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Critical factors when implementing Lean practices and Lean distribution for a micro company in the start-up phase

Product and process development Production and Logistics

Written by Amanda Ivars, Mathias Lundberg

Paper category

Bachelor Thesis


Business Administration>Supply Chain & Logistics




Bachelor Thesis: Logistics system There are many definitions of logistics. The international leading logistics industry organization Supply Chain Management Professional Committee defines logistics management as follows: "Logistics management is part of the planning, implementation and control of efficient and effective goods flow and reverse flow and storage in supply chain management, the source and the point of consumption. Between services and related information to meet customer requirements.” (Professional Committee on Supply Chain Management, 2019). Logistics is a system that makes it possible to move activities between different companies. Get along well with customers. These types of activities involve almost all types of companies in various industries. This makes the logistics system an important part of organizational understanding and optimization (Jonsson, 2008). The logistics system can also be described as a set of functional subsystems. Table 2 below shows examples of common logistics-related functions in distribution (Jonsson & Mattsson, 2016). The activity that the logistics system focuses on is the transition process from input to output, which has a clear beginning and end. The output of one process will eventually become the input of another process. The processes and activities strung together form an organization. The goal of these processes is to create value for customers as efficiently as possible while consuming the least amount of investment. Processes can be distinguished, so they can be divided into core processes, support processes, and management processes. The core process is initiated by events, the supporting process supports the core process, and the management process is often a persistent strategy and plan (Jonsson, 2008). 3.2 Distribution channels When creating distribution channels, there are two very core choices, especially for material channel flow; speculation and delay strategies. The speculative strategy means that in the context of the supply chain, value-added or material movement activities are carried out without customer orders. On the contrary, the activities are launched according to forecasts. By using this strategy, there is a risk of producing products that will never be in short supply or sold, causing these products to become obsolete. This strategy also leads to higher inventory costs and the funds used to build inventory. Speculative strategies have disadvantages, postponement strategies have advantages, and vice versa. The delay strategy waits as long as possible before performing value-added and material movement activities, preferably before receiving customer orders. 3.6 Lean The goal of Lean is to create maximum value for customers at the lowest cost, by eliminating waste and generating flow, while participating in and utilizing the full potential of the labor force (Bicheno & Holweg, 2016; Reichhart & Holweg, 2007). An organization that uses lean can achieve these goals through its tools and lean philosophy. Lean philosophy and its tools can be used by other industries, even if it originated in automobile production (Melton, 2005). One of the fundamental parts of Lean is its long-term philosophy. Starting from the highest level of the company, all decisions should be focused on adding value to customers and society. This promotes a long-term approach to building a learning organization that can adapt to changes in the surrounding environment and survive as a production company. Without this foundation for long-term thinking, it is impossible to invest in continuous improvement and learning. It is also important to cultivate a culture in the organization where everyone is striving for continuous improvement. An organization that combines lean tools with lean thinking can become a lean organization. The key methods and tools of lean are Kanban, 5S, visual control, pull system and JIT (Liker, 2004). 3.75S The lean tool that focuses on eliminating waste that generates errors, defects, and workplace hazards is 5S. It stands for classification, order, shine, standardization and maintenance. When 5S is used together to create a cleaner and more efficient streamlined workplace, 5S will become a tool for continuous improvement (Liker, 2004; Dennis, 2007). Sort creates various workplaces by removing unnecessary tools that hinder employee productivity. When classifying workplaces, a common method is red marking. Red marking is performed by marking tools that are rarely used in the process and deleting them later to eliminate the time to search for the correct part or tool. The result of not doing so is that the workplace may have a negative impact on efficiency due to oversaturation of materials (Liker, 2004; Dennis, 2007). • Arrange orderly by distributing tools and materials to place the workplace in the best position to help them organize the workplace operators to work efficiently and the workplace is stable. If a workplace is organized, the operator should be able to reach the most commonly used (Liker, 2004). When organizing the workplace, visualization tools can be used to make it clear where tools and materials should be placed to save the operator's time (Dennis, 2007). • 5S Bright Cleaning has a dual function, because the cleaning process can be used as an inspection to detect problems before using the machine as well as general cleaning (Liker, 2004). According to Dennis (2007), the working spirit among operators will be the result of a clean workplace. Read Less