Logistics and Distribution

Manage Inventory Better

Lean logistics is an integral part of a pull-based value chain that begins with the customer order. The guiding principles in the warehouse and distribution network are no different from the factory: Keep material flowing with the fewest possible touches and wasted movement from order picking through packing, shipping and delivery. 

The amount of finished goods inventory that a company carries is a direct reflection of how long it takes to get product through the distribution cycle. Speed up that cycle and inventory levels can be lowered without increasing the risk of out-of-stock items and lost sales. Lean fulfillment operations have less warehouse space to manage, lower risks of product obsolescence, and less cash tied up in inventory. 

TBM’s Lean Sigma logistics and distribution experts help you apply the lean principles of eliminating waste, creating flow and implementing pull-based processes within your warehouses and distribution network. Lean tools and techniques can be used to simplify packaging, streamline material flow, reduce shipping errors, eliminate extra handling, reduce loading dock floor-space requirements and improve inventory management. 

Following our rapid Lean Sigma kaizen methodology, TBM has worked with our clients in every aspect of their distribution operations, from optimizing their order picking activity to completely redesigning their distribution network. 

Order Picking – We worked with one client to install flow racks and re-slot products based on sales velocity and ergonomic factors (with fast movers located between the thighs and shoulders). The flow racks allow incoming product to be loaded on one side and slide forward to the pick face as it is consumed, supporting first-in, first-out inventory management. The travel time for order pickers compared to the existing pallet rack shrank from upwards of two minutes per item to 40 seconds or less with flow racks.

Packing – We helped a client design and implement a lean packing operation that features ergonomically designed workcells, each outfitted with the same equipment, which supports standardized work and makes it easy for employees to rotate from one workstation to the next. Each workcell utilizes standard-sized boxes and has all packing materials within easy reach. A dedicated material support person (a “waterspider”) helps replenish packaging supplies for all of the cells and loads the sealed boxes onto pallets.

Distribution Network Re-Design – A TBM client previously operated 40-plus distribution centers (DCs) across the United States. Duplicate ordering systems had created stockpiles of expensive product in every location. We helped them transition to a hub-and-spoke network, with the hub warehouses stocking all goods, including low-volume specialty items, and the spoke operations carrying popular, high-volume SKUs for rapid delivery. Transitioning the entire network over the course of just four week-long kaizen events, we helped them make dramatic inventory reductions and free up more than $3 million in working capital. 

Inventory Optimization – A client’s assembly plant could produce every product every day, but that production flexibility was not being leveraged in its fulfillment processes. Only 55 percent of product moved directly from the assembly line to the truck. Twelve to 16 weeks of inventory sat in the company’s four DCs and 60-plus customer-service centers. After extensive kaizen activity, we helped them transition to nine smaller DCs, all within existing facilities, that serviced the customer service centers. Direct-to-truck performance improved to 85 percent, finished goods inventory dropped by 35 percent, and total manufacturing and logistics costs fell by 13 percent.