It wasn’t very long ago that warehouses in every industry stored not only what was ordered, but also a generous surplus of products in order to meet unexpected demand. It was a method that complicated purchasing and forced warehouses to work around lots of unsold goods, leading to waste when out-of-date groceries and pharmaceuticals had to be disposed of. However, improvements in computing and communications have led to better warehouse management techniques that allow logistics managers to cut costs and reduce waste. Companies can now stock only the products that are needed and only for as long as they are needed, making the entire supply chain lighter. This method of streamlining and reducing waste in processes is called lean supply chain management. Lean management principles are based on the theory that it is possible to constantly refine your processes in order to continually reduce waste, trim costs, and ultimately improve your business.
Lean Supply Chain Basics
The core tenets of lean business practices revolve around communication and removing ambiguity. In 1999, Steven Spear and H. Kent Bowen identified the tenets of Toyota’s success—and by extension lean business practices—as the following four principles:
- All work shall be highly specified as to content, sequence, timing, and outcome.
- Every customer-supplier connection must be direct and there must be an unambiguous yes or no way to send requests and receive responses.
- The pathway for every product and service must be simple and direct.
- Any improvement must be made in accordance with the scientific method under the guidance of a teacher at the lowest possible level in the organization.
In a manufacturing plant, most of these can tenets can be fulfilled without the need for complicated communications technology. In a supply chain that stretches for thousands of miles, this kind of communication and demonstrable improvement is only possible with sophisticated data collection and equally sophisticated communications to make collected data accessible in real-time. The data can then be analyzed to reduce wasted time, effort, and materials.
Leveraging Technology to Support Lean Practices
To eliminate waste in your supply chain, you first need to determine where it’s happening. The traditional method of accumulating data was to have employees self-report on their tasks or to hire outside consultants to record and analyze data. However, these methods are limited in scale and may introduce a reporting step into every employee task. Fortunately, technology makes it possible to incorporate data tracking into your daily operations on a broad scale without intrusion.
RFID tags are small radio transmitters that transmit a GS1 standard identity number.
Radio Frequency Identification (RFID) allows automatic capture of data without interrupting your employees’ work. RFID tags are small radio transmitters that transmit a GS1 standard identity number. They can be attached to products or shipping platforms, and with the right scanning equipment, they can be tracked and can offer insights into your supply chain, employee behavior, and the effectiveness of your current warehouse management techniques. Analysis of the data collected can reveal events in the supply chain where time and energy are wasted.
Collecting Data to Inform Lean Supply Chain Management
One of the things automatic data collection can provide is a much more accurate picture of customer demand and the channels that your supply chain uses to fulfill it. This allows you to more accurately predict customers’ future demand, and allows your warehouse to switch to a pull model of inventory management in which stocks are only refreshed when they’re depleted below a certain threshold. This has the effect of reducing inventories for individual Stock Keeping Units (SKU) and SKU dwell time, freeing up space in the warehouse for product processing or a greater variety of SKUs. Automatic data capture enables a business to put into practice the following lean supply chain management principles as well:
- Information Flow: Efficiency improvement can come from anywhere, including–or perhaps especially–from low-level employees on the warehouse floor. A forklift driver may notice that an unnecessary stop is taking a lot of his time, and if the manager he complains to has access to the data that proves his point, that step can be cut out. The best use of collected data is to improve your daily operations, which means it needs to be available to staff at all levels.
- Event Management: Every time a product is handled or processed in the supply chain counts as an event that takes time and labor. Automatic data collection is able to document each of these events in order to make it clear where time or money is being wasted. If two different supervisors are inspecting products twice with no processing in-between, one can be assigned to a different task to reduce the time and labor needed to get products to the sales room floor.
- Rapid Reaction: Not every incident of wasted time and labor is due to human inefficiency. Some occur due to accidents or forces of nature. If a shipment is lost due to a highway accident, for example, accurate data collection allows you pull excess product from other inventories to fulfill the orders the lost shipment was meant to fill.
- Continuous Improvement: As your pool of collected data grows, you should be able to discover more ways to streamline your supply chain practices and make them leaner by changing handling practices or reallocating employees or machinery at peak times to speed up throughput. The possibilities for ongoing improvements are limitless.
Data is fundamental to making new technologies work, not just in the supply chain, but across the entire business environment, from manufacturing to ecommerce. It is at the heart of any supply chain, but is especially crucial in lean supply chain management. The trick to implementing lean practices in the modern logistics network is to introduce data collection in a way that won’t disrupt your current operations.
Scalable Platforms Complement the Lean Supply Chain
For lean supply chain management to be viable, it’s important that constant small process improvements create as little disruption as possible. That means implementing a method of data collection that doesn’t disrupt your current operations. One method of doing this is by using plastic pallets with built-in RFID tracking.
RFID-enabled plastic pallets can be used in place of wood pallets in every situation, allowing you to begin collecting data right away.
An advantage of using RFID-enabled plastic pallets is that they can easily be introduced to your supply chain and handled with the exact same equipment you’re already using. A plastic pallet will have the same dimensions as a GMA spec wood pallet, and, unlike introducing RFID to packaging, switching to a plastic pallet won’t alter your current processes. They can be used in place of wood pallets in every situation, allowing you to begin collecting data right away. A plastic pallet pooling program helps support your lean practices by delivering the pallets to your manufacturing centers for you and handling the transport of empty pallets, letting you focus on making your supply chain as efficient as possible.
The iGPS plastic pallet pooling program provides a lightweight and durable GMA spec shipping platform that can be tracked using scanners or RFID receivers, allowing scalable data collection. To take the first step toward a lean supply chain, give our team a call at 1-800-884-0225, email a specialist at firstname.lastname@example.org, or visit our contact page.
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