3PLs And The Lean Warehouse

When companies decide that their own internal warehousing capabilities are lacking, they can decide to select a third-party logistics (3PL) provider to run their warehousing operation for them. Often, a shipper will demand more from a 3PL than it would from itself. This is particularly true when it comes to continuous improvement. However, while lean manufacturing and Six Sigma practices have been widely adopted to improve production activities, this is far less common in the warehouse.

Companies seeking continuous improvements in the warehouse by outsourcing to a 3PL should apply diligence to determine whether that 3PL has a robust continuous improvement culture in place. While many 3PLs will claim that this is the case, it’s likely that at least some of these only dabble in lean and kaizen; mastering the terminology, but not necessarily the true cultural requirements. So, how can a company that wants to outsource its warehousing operations pick a 3PL that really does have strong capabilities here?

Site Visits Imperative

You cannot learn about a 3PL’s lean culture by sitting in a conference room. You have to go to a site, look at the warehouse, and talk to workers on the warehouse floor.

Just looking at the site will tell you something. Is it clean and bright? Does the 3PL use visual management techniques?

During the tour of the 3PLs warehouse facilities, the shipper should ask employees on the warehouse floor if they have been involved lean projects and Kaizen events and, if so, how many and how did these work out? Do floor workers know the different forms of waste?

A core concept in lean management is that worker’s always know exactly what is expected from them. For example, expectations about how many pallets they should be able to pick in an hour should be clearly defined. The workers then need to know how they are doing against those goals over the course of the day using clear visual management techniques.

At a site with more advanced lean practices you would see dry eraser boards placed in highly visible places on the warehouse floor. Managers would post on that board on an hourly basis how each team member in their group is performing to standard by coloring the box next to the worker’s name red, yellow, or green. If a team member had a red box, they would be expected to add a comment to the board. These comments could provide opportunities to improve the flow of the warehouse. For example, if team members post something like, “Congestion in Aisle 4 – five pickers in the aisle,” this might be a good candidate for a kaizen (quick improvement) event. Noncompliance should be viewed as an opportunity for improvement, either for the individual or the warehouse as a whole.