Section 3. The Logistics Bridge Model

Table of Contents
v
The Importance of the Logistics Bridge Model .......................................... 66
The CEO’s Perspective .............................................................................. 67
The Implementer’s Perspective ................................................................ 69
The Logistics Bridge Model: Getting Started .............................................. 70
Chapter 11. Logistics Flow: Asset Flow ...................................................... 71
People Flow ................................................................................................... 72
The People “Perfect Order” ...................................................................... 73
Organizing People ..................................................................................... 73
Bridging the People Gap .......................................................................... 74
Inventory Flow ............................................................................................... 75
Understanding Safety Stock ...................................................................... 76
Inventory Management .............................................................................. 77
Starting with the Systems Approach ........................................................ 77
Inventory and Cause and Effect ............................................................... 78
Inventory Management Fundamentals ...................................................... 79
Fixed Resources Flow ................................................................................... 80
Identifying and Mapping Fixed Resources .............................................. 81
Questioning the Need ................................................................................ 82
Vision of Excellence and Fixed Resource Flow ..................................... 83
Chapter 12. Flow: Information Flow ........................................................... 85
Data Flow ....................................................................................................... 86
Historical Data ........................................................................................... 86
Event and Real-Time Data ....................................................................... 87
Future and Deterministic Data ................................................................. 87
Data Excellence ......................................................................................... 89
Knowledge Flow ............................................................................................ 89
Continuous Improvement and Knowledge Flow ..................................... 90
Standardized Work and Knowledge Sharing ........................................... 91
Getting Knowledge to Flow ..................................................................... 92
Communication Flow ..................................................................................... 93
Strategic Communication .......................................................................... 93
Hoshin Planning .................................................................................... 94
Operational Communication ..................................................................... 95
Chapter 13. Flow: Financial Flow .............................................................. 97
Income Statement Flow ................................................................................. 98
Logistics Activities and Hidden Operating Costs ................................... 99

vi
Lean Six Sigma Logistics
Logistics Costs Flow Across the Organization ..................................... 100
Inventory Carrying Costs and the Income Statement ........................... 101
Vision of Excellence and the Income Statement .................................. 102
Balance Sheet Flow ..................................................................................... 103
Inventory as a Current Asset .................................................................. 104
Inventory Turns and the Balance Sheet ................................................ 105
The Balance Sheet and Business Strategy ............................................ 106
Flexibility ............................................................................................. 106
Visibility .............................................................................................. 107
Cash Flow .................................................................................................... 107
Cash Flow Drivers .................................................................................. 108
Accounts Payable and Cash ............................................................... 108
Accounts Receivable and Cash .......................................................... 110
Revenue Growth and Cash ................................................................. 110
Gross Margin and Cash Flow ............................................................ 111
Selling, General, and Administrative Expense and Cash Flow ....... 111
Capital Expenditure and Cash Flow .................................................. 112
Inventory and Cash Flow ................................................................... 113
Vision of Excellence and Cash Flow .................................................... 113

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