Waste and lost productivity are never positive in the transportation industry. Whether it’s the existence of redundant systems or using antiquated and outdated systems, the logistics industry depends on streamlining their operations to stay competitive and profitable. This is where lean management practices come into play. While many industries utilize this proven method of operation, the transportation industry has to carefully balance the desire of running lean, without running out of fuel to sustain their business and satisfy customers.
Noted below we will articulate the concept of lean management practices, how it works in the transportation industry and explain a few of the benefits it offers a transportation company.
In theory, the lean management concept is designed to review the overall operations of an organization and remove or revise to optimize efficiency. To be blunt, lean management is 100% about reducing overhead and operational costs, to improve bottom line profits. The issue many executives in the transportation industry deal with is balancing how far they can push the needle. Since lean management is focused on reducing waste and improving efficiency, there needs to be a system of standards that guide managers in implementing a lean management program.
Fortunately, there is a system – and it’s known as the eight rights of lean management. When a company is thinking about implementing a lean manufacturing or management program, they need to consider 8 fundamental areas:
• Do we utilize the RIGHT materials: In manufacturing or in the supply chain, using the RIGHT materials that are designed for optimal performance is a great way to reduce operational cost.
• The RIGHT quantity: Maintaining an inventory of the right supplies and products ensures that the transportation company does not suffer delays in the day-to-day operations. This permits them to service customers efficiently – which keeps the revenue flowing in.
• Are we operating at the RIGHT time: With transportation, scheduling operations at the right time can improve on-road and in warehouse efficiency.
• Are we operating in the RIGHT place: Location is critical for a transportation or supply chain organization.
• Do we utilize the RIGHT source? Choosing the best vendors and suppliers that are consistent and reliable is vital to maintaining your operational efficiency.
• Are we charging the RIGHT price? Staying competitive with pricing while maintaining profitability is a difficult and challenging task.
• Do we have the RIGHT quantity: From employees, supplies, inventory and more – managers must maintain the right quantity of commodities to stay active.
• Are we providing the RIGHT service: In some cases, providing a service that is not cost-effective can be revised or removed in a lean management program.
Just like any other industry, the transportation industry depends on consistency. The lean management system is intended to streamline the operations of a transportation company without compromising the ability to serve their customers and offer consistent services. When done correctly, a lean management system can significantly benefit a transportation company in multiple ways:
• Reduce operational costs: The lean management system finds creative ways of reducing waste – whether in the cost of supplies, how they are shipped, or other aspects of the business, when done correctly, reduced operational costs can be achieved.
• Improve employee production: Lean management also focuses on helping employees improve their efficiency – without compromising quality. As people become more efficient, fewer resources are used, and simply put – more gets done; faster.
• Become environmentally conscious: Not everything is financially driven. In fact, one of the major reasons why a company will activate a lean management program is to reduce dependency on fossil fuels and other natural resources.
• Increase bottom line profit: As you reduce waste, optimize the efficiency of the business, and implement an effective lean management system – bottom line profits typically will increase.
As you can see, when correctly planned and activated, a lean management program can significantly improve the operational efficiency of a transportation company. The risk however, is knowing how to create a plan that does not compromise your ability to operate and grow. Here are four items that any company should consider before activating a lean management program.
• Always ensure your program is customer-centric FIRST: Without customers, a transportation company can’t exist. To thrive, a transportation company must develop their lean management programs with their customers top of mind.
• Remove Waste – But Don’t Cut Corners: A smart transportation company understands the difference between waste and backup. Certain areas including safety, HR, and paperwork control often require redundant backup systems to keep the company protected. These are areas that should never be cut.
• Set Measurable Goals: The best companies always set goals with every aspect of their business. The same thing applies to a lean management system. Goals should be set on a realistic scale.
• Review and Revise: The lean management system is not a black and white operation. It’s quite gray, meaning it always requires constant fine-tuning in order to be effective.