Embrace Systems Thinking

Oct. 25, 2010
Tips for building a lean fulfillment stream

When does it make good business sense for functions to operate in splendid isolation? Not when it comes to building a better lean fulfillment stream. Rather, its the system thats important, say Robert Martichenko, CEO of third-party logistics provider LeanCor, and Kevin von Grabe, the companys vice president of lean deployment.

The two men, co-authors of "Building a Lean Fulfillment Stream," define the fulfillment stream as starting with customer consumption as the trigger point for all upstream activities. Key to it are logistics functions, such as distribution and material handling, as well as supply chain management, which makes sure the functions work together as a system, in harmony.

Critical to building a lean fulfillment stream is an embrace of systems thinking, says von Grabe, who along with Martichenko recently presented a Lean Enterprise Institute webinar on the lean fulfillment stream. He noted that systems thinking says that behaviors or functions are important in how they interact with one another, not how they operate in isolation. In the lean fulfillment stream, such thinking suggests that the strategy of any one function -- purchasing, for example -- is not important in isolation. What is important is how that strategy supports the system, says von Grabe. To embrace a systems approach, the vice president says:

  • First understand and articulate the current state.
  • Have cross-functional collaborative discussions that go horizontal and even extend outside the organization.
  • Recognize that measurement systems are not set up to support systems thinking. Many companies, he notes, are very vertically structured, with people measured on their small piece of the fulfillment stream. Such a set up supports functional silos and leads to continually optimizing a piece of the stream at the expense of the whole.

It leads to management by monthly report, says Martichenko. This continuous game of whacking the mole thats popping its head up is not an effective way to run a business, and we need to start focusing on flow. We need to start focusing on horizontal thinking, collaboration.

An organization must also recognize that any process put in place wants to fall apart, says von Grabe. Thus the need for PDCA (plan, do, check, act) to keep the process intact.

During the events question-and-answer session, the presenters were asked how to develop a problem-solving culture across the lean fulfillment stream. Their response: Build awareness that the organization wants problems to be identified. Then begin managing and solving the problems once they start to flow in -- which means developing problem-solving skills. Martichenko says pareto charts, fishbone diagrams and five whys likely will solve 96% of the problems in supply chain and logistics, at least at the beginning.

To view the entire webinar, go online to Lean Logistics & Supply Chain Networks: 8 Guiding Principles.

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