Lean Supply Chains - MGT 295 Chapter 12 PDF

Lean Supply Chains Chapter 12  Lean Supply Chains Explain Lean Production Illustrate how lean concepts can be applied to supply chain processes Analyze supply chain processes using Value Stream Mapping Apply lean concepts to service processes  US Inventory to Sales Ratio...

Lean Supply Chains Chapter 12  Lean Supply Chains Explain Lean Production Illustrate how lean concepts can be applied to supply chain processes Analyze supply chain processes using Value Stream Mapping Apply lean concepts to service processes  US Inventory to Sales Ratio Through September 2024  What are the CEO / COO thoughts about his/her Supply Chain ?  Is our Supply Chain efficient ?  A major cost driver to the organization  What is the cost of our Supply Chain ?  Achieving very high level of customer satisfaction can be expensive, and actual targets must be known and agreed to  Where can we improve on our Supply Chain ?  With the complexity of most Supply Chains, there is always opportunity for improvement  We can improve by considering and applying Lean concepts within our Supply Chain 4  Lean Production Lean Production - can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods)  The Lean Approach systematically identifies and eliminates waste (non-value-added activities) through continuous improvement by flowing through downstream demand pull Lean production is also called…  JIT Production  Toyota Production  Lean Production Lean production - integrated activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods) Waste - anything Customer value - something for that does not add Timing – careful which the customer is willing to value from the scheduling of pay customer’s activities perspective Value chain - Lean Production Lean coordinates If an activity each step in the involves the the timing of does not create supply chain elimination of production (parts value, it should should create waste in arrive “just in be removed value production effort time”)  Mass Production Characteristics Mass production is in conflict with Lean Concepts  Large, specialized equipment  Production in large lot sizes  Push system  The Toyota Production System  Global Modular Assembly to design vehicles  Increase the sharing of components  Why?  Based on two philosophies: 1. Elimination of waste 2. Respect for people  The Toyota Production System  Waste- anything that does not add value from the customer’s perspective  Overproduction  Waiting  Transportation  Inventory  Processing waste (over-processing)  Motion  Defects WATCH TOYOTA PRODUCTION SYSTEM VIDEO  Respect for People NUMMI (New United Motor Manufacturing, Inc.) – See Article on Canvas 1. What reputation did the Fremont workers have? 2. What types of activities did they do? 3. Why did they act this way? 4. Would you have selected them? 5. What ultimately happened to them? 6. Today Toyota will allow the public to tour their plants, even from a competitor. Why don’t they fear sharing lean concepts with competitors?  Respect for People Level payrolls Lifetime employment Cooperative employee unions Quality circles  Teams Value Mapping  Lean Supply Chains Value Stream The value-adding and non-value-adding activities required to design, order, and provide a product or service Waste Reduction The optimization of the value-adding activities and the elimination of non-value-adding activities  Value Stream Mapping Value stream mapping - a special type of flowcharting tool used to analyze where value is or is not being added as material flows through a process  Useful for developing lean processes  Creating of lean processes requires a full understanding of the business, including production processes, material flows, and information flows Kaizen – concept of continuous improvement Value Stream Mapping – Symbols Manufacturing Process Map (AS-IS) Improved (To-Be) - Manufacturing Process Map Lean Principles and Concepts Lean Supply Chain Design Principles Group technology Lean Layouts Quality at the source JIT production Lean Production Uniform plant loading Schedules Kanban production control system Specialized plants Lean Supply Work with suppliers Chains Building a lean supply chain  Group Technology Group technology- a philosophy in which similar parts are grouped into families The processes required to make the parts are arranged in a manufacturing cell Eliminated movement and queue time between operations, reduces inventory, and reduces employees  Lean Concepts Plant layout designed to ensure balanced work flow with a minimum of WIP inventory Preventive maintenance is emphasized to avoid downtime  Operators perform much of the maintenance to keep equipment reliable  Quality at the Source Lean Manufacturing Cell Video  Quality at the Source Factory workers are personally responsible for the quality of their output and become their own quality inspectors Factory workers are empowered to do their own maintenance Poka-yoke devices “Do it right the first time” “Produce no Defect Pass no Defect and Accept no Defect” CORRECT BACKWARDS!!! POKA YOKE POKA YOKE  Just-in-Time (JIT) Production JIT production - producing what is needed when needed and nothing more Anything over the minimum is waste Idea lot size is “one” Vendors ship several times a day JIT exposes problems otherwise hidden by inventory Inventory Hides Problems  Lean Supply Chain Design Principles Group technology Lean Layouts Quality at the source JIT production Lean Production Uniform plant loading Schedules Kanban production control system Specialized plants Lean Supply Work with suppliers Chains Building a lean supply chain  Uniform Plant Loading (heijunka) “The slower but consistent tortoise causes less waste and is much more desirable than the speedy hare that races ahead and then stops occasionally to doze. The Toyota Production System can be realized only when all the workers become tortoises.” Tai-ichi Ohno, 1988  Lean Production Schedules Uniform plant loading - smoothing the production flow to dampen the reaction waves that normally occur from schedule variations Level schedule - one that requires material pulled in a pattern uniform enough to allow production to respond to pull signals Freeze windows - that period of time during which the schedule is fixed and no changes are possible  Minimizing Waste: Uniform Plant Loading (heijunka) Suppose Supposeweweoperate operateaaproduction productionplant plantthat thatproduces producesaasingle single product. product. The Theschedule scheduleofofproduction productionfor forthis thisproduct productcould couldbe be accomplished accomplishedusing usingeither eitherof ofthe thetwo twoplant plantloading loadingschedules schedules below. below. Not uniform Jan. Units Feb. Units Mar. Units Total 3,200 2,800 3,000 9,000 or Uniform Jan. Units Feb. Units Mar. Units Total 3,000 3,000 3,000 9,000 Lean Production – Pull System  Kanban Production Control Systems Kanban means “sign” or “instruction card” in Japanese Cards or containers are used Make up the Kanban pull system Other Kanban Approaches Marked spaces on the floor to Kanban identify where squares material should be stored The container is Contain used as a signal er device system Each golf ball Colored signals golf production of a balls different item Kanban Process Schematic  Determining the Number of Kanbans Needed Expected demand duringlead time+ Safety Stock 𝑘= ¿ the container  Setting up a Kanban 𝑜𝑟 system requires k= DL(1+ S) determining the number of C Kanban cards (or containers) needed k = number of Kanban card sets  Each container represents D = average number of units demanded over a given time period the minimum production lot L = lead time to replenish an order size  An accurate estimate of (in same time units as demand) S = safety stock expressed as a the lead time required to percentage of demand during produce a container is key leadtime to determining how many C = container size Kanbans are required  Example 12.1- Catalytic Converter Average number of units demanded over a given time period (D ) = 8 per hour Lead time to replenish an order (L ) = 4 hours Safety stock (S ) = 10% Container size (C) = 10 units Round up to 4 containers  Minimized Setup Times Reductions in setup and changeover times are necessary to achieve a smooth flow Kanban reduces setup cost The organization will strive for a lot size of one  Minimized Setup Time Single Minute Exchange of Die (SMED) Internal setups – setup operations that can be performed only when the machine is stopped – such as mounting or removing dies External setups – setup operations that can be completed while the machine is running, such as transporting dies, gathering parts  Lean Supply Chain Design Principles Group technology Lean Layouts Quality at the source JIT production Lean Production Uniform plant loading Schedules Kanban production control system Specialized plants Lean Supply Work with suppliers Chains Building a lean supply chain  Lean Supply Chains  Specialized plants  Small specialized plants rather than large vertically integrated manufacturing facilities  Can be constructed and operated cheaper  Developing strong relations with supplies  Sharing projected demand allows the supplier to plan for long-runs, level production, low inventories through JIT and ultimately reduces waste Minimizing Waste: These Thesearearesmall small Focused Factory specialized specializedplants plantsthat that limit limitthe therange rangeof Networks products of productsproduced produced (sometimes (sometimesonly onlyone one type typeofof product productforforan an entire entirefacility) facility) Some Someplants plants in inJapan Japanhave have Coordination as asfew few as as30 30 System Integration and andasasmany many as as1000 1000 employees employees  Opportunities in an Integrated Supply Chain  Collaborative planning, forecasting, and replenishment (CPFR)  Standardization of processes  Accurate “pull” data  Vendor managed inventory (VMI)  Drop shipping and special packaging  Blanket orders  Lot size reduction  Improved Inventory Tracking (RFID)  Collaborate with Suppliers through CPFR Reduce lead times Frequent deliveries Project usage requirements  create level production scheduling Communicate quality expectations Result:  Minimize the Bull Whip Effect  Components of a Lean Focused Supply Chain Lean suppliers  Able to respond to changes  Lower prices  Higher quality Lean procurement  Key is automation (e-procurement)  Suppliers must see into the customers’ operations and customers must see into their suppliers’ operation Lean warehousing  Eliminate non-value-added steps and waste in storage process  Components of a Lean Focused Supply Chain Continued Lean logistics  Optimized mode selection and pooling orders  Combined multi-stop truckloads  Optimized routing  Cross docking  Import/export transportation processes  Backhaul minimization- “Never Ship Air” Lean customers  Understand their business needs  Value speed and flexibility  Establish effective partnerships with suppliers Lean Services  Service Operation 49 Waste Created by Uncertainty Uncertainty Uncertainty in task in demand times Customers’ production roles  Lean Services Organize problem-solving groups Upgrade housekeeping Upgrade quality Clarify process flows Revise equipment and process technologies  Lean Services Level the facility production volume Eliminate unnecessary activities Reorganize physical configuration Introduce demand-pull scheduling Develop supplier networks