Lean Principles In Wholesale Distribution Supply Chains

Some recent client engagements have brought to mind Einstein’s quote – “Doing the 
same thing over and over expecting different results, is insanity.” 
 
Whether forced to, or by choice, some major corporate entities are changing how they 
conduct their businesses and are evaluating the landscape they operate in – looking for 
ways to change it….change meaning speeding up, eliminating waste and redundancies, 
new partnerships, new types of relationships, etc. Everything is being evaluated. Now, 
just because these entities are measured in billions, and you’re not, isn’t any reason 
why you shouldn’t be doing the very same exercise. 
 
The development cycle for “supply chain” concepts and methods has traditionally come 
from larger corporations, actually many in retail, who have invested millions in business 
process re-engineering, software, and I/T, as a platform to conduct their business. What 
happens is that these “new chapters” in Supply Chain are then passed along from 
company to company, for years, and then “elements” of the new developments leak 
down to different industries and smaller sized business entities. This slow progression 
often takes fifteen to twenty years, during which the benefits may be lost to you. 

We don’t believe it should remain this way. There is a need to accelerate the time line. 
There are developments going on, currently, that you should be aware of and should be 
considering for your operations. For example: 
 
o Changing from “Push Replenishment” models to “Pull Replenishment” models 
o Viewing costs for the whole Supply Chain and not just for some elements of it 
o Entering into truly collaborative relationships 

In many cases, certain assumptions have been made and built into the fabric of our 
organizations and processes, without being fully challenged. “Lean Principles” can bring 
these to light. There is a substantial amount of cost and inventory in distribution; 
therefore it is a natural target for all kinds of profitability improvement efforts. For 
instance, freight savings goes directly to profitability improvement and encourages an 
ongoing emphasis on reducing freight costs. As a result, traditional cost savings efforts 
have been focused on narrow individual “components”, one of disconnected functional 
silos, possibly sub-optimizing the overall Supply Chain; rather than starting with the 
“total” and working back to those individual components, how they are processed and 
executed, and fit within your inventory, distribution network, and supply chain strategies. 
 
The approach outlined in this white paper is to radically move supply chain thinking 
forward, by skipping the incremental development, within the wholesale distribution 
arena, and to begin looking at the supply chain in total; what it potentially means to 
inventory planning, product distribution, product procurement, warehousing, finances, 
supplier relationships and customers. Overall, it is a focus on the distributor processes; 
demand planning, supply planning, and overall product distribution methods. 

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