Anyone in supply chain management, manufacturing, or hospitals is probably already aware of the principles I’ll be reviewing here: Lean Systems. Alternatively, Lean methodology is referred to as Kaizen, referencing where it was first pioneered as a part of Toyota’s manufacturing in Japan.
A brief background of Lean manufacturing (where the methodology got its start) will help you understand the concepts I’ll be suggesting you apply to your transportation management systems.
The core concept behind Lean manufacturing (alternatively referred to as Lean production, or just “lean”) is to make it extremely obvious what adds value by reducing anything that doesn’t. It was first pioneered by Toyota, who implemented it as a management philosophy back in the 80s.
The primary goal of lean is reducing waste, plain and simple. Different schools of thought emphasize waste reduction or the ‘flow’ of work, but the end result is generally the same: drastic improvements in the speed at which products are manufactured, the efficiency of producing those products, and a decrease in the cost needed to make the products.
The main focus, above all else, is on the value the customer or client finds in your product.
There are three types of waste that the Toyota system identifies: non value adding work, overburden, and unevenness.
Non value adding work is busy work, to put it another way.
For TMS, that would be the need to double-enter your data, copy documents multiple times, or otherwise do tasks that don’t really add any value to your end client, as far what your end client sees.
Your end client doesn’t care about your administrative needs – so administrative tasks are non-value adding tasks, and should be reduced as much as possible.
Overburden is when too much is required of a single step, such that it becomes too complicated to identify areas of improvement. Does generating a quote require clicking through 20 different screens and entering in information that isn’t directly relevant at that stage?
You can avoid overburden by simplifying your steps, making it clear and obvious what each step of your process is, how long each step should take, and how to make the process efficient and repeatable. Generating invoices, bills of lading, or simply managing the accounting – it should be simple to move from one step to the next. You shouldn’t have to hunt for documents, data, or resources at every stage.
Finally, there’s unevenness, which can also be referred to as production bottlenecks. This happens often in systems where there’s an expensive or unwieldy tool, so managers will pause production or wait until they have a lot to process, before actually using the tool.
They’ll place undue emphasis on a single point of production, which in turn, slows the entire process down. That unevenness, while it seems to make sense to try and get the most out of a single tool, actually costs more than it saves by slowing down production.
Is your process uneven because you’re trying to get more out of a single tool? You might be able to become more efficient by evening out the process – improving the “flow” of work and streamlining your system.
When a company’s manufacturing process becomes Lean, and there’s been a heavy focus on efficiency and waste reduction in their manufacturing, the next logical step is to Lean their supply chain. It’s no use having Lean manufacturing if your supply chain isn’t equally as efficient, right?
That’s where the transportation management system used needs to keep up.
We’ve discussed wasted time and the impact that has on your bottom line before, but the ramifications of how much all of the waste in your freight management can add up become excruciatingly clear when you view it from a Lean methodology perspective.
One cent of wasted money (in time, personnel resources, or materials) isn’t much on its own, but when you add up one cent of waste in each step, for each client, for each truckload… that becomes a lot of dough. And when you’re working in slim margins to begin with, you (and your clients) don’t want to lose a single cent you don’t have to.
One of the aspects that Lean really excels in is finding tiny improvements (often sourced directly from your employees) that add up to big savings.
One major source of savings is having an all-in-one transportation management system, rather than piecing together several solutions for all of your needs. It seems like a simple thing to have just a single window for inputting all the necessary data, rather than clicking through window.
You or your employees might just be used to clicking through 5, 10, or 20 windows to generate an invoice, shipment, or bill of lading, but once they experience a single window to do it all, they’re never going to want to go back.
Another waste-eliminating ability is having the relevant documents get pulled into each customer record, allowing you to view all the necessary information in one place. The same with accounting – just eliminating double entry alone reduces the risk of errors and saves time. It’s the idea of that single penny that adds up every single time you have to change windows, look for data, or copy and paste data fields.
While a Lean evangelist will tell you that you can’t get the full benefits of a Lean system without embracing it fully, you can still see significant improvements in your bottom line, your efficiency, and employee satisfaction by implementing certain Lean concepts.
The Lean concepts you’ll want to implement are practical, actionable ideas that you can start using today.
The first step is to take a moment to actually sit down and document your entire process of generating a quote or booking a shipment.
How many steps does it take? What, exactly, are those steps? They should be clear, simple, and easy enough to follow that someone who’s never seen your system before should be able to follow along.
Once you do that, you may already see areas that can be improved. Things like organizing the tariffs that need to be applied to certain shipping areas, how much information is needed for a shipping quote, or just what information is needed in reports generated for clients – these are all potential areas for improvement. Above all else, keep in mind the value your customer sees in the process: what can you eliminate, reduce, or make more efficient that would make them see your services as more valuable?
There’s an easy way to simplify large amounts of work – and that’s with an integrated, efficient TMS. Any step that involves finding documents, copy pasting information, or duplicate screens can and should be possible to turn into a single step or eliminate entirely with a more advanced TMS.
The use of APIs in the more advanced TMS systems means that much of the data you need can be pulled directly from your carrier’s websites. This decreases waste in the form of time spent looking for that data, and increases value by providing your clients real time information about their shipments.
The (hopefully) easy part that you can start today is identifying your shipment booking or quote generating process. It may seem simple, or a bit mundane, or obvious, but it’s important to think about it from the perspective of your client.
How much value do they really see in the process? Is it something that they see as an asset to their business, or are you just a necessary evil they have to deal with?
The way to increasing your profits is through making your customers happier.
And a smoother, more efficient shipping process is the best way to do that.
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