Lean Myths -- Kanban Will Drive Up My Shipping Costs

Another excuse we frequently hear for not deploying Kanban or Lean production is that moving from push to pull will drive up shipping costs. To a Lean skeptic, the potential for increased shipping costs outweighs the potential gains from a transition.

Well, you can probably guess that we think these skeptics are wrong. Shipping costs don't always increase. First, shipping frequency tends to already be an issue. The problem is the shipments tend to come in several large bulk orders, then lots of smaller orders to attempt to ameliorate the impact of poor forecasting. With a Kanban system, where pull drives replenishment, the number of orders typically doesn't change dramatically, rather the variance in order size changes. The end result of a Kanban implementation is typically a much smoother order curve, not higher shipping costs.

Now, let's talk benefits. Even where shipments are more frequent, doesn't it seem the tradeoff is worth it? Lower inventory, increased turaround times, fewer rush orders, more on time deliveries... Independently, each variable would likely offest any increase in shipping costs. Taken in aggregate in a lean manufacturing operation, the benefits of utilizing, for example, kanban cards or an electronic kanban system far outweigh any potential costs.

Anything more than a marginal increase in shipping costs is unikely. But those costs are quickly and easily more than offset in any successful Lean impelmentation.