Creating the ‘Lean’ supply chain
Bringing a ‘Lean’ philosophy into the working culture of a business will offer tremendous rewards,
both in terms of performance improvements and the engagement of the workforce. By Onno Meij
Retaining a competitive edge calls for critical self analysis and an innate drive to deliver value. These
core principles are essential to the success of any commercial or industrial enterprise, but they require a
structure and discipline that is incorporated into the very fabric of the business, creating the DNA by
which working processes are continuously improved.
This thinking has been widely absorbed into the culture that surrounds World Class manufacturing,
having originally been developed by Toyota as its Lean Manufacturing Process Management Philosophy.
The overriding objective behind ‘Lean’ is to continuously improve operations by offering a systematic
way to identify, analyse and eliminate waste, and its success in delivering productivity gains is now
Ultimately, these gains enable the business to offer improved value to the customer, an essential
ingredient in attaining or retaining competitive advantage.
However, ‘Lean’ is no longer confined to the realms of manufacturing. ‘Lean’ thinking is now being used
effectively by leading organisations within their supply chains to drive out waste and improve efficiency,
particularly around processes centred on the warehouse or distribution centre.
Eight types of waste are identified under the ‘Lean’ methodology and can be applied directly to supply
chain operations such as picking, order assembly, kitting, cross‐docking, returns processing and packing.
The eight types of waste are: Overproduction – producing too much or too fast; Transportation –
movement between processes; Inventory – everything that is in excess of the minimum required to
perform the task; Waiting – waiting for parts or waiting until someone else has completed their cycle;
Over processing – more steps in the process than required; Rework – repairing poor quality or correcting
mistakes; Motion – every motion that is not adding value; Loss of intellect – not fully utilising the talent
of all employees.
It would be wrong to think of the pursuit of ‘Lean’ as purely a cost reduction exercise. By focusing on
these key sources of waste, quality, flexibility and productivity can be improved, which may not only
deliver cost reductions, but may also enhance customer satisfaction through improved product quality
or service offerings. This all has the added advantage of reflecting positively on the brand. The mere fact
that ‘Lean’ is adopted within the business culture can have a direct affect on customer perception of the
Within CEVA the journey to becoming a ‘Lean’ organisation started five years ago. Working closely with
management consultants, McKinsey & Company, the methodology was first applied at three key sites in
The Netherlands and involved a year long programme where future ‘Lean experts’ were trained on the
philosophy and principles of ‘Lean’ in five separate nine week programmes known as ‘nine week waves’.
This intensive training programme, aimed at key operational staff with strong analytical skills, has now
been rolled out to over a thousand sites worldwide, with over 125 ‘Lean experts’ having being created
within the company over the last five years.
‘Lean experts’ are deployed to operational units throughout the world to introduce Lean thinking to
local sites. These experts work with the local teams via the nine week wave programme to create local
‘Lean experts’, or ‘Change Agents’ as they are known, and their fundamental objective is to drive
continuous improvement in that specific location. Part of the programme at the local level is to analyse
processes within the operating units and diagnose sub‐optimal procedures. For example, the team will
assess the time taken for a process step and compare it to the benchmark for that particular operation.
If improvements can be made then the team works on ideas to cut waste from that process step to
create a leaner, more productive flow.
Although originally started when the company was known as TNT Logistics, the roll out of ‘Lean’ has
been accelerated under its new incarnation as CEVA. A shorter more condensed version of the nine
week wave programme was developed, called ‘Basic Lean’, which was used to infuse ‘Lean’ thinking at a
faster rate across the entire international enterprise and across the various businesses. The merger with
freight forwarder, EGL, brought a further 300 sites into the programme in 2008.
What is particularly important in rolling out ‘Lean’, in any business, is making it part of the culture and
ensuring that it is sustainable. And that means building ‘Lean’ into the everyday thinking of each
individual member of the operational team, so that results are clearly visible on an ongoing basis.
At CEVA the 5S methodology is now being adopted in order to ensure that the basics for operational
efficiency are in place at each site – improving workplace moral, safety and efficiency. This involves
making sure that the basic layout and structure is correct to the task and that everything needed for a
procedure has its set place. Also of great importance are cleanliness and a tidy work space, along with
essentials such as Health & Safety issues and clear and visible instructions for each member of staff on
Good communications between management and staff is essential and should encompass performance
management – that is making visible the performance data for each team and for each operation.
Ideally, everyday a shift should start with a five to ten minute team meeting where the performance and
productivity of the previous day is reviewed, covering both good and bad aspects and addressing quality
issues. Central to this is the use of performance boards to feed back that information.
Part of the way improvements are made is by using monitoring tools to measure the efficiency of an
operation and then compare the results with performance data from the previous year. That may be the
time taken to perform a task or perhaps, the number of operatives required to produce a given volume
of goods or completed orders. Performance improvements are then checked with the Profit and Loss
account to determine if the savings translate into a clear benefit for the customer and for the service
At Italian footwear and clothing retailer, Scarpe & Scarpe, logistics activities are run by CEVA from two
warehouses, processing delivered stock of 250,000 boxes a year. A nine week Lean wave identified three
key areas for improvement – Inbound, Accessories and Return Clothes.
On the Inbound operation, time was being wasted searching for and matching the correct label to the
correct box, with excess motion taking place in repeating the process for each box. A new layout for the
inbound area and a new process involving a one piece flow of cut, label, scan, together with a specially
designed ticket for the process resulted in a time saving of 15.4 hours per week and reduced the time
stock was buffered for before being put away.
In the Accessories area, a combination of high transportation waste, double handling and excessive data
manipulation created a challenge. The solution was to change the layout of the area, introduce new
work stations and create a one piece flow to reduce double handling. The RF system was also adapted to
recognise more than one item for each shop. The result was a saving of 21 hours per week and greatly
reduced transportation waste.
The third area, Return Clothes, had challenges around double handling and levels of sorting,
transportation waste due to the layout of the sorting area and the absence of a direct flow for pallet
movements. Here, the solution was to compact four processes into two, create direct flow, and change
the layout of the sorting area to a Z formation. This approach helped standardise the work flow, reduced
transportation waste, and optimised warehouse space, increasing pallet density from 460 locations to
Overall, taking a Lean approach to operations undertaken for Scarpe & Scarpe reduced double handling
in most processes, increased productivity, improved pallet storage capacity, reduced costs and had a
positive impact on staff attitude and their efficiency rate.
One of the greatest potential areas for removing waste is around scheduling – that is aligning a labour
resource, and the hours that the resource is required, to the volume of work at any given time. In a
warehouse operation this can be difficult. It may be that on a Monday morning there is little to do,
whereas in the afternoon it becomes very busy. So, how do you optimise the use of labour in a dynamic
way? Building in flexibility to the way labour is contracted and deployed greatly reduces waste in the
process, but first, it is essential to work with both a customer and its suppliers to attain a reliable, high
quality forecast, so that workforce numbers are aligned to the task at hand. Gaining visibility of
deliveries through suppliers sending Advanced Shipment Notices (ASNs) may also help
Flexible working hours and contracts that allow for say, four hour days, rather than eight can facilitate
the removal of waste but it is not always easy to achieve and may be complicated by such issues as
employment law, union involvement, labour availability to a location, the skill sets of staff and the
policies surrounding the use of temporary labour.
Forward planning for peak periods, new product launches and special promotions is an important aspect
of ensuring that resources are correctly allocated to minimise waste. Good volume forecasts are
essential here and this may require close collaboration with Sales and Marketing or, in the case of a
logistics service provider, with the customer.
However, one of the greatest challenges to building in flexibility to the deployment of labour resources
is the skill‐sets of the staff. Training staff for several activities is an important aspect of developing a
flexible workforce, one that can be easily deployed to a variety of tasks as work patterns demand.
Careful analysis of set procedures and processes, along with open discussions within teams, can reveal
new ways of doing things and of cutting waste. An illustration of how this can be achieved is in the
kitting operations undertaken by CEVA for a client in the telecoms sector. Mobile phones have to be
packed into boxes for consumers along with instruction booklets, warranty documents and a variety of
other items. This activity was originally undertaken in a production line process with operatives
performing just a single task. Now, after close examination, it has been determined that best practice is
a single‐station approach, where just one operative undertakes all the necessary steps.
What is important here is that buffers have been reduced, which in ‘Lean’ terms means that waiting
time has been removed – a key area for waste. In any operation a buffer is a significant indication that
processes are not optimally aligned between one another or that there is no flow between steps. The
net result of this process change was that quality went up and cost went down.
Significant benefits can accrue from engaging the work force in problem solving as a team. This requires
management to be trained in encouraging this team approach and in facilitating analysis of tasks and
processes to identify the causes of waste and in helping team members suggest actions for
improvement. By adopting Kaizen methodology the workforce becomes actively engaged in the process
of continuous improvement, encouraging each team member to look for small amendments to the way
they work – small improvements can make a big difference. At CEVA, every supervisor is expected to
lead five Kaizens a year, which over the whole organisation amounts to 15,000 process improvements
Rewarding the team and offering feedback helps improve productivity and quality. But, it is a matter of
finding appropriate ways of building a team spirit, of developing a culture centred on achievement,
perhaps by ‘employee of the month’ awards etc.
A ‘Lean’ culture creates the environment in which progress and improvement can be sustained. By
getting ‘Lean’, businesses are better positioned to compete in a world where operational efficiency and
a well motivated workforce make all the difference between success and failure.
Onno Meij is Group Director, Operational Excellence CEVA