Lean Supply Chain
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Lean Supply Chain. The History, Application, and Life after Live. Agenda. Introductions Lean Definitions History of Lean Practical approach to Lean – Supply Chain deployment Deployment discussion Wrap up and questions. Introductions.

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Lean supply chain

Lean Supply Chain

The History, Application, and Life after Live


Agenda

Agenda

  • Introductions

  • Lean Definitions

  • History of Lean

  • Practical approach to Lean – Supply Chain deployment

  • Deployment discussion

  • Wrap up and questions


Introductions

Introductions

  • Why have a Chief Operating Officer of a Human Resource Consulting Company speak on Lean and Supply Chain?

    • Background

    • Principles created from desire to improve Manufacturing Operations

    • Finite ability to streamline operations

      • Systems

      • Measure results

    • Continuous Improvement initiatives

    • Examples


Lean definitions

Lean Definitions

It is not Supply chain on a diet

It is not a stand alone process

Requires a cultural change within most organizations


Lean definitions1

Lean Definitions

Lean*

Production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination

Value

Any action or process that a customer would be willing to pay for

Create “More Value with Less Work”

*Wikipedia definition


Traditional vs lean

Traditional vs. Lean

Traditional Perspective

Lean Perspective

  • Some defects are acceptable

  • Errors will be caught by inspectors

  • Defects are fixed later

  • Higher quality = higher cost

  • Suppliers are adversaries

  • Quality results from inspection

  • Buy from lowest bidder

  • Low quality is caused by people

  • Quality is a function of the shop floor

  • Quality is the responsibility of QC

  • Management must discover problems

  • Statistics constitute a complex tool

  • Defects are never acceptable

  • Employees catch mistakes

  • Defects are fixed now

  • Higher quality = higher profits/lower costs

  • Suppliers are trusted team members

  • Quality built into the product/process

  • Buy for quality/reliability

  • Low quality is caused by poor process management

  • Quality is a function of all functions

  • Quality is everyone's responsibility

  • Employees discover problems

  • Statistics can be used by anyone


Why deploy lean

Why deploy Lean?

% improvement

Base year

Base +5

Inventory Turns15 50333

On-time ship %9799.99 3

Customer order ship time 8 4 50

SalesBase$Base X2$100

Defects (PPM) 50 2 96

Data entry (hrs/week) y .25y 75

PO releaseHours1 Min 99

Mat’l Mgt work week (hrs) 60+ 40+ 33

Automotive manufacturing company results from a 5 year period

By focusing on the Value Proposition your organization has to offer in the marketplace, the reward is virtually unlimited


History of lean summary

History of Lean - Summary

  • Foundation built in United States in early 1900’s

  • After world war II concepts expanded in Japan – Toyota

  • Industrial Revolution in United States masked impending quality and cost Tsunami

  • 1980’s saw the rebirth of the United States quality programs

  • Late 1990’s early 2000’s began Holistic movement of quality to back office operations

  • Key concept:

    Lean is focused on getting the RIGHT things to the RIGHT place at the RIGHT time in the RIGHT quantity – while minimizing waste and implementing continuous improvement


Lean supply chain key tenet

Lean & Supply Chain Key Tenet

  • Key Tenet of Lean is Elimination of Waste

  • To eliminate – Must first understand

  • Shigeo Shingo noted

    • Only the last turn of the bolt tightens it – the rest is just movement

  • Toyota defined 3 types of waste

    • Muri

    • Mura

    • Muda


Types of waste defined

Types of WasteDefined

  • Muri

    • Unreasonable work management imposes on people and machines

    • Ask for higher performance than person or machine can achieve with out taking shortcuts

    • Usual cause of variations in product quality and output

    • Focuses on the preparation and planning of the process – what work can be avoided by design

  • Mura

    • Focus on implementation of work design

    • Elimination of fluctuations at scheduling or operations level – i.e. quality or volume

  • Muda

    • Results of the design and implementation of the process (Muri & Mura)

    • Managements role to investigate causes of variations caused by Muri and Mura

    • Feedback to the Muri


Typical example

Typical Example

  • Quarter end –

    • “make the numbers” edict comes out

    • Demand is increased to make plan (Mura)

    • System is stressed causing extra capacity to be squeezed from the process

      • Standards relaxed

      • Short-cuts taken

    • Muri – Focus on shipping product at all cost - leading to downtime, mistakes, waiting, rework - Waste

    • Leads to Muda

      • Transportation (Moving products not required to perform the process)

      • Inventory (not all WIP being processed)

      • Motion (excess movement of people and materials)

      • Waiting (Queue times extend)

      • Overproduction ( build to stock)

      • Over Processing ( equipment & process not geared for increased volume)

      • Defects (Increase in rework and inspection)


Waste elimination

Waste Elimination

Three underlying Waste Elimination methods

  • Pull Scheduling

    Make what the customer is buying today

  • Takt time

    Change processes to run at rate which output is required

  • Flow Production

    Rearrange processes to eliminate batch processing

    Strive for most efficient way to process one (1)


Best in class misperception

Best In ClassMisperception

  • Best in Class Companies*

    • 96% of orders delivered to customers complete and on time

    • 96% of orders received from suppliers complete and on time

    • Decreased by 3% total landed costs per unit in past year

    • Decreased by 3% supply chain execution cost relative to revenue

      *Aberdeen Group


Focus shift

Focus shift

Supply Chain Personnel Today

Kaizen

Acquisition

Product Line Profitability

Inventory Optimization

Supplier Relationship

Consulting

Consulting

Analysis

Pricing

Cost Elimination

Multi-sourcing

Funding

Analysis

Transactions

Releasing purchase orders

Expediting

Quality tracking and reporting

Transactions

A true transformation of activities

* Taken from Jean Cunningham's Real Numbers


Guiding principles for implementation

Guiding Principles For Implementation

Stepping back – Why are we interested in Lean Supply Chain?

  • In business to maximize profits by selling what the customer wants

    • Timely – Accurate - Meaningful – Actionable information

  • How do we do that? – 5 Principles

    • Value

    • Value Stream

    • Flow

    • Pull

    • Perfection


5 guiding principles

5 Guiding Principles

  • Value

    • Everything that a company does must add value

    • Every activity must be aligned or changed or eliminated

    • Set in marketplace –

      • Not cost plus markup to get selling price

      • i.e. Postal Service vs FedEx


5 guiding principles cont

5 Guiding Principles(Cont.)

  • Value Stream

    • All items from raw materials to customer delivery

    • Determined at Product/Service design

    • Includes Invoicing – field service – etc….

    • When Lean is implemented – traditionally this is where folks begin

  • Flow

    • Products & Information should flow from inception to completion with no stops

    • Prime example of non continuous flow – leaf floating down a mountain stream

    • One Piece Flow

    • Control systems must be updated when moving from Job-shop (batch) to flow – i.e. no longer have materials sitting in queues – no standard lot sizes – etc….


5 guiding principles cont1

5 Guiding Principles(Cont.)

  • Pull

    • Traditional ERP systems (Push) build to forecast (Inventory build)

    • Only build what Customers want – (small inventory)

    • Dynamic re-assignment of personnel to other tasks not related to building products

    • Will require change to performance benchmarks

      • Efficiency & Utilization become obsolete terms

      • One of the quickest ways to “Kill” a lean implementation

    • All downstream processes are driven by upstream demand


5 guiding principles cont2

5 Guiding Principles(Cont.)

  • Perfection

    • Perfect quality

      • No inventory buffers– can’t afford defects

      • Quality programs and Lean Programs go hand-in-hand

      • Not just physical product quality – but right product at right place at right time (subassemblies)

      • Toyota Tundra plant – door glass example

    • Continuous improvement

      • Goes beyond the shop floor

      • Focus on driving waste out of the “system”


How do we do it

How do we do it?

  • Starts with the product and/or service being offered

    • People are the foundation – Empowered employee program must be underway

    • 5s methodology in-place

      • Sort

      • Set in Order

      • Shine

      • Standardize

      • Sustain

    • Just in Time manufacturing based only on customer demand

    • Quality designed into product and processes – not inspected in

    • Suppliers included in design process

    • Visual performance tracking

    • Continuous improvement

    • Cells vs traditional work centers


Some common misconceptions regarding lean

Some Common Misconceptions Regarding Lean

  • It is a management program to lay off workers

  • It is a management ploy to bust the union

  • It is a management ploy to make workers work harder for same pay

  • Management will lose control of the operation

  • It is to difficult to put in


Analyze the work flow

Analyze the work flow

2nd Floor

1st Floor

8th Floor


Redesign the workplace process

Redesign the workplace/process

3rdFloor

3rdFloor

3rdFloor

Measure & Refine Metrics


Deploying lean

Deploying Lean

  • I’ve captured the low hanging fruit – now what?

  • The vision is to drive down transaction processing costs, while driving the work towards more value added analysis

  • Reduce overproduction with end goal to eliminate it

    • High setup costs

    • Making the numbers

    • Poor quality – high scrap rates

    • “Clean the plate” mentality

    • Everything is running well – hate to stop

  • Work to drive production cycle times to match customer consumption

  • Make versus Buy analysis on every component

  • Attempt to Continuous flow everything

  • Be selective in areas where inventory buffers are created

  • Tie customer trigger to pacing manufacturing item

  • Educate the customers on your activities to help normalize demands

  • Educate your suppliers to reduce variations and minimize outages


Post deployment discussion

Post Deployment Discussion

  • Continuous process – does not end

  • Be Patient

    Earth wasn’t made in a day

Act

Plan

Check

Do


Post deployment discussion1

Post Deployment Discussion

  • Remember why you are in business

    • To make a profit

    • Lean implementations tend to become self serving

  • Tools are a means to the end – not the end

    • Over measurement – not every variable is important

    • Tendency to take tools beyond their practical application

      • i.e. value stream mapping good at flows, but poor in metrics


Post deployment discussion2

Post Deployment Discussion

  • Management Techniques

    • Cultural change – employees must pull change not management push

    • Train the management team – then the employees

    • Get buy in at mid management level – hardest for them to give up authority

    • Practice what you preach


Deployment discussion

Deployment Discussion

Things to consider

  • Have we communicated to all involved parties? - are they committed?

    • Senior Management

    • Board of Directors

    • Shareholders

    • Employees

    • Unions

    • Banks/financial institutions/Investment community

    • Auditors

    • Suppliers

    • Customers

  • Do we have a clear vision of why we want to implement Lean? – “program of the day”

  • Who is going to lead down in the trenches?

  • Where and how much help will we need?

  • Are we in it for the long haul?


Wrap up

Wrap up

Questions?


Lean supply chain

Gary D. Glick

Chief Operating Officer

Provenir LLC

(210) 479-3444

[email protected]


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