Guest Post: Lean Logistics: Going Lean is Going Green

Today’s guest post comes from Danielle M.  She has been a dedicated student of Lean Manufacturing methodologies since 2006. It was love at first sight when she read the motto, “Everything has a place; everything in its place” in her first copy of The Toyota Way.

Lean logistics offer a systematic way of managing logistics from when the order is placed until it arrives on a customer’s doorstep. They include a highly detailed organizational approach to managing logistics while cutting out the fat of inventory, fuel costs and middle-man handling. However, there are challenges to this approach to logistics of real world operations with factors, such as natural disasters, social chaos and unpredictable markets, that come into play. Yet companies and technologies have put lean logistics concepts into action with great results.

Challenges in a Lean Transportation System

The transportation industry is expected to see drastic changes in the near future, with the implementation of natural gas and EOBRs. However, according to the lean system of logistics, these changes are vital to the continual operation of the trucking industry. Robert Martichenko, the CEO of the LeanCor Supply Chain Group, notes that transportation is a necessary evil. He states that looking at transportation costs as a separate entity is a fruitless effort. Instead, consider the total logistics cost, which includes purchasing, transporting, warehousing and ordering costs. Martichenko continues by identifying five guiding principles associated with lean transportation including strategy, waste, performance, cost structure and daily event management. For example, by shipping according to customer’s demand, rather than storing products in warehouses until they are requested as does Amazon, lean logistics reduces the amount of work associated with inventory control and warehousing.

Lean Technology

While most in management consider lean logistics in conjunction with manufacturing, technology used for these companies also incorporate lean concepts. For example, the supply and demand giant Amazon has created Amazon Web Services that uses cloud computing to offer infrastructure investment (IT) services and application at a low cost. More importantly, cloud computing allows even the smallest of businesses to create customizable and full-service IT departments using cloud storage and capacity. This cuts out the extra cost associated with hiring and managing an entire IT department in-house. Businesses using cloud computing can purchase only what services they need, such as secure large-scale document housing, temporarily increased bandwidth and expansion of servers. Development and implementation of applications is also streamlined when using cloud services, which allows businesses to reduce the cost and time associated with customizing technology associated with logistics management.

Green and Lean Businesses

Going green for many in the logistics industry is an overwhelming process. Combined with the aspect of keeping with lean logistics, it can seem like an impossible task. However, green and lean are actually very similar, as lean logistics reduces the ecological footprint while streamlining the logistics process. One website focused on operations research with a green and lean foundation is GreenOR. This site offers suggestions for creating greener logistics, such as through energy efficiency, green supply chains, waste flow and renewable energy. For example, through the use a fleet management system such as those offered by Omnitracs, a trucking management team and its drivers are capable of cutting down on fuel costs by creating more efficient routes and by streamlining driving habits. The lean method is evident throughout the use of sustainable logistics methods, such as with the reduction of energy use and the establishment of green supply chains that reduce the amount of waste in the system.

President Obama – Traditional Leader or Lean Leader?

I have absolutely no interest in getting into a political debate.  I am not interested in anyone’s political views.  That is not the point of this blog.  The question I have has to do with the leadership style exhibited by President Obama in an interview on NBC.  Here is the specific clip from the interview about the oil spill in the Gulf.

President Obama wants to know “who’s a@@ to kick”.  Right away, I jump to this being a trait of a traditional leader.  Someone looking for a scape goat and looking to place blame.  I agree that BP should be held responsible for the effects of the spill, but what good does it do to blame a person?  Shouldn’t we be concerned with the temporary containment of the oil leak?  What about the clean up?  More importantly, how do we error proof this so it never happens again?  I can remember getting my rear kicked when I worked in the auto industry.  In fact, it took all of 3 days before I had the assistant plant manager screaming at me, because I allowed 3 or 4 bad parts through in my 12 hrs of inspection of about a thousand parts.  He was also one of the first to go when we started implementing lean.

So, is this comment taken out of context?  Is this comment a trait of a lean leader or a traditional command and control leader?

EPA using Lean to go Green

I was shocked, but happy when I read the EPA is trying to educate businesses on lean principles in order to help improve efficiency resulting in a better environment.   The interview is with George Wyeth, a professor at Lawrence University who leads the innovation efforts with the EPA.

From the interview with Mr. Wyeth:

Lean manufacturing is really a business strategy, not an environmental strategy.

Mr. Wyeth recognizes lean as more than a set of tools to get a greener world, but a business strategy that can help companies reduce waste resulting in a smaller carbon footprint.  It sounds like they are trying to educate on the how (lean principles) in order to get the what (cleaner environment) that is wanted.

Lean, because it focuses on the elimination of waste, has a lot in common with what we call pollution prevention, which we’ve been preaching for 20, 25 years. As companies focused on eliminating waste, we realized they were doing pollution prevention and didn’t even know it.

It is refreshing to see someone recognize the synergies between lean and green.  How they are intertwined with each other.  When I worked in the auto industry in the early 2000’s, we knew we had to control our costs better.  One way was to use the water from our painting and electroplating lines more efficiently and what we was excess we needed to recycle back through the system.  This was before the green movement become so overwhelmingly popular.  We spent quite a bit of money to implement the system but it paid itself back in less then a year in not only water savings, but also less cost to cleanse the water before disposing it in the city drain.

From the article:

We thought that presented an opportunity for us to take the message we’ve been preaching for a long time and presenting it in a way that would be better understood and be more easily incorporated into the business, so it’s not seen as, here’s the government with a hammer forcing you to do something.

The EPA knows they are a regulatory agency.  Unfortunately, the perception is very similar to the cost versus quality perception.  You can’t have both.  It is either one or the other………..regulatory compliance or low cost.  The EPA wants to educate that you can have both and using lean principles is a way to get both.  WOW!!!  Cost, Quality, and Low carbon footprint………you can have them all?!  Who would have ever thought?

Companies must be interested in how lean can help with the environment:

We get a lot of hits on our website on lean manufacturing materials, and there’s a lot of interest from people who want to talk to us.

I am glad to see the EPA has lean materials on their website. Not only about lean and the environment but also lean and government.  Is this a way to get more people interested in lean principles and how it can help their business?  I hope the EPA continues to help companies see the benefits.  They could be another outlet to reinforce the lean message.