Mitsubishi Caterpillar Forklift America Inc. started off with a "push"-based fulfillment model for serving its customers, according to value stream manager Saravana K. Sigamani. It would make forklift trucks to stock, then look for buyers. But as the company entered the 2000s, it found that its replenishment systems were inconsistent, with no formal link between demand and supply. Clearly it was time for a change.

The company sought no silver bullet; instead it phased in a new approach over the next decade. The first step involved a close look at existing systems, to see how well they were integrated into the supply chain. Then came an internal effort to apply Lean transformation practices within the company's own walls. "We wanted to get our ducks in a row first, before going to suppliers," says Sigamani. The company spun out a cross-functional program that it called Velocity, with an eye toward solving nagging replenishment problems and other "major burning platform" issues.

Mitsubishi Forklift sought to integrate its processes from suppliers to the warehouse, and on to the assembly line. Its formalized replenishment process is based on several best practices, including Lean, kanban, just-in-time and min-max inventory management. Replenishment triggers were simplified, and reduced from 23 to just three.

Results included a dramatic reduction in inventory levels and a 40percent improvement in on-time performance. Adherence to committed ship dates went from 60 to 95 percent, Sigamani says.

The next step is to take a close look at the "bullwhip effect" on the company's supply chain. The goal is to identify inconsistencies in supply and demand spikes that get created inside the organization, then multiple throughout the chain. To address the problem, Mitsubishi Forklift has created a new model that incorporates level scheduling and helps to improve the company's production time starts. "Our journey going forward in supply-chain improvements is toward one key word: integration," says Sigamani.

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