Simulating Lean Supply Chain Thinking

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Podcast Transcription Implementing Lean Marketing Systems

Simulating Lean Supply Chain Thinking Guest was Paul Myerson

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Podcast Transcription Implementing Lean Marketing Systems Paul Myerson has been a successful change catalyst for clients and organizations of all sizes. He has more than 25 years of experience in supply chain strategies, systems, and operations that have resulted in bottom-line improvements for companies such as General Electric, Unilever, and Church and Dwight. He is currently Managing Partner at Logistics Planning Associates, LLC, a supply chain planning software and consulting business (www.psjplanner.com).

Lean Supply Chain and Logistics Management provides explanations of both basic and advanced Lean tools, as we as specific Lean implementation opportunities. Real-world examples and case studies demonstrate how to effectively use this powerful strategy to realize significant, long term improvements and bottom-line-savings.

This practical guide reveals how to identify and eliminate waste in any organization's supply chain and logistic function. Paul is a leading supply chain and logistics management expert with consulting, teaching, training and industry experience. He combined all aspects of Lean - Lean tools, methodologies, keys to success, and provides complete coverage of all functional areas of supply chain and logistics management, to enable the reader not only to begin the Lean SCM journey but sustain it into the future, where the ultimate rewards of increased competitiveness and profitability are attained.

Paul developed the Lean Supply Chain & Logistics Simulation for Enna.

Teaching Lean Supply Chain thru Simulation Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems Transcription of Podcast Joe Dager: Welcome everyone. This is Joe Dager the host of Business 901 Podcast. With me today is Paul Myerson. Paul is the founder and CEO of Logistics Planning Associates; author of the recent book Lean Supply Chain and Logistics Management. In conjunction with the consulting services he offers PSI, Planner and Supply Chaining Software, which is targeted to small and midsized organizations and is in use throughout the world. Early last year Enna released their new Supply Chain Logistics Management Training Package and this in addition to previously released Lean Supply Chain Logistic Management Simulation Game, both in which are available for purchase at their website.

Paul was instrumental in developing both packages. I would like to welcome you Paul.

Could you clean that up a bit and tell me how all these different elements fit together?

Paul Myerson: Sure Joe. Thanks for having me today. I've been in the supply chain and logistics area for 30 years now; undergraduate, graduate degree in it. I've worked for many large companies; General Electric, Unilever. Along the way, I got into consulting, and I basically saw a supply-chain planning system that the Windows based application; inexpensive, easy to implement and use. That's where I came up with the PSI Planner back in the late 90s.

During that time, as I said, I did a lot of consulting, and that software package really is to help a company, small, medium-sized manufacturer; distributor go from more of a push to a pull system using this type of technology; better forecasting, better collaborative forecasting, and the distribution requirements planning to help forecast closer to the customer level in your distribution network.

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Podcast Transcription Implementing Lean Marketing Systems I also around this time started doing a lot of Lean manufacturing training and consulting and that branched into as they call it today or what I refer to it as Lean Enterprise because it started expanding if you recall. It started in manufacturing, mainly in repetitive manufacturing like the auto industry and expanded into other industries and to the office, in the last five or so years into the supply chain and logistics area.

I always differentiate I call it supply chain and logistics because some people consider supply changes purchasing and procurement, and I include the aspect of transportation, distribution, planning, scheduling, etc.

As I did a lot of training in Lean, I used several simulation training games to teach people some of the concepts of Lean and how to apply it to manufacture. I realized that there was a real hole or gap there in Supply Chain and Logistics Management. That's where I came up with the idea for coming up with a simulation game with a training package and that also eventually lead to my book on Supply Chain and Logistics Management.

Joe: What's the difference between the training package and the simulation package?

Paul: The company that I wrote this with, the publisher Enna, enna.com, basically that was the way they work. It's a two-pronged approach. They basically sell them separately.

Some people just want to do training. In other words, as a consultant or an in-house trainer, you want to teach people on concepts and what are Lean concepts and how do you apply them to the workplace? That's all well and good but if you want to take it to the next level I find it helpful to have a simulation game so people can actually translate what they're learning in a classroom and apply it in real life or at least close to real life.

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Podcast Transcription Implementing Lean Marketing Systems So they're two separate things, but some people prefer just doing the training then going out on the work floor. Other people prefer to start off the training with a simulation game.

Joe: You can either use one or both together then?

Paul: Right, right. If you were to purchase from Enna the simulation game, it comes with basically the training package integrated in it. However, it's less expensive just to buy the training package which basically has slides and training concepts and tools in it without the simulation game. The game is actually a physical game that you purchase. They're also coming out with other training packages like I believe this June they are going to have a Lean Supply Chain for 5S Workplace Organization. The first one they came out with was a general overview of Lean Supply Chain and Logistics Training Package.

Joe: Now, do you use this simulation package yourself in your instruction?

Paul: I have used it. It really depends on the situation. If I have a client that is doing Lean, we're looking at a training event for teaching Lean Supply Chain in the appropriate company or the appropriate environment. I do use it. I have used it. Other companies, if it's more of a manufacturer, and they want a general training for manufacturing, then I'll use others. There are a lot of other training packages that are geared more toward manufacturing. In other words, we're looking at changeovers, equipment, and layout, things like that as opposed to more the Supply Chain Logistics that are specific to supply chain such as warehouse layout and adjusting time and things like that.

Joe: When would you use the game for training?

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Podcast Transcription Implementing Lean Marketing Systems Paul: Well, I find it useful whether I'm doing Lean Manufacturing for manufacturing or Lean Office for warehouse or supply chain and logistics. To be truly successful with Lean I think most people would agree that everybody has to be involved and understand that the concepts and the applications, so you always want to run as many people in your company through some kind of Lean training. The simulation is appropriate; I think, in the introductory types of setups where people they might sit there and listen, not listen, be bored if you're listening to a lecture. This way, it gets them engaged. It's a good team building approach to get them involved and see where it can really benefit them and the company and what their role in it is. So I find it to be very useful.

Joe: When you use it in a workshop setting do you use it in the introduction process or midday after you went through a few Lean principles?

Paul: Well, it's kind of a stand-alone thing. It is basically the introductory workshop. So my particular simulation game for a supply-chain logistics has three rounds, you can use less than three if you want to make it shorter, or you can do it in two rounds. It's typically meant to be a six to an eight-hour event that can be done shorter as I said or longer.

However, it's typically for 10 to 15 people, probably closer to 10 are better. Again, it's kind of the introductory first-day training to get people involved and a basic understanding.

Joe: So you're sitting there using all day long and explaining the different components.

Better yet, you explain how you go through the workshop with it.

Paul: In a nutshell, we have three rounds as I said. What we do is we start off, before we actually play the first round of the game have an introduction of Lean, just a concept of the seven ways, the non-value added, value added, all that stuff. We lay out the scenario.

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Podcast Transcription Implementing Lean Marketing Systems Again if the person who purchases the software, there're roles to play, everybody plays a role; supply chain manager, shipper, customer service, etc. The person doing the training or the teaching might be the role of the owner of the company or a consultant brought in order to teach Lean.

The first round is kind of the as is. Here's the situation, business runs as usual, kind of the traditional methods of push, in this case for supply chain pushing orders in waves or in batches through a warehouse for layout, large inventories, etc. at high costs.

After the first round, we do some wrap up and get some people involved. We say, "OK, here's where we are now let's bring in this expert in Lean and talk about where we might apply Lean here." The consultant or owner comes in and talks about some basic foundation concepts of Lean and where you might apply it in distribution and supply chain.

The second round you'll implement some basic improvements, not dramatic but basic ones, and you'll actually measure the end of each round. You'll measure your profitability; your costs, inventory levels, service levels, and things like that.

Then after the second round you'll do even more advance concepts teaching to the group, and they'll come up with ideas for the final round, which can be pretty dramatic in terms of using vendor managed inventory, which is really just in time, dramatic one-piece flow, things like that.

By the end of the third round and the wrap up at the end dramatically increase your profitability and service levels. Talk about steps, what you might do such as value stream mapping to get into detail about the current state and how you might dramatically change Teaching Lean Supply Chain thru Simulation Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems it to a future state in your workplace where you might apply some of this stuff once you get out of this classroom.

That's, in a nutshell, what the game does. It's not a game board but people actually play the roles in the game. There are game pieces such as Lego blocks to represent inventory and a stopwatch, so it's actually a complete game.

Joe: Do you keep the same roles that people are in their work? Do you keep the roles in the game or do you have them mix it up?

Paul: If this person is an inventory manager, we wouldn't give them the role of the inventory manager in this game. It's better to mix it up in terms of what they do in real life. I mean in this case they all have the same position in supply chain and logistics, which may be in sales or customer service. But the idea is not to put them in the role that they normally do, so they can see it from outside. But throughout the game, you do typically keep the same role. If your role is to do order entry, then you'll probably do order entry throughout the game. However, your position might be eliminated then you might move to a more value added position.

Joe: As I hear you explain the game you go through, the key stages of gaming. You start as a newbie in an on boarding process and you go to more of a regular player, and then you develop it, in the gaming world they're called an enthusiast but more of a master level.

So you're taking them through three stages in your process?

Paul: Yeah. The game itself has 10 participants and there can be observers and such. As I said different positions like sales, order processing, supply chain manager, order picker, Teaching Lean Supply Chain thru Simulation Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems etc. It's a 20 minute round. As I said you'll actually teach them the concept that they'll see the company, the business evolve from a less efficient business to a more efficient and profitable business over each 20 minute round. As you said, the first round is kind of the as is or current state. The second or third round is the future state.

And they actually not only get to map it or think about it, they actually get to do it and see their results. It's kind of neat, and it's a lot of fun. It's good for team building. They work together.

When you do this kind of training it is such is the concept you do as a wrap up if you're a good consultant or trainer you do say, "Does any of this stuff ring true to you? Here is the current process, we're losing money, there's too much inventory. Do these things ring true to you? Do you see them?"

During each round as you make improvements, could have you done this with the problems that you mentioned? Do you know what I mean? That's how you relate it to the real world, to the people in the training.

Joe: Do you see players engaging right away or do you have to kind of prompt them?

How do you get them warmed up and into the game?

Paul: Well, a lot of that you can only do so much with the game itself and the slides. A lot of it comes from the enthusiasm. The group itself being enthusiastic, the person running it whether it's the consultant or it's the trainer has to obviously show enthusiasm. You want to give people breaks. You don't just want to have them sitting in a room for six, eight hours without breaks and lunch and a chance to stretch and get caught up. It's kind of Teaching Lean Supply Chain thru Simulation Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems both. The people you bring in have to understand how important it is but also be able to have some fun and relax.

Joe: Do you see any difference in the engagement from a gender, age, or a position standpoint at all?

Paul: Well, in all games, again not just this game but when I've done simulations for Glee Manufacturing, some people come in really negative, and they don't really believe in this stuff, some people know a little. Then some of the people who are the most negative might come out of the game the most positive or might come up with ideas. I think you have to emphasize to people that things are changing these days even more rapidly, and you've got to go with the flow. Yeah, you might see someone who's been around a long time might be resistant to change, but that's not always the case. Sometimes it's the younger person and sometimes it could be job security or just lack of interest. But I think you've got to show them that it can an evolution, not a revolution type of thing, that you can apply bits and pieces of what works for your company, and this is a good way to show that, because they're going to actually have the input as to what can change over each round.

Joe Dager: As let's say a viewer of people participating, do you see people really getting into the game, joining in the flow of the game and kind of moving themselves away from reality, or is reality just always there...do you see that creeping back in during the game all the time?

Myerson: Well, during the training part before each round, you might hear some of the negativity or "Well; we can't do that," or "Yeah, if management did that it would work, but they won't do that," things like that. During the game itself, the actual round, it's usually Teaching Lean Supply Chain thru Simulation Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems people kind of let go and have fun, and when I play the role of the consultant and/or the owner, I try to make it realistic and joke around, like, "You could be fired;" and "Let's get going," and "Work harder and smarter." So, you make it kind of entertaining and fun. I've been in some of these simulations where the guy's coming in playing the owner's role, they'll have a cigar...you know they'll really get into the character themselves, and that helps to get the people involved, and then they kind of tease each other, and we have a lot of fun.

Dager: Well, it's kind of like a murder-mystery dinner or something, right?

Myerson: Yeah, and that's why it's important to have the client bring in a good lunch for people, and snacks.

Dager: Are there any rewards as part of the game structure, or is it just the competitiveness of the results of the improvement that's there?

Myerson: There are no specific rewards. It's really...again; I've been in some simulation games where everybody makes a clock -- this was for Lee Manufacturing -- and at the end, they get to keep the clock. It's a cheap clock, but I don't think people...you know, that's a nice thing. Some companies will give you training certificates. If you do this through a certified trainer, you might be able to get things like Continuing Education units or certifications -- you know, little plaque-type things -- but the big thing is, at the end of each round, there's a spreadsheet that comes with it where the trainer...actually, the warehouse manager, I believe...will actually track the improvements. You're actually gathering data from each round; how much was shipped, what the inventory levels were, and things like that. At the end of each round, you'll be able to determine profitability, Teaching Lean Supply Chain thru Simulation Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems sales revenue, and all those things. So, it becomes kind of fun, and I don't want to say it's rigged, but if you run this correctly, all these simulation games by the second or third round or however many rounds you have...it's a fairly dramatic improvement from usually having a loss, not a profit, to then, at the end, having fairly significantly profits and increases in sales. So, that's a reward in itself, I think.

Dager: Do you think you could have accomplished the same outcomes or learning without a game?

Myerson: I do a lot of teaching myself. I'm an adjunct professor at several universities; I learned a long time ago when I took classes in giving presentations that people learn in different ways. Some people are visual; they learn through seeing; other people are more auditory; they learn better through hearing; and some people are more hands-on, - on; they learn through touching. And so, typically, you're dealing with people that are out there...it depends if you're dealing with more office people versus people who are out on the floor that are more hands on...that people generally need a combination of all these things. So I might actually mix some video, when I do training in a classroom for university.

I think that reinforces any concepts. That's why we do it in rounds, start off with some simple training, and they get a little more detailed and complex and actually implement this stuff in the game.

Dager: Can you use the game repetitively? Get deeper meaning out of it, besides just these initial three rounds?

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Podcast Transcription Implementing Lean Marketing Systems Myerson: Well, it's not designed that way. As I said, this is really more an overview to get people started on many of the concepts, but like any introduction to Lean, whether it's manufacturing or supply chain, you're covering so many concepts, and so you're touching on adjustment time, layout, visual workplace, all that stuff, so that, typically the next step -- and we have this in the next step at the end of this game -- is to talk about, well, maybe you want to go do a value-stream app for a specific process. Maybe you want to look at the picking process in your warehouse, or the entire process in your warehouse, or the order of your office's management process. And then, you'll come up with specific opportunities, where you'll then want to look at how you're getting down to one piece slow or quick change-over, maybe. It's what they call "Total Productive Maintenance: Equipment Related Waste", where you have to look at equipment and how it's maintained, and that takes more specific training, it's a little more technical, and it's very focused. So I would say the answer is no, it is what it is, but it leads you to those next steps with more complex training.

Dager: Why do you think the interest in kind of "gaming up" learning has happened lately? Why do you think that there's a stronger interest in that in most workshops, even?

Myerson: Well, I think, obviously; it must be working or there wouldn't be the increased requests or the demand for it. I think it definitely works. It gets better results; people tend to enjoy it. Typically, after any kind of training, people fill out evaluation forms; I think they tend to get better evaluations when they do this type of stuff. Also, probably just that simulation in general has been used for training and improving processes for a long time.

Probably, also, it's just a technical age when people are used to gaming -- even though this is not an online game -- but, you know, a lot of younger people these days basically do Teaching Lean Supply Chain thru Simulation Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems gaming and simulations on computers, and it feeds to that, even though it's not a video game, but I guess they're used to this type of things, playing different roles with different people, so they're kind of comfortable in that.

Dager: What's your overall perspective on gaming simulation? Would you really recommend always having some type of structured activity within a workshop?

Myerson: Well, if it's a general workshop, I would say yes. At the very least, if I don't do a simulation game, I at least try and get some videos in there. Some people like to learn visually, but it's also so they get to see how this stuff gets implemented in a workplace -- any workplace -- but a real workplace. So, I think that helps learning. If you can get the simulation involved, that's good too. As you get into...as I said, other training and consulting where you're getting into specifics, let's say, TPM -- Total Productive Maintenance -- you're going to actually be out there observing real equipment. Now, I also integrate specific...not simulations, but videos for that, showing how people in a real company went through that particular event, in this case a TPM event, or if it's a quick change-over, here's how they actually did it, so it's not a simulation, people actually get to see how it worked in real life.

Dager: Now, when you use these different games that you have there, does that help, using your software? Is that an extension of...you know, do you understand the software better, or the practicality of the software better?

Myerson: I don't want to say they're not related, but our supply chain planning software...I guess was doing some Lean supply chain and logistics training, and they saw how you go from push to pull, then you can relate that to my software, which is supply Teaching Lean Supply Chain thru Simulation Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems chain planning software which helps a company in real-life go from a push to pull environment. Now, there are other technologies as well that we don't sell; we've bartered with other companies like Warehouse Management Software, which would help you to flow better within your warehouse. So, I suppose in that way, you could link it together, but generally, they're kind of separate.

Dager: Could you explain what your software is, and a little more about it?

Myerson: It's called PSI Planner for Windows. As I mentioned, I've used a lot of different technical software from some of these larger companies, like Manugistics and Logility and etc. They're very complex, very expensive, like hundreds of thousands of dollars and you had to be a rocket scientist to understand ...weeks or months of training. Our system is relatively simple. It's for a small to medium sized manufacturer or distributor of products, or a company that imports products and slaps their name on it, even. It's especially useful for companies that have regional networks of distribution centers or warehouses. Basically, it helps companies to forecast demand, "What am I going to sell?" It uses a collaborative Approach -- we call it the "Pyramid Approach," which has been around since the 1980s -- where you can generate forecasts at detailed levels, but then aggregate them to higher levels. So you might generate your forecast at the SKU item location; you might have one item at ten warehouses, and you want to forecast at the level so that you're closer to the customer, and ultimately; you might even want to forecast at the customer warehouse location. That's a whole process in itself called CP4 -- Collaborative Planning Forecast and Replenishment -- which our software can be used for.

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Podcast Transcription Implementing Lean Marketing Systems Basically, the forecast gets generated at a detailed level. You can make management overrides; you can use various simple, easy to understand statistical methods. Then, you can aggregate it up, because maybe sales and finance really want to look at forecasts and by class of products and sales dollars, not in cases and by warehouse. So, you collaborate and share that information, you ultimately come up with a forecast you're comfortable with, going up to, in our case, 36 months in daily, weekly, and monthly buckets.

Then, we have what's called Distribution Requirements Planning -- DRP -- it's similar to MRP in your distribution network. So, you do this time-phased planning, where you take this forecast in time-buckets, like, let's say, weekly buckets, and you look and say, "What's my inventory in my warehouse, less the greater of my forecasts for open customer orders, plus any scheduled receipts, transfers, purchase orders, scheduled production coming in," and it creates your projected ending inventory in the future.

The idea of DRP is it says, "OK, I don't ever want to run out of product; I want to keep some safety stock or safety-time level of buffer inventory, and in a month or two from now, when I'm going to drop below that, based on this forecast, it tells you. It creates what are called Planned Receipts and Orders. Planned Receipts says when I need to receive more product at that warehouse, and Planned Orders backs you up the lead time -- the transportation lead time, the manufacturing lead time, etc. -- and it's hierarchical, so you can go through a distribution network.

You might have regional warehouses that are sourced from a central warehouse that are sourced from a manufacturer, and work your way up that supply chain, and tell me what my ultimate requirements are for my manufacturing, and explode that into raw Teaching Lean Supply Chain thru Simulation Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems components using MRP, which we have to tell my manufacturers what we need to make my suppliers. So it goes from pushing out and guessing, to get closer to the customer to use that demand to pull through your requirements. So, that's the application, PSI Planner.

That actually stands for Production Sales Inventory Planner; that's not a term I made up, that's actually a term that's used in supply chain planning.

Dager: So, what's next for you, Paul? I mean, you're a software developer; you're a game developer, an author; you're a consultant. Is that going to keep you busy enough?

Myerson: I hope so. You know, as I said, I also have regular gigs teaching at a couple of universities here in New Jersey, but I'm always looking for opportunities. I also have a new column in Inbound Logistics Magazine, and, potentially, I'm told I'm going to get a web blog for Industry Week Magazine. But, I feel that I'm somewhat of a thought leader by doing all these different things, and so I'm always looking for opportunities to help companies and businesses, so I'm continuing to build on that, in terms of training and consulting. The software...we come out with new versions every year; we make enhancements to improve it, and I enjoy doing all these things.

Dager: Where can someone contact you?

Myerson: Our website is www.psiplanner.com. Our phone number is (1-800) 472-0233.

You can always email me at paul@psiplanner.com.

Dager: Your book name again, and where that can be found?

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Podcast Transcription Implementing Lean Marketing Systems Myerson: Yep, it's from McGraw Hill Professional; it's called "Lean Supply Chain and Logistics Management," and you can just go on Amazon.com; you can type in Myerson and Lean, and it'll come up.

Dager: Well, I'd like to thank you very much, Paul. I appreciate your input. This podcast is available through the business901.com website and the Business901 iTunes store.

Myerson: Thanks, Joe, I enjoyed it.

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Podcast Transcription Implementing Lean Marketing Systems Joseph T. Dager Business901 Phone: 260-918-0438 Skype: Biz901 Fax: 260-818-2022 Email: jtdager@business901.com Website: http://www.business901.com Twitter: @business901

Joe Dager is president of Business901, a firm specializing in bringing the continuous improvement process to the sales and marketing arena. He takes his process thinking of over thirty years in marketing within a wide variety of industries and applies it through Lean Marketing and Lean Service Design.

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