Chapter 8 part 2
Quick Resonse
the rapid replenishment of a customer's stock by a supplier with direct access to date from the customer's point of sale
Benefits of LEAN Waste Reduction
Typically only 1-10% of the process steps or activities are value added Implement LEAN to reduce the waste (non-value added) Reducing wastes consequently results in : -Reduced cycle times -Greater throughput -Better productivity -Improved quality -Reduced costs All of these can improve customer satisfaction and provide the company with a competitive advantage
Respect for People
Respect for all people must exist for an organization to be at its best -Flatter hierarchy than traditional organizations. -Ordinary workers given greater responsibility. -Supply chain members work together in cross functional teams.
Efficient Consumer Response (ECR)
a strategy to increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers.
Just-In-Time (JIT)
an inventory strategy to decrease waste by receiving materials only when and as needed in the production process, thereby reducing inventory costs
Lean
an operating philosophy of waste reduction and value enhancement. It was originally created as the Toyota Production System (TPS) by key Toyota executives focuses on waste reduction by streamlining a process
Keiretsu Relationships
involves companies both upstream and downstream of a manufacturing process, remaining independent but working closely together for mutual benefit
Waste Reduction
-Firms reduce costs and add value by eliminating waste from the production 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 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 is composed of three components working in unison:
LEAN Manufacturing Total Quality Management Respect for People
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 is not a tool box of methods, ideas, or methodologies...
it is a philosophy/culture
Uniform Plant Loading
Problem: -Demand exceeds capacity at points in the planning horizon. -Matching the production plan to follow demand exactly can contribute to inefficiency and waste, including excess inventory or shortages of inventory. 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
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 Sustainability is a LEAN concept
Lean + Six Sigma -->
Speed and Accuracy
Six Sigma
a disciplined, statistical-based, data-driven methodology for identifying, and removing the cause of defects (errors) and minimizing variability in manufacturing and in business processes. It was originally developed by Motorola
LEAN Manufacturing
a natural fit within the discipline of Supply Chain Management as all of the LEAN goals and objectives help to facilitate an efficient supply chain -Satisfying internal customer demand -Communicating demand forecasts and production schedules up the supply chain -Quickly moving products in the production system -Optimizing inventory levels across the supply chain -Increasing the value, capabilities, and flexibility of the workforce through cross-training -Extending collaboration and alliances beyond just 1st tier suppliers and customers to include 2nd and 3rd tier suppliers and customers as well
The goal of Lean is to
eliminate waste and the minimization of the amount of all resources used in the operation of a company -LEAN is standard in many industries -regularly results in: large cost reductions improved quality increased customer service
Lean Manufacturing (in one sentence)
the combination of these concepts have emerged as the philosophies and practices
Changeover Time
the time taken to adapt and modify the manufacturing equipment and systems to produce a different product or a new batch of the same product
Setup Time
the time taken to prepare and format the manufacturing equipment and systems for production
The Components of LEAN Manufacturing
1. Waste Reduction 2. LEAN Layouts 3. Inventory, Setup Time, & Changeover Time Reduction 4. Small Batch Scheduling and Uniform Plant Loading 5. LEAN Supply Chain Relationships 6. Workforce Empowerment 7. Continuous Improvement
Inventory, Setup Time & Changeover Time Reduction
Some inventory may be necessary, but excess inventory is a waste -Excess inventory takes up space, and costs money to hold, maintain, protect, secure, and insure. -It ties up financial capital which could be used for other aspects of the business. Reducing inventory can free up capital and reduce holding costs. -There is less likelihood of waste being created by obsolescence, expiry, spoilage, or damage with lower inventory levels.
Waste Categories
"DOWN TIME" Defects (anything that does not meet the acceptance criteria) Overproduction (production before it is need, 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/Movement (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)
LEAN Supply Chain Relationships
-Firms develop lean supply chain relationships with key customers and key suppliers. -In an ideal LEAN supply chain relationship, both customers and suppliers get connected in ways that allow them to easily exchange information, demand data, and the visibility of status. -Mutual dependency and benefits occur among these partners. -Suppliers and customers work to remove waste, reduce cost, and improve quality and customer service
The Role of Workers, Management, and Suppliers
-The goal is NOT to reduce the umber of people in an organization, it is to use people resources more wisely
Kanban
-means "Signal" or "Card" in Japanese and is used for communication (e.g., visual signal) between workstations. -authorize production or the movement of materials to the next workstation. -Could be facilitated through the use of a computer software program, i.e., ERP system.
The Five-S's
5-S, or the five pillars of the visual workplace, is a systematic process of workplace organization Sort- Keep only necessary items in the workplace, eliminate the rest Straighten-Organize and arrange items to promote an efficient workflow Shine-Clean the work area so it is neat and tidy Standardize- schedule regular cleaning and maintenance Sustain- Stick to the rules. Maintain and review the standards
Continuous Improvement
Continuous approach to reduce process, delivery, and quality problems, such as machine breakdown problems, setup problems, and internal quality problems
Role of Management
Create the cultural change needed for LEAN to succeed: -Provide an atmosphere of cooperation. -Empower workers to take action based on their ideas. Develop incentive systems to recognize and reward LEAN behaviors
Role of Supplier
LEAN involves building long-term supplier relationships -Partnerships with suppliers. -Improving process quality. -Sharing information. The goal is to have the fewest number of high-quality suppliers possible without unnecessarily increasing risk.
Small Batch Scheduling
LEAN Manufacturing attempts to reverse this though small batch scheduling. -Smaller batches will facilitate producing at the same rate as customer demand. Production in small batches creates a smooth workload as production can be synchronized with customer demand, facilitating a pull system. -It increases flexibility allowing the company to respond to changes in customer demands more quickly. -Throughput times in manufacturing go down, and Work-in-Process inventory goes down, reducing costs and eliminating or minimizing waste in the system. Can be facilitated through the use of Kanbans
Role of Workers
Perform tasks and actively pursuing company goals: -Improve production process -Correct quality problems -Monitor quality Work in Teams (i.e., Quality Circles)
Non-Value Added Process
Process steps that take time, resources, or space, but do not transform or shape the product or service.
Value Added Process
Process steps that transform or shape a product or service which is eventually sold to a customer.
LEAN History
Starting in the 1910's, Henry Ford's mass production line was a first breakthrough by using continuous assembly 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
Small Batch Scheduling and Uniform Plant Loading
The ideal schedule is to produce every product as quickly as possible and at the same rate as customer demand. In the real world, material availability, labor availability, and setup or changeover time influences the scheduling of large batches Large batches can exacerbate the Bullwhip Effect as production in large batches creates an uneven workload Production is not synchronized with customer demand, making a pull system impossible. Throughput times in manufacturing go up, and work-in-process inventory goes up, creating more waste in the system
The Pull System
Traditional Approach: -Supply chains work as "push systems, and inventory is carried to cover up problems Pull Approach: -Each stage in the supply chain requests quantities needed from the previous stage. -No excess inventory is generated. -Reducing inventory levels can. also uncover production problems
Understand "Value"
Value is the inherent worth of a product as judged by the customer, and reflected in its selling price and market demand. It is any activity that increases the market, form, or function of the product/service. Things for which the customer is willing to pay.
Setup Time and Changeover Time Reduction
both considered a waste as they are times when the equipment is not performing its intended function... producing product While setting up the equipment is a necessary function, if the set up time can be minimized, the difference will be more time available to produce. Both setup and changeover are non-value added operations and should be minimized as much as possible.
