Taking the Risk Out of Lean

The definition of lean logistics varies from person to person. For some, it means eliminating inventory and getting stuff out the door before it has time to cost anything. For others, it’s a more general idea of bringing efficiency to the entire logistics process. Whatever the case, lean has an inherent amount of risk built into the process, especially when you get to the extremes of efficiency. If you’re so lean that a small disruption destroys the whole chain, then business might suffer as a result. You can’t eliminate all the risk, but there are some things to keep in mind when going lean.

Backups aren’t always bad

A recent post about inventory and its purpose does a good job of bringing a situation to light where risk can, and should, be mitigated. The post describes a situation where a supplier refused to carry inventory in the hopes of staying lean, and it was causing issues downstream because of relatively small disturbances upstream. The supplier couldn’t fulfill customer needs because of inconsistencies in raw material delivery schedules. The obvious solution would be to have some buffer stock, but that meant inventory and it was thrown out in the name of lean. Small risks that could have easily been mitigated were causing unnecessary problems.

As you can see, it isn’t always bad to consider implementing a backup or contingency plan, even if it means sacrificing your lean aspirations. It doesn’t do any good if you’re lean and losing customers because of inconsistencies. This was a situation with an active risk that was wreaking havoc, but we can use it as a motivation to assess potential risks as well. If you can find a potential situation that can ruin the whole chain and it has even the smallest chance of happening, you should address it before it becomes a problem. Your focus should be on lean for the most part, but risk assessment and mitigation is just as important when you’re running close to the edge. That brings us nicely to the next consideration.

Lean is proactive

Oftentimes, people look at lean through the lens of the current situation and circumstances. It’s easy to think if you can just squeeze a bit more lean out of the situation then everything will be better. In reality, the status quo might be the problem instead of the approach at getting more lean. There are situations where fatal flaws mean that no amount of fiddling or cost cutting is going to make for a positive outcome. If you stay in the trenches and keep trying to beat it, you’re going to come out a loser.

Instead, lean should be about proactive thinking and problem solving. If it’s not working, change the whole thing! The proactive thinking requires a willing to be agile and switch things around at the drop of a hat if that’s what’s necessary. The biggest risk in this situation is an unwillingness to change.

Thinking about backups and being proactive will go a long way in making your lean logistics a success. Don’t get so focused on the fine details that you miss the big changes that can make your operation a success!

Take aways

  • Create contingency plans that address disruptions in the chain.
  • Practice implementation of the contingency plans before they become necessary.
  • Make risk mitigation a priority.
  • Be willing to go against lean principles temporarily if it means long-term efficiency.
  • Proactively seek out lean opportunities on a daily basis.

Author’s bio: Ryan Franklin is a guest blogger who is trying to implement lean logistics at a yacht shipping company.

Posted by LeanCor Supply Chain Group

LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.

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