1) Lean supply chains began in the 1980s with companies like Toyota and Seven-Eleven Japan and continued to develop through the 1990s and 2000s with retailers like Tesco and discounters. 2) Lean focuses on defining value from the customer perspective, looking at the entire value stream, focusing on reducing time to create flow, and solving the root causes of waste like forecast errors. 3) Next generation IT systems must be simpler and enable supply chain flow, not top-down control. Separating high and low volume SKUs and letting inventory absorb variation rather than production schedules also helps reduce waste.

1. Lean Supply Streams
for the Web Era
Daniel T Jones

2. Lean Supply Streams
• The lean FMCG journey began in the 1980s
Toyota’s parts distribution system
Seven-Eleven Japan
• Continued in the 1990s
Unipart parts distribution
Tesco’s supply chain
The Discounters
• Built on in the 2000s
ECR – ICI – GCI – IGD
Now the Consumer Goods Forum
www.leanuk.org

3. Major Lessons
• Define value back from the customer
not forward from our assets or targets
• Look at the whole value stream
rather than optimising points along it
• Focus on time
creating flow makes waste visible
• Waste is a symptom of
forecast errors and batching
system generated order amplification
poor cooperation along the stream
www.leanuk.org

4. IT is not the answer
• Top down control, point optimisation
systems are very inflexible and expensive
• Optimising horizontal value streams by
removing buffers means
making the plan and deviations visible
knowing how to respond quickly
good root cause problem solving
• Next generation IT systems must be simpler
and enable flow
• Don’t schedule every flow the same way
www.leanuk.org

5. 6% SKUs = 30% SKUs =
50% Volume Batch Logic 1% Volume
• Multi-product production means
batching - long lead times - lots of stock
long supply chains – slow to respond
• Separate the few high volume SKUs
make them every week or every day
• Plus capacity to make the tail quickly
• Let inventories rather than production take
the strain – to cover variation in demand
• Only schedule what varies
fixed plans for what does not
www.leanuk.org

6. Global Supply Chains
• The end of the “China price”
and extended supply chains
• Analysis of the total cost of supply chains is
bringing production back within region
• Many manufacturers are dramatically
compressing their supply chains
• Using lean Hugo Boss in Turkey is
faster and cheaper than China
• Big supply chain development opportunity –
better, simpler, cheaper and closer!
www.leanuk.org

7. Barriers to Cooperation
• Synchronising flow works best with a core
range and with own brand where there is a
clear win-win to share future growth
• FMGC suppliers are preoccupied with
maintaining their premiums not cutting waste
• But lean will transform their supply chains
and non-food supply chains
• But the main problems are still internal –
working across functions and through HQ
www.leanuk.org

8. Transformation Design
• Rolling out staff driven training programmes
from HQ rarely delivers sustained results
• Lean is not just a tool box for eliminating
waste – but the capabilities to respond and
solve problems that are learnt by doing
• Lean is a line management responsibility
• Begin proof of concept experiments quickly,
evaluate and then share practices
• Focus efforts only on what delivers results
www.leanuk.org

9. Just the Start
• The web is shifting power to consumers –
now informed, empowered and impatient
• Consumers must now become an integral
part of the supply stream
• Households are mini-businesses – full of
complex processes that need to be managed
• What we do is to help them to create value in
their lives and to manage their consumption
• Consumers will in future manage their own
data and share it with chosen providers
www.leanuk.org

10. Rethinking Convenience
• The convenience store could be much more
than a mini-supermarket
a meeting point
an ordering point
a pick up point
a delivery point
• Create a dialogue and plan
ahead with core customers
• To reduce the cost of the last mile while
maximising convenience
www.leanuk.org

11. Rethinking Supply
• By reversing the trend to big, centralised and
complex plants serving a whole region
• Exploring distributed production close to
consolidation centres
• Developing small local suppliers
• Cross docking through other DCs
to local picking centres and stores
• Possibly using shared production facilities
and logistics
www.leanuk.org

12. The Big Lesson
The is no one best way!
We have to work together and with
consumers to design supply streams
that mirror customer circumstances
Thank you
www.leanuk.org

13. Lean Supply Streams
for the Web Era
Daniel T Jones