Business Magazine

Building a Lean Culture: A Critical Step in the Transformation of a Retail Distribution Operation

Posted on the 08 May 2014 by Ryderexchange

How Lean Principles and 10 improvements helped an automotive retailer improve efficiency

In last month’s blog post, I talked about an automotive supplier that was teetering on the brink of collapse. When market conditions and customer demand changed, the company lacked the supply chain flexibility or infrastructure to adapt and overloaded its distribution center with more product lines than it could handle.

Soon, the automotive parts supplier saw complaints reach epic proportions. Unable to address increasing complexity and volumes, the previously stable operation became unstable and unprofitable. As it did, safety, service, and cash reserves plunged.

We came in to partner with the company in turning things around. Step one was to triage the situation before things spun out of control. Once we stabilized the operation, we could focus on helping the retail supplier get on the road to Lean.

Destination Lean: new leadership, systems and processes 

For the retail customer, the second phase of the transformation was to cultivate a Lean culture. This effort focused on three primary goals:

1. Create an incident-free workplace

2. Improve customer service

3. Eliminate waste by empowering employees, improving continuously and engaging leadership

The secret to achieving these goals: reinforcing the staff with new operations and engineering managers experienced in Lean principles and continuous improvement, and educating high-potential managers on Lean. This enabled the company to focus on aligning information systems, standardizing work processes and building a Lean culture.

Top 10 Mile Posts on the Journey to Lean

The new team swung into action, implementing 10 process improvements:

1. Set up more efficient systems for collecting information from the field:

The first step was to set up a system for collecting information from the field. We implemented Management for Daily Improvement (MDI) information centers, comprising whiteboards at GEMBA (on the warehouse floor). The team listed all field failures on the white boards, from inventory overages, shortages or damage to pallets that were either missing or sent to the wrong customer. Next, the team prioritized failures based on the severity of their impacts on customers.

2. Tracked Key Performance Indicators (KPIs) on a glass wall:

To address issues with safety, inventory and quality, the team began tracking KPIs on a glass wall. This included measuring OSHA Recordable Incident Rate (ORIR), Pick/Ship Accuracy, and Carton per Man Hour (CPMH) metrics. The goal was to shift the focus from cost to productivity. The team held daily face-to-face meetings to review and discuss Root Cause Counter Measure (RCCM) opportunities. Just by tracking KPIs, the team improved safety, productivity and fulfillment quality.

3. Revamped the safety incident reporting program:

To reduce the number of safety incidents, we turned control of the incident reporting system over to the team members. While many think that the safety manager “owns” safety, the desired state is for everyone to own safety. To facilitate the shift, we set up systems to engage employees and created a safety council responsible for developing policies, reviewing incidents, and owning floor messaging.

4. Updated the Warehouse Management System (WMS) and codes

To improve output quality, we set up a new Warehouse Management System and changed all codes in the system, effectively automating the entire distribution system. Previously, warehouse staff would use a paper list to pick products for orders and put them in boxes to ship to customers.

Now, the new WMS generates labels and scans products, associating each product with the correct shipper. The new compliance scanning and case picking system ensures quality at the source, establishing standards for field picking. It also enables supervisors to staff operations more efficiently. For the first time, the team can ensure that only what’s supposed to ship goes out. No more, no less.

5. Equipped supervisors to train hourly associates on Lean practices

This step aimed to engage both leadership and operations teams by holding formal classroom training sessions every week and quizzes/exercises to ensure comprehension.

6. Implemented eight safety and ergonomics improvements 

warehouse management

To further improve safety, the team targeted the department with the highest personal risk: pallet building. The team identified risks and reconfigured the space to engineer out risk and build in ergonomics. This entailed changing the heights of where products and pallets were located and moving tools closer to workers to minimize reaching, bending at the waist, heavy lifting and other hazards.

7. Eliminated unnecessary quality checks

Eliminating waste is a key Lean principle. Waste takes many forms, including unnecessary processes. In that spirit, the team replaced an ineffective quality check – weighing pallets – with compliance scanning. Instead of measuring quality by weight, the team scanned boxes, cartons and pallets to make sure the right number of parts was packed inside.

8. Reallocated associates from QA to RCCM

Now that the automated compliance scanning system eliminating the need to weigh pallets to check for quality, the team was able to re-allocated resources to build quality in rather than inspect for it. The workers who had been weighing cartons and pallets, both ergonomically risky activities, were moved to other functions: doubling down on root cause countermeasures as part of a warehouse action (SWAT) team, focused on identifying waste and inefficiency and eliminating it. In a non-Lean environment, the workers would have been let go. In a Lean environment, they received 30 hours of RCCM training, and returned to the floor with new skills, in a new capacity.

9. Created lane assignments for Pallet Build associates

Previously, there wasn’t a structured system for assigning pallets to lanes for picking and pallet building. Parts moved randomly to operators by conveyor belt, forcing workers to run around and crisscross lanes to fulfill orders. To streamline operations, the team assigned workers to dedicated lanes. This not only eliminated unnecessary movement, it improved safety and throughput.

10. Established performance reviews for salaried leads and managers

To create a performance-based culture, the team established one-on-one talent reviews for salaried leads and managers. In the reviews, leaders were asked to identify their goals, skills, and responsibilities, and help build a talent development plan, tying personal incentives to team performance. The new system not only eliminated favoritism and empowered employees, it improved accountability.

By fast-tracking improvements in all ten of these areas, the company completed a transformation in less than a year that normally would take much longer. Want to find out how a Lean culture could help you drive productivity, quality and safety improvements? Learn more here.


Written by Jimmy Fitzpatrick, Group Director of Operations at Ryder. Jimmy is a Lean Operations professional with 15 years of experience in distribution management, manufacturing operations, and behavior-based Lean philosophy. Throughout his career, Mr. Fitzpatrick has played an active role in leading network optimization, talent growth and operational excellence turnarounds for Ryder’s Retail and Consumer Brands customers.


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