Lean Supply Chain Applied to International Logistics Projects

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Angela Mazzeo
08/22/2012

With the current ongoing process of globalization and the world still struggling with the European recession and economic stagnation in North America, international logistics face an increasingly dynamic and recessive environment, which demands workers to have multiple professional skills. In this highly competitive scenario, companies are seeking new business practices so that they can optimize their operations and cut costs, improve the quality of their processes and, above all, reduce delivery times for their clients more and more.

In this context, Lean, Agile and project management methods, for example, have become attractive. Until recently, the quality factor was seen as a competitive advantage in logistics operations, but nowadays it is a must if a company wants to operate in the market.
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The major challenge for logistics project managers is to make sure the triad (delivery time, cost and quality) is achieved during a project lifecycle, in order to ensure that the right product is delivered to the right place, at the right time, and within the budgeted cost. The key to achieving success in this context is strong management aligned with best practices, focused on improving lean processes and job training.

In international logistics projects, we are faced with the same difficulties and limitations of a conventional project: change requests, schedule delays, miscommunication and, mainly, cost overruns. In addition to these factors, which are related to the structure of a project, the logistics process has its own inherent risks, which must be mapped and considered prior to project approval.

The main risks related to international processes include:

Single supplier;
Airline;
Carrier;
Cargo insurance;
International law;
Customs procedures;
Policy changes in the country of origin;
International crises;
Terrorist attacks;
Climate change;

If the Lean principle is aimed at adding value to products and services by reducing costs and increasing quality, then the Lean Supply Chain concept applies to these projects. The first step during development of the Project Plan is to analyze the entire logistics process flow, identifying what adds value, as well as the critical points that may affect the quality and delivery time of deliverables. It is crucial to map and manage every stakeholder involved in the project and formally document their corresponding responsibilities, including their expectations. Information management has become fundamental to the success of this project, as certain types of cargo have some restrictions concerning transport packaging, transit time and specific conditions for storage, so that the quality of a product in transit is maintained.

For suppliers with subsidiaries in several countries, it is important to check standards for cargo configurations and reference documentation. Everyone involved in the operations must be aware of conditions and restrictions prior to project approval. When it comes to projects with big budgets and tight deadlines, one viable option is to use an alliance contract, in which the risks are shared with the stakeholders in the chain, allowing for better supply chain synergy. Because of this, development of suppliers is important to standardize documents and the flow of information, otherwise the result will be a mixed chain, with links either pulling or pushing the operations, which can cause delayed deliveries. In international logistics projects, it is important to consider the cultural aspect, since the alliance establishes a relationship between companies and contractors, forming a new "organization", whose mission is to implement the project; both parties must be prepared for cultural changes that will make an impact on their knowledge and on the conduct of stakeholders.

Therefore, the Lean concept applied to projects contributes to enhancing integration in a business chain, so that the stated deliverables in the project scope can be executed within planned costs, time and quality, thus meeting the customer's expectations.

Author: Angela Mazzeo

Co-author: Nelson Rosamilha