Lean Production & Supply Chain Management PDF

Introduction In 1990s, supply chain management combined:  Quick response (QR) - speed and flexibility  Efficient Consumer Response (ECR) - speed and flexibility  Just-in-Time (JIT) - Continuous reduction of waste  Keiretsu Relationships – partnership arrangements These appr...

Introduction In 1990s, supply chain management combined:  Quick response (QR) - speed and flexibility  Efficient Consumer Response (ECR) - speed and flexibility  Just-in-Time (JIT) - Continuous reduction of waste  Keiretsu Relationships – partnership arrangements These approaches have emerged as philosophies and practices known as Lean Production (or Lean Manufacturing) or simply Lean Thinking Lean Production & Toyota Production System (TPS) Lean Production An operating philosophy of waste reduction & value enhancement & was originally created as Toyota Production System (TPS) by key toyota executives Early versions were based on Ford assembly plants Also U.S. supermarket distribution systems  Key Concepts in TPS  Muda - Waste in all aspects of production  Kanban - Signal card & as part of JIT  Statistical process control (SPC) as part of TQM Efforts  Poka-Yoke - Error or mistake-proofing  Yokoten – sharing of best practices Lean Production emphasizes on  Reduction of waste  Continuous improvement  Synchronization of material flows within the organization  Channel integration- extending partnerships in the supply chain 3 4  The Key Elements of Lean  Waste Elimination  Lean Supply Chain Relationships  Lean Layouts  Inventory & Setup Time Reduction  Small Batch Production Scheduling  Continuous Improvement  Workforce Empowerment  Waste (Muda) Elimination  Firms reduce costs & add value by eliminating waste from the productive system.  Waste encompasses wait times, inventories, material & people movement, processing steps, variability, any other non-value-adding activity.  Taiichi Ohno described the seven wastes  The Seven Wastes (Table 8.2) Wastes Description Overproducing Unnecessary production to maintain high utilizations Waiting Excess idle machine & operator & inventory wait time Transportation Excess movement of materials & multiple handling Overprocessin Non-value adding manufacturing & other activities g Excess Storage of excess inventory Inventory Excess Unnecessary movements of employees movement Scrap & Scrap materials & rework due to poor quality Rework  The Five-S’s in Lean Japanese S- English S-Term English Translation Term Used 1. Seiri Organization Sort 2. Seiton Tidiness Set in order 3. Seiso Purity Shine 4. Seiketsu Cleanliness Standardize 5. Shitsuke Discipline Sustain (Table 8.3)  Lean Supply Chain Relationships Suppliers & customers work to remove waste, reduce cost, & improve quality & customer service Lean Thinking includes delivering smaller quantities, more frequently, to point of use Firms develop lean supply chain relationships with key customers. Mutual dependency & benefits occur among these partners. Locate production or warehousing facilities close to key customers  Lean Layouts  Move people & materials when & where needed, ASAP  Lean layouts are very visual (lines of visibility are unobstructed) with operators at one processing center able to monitor work at another  Manufacturing cells  Process similar parts or components saving duplication of equipment & labor  Are often U-shaped to facilitate easier operator & material movements U-shaped Work Cell  Inventory and Setup Time Reduction  Excess inventory is a waste  Reducing inventory levels causes production problems  Once problems are detected, they can be solved.  The end result is a smoother running organization with less inventory investment.  Reduce purchase order quantities and production lot sizes Relationship between Order Quantity, Lot Size and Average Inventory (Fig. 8.2)  Small Batch Production Scheduling  Small batch scheduling drives down costs by –  Reducing purchased, WIP, & finished goods inventories  Makes the firm more flexible to meet customer demand  Small production batches are accomplished with the use of Kanbans  Kanbans generate demand for parts at all stages of production creating a “pull” system Small Lot Sizes Increase Flexibility  Kanban System Originating from Toyota’s production system, the Kanban system aligns supply and demand more closely by ensuring that materials and products are replenished only when needed, minimizing excess inventory and reducing costs.  Pull-Based System  Visual Cues (e.g., Kanban cards, bins, pallets, containers, or electronic signals)  Reduce Work in Progress (WIP) & Inventory  Internal & External Collaboration  Continuous Improvement (Kaizen) 16 17 The Kanban System Number of Kanban Calculation 19 20  Continuous Improvement (Kaizen) Continuous approach to reduce process, delivery, & quality problems, such as machine breakdown problems, setup problems, & internal quality problems Kaizen Blitz -- rapid improvement event or workshop, to find big improvements quickly  Workforce Involvement/ Commitment Managers must support Lean Production by providing subordinates with the skills, tools, time, & other necessary resources to identify problems & implement solutions  Empowering Employees  Training and Development  Continuous Improvement (Kaizen)  Measuring performance  Recognition and reward systems