The Lean Process Development (LPD): A new approach to innovation in logistics and supply chain

Product and process innovation has been one of the focal points in the supply chain, in the search for competitive advantages in the business environment. Innovating in products becomes a strategy to escape the so-called “red ocean” of extreme competition, while process innovation can breathe new life into businesses with gains in productivity and quality. The combination of the two lines of innovation — products and processes — can mean a leap in results for the corporation.
In this scenario, it is natural that Supply Chain leaders look for approaches that support the development of new products and processes, while also enabling speed in building engagement and achieving results along the chain. The Lean approach, with its recognized ability to add value for the customer and succeed in problem solving, has been constantly sought by companies as a means of reaching this new state of continuous innovation.
In this scenario, there is a need for a better understanding of some of the main practices of the Lean approach in Process Development and their intersections with the development and innovation of Logistics and Supply Chain. It is an important topic in the Lean philosophy for innovation, but one that is often neglected. It is a fundamental mechanism for enabling the structuring of a culture of continuous innovation. This article defines the purpose of Lean Process Development (LPD), presents its basic structure, outlining its main content elements, and, finally, explains its importance for a transformation of the innovation culture.

Purpose

In the business environment, it is common for companies to be involved in developing new generations of products and services, digital or analog, whose launch is strategic to win markets with quality, cost and flexibility, even creating new global markets.
Managers routinely discuss the limitations and obstacles that traditional development approaches bring to the company’s day-to-day — and if not, they think of startups as the solution to break the inertia. However, most of the time, they recognize that the traditional way of developing must be changed.
A typical scenario is the situation in which processes are improved after they are put into operation and take months or even years to reach stability, working with the operations and support teams. In other situations, the new processes run into problems in their implementation and reach the market with performance problems. If it is part of the digital transformation, the excuse of it being a technological advance ends up being used to justify operational instability during implementation; however, over time, it is bound to lose its power to contain those dissatisfied with the results.
In the logistics sector, this situation of unstable processes can mean extreme dissatisfaction, consumer irritation and situations in which quick problem solving may no longer be enough, in addition to the fact that these containment measures bleed the company’s cash.
Lean Development Process (LDP) is a structured approach with a cross-functional work team, interacting with corporate strategy and customers’ value attributes. Its purpose is to develop new lean and stable processes more quickly, aligned with high quality and performance standards, contributing to the improvement of services and products insofar as it adheres to simultaneous development.

Basic structure and elements of LPD

The foundation for structuring LPD is the use of two structuring elements of Lean thinking: the A3 method in conducting development (Figure 1) and the 3P tool for generating and choosing alternatives (Figure 2).
In the A3, understanding the context and the current situation are starting points for the development team to seek data, facts and an understanding of which problem they want to solve by developing the new processes. The company’s strategic problems, obstacles to delivering value to the customer and society, performance issues to be delivered to shareholders, and so on… the aim is to make it as clear as possible what is intended to be achieved with the new processes.
This A3 step may require the use of VSM to provide a view of what is intended to be accomplished with the processes in flow, the calculation of takt time and the value attributes that need to be achieved. With this understanding of the purpose of the development, which should involve the whole company, pulled by the cross-functional LPD team, the next step of the A3 is reached, characterized by setting the development objectives, expressed in indicators with targets and deadlines.
Once this step is completed, in which the A3 as a method plays the role of a guide and organizer of thinking, indicating the agenda for discussions and the gathering of data and facts, we move on to the analysis phase, in which the 3P tool will play the role of structuring the generation of process alternatives to reach the targets.
The 3P tool (Production Preparation Process) structures the step of designing the operational processes capable of achieving the expected results and obtaining solutions to flow problems in order to create the intended value (Figure 2). As a consequence, innovation of the current state is achieved.
The multidisciplinary LPD group must assess whether one team will be enough to undertake the generation of alternatives for all processes or whether other multidisciplinary groups should be created to apply 3P to certain processes, dividing the development load, but always aligned with the main LPD team of the A3.

Figure 1 — Example of an A3 applied to the Logistics of a DC for the generation
of new processes

Figure 2 — Schematic drawing of the 3P tool with its structuring elements
for generating process alternatives, which will lead to the gradual convergence on the
best process

In the first step, the group designs several alternative process concepts, using the targets as a stimulus for creation. In this step of 3P, the concept of “set-based” (considering several process alternatives with different concepts) is used instead of the traditional “point-based” (choosing a single alternative process concept). The objective is to develop a set of alternatives whose strengths converge into a more robust process, while the weaknesses are eliminated or replaced (Figure 3). The alternatives may contain improvements to the logistics service or product that is being developed simultaneously or proposals for changes in the case of current services and products in the portfolio. The first option is preferred because it boosts the likelihood of finding problems earlier and correcting them before the product with potential problems reaches the market.

Figure 3 — differences in the generation and treatment of process alternatives during
development, between traditional point-based and the set-based technique used in the Lean approach

The concepts of the alternative processes are then evaluated against 14 requirements of a Lean process system. The alternatives are evaluated with respect to the Lean process elements that 3P highlights, such as “hanedashi”, “chaku chaku”, operator involvement, among others. There is a structure for the direction in which the alternatives should converge, going beyond time and motion in the work, since the processes must ensure flexibility, resilience, adaptability and other characteristics that are conferred by the 14 requirements evaluated.
Each process alternative receives a score on each criterion representing its potential to deliver value in a stable way. The alternatives with a significant total score, meeting the established criteria, move on to the simulation and experimentation step.
In simulation and experimentation, the development group (or groups) must get closer to the Gemba and carry out full-scale simulations and experiments on the critical performance points or to clear up doubts about performance. The selected alternatives thus gradually converge toward the best solution, revealing which process configuration comes closest to achieving and meeting the requirements of the operating system, of the products and services, and their objectives.
As a reference, the LPD group generally aims, in this phase, for around three to four process alternatives, which are tested and compared with one another through iterations with the layout, in the case of material flow, or in information flow simulators and Beta versions of applications. The combination of simulation and physical and virtual experiments is central to achieving convergence on the best concept. This is what provides the validation of the earlier phases of generating and evaluating alternatives, avoiding confirmation bias or optimistic thinking (wishful thinking). If the generation was entirely biased or carried out just to tick a box, the experiments reveal the poverty of the results, and the team is forced to go back to a new generation of alternatives — this time taking care to avoid preconceived ideas or options already chosen.
The team’s successive iterations, physical and virtual 3D experiments and other tests aim to improve the selected concepts and achieve their partial or total integration into a concept that has advantages over the others, in addition to meeting the requirements of the Lean system and the company’s target. In this phase, it is also assessed whether the concepts easily allow the introduction of solutions such as “hanedashi”, “chaku-chaku”, balancing, flexibility of “takt-time”, versatility in balancing and layout, so as to verify, through these objective elements, the achievement of the characteristics of flexibility, adaptability and resilience — factors that are still somewhat subjective in the treatment of Supply Chain processes, but which, with this approach, gain objectivity. In the end, the convergent process is represented by a future VSM (material and information, it is always worth remembering) and its respective macro layout, then moving on to the next step of the A3: defining the countermeasures for detailing and final configuration.
With convergence on a leaner process configuration achieved, the next step is the detailed design of the process in the countermeasures and future state step of the A3. It is in this step that the process concept chosen after experiments and simulations takes shape, defining the technologies in detail. Now the chosen concept must be detailed at each physical logistics workstation through standardized work, relating it to the material flow and quality deliverables. The relationships of the new process with the information systems, in turn, must be designed in terms of data access and the quantity and quality of transactions needed in a continuous flow. The definition of any technologies is a consequence of the concept developed and chosen in the simulation. In fact, before defining the technology, we must be concerned with the required mobility, relative movements in the layout, forms of loading and unloading, physical agents employed, data origin and integrity, required connectivity, data transactions, among other primary aspects of the future state to be achieved.
Defining technology as a consequence and not as the first definition of development is one of the most important concepts of innovation with a Lean approach. It is the principle of the right-sized tool (right size tools), not necessarily referring to every type of physical means and technology, which will automatically avoid waste if its configuration respects the concept chosen, tested and simulated. This step is a robust antidote to unnecessary consumption of technology, which can amount to technological waste and even create other problems. Technology is chosen based on its ability to fit the concept of the lean process and not on the power of marketing. Companies practicing LPD report savings of 30 to 50% in capital investments and 20 to 40% in operating costs as a result of applying 3P.
Following this phase, after the countermeasures have been defined with the detailing of the selected concept, development moves on to the A3 step of defining the schedule and monitoring the construction of the process, with each detailing action monitored through the continuous evaluation of tests, “try-out” and alignment among the operational steps, in order to make adjustments and integrate the physical and information systems with a view to achieving the results of the operational and financial metrics.
There is no progress if the expected indicators are not evaluated and delivered. Suppliers are monitored at their sites with the same evaluation in short, continuous cycles as a way of identifying possible problems before the delivery is finalized. Problems detected earlier and smaller are easier to correct.
For monitoring, it is recommended to use other Lean tools that support the A3, such as DM and OBEYA, in which the phases and their deliverables are displayed and discussed among groups and with senior leadership. Visibility is total, with transparency about problems along the way, risks and obstacles, and support groups are assigned as a chain of help at various hierarchical levels to overcome difficulties and bring agility to solutions and adjustments.
With this last step of the A3 — supported by the 3P tool —, the expected results are gradually confirmed or adjustments are made earlier and, therefore, more easily and economically, in order to converge toward the confirmation and completion of the process. The new process is delivered ready for the start-of-operation step and able to meet demand with stability and efficiency.

Final considerations

The LPD described here is a scientific work roadmap adapted for application in process development, based on hypotheses and experiments, with action maps designed to achieve a desired state. However, if this roadmap were assigned only to one department or group, process development would stagnate and be confined to experiments based on a single concept of how things should be done or to a specific class of processes and technology. We would limit the reach of innovations, reduce the results, and an organizational culture focused on innovation would not be developed.
The key to LPD is to carry out development through multidisciplinary groups in logistics and Supply Chain, using the technique of generating alternatives with the “set-based” approach and their convergence through experiments and simulations, with the involvement of the Gemba and of people, seeking participation as a way of confirming the validity of the process’s value hypothesis.
This structure drives the creation of a culture of innovation through “learning on the job”, with an effective understanding that development must be grounded in facts and data and validated empirically in a hierarchy of deliverables. First, we generate concept alternatives, evaluate the potential of the concepts, select the fittest, converge on the definition of the chosen concept, the core of the process, then the complete process, the layout, and only at the end do we think about technology. All of this with transparency, debates based on facts and data, and the pursuit of results with waste-free processes. A cultural change, in practice.