A review of contemporary lean logistics concept

Logistics is very rooted in all business systems so it is very difficult to find one definition that could cover everything that logistics has to offers. Based on Goldsby & Martichenko (2005) it covers all internal operations and roots to any business supply chain partner; it would also be fair to mention that the definition certainly covers the entire inventory management, i. E. Materials, people or information.

Today, technological developments, emerging markets and rapidly growing population are increasingly affecting the rising demand for products and services, therefore the latter puts great pressure on logistics, especially in the implementation of e. G. Delivery of material Just In Time (JIT), effective management material within processes and timely delivery of finished products. Logistics operations are often being characterized by a high degree of manual control and consequently have a significant impact on the price of operations; therefore there exists many initiatives for improvement. This means that logistics plays a significant role in today's businesses, particularly their effectiveness and competitiveness.

Failure in material or information flows may result in costly time breaks/interruptions which explain the importance of well-functioning logistics system to support all operational units (Schulze & Wullner, 2006). We also have to acknowledge that average logistics costs mostly account for between 10 % and 30 % of a sell turnover for a typical manufacturing company (Gattorna, Day & Hargreaves, 1991), so every failure, inconsistency or any kind of waste can represents great costs. This is the point where the concept of "lean thinking" takes on.

The development of lean thinking.

It is no novelty that the beginning of lean thinking comes from the Toyota manufacturing system (Shingo, 1988; Monden, 1983) and that it is also a subject of a work entitled The Machine that Changed the World (Womack, Jones & Ross, 1990) which highlighted Japanese production methods in comparison to traditional Western mass production systems.

According to Melton (2005) had Taiichi Ohno in the late 1940's started working in the Toyota Production System (TPS) and continued in late 1980's unhindered by the advancements in computers which allowed mass production to be enhanced by manufacturing resource planning computer systems. By the 1970's Toyota's own supply base was lean and by 1980's also their distribution base. It was at that time that supplier manuals were produced and the lean approach was shared with other companies besides Toyota. These manuals were written in Japanese and were available in English as far as almost 10 years later (e. G. Shingo, 1981; Hall, 1983; Monden, 1983).

Among others, scholars Krafcik & MacDuffie (1998) and Goldsby & Martichenko (2005) also dealt with the beginnings of the philosophy of lean thinking namely with its development somewhere in the early fifties as an additional contrast to the expression JIT used by Japanese automobile manufacturers (e. G. Toyota) who had previously used methods of mass production. The latter were with this kind of thinking giving response to evolving production processes which have operated with minimum waste (Taj, 2008). Their desire was basically to perform a continuous flow which did not rely on long production runs to be efficient; it was based around recognition that only a small fraction of a total time and effort to process a product added value to the end costumer (Melton, 2005).

This kind of approach focused on waste elimination and excess from the tactical product flows at Toyota (the Toyota "seven wastes") and represented the exact opposite of Western mass production systems of standardized products with minimal product changeovers firstly developed by Henry Ford (large batch sizes, dedicated assets and "hidden wastes"). For a well description of these processes, techniques, methods and systems see Monden (1983). Taiichi Ohno also identified seven wastes, activities that add cost but no value: (1) production of goods not yet ordered, (2) waiting, (3) rectification of mistakes, (4) excess processing, (5) excess movement, (6) excess transport and (7) excess stock (Monden, 1993). The work Lean Thinking: Banish Waste and Create Wealth in your Organization (Womack & Jones, 1996) is also a key step in the history of lean as it summarizes the lean principles and coins the phrase "lean production". By Copacino (1997) logistics, also supply chain management in a broader range refer to the art of managing the flow of materials and products from source to ОС . According to Levy (1997), JIT delivery and low inventory are the heart of lean production which requires frequent, rapid flows of information and goods along the value chain.

Flott (2002) and Srinivasaraghavan & Allada (2006) state that lean production aims to reach a smooth production flow by reducing losses and increasing the value of individual activities. Some analysts also argue that if the organization hasn't adopted the strategy of lean production, the company cannot compete in the current global competition for higher quality, faster delivery and lower costs.

An extensive literature review has been conducted in the fields of basic lean approach, lean manufacturing, production and LL using mainly Google Scholar. The latter allows to search within many sources, among them peer-reviewed papers, theses, books, abstracts and articles, from both academic and professional organizations and publishers. It discovers the most relevant research across multiple disciplines and when used in conjunction with a university research library, it directly links you to multiple databases including Elsevier, Science Direct, Springer Link, Wiley Interscience, EBSCO Business Source, Premier and JSTOR. The development of the keywords was an iterative process. We firstly employed a brainstorming technique and secondly used a snowballing process to add keywords to the search as they were discovered in the literature. These additional keywords were added until a point of saturation was reached, where no new keywords or articles were identified.

The articles titles, abstracts and texts containing key words: lean, lean manufacturing, lean production and LL were scanned to determine the relevance to the review of LL literature, especially its development and connection with lean manufacturing. Non-relevant articles were eliminated.

Lean logistics (LL) as a new concept appeared somewhere in the 90's. Womack & Jones (1996) studied the transformation of the Toyota US parts distribution system back to the second-tier parts manufacturer of a replacement bumper and compared it with its system in Japan. Even Toyota saw lean improvements in logistics especially in the fields or within manufacturing, delivery, ordering, warehouse management, dealers and network structure. By Baudin (2004) LL is a logistical dimension of lean manufacturing. Its primary objective is to deliver the right materials to the right locations, in the right quantities, and in the right presentation; its second to do all this efficiently. LL tailors approaches to the demand structures of different items as to one-size-fits-all. It is a pull system: materials move when the destination signals that it is ready for them. The same author continues that LL could be and has been the concept applied to services, but they have focused on the manufacturing as a domain whereas it is rich in logistics concepts, approaches and techniques which can be addressed as "lean" because either they are part of the TPS or they were adapted from it for application in different contexts.

For Jones, Hines & Rich (2014) LL also takes its fundamental philosophy from the TPS and is based around extended TPS right along supply chains from customers right back to raw material extraction. This kind of approach has been developed in order to overcome some of the fragmentation problems of traditional functional and business thinking. Within the scope of LL concepts such as value, value streams, flow, pull and perfection have been discussed. Bowersox, Closs & Cooper (2002) state that LL refers to the superior ability to design and administer systems to control movement and geographical positioning of raw materials, work-in-process, and finished inventories at the lowest cost. In other words LL simply put, can be described as a way to recognize and eliminate wasteful activities from the supply chain in order to increase product flow and speed. To sum up, lean brought disciplines and a large number of tools and techniques to logistics. Using this tools allows companies to uncover and deal with waste and inefficiencies.

LL as a concept has evolved over time and will continue to do so. As a result of the derivation of the LL term from lean manufacturing (Baudin, 2004) as it is rich in logistics concepts, significant confusion about what is lean manufacturing and LL and what they are not, also their scope, borders and corresponding methods have arisen. Hines, Holweg & Rich (2004) state that lean, as often not acknowledged, has evolved from a mere factory shop floor-application to also one of most influential new paradigms in manufacturing. During the mid-1990s, the value stream concept evolved and was seen to extend beyond manufacturing or the single company, and stretch from customer needs right back to raw material sources. This provided the link between lean and the supply chain, as for the first time, the production "pull" was extended beyond the boundary of the single factory to include the up-and downstream partners (Hines & Rich, 1997; Rother & Shook, 1998).

Schiava (2012) wrote an interesting article entitled Lean Manufacturing: lessons for logistics. He discusses about many logistics companies looking today at lean manufacturing in the quest to improve their processes, he also considers how logistics is getting lean and looks closely at 5S methodology. The author also stipulates that to understand LL we need to have a full understanding of lean manufacturing. For him LL is a management approach that endeavors to eliminate or reduce all activities that do not add value. The main idea is that, by making production "leaner", product quality will improve and manufacturing costs should decrease. There is a strong focus on current activities and ways in which they can be made as efficient as possible.

LL focuses on the key concepts of value, value streams, flow, pull, and perfection (Jones, Hines & Rich, 1997). Since the degree of leanness cannot be directly observable, Wu (2003) created an index of individual measures of leanness. Based on his literature review, the following practices were used to evaluate the degree to which lean manufacturing has been implemented inside each particular plant. The five variables measured assigned with an equal weight are: (1) pull system, (2) level production, (3) short lead time, (4) continues flow and (4) high inventory turnover.

Organizations like CorpLean suggest that in order to do a successful implementation of LL tools it is desirable to have some stability in the manufacturing processes. It is preferred to have already implemented Lean Manufacturing. It is necessary to learn the tools to achieve the LL.

As this paper has been designed to be largely conceptual in nature it may be useful to suggest a number of missing areas or unresolved issues in our knowledge and application of LL. Also, in any business area, a new thought process will be embraced by many new scholars who will put their own way of thinking on our main concept. In some cases, this is merely a quest to become an opinion leader but, sometimes, an open minded thinker will add new insights, which lead to a new way of thinking.

The concept of logistics has evolved over time, and will continue to do so. It has undergone a significant evolution and expansion beyond its beginnings in both world wars, especially WW II. Later on, also organizations noticed the importance of efficient logistics and with the development of the lean concept from a mere factory shop floor-application to manufacturing, also because logistics mainly seeks for time and place optimization and lean for the elimination of waste, it is very logical that the two of the concepts somewhere had to combine. As Schulze & Wullner (2006) discussed failure in material or information flows may result in costly time breaks/interruptions which explain the importance of a well-functioning logistics system to support all operational units; so this is the part where the concept of lean joins logistics, as its main purpose is the elimination of waste.

The overview indicates that there are different opinions on the development of LL and confusion on what is LL and what is lean manufacturing, also their scope and borders. Some scholars suggest that the concept roots from the TPS and some suggest that it has merely evolved from lean manufacturing (f. E. Baudin (2004)). The term LL has started to been mention in the 90's, but most probably started to evolve just right after the implementation of lean manufacturing as it is rich in logistics concepts.

Although this tool is very powerful, companies should keep in mind that for lean to work in logistics, companies have to make a change in their way of thinking, meaning they have to start making decisions based on the concept of total logistics costs and they must have the courage to eliminate inventories that are unnecessary.

References

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