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 Introduction to Lean
Processes in the Warehouse

David Frentzel – APL Logistics

Charlie Jacobs – APL Logistics
July 9, 2010

© 2010 APL Logistics

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 Introduction to Lean

Lean Beginnings
• Historically, firms have been organized in
functional silos with poorly defined processes
with many non-value-added activities.
• Successes at Toyota and other world class firms
have defined an ideal model for operational
efficiency, and a means to pursue that model.

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 Introduction to Lean

Lean Beginnings
• Lean thinking demands an organizational
culture that is intolerant of waste in all its forms.
• Many companies embed the Lean discipline into
their Six Sigma deployment.

Lean is achievable by everyone!

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 Introduction to Lean

What Lean is:

• Lean is based on the premise that anywhere
work is being done, waste is being generated.

Lean philosophy is a relentless focus on the

identification and elimination of waste.
• A team based process to quickly help a team
understand a business process, identify and
eliminate waste to increase efficiency and
effectiveness.

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 Introduction to Lean

What Lean is:

• A process that can be used at any level of the
organization and applied to any process or work
area.
• Primary focus on improving efficiency and cycle
time.

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 Introduction to Lean

What Lean is not:

• A long, complicated process based on a lot of
statistical analysis.

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 Introduction to Lean

Why Companies Use Lean

Reduced Increased
• Waste • Quality
• Lead time to customer • Process capability
• Process cycle time • Productivity
• Inventory • Safety
• Cost • Worker morale

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 Lean Focus – Reducing Waste

Typically 80% of what is

done in a process is Non-
Value Add (NVA)
NVA
Only 20% of what is done
would your Customer really
be willing to pay for – Value
Add (VA)
VA

All Non-Value Add work is Waste!

9

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 How VA / NVA Can Impact
Ability to Improve a Process
• Traditional thinking has focused on technology,
additional resources or working “harder” to
improve productivity.
• Very often the time actually spent Adding Value
to the product or process is a small percentage of
the overall cycle time.
• The largest percentage of the cycle time, Waste,
usually goes untouched.
• Improvement results:
– Incremental at best

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10
 Benefits of Lean - 2 Types
• “Hard” Benefits
• “Soft” Benefits

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 Hard Benefits of Lean
Faster
• Removing waste, complexity, and bottlenecks
improves process flow and means things can be
done faster and at a more predictably
Cheaper
• If there are fewer unnecessary steps, less
complexity, and things get done faster because
of better overall flow, then fewer resources will
be consumed
• Savings may go right to margin, or be shared with
customers

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 Hard Benefits of Lean

Better
• Complexity = more opportunities for defects
= reduced service quality
• Reduce complexity, quality improvements often
are a natural by-product

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 Soft Benefits of Lean

Lean, done correctly, engages a broad population of

the enterprise in constant, incremental
improvements to the business
• Project and results centric, not training centric
• Accessible to the entire enterprise, from process
operators to the CEO
• Common sense, practical approach to problem
solving that is applicable to a large percentage of
challenges that process and transactional oriented
businesses face

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 Soft Benefits of Lean

Customer Experience
• Benefits are tangible and can be leveraged to
enhance the service you provide to customers
– Lower the risk of attrition, increase share of wallet

Risk Mitigation
• Smoothly operating, well characterized processes
make the job of bidding and pricing engagements
simpler and less risky

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 Benefit Examples of
Significant Projects

Storage density project

• Focused on increasing density of storage to avoid
overflow
• Saved the customer over US$1M annually
Wood pallet consumption project
• Focused on maximizing utilization of pallets
during picking process
• Saved the customer over US$700K annually

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 Benefit Examples of
Significant Projects

Shipping accuracy project

• Focused on improving the quality control of the
shipping process
• Saved the customer and APLL over US$145K
annually
Clerical efficiency project
• Focused on improving the clerical processes to
reduce cost
• Saved the customer and APLL over US$98K
annually

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 APL Logistics’ Approach

• Build a program – APL Logistics Continuous

Improvement (ACI)
• Set an expectation that all associates are engaged
• Train them
• Set expectations of results from their efforts
• Track their progress and the results
• Financially validate the results
• Establish incentives and rewards

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 ACI Process

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 ACI Program
• Sustainable structured program that drives the
culture of the organization
• Identify roles in the organization
• Identify the methodology and tools that most benefit
the business
– Use pull system to make additional tools available
based on need
• Identify deliverables from practitioners of the
program
– Built templates to simplify this for practitioners

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 ACI Program

• Align the activity to business objectives

– Results of the program tied to business plans

• Track the activity

– Use a web based tool to track and share projects

• Reward based on results

– Annual project competition with cash awards

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 ACI Project Life Cycle
Lean Project Phases

n
tio
e

e
at

ta

n
at
St

en

io
St

at
nt
r

em
e

re

liz
• Simplified approach

re
rt

tu

pl
ha

ea
ur

Fu

Im
C

R
• Quick Wins 1 Week 4 - 6 Weeks 12 Months

• Realization lasts 12 months to ensure improvements

are sustained
• Financial validation and formal project review occurs
in Realization

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 ACI Lean Roadmap

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 ACI Project Deliverables
Project Report Out
• Soft copy of the project in PowerPoint
• Captures all of the tools used on the project

Formal project completion review

• Review project with management and finance

PowerSteering project tracking application

• Track activity with expected and actual results
• Share projects across organization

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 ACI Training Workshops

Basic Lean Practitioner Workshop

• Basic Lean Roadmap
• Team level training working on real project in
workshop
Time: 16-20 hours

Champions Workshop
• Management level training
• Focus on defining projects, Value Stream Map and
Project Prioritization
• Overview of Lean tools on Basic Roadmap
Time: 8-12 hours

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 ACI Training Workshops

Six Sigma Green Belt Certification

• Full DMAIC training
• Actual project worked on during and between
sessions
Time: 8 days, 2 sessions

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 ACI Incentives and Rewards

• Every project success is celebrated within an

operation
• Annual project competition
– Select the best projects completed during the year
– Monetary award to team members
• Annual incentive plan
– Targets established based on results of activity

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 Tools Used – Facility Level

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 Case Study

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 Returns Project
Charter Statement

Problem Statement: Start / Stop Points for Project:

During 2008, the average cycle time for processing returns was Starting on November 17 and stopping no more than 8 to 10
45 days. There is a gap of 33 days from the desired cycle time weeks out for implementation.
representing US$307,000 of cost of poor quality.

In Scope:
All returns from customer - office products arriving to
Warehouse #4
Goal Statement:
Decrease the cycle time for processing returns to 12 days
average. This improvement represents 70% of the gap Out of Scope:
representing US$221,000 of reduced claims charges. The Returns from any of the other divisions from customer.
process improvement will be completed by the Jan 26, 2010. Example:
Co-packing

Project Team:
Champion: Ignacio A. Szymanski (GM)
Team Leader: Manuel Flores
Team Member: Jonathan Linares
Team Member: Ignacio Olvera
Team Member: Sup Returns Newell
Team Member: Sup Returns APL
Team Member: Luis Juárez

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 Primary Metric Chart
• Primary Metric
– 2008 Cycle Time per Return . . . . . . . . . 45 days
• Secondary Metrics
– 2008 Inventory Adjustments . . . . . . . . . MXN $4M
– Headcount . . . . . . . . . . . . . . . . . . . . . . . 150 people
– Pieces processed per headcount . . . . . 29,235
Newell-Rubbermaid Returns VSM

Value Enabling Functions

Business (VOB) Customer (VOC)
Customer
HR IT Finance Sales OPS
Service Efficiency Metrics
Returns Cycle Time
Current Target Efficiency Metrics
45 days 12 days # of documents processed ###
Current Target
###

Enabling Systems
Effectiveness Metrics Current Target Effectiveness Metrics Current Target
Inventory Accuracy ##% ##% Budget Compliance #% #%
APLL
SICA MAPICS
WMSp

Credit Note
(VOP)

Receipt Receipt Audit Separation Creation Storage

Process Owner: Process Owner: Process Owner: Process Owner: Process Owner:
Description: Unload staging of Description: Auditng of returns Description: Separate good from Description: Create credit note Description: Putting good product
returns received bad product for return into inventory
Efficiency Current Efficiency Current Efficiency Current Efficiency Current Efficiency Current
Receipt CT 2 hrs Audit CT 10 hrs Separation CT 32 hrs CT to generate 2 hrs Process CT 2 hrs

Effectiveness Current Effectiveness Current Effectiveness Current Effectiveness Current Effectiveness Current
Rec Accuracy ###% Audit Accuracy 100% Separation Acc ##% Credit note Acc 100% Inv Accuracy ##%
Budget compliance ##% # of documents processed Budget compliance ##%

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 Tools Used – Process Mapping
Current State Process Map DAILY PROCESS MANAGEMENT DAILY PROCESS MANAGEMENT DAILY PROCESS MANAGEMENT DAILY PROCESS MANAGEMENT
Priority Process: NR Returns Process No: Date: 11/20/09 Pg: 1 of 4 Priority Process: NR Returns Process No: Date: 11/20/09 Pg: 2 of 4 Priority Process: NR Returns Process No: Date: 11/20/09 Pg: 3 of 4 Priority Process: NR Returns Process No: Date: 11/20/09 Pg: 4 of 4

Process Owner: APL Logistics Process Customer: Newell-Rubbermaid Process Owner: APL Logistics Process Customer: Newell-Rubbermaid Process Owner: APL Logistics Process Customer: Newell-Rubbermaid Process Owner: APL Logistics Process Customer: Newell-Rubbermaid
Ausencia
Process Flowchart
Process Flowchart Process Flowchart Process Flowchart de
conocimi
RESPONSABILIDADES APLL RESPONSABILIDADES RUBBERMAID RESPONSABILIDADES APLLento para
RESPONSABILIDADES APLL RESPONSABILIDADES RUBBERMAID RESPONSABILIDADES APLL RESPONSABILIDADES RUBBERMAID
los
criterios
de
Start B
D clasificac
A
e -# de tarima. C D ión de la E
La -Nombre del cliente. mercancí
El recibidor del
m
mayoría Newell rubbermaid -Total de cajas. a.
área de Arriba el or
de las comunica a -# de devolución.
devoluciones transporte al a Se inicia la captura
devoluci APLlogistic la Se identifican las del credit memo.
registra en Excel centro de e Se reacondiciona Se hacen cajas
ones NO llegada de las tarimas con los
los datos de la distribución n Se realiza el el producto para con piezas de las
traen la devoluciones. siguientes datos.
devolución. a conteo mediante No Es vendible? darle su mismas
docume escáner presentación características.
ut API entrega la
-Nota de cargo. ntación documentación al original.
El transportista
or
-Remisión del cliente. complet Se lleva la coordinador para
entrega al -Formato autorizado por iz
a y se mercancía al área la aplicación del Físicamente se Si Se lleva la
encargado de el departamento de ventas a
generan de almacenaje. crédito memo. empaca y para fines Se etiqueta la mercancía
devoluciones los (OBLIGATORIO) ci
documentos de la conflicto de sistema se da de Se realiza el mercancía físicamente al
o baja en el almacén conteo mediante reacondicionada. almacén de WIP.
mercancía. s al
n #4 y se da de alta en escáner
ingresar El almacenista Una vez
e el #9.
la separa las cajas escaneada cada
El supervisor del
s. pieza dentro de la Con respecto a
mercanc por nota de Se envía al
área de Coordinador crédito. línea se separa la departamento de sistema se da de
Trae la ía.
devoluciones Lo autoriza el informa a APIl de mercancía en tres recibo. baja del almacén
documentación No No #4 y se hace el
notifica al coordinador? regresar el categorías.
completa?
coordinador deLa transporte. traspaso al centro
docu
newel-rubbermaid. Envía en lotes de de costos 525.
diez tarimas a la Se da de baja en
ment
Si zona 1 del área de Falta de el almacén #4 y se
ación da de alta en el #1
devoluciones. capacitación y
No Anaranjado Desecho Categoría? Rojo (WIP)
Se captura la nota compromiso del
da el
de cargo para personal al
generar el folio de detall Si Se ingresa el escanear las piezas Fin
Newell- e de
numero de cliente ( solo escanean un
Rubbermaid. las Verde Disponible
y folio para cargar código y digitan el
descr en SICA numero de piezas).
ipcio Se envían las Se envían las Se envían las
El capturista nes Demora en la cajas de los pallets cajas de los pallets cajas de los pallets
elabora reporte. ni activación de los a la mesa de a la mesa de a la mesa de
Se escanea pieza Al no estar trabajo. trabajo. trabajo.
canti códigos en la base
por pieza en SICA. actualizada la base
dade de datos.
s de datos se
APLlogistic
devu generan conflictos Se abren las cajas Se abren las cajas Se abren las cajas
descarga el
eltas Con respecto a la al generar la de los mismos de los mismos de los mismos
contenedor.
parte inerfase del WMS & sku's. sku's. sku's.
gene administrativa el
ra ERP
capturista genera
Valida el numero irreg la interfase.
de bultos vs. la ulari Se clasifica en Se realiza el Se realiza el
nota de cargo. dade vendible y no conteo mediante conteo mediante
vendible. escáner. escáner.
sy Crédito y
El supervisorconfu
del área Hay errores en
API informa a planeación
elabora un reporte la clave del
sionede Si crédito y reactivan o activan
incidencias e informa al cliente o esta
s Coordinador suspendido?
planeación el cliente o el C D E
Son correctas coordinador newel- producto.
No informa a
las cantidades? rubbermaid y sobre el
Costumer Service.
talón del transportista
escribe la diferencia en No
bultos.
Si
B

Future State Process Map DAILY PROCESS MANAGEMENT DAILY PROCESS MANAGEMENT DAILY PROCESS MANAGEMENT
Priority Process: NR Returns Receipt/Credit Process No: Date: 11/20/2009 Pg: 1 of 2 Priority Process: NR Returns Receipt/Credit Process No: Date: 11/20/2009 Pg: 2 of 2 Priority Process: NR Returns Inspection Process No: Date: 11/20/2009 Pg: 1 of 1

Process Owner: APL Logistics Process Customer: Newell-Rubbermaid Process Owner: APL Logistics Process Customer: Newell-Rubbermaid Process Owner: APL Logistics Process Customer: Newell-Rubbermaid
Process Flowchart Process Flowchart Process Flowchart

APL Logistics Newell-Rubbermaid APL Logistics Newell-Rubbermaid APL Logistics Newell-Rubbermaid

Para la clasificación de
A mercancía vendible y no
Start Start
vendible se pide Vo Bo de
Se escanea pieza Value Add
calidad NR y asi no genera
por pieza cada errores de ingreso de
producto por sku Inventory Product received mercancía obsoleta.
Position trailer in Scan merchandise in inspection area Inventory
Yes
the dock door into SICA
Inventory Inventory
Inventory Inventory

Rejected and Finance release

Documentation
Coordinator document the product to be
Request Coordinator Scanned Inform NR returns Inform NR Is sellable? No sent to NR
Was Arrival Advise Newell- No verifies if product Activate? No generated to send sent to obsolete
No authorization to Authorizes? No returns the trailer correctly? coordinator Finance Finance for review
scheduled? Rubbermaid can be activated to obsolete and written off
unload to the customer

Inventory
Yes
Yes
Verify quality of
End Customer
product Product is
Coordinator Service
Discrepancy at Inform NR returns destroyed
Yes informs Customer credit/
Unload the trailer Yes SKU level? coordinator Sistemas APLL & collection
Service
Planeación negotiation Capture product in
Newell autorizara trabajan en SICA
y notifica vía mail No conjunto para
los arribos y agilizar la
Validate number of recepción de activación de
Generate the Print label for
packages versus
mercancía. physical interface SKUs con receipt of product
the cargo note Inventory
Inventory problemas y
generar la
interfase para
Verify receipt
Inform the NR Coordinator
obtener la nota de physically
Keying errors? Yes Correct errors
A difference? Yes Returns informs Customer Secrédito.
agiliza la
Coordinator Service captura de la nota
Inventory de crédito en Put away in
No conjunto con el available bin
No
coordinador de
devoluciones
Credit and NR
APLL assigns
Planning
conre-el apoyo del Verify that an
returns # with date Client Inform NR Credit
Yes activateadministrativo
client or de interface is
or arrival and suspended? and Planning
activate client/ generated
attaches to pallet
product
devoluciones
APLl. between SICA and
Value Add MAPICS
No
Product in
warehoused in Credit memo
returns area Enter product into
initiated inventory control

Merchandise count Enter

recorded documentation to NR issues credit End
End
credit via credit note to client
memo

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 Tools Used - Waste & Constraints;
Spaghetti Chart; Fishbone

Wastes & Constraints Spaghetti Chart

Fishbone Diagram
MATERIALES MANO DE MEDIO
OBRA AMBIENTE

Falta de liderazgo.
Falta de motivacion.

Rotacion del personal.

Agotamiento del personal por exeso de calor.
Falta de entrenamiento
Instalaciones no aptas
Retraso en la entrega del material de empaque. Error en la captura
Lay out deficiente o sin definir
DIFERENCIA EN EL
TIEMPO DE
Falta de autorizacion para obsoletos por parte de finanzas. PROCESAMIENTO DE
Limitacion de usuarios en el sistema LAS DEVOLUCIONES.
Demora en las autorizaciones de ingreso por parte de NR.
Error en las interfases (entre Mapic's & Sica)
Devoluciones NO programadas
Pc no habilitadas con el WMS
Almacenamiento de producto sin procesar.
Base de datos del Wms sin actulizacion.
Burocracia en las autorizaciones.
MAQUINAS

METODOS DE
TRABAJO

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 Implemented Solutions

• Implemented formal staging area for receiving

• Created production lines scanning all pieces
• Implemented use of counting scales
• Created new segregation process using color
codes
• Track and report by customer
• Check point to validate transaction between ERP &
WMS
New Layout:
• Daily reports to Finance
Mesa de trabajo

Mesa de trabajo Mesa de trabajo

Mesa de trabajo Mesa de trabajo

5 mts

27 mts

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 Post Project Metrics

Primary Metric
Cycle Time per Return

2009

2008

Time (days)

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 Post Project Metrics

Secondary Metrics

2009

2008
2009

2008
2009

2008

2008

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 Realized Benefits

Financial Benefits
• Reduced Inventory Adjustments
MXN $562,000
• Reduced headcount required in process
MXN $488,000

Total Savings: MXN $1,050,000

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 Realized Benefits

Non Financial Benefits

• Employee morale greatly improved
• Increased customer satisfaction
• Faster re-integration of inventory into stock for
new orders
• Cleaner inventory reconciliation with customer

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 Audience
Questions & Answers

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