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Creating a Lean, Mean Distribution Machine, Part I

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Creating a Lean, Mean Distribution Machine, Part I

Frequently associated with manufacturing facilities, the term “lean” is actually pretty universal and applicable across all companies. Originally developed to describe Toyota’s business during the late-80s, lean is all about simplifying needlessly-complicated processes and removing waste (i.e., excessive clutter around a workstation, unnecessary steps in the distribution process, excessive returns, handling/processing, and so forth).

In most organizations, lean simply addresses age-old processes that have been “done this way for years,” without anyone realizing the potential for efficiency and productivity gains. In the electrical distribution environment, for example, this could mean simplifying packaging, eliminating extra handling of products, streamlining inventory management, and reducing errors—all of which can positively impact employee productivity, time savings, and the company’s bottom line.

Paul Akers, president at FastCap, a product development company in Ferndale, Wash., and author of 2 Second Lean, says he’s inundated by associations and individual organizations that want to know more about lean. “It’s insane,” says Akers. “I get speaking requests every day from somewhere in the world. I can’t even keep up with it.”

Driving this demand, says Akers, is the lean’s transition from being an extremely analytical and technical concept, to one which primarily involves people. Where companies used to hire outside consultants to come in and “lean out” their facilities—a strategy that Akers says often failed—they’re now focusing on building out corporate cultures and creating lean-centric training programs.

For electrical distributors, competitive threats from online e-tailers like Amazon are pushing companies to rethink the way they do things. “If Amazon is in your space, then you need to be more like them,” Akers says. “The reason Amazon is winning is because it’s delivering what the customer wants just-in-time. Hypothetically, I bet that if I were to look at the typical electrical distribution facility and how it runs, it would be very clunky compared to the expediency of Amazon.”

Becoming “Gumby”
Ask most distributors why they’re still relevant in their customers’ eyes and they’ll probably tell you that they offer a level of expertise that an online e-tailer or big box store can’t match, and that they have long-standing relationships with customers who depend on them. While these two pillars may have been enough to stand on 10 years ago, Akers says companies really need to pull their heads out of the sand and come up with better selling propositions.

“Your company needs to become Gumby; it needs to be the most flexible entity possible,” says Akers. “The world is changing so quickly, and you have to be able to be adaptive to what’s going on in the marketplace, or you’re going to lose.” And that’s where lean comes into the picture, according to Akers, who calls it “the underpinning” of any distributor’s effort to become more Gumby-like in today’s evolving sales environment.

“You can’t compete with Amazon unless you’re running faster than it is in terms of the ‘change’ element,” Akers says. “The problem is, companies across all industries want to fall back on the old stuff.” The electrical distributor that assumes its veteran staff members’ 50+ years of electrical expertise will be enough to keep customers coming back for more, for example, may be in for a shock when it sees how many video tutorials are now available on YouTube.

“I can go to YouTube right now and learn how to do anything—from wiring a 3-phase circuit to doing brain surgery; I have it all right at my fingertips,” says Akers. “That’s the reality of it.”

Your Lean Assessment
For distributors, lean provides a platform for rethinking even the most mundane, everyday processes, eliminating waste and extra steps from those processes, and then making significant changes to the way things have been done for years (or decades). “It’s no different than building a car,” says Akers. When you’re moving parts from point A to point B, packaging them, and delivering them, for example, the key is to assess every step within the process (i.e., How far do employees have to walk to get a label for a box? How many returns or defects are you creating with orders that are shipped incorrectly?) and use that intelligence to eliminate steps and waste.

“Look both upstream and downstream in your distribution chain, examining every element of every process,” says Akers, “with the goal of improving it to the point where there are zero defects within a just-in-time distribution model.” A good starting point down that road, he suggests, is to set a lofty goal like, “When the customer places an order, we will pick, pack, and ship it to that person within one hour.”

“Set some very high targets that are significantly above what you’re currently achieving, and then sit down and figure out how you can achieve them,” Akers says. Another good step is to start an assessment journal where for one week you can keep track of all the activities and processes every day that might have waste in them. “At the end of the week see if there are more things that are wasteful than they are profitable, productive, and efficient,” says Akers. “The results might surprise you.”

In assessing the typical returns on a “lean” initiative, Akers says distributors can expect some clear benefits that include, but aren’t limited to, improved operational excellence, lower employee turnover, better customer retention, consistent reductions in cost, consistent increases in quality, and continuous innovation. “Plus,” he adds, “your company will become known as the ‘fun place to work.'”

 

SIDEBAR:

The 8 Deadly Wastes    

In 2 Second Lean, FastCap’s Paul Akers tells the story of his own company’s “lean journey” and gives readers some hands-on tips for launching their own initiatives. Here’s one of the first exercises that distributors need to do:

Look around your company and identify one example of each of the eight wastes in your operations, which typically are:

  1. Over-production
  2. Over-processing
  3. Excess inventory
  4. Defects
  5. Transportation
  6. Wasted motion
  7. Waiting time
  8. Not using employee genius
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Bridget McCrea  is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.

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