What is Lean Logistics? – Understanding the Concept

Organisations are stuck in a constant cycle that pushes them to improve their business in order to gain a competitive advantage. They consistently feel the stress to reduce costs, time and inventory. One way that has proven to improve an organisation substantially is a supply chain process known as Lean Logistics.

What is the importance of Lean Logistics?

Lean Logistics, simply put, can be described as a way to recognise and eliminate wasteful activities from the supply chain in order to increase product flow and speed. In order to achieve Leaner Logistics; organisations need to implement leaner thinking. Organisations that incorporate lean thinking into their supply chain can benefit from improved customer service, reduced environmental impact by reducing waste and even overall corporate citizenship.

What is Lean Thinking?

Lean Thinking originated from manufacturing methods used by Japanese automotive manufacturers. Due to minimal resources and shortages, they employed a production process that worked with minimum waste. This thinking soon spread to all manufacturing areas, new product development and supply chain management. (Krafcik and MacDuffie, 1989)

Lean Thinking involves a constant cycle of seeking perfection by eliminating waste and maximising product value. This process means that end-customers don’t pay for organisation inefficiency and waste. Four principles are involved in achieving minimal waste:

1. Specify value: Customer value is identified and added along the supply chain network.
2. Map out value stream: Identifying all processes along the supply chain network in order to eliminate the processes that do not create value to the overall product. This mapping helps us understand how the value is created into the product from the customer’s perspective.
3. Create a product flow: Applying the factors outlined in order to make valuable processes to occur in a smooth system; minimising interruptions, inventories, downtime.
4. Establish customer pull: Manufacturing only in response from the customer that more is needed; implying that demand information is made available across the supply chain.

Each of these four processes seeks perfection to progressively improve every process; minimising waste and maximising value.

Reference:

Alan Harrrison, Remko V Hoek (2011) Logistics Management and Strategy, 4th edn, Pearson