Why Does Your 3PL Need to Follow Lean Production Principles?

Why Does Your 3PL Need to Follow Lean Production Principles?

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Despite the clear benefits of lean production principles and more widespread use across various industries, it is still uncommon to see in the warehouse. Whether you’re talking about internal operations or third-party services, it doesn’t matter. Lean production and development can offer efficiency improvements, cost savings, faster delivery times and higher customer satisfaction ratings.

Today’s speed-intrinsic landscape all but demands lean production to offer faster fulfillment times, if only for the customers alone. That’s precisely why all 3PL or third-party logistics providers should have well-established lean production processes or should be working toward implementation if they don’t already have these in place.

Why 3PLs Must Go Lean

Creating a lean operation, especially within a warehouse environment, is not something that happens all at once. It takes a considerable amount of time, planning, organization, new tools and, most of all, people.

The entire team must be on board, with every member playing the role of a problem-solver. Leadership must evolve, as well, to support the rest of the staff. The ultimate goal is to reach a level of continual improvement, or in other words, an endless and ever-growing level of efficiency.

Here are just a handful of results gained when implementing lean practices in the warehouse:

  • Decreased inventory levels
  • Improved customer fill rates
  • Improved inventory and picking accuracy
  • Decreased carrying and handling costs
  • Increased use of assets
  • Better team and personnel management
  • Higher customer satisfaction ratings
  • Reduction in theft, damaged or misplaced goods

Furthermore, because of how 3PLs operate — handling other parties’ goods, by definition — they have a responsibility to protect and foster adequate handling techniques. Rather than merely reacting to orders that come in, every operation should service a smarter, more efficient flow. 3PLs, above all, need to do this because they are working with so many partners or businesses.

What Does “Lean Production” Genuinely Mean?

It’s clear that “lean production” is a buzzphrase used in many different ways to describe an efficient and minimal operation. The question is, what does it genuinely mean to third-party logistics providers? What does lean look like within the context of 3PL activities, specifically?

The definition of “lean” is broad. It applies to many different industries and applications, but what it means within the warehouse is entirely different than what it means in, say, manufacturing. That is, ultimately, because the tools, workers and strategies vary so widely between these industries.

A lean warehouse environment honors the five basic principles of lean operations: value, flow, pull, perfection and value stream. Reports have identified the continuous improvement and visual management principles as most important in any warehouse.

Converting to a lean operation does not necessarily mean implementing a single practice, technique or even tool. Instead, it’s an entirely different way of doing business, of carrying yourself and the team. Lean principles should engage staff — all staff, from the bottom up — so they take part in a continuous improvement process. Every associate or employee must be able to identify the problems they encounter and come up with a solution, but not always on their own. They should be able to consult and propose issues to the rest of their team and leaders, with everyone working to improve the operation as best they can.

Standard lean tools like Kaizen, line-balancing, visual management, error proofing and value stream mapping can service this idea at various stages of the operation.

The result is a well-oiled machine that is always moving forward, continually improving and regularly seeing the benefits. Keep in mind, however, that doesn’t necessarily mean benefits will happen overnight, especially during the earlier stages of adoption.

How to Spot Lean Operations

Just because a company or third-party logistics provider claims to be “lean” does not mean it’s true. There are some things to look out for when selecting a 3PL, particularly when it comes to identifying an efficient operation.

  • Inventory: Proper inventory management is a staple of lean production. A 3PL should be coordinating directly with suppliers to keep regular shipments coming in. As a result, the production line should flow smoothly, with no hiccups or pauses whatsoever. 3PLs should also do the opposite and make sure there’s no over-abundance of inventory going to waste.
  • Lower costs: By outsourcing warehouse operations to a third party, businesses will already see a considerable reduction in operating costs. The savings shouldn’t end there, however. 3PLs should also be providing ample storage and transportation needs to eliminate most of the responsibility associated with internal inventory management processes.
  • Faster delivery: Efficient operations will see a massive boost to delivery and fulfillment times. With 3PLs, businesses should see much higher success rates than they would internally. In an ideal setup, those rates will continue to improve over time.
  • Value stream engagements: How many value stream engagements did the 3PL map? How did those impact supply chain processes? Are operations improving as time goes on, or has the “lean” process become more stagnant?

After Lean, You Never Go Back

In selecting a 3PL to handle warehouse and inventory operations, your business is already moving toward a lean, minimal structure. It’s not a leap, then, to overhaul the entire company to service the idea of continual improvement. The benefits are worth the investment, and customers will always respond positively to faster, more accurate and better fulfillment processes.

Lean production should be more common in warehouse environments, whether you’re talking about internally operated programs or those outsourced to third parties.

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