Supply Chain- Process Management Exam 3- William McLaury

SCM 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

Inventory and Setup Time Reduction

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

Waste 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

3 elements of LEAN working in unison

- LEAN manufacturing - Total Quality Management - Respect for People

Value is...

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

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 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.

Continuous Improvement

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

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

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

5 S's of LEAN Manufacturing

Sort- organization Set- tidiness Shine- purity Standardize- cleanliness Sustain- discipline

Elements of LEAN Manufacturing

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

8 Wastes of DOWNTIME

DEFECTS Anything that does not meet the acceptance criteria OVERPRODUCTION Production before it is needed, or in excess of customer requirements. Providing a service that is not needed. WAITING Elapsed time between processes when no work is being done NON-UTILIZED TALENT Underutilizing people's talents, skills or knowledge. De-motivating the workforce by not asking for input or recognizing success TRANSPORTATION Unnecessary movement of materials or products INVENTORY Excess products or materials not being processed MOTION Unnecessary movement of people. Multiple hand-offs EXTRA- PROCESSING Unnecessary steps in a process. Redundancies between processes. More work or higher quality than required by the customer

Reduced wastes consequently results in

Reduced cycle times Greater throughput Better productivity Improved quality Reduced costs

Lean & Six Sigma complement each other

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

Value Added Process

- Process step that transforms or shapes a product or service which is eventually sold to a customer

Non-Value Added Process

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

In the 90's, supply chain management combined

- 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

History of Lean

- 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 - 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 is

- a culture - NOT a tool box of methods, ideas, or methodologies - provides value for customers through the use of most efficient resources possible - a standard in many industries - Results in: large cost reductions, improved quality, increase customer service

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.