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Summary
Summary
Speed to market, reducing costs, and accelerating lead times are vital for survival in today's competitive environment. This "how to" book illustrates how to integrate Lean, Six Sigma and Logistics into a cohesive process that will help you eliminate unnecessary inventories through disciplined efforts to understand and reduce variation, while increasing speed and flow in the supply chain. Lean Six Sigma Logistics provides the vehicle to solidify strategic position, win over customers, and achieve increased profit margins. It is the one book that executives, practitioners, consultants and academics will all want on their bookshelf.
Author Notes
Dr. Thomas Goldsby is experienced practitioner and consultant and currently an Assistant Professor of Marketing and Logistics at The Ohio State University. He is a published author in numerous well know professional and academic journals such as Supply Chain Management Review, Journal of Operations Management, Journal of Business Logistics, International Journal of Logistics Management, International Journal of Physical Distribution & Logistics Management, Management Science among others. He is a member of the Distribution Management Association; the Education Strategies Committee for the Council of Logistics; Subcommittee on Collaborative Transportation Management for the VICS Association, Faculty Advisor to the Operations and Logistics Management Association. He is a sought after speaker and on the editorial review board for the International Journal of Logistics Management. Robert Martichenko is President of LeanCor LLC, headquartered in Burlington, Kentucky. LeanCor delivers Logistics and Supply Chain Management services to organizations embracing Lean production principles. Robert is a certified Six Sigma Blackbelt and he has over ten years of transportation, consulting and third party logistics experience which includes multiple operational launches such as the "green field" start up at Toyota Motor Manufacturing. Mr. Martichenko is also an active instructor of Supply Chain Management, Logistics, Lean and Six Sigma programs offered by the Lean Enterprise Institute and Saint Louis University - John Cook School of Business. He is an experienced author who currently sits on the Editorial Advisory Board of "Logistics Quarterly" magazine and is past President of the Cincinnati Council of Supply Chain Management Professionals (CSCMP) Roundtable and now serves as a regional advisor.
Table of Contents
Preface | p. xi |
Acknowledgments | p. xiii |
About the Authors | p. xv |
Web Added Value | p. xvii |
Section 1 Lean Six Sigma Logistics: Why Bother? | |
Chapter 1 What Is Lean Six Sigma Logistics? | p. 3 |
What Is Logistics? | p. 4 |
What Is Lean? | p. 4 |
Lean and the Logistician | p. 4 |
What Is Six Sigma? | p. 5 |
Six Sigma and the Logistician | p. 5 |
What Is Lean Six Sigma Logistics? | p. 6 |
The Logistics Bridge Model | p. 7 |
Chapter 2 The Importance of Logistics and Supply Chain Management | p. 9 |
Discovering the Dark Continent of Logistics | p. 9 |
This Thing Called "Supply Chain Management" | p. 11 |
The Logistics Wastes | p. 14 |
Section 2 The Logistics Wastes | |
Chapter 3 The Waste of Inventory | p. 19 |
Logistics and Inventory Management | p. 19 |
The Temptation of Inventory | p. 20 |
The Costs of Holding Inventory | p. 22 |
Chapter 4 The Waste of Transportation | p. 27 |
Logistics and Transportation Management | p. 27 |
Transportation and Logistics Trade-offs | p. 29 |
Transportation Carrier Relationships | p. 31 |
Minimizing the Day-to-Day Wastes in Transportation | p. 32 |
Chapter 5 The Waste of Space and Facilities | p. 35 |
Logistics and Warehousing | p. 35 |
How Many Facilities? How Much Space? | p. 36 |
Are Advanced Technologies a Cure or Merely a Crutch? | p. 37 |
Chapter 6 The Waste of Time | p. 39 |
Logistics and Time Wastes | p. 39 |
Order Transmission | p. 39 |
Order Processing | p. 41 |
Order Filling | p. 42 |
Order Staging and Verification | p. 43 |
Order Shipping and Delivery | p. 44 |
Chapter 7 The Waste of Packaging | p. 47 |
Logistics and Product Packaging | p. 47 |
Packaging as a Source of Waste | p. 48 |
Packaging as a Waste | p. 49 |
Packaging as a Visual Control | p. 50 |
Chapter 8 The Waste of Administration | p. 51 |
Logistics and Administration | p. 51 |
Administration as Help and Hindrance | p. 52 |
Technology and Administration | p. 52 |
Chapter 9 The Waste of Knowledge | p. 55 |
Logistics and Knowledge | p. 55 |
Cultivating Knowledge | p. 56 |
Managing the Flow of Knowledge | p. 57 |
The River of Wastes | p. 59 |
Section 3 The Logistics Bridge Model | |
Chapter 10 A Tour of the Bridge | p. 65 |
History of Lean Six Sigma Logistics | p. 66 |
The Importance of the Logistics Bridge Model | p. 66 |
The CEO's Perspective | p. 67 |
The Implementer's Perspective | p. 69 |
The Logistics Bridge Model: Getting Started | p. 70 |
Chapter 11 Logistics Flow: Asset Flow | p. 71 |
People Flow | p. 72 |
The People "Perfect Order" | p. 73 |
Organizing People | p. 73 |
Bridging the People Gap | p. 74 |
Inventory Flow | p. 75 |
Understanding Safety Stock | p. 76 |
Inventory Management | p. 77 |
Starting with the Systems Approach | p. 77 |
Inventory and Cause and Effect | p. 78 |
Inventory Management Fundamentals | p. 79 |
Fixed Resources Flow | p. 80 |
Identifying and Mapping Fixed Resources | p. 81 |
Questioning the Need | p. 82 |
Vision of Excellence and Fixed Resource Flow | p. 83 |
Chapter 12 Flow: Information Flow | p. 85 |
Data Flow | p. 86 |
Historical Data | p. 86 |
Event and Real-Time Data | p. 87 |
Future and Deterministic Data | p. 87 |
Data Excellence | p. 89 |
Knowledge Flow | p. 89 |
Continuous Improvement and Knowledge Flow | p. 90 |
Standardized Work and Knowledge Sharing | p. 91 |
Getting Knowledge to Flow | p. 92 |
Communication Flow | p. 93 |
Strategic Communication | p. 93 |
Hoshin Planning | p. 94 |
Operational Communication | p. 95 |
Chapter 13 Flow: Financial Flow | p. 97 |
Income Statement Flow | p. 98 |
Logistics Activities and Hidden Operating Costs | p. 99 |
Logistics Costs Flow Across the Organization | p. 100 |
Inventory Carrying Costs and the Income Statement | p. 101 |
Vision of Excellence and the Income Statement | p. 102 |
Balance Sheet Flow | p. 103 |
Inventory as a Current Asset | p. 104 |
Inventory Turns and the Balance Sheet | p. 105 |
The Balance Sheet and Business Strategy | p. 106 |
Flexibility | p. 106 |
Visibility | p. 107 |
Cash Flow | p. 107 |
Cash Flow Drivers | p. 108 |
Accounts Payable and Cash | p. 108 |
Accounts Receivable and Cash | p. 110 |
Revenue Growth and Cash | p. 110 |
Gross Margin and Cash Flow | p. 111 |
Selling, General, and Administrative Expense and Cash Flow | p. 111 |
Capital Expenditure and Cash Flow | p. 112 |
Inventory and Cash Flow | p. 113 |
Vision of Excellence and Cash Flow | p. 113 |
Chapter 14 Capability: Predictability | p. 115 |
Organization | p. 116 |
Highlighting Waste and Creating Visibility | p. 117 |
Standardized Operations and Setting Priorities | p. 118 |
The Organized Workplace: Clutter, Complexity, and Quality | p. 119 |
Measurement and the Organized Workplace | p. 119 |
Coordination | p. 120 |
Coordination and Value Stream Mapping | p. 121 |
Coordination and Detailed Planning | p. 122 |
Coordination and Measurement | p. 124 |
Complexity | p. 124 |
Complexity of Products | p. 125 |
Complexity of Processes | p. 126 |
Chapter 15 Capability: Stability | p. 129 |
Standardization | p. 130 |
The Key Aspects of Standardization | p. 130 |
Standardization and Continuous Improvement | p. 131 |
Flexibility | p. 132 |
Developing Flexibility and Back to Basics | p. 133 |
Flexibility and Lead Time | p. 134 |
Logistics Infrastructure Flexibility | p. 135 |
Planned Network Design and Visibility | p. 136 |
Control | p. 137 |
Today's Capability Is the System's Capability | p. 138 |
Common and Special Cause Variation | p. 139 |
Chapter 16 Capability: Visibility | p. 141 |
Understandability | p. 142 |
Beginning to Understand | p. 143 |
Channel Partners and Their Important Role | p. 143 |
Opportunities and the Moment of Truth | p. 144 |
Measurability | p. 145 |
Voice of the Customer | p. 146 |
Creating Internal Measures of Meaning | p. 148 |
Actionability | p. 149 |
Chapter 17 Discipline: Collaboration | p. 153 |
Teamwork | p. 154 |
Processes and Knowing the Customer | p. 155 |
Building Teams | p. 156 |
Complementary Skills and Opposing Views | p. 156 |
Natural Stages of Team Development | p. 157 |
Strategic Sourcing | p. 158 |
Raw Material Suppliers | p. 159 |
Standardization, Complexity, and Dual Sourcing | p. 160 |
Beware the Term "Partnership" | p. 160 |
Collaboration and Logistics Services | p. 161 |
Third-Party Logistics | p. 162 |
Developing a Lean Third-Party Logistics Relationship | p. 163 |
Project Management | p. 165 |
Project Management: The Basics | p. 166 |
Meeting Agenda (Compass) | p. 167 |
Storyboard | p. 167 |
Gantt Chart | p. 168 |
Failure Mode and Effects Analysis | p. 169 |
Chapter 18 Discipline: Systems Optimization | p. 173 |
Total Cost | p. 174 |
Explicit and Implicit Costs | p. 174 |
Horizontal Integration | p. 177 |
Perceived Difficulty and System Constraints | p. 179 |
Compensation and Incentive Programs | p. 179 |
Teamwork, Imperfection, and Defensive Behavior | p. 180 |
Breaking Down the Walls | p. 181 |
Vertical Integration | p. 181 |
From Customer to Supplier | p. 182 |
Vertical Integration and Information | p. 182 |
Variability, Leveled Flow, and Vertical Integration | p. 183 |
Chapter 19 Discipline: Waste Elimination | p. 185 |
Quality at the Source | p. 186 |
The Benefits of Quality at the Source | p. 187 |
Logistics and Quality at the Source | p. 189 |
Continuous Improvement | p. 190 |
Continuous Improvement: The Bare Facts | p. 190 |
The Challenges of Continuous Improvement Implementation | p. 192 |
Bridging the Gap | p. 193 |
Getting People Trained | p. 194 |
Execution | p. 195 |
Acting as Lean Six Sigma Logistics Leaders | p. 195 |
Section 4 Building the Bridge: Lean Six Sigma Logistics Tools | |
Chapter 20 Strategy and Planning Tools | p. 201 |
Surveying the Tool Kit | p. 201 |
Voice of the Customer | p. 202 |
Voice of the Business | p. 204 |
Value Stream Mapping | p. 206 |
Pareto Analysis and ABC Classification | p. 208 |
The XY Matrix | p. 211 |
Chapter 21 Problem-Solving Tools | p. 213 |
DMAIC (Define-Measure-Analyze-Improve-Control) | p. 213 |
Define | p. 214 |
Measure | p. 214 |
Analyze | p. 215 |
Improve | p. 216 |
Control | p. 217 |
Causal Analysis Tools | p. 218 |
Brainstorming | p. 218 |
Cause-and-Effect Diagrams | p. 219 |
Five-Why Analysis | p. 220 |
Design of Experiments | p. 222 |
Inferential Statistics | p. 223 |
Chapter 22 Operational Tools | p. 227 |
Flow Concepts | p. 227 |
Just-in-Time and the Pull System | p. 227 |
Lead-Time Management, Speed, and Flexibility | p. 229 |
Leveled Flow | p. 230 |
Frequency and Lot Size | p. 232 |
Organization Concepts | p. 232 |
Standardized Work Plan | p. 233 |
The SIMPOC Model | p. 233 |
5S Organization and Visual Control | p. 234 |
Red Tag Initiatives | p. 235 |
Poka-Yoke | p. 236 |
Chapter 23 Measurement Tools | p. 237 |
Data Collection Plan | p. 237 |
Process Capability | p. 238 |
Defects per Million Opportunities | p. 241 |
Sigma Calculations | p. 242 |
Conventional Measures of Logistics Performance | p. 245 |
Total Cost Analysis | p. 246 |
Chapter 24 Case Study: GoldSMART Products, Inc. | p. 249 |
Lean Six Sigma Logistics: A Real-World Story | p. 249 |
GoldSMART Products, Inc.: A Cast in Lean Six Sigma Logistics | p. 250 |
The Calm Before the Storm | p. 250 |
The Approach of Ominous Clouds | p. 251 |
In the Eye of the Storm | p. 252 |
Riding Out the Storm | p. 255 |
Seeing Daylight Again | p. 260 |
Chapter 25 Summary and Conclusion | p. 267 |
Index | p. 271 |