What’s This Thing Called Lean?

By Steve Kane

My introduction to lean occurred many years ago while working in the motorcycle business.  I went to work for a BMW Motorcycles dealer in California as a parts and accessories specialist.  My job was to sell cool motorcycle stuff to motorcyclists.  I thought this was perfect because I was a pretty serious BMW rider myself.

My first day with the company, my boss told me that one of the company’s principles was to improve everyday.  While this was one of the company’s principles, there really wasn’t a systematic approach to it.  The people there didn’t speak Lean.  I had no idea what it was.  Fundamental lean concepts and tools were foreign to all of us.  Continuous improvement, though, was a frequent discussion.  We often asked “how can we be better?”

This was 2001 when internet retailing was still pretty new for the motorcycle industry.  This shop had the largest online presence for BMW Motorcycles specific products in North America, if not the world, at the time.  There was a lot of product coming in and a lot of product going out through a single 36” wide door every day.

Work Was Harder Than It Needed To Be

We placed large stock orders weekly from some suppliers and monthly from others.  This created a wave of work for everyone in the parts department.  Receiving and stocking larger orders was a huge burden for all of us.  This was time consuming work that often didn’t get done the day it started.

Parts were on workbenches, desks, the floor, the customer service counter, and some were even on the stock shelves where they belonged.  The constant state of work being undone created a stressful environment where people were continually unsuccessful.

The product storage area had been rapidly expanding for several months.  The interesting thing was that inventory had grown faster than sales.  We were bringing much more product than we were sending out.

The few of us who worked in the stock room were stepping over product and bumping in to each other day in and day out.  It seemed we received customer complaints daily related to on-time delivery.

We Needed To Find A Better Way

It seemed intuitive that product should flow like water.  Anything in the shop that disturbed the flow would create ripples that resulted in customer dissatisfaction, damage, loss, and frustration.  The team decided to create flow to simplify our lives and better serve the customer.

The first step was to make product flow in and out of the single door.  We installed wall mounted workbenches on either side of the door.  The workbenches were wall mounted because table legs would waste our limited floor space and disrupt flow.  From the inside of the door looking out, the space to the right of the door was for receiving and the space to the left side was for shipping.

Standard Work

We set up ground rules for the team.

  1.  Incoming product was never to be placed on the shipping side of the room and outbound shipments were never to be placed on the receiving side of the room—NEVER!

  2.  Stock orders would be placed daily to reduce order size and simplify receiving.

  3.  All receiving would be completed the day the order arrived at the shop regardless of overtime.  No exceptions.

  4.  Once a team member touched an item in receiving, that product could not be put down anywhere except in its proper stock location.

  5.  Once a team member touched an item included in an outbound order, that item could not be put down anywhere except in an order fulfillment bin and only with the invoice/packing slip.

  6.  Every customer order that came in would be packed and shipped the same day.  No exceptions.

  7.  The shipping and receiving counters were to be clean and empty at all times.  Anything on the receiving counter was to be put away the moment it was seen.  Anything on the shipping counter was to be packed and shipped the moment it was seen.  No exceptions.

  8.  The stock room was to be cleaned when the store closed daily.  Nothing on the floor except furniture at the end of the day.

Creating Flow

Within a couple of days our stock room was cleaned up and product began to flow.  After a few weeks the department ran like a well oiled machine.  We were fanatical about the rules.

With shipping and receiving under control, we were able to shift our attention to inventory.  We had tons of product that wasn’t selling and at the same time out of stock on items that could sell.

We came to learn that more than an 85% order fulfillment rate (fulfilling customer demand without a special order) required an unreasonably large inventory and created enormous waste.  Higher than 85% required stocking of items that would sell only once every two or more years, if they sold at all.  We went after inventory with a vengeance.

Instead of carrying things we thought or hoped would sell, we based our purchasing decisions on quantifiable demand.  Because we were ordering daily, we went from months of inventory for a given item to just a few days.

Any items in stock for more than 12 months (and there was a lot them) were listed on eBay with a $0.01 starting bid and no reserve.  Get rid of it first.  Get paid for it second.  In one year, the inventory was reduced by 33% while sales steadily grew.

Success

Ultimately, the shop ran much more smoothly.  Inventory turns increased; sales increased; on-time delivery improved; and the work was easier.

It wasn’t until a couple of years later that I went into manufacturing and learned about things like the seven wastes, 5S, standard work, single piece flow, and lean in general.

---