The 2nd installment of this 8-part series on reducing the waste in manufacturing is Transportation. Transportation is considered by many as the most costly part of the supply-chain. Thus, it is also a huge area from muda to hide in.
Riddle: What am I that runs so fast? Carrying a load and giving a blast. Watch as I flow right under the overpass. What am I ?
The Value In Transportation
Transportation in itself can become complicated. Due to the many moving pieces, waste is prone to happen.Transportation can entail moving a product a couple 100 feet to moving a product 1,000s of miles away across road, rail, sea, and
air.
Transportation is not a function that adds value to your end product but, it plays a huge role in the Cash - Conversion Cycle ( a cash flow calculation that measures how quickly a company can convert their investment in inventory, resources, product, etc. into cash.) It also contributes to customer satisfaction. Delayed delivery times is a common complaint that many disgruntled clients have with their provider.
If you look at the Toyota Production System ( TPS ) and the Lean Manufacturing philosophy, you will notice that many of their suppliers have footprints near their manufacturing facilities.
This is a strategy aimed at reducing the risk, costs, and waste of transportation.
The Risks of Transportation
Transportation lends itself to a fair amount of risk within your supply chain.
When your product becomes mobile, variability and loss of control becomes more of a problem. You open yourself up to the risk that your product will be lost or damaged in transport. You risk the delay of the supplies being delivered for production that will increase lead times in your supply chain. Transportation can also slow down operations within your production lines. This halts the manufacturing flow which forces employees to sit idle.
Costs of the Waste of Transportation
Transportation can cause an organization to hemorrhage money. There are many costs involved in transportation. You have the costs of owning or renting the material handling equipment.
You have the costs of fuel needed to run this material handling equipment. To name a few more costs, you have: staffing expenses , training expenses , safety precautionary expenses , the costs associated with extra space for the movement of materials, etc.
Causes of the Waste of Transportation
There are many causes that contribute to the waste of transport. Excess inventory can be a waste of transportation. Manufactures tend to over purchase due to the fear of not having enough supplies for production or delays slowing down the manufacturing rhythm.
This is known as the " Push - Purchasing" Cycle.
This is the most common purchasing philosophy that manufactures use. The supplier produces " x" amount of product and sells it the manufacturer at a reduced rate due to the bulk purchase. The manufacturer sees it as a cost savings.
What happens when market demands shift ?
What happens when historical sales data used for forecasts are not accurate ?
The manufacturer has over produced a product that they cannot easily move. The inventory storage costs become higher and space becomes limited.
Another main waste in transportation is layout.
The layout of an organization's facility often leads to the need to transport product. For example, you have specific areas for functions such as welding, pressing, molding etc. The product is transported from one station to another.
An inefficient layout causes wasteful movements that add up into wasted time and costs.
How RBW Can Help You Eliminate or Reduce Transportation Waste
- Supplier - Pull Management: This is a concept that RBW has perfected for our clients. It's simple. It targets the waste found in overproduction due to excess inventory. RBW projects the amount of supplies needed for production based upon the production levels of the manufacturer. This allows the supplier to level their production and ensures that the correct amount of supplies are in stock when needed. The result is a harmonious cycle in which the manufacturer only purchases the supplies they need and the supplier can feel confident in their productions without the fear of peaks and valleys due to demand.
- Warehouse Management: Improving factory layout through the use of value stream mapping and process mapping can give huge savings in time and money, often with little cost involved relative to the savings to be made. This requires you to have production lines or cells that contain all of the value adding processes rather than a functional layout. This is another area that your 3PL can be an asset. 3PLs are in the business of getting your product from A - Z as efficiently and effectively as possible. Part of this process typically includes warehousing. It is not out of the realm of possibility that your 3PL can run and consult you on the most optimum factory layout. On - Site Services is a service that RBW offers.
- Transportation Rates: Due to the strategic partnerships and logistical networks that we have with carriers and freight - forwarder, we are able to negotiate for better rates than you possibly can.
- Software Investments: Great 3PLs leverage technology to gain more visibility and insight into the supply-chain. The investment into these types of software can be costly. Leverage them and their knowledge to provide the visibility that is need to make sound decisions.
- Experience: Great 3PLs have great process, procedures, management, and continuous improvement initiatives that allow them to consistently find ways to reduce the waste. Use our expertise.
RBW provides you with the visibility and expertise needed to make smart decisions to reduce the muda found in transportation.
Answer: A Train
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