Simulating Lean Supply Chain Thinking

Business901 Podcast Transcription
Implementing Lean Marketing Systems
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Simulating Lean Supply Chain Thinking
Guest was Paul Myerson

Related Podcast:
Teaching Lean Supply Chain thru Simulation

Copyright Business901


Paul Myerson has been a successful change catalyst for clients
and organizations of all sizes. He has more than 25 years of
experience in supply chain strategies, systems, and operations
that have resulted in bottom-line improvements for companies
such as General Electric, Unilever, and Church and Dwight. He is
currently Managing Partner at Logistics Planning Associates, LLC,
a supply chain planning software and consulting business
(www.psjplanner.com).

Lean Supply Chain and Logistics Management provides
explanations of both basic and advanced Lean tools, as we as
specific Lean implementation opportunities.
Real-world examples and case studies
demonstrate how to effectively use this
powerful strategy to realize significant, long
term improvements and bottom-line-
savings.

This practical guide reveals how to identify
and eliminate waste in any organization's
supply chain and logistic function. Paul is a
leading supply chain and logistics
management expert with consulting,
teaching, training and industry experience.
He combined all aspects of Lean - Lean tools, methodologies,
keys to success, and provides complete coverage of all functional
areas of supply chain and logistics management, to enable the
reader not only to begin the Lean SCM journey but sustain it into
the future, where the ultimate rewards of increased
competitiveness and profitability are attained.

Paul developed the Lean Supply Chain & Logistics Simulation for
Enna.


Transcription of Podcast
Joe Dager: Welcome everyone. This is Joe Dager the host of
Business 901 Podcast. With me today is Paul Myerson. Paul is the
founder and CEO of Logistics Planning Associates; author of the
recent book Lean Supply Chain and Logistics Management. In
conjunction with the consulting services he offers PSI, Planner
and Supply Chaining Software, which is targeted to small and
midsized organizations and is in use throughout the world. Early
last year Enna released their new Supply Chain Logistics
Management Training Package and this in addition to previously
released Lean Supply Chain Logistic Management Simulation
Game, both in which are available for purchase at their website.
Paul was instrumental in developing both packages. I would like
to welcome you Paul. Could you clean that up a bit and tell me
how all these different elements fit together?
Paul Myerson: Sure Joe. Thanks for having me today. I've been
in the supply chain and logistics area for 30 years now;
undergraduate, graduate degree in it. I've worked for many large
companies; General Electric, Unilever. Along the way, I got into
consulting, and I basically saw a supply-chain planning system
that the Windows based application; inexpensive, easy to
implement and use. That's where I came up with the PSI Planner
back in the late 90s.
During that time, as I said, I did a lot of consulting, and that
software package really is to help a company, small, medium-
sized manufacturer; distributor go from more of a push to a pull
system using this type of technology; better forecasting, better
collaborative forecasting, and the distribution requirements
planning to help forecast closer to the customer level in your
distribution network.
I also around this time started doing a lot of Lean manufacturing
training and consulting and that branched into as they call it

today or what I refer to it as Lean Enterprise because it started
expanding if you recall. It started in manufacturing, mainly in
repetitive manufacturing like the auto industry and expanded into
other industries and to the office, in the last five or so years into
the supply chain and logistics area.
I always differentiate I call it supply chain and logistics because
some people consider supply changes purchasing and
procurement, and I include the aspect of transportation,
distribution, planning, scheduling, etc.
As I did a lot of training in Lean, I used several simulation
training games to teach people some of the concepts of Lean and
how to apply it to manufacture. I realized that there was a real
hole or gap there in Supply Chain and Logistics Management.
That's where I came up with the idea for coming up with a
simulation game with a training package and that also eventually
lead to my book on Supply Chain and Logistics Management.
Joe: What's the difference between the training package and the
simulation package?
Paul: The company that I wrote this with, the publisher Enna,
enna.com, basically that was the way they work. It's a two-
pronged approach. They basically sell them separately. Some
people just want to do training. In other words, as a consultant or
an in-house trainer, you want to teach people on concepts and
what are Lean concepts and how do you apply them to the
workplace? That's all well and good but if you want to take it to
the next level I find it helpful to have a simulation game so
people can actually translate what they're learning in a classroom
and apply it in real life or at least close to real life.
So they're two separate things, but some people prefer just doing
the training then going out on the work floor. Other people prefer
to start off the training with a simulation game.


Joe: You can either use one or both together then?
Paul: Right, right. If you were to purchase from Enna the
simulation game, it comes with basically the training package
integrated in it. However, it's less expensive just to buy the
training package which basically has slides and training concepts
and tools in it without the simulation game. The game is actually
a physical game that you purchase. They're also coming out with
other training packages like I believe this June they are going to
have a Lean Supply Chain for 5S Workplace Organization. The
first one they came out with was a general overview of Lean
Supply Chain and Logistics Training Package.
Joe: Now, do you use this simulation package yourself in your
instruction?
Paul: I have used it. It really depends on the situation. If I have
a client that is doing Lean, we're looking at a training event for
teaching Lean Supply Chain in the appropriate company or the
appropriate environment. I do use it. I have used it. Other
companies, if it's more of a manufacturer, and they want a
general training for manufacturing, then I'll use others. There are
a lot of other training packages that are geared more toward
manufacturing. In other words, we're looking at changeovers,
equipment, and layout, things like that as opposed to more the
Supply Chain Logistics that are specific to supply chain such as
warehouse layout and adjusting time and things like that.
Joe: When would you use the game for training?

Paul: Well, I find it useful whether I'm doing Lean Manufacturing
for manufacturing or Lean Office for warehouse or supply chain
and logistics. To be truly successful with Lean I think most people
would agree that everybody has to be involved and understand
that the concepts and the applications, so you always want to run
as many people in your company through some kind of Lean
training. The simulation is appropriate; I think, in the

introductory types of setups where people they might sit there
and listen, not listen, be bored if you're listening to a lecture. This
way, it gets them engaged. It's a good team building approach to
get them involved and see where it can really benefit them and
the company and what their role in it is. So I find it to be very
useful.
Joe: When you use it in a workshop setting do you use it in the
introduction process or midday after you went through a few Lean
principles?
Paul: Well, it's kind of a stand-alone thing. It is basically the
introductory workshop. So my particular simulation game for a
supply-chain logistics has three rounds, you can use less than
three if you want to make it shorter, or you can do it in two
rounds. It's typically meant to be a six to an eight-hour event
that can be done shorter as I said or longer. However, it's
typically for 10 to 15 people, probably closer to 10 are better.
Again, it's kind of the introductory first-day training to get people
involved and a basic understanding.

Joe: So you're sitting there using all day long and explaining the
different components. Better yet, you explain how you go through
the workshop with it.
Paul: In a nutshell, we have three rounds as I said. What we do
is we start off, before we actually play the first round of the game
have an introduction of Lean, just a concept of the seven ways,
the non-value added, value added, all that stuff. We lay out the
scenario. Again if the person who purchases the software,
there're roles to play, everybody plays a role; supply chain
manager, shipper, customer service, etc. The person doing the
training or the teaching might be the role of the owner of the
company or a consultant brought in order to teach Lean.
The first round is kind of the as is. Here's the situation, business
runs as usual, kind of the traditional methods of push, in this

case for supply chain pushing orders in waves or in batches
through a warehouse for layout, large inventories, etc. at high
costs.
After the first round, we do some wrap up and get some people
involved. We say, "OK, here's where we are now let's bring in this
expert in Lean and talk about where we might apply Lean here."
The consultant or owner comes in and talks about some basic
foundation concepts of Lean and where you might apply it in
distribution and supply chain.
The second round you'll implement some basic improvements,
not dramatic but basic ones, and you'll actually measure the end
of each round. You'll measure your profitability; your costs,
inventory levels, service levels, and things like that.
Then after the second round you'll do even more advance
concepts teaching to the group, and they'll come up with ideas for
the final round, which can be pretty dramatic in terms of using
vendor managed inventory, which is really just in time, dramatic
one-piece flow, things like that.
By the end of the third round and the wrap up at the end
dramatically increase your profitability and service levels. Talk
about steps, what you might do such as value stream mapping to
get into detail about the current state and how you might
dramatically change it to a future state in your workplace where
you might apply some of this stuff once you get out of this
classroom.

That's, in a nutshell, what the game does. It's not a game board
but people actually play the roles in the game. There are game
pieces such as Lego blocks to represent inventory and a
stopwatch, so it's actually a complete game.


Joe: Do you keep the same roles that people are in their work?
Do you keep the roles in the game or do you have them mix it
up?
Paul: If this person is an inventory manager, we wouldn't give
them the role of the inventory manager in this game. It's better
to mix it up in terms of what they do in real life. I mean in this
case they all have the same position in supply chain and logistics,
which may be in sales or customer service. But the idea is not to
put them in the role that they normally do, so they can see it
from outside. But throughout the game, you do typically keep the
same role. If your role is to do order entry, then you'll probably
do order entry throughout the game. However, your position
might be eliminated then you might move to a more value added
position.
Joe: As I hear you explain the game you go through, the key
stages of gaming. You start as a newbie in an on boarding
process and you go to more of a regular player, and then you
develop it, in the gaming world they're called an enthusiast but
more of a master level. So you're taking them through three
stages in your process?
Paul: Yeah. The game itself has 10 participants and there can be
observers and such. As I said different positions like sales, order
processing, supply chain manager, order picker, etc. It's a 20
minute round. As I said you'll actually teach them the concept
that they'll see the company, the business evolve from a less
efficient business to a more efficient and profitable business over
each 20 minute round. As you said, the first round is kind of the
as is or current state. The second or third round is the future
state.
And they actually not only get to map it or think about it, they
actually get to do it and see their results. It's kind of neat, and
it's a lot of fun. It's good for team building. They work together.


When you do this kind of training it is such is the concept you do
as a wrap up if you're a good consultant or trainer you do say,
"Does any of this stuff ring true to you? Here is the current
process, we're losing money, there's too much inventory. Do
these things ring true to you? Do you see them?"
During each round as you make improvements, could have you
done this with the problems that you mentioned? Do you know
what I mean? That's how you relate it to the real world, to the
people in the training.
Joe: Do you see players engaging right away or do you have to
kind of prompt them? How do you get them warmed up and into
the game?
Paul: Well, a lot of that you can only do so much with the game
itself and the slides. A lot of it comes from the enthusiasm. The
group itself being enthusiastic, the person running it whether it's
the consultant or it's the trainer has to obviously show
enthusiasm. You want to give people breaks. You don't just want
to have them sitting in a room for six, eight hours without breaks
and lunch and a chance to stretch and get caught up. It's kind of
both. The people you bring in have to understand how important
it is but also be able to have some fun and relax.
Joe: Do you see any difference in the engagement from a
gender, age, or a position standpoint at all?
Paul: Well, in all games, again not just this game but when I've
done simulations for Glee Manufacturing, some people come in
really negative, and they don't really believe in this stuff, some
people know a little. Then some of the people who are the most
negative might come out of the game the most positive or might
come up with ideas. I think you have to emphasize to people that
things are changing these days even more rapidly, and you've got
to go with the flow. Yeah, you might see someone who's been
around a long time might be resistant to change, but that's not

always the case. Sometimes it's the younger person and
sometimes it could be job security or just lack of interest. But I
think you've got to show them that it can an evolution, not a
revolution type of thing, that you can apply bits and pieces of
what works for your company, and this is a good way to show
that, because they're going to actually have the input as to what
can change over each round.

Joe Dager: As let's say a viewer of people participating, do you
see people really getting into the game, joining in the flow of the
game and kind of moving themselves away from reality, or is
reality just always there...do you see that creeping back in during
the game all the time?
Myerson: Well, during the training part before each round, you
might hear some of the negativity or "Well; we can't do that," or
"Yeah, if management did that it would work, but they won't do
that," things like that. During the game itself, the actual round,
it's usually people kind of let go and have fun, and when I play
the role of the consultant and/or the owner, I try to make it
realistic and joke around, like, "You could be fired;" and "Let's get
going," and "Work harder and smarter." So, you make it kind of
entertaining and fun. I've been in some of these simulations
where the guy's coming in playing the owner's role, they'll have a
cigar...you know they'll really get into the character themselves,
and that helps to get the people involved, and then they kind of
tease each other, and we have a lot of fun.
Dager: Well, it's kind of like a murder-mystery dinner or
something, right?

Myerson: Yeah, and that's why it's important to have the client
bring in a good lunch for people, and snacks.

Dager: Are there any rewards as part of the game structure, or
is it just the competitiveness of the results of the improvement
that's there?

Myerson: There are no specific rewards. It's really...again; I've
been in some simulation games where everybody makes a
clock -- this was for Lee Manufacturing -- and at the end, they
get to keep the clock. It's a cheap clock, but I don't think
people...you know, that's a nice thing. Some companies will give
you training certificates. If you do this through a certified trainer,
you might be able to get things like Continuing Education units or
certifications -- you know, little plaque-type things -- but the big
thing is, at the end of each round, there's a spreadsheet that
comes with it where the trainer...actually, the warehouse
manager, I believe...will actually track the improvements. You're
actually gathering data from each round; how much was shipped,
what the inventory levels were, and things like that. At the end of
each round, you'll be able to determine profitability, sales
revenue, and all those things. So, it becomes kind of fun, and I
don't want to say it's rigged, but if you run this correctly, all
these simulation games by the second or third round or however
many rounds you have...it's a fairly dramatic improvement from
usually having a loss, not a profit, to then, at the end, having
fairly significantly profits and increases in sales. So, that's a
reward in itself, I think.
Dager: Do you think you could have accomplished the same
outcomes or learning without a game?
Myerson: I do a lot of teaching myself. I'm an adjunct professor
at several universities; I learned a long time ago when I took
classes in giving presentations that people learn in different ways.
Some people are visual; they learn through seeing; other people
are more auditory; they learn better through hearing; and some
people are more hands-on, - on; they learn through touching.
And so, typically, you're dealing with people that are out there...it
depends if you're dealing with more office people versus people
who are out on the floor that are more hands on...that people
generally need a combination of all these things. So I might


actually mix some video, when I do training in a classroom for
university.

I think that reinforces any concepts. That's why we do it in
rounds, start off with some simple training, and they get a little
more detailed and complex and actually implement this stuff in
the game.

Dager: Can you use the game repetitively? Get deeper meaning
out of it, besides just these initial three rounds?

Myerson: Well, it's not designed that way. As I said, this is
really more an overview to get people started on many of the
concepts, but like any introduction to Lean, whether it's
manufacturing or supply chain, you're covering so many
concepts, and so you're touching on adjustment time, layout,
visual workplace, all that stuff, so that, typically the next
step -- and we have this in the next step at the end of this
game -- is to talk about, well, maybe you want to go do a
value-stream app for a specific process. Maybe you want to look
at the picking process in your warehouse, or the entire process in
your warehouse, or the order of your office's management
process. And then, you'll come up with specific opportunities,
where you'll then want to look at how you're getting down to one
piece slow or quick change-over, maybe. It's what they call "Total
Productive Maintenance: Equipment Related Waste", where you
have to look at equipment and how it's maintained, and that
takes more specific training, it's a little more technical, and it's
very focused. So I would say the answer is no, it is what it is, but
it leads you to those next steps with more complex training.

Dager: Why do you think the interest in kind of "gaming up"
learning has happened lately? Why do you think that there's a
stronger interest in that in most workshops, even?
Myerson: Well, I think, obviously; it must be working or there
wouldn't be the increased requests or the demand for it. I think it

definitely works. It gets better results; people tend to enjoy it.
Typically, after any kind of training, people fill out evaluation
forms; I think they tend to get better evaluations when they do
this type of stuff. Also, probably just that simulation in general
has been used for training and improving processes for a long
time. Probably, also, it's just a technical age when people are
used to gaming -- even though this is not an online game -- but,
you know, a lot of younger people these days basically do gaming
and simulations on computers, and it feeds to that, even though
it's not a video game, but I guess they're used to this type of
things, playing different roles with different people, so they're
kind of comfortable in that.
Dager: What's your overall perspective on gaming simulation?
Would you really recommend always having some type of
structured activity within a workshop?

Myerson: Well, if it's a general workshop, I would say yes. At
the very least, if I don't do a simulation game, I at least try and
get some videos in there. Some people like to learn visually, but
it's also so they get to see how this stuff gets implemented in a
workplace -- any workplace -- but a real workplace. So, I think
that helps learning. If you can get the simulation involved, that's
good too. As you get into...as I said, other training and consulting
where you're getting into specifics, let's say, TPM -- Total
Productive Maintenance -- you're going to actually be out there
observing real equipment. Now, I also integrate specific...not
simulations, but videos for that, showing how people in a real
company went through that particular event, in this case a TPM
event, or if it's a quick change-over, here's how they actually did
it, so it's not a simulation, people actually get to see how it
worked in real life.
Dager: Now, when you use these different games that you have
there, does that help, using your software? Is that an extension


of...you know, do you understand the software better, or the
practicality of the software better?

Myerson: I don't want to say they're not related, but our supply
chain planning software...I guess was doing some Lean supply
chain and logistics training, and they saw how you go from push
to pull, then you can relate that to my software, which is supply
chain planning software which helps a company in real-life go
from a push to pull environment. Now, there are other
technologies as well that we don't sell; we've bartered with other
companies like Warehouse Management Software, which would
help you to flow better within your warehouse. So, I suppose in
that way, you could link it together, but generally, they're kind of
separate.
Dager: Could you explain what your software is, and a little
more about it?
Myerson: It's called PSI Planner for Windows. As I mentioned,
I've used a lot of different technical software from some of these
larger companies, like Manugistics and Logility and etc. They're
very complex, very expensive, like hundreds of thousands of
dollars and you had to be a rocket scientist to understand
...weeks or months of training. Our system is relatively simple.
It's for a small to medium sized manufacturer or distributor of
products, or a company that imports products and slaps their
name on it, even. It's especially useful for companies that have
regional networks of distribution centers or warehouses.
Basically, it helps companies to forecast demand, "What am I
going to sell?" It uses a collaborative

Approach -- we call it the "Pyramid Approach," which has been
around since the 1980s -- where you can generate forecasts at
detailed levels, but then aggregate them to higher levels. So you
might generate your forecast at the SKU item location; you might
have one item at ten warehouses, and you want to forecast at the


level so that you're closer to the customer, and ultimately; you
might even want to forecast at the customer warehouse location.
That's a whole process in itself called CP4 -- Collaborative
Planning Forecast and Replenishment -- which our software can
be used for.
Basically, the forecast gets generated at a detailed level. You can
make management overrides; you can use various simple, easy
to understand statistical methods. Then, you can aggregate it up,
because maybe sales and finance really want to look at forecasts
and by class of products and sales dollars, not in cases and by
warehouse. So, you collaborate and share that information, you
ultimately come up with a forecast you're comfortable with, going
up to, in our case, 36 months in daily, weekly, and monthly
buckets.
Then, we have what's called Distribution Requirements
Planning -- DRP -- it's similar to MRP in your distribution network.
So, you do this time-phased planning, where you take this
forecast in time-buckets, like, let's say, weekly buckets, and you
look and say, "What's my inventory in my warehouse, less the
greater of my forecasts for open customer orders, plus any
scheduled receipts, transfers, purchase orders, scheduled
production coming in," and it creates your projected ending
inventory in the future.

The idea of DRP is it says, "OK, I don't ever want to run out of
product; I want to keep some safety stock or safety-time level of
buffer inventory, and in a month or two from now, when I'm
going to drop below that, based on this forecast, it tells you. It
creates what are called Planned Receipts and Orders. Planned
Receipts says when I need to receive more product at that
warehouse, and Planned Orders backs you up the lead time -- the
transportation lead time, the manufacturing lead time, etc. -- and
it's hierarchical, so you can go through a distribution network.


You might have regional warehouses that are sourced from a
central warehouse that are sourced from a manufacturer, and
work your way up that supply chain, and tell me what my
ultimate requirements are for my manufacturing, and explode
that into raw components using MRP, which we have to tell my
manufacturers what we need to make my suppliers. So it goes
from pushing out and guessing, to get closer to the customer to
use that demand to pull through your requirements. So, that's
the application, PSI Planner. That actually stands for Production
Sales Inventory Planner; that's not a term I made up, that's
actually a term that's used in supply chain planning.
Dager: So, what's next for you, Paul? I mean, you're a software
developer; you're a game developer, an author; you're a
consultant. Is that going to keep you busy enough?
Myerson: I hope so. You know, as I said, I also have regular
gigs teaching at a couple of universities here in New Jersey, but
I'm always looking for opportunities. I also have a new column in
Inbound Logistics Magazine, and, potentially, I'm told I'm going
to get a web blog for Industry Week Magazine. But, I feel that I'm
somewhat of a thought leader by doing all these different things,
and so I'm always looking for opportunities to help companies
and businesses, so I'm continuing to build on that, in terms of
training and consulting. The software...we come out with new
versions every year; we make enhancements to improve it, and I
enjoy doing all these things.
Dager: Where can someone contact you?

Myerson: Our website is www.psiplanner.com. Our phone
number is (1-800) 472-0233. You can always email me at
paul@psiplanner.com.

Dager: Your book name again, and where that can be found?


Myerson: Yep, it's from McGraw Hill Professional; it's called
"Lean Supply Chain and Logistics Management," and you can just
go on Amazon.com; you can type in Myerson and Lean, and it'll
come up.
Dager: Well, I'd like to thank you very much, Paul. I appreciate
your input. This podcast is available through the business901.com
website and the Business901 iTunes store.
Myerson: Thanks, Joe, I enjoyed it.



Joseph T. Dager
Business901
Phone: 260-918-0438
Skype: Biz901
Fax: 260-818-2022
Email: jtdager@business901.com
Website: http://www.business901.com
Twitter: @business901

Joe Dager is president of Business901, a firm specializing in
bringing the continuous improvement process to the sales and
marketing arena. He takes his process thinking of over thirty
years in marketing within a wide variety of industries and applies
it through Lean Marketing and Lean Service Design.

Visit the Lean Marketing Lab: Being part of this community will
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