Exam 2 - Process Management (Section 8)

A coordinated system producing the exact products desired, delivered in the right quantities, where needed, and Just-in-Time (JIT)

The Pull System Visual Signals Small Lot Production Uniform Plant Loading

Value

-Value is the inherent worth of a product as judged by the customer and reflected in its selling price and market demand -Value is defined as anything for which the customer is willing to pay

The Five-S's

1. Seiri: Organization - Sort: keep only necessary items in teh workplace 2. Seiton: Tidiness - Set in order: arrange items to promote efficients workflow 3. Seiso: Purity - Shine: Clean the work area so it is neat and tidy 4. Seiketsu: Cleanliness - Standardize: set of standards for a consistently organizes workplace 5. Shitsuke: Discipline - Sustain: stick to the rules. Maintain and review standards.

Value Added Process

A process step that transforms or shapes a product or service which is eventually sold to a customer.

Reducing wastes consequently results in:

All of these can improve customer satisfaction and provide the company with a competitive advantage!!

Supply Chain Management seeks to incorporate LEAN elements using:

CROSS-TRAINING Satisfying internal CUSTOMER DEMAND Quickly MOVING PRODUCTS in the production system COMMUNICATING demand forecasts and production schedules up the supply chain OPTIMIZING inventory levels across the supply chain CHANNEL INTEGRATION - extending alliances to suppliers' suppliers and customers' customers

Continuous Improvement (Kaizen)

Continuous approach to reduce process, delivery, and quality problems, such as machine breakdown problems, setup problems, and internal quality problems

The 8 Wastes

DOWN TIME: D: Defects - Anything that does not meet the acceptance criteria. O: Overproduction - Production before it is needed, or in excess of customer requirements. Providing a service that is not needed. W: Waiting - Elapsed time between processes when no work is being done. N: Non-Utilized Talent - Underutilizing people's talents, skills, or knowledge. De-motivating the workforce by not asking for input or recognizing success. T: Transportation - Unnecessary movement of materials or products. I: Inventory - Excess products or materials or products. M: Motion - Unnecessary movement of people. Multiple hand-offs. E: Extra-Processing: Unnecessary steps in a process. Redundancies between processes. More work or higher quality than required by the customer.

The Pull System - Pull Approach

Each stage in the supply chain requests quantities needed from the previous stage. No excess inventory generated. Reduced inventory exposes problems.

Inventory and Setup Time Reduction

Excess inventory is a waste Reducing inventory levels can UNCOVER production problems Once problems are detected, they can be solved. The end result is a smoother running organization with less inventory investment.

Communication between workstations

Kanban: "Signal" or "Card" in Japanese. Contains information passed between stations. Authorizes production or the movement of materials to the next workstation

LEAN is composed of three elements working in unison:

LEAN Manufacturing Total Quality Management Respect for People

LEAN and Six Sigma complement each other

LEAN focuses on eliminating wastes and improving efficiency Six Sigma focuses on reducing defects and variations

LEAN is NOT a tool box of methods, ideas, or methodologies LEAN is a culture

LEAN provides VALUE for customers through the use of the most efficient resources possible LEAN is standard in many industries LEAN often results in: -Large cost reductions -Improved quality -Increased customer service

Workforce Commitment

Managers must support LEAN Manufacturing by providing subordinates with the skills, tools, time, and other necessary resources to identify problems and implement solutions

The Pull System - Traditional Approach

Supply chains work as "push" systems Inventory carried to cover up problems

LEAN Layouts

Move people and materials when and where needed, and as soon as possible 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 and labor Are often U-shaped to facilitate easier operator and material movements

LEAN builds long-term supplier relationships:

Partner with suppliers. Improve process quality. Information sharing. Goal to have single-source suppliers.

Uniform Plant Loading (Problem before it and what it is):

Problem: Demand exceeds capacity at points in the planning horizon. Matching the production plan to follow demand exactly can contribute to inefficiency and waste. Uniform Plant Loading: Planning up to capacity in earlier time periods to meet demand in later time periods. Also called "front-loading" the plan or "leveling" the plan. Production schedule is frozen in the up-front time period (i.e., month) Helps suppliers better plan production.

Non-Value Added Process

Process steps that take time, resources, or space, but do not add value to the product or service

In the 1990s, supply chain management combined (LEAN & six sigma):

Quick Response (QR) - speed and flexibility Efficient Consumer Response (ECR) - speed and flexibility Just-in-Time (JIT) - Continuous reduction of waste Keiretsu Relationships - Including suppliers in JIT/TQM efforts

LEAN Green Practices

Reduce the cost of environmental management Lead to improved environmental performance. Increase the possibility that firms will adopt more advanced environmental management Carbon-neutral offsetting the carbon footprint of a firm's operations

Small amount of product produced at any one time:

Reduces inventory and excess processing. Increases flexibility. Responds to customer demands more quickly. Shortens manufacturing lead time. Setup time must be low

Respect

Respect for all people must exist for an organization to be its best Flatter hierarchy than traditional organizations. Ordinary workers given great responsibility. Supply chain members work together in cross functional teams. Look at Role of: Workers, management, and suppliers.

Small Batch Scheduling

Small batch scheduling drives down costs by: Reducing purchased, WIP, and 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

LEAN History

Starting 1910's, Henry Ford's mass production line was a first breakthrough by using continuous assembly and flow systems that made parts find their way into finished products Video: Ford Model T - 100 Years Later (5 mins) In the 1940's, Taichii Ohno and Shigeo Shingo created the Toyota Production System (TPS), which incorporated Ford's production system and other techniques to form the basis of what is now known as LEAN. The term LEAN was first coined by John Krafcik in 1988 and the definition was expanded in the 1990 book, The Machine that Changed the World.

LEAN Supply Chain Relationships

Suppliers and customers work to remove waste, reduce cost, and improve quality and customer service JIT purchasing includes delivering smaller quantities, at right time, delivered to the right location, in the right quantities Firms develop lean supply chain relationships with key customers. Mutual dependency and benefits occur among these partners.

The Elements of LEAN Manufacturing

Waste (Muda) Reduction Firms reduce costs and add value by eliminating waste from the productive system. Waste encompasses wait times, inventories, material and people movement, processing steps, variability, any other non-value-adding activity. - Before Waste is removed, processes are often scattered, which can negatively affect your customers - After Waste is removed, processes are more streamlined, resulting in more satisfied customers. You'll also save your organization time and money

LEAN manufacturing

Waste Reduction LEAN Supply Chain Relationships LEAN Layouts Inventory and Setup Time Reduction Small Batch Scheduling Continuous Improvement Workforce Empowerment

Role of Workers

Workers performing different tasks and actively pursuing company goals: Worker duties Improve production process Monitor quality Correct quality problems Work in Teams Quality circles

Six Sigma

is an enterprise and supply chain-wide philosophy that emphasizes a commitment toward excellence and encompasses suppliers, employees, and customers

LEAN

is an operating philosophy of waste reduction and value enhancement and was originally created as the Toyota Production System (TPS) by key Toyota executives.

Create cultural change needed for LEAN to succeed:

Provide atmosphere of cooperation. Empower workers to take action based on their ideas. Develop incentive system for lean behaviors.