Lean Transportation Management

Lean Transportation

Management

Lean Transportation

Management

Using Logistics as a Strategic

Differentiator

Mohamed Achahchah

A PRODUCTIVITY PRESS BOOK

First published 2019

by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

and by Routledge

711 Third Avenue, New York, NY 10017

Routledge is an imprint of the Taylor & Francis Group, an informa business

© 2019 Mohamed Achahchah

The right of Mohamed Achahchah to be identified as author of this work has been asserted by him in

accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form

or by any electronic, mechanical, or other means, now known or hereafter invented, including

photocopying and recording, or in any information storage or retrieval system, without permission in

writing from the publishers.

Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are

used only for identification and explanation without intent to infringe.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Names: Achahchah, Mohamed, author.

Title: Lean transportation management : using logistics as a strategic

differentiator / Mohamed Achahchah.

Description: Boca Raton : Taylor & Francis, 2019. | Includes bibliographical

references and index.

Identifiers: LCCN 2018026354 (print) | LCCN 2018028631 (ebook) | ISBN

9780429490101 (e-Book) | ISBN 9781138592278 (hardback : alk. paper)

Subjects: LCSH: Business logistics--Management. | Shipment of

goods--Management.

Classification: LCC HD38.5 (ebook) | LCC HD38.5 .A295 2019 (print) | DDC

658.7/882--dc23

LC record available at https://lccn.loc.gov/2018026354

ISBN: 978-1-138-59227-8 (hbk)

ISBN: 978-0-429-49010-1 (ebk)

Typeset in Minion Pro

by Taylor & Francis Books

First published 2019

by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

and by Routledge

711 Third Avenue, New York, NY 10017

Routledge is an imprint of the Taylor & Francis Group, an informa business

© 2019 Mohamed Achahchah

The right of Mohamed Achahchah to be identified as author of this work has been asserted by him in

accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form

or by any electronic, mechanical, or other means, now known or hereafter invented, including

photocopying and recording, or in any information storage or retrieval system, without permission in

writing from the publishers.

Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are

used only for identification and explanation without intent to infringe.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Names: Achahchah, Mohamed, author.

Title: Lean transportation management : using logistics as a strategic

differentiator / Mohamed Achahchah.

Description: Boca Raton : Taylor & Francis, 2019. | Includes bibliographical

references and index.

Identifiers: LCCN 2018026354 (print) | LCCN 2018028631 (ebook) | ISBN

9780429490101 (e-Book) | ISBN 9781138592278 (hardback : alk. paper)

Subjects: LCSH: Business logistics--Management. | Shipment of

goods--Management.

Classification: LCC HD38.5 (ebook) | LCC HD38.5 .A295 2019 (print) | DDC

658.7/882--dc23

LC record available at https://lccn.loc.gov/2018026354

ISBN: 978-1-138-59227-8 (hbk)

ISBN: 978-0-429-49010-1 (ebk)

Typeset in Minion Pro

by Taylor & Francis Books

To my wife Nasima, my son Ilyas and my daughters Amal and

Maysa, who all have been my best supporters in this Lean journey.

vii

Contents

List of Figures ..................................................................................... xiii

List of Tables ......................................................................................... xv

Introduction........................................................................................xvii

About the Author.................................................................................xxi

Chapter 1 Lean..................................................................................... 1

1.1 The Voices..........................................................................2

1.1.1 Voice of the Customer.........................................2

1.1.2 Voice of the Employee.........................................4

1.1.3 Voice of the Process.............................................5

1.1.4 Voice of the Business...........................................5

1.2 Lean Thinking...................................................................5

1.3 Lean Principles..................................................................8

1.4 Lean Culture......................................................................8

1.5 Lean Leadership................................................................9

1.6 Lean Tools........................................................................11

1.6.1 Breakthrough Improvement............................12

1.6.2 Continuous Improvement................................14

1.6.3 Kaizen .................................................................17

1.6.4 Value Stream Mapping .....................................21

1.6.5 Daily Management............................................25

1.6.6 Problem Solving................................................ 28

1.6.7 Standard Work...................................................32

1.6.8 5S..........................................................................36

1.6.9 Overview.............................................................38

1.7 Lean Maturity .................................................................38

Chapter 2 Transportation ................................................................. 41

2.1 Location and Flow Types.............................................. 44

2.2 Outbound Process..........................................................47

2.3 Inbound Process.............................................................50

2.4 Shipment Preparation ....................................................50

viii • Contents

2.5 Transportation Modalities........................................... 54

2.5.1 Parcel and Express............................................ 56

2.5.2 Airfreight............................................................61

2.5.3 Road Transportation.........................................72

2.5.4 Sea Freight ..........................................................77

2.5.5 Train....................................................................83

2.5.6 Intermodal......................................................... 84

2.5.7 Overview.............................................................85

2.6 Costs and Transit-Times............................................... 86

2.7 Incoterms® Rules........................................................... 88

2.8 Trade Compliance ..........................................................91

2.8.1 Documentation..................................................92

2.8.2 Customs Clearance............................................95

2.8.3 Supply Chain Security ......................................97

2.8.4 Dangerous Goods............................................. 99

2.8.5 Embargoed and Sanctioned Countries ........101

2.8.6 Local Authorities.............................................102

2.9 Total Cost of Ownership..............................................102

2.9.1 Cost and Budgetary Control..........................104

2.9.2 Freight Payment and Auditing ......................109

2.9.3 Spend Analysis.................................................111

Chapter 3 Transportation Management......................................... 113

3.1 Commodity Strategy....................................................113

3.1.1 Build the Team and the Project Charter......115

3.1.2 Conduct Market Intelligence Research

on Suppliers......................................................115

3.1.3 Strategy Development.....................................117

3.1.4 Contract Negotiation ..................................... 120

3.1.5 Supplier Relationship Management............. 120

3.2 Carrier Selection Process.............................................121

3.3 Carrier Review Process................................................136

3.4 Complaint and Claim Handling ................................146

3.5 Network Optimization.................................................148

3.6 Benchmarking...............................................................150

3.7 Outsourcing...................................................................151

3.8 Sustainability.................................................................155

3.9 Quality Management System......................................156

Contents • ix

3.10 Transportation Management System.......................159

3.10.1 Master Data Management........................161

3.10.2 Complete Transportation Order .............162

3.10.3 Document Verification .............................162

3.10.4 Order and Capacity Planning..................162

3.10.5 Order Consolidation .................................162

3.10.6 Carrier Selection........................................163

3.10.7 Non-Standard Order Management.........163

3.10.8 Supply Chain Visibility.............................163

3.10.9 Proactive Shipment Monitoring..............165

3.10.10 Customer Service.......................................166

3.10.11 FPA ..............................................................167

3.10.12 Tendering....................................................168

3.10.13 Process Standardization ...........................168

3.10.14 Reporting....................................................168

3.10.15 Performance Reviews................................169

3.10.16 Sustainability..............................................169

3.10.17 Managed Transportation Services..........169

3.10.18 EDI and Interfacing...................................169

3.10.19 TMS and MTS Providers..........................171

3.11 Transportation Management Maturity ...................171

3.11.1 Category Strategy Development..............172

3.11.2 Supplier Evaluation and Selection...........173

3.11.3 Supplier Quality Management.................173

3.11.4 Supplier Management and

Development ..............................................174

3.11.5 Worldwide Sourcing..................................175

3.11.6 Human Resources .....................................175

3.11.7 Organizational Design..............................176

3.11.8 Information Technology...........................176

3.11.9 Measurement..............................................176

3.11.10 Transportation Strategy............................176

3.12 Market Trends.............................................................179

3.12.1 Fewer Trade Barriers but More

Regulations.................................................180

3.12.2 Increasing Political Instability.................180

3.12.3 Increasing Supply Chain Complexity.....180

3.12.4 Global Sourcing .........................................183

3.12.5 Omni-Channel Business Models ............183

x • Contents

3.12.6 New Centers of Economic Activity .........184

3.12.7 Segmentation..............................................184

3.12.8 Mergers and Acquisitions.........................184

3.12.9 Crowd Funding ..........................................184

3.12.10 Share Economy...........................................185

3.12.11 Mass Customization..................................185

3.12.12 Urbanization...............................................185

3.12.13 Big Data/Open Data ..................................185

3.12.14 Uberization and Online Logistics

Marketplaces...............................................186

3.12.15 3D Printing .................................................186

3.12.16 Robotics.......................................................187

3.12.17 Internet of Things, Cloud Computing

and Industry 4.0.........................................187

3.12.18 Crypto Currencies and Payments and

Block Chain Technology...........................188

3.12.19 Circular Economy......................................188

3.12.20 Resource and Energy Limitations ...........188

3.12.21 Fair Trade....................................................189

3.12.22 Sustainability ..............................................189

3.12.23 Safety............................................................189

3.13 Risk Management....................................................... 190

Chapter 4 Lean Transportation Management ............................... 193

4.1 Prepare for the Change...............................................196

4.2 Success Factors............................................................ 200

4.2.1 Lean Leadership........................................ 200

4.2.2 Lean Value Stream Manager

Transportation ...........................................201

4.2.3 Lean Value Stream Organization

Chart Transportation............................... 202

4.2.4 Lean Metrics.............................................. 203

4.3 Transportation House of Lean ................................. 205

4.4 Reduce Waste: Lean Customer................................. 208

4.4.1 Develop and Deploy a Transportation

Strategy and Policy ................................... 209

4.4.2 Collaborate with the Customer............... 209

Contents • xi

4.4.3 Pack Properly and Prevent Damages

and Losses ......................................................211

4.4.4 Improve Visibility .........................................212

4.4.5 Extend Order Cut-Off Times and

Customer Service Availability.....................213

4.4.6 Reduce Transit Times and Their

Variances..................................................... 213

4.4.7 Plan for Adverse Weather Conditions,

Peak Seasons, and Holidays.........................214

4.4.8 Other...............................................................214

4.5 Reduce Waste: Lean Finance.......................................216

4.5.1 Consider Modal Shifts..................................217

4.5.2 Consolidate Shipments.................................218

4.5.3 Set Up Tender Roadmaps.............................218

4.5.4 Negotiate Fuel Surcharge Costs ..................219

4.5.5 Leverage Purchasing Volumes ....................219

4.5.6 Improve Loading Degrees........................... 220

4.5.7 Apply a TCO Tool ........................................ 220

4.5.8 Do Not Accept General Rate Increases

and Price Indexations...................................221

4.5.9 Introduce Direct Deliveries.........................221

4.5.10 Check the New Silk Route............................221

4.5.11 Other.............................................................. 222

4.6 Reduce Waste: Lean Processes................................... 226

4.6.1 Consider in- and Outsourcing ................... 227

4.6.2 Implement Daily Performance

Reporting and ProActive Exceptions

Monitoring .................................................... 228

4.6.3 Level Out Demand....................................... 229

4.6.4 Limit and Manage Returns......................... 230

4.6.5 Optimize Vendor Inbounds ........................231

4.6.6 Implement Smart and Re-Useable

Packing Material ...........................................232

4.6.7 Plan Docks.....................................................233

4.6.8 Other...............................................................233

4.7 Reduce Waste: Lean It................................................. 236

4.7.1 Consider a TMS.............................................237

4.7.2 Use a Dynamic Carrier Choice System..... 238

xii • Contents

4.7.3 Automate and Digitalize More.....................239

4.7.4 Consider a Yard Management System........ 240

4.7.5 Use Online Transportation Market

Places............................................................ 241

4.7.6 Other................................................................241

4.8 Reduce Waste: Lean Organization........................... 242

4.8.1 Hire Qualified Employees............................ 242

4.8.2 Develop and Co-Operate with Carriers....... 244

4.8.3 Standardize Processes................................... 245

4.8.4 Install a Key Transportation Leadership

Position ........................................................... 246

4.8.5 Plan to Map all the Value Streams

and Value Stream Loops............................... 246

4.8.6 Other............................................................... 246

4.9 Reduce Waste: Lean Compliance ............................. 248

4.9.1 Sign a Carrier Quality Agreement.............. 248

4.9.2 Expedite Customs Clearance Processes..... 249

4.9.3 Manage Transportation Risks..................... 249

4.9.4 Implement the Neutral Delivery Service...... 250

4.9.5 Reduce the Carbon Footprint...................... 250

4.9.6 Reduce Duties and Prevent Delays

and Penalties............................................ 251

4.9.7 Take Advantage of Preferential Trade

Agreements .....................................................251

4.9.8 Act with Integrity, Honestly, Ethically,

and Support Fair Trade .................................251

Abbreviations...................................................................................... 253

Further Reading.................................................................................. 259

Index.................................................................................................... 261

xiii

List of Figures

Figure 1.1 Value and non-value-added activities........................................6

Figure 1.2 PDCA cycle ..............................................................................17

Figure 1.3 Kaizen template.......................................................................18

Figure 1.4 Value Stream Map...................................................................22

Figure 1.5 Daily management board.......................................................26

Figure 1.6 Problem-solving cycle.............................................................29

Figure 1.7 Takt time calculation............................................................. 34

Figure 1.8 Cycle time vs takt time...........................................................35

Figure 2.1 WACC calculation ................................................................. 42

Figure 2.2 Solid package .......................................................................... 48

Figure 2.3 Pallet .........................................................................................52

Figure 2.4 Goods within the pallet boundaries.................................... 54

Figure 2.5 Typical phases of a transportation flow.............................. 56

Figure 2.6 Parcel sorting belt ...................................................................59

Figure 2.7 Air pallets.................................................................................63

Figure 2.8 ULD ......................................................................................... 64

Figure 2.9 Volumetric weight...................................................................71

Figure 2.10 A truck with a standard trailer..............................................74

Figure 2.11 Containers on a ship ...............................................................78

Figure 2.12 Transportation by train......................................................... 84

Figure 2.13 Costs and transit-times per modality...................................87

Figure 3.1 Carrier management cycle ...................................................114

Figure 3.2 SWOT analysis......................................................................118

Figure 3.3 Service portfolio analysis.....................................................118

xiv • List of Figures

Figure 3.4 Supplier’s view analysis ........................................................119

Figure 3.5 Tender document content list............................................. 122

Figure 3.6 LOI content list......................................................................130

Figure 3.7 Example SLA content list.....................................................131

Figure 3.8 Example SOP content list.....................................................135

Figure 3.9 Example transportation KPIs..............................................138

Figure 3.10 Example Pareto root causes.................................................141

Figure 3.11 Main and sub-processes transportation

management cycle .................................................................160

Figure 3.12 Example transportation strategy summary ......................179

Figure 4.1 Lean value stream organization chart transportation.... 204

Figure 4.2 Transportation management house of Lean.................... 207