Armanino Blog

Lean Logistics and Six Sigma Methodology

by Scott Copeland
September 27, 2012

A successful distributor must be able to reduce overall costs and cut its time to market, all while improving the quality of its delivery. What is the secret formula for achieving these goals? Taking the practice of lean logistics management and mating it with Six Sigma process improvement methodology.

To be lean in logistics management you must eliminate costly distribution process waste and improve the speed and flow of goods throughout the supply chain. Therefore, a top waste-reduction priority of lean logistics focuses on reducing inventory to the minimum required levels for successfully fulfilling customer needs and effectively streamlining distribution processes and delivery times. Emphasis is placed on carefully balancing timely delivery with reducing overall total cost of inventory ownership.

Six Sigma methodology complements the practice of lean logistics management by focusing on achieving near perfection in business processes through the elimination of process variation or defects for virtually any industry today, including wholesale and distribution.

In applying the Six Sigma methodology to lean logistics management in distribution, the focus is on eliminating variation in distribution processes to improve overall delivery quality in terms of accuracy and reliability.

Otherwise, process variation in distribution results in rush deliveries to fulfill customer orders and stockouts. This translates into costly distribution and customer dissatisfaction. A typical bandage solution then is hoarding safety stock. Greater reliance on safety stock, of course, contributes to higher inventory storage and handling management costs.

In effect, successfully combining the lean logistics management concept with the Six Sigma methodology requires a commitment to eliminating costly excess inventory and process variation. Mastering the practice of lean logistics management becomes increasingly important with globalized distribution, for which the supply chain is longer in both distance and time and involves numerous business partners and handoffs.

Combining lean logistics and Six Sigma methodology principles typically requires third-party help. Make sure you consult with a firm that specializes in supply chain management and is familiar with the ins and outs of lean logistics and Six Sigma methodology.

September 27, 2012

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Scott Copeland - Partner-in-Charge, Audit - San Francisco CA | Armanino
Partner-In-Charge of Audit
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