I talked to Bob Arndt, the Vice President of Lean Supply Chain Solutions at Ryder. Ryder is a leading 3PL. I talked to Bob about Ryder’s use of Lean programs to continuously improve warehousing operations.
Many potential customers want to make sure that a 3PL has a robust continuous improvement culture in place. But it is likely that many 3PLs will claim to have a robust Lean culture. How can a company that wants to outsource their warehousing operations pick a 3PL that really does have strong capabilities here? Bob points out that you can’t learn this about a 3PL by sitting in a conference room. You have to go to a site, look at the warehouse, and talk to workers on the shop floor.
Just looking at the site will tell you something. Is it clean and bright? Is the 3PL using visual management? Do floor workers know the different forms of waste? Have the participated in Kaizen events?
A core concept in lean management is that worker’s need clearly defined expectations, for example on how many pallets they should be able to pick in an hour. The workers then need to know how they are doing against those goals on a regular basis as the day progresses. Being able to see ongoing performance in Lean is “visual management.”
At a Ryder site you would see dry eraser boards placed in highly visible places on the warehouse floor. Managers would post on that board on an hourly basis how each team member in their group is performing to standard by coloring the box next to the worker’s name red, yellow, or green. If a team member had a red box, they would be expected to add a comment to the board. Perhaps the comment would be “I will pick up my pace.” But comments also might provide opportunities to improve the flow of the warehouse. For example, if team members post something similar to “Congestion in Aisle 4 – five pickers in the aisle,” then this might be a good candidate for a kaizen event (improvement project). Noncompliance should be viewed as an opportunity for improvement, either for the individual or the warehouse as a whole.
Bob and I talked a bit about the importance of creating an atmosphere where people are the most important assets, that folks on the floor know the problems, without their ownership the gains achieved in a Kaizen event are apt to be lost after two or three months, and the importance of celebrating successes. But that discussion did not much impress me; that is all standard Lean messaging.
What helped to convince me that Ryder achieves bottom up engagement was our discussion of taking over a client’s warehouse operation. In other words, using the client’s warehouse and people, but taking over management responsibilities. According to Bob, when they take over a warehouse’s staff they don’t need to hire new people. The existing workers know the business and they already have the basic warehousing skills necessary to do their job. But the warehouse does need Lean leaders.
Every day starts with a shift meeting. Discussion items include how things went the previous day, a safety message, the coming day’s distinctive challenges. In discussing how things went the previous day, floor personnel are asked what did not go right. How might things be improved so those problems don’t reoccur? Bob points out that once you engage people and get their suggestions, managers have to execute on those suggestions. The suggestions are written on the board, and it is management’s job to assign an owner to that suggestion and get an answer by the end of the week.
Finally, Lean needs to apply to all processes. So, for example, a company looking to outsource warehousing should insure that the 3PL they work with has robust risk mitigation capabilities associated with transitioning a warehouse operation from the customer to the 3PL’s oversight. The Ryder risk mitigation process is called Collaborative Due Diligence (CDD). The CDD process is based on hundreds of startups. It is a two day process where key Ryder IT, Human Resources (HR), Finance, and Warehousing personnel sit down with the customer’s IT, HR, Finance, and Warehousing personnel. For example, HR folks would discuss the hours of operations, the pay process, etc. IT would discuss what percentage of shipments are preceded with Advance Ship Notices, what types of RF guns are used, whether there is good RF coverage for the whole warehouse, etc.
This Collaborative Due Diligence process itself is the result of continuous improvement. When something has gone wrong in the past – for example Ryder may have assumed that all shipments were preceded by ASNs, when only 40 percent of inbound shipments came in that way – this item is added to the list of topics to be discussed in a future CDD engagement.
The Lean approach to continuous improvement always needs top management support; it always has to be partly top down. But Bob pointed out that to make Lean a core part of the culture, it also has to be bottom up. Ryder works very hard to insure bottom up involvement in Lean.