The Eight Goals of Lean Material Management
This short video describes the eight main objectives of a Lean Material Delivery system.
The benefits of a well-designed material delivery system are many, and this is a list of the biggest ones, not in any particular order. Some of these goals are “North Star” statements that establish our direction, but may be impossible to fully achieve. Let’s go through them one by one.
Zero Material Shortages
This is a typical “North Star” statement. It is unlikely that an organization will every achieve Zero Material Shortages, except for a brief moment in time. That was however, the direction that we want to travel.
Optimized Storage Space
The amount of inventory stored on the factory floor is directly related to the amount of floor space needed to store it. Being able to run an efficient material delivery system with less inventory will result in a dramatic reduction in the floor space required.
Waste is defined as activity that does not benefit the customer, or move the product closer to the point of completion. Efficient material management has a positive impact on many of the famous seven categories of waste, including the waste of Inventory, Motion, Transportation, Waiting, and Overproduction.
Improve System Productivity
Notice the intentional use of the word “system”. It does no good for the company if efficiency improvement in one department causes a drop of efficiency in another. It is important for the material delivery process to be cognizant of this potential, since there are many opportunities to reduce material handling that will have a large negative impact on other parts of the organization.
Optimize Material Investment/Increase Velocity
These two statements are mentioned together because they go hand in hand. If you want to reduce the material investment, with all other factors remaining equal, there is no other way to do it other than by delivering smaller quantities more frequently. The velocity of material delivery will need to increase, in other words, if you expect to build the same number of products. The formula for calculating Inventory Turnover is: Cost of Goods Sold / Average Inventory.
The material flow system isn’t infinitely flexible, but rather there is a planned level of flexibility within the system to meet changes in customer demand.
Reduce Manufacturing Critical Path Time
A reduction in MCT (Manufacturing Critical Path Time) is primarily a goal for the line design team. Good material delivery will make or break the actual accomplishment of reduced MCT, however.
Drive Collaboration Throughout Value Chain
This goal is somewhat obvious, but it is that no company is an island. A close look at organizations that are leaders in material flow performance typically have strong and long-term relationships with their supply chain. The supply chain is also able to respond to “Pull” signals instead of relying on scheduled deliveries alone. The Value Chain is broader than the Supply Chain, and also incorporates other functional areas including Manufacturing Engineering, Supply Management and Operations.
As we said previously with the "Seven Rights", these eight goals should be Top of Mind when working on a new Material Flow project. They can also be used as the basis for a quick assessment of your Current State, in order to uncover opportunities for improvement.