Tools. 201 Surveying the Tool Kit. 201 Voice of the Customer.
202 Voice of the Business. 204 Value Stream Mapping. 206 Pareto Analysis and ABC Classification. 208 The XY Matrix.
Problem-Solving Tools. 217 Causal Analysis Tools. 218 Cause-and-Effect Diagrams. 219 Table of Contents ix Five-Why Analysis.
220 Design of Experiments. 227 Just-in-Time and the Pull System. 227 Lead-Time Management, Speed, and Flexibility. 230 Frequency and Lot Size.
232 Standardized Work Plan. 233 The SIMPOC Model. 233 5S Organization and Visual Control. 234 Red Tag Initiatives.
237 Data Collection Plan. 238 Defects per Million Opportunities. 242 Conventional Measures of Logistics Performance. 245 Total Cost Analysis.
Case Study: GoldSMART Products, Inc. 249 Lean Six Sigma Logistics: A Real-World Story. 249 GoldSMART Products, Inc.: A Case in Lean Six Sigma Logistics. 250 The Calm Before the Storm.
250 The Approach of Ominous Clouds. 251 In the Eye of the Storm. 252 Riding Out the Storm. 255 Seeing Daylight Again.
Summary and Conclusion. 271 PREFACE As logistics and supply chain professionals, we all have one thing in common. This commonality is that time is a scarce resource, one that must be treated as a treasured commodity. This means that we must choose wisely when deciding what books to read or what avenues to pursue for professional development.
With any luck, when we do invest our time in reading an industry book, we will walk away with one or two “golden nuggets” that can help us with our day- to-day responsibilities and challenges. As the authors of Lean Six Sigma Logistics, we certainly kept the above in mind as we developed the framework for this book. To begin, we continuously asked ourselves whether a certain topic or theme was relevant to today’s logis- tics and supply chain practitioner. We continuously asked ourselves whether each point passed the “so what?” test.
Consequently, we spent significant time up front developing the framework for the book. Using the serene background of Benson Lake in Eastern Ontario, Canada, we devised what we believe to be the key drivers for all logistics processes. This was no easy task. First of all, we must consider the two authors: one practical-thinking academic and one academic-thinking practitioner.
Many times, we debated theory versus practicality and, oddly enough, many times the academic argued for practicality and the practitioner argued for rigor of theory! What lesson did we learn from this? The first was that theory relates directly to strategy. The second lesson is that practicality relates to tactical realities. To be sure though, we recognized that strategy and tactics are both required to achieve anything of significance. We must know what we want to accomplish and we must understand how to accomplish it! A majority of our discussion surrounded the topic of “flow.” Not flow from an inventory point of view, but rather the flow of the book itself.
We continu- xi xii Lean Six Sigma Logistics ously reminded ourselves that readers must be able to see the book as a whole, such that by the end they will say, “I see it, I get it!” And, therefore, the Logistics Bridge Model was born. The Logistics Bridge Model is a compass and map. It will help us to set a strategic destination and direct us on the operational journey. It is not a step- by-step “how-to” guide, but rather a path for critical thinking.
In our opinions, it is critical thinking that is required in logistics and supply chain management today. We need to be able to look at operations differently. We need to under- stand what value is and what waste is. We need to leverage value and eliminate waste.
That is the primary purpose of this book. In all sincerity, we appreciate your valuable time and we hope this book will help you to achieve your professional goals and organizational objectives. As well, we hope you will embrace the Logistics Bridge Model and enhance your ability to look at your supply chain with a critical eye and vision for improvement. Thomas Goldsby and Robert Martichenko ACKNOWLEDGMENTS Writing a book might be compared to any number of challenging yet rewarding experiences.
We have likened it to a great mountain expedition. Mountaineering is regarded as one of the most grueling pursuits of human endeavor. Writing a book and living to tell about it may not be far behind! Yet, we recognize that many people have helped us in our expedition. We would like to acknowledge our many friends and colleagues for their support of this effort.