Improvement of Outsourcing Processes with Lean Management

This report examines the application of lean management principles to improve outsourcing processes within the shipping company Spedition Hendricks GmbH and Co. KG. The study begins by outlining the problem of inefficiencies in outsourcing, particularly concerning the risk of waste, loss, and theft of goods, and the impact of changing market trends. The research explores various lean management methods, including Value Stream Mapping, 5S, FIFO, One-Piece Flow, Kanban, Kaizen, Poka Yoke, and PDCA cycles. The report provides an overview of the company, its operations, and the challenges it faces. The study then analyzes the selected lean management methods to identify potential improvements in the company's shipping and outsourcing activities. The target state focuses on improving cooperation, transparency, and warehouse space usage. Finally, the report proposes an implementation plan detailing the practical steps for implementing the chosen lean management methods within the company's operations, and concludes with a summary of findings and recommendations.

IMPROVEMENT OF THE
OUTSOURCING PROCESSES
THROUGH THE APPLICATION OF
METHODS OF LEAN
MANAGEMENT AT THE SHIPPING
COMPANY HENDRICKS GMBH
AND CO.

TABLE OF CONTENTS
TOPIC ............................................................................................................................................................................1
INTRODUCTION..........................................................................................................................................................1
Problem Statement...............................................................................................................................................1
Objective of Study...............................................................................................................................................2
Procedure of Study...............................................................................................................................................2
ANALYSIS OF LEAN MANAGEMENT.....................................................................................................................4
Lean Management................................................................................................................................................4
Muda (Waste)......................................................................................................................................................5
5's for Lean Culture.............................................................................................................................................6
Plan Do Check Act Cycle....................................................................................................................................8
Standardization..................................................................................................................................................10
First in, first out lean management....................................................................................................................13
One-piece Flow..................................................................................................................................................14
Kanban...............................................................................................................................................................14
Kaizen................................................................................................................................................................15
Poka Yoke..........................................................................................................................................................17
Quality Features failure mode and influence analysis.......................................................................................18
Value Stream Mapping......................................................................................................................................19
PRESENTATION OF COMPANY..............................................................................................................................21
REVIEW OF SELECTED METHODS OF LEAN MANAGEMENT........................................................................22
Value Stream Mapping......................................................................................................................................22
Lean and quality techniques..............................................................................................................................23
TARGET STATE.........................................................................................................................................................25
Improvement of cooperation:.............................................................................................................................25
Transparency and Independence .......................................................................................................................25
Optimization of warehousing and storage space usage....................................................................................26
Value Stream......................................................................................................................................................27
IMPLEMENTATION PLAN ......................................................................................................................................28
Implementation of value stream mapping ........................................................................................................28
Implementation of Muda (Waste)......................................................................................................................29
Implementation of Poka Yuke...........................................................................................................................30
CONCLUSION.............................................................................................................................................................31
REFERENCES..............................................................................................................................................................33

TOPIC
“To explore the improvement measures of outsourcing processes through the application of methods of
lean management at shipping: A case study on Spedition Hendricks GmbH and Co. KG”
INTRODUCTION
Spedition Hendricks GmbH and Co. KG, the company on which this research is based, is a service provider
for Zuma Beach Trading Limited. Zuma, meanwhile, is a textile wholesaler. The exchange between these two
organizations occurs via seek and airway. However, in order to make the exchange process effective, the companies
employ a system of numbering to every batch in order to prevent the risk of theft or loss. Lean management plays an
important role in shipping activities as it helps firms reduce the risk of product mis-management during exchange
and transportation. Frequently, it is this system which helps organizations to enhance the value of their products by
continuously improvising their commodity as per market trends. (Dave, Kubler and Koskela, 2015). This strategy
seeks the attention of firms selling old products in order to minimize waste and optimize its resources.
There are various methods, including value stream mapping and the one-piece flow PDCA cycle, which
can companies in managing the smooth flow of shipping and outsourcing processes (Standardized Work: The
Foundation for Kaizen, 2017). This study seeks to analyze the different methods which can assist scholars in
establishing improvement measures within the functions of Hendricks GmbH and Co. KG. The organization was
founded in 1972 by Eduard Hendricks. Initially, the firm operated using normal functions. However, owing to its
continuous success, it managed to implement critical functions and business processes. Thus, in just a few years, the
firm progressed from being a small organization to a medium size business function. Accordingly, the philosophy of
the entity is focused on providing buyer satisfaction. As such, the key functions of the enterprise aim to deliver high
quality service which is able to meet the changing trends and demands of its customers.
Problem Statement
Outsourcing and service provision are the riskiest management functions of any organisation because they
relate to risks of loss, wastage, and theft, amongst other things. Every transportation lot comprises 900 to 1,000
items. These items continually change as per market trends and consumer preferences. Further to this, the company
numbers every article in each batch in order to limit the likelihood of it being lost of stolen. It has been ascertained
that there are numerous items in stock which become obsolete due to either changing trends or mismanagement. In
accordance with this, it has been identified that the firm is lacking in its lean management. Because of this, KG is
unable to enhance the value of its products, which is impacts on its overall business process. Thus, as per the
problem analysis, it has been determined that it is important for the firm to improve its shipping management in
order to achieve a competitive advantage.
Aim
“To explore the improvement measures of outsourcing processes through the application of methods of
lean management at shipping: A case study on Spedition Hendricks GmbH and Co. KG”

Objectives of Study
 To assess the application of methods of lean management
 To evaluate the methods of lean management in relation to shipping
 To identify improvements in the management system of the shipping activities of KG
The motive behind this study is to define the application of lean management, which assists in improving
logical company functions in order to keep a check on productivity, technological advancement, shipping functions,
dealing of products and to stand out from the competition. Utilizing appropriate tools and methods could help the
enterprise to develop potential growth with regard to its to competitors across the globe.
Procedure of Study
In order to establish a smooth flow for study, the focus of the scholar is to first determine an appropriate
structure and procedure which will be followed consistently throughout. Accordingly, the structure of this
dissertation is as follows:
Introduction: In this chapter, the researcher will summarize the problem statement. This will help in
developing a critical understanding of the title of study. Furthermore, in this section of the dissertation, the focus of
the scholar is on framing the aims and objectives of the research with the help of the instructions of the company and
the problem statement. Defining the core motives of the dissertation within this chapter will assist the scholar in
delivering a smooth flow of investigation on the basis of the aims and objectives.
Analysis of lean management: This chapter focuses on developing knowledge regarding the key concerns
of the objectives, such as standardization 5 S, FIFO, one piece flow, kanban and so forth. Further to this, in order to
summarize these terms, the researcher will explore various online articles and journals. This chapter will be focused
on secondary information, which will help the scholar in extracting reliable information.
Presentation of the company: This is a crucial part of the study because it will facilitate an understanding
of key functions and areas of the firm, such as its outsourcing process, shipping management and warehouse areas.
Detailing organizational information is a core aspect which helps the scholar to deliver effective and reliable data
collection and analysis for the implementation plan. Thus, it could be proposed that presenting the company‘s
information in this chapter of the dissertation will help in understanding the problem statement and ascertaining
improvement measures.
Reviewing the selected methods of lean management: In this chapter, the scholar aims to analyze the
effectiveness of the methods selected for lean management within Spedition Hendricks GmbH and Co. KG.
Reviewing the chosen themes plays an important role as it helps the company in determining the effectiveness of
tools in accordance with the problem statement. However, in this chapter, the researcher will focus on evaluating the
applicability of the chosen lean management methods in order to improve the outsourcing and shipping governance
of the organization.
Target State: This chapter will be focused on targeting the chosen method of lean management in
accordance with the review. insofar as this is concerned, only a few tools will be targeted, in accordance with the
problem statement of the company and the implementation measures. This chapter of study will be focused on the

limited aspects and methods such as improvement of cooperation, transparency and Independence, optimization of
warehousing and storage space usage.
Implementation plan: This chapter of the dissertation will be related to the chosen methods of lean
management and their implementation within the shipping and outsourcing functions of the company. However, it
will also help in evaluating and summarizing the learning of the overall research with regards to the business process
of KG. Implementing changes in the organization will develop understanding of the importance of change and the
effectiveness of lean management methods., To emphasize its significance, the researcher will break the plan into
steps. Step wise process will assist the scholar in making clear description of change and implementation measures
with regard to choices.
Conclusion: The conclusion will summarize the findings of the data collection, data analysis and change
process. This is important as it allows the scholar an opportunity to define the overall information included in the
study. To make the conclusion effective, the scholar will focus on separating it into paragraphs related to each
chapter. This segregation of findings will assist the researcher in developing a clear and systematic understanding of
the overall information.
ANALYSIS OF LEAN MANAGEMENT
Lean Management
According to Tandler, 2013, lean management plays a crucial role in managing successful business
functions because it helps firms to deliver functions in the same direction in order to serve customer demands and to
maintain a competitive advantages. It helps enterprises to achieve their purpose of delivering consumer satisfaction.
Furthermore, it has been it has been identified that lean management is a set of values and principles which assist
companies in enhancing their product values at every possible step. In accordance with the enhancement of goods, it
can be said that products are the asset to organisation. Therefore, it is essential for organisation to manage lean
which is related to improving production function, manufacturing process. Further, change management, supply
chain issue, technological advancement and employee turnoverb are another concern of lean management of
organisation. Lean management, with its 5 elementary principles, is known to offer significant benefits to
manufacturing firms. These five principles are value, the value stream, flow, pull and perfection.
Forbes and Ahmed, 2010, stated that it is important for transportation and logistics firms to manage
standardization, quality, cost effectiveness and growth. In accordance with this, to manage lean, it is important for
firms to follow certain rules. These can include the necessity of the organization’s work to be highly specific in
relation to sequence, timing, outcome and content. Further to this, it is important for management to maintain an
effective customer supplier connection in order to minimize the chances of waste and to maintain cost effectiveness
within business functions. Establishing a connection with buyers is an important process since it is this that drives
consumers’ perceptions of their products and services. Further, deriving path way of every logistic and shipping
functions helps company in managing direct and simple management functions which is also beneficial in
maintaining the cost effectiveness of business functions. In contrast, Uygun and Wagner, 2011, stated that
implenting and following rules is the lean plan which helps logistics and transportation companies to easily manage

their products and services. This can aid them in minimizing waste and optimising use of their resources and
working as per changing trends.
However, the author explores the rule relating to improvement measures and managing continuous change.
The scholar believes that whilst this is a predominantly scientific method, it can also be an effective technique for
logical and transformation firms. This method establishes safe management functions with regards to dynamic
market trends. Likewise, the shipping and exchange services of Spedition Hendricks GmbH and Co. KG and Zuma
Beach Trading are focused on marking; employing a technique whereby they label all their batches at the time of
exchange in order to prevent risk of waste, loss or theft. To make the labelling specific to them, the firm also enables
with article number to items at the time of individual packaging. On the other hand, the present application and
management styles of company end up wasting old garments due to changing trends. Therefore, to mitigate this
issue, the firm needs to implement the use of lean management, as this offers different applications of managing safe
products and logistic services, like value stream mapping 5S. Thus, it could be suggested that implementing lean
could assist the firm in managing their product waste due to changing trends and changing articles constantly.
Kaizen
Martin and Osterling, 2014, noted that Kaizen is tool for lean management which assists the organization in
instances where the improvement of a firm is related to its employees’ motivation empowerment and collective
efforts. This tool allows the organization to set measures for improvement with the aim of enhancing employee
efficiency, incremental changes and reducing the manual workload in manufacturing processes and so on. Kaizen
manages change from top level of the organization (the CEO) down to the bottom (assembly line worker). However,
can be an especially effective process when employed in the context of logistical and purchasing services. In
addition to this, it helps management in setting cross-sectional boundaries in the supply chain, which serves to
remove the chance of overlapping and missing goods which are supplied in batches.

Through analysis of Illustration 7, it is reasonable to suggest that the Kaizen model may
help a company to implement continuous improvement, where the process is cyclical and the
focus of management is on determining the root causes of their problems. Further, for the
problems, alternative solutions are predicted and tested as per organizational functioning.
Illustration 1: Kaizen
Source: (Keyte and Locher, 2016.)

Following this, the best alternative will be implemented and work will be carried out in a
standardized way. This will help to highlight problems and mis-management. However, with
completely process and analysis the business aims at developing counter measures for overall
improvement. Hence, from this discussion, it can be concluded that the model offers a long-term
approach by helping the enterprise in achieving small and incremental changes. It is beneficial
for both employees and management. The process is considered effective for logistics and
transportation processes because it assists in improving the quality and efficiency of outsourcing
firms.
Muda (Waste)
According to Yamamoto and Bellgran, 2010, the term lean manufacturing was first
proposed by Womack, Jones in their book “The Machine That Changed the World” which was
launched in 1991. In its original incarnation, the term came about as a refusal to accept waste.
Similarly, Muda is a Japanese term that denotes waste. However, the mechanism of Muda is
based on seven different types of waste, which are outlined below:
 Over processing: It is common for logistics and transportation services to manufacture
extra products in order to minimize defects.
 Waiting: Waiting for the production of goods is a step which impacts the cost
effectiveness of business operations and hampers the smooth flow of logistic activities.
 Over production: This is related to waste, where the goods produced are greater than
customer demand. Over production of products leads to waste and disrupts production
activities of other batches.
 Transportation: This is related to the movement of products from one place to another.
Of course, this is a core the function of organizations and cannot be stopped.
Transportation can cause various types of waste, through defects, loss and delays.
 Inventory: Inventory relates to raw materials, work in progress and the processing of
finished products. However, management of inventory plays a crucial role in managing
waste because it is directly linked to resources.
 Motion: This is the movement of goods from one place to another. However, movement
of goods within the context of logistic is related to bulk transfers, which holds the
potential for waste.

 Defects: Defect is a situation which occurs when goods are distributed to consumers.
Though it occurs during transit, the defective products are ultimately waste which is
attributable to the firm because buyers will not purchase damaged goods. Thus, this is the
situation most applicable to Spedition Hendricks GmbH and Co. KG
As per the views of Österman and Fundin (2014), who suggested that lean thinking which
is based on banishing waste and creating wealth for the organization. In keeping with this, it
could be said that it is important for the organization to consider a lean thinking approach. This
will comprise factors including specific value, value stream, flow, pull and perform. All these
factors of lean thinking focus on growth and competitive advantage. This approach can assist
companies in considering the practical aspects of lean management. In addition, the author stated
that the concepts of fundamental lean thinking help enterprises in enabling the use of different
stages with regards to improvement processes.
5's for Lean Culture
According to Ansah, Sorooshian and Mustafa, 2016, 5's of lean management reflects the
culture of the workplace. 5's denotes the five primary phases which need to considered for
managing an effective and productive work environment. It is this strategy which assists
companies in establishing the orderly flow of management and business operations. Furthermore,
it is considered an effective technique within logistics and transportation functions, because it
helps to eliminate waste and establish a smooth and systematic flow of organizational functions.
Implementing tool for lean culture assists the enterprise in managing effective workflow, with
optimum utilization of resources. The author discussed about functions and detailed use of 5's
tool differently which is described below:
 Sort: Sorting is the most common part of the lean approach, where an organization
focuses on dividing activities according to their workplace categorical distribution. In
this, the focus of the firm is to reduce the pressure of the work in progress in order to
minimize waste. Insofar as this is concerned, logistics firms use red tagging to specify the
location of particular items.
 Set in order: Setting in order is used to specify a series of steps in continuous order. This
strategy helps the business in removing disruption in systematic order management. It
acts as a pillar to organizational functions and is beneficial to the firm as it helps them to
establish the phase of every procedure and action.

 Shine: This relates to the workplace environment, for which it is the responsibility of the
firm to ensure a safe and productive environment by managing the workplace
relationships of the employees and the employer. Shine helps the firm to maintain a
positive working environment through continuous working and by implementing
preventive measures.
 Standardize: This is related to improvement measures, where the firm aims at
scheduling improvement guidelines in order to minimize the chances of a relapse. In this
strategy, the organization aims to set a priority for managing changes in order to reduce
the chance of misconceptions and mis-management of programs.
 Sustain: This S of lean culture is related to the establishment of discipline within
activities which are related to the workplace environment, stock management, inventory
management, production, transport, waste and productivity. However, sustainability in
organizations is connected to communication, specification of activities, structure, time,
knowledge, training and rewards and recognition.
Thus, in accordance with 5's methodology within the context of lean initiative, it has been
determined that it is a plan which helps the firm in setting effective techniques for maintaining a
positive and productive work environment.
One-piece flow
Tandler, 2013, identified that a one-piece flow system can help an organization to
manage its services and function in order to become lean. The flow in this strategy is related to
eliminating large amount of Muda that is waste out of organization. The functions in this process
goes in u shape, where information flows from one person to another as per their responsibility
and authority. This system of lean management helps the enterprise to manage overlapping of
activities, ways, over processing and over-production. Moreover, it is considered a careful way
of working and managing business operations.

In accordance with the one-piece flow system, it has been determined that it can be an
effective tool for lean management, because it offers a step-wise process in which the firm
derives the components of activities the in initial step in order to avoid the chance of confusion
and waste. Furthermore, the steps comprise a shift in activities from workstation to workstation,
as per assembly line flow. Hence, the flow ends at the final processing and at the production
stage where the goods are ready to meet customer demands.
Kanban
Uygun and Wagner, 2011, proposed that the Kanban approach is established in
organizations for the purposes of continuous, incremental and evolutionary changes. Kanban is a
Japanese word which reflects card or label. The approach is consumer-centric, and allows the
consumer to pull the products they want from the company, according to their needs and wants.
This approach is effective in lean management because it helps the firm to minimize waste by
only producing limited products which meet the buyer’s requirements. Thus, it negates the need
for production of large volumes of products, which again minimizes waste and helps in
establishing lean business activities. Additional to this, as outlined in Illustration 6 below, it
could be suggested that the Kanban model helps organizations to maintain a positive relationship
with their customers as this approach to lean helps the firm to enhance its products and services
in accordance with their customers’ needs.
Illustration 3: One piece flow

As demonstrated by Yamamoto and Bellgran’s (2010) model, Kanban establishes a cyclic
process for managing consumers’ needs and wants. This Kanban cycle comprises limited work in
progress, managing flow, explicit policies for managing ethical flow, feedback loops,
improvement measures and visualization of changes.
Quality features failure mode and influence analysis
Singh, Garg and Sharma, 2011, discussed failure mode and influence evaluation, which
are types of Failure modes and effects analysis (FMEA) a system which is related to the global
level services of an organisation. Further to that, there is a design which is related to internal the
business environment, its components and sub system. Additionally, there is a process which
relates to the manufacturing and assembly line production system that can assist in eliminating
the waste activities and proper utilisation of resources. Apart from, this there is a component
which is related to services and business operations. Lastly, the software component relates to
the software functions of management.
Illustration 4: Kanban process of lean management
Source: (Yamamoto and Bellgran, 2010)