Benefits of Lean Management Practices

Previously, lean management practices were core characteristics of the production process in most manufacturing companies; however, that has begun to change. Lean is extending its reach and being applied to other industries well beyond manufacturing. When applied properly, lean management practices can improve efficiency and reduce waste in the logistics and transportation industry. This would require aligning and integrating transportation management processes with the 8 Rights of Lean Management, which are;- Right Materials, Right Quantity, Right Time, Right Place, Right Source, Right Price, Right Quality and Right Service. 

Lean manufacturing philosophy states that there exist opportunities for improvement, even within the best of practices. There are a lot of waste and redundant costs in most transportation networks, and these can be reduced using lean management techniques. Let’s take a look at how Lean techniques can help optimize transportation and how your company can benefit from the incorporation of Lean transportation management within your supply chain.

Development of a Customer-Centric Strategy

Usually, logistics firm develop inventory and customer strategies around their transportation requirements; however, lean management requires the reverse to be the case. Transportation strategies, as well as product delivery timeframes and methods, should be based on optimum inventory levels and customer requirements. This will reduce the lead time between orders and deliveries and help improve the quality of service and customer satisfaction. An accurate understanding of your customers’ expectations will reduce inventory risk and the operating cost of inventory management.

Reduce Excessive Waste within Transportation Networks

Lean management practices challenge the current notions of size-based cost efficiency, which suggests that transporting larger batches is cheaper than the frequent movement of smaller batches. However, combining shipments into large batches may significantly increase the lead time between orders and deliveries, resulting in unnecessary delays and adverse impact on customer satisfaction. It has been proven that faster deliveries leads to improved customer satisfaction, a key factor in determining the success of an organization.

Focus on Optimizing Productivity Costs

The cost structure of the transportation industry is divided into productivity costs (such as total distance covered, vehicle waiting time, trailer utilization, etc.) and unit costs. In line with Lean management practices, logistics managers should focus on productivity costs since they offer more opportunities for cost reduction. Focusing on the optimization of productivity costs instead of carrier rates allows logistics firms to minimize waste of time, effort, and materials, enabling them to offer customers lower rates while maintaining profitability.

Optimal Organization of Daily Event Management

There are instances where network designs do not ensure sustained cost savings in the logistics industry; instead, focus should be placed on optimal organization of daily event management and the detection and elimination of waste. You should create and execute a well-thought-out daily transportation plan, consistently check for discrepancies and optimize as necessary.

The basic principles of Lean management can be applied to every link in the logistics supply chain, and there are lots of tools and solutions that can help you do just that. These principles can be adapted to ever-changing customer demands, new auditing or freight shipping practices, advanced techniques, core processes and so much more.

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