LEAN and Sustainable Supply Chains

1. LEAN and Sustainable Supply Chains CHAPTER 13

2. Learning Objectives • Describe how Green and Lean can complement each other. • Explain how a production pull system works. • Understand Toyota Production System concepts. • Summarize important attributes of a lean supply chain. • Analyze a supply chain process using value stream mapping. • Know the principles of supply chain design.

3. What is Lean? Is it skinny? Is it less people? Is it working harder? Is it making less? What is Lean?

4. What is Lean? Why no Sir! Lean is none of those things. Lean is an ever evolving philosophy based on proven principles and practices aimed at the elimination of wastes.

5. What is Lean? Lean is a continuing process of change involving everyone in the organization.

6. Designing processes for your business • Deliver exactly what the customer needs (defect free) • Be able to deliver customized value to each individual customer • Deliver on demand exactly as requested • Respond immediately to problems or changes • Have no waste

7. LEAN in general Continued • Value chain: each step in the supply chain should create value • If it does not create value, it should be removed • Customer value: something for which the customer is willing to pay • Waste: anything that does not add value from the customer’s perspective LO 1

8. Understanding Value-Added Activity

9. Understanding Value-Added What would you be willing to pay for when ordering a hamburger? ___ Cost of radio, TV, web ads ___ Cost of delivery truck signs ___ Cost of store manager ___ Cost of cleaning ___ Cost of menus ___ Employee training ___ Profit ___ Meat ___ Dough ___ Ketchup ___ Electricity to run ovens ___ Electricity to run outdoor lights left on accidentally ___ Person paid to inspect take-out orders ___ Cost of hamburgers not sold ___ Distribution Center

10. Toyota Production System

11. The “4P” model PROBLEM SOLVING (Continuous Improvement And Learning)

12. The “4P” model PROCESS (Eliminate Waste)

13. The “4P” model PEOPLE AND PARTNERS (Respect, Challenge, and Grow Them)

14. The “4P” model PHILOSOPHY (Long-Term Thinking)

15. Understanding Waste Waste: anything that adds cost or time without adding value

16. Understanding Waste Overproduction – producing work prior to it being required is waste and is the greatest of all the wastes • Producing reports no one reads or needs • Making extra copies • E-mailing, faxing same document • Entering repetitive information on multiple documents • Ineffective meetings

17. Understanding Waste Waiting – for people, signatures, and information is waste. This is “low hanging fruit” which is easy to reach and ripe for the taking. • Excessive signatures or approvals • Dependency of others to complete tasks • Delays in receiving information • Computer program revision problems • Cross-departmental resource commitments • Not a priority for someone to complete

18. Understanding Waste Motion - any movement of people, paper, electronic exchanges that does not add value is waste • Searching for computer files • Searching for documents in file cabinets • Repeatedly reviewing manuals for information • Hand carrying paper to another process • Cross-departmental resource commitments • Not a priority for someone to complete

19. Understanding Waste Transport - affects the time of delivery of any work within an office • Delivering unneeded documents • Excessive filing of work documents • Over-addressed e-mail distribution lists • Hand-carrying paper to another process • Cross-departmental resource commitments • Mis-prioritization

20. Understanding Waste Overprocessing - putting more work or effort into the work required by internal or external customers is waste • Duplicative reports or information • Repetitive data entry • Incorrect information being shared • Constantly revising documents • Ineffective meetings and no agendas • Duplicative documentation • Lack of accurate project planning

21. Understanding Waste Inventory (Time) - work piles, excessive supplies, and excessive signature requirements are waste • Files awaiting signatures or approvals • Work awaiting task completion by others • Obsolete files • Obsolete office equipment • Not sufficient training of back-ups • Purchasing excessive office supplies.

22. Understanding Waste Defects (or mistakes) - refers to all processing required creating a defect or mistake and the additional work required to correct it • Data entry errors • Pricing errors • Forwarding incomplete documentation • Incorrect information on document • Inefficient file system on PC or in cabinet • Not appropriate staffing to service customer

23. Understanding Waste Underutilization of People - is a result of not placing people where they can (and will) use their knowledge, skills, and abilities to the fullest (8th Waste) • Project deadlines not being met. • Work loads not evenly balanced due to lack of cross-training • High absenteeism and turnover • Inadequate performance management system • Incomplete job skill assessment prior to hiring

24. JIT Pull System

25. Minimizing Waste: Kanban Production Control Systems This puts the system back were it was before the item was pulled Once the Production kanban is received, the Machine Center produces a unit to replace the one taken by the Assembly Line people in the first place Withdrawal kanban Storage Part A Storage Part A Machine Center Assembly Line Production kanban Material Flow Card (signal) Flow The process begins by the Assembly Line people pulling Part A from Storage

26. Other Approaches • Kanban squares: marked spaces on the floor to identify where material should be stored • Container system: the container is used as a signal device • Colored golf balls: appropriate golf ball signals production LO 2

28. Determining the Number of Kanbans Needed • Setting up a kanban system requires determining the number of kanbans cards (or containers) needed • Each container represents the minimum production lot size • An accurate estimate of the lead time required to produce a container is key to determining how many kanbans are required LO 2

29. The Number of Kanban Card Sets LO 2

30. Minimized Setup Time • Reductions in setup and changeover times are necessary to achieve a smooth flow • Kanban significantly reduces the setup cost • The organization will strive for a lot size of one LO 2

31. Container Flag or with 2 parts signal (lot size = 2) marker Work Center 3 Work Center 1 Work Center 2

33. JIT ‘Pull’ System Simulation JIT ‘Pull’ System Simulation JIT ‘Pull’ System Simulation © 1997 Prentice-Hall, Inc. © 1997 Prentice-Hall, Inc. 11- 11- 20 20