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Lean Logistics is

1. Introduction

Lean Logistics can be considered as an evolution of Lean Systems following Lean Manufacturing. However, not be confused with Lean Manufacturing, because production is not logistics: the first transforms materials into products adding value mainly in shape, quality and cost. The second delivers products to customers primarily adding value of time and place. Adding value to the customer - the most important principle of Lean Manufacturing - is different from eliminating waste, since an undesirable product would not sell even if the flow were perfect. This means that beneath the definition of logistics, value has a broader scope than Value Stream Mapping (VSM). In other words, non-waste is different from value.

Also Lean Logistics differentiates from Lean Manufacturing due to the nature of wastes:

Waste category	Lean Logistics	Lean Manufacturing
Waste related to unnecessary movement of materials/products	If the movement is towards the customer, value is added. Transportation adds value of place. That is, the customer wants to receive the products in desired place.	Movement is waste. Transportation is waste.
Waste related to inventory	Stock sold immediately after build up means value of time. That is, the customer wants to receive the products in the right time. The excess inventory above the amount strictly necessary is waste.	The goal is to achieve or get closer to the zero inventory.
Waste related to order processing	Waste on order processing (discarded packaging, mistakes in orders, conferences, counting, etc.).	Waste inherent to the transformation of materials into products.
Waste caused by planning process - forecasting, planning, scheduling and lead time	P-waste, whose effects are well known in logistics as bullwhip effect and snowball effect.	Does not belong to the seven wastes of Ohno. Mura and Muri are conceptually closer to this category of waste.
Waste of sales	Logistics is concerned with service level and order fulfillment.	Does not stress the waste of sales. Solves the inventory disruption problem through leveling and capacity.

Given these differences on dealing with waste and value to the customer, there are eight fundamental wastes:

1. Overoffer of quantity;
2. Overoffer of antecipation;
3. Underoffer;
4. Waste of wait;
5. Waste due to defects;
6. Waste of movement;
7. Waste of processing;
8. P-waste.

Both in Lean Logistics and in Lean Manufacturing, inventory is an indication of waste. However, in Lean Logistics, a portion of the inventory is waste and the other is value. So it is because it is impossible to satisfy the customer with zero inventory when non-stock delivery lead time is bigger than the delivery time that customer desires.

2. Definition of Lean Logistics

From the logistics perspective on waste and value:

“Lean Logistics is the continuous improvement of value stream to the customer and continuous elimination of waste in the internal and external logistics through lean practice.”

The value stream and the elimination of waste include the core idea of Just-in-time: delivering the right product, at the right quantity, at the right quality, at the right time, at the right place at an affordable cost. Continuous improvement concerns to Kaizen, as the foundation of Lean System. More specifically, Gemba Kaizen whose first rule is "go first to Gemba" when a problem arises. Therefore, Lean is primarily a practice. The internal logistics deals with the movement, storage and handling of materials within the operation and external logistics deals with the supply of materials (inbound) and distribution of products (outbound).

The definition of Lean Logistics, as explained above, is consistent with the classical definition of Logistics:

“Business logistics covers all handling and storage activities that facilitate the flow of goods from point of origin of raw material to the point of final consumption of product, as well as information flow that put products in motion, with purpose of providing adequate service level to customer at a reasonable cost. (Ballou, R., 1987).”

At the same time, the elements of Lean Systems - such as adding value, elimination of waste, inventory reduction, flow, stability, stability and leveling - are present in Lean Logistics.

3. History

The Lean System origin comes from the research of Toyota Production System (TPS). In early 1985, the IMVP program (International Motor Vehicle Program) was designed by MIT (Michigan Institute of Technology) to explore creative mechanisms to interact with industry, government and academia in order to understand the fundamental forces of industrial change and improve the process of developing policies to deal with change. Until then, many initiatives in this direction had failed for not going beyond the factory. In this study, the Toyota production management system was coined as Lean by John Kraficik (IMVP researcher) because this system uses less resources, effort and time than mass production: less human effort, less space in operation, less investment in tools, fewer defects, fewer hours to develop a new product, less inventory, less assets and has the flexibility to produce a greater variety of products.

One of the earliest mentions of the term Lean Logistics was made by Colonel Arthur B. Morrill III, who sought the best business practices to improve the U.S. Air Force (USAF). He considered Lean Logistics as a system of innovations that improve core competences and logistics processes. The goal was to improve fight capability and reduce operating costs, both in peacetime and wartime.

Michel Baudin (“Lean Logistics”, 2004) explores the key elements of Lean Logistics. From the definition of Logistics (Council for Logistics Management), in “Lean Logistics“ he describes it as the logistics dimension of Lean Manufacturing. Milk Run, fixed time pickups, pull systems (kanban) and returnable containers are solutions for Lean Logistics. Information management system encompasses visual management. The lean operation involves moving small quantities between plants with short and predictable lead times. Baudin pays special attention to warehouse management, logistics service providers and the relationship with suppliers.

In 2005, “WOMACK, J., Lean Solutions“ describes the consumer´s and the provider´s vision for services and goods sold. Goldsby and Martichenko try to join Lean and Six Sigma as a solution for Logistics.

In 2006, Kirk Zylstra discusses “Lean Distribution”, evaluating the role of demand forecasting and its impact on logistics. He distinguishes two phenomena in logistics - the snowball effect and bullwhip effect - which produce fluctuations in the supply chain. The proposed framework for Lean Distribution has five elements: customer service policy, buffer strategy, replenishment cycles, pull approach, operating and sourcing capabilities. These elements are implemented with support of Lean Distribution enablers: formal service policies, support, pull, isolate variability, linkage to the pull, reducing lead times, reducing variability, decreasing the lot sizes and costs tradeoffs. Special attention is paid to the delivery cost and information technology.

There are conceptual shortcomings for Lean Logistics, as compared to Lean Manufacturing and Lean Solutions. He proposed eight wastes for Lean Logistics in order to match logistics perspective, value and wastes, among them the P-waste, which represent the artificial requirements fluctuations due to planning processes (forecasting, planning, scheduling and lead time). Kaizen plays a fundamental role in a Lean Logistics System to mantain it. An approach regarding the barriers to lean transformation is vital to the success of Lean Logistics system.

4. Specific Publications on Lean Logistics

• 1995 [Jan / Feb] - MORRILL III, Arthur B. Lean Logistics: Its Time Has Come. Program Manager, jan-feb/95.
• 2004 - BAUDIN, Michel. Lean Logistics: nuts and bolts of Delivering materials and goods - New York, Productivity Press, 2004.
• 2005 - GOLDSBY, Thomas J. and MARTICHENKO, Robert. Lean Six Sigma Logistics. Florida, J. Ross Publishing, 2005.
• 2006 - ZYLSTRA, Kirk. Lean Distribution: the lean approach applied to distribution, logistics and supply chain. New Jersey: Wiley & Sons, 2006.
  

5. References

• BALLOU, Ronald H. Supply Chain Management / Logistics Business. Porto Alegre: Bookman, 2005.
• BAUDIN, Michel. Lean Logistics: nuts and bolts of delivering materials and goods – New York, Productivity Press, 2004.
• OHNO, Taiichi, Toyota Production System: Beyond large-scale production.Productivity Press, 1988.
• WOMACK, James P. The machine that changed the world. Rio de Janeiro: Campus, 1992.
• WOMACK, James P. Lean Thinking in the companies, Rio de Janeiro: Editora Elsevier, 2004.
• WOMACK, James and P.Jones, Daniel T. Lean solutions: how companies and customers can create value and wealth together. Rio de Janeiro: Elsevier, 2006.
• ZYLSTRA, Kirk. Lean Distribution: the lean approach applied to distribution, logistics and supply chain. Porto Alegre: Bookman, 2008.
  

6. See also

Lean Manufacturing
Toyota Production System
Kanban
Heijunka
Kaizen
Takt Time
5S
Andon
Poka-Yoke

7. External links

[HTTP:\\www.lean.org]
[http:\\www.clm1.org]