1. Inbound Logistics | LeanCor
The inbound flow of raw materials and parts is a major area of opportunity to gain efficiencies and
decrease the total cost of your supply chain. At LeanCor, we refer to our inbound logistics solutions
as lean logistics engineering. The lean logistics engineering process incorporates several
complex factors including volume fluctuations, sourcing changes, and lead, window, and service
times to determine transportation modes, sourcing locations, freight consolidation, trailer loads,
route combinations, and freight sequences. With lean inbound logistics processes, you can control
what parts to receive, when to receive them, and in what quantity. This customer-focused
engineering optimizes resources, minimizes cost, and maximizes customer service.
Here are seven action steps to plan a lean inbound logistics strategy:
1. Collect data on current inbound logistics:
As with other areas of a fulfillment stream, the first step in moving to a future state for inbound
logistics is to make the current state visible by collecting data. This should include:
Supplier shipping locations
Part numbers purchased from each supplier
Part number consumption - quantity obtained from each supplier
Pickup and delivery frequency from each supplier
Transportation costs to support the current network
Verifying, standardizing, and compiling information may require substantial effort, but accurate
information is vital for understanding the inbound logistics process.
2. Map the current inbound logistics network.
Based on the data collected, you can review a map of supplier locations, part-quantity volumes, and
current delivery frequencies from each supplier. From this, you can create a map that was used to
identify and plan milk-runs and shipping-consolidation opportunities. Working with planned delivery
frequency (documented in the PFEP), your team can determine how to consolidate volumes within
your entire supply base in order to increase delivery frequency while reducing (or at least
stabilizing) transportation costs of the inbound logistics network.
3. Develop an inventory strategy based on pull.
The goal is to have minimal raw-materials inventory at your facilities. But like most manufacturers,
you will need some inventory to protect yourself from part shortages and other unexpected
variations. The solution is to create an inbound supermarket to hold small amounts of supplier-
2. material inventory. You can determine appropriate inventory levels and space requirements by
reviewing each part's PFEP.
4. Develop a transportation strategy based on pull.
A supplier-material supermarket system will need an external logistics network to support it. Lot
sizes, MOQ's, consolidations, and delivery frequencies will need to change to match pull
replenishment cycles. This can occur without driving up costs, even though it involves moving to
smaller, more frequent deliveries.
5. Move from warehousing to cross-docking.
A cross-dock is a facility that consolidates material from multiple suppliers going to the same
destination or splits up material from individual suppliers going to multiple destinations.Unlike a
warehouse, a cross-dock never stores material. It simply redirects it within a few hours (or at most a
day) from inbound vehicles to outbound vehicles, while it is on its way from suppliers to customers.
Cross-docking is an important technique to support flow and reduce the need for warehousing.
Warehousing means receiving items, storing them while waiting for demand, picking the items, and
then shipping or moving them. Storing, waiting, and picking are all wastes that should be
eliminated.
6. Develop a packing strategy based on pull.
Packaging plays the same role in inbound logistics as it does in outbound logistics. Smaller lot sizes
and minimal packaging allows for more efficient utilization of trailers and better connection with
production-line processes. Logistics can collaborate with production to identify the best packaging
to support the production lines. Many manufacturers accomplish this through the use of returnable
containers. But purchasing returnable packaging requires a capital expenditure.
7. Develop daily logistics engineering and PDCA.
Lean transportation and facility management are a part of a planned system that must be managed
daily. This is particularly true for inbound logistics, for which complete control is critical to the
success of all downstream processes. Too many organizations do a one-time logistics network
analysis, implement a new plan, and then fail to check the plan. Within days performance to the plan
will deteriorate as operational variables and assumptions change, often resulting in under-used
transportation resources, increased inventories, and a reduction in fulfillment-stream performance.
http://www.oracle.com/us/products/applications/supply-chain-management/overview/index.html
In order to make a planned system a reality, it's a best practice to hold daily PDCA meetings to
review inbound logistics. Attendees should include logistics engineers, material planners, and
representatives from core carriers. They should review:
Carrier performance
Carrier feedback on routing
Supplier constraints to optimal design
