Supply Chain Management

1. Supply Chain Management Manufacturing

2. Supply Chain Management • Manufacturing is all about converting raw material into consumer or industrial products. A firms manufacturing competency is based on • Brand power • Volume • Variety • Lead time

3. Supply Chain Management Lean Manufacturing “A philosophy of manufacturing based on planned elimination of waste and continuous improvement of productivity ……” Lean is, To create the most value while consuming the fewest resources.

4. Supply Chain Management History of Lean Manufacturing • The concept of Lean Manufacturing was developed by Henry Ford in 1920’s . • Toyota was the first company to introduce ‘lean manufacturing’ concept in its production system.

5. Supply Chain Management

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7. Supply Chain Management What are the documents?

8. Supply Chain Management Seven Wastes in lean manufacturing (1) Waste from overproduction (2) Waste of waiting time (3) Transportation waste (4) Inventory waste (5) Processing waste (6) Waste of motion (7) Waste from product defects

9. Supply Chain Management Overproduction Producing more than needed Producing faster than needed Causes of overproduction: • Just in case logic • Long process setup • Unbalanced work load • Misunderstood communication • Reward system

10. Supply Chain Management Waiting Time Waste Characteristics: • Man Waiting for Machine • Machine/Materials Waiting for Man • Lack of Operator Concern for Equipment Breakdowns

11. Supply Chain Management Transportation waste • Extra carts, fork lifts, dollies • Multiple Storage Locations • Extra Material Racks • Extra Facility Space • Incorrect Inventory Counts • Damaged Material

12. Supply Chain Management Inventory Waste • Extra space on receiving docks • Stagnated material flow • LIFO instead of FIFO • Extensive rework when problems surface • Long lead time for engineering changes • Additional material handling resources (Men, equipment, racks, storage space)

13. Supply Chain Management Processing Waste • Process Bottlenecks • Lack of Clear Customer Specifications • Redundant Approvals • Extra Copies/Excessive Information

14. Supply Chain Management Motion Waste • Looking for Tools • Excessive reaching or bending • Material too far apart (walk time) • Equipment for moving parts • Extra “Busy” movements while waiting

15. Supply Chain Management Defects • Waste of inspection, repair and scrapping of material to which value has already been added Causes of defects: • Weak process control • Poor quality system • Product design • Customer need not understood • Defective information

16. Supply Chain Management JUST In Time

17. Supply Chain Management JIT Synonyms • IBM - Continuous Flow Manufacturing • HP - Stockless Production - Repetitive Manufacturing System • GE - Management by Sight • Motorola - Short Cycle Manufacturing • Japanese - The Toyota System • Boeing - Lean Manufacturing

18. Supply Chain Management JIT: A Pull System • In a pull system, such as JIT, we look only at the next stage of production and determine what is needed there, and then we produce only that • As Robert Hall states, “You don’t never make nothing and send it no place. Somebody has got to come and get it”

19. Supply Chain Management Elements of JIT Manufacturing • Eliminating waste • Enforced problem solving and continuous improvement • People make JIT work • Total Quality Management (TQM) • Parallel processing • Kanban production control • JIT purchasing • Reducing inventories • Working toward repetitive manufacturing

20. Supply Chain Management People Make JIT Work • JIT has a strong element of training and involvement of workers. • A culture of mutual trust and teamwork must be developed. • An attitude of loyalty to the team and self-discipline must be developed. • Another crucial element of JIT is empowerment of workers, giving them the authority to solve production problems.

21. Supply Chain Management TQM and JIT • Long-term relationships with suppliers • Certified suppliers eliminate incoming inspection • Share design process for new products • Simplify design/processes • Process capable of meeting tolerances • Operators responsible for quality of own work

22. Supply Chain Management • Parallel Processing • Operations performed in series: Cycle Time for Each Operation = 1 Hour Total Product Cycle Time = 1 x 8 = 8 Hours Op 1 Op 2 Op 3 Op 4 Op 5 Op 6 Op 7 Op 8 • Operations performed in parallel: Cycle Time for Each Operation = 1 Hour Total Product Cycle Time = 1 x 5 = 5 Hours Op 2 Op 1 Op 3 Op 6 Op 7 Op 8 Op 5 Op 4

23. Supply Chain Management Kanban Production Control • At the core of JIT manufacturing at Toyota is Kanban, an amazingly simple system of planning and controlling production • Kanban, in Japanese, means card or marquee • Kanban is the means of signaling to the upstream workstation that the downstream workstation is ready for the upstream workstation to produce another batch of parts

24. Supply Chain Management • Signals come in many forms other than cards, including: • an empty crate • an empty designated location on the floor

25. Supply Chain Management Essential Elements of JIT Purchasing • Cooperative and long-term relationship between customer and supplier. • Supplier selection based not only on price, but also delivery schedules, product quality, and mutual trust. • Suppliers are usually located near the buyer’s factory. • Shipments are delivered directly to the customer’s production line. • Parts are delivered in small, standard-size containers with a minimum of paperwork and in exact quantities. • Delivered material is of near-perfect quality.

26. Supply Chain Management E-Commerce and JIT Purchasing • Internet-based information systems allow firms to quickly place orders for materials with their suppliers • This is an efficient and effective purchasing process • Saves the time of paperwork • Avoids errors associated with paperwork • Reduces procurement lead time • Reduces labor costs

27. Supply Chain Management Reducing Inventories through Setup Time Reduction • Central to JIT is the reduction of production lot sizes so that inventory levels are reduced. • Smaller lot sizes result in more machine setups • More machine setups, if they are lengthy, result in: • Increased production costs • Lost capacity (idle machines during setup) • The answer is: REDUCE MACHINE SETUP TIMES

28. Supply Chain Management Working Toward Repetitive Manufacturing • Reduce setup times and lot sizes to reduce inventories • Change factory layout to allow streamlined flows • Convert process-focused layout to cellular manufacturing (CM) centers • Install flexible manufacturing systems (FMS)

29. Supply Chain Management Benefits of JIT • Inventory levels are drastically reduced: • frees up working capital for other projects • less space is needed • customer responsiveness increases • Total product cycle time drops • Product quality is improved • Scrap and rework costs go down • Forces managers to fix problems and eliminate waste .... or it won’t work!

30. Supply Chain Management JIT in Services (Examples) • Organize Problem-Solving Groups • Upgrade Quality • Clarify Process Flows • Revise Equipment and Process Technologies

31. Supply Chain Management JIT in Services (Examples) • Level the Facility Load • Eliminate Unnecessary Activities • Introduce Demand-Pull Scheduling • Develop Supplier Networks

32. Supply Chain Management End of Topic