Lean Six Sigma Logistics Figure 25.1

271
INDEX
A
ABC classification, 208–210
Acceptable tolerances, 245
Accountability, 52
Accounts payable, 108, 110
Accounts receivable, 110
Actionability, 149–151, 264, 266
Activity-based costing, 204, 205, 248
Administration, waste of, 51–53
Advanced Shipping Notice (ASN), 122
Advanced technologies, 37–38
Agenda, 167
Analysis of variance (ANOVA), 223, 224,
225
Analyze, 215–216
ANOVA. See Analysis of variance
Army, 36, 52
AS/RS. See Automated storage and
retrieval system
Asset flow, 71–84, 263, 265
fixed resources flow, 80–84
inventory flow, 75–80
people flow, 72–75
Asset management, 81–82
Assets
leased or rented, 81
purchased, 80
Assignable costs, 204
Automated storage and retrieval system
(AS/RS), 38
Automotive industry, 148, 228–229
Average transit time, 28
Awareness campaigns, 268
B
Balance sheet, 80
business strategy and, 106
fixed resources on, 80
flow, 103–107, 264, 265
inventory turns and, 105–106
logistics drivers and, 105
paradoxes, 103–104
Bell-shaped curve, 238
Benchmark, 92, 130
Best practices, 90, 92
Bills of lading, 118–119
Boardroom, 142
Bonus, 179
Bottlenecks, 44, 230
Brainstorming, 218–219, 226
Buffer inventories, 28, 44, 159
Bullwhip effect, 88, 182, 231
Business excellence, 267
Business strategy, 106
C
Capability, 7, 145, 196. See also Logistics
capability; specific topics
predictability, 114–127

272
Lean Six Sigma Logistics
stability, 129–140
visibility, 141–151
Capacity, 32
Capital, opportunity, cost of, 101, 247
Capital costs, 101
Capital expenditure, 112–113
“Captive thinking,” 222
Carriers, 142, 144, 150, 161, 162, 256
relationships with, 31–32
Carrying costs, 159, 174, 247
Case study, 249–270
Cash
accounts payable and, 108, 110
accounts receivable and, 110
fixed resources and, 82
inventory and, 104, 113
revenue growth and, 110–111
Cash flow, 107–114, 264, 265
capital expenditure and, 112–113
drivers, 108, 109
gross margin and, 111
inventory and, 113
SG&A and, 111–112
statement of, 80
vision of excellence and, 113–114
Cash management, 108
Cash-to-cash cycle, 114
“Catch ball,” 94, 95
Causal analysis tools, 218–226
Causality, 225
Cause-and-effect diagram, 219–220, 221, 226
Cause-and-effect relationship, 77, 78–79,
220
CEO, 67–69, 195
Change management, 82, 195
Changeovers, 253
Channel partners, 129, 142, 143–144, 145
C-level officers, 112, 114
Clutter, 119, 234
Coca-Cola, 12
Collaboration, 153–171, 264, 266
logistics services and, 161–162
project management, 165–171
service providers and, 161
strategic sourcing, 158–165
teamwork, 145, 154–158, 180
waste and, 208
Collaborative Planning, Forecasting, and
Replenishment (CPFR
®
), 32
Common cause variation, 139–140
Common goal, 179, 180
Communication
barriers, 155
change and, 217
conventional methods, 40–41
electronic modes, 41
flow, 93–96, 149–150, 264, 265
infrastructures, 93–96
internal and external, 150
organizational, 93–96
path, incongruence in, 178
person-to-person, 52
strategic, 93–94
vertical integration and, 184
Compass, 7, 66, 167, 168, 196, 268
Compensation, 179
Competitive advantage, 55–56
Complementary skills, 156–157
Complexity, 119, 124–127, 160, 188, 234,
264, 266
Computer systems, 179
Condition of process, 130
Containerization. See Packaging; Waste of
packaging
Continuous improvement, 265, 266
basics, 190–192
communication and, 150
implementation challenges, 192–193
knowledge flow and, 90–91, 92
quadrants, 191
standardization and, 131–132
third-party logistics and, 164–165
training, 194–195
Control, 137–140, 217–218, 264, 266
Control chart, 140, 245–246
Conversion table, 243
Coordination, 264, 266
detailed planning and, 122–123
measurement and, 124
objective, 13
of total cost management, 177
value stream mapping and, 121–122
Core competency, 73
Core processes, 155–156, 180, 181

Index
273
Corporate awareness, 90
Corporate boardroom, 142
Corporate overhead, 111
Corporate performance, 246
Correlation analysis, 225
Corrugated packaging, 50
Cost of capital, 174–175
Cost of poor quality, 210
Cost-per-unit measures, 232
Costs. See also Total cost analysis; Trucking
allocation, 205
carrying, 159, 174, 247
explicit, 174–175, 247
fixed, 37
implicit, 174–175, 247
inventory carrying, 101–102
logistics, 100–101
operating, hidden, 99–100
reduction, 137, 161
risk, 113
savings, 50
service, 113, 247
transportation, 102–103, 150, 160, 176
unsuccessful supplier relationships, 164
variable, 37
visible and invisible, 174, 274
CPFR
®
. See Collaborative Planning,
Forecasting, and Replenishment
Critical feedback, 180, 181
Critical waste, 32
Cross-docking, 38, 165, 177, 232
Cross-functional teamwork, 154–155,
175–176
Culture, 52, 217, 235
Current asset, 104–105
Current condition, 74, 120, 265–266
Current state, 208, 258
Customers
challenges, 263, 265
defect, 186–187
demands, 206
in distinct segments, 203
expectations, 263, 265
external, 72
good, 43, 110
internal, 72
“like-minded,” 203
loyalty, 11
needs, 155–156, 203, 206
overstocks, 256
perceptions, 263, 265
preferences, 246
service, 40, 42, 160, 174
tier 2, 231
voice of the, 146–148, 202–204
Customs brokers, 144
Cycle stock, 75–76
D
Damaged goods, 48. See also Handling
Damage prevention, 50
Data analysis, 226
Data collection plan, 237–238
Data excellence, 89
Data flow, 86–89, 263, 265
Defects, 241–242
opportunities for, 124
Defects per million opportunities (DPMO),
226, 238, 241–244
Defensive behavior, 180
Define, 214
Define-Measure-Analyze-Improve-Control
(DMAIC), 213–218. See also
specific stages
in continuous improvement, 193, 195
explained, 5, 167
improvement initiative, 66
for project management, 165
Six Sigma “backbone,” 213–214, 218
tollgate meetings and, 169
Delivery frequency, 177
Dell, 9, 55, 110
Demand
near-term, 26
seasonal, 21
spikes, 22
Demand planning, 183
Departmental barriers, 155
Departmental dysfunction, 155
Depreciation, 112
Design for Six Sigma, 91
Design of Experiments (DOE), 222
Detailed planning, 122–123

274
Lean Six Sigma Logistics
Deterministic data, 87–88
Discipline, 7, 52, 151, 196. See also
Logistics discipline; specific topics
collaboration, 153–171
systems optimization, 173–184
waste elimination, 185–197
Dispersion, 223
DMAIC. See Define-Measure-Analyze-
Improve-Control
Documents, 125–126, 144
DOE. See Design of Experiments
Domestic supply base, 159, 160
Downstream trading partners, 4
DPMO. See Defects per million opportunities
Drucker, Peter, 10
Dual sourcing, 160
Due diligence, 161
E
Economic conditions, 161
Economies of scale, 182, 203
EDI. See Electronic data interchange
Efficiency, 37, 50, 224
80/20 rule, 209
Electronic data interchange (EDI), 41, 52
Electronic transportation marketplace
(ETM), 30
Enabling processes, 155, 180, 181
Environmental impact, 49
Ergonomics, 49
Error proofing, 186
ETM. See Electronic transportation
marketplace
Event data, 87, 88
Excellence, 13, 56, 72, 74, 89. See also
Vision of excellence
Excess capacity, 32
Execution, 195–197, 265, 266
Expendable packaging, 50
Explicit costs, 174–177
Explicit promises, 10
F
Facilities, waste of. See Waste of space
and facilities
Failure Mode and Effects Analysis
(FMEA), 167, 169–171
Feedback, 180
Ferry service provider, 60
cause-and-effect diagram, 220
DPMO and sigma performance, 244
improvement opportunities, 243
inferior service, 221
Pareto analysis, 209–210
value stream, 207
Financial data, 260
Financial flow, 97–114, 264, 265
balance sheet flow, 103–107
cash flow, 107–114
income statement flow, 98–103
Financial statements, 80, 175
First to market, 11
Fishbone diagram, 219–220
Five rights, 189
5S organization, 116, 119, 234–235
Five-why analysis, 220–222, 226
Fixed costs, 37
Fixed resources, 80–84, 263, 265
Flexibility, 106–107, 132–137, 229–230,
264, 266
Flexible supply chain, 132
Flow, 7. See also Logistics flow; specific
topics
asset flow, 71–84
of communication, 93–96
concepts, 227–232
of data, 86–89
financial, 97–114
fixed resource, 83–84
frequency, 232
improvement, 50
income statement, 98–103
information, 85–96
knowledge, 89–92
leveled, 6, 230–231
logistics, 196
lot size, 232
tools, 227–232
Flowchart, 206
FMEA. See Failure Mode and Effects
Analysis
FOB, 29–30

Index
275
Ford, Henry, 125, 182
Forecast, 20, 183
Forming, 157
Forrester, Jay, 182
Freight. See Waste of transportation
Frequency of delivery, 232
“Freshness,” 11
Functional areas, 178
Functional barriers, 181
Functional silos, 154, 155, 156
Function-oriented jobs, 165
Future data, 87–88
Future state, 208
G
Gantt chart, 167, 168–189, 170, 194
Garbage in/garbage out (GIGO), 215, 226
Generalizable findings, 244
General Motors (GM), 125
GIGO. See Garbage in/garbage out
Global companies, 92, 100
Global dynamics, 142
Global shipment, 144
GoldSMART Products, Inc., 249–270
“Good customers,” 110
Gross margin, 111
H
Handling, 33. See also Damaged goods
Hard goods, 4
Heuristic (nonquantitative) methods, 222
Hidden factory, 133–134
Hidden operating costs, 99–100
Historical data, 86–87, 88
“Hit rate,” 206
Holistic point of view, 100, 156
Horizontal integration, 177–181, 264, 266
Hoshin planning, 66, 94–95
Human capital. See People
Human imperfection, 180
Human resources, 73
I
Idle time, 44
Imperfection, 180
Implicit costs, 174–177
Implicit promises, 10
Improve, 216–217
Improvement, 66, 194, 208, 217, 240
Inbound logistics activities, 176, 247
Incentive programs, 179
Income statement
fixed resources on, 80
flow, 98–103, 264, 265
inventory carrying costs and, 101–102
vision of excellence and, 102–103
Incongruence, 178
Industrial Dynamics, 182
Inferential statistics, 216, 222, 223–226
Information flow, 85–96, 263–264, 265
communication flow, 93–96
data flow, 86–89
knowledge flow, 89–92
Information technology (IT), 53
Ingenuity gap, 195
Integrated logistics network, 129
Integrated supply chain, 79
Internal departments, 178
Internal operations, 4
Internet, 30, 52
Intranets, 92
Inventory, 263, 265. See also Buffer
inventories; Logistics; Safety stock;
Variation; Waste of inventory
buildup, 135, 160
carrying cost, 24–25
cash flow and, 113
control, 263
counterproductive nature of, 113
as current asset, 104–105
flow, 75–80
holding costs, 22–26, 175
not an asset, 107
obsolete, 119
reduction, 146
“right-sizing,” 26
risk costs, 101
service costs, 101
stockkeeping unit, 125–126
storage space costs, 101
strategy, 174
temptation of, 20–22

276
Lean Six Sigma Logistics
turns, 25–26, 104, 105–106
visibility, 118
warehouse utilization and, 179
as waste, 102, 268
Inventory carrying costs. See Carrying
costs; Inventory
Inventory management
entire organization and, 77
fundamentals, 79–80
logistics and, 19
proactive, 75
Ishikawa diagrams, 219–220

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