The Structure of KAIZEN™ in Logistics and Supply chains

The approach to KAIZEN™ in logistics and supply chain via the Total Flow Management (TFM) system is one that includes the entire supply chain of a given company. The starting point for the design is the point where you are located in the supply chain. Maybe your organization is a manufacturing facility or a product-distribution facility. By applying the model, you will be creating your internal pull-flow system and also considering how you can expand this model, both downstream of your supply chain and upstream.

The basic TFM model is shown in the above figure. This diagram shows the different supply chain flows from the perspective of a single manufacturing plant. The delivery of raw materials and components from suppliers to the plant is shown as regular, high frequency transport loops. Manufacturing is pulled from the retail customer on the basis of continuous real demand requirements. Similarly, forecasts are also sent from retail customers, to be used for capacity- planning purpose only. Not to drive actual production.

The main target is the reduction of the total Lead Time in the supply chain. The measure of Lead Time is the inventory coverage across the entire supply chain. It is called Lead Time and not coverage because the inventory coverage is usually a good estimate of the time it takes one individual product unit to cross the chain.

Reducing Lead Time also eliminates the waste of waiting and really means creating a material flow. Rigorous systems, processes, and standards are required to create and maintain this flow and to ensure

  1. Reduced Cost
  2. Reduced Working Capital
  3. Increased Productivity
  4. Improved Quality
  5. Higher level of Customer service and satisfaction

This is achieved by creating a flow across the entire supply chain, starting with customer consumption that is, production can be driven by real orders or inventory – replenishment orders. It will be necessary to physically create one – piece flow, one-container flow, and one pallet flow and to accelerate this flow by redesigning transport routes using the concept of high-frequency transport loops.

Forecasts will no longer be used for creating production or distribution orders, rather, they will be used only for capacity management.

At the same time, the system works to change the company culture to one that is based on the KAIZEN™ spirit of improvement every day, everywhere, and by everybody.

To understand more about how KAIZEN™ can be applied in logistics & distribution, please attend IndiZen, the 8th National Convention on Operational Excellence which is going to be held on 21st and 22nd Feb 2017 @ Hyatt Regency, Pune.

In case you missed it, my last post was Application of Golden Rules.

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Acknowledgement: KAIZEN™ in logistics and supply chain book by Euclides coimbara

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