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Lean Transportation: Are you Using Lean Thinking for Transportation Management? If not, Why?

lean transportation

The most dangerous kind of waste is the waste we do not recognize”: Shigeo Shingo

Lean is a new way of doing business. For shippers, culture and behavior have to change to apply Lean Transportation thinking. Lean thinking focuses on the elimination of all waste (where waste is defined as any non-value added process) and bringing value to the customer, beyond the customer’s expectations. Try to recognize all of your wastes.

The “Them (company leadership) versus Us (shop floor associates)” mentality also needs to change for Lean Transportation to "WE." Problem and process solving needs to be done together, by leadership and associates, on the shop floor where problem and processes actually occur.

The 8 Rights To Achieve Lean Transportation Practices

The are the 8 Rights of Lean Transportation thinking:

  1. Right Materials,
  2. Right Quantity,
  3. Right time,
  4. Right Place,
  5. Right Source,
  6. Right Price,
  7. Right Quantity, and
  8. Right Service.

It is obvious why moving parts further than necessary is wasteful. Transportation takes time. There is also the frequently overlooked fact that people often have to make round trips, adding to the delay. It is surprising how far people walk in the course of a year in many processes. Walking 100 feet to get parts 20 times a day can add up to nearly 170 miles a year.

The need to transport parts also drives inventory up, creates a need for space to store those parts, and uses energy for more forklift time and warehouse heating. The list of additional waste generated by transportation goes on and on. 

5 Practical Applications to Achieve Lean Transportation

Customer Centric Lean Transportation: Bring value to the Customer

Transportation strategy should not drive how and when product is delivered. Rather, going beyond customer expectations needs to be fully understood, and transportation strategies then developed to meet those expectations with optimal inventory levels. Transportation strategy and tactics must support Lean inventory strategies.

Eliminate Transportation Waste

All transportation is not waste and transportation can be used as a strategic differentiator. Transportation in excess of necessary requirements is waste and should be eliminated. Focus on how transportation could be your strategic differentiator in the industry.

Measure Transportation Performance

Shippers should not view transportation providers as transactional, but rather as strategic partners. Collaboration, trust, teamwork and cross-function thinking. Metrics and Key Performance Indicators (KPIs) measure how well the shipper-transportation provider does in daily continuous improvement. To build a lean supply chain, organizations need to build long term relationships with quality carriers that are stable, dependable, and committed to servicing the organization.

Understand Transportation Cost Structure

Transportation cost is made of two distinct areas: unit costs and productivity costs. The significant opportunity for transportation cost reduction is in productivity costs. Focusing on unit costs, or carrier rates, will only result in creating instability in the transportation network. Rather, focus on productivity: trailer utilization, total miles ran, equipment waiting time (which is pure waste) and adherence to core carrier routing guides. No one wins when shippers beat down carriers on rates to the point where they are running unprofitably. The real goal is to negotiate carrier rates that are fair, competitive, and equitable for all parties.

Perform Transportation Daily Event Management

Sustained cost reduction is not realized through infrequent transportation network designs and carrier RFQ’s. Cost savings result from disciplined, daily event management and hour-to-hour focus on waste identification and reduction. Every day, start with a transportation plan, execute the plan, and then check actual condition to the plan. Any detected waste needs to be documented and followed by problem-solving. Create daily route designs, complete real time track and trace, generate real-time metrics, and complete daily problem solving. This investment and focus on process discipline is the lean way.

Problem-solving methods

Use: PDCA: Plan, Do, Check. Act and/or DMAIC: Define, Measure, Analyze, Improve and Control. This can be done by individuals, but cross-functional team problem solving is more effective.

So where do you go from here?

In order for the benefits of Lean Transportation to be fully realized, the organization’s transportation management needs to be integrated into the implementation. As stated earlier, all transportation is not waste, and transportation can be used as a strategic differentiator. Hopefully, this article has given you some key concepts to remember as you focus on how to make transportation a strategic differentiator for your firm.

What good is all of this important transportation Lean theory, without some practical, Lean Transportation examples?

Lean Transportation Examples for Carriers/Truckers

In studying trucking and fuel costs in detail, I found the following facts to be true:

Truckers face challenges and those that best manage fuel consumption enjoy a competitive advantage over the rest.

According to the American Trucking Research Institute (ATRI), fuel costs account for roughly 35 percent of average marginal costs per mile, and with diesel prices expected to remain high, competitive advantage will be bestowed on trucking companies who are best able to manage fuel consumption and contain fuel costs.

Overall, aerodynamics may account for 15 percent to 22 percent of energy losses for a fully loaded Class 8 truck traveling at highway speeds. Significant fuel savings can be realized by matching cab height to trailer height, reducing the gap between the cab and the trailer, and installing fairings on the chassis and the trailer.

Additional savings can be had by rounding the corners on trailers, installing wheel covers, removing sun visors and auxiliary mirrors, and installing aerodynamic primary mirrors or rear-facing video cameras.

Rolling resistance accounts for another 13 percent to 16 percent of energy losses for the average Class 8 truck traveling at highway speeds and 8 percent to 12 percent of energy losses for Class 8 trucks operating in the city. These losses provide a clue as to why nearly all fuel tanker trucks and trailers are equipped with super-single tires instead of the standard dual variety.

Super-single tires reduce total vehicle weight by 1,000 pounds or more when paired with aluminum wheels. In cases where the truck is not cubed-out, as is the case with tanker trucks, these weight savings allow for higher payloads. They also generate significant improvements in fuel consumption per ton-mile.

In cases where trucks are cubed out, meaning that they become filled before reaching the maximum weight restrictions, the reduction in weight reduces rolling resistance associated with sidewall and tread deformation. Of course, because the number of sidewalls is nearly halved by swapping super-singles for dual wheels, rolling resistance due to sidewall deflection is already significantly reduced.

According to statistics published in the Transportation Energy Data Book, the average fuel economy for dual-tire tractor-trailer combinations was 6.73 miles per gallon in 2011, and fuel economy for super-single tractor-trailer combinations was 7.35 miles per gallon. This equates to 9.2 percent savings or more than 1,500 gallons per 125,000 miles—which is the average number of miles driven per truck per year. At $4 per gallon, that pencils out to $5,000 in savings per 100,000 miles, and $600,000 per year for a fleet of 100 trucks.

Super-single tires also offer better brake cooling and better traction in snowy conditions, both of which are definite benefits—especially in mountainous regions. Maintenance is also easier and cheaper, and labor costs for tire replacement is cut in half. Another benefit of super-singles is that they are marginally more aerodynamic than dual wheel/tire combinations.

Fuel savings are not restricted to reducing rolling resistance and wind drag, however. On average, 5 percent of fuel consumed by Class 8 trucks is burned while idling. Of course idling cannot be completely eliminated, but it can certainly be reduced. Doing so, however, requires drivers to change their behaviors—and as long as this is an option, I see no reason to restrict behavior modification to idle-time reduction.

According to Brian Daniels, the powertrain products manager for Daimler Trucks of North America, drivers are directly responsible for 30 percent of the factors that affect fuel economy.

So the message is clear for private fleet managers: Managing costs clearly requires investment in both equipment and worker training.

Chief among the fuel efficiency recommendations for drivers is to reduce highway speeds. In this regard, the amount of horsepower required to overcome wind resistance increases 50 percent, from 120 HP to 180 HP as a fully loaded class 8 truck increases its speed just 10 miles per hour, from 60 mph to 70 mph.

In addition, the driver should focus on maintaining steady speed and low rpm as it is more efficient to take advantage of torque down low rather than horsepower up high. There is, of course, an exception to the rule of maintaining steady engine speed, and that is to “drive with momentum” on undulating terrain.

 In anticipation of upcoming hills, drivers should accelerate gently in advance of the hill, and allow the truck to decelerate on the incline and work gravity to their advantage on the backside of the hill.

According to Michael Roeth of the North American Council for Freight Efficiency, the difference in fuel economy between the best and the worst driver can be up to 25 percent. And with the contraction in drivers that has resulted from the volatile economic times of late, the population of fuel-efficient drivers is declining.

There is no better time for shippers to demand carriers to make these cost-reduction investments or use this knowledge in negotiations with carriers.  

The Leaner the transportation company gets, the better it is for all concerned.

Chuck Intrieri
Mr. Chuck Intrieri is a highly experienced and credentialed Supply Chain Management professional and is a recognized thought leader and innovator, primarily in the areas of Supply Chain Optimization, LEAN initiatives, Operations, Manufacturing, Third Party Logistics (3PL) International Purchasing/Importing, Inventory Management and Logistics, Strategic Sourcing, and Procurement Operations.
Chuck Intrieri
Chuck Intrieri
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