New Twists on Lean Allow Companies to Excel in Turbulent Times

Demand management helps you see true customer demand. It allows you to forecast at the product family and stock-keeping unit (SKU) levels so you can better plan resources and capabilities. Customer point-of-sale drives execution and replenishment. Through demand segmentation, you understand the volume and frequency of demand patterns, and you shape demand by taking advantage of more agile order fulfillment. This means addressing customer-facing policies such as promotions, pricing structures and delivery frequencies that create demand volatility. Taking the volatility out of the demand pattern helps you lower capital and capacity required, improve service and reduce inventory.

Lean order fulfillment improves the efficiency of order entry and processing, warehouse design and operations, packaging, the distribution network and logistics management. By applying Lean to order fulfillment, companies require less inventory, reduce their distribution costs, improve put-away and picking capabilities, and develop distribution points based on their customers' locations.

Creating flow throughout the value chain requires connecting all links and synchronizing them to serve customer demands. A robust business planning and scheduling process aligns every part of the company with customer requirements. Production smoothing and daily sequencing leverage lead time and stock to deliver the right products at the right time based on actual consumption.

The heightened focus on supply chain management over the past decade has helped companies improve the quality and on-time delivery of supplied parts. Lean supply management builds on these successes by aligning supply relationships and flow to deliver value to your customers. Supply management involves key processes that promote flow from your suppliers, build strategic supplier relationships, improve receiving and warehousing, and reduce costs. It develops clear commodity and sourcing strategies to control purchasing costs. It streamlines your sourcing and contracting process to develop supplier partnerships.

With today's difficult economic conditions and the increasing focus on being more environmentally friendly, it is time to step up the game in Lean implementations. Apply Lean techniques to energy usage to identify and eliminate energy wastes to reduce consumption and become "more green." Conduct demand segmentation to quickly identify and address service strategies and product line performance to improve your working capital situation. Finally, expand Lean beyond your manufacturing operations and eliminate the wastes in material and information flows used to support value creation for your customer. Stepping up the intensity and focus in these new areas will reap significant benefit for your organization.

About the Author: Ken Koenemann is managing director of the Lean Value Chain Practice for TBM Consulting Group, Inc. He helps clients leverage Lean into the extended enterprise — applying Lean principles to their sourcing, manufacturing, warehousing, distribution, planning and scheduling processes. He was trained by two original members of Taiichi Ohno's Autonomous Study Group and spent six months in Japan learning and implementing the Toyota Production System. LeanSigma is a registered trademark of TBM Consulting Group, Inc. More information on TBM Consulting Group at www.tbmcg.com.