Supply Chain CH 8

Lean practices reduce waste and lead to Lean Green practices:

Adopt improved environmental management processes Improve environmental management performance. Develop Sustainability programs for more advanced environmental management

Elements of Quality Management

Create constancy of purpose to improve product & service. Adopt the new philosophy. Cease dependence on inspection to improve quality. End the practice of awarding business on the basis of price alone. Constantly improve the production & service system. Institute training. Institute leadership. Drive out fear. Break down barriers between departments. Eliminate slogans & exhortations. Eliminate quotas. Remove barriers to pride of workmanship. Institute program of self-improvement Take action to accomplish the transformation

Defects per Million Opportunities (DPMO)

DPMO= number of Defects / (opportunity for a defect) X (Number of Units) **example of six sigma**

The Seven Wastes

Overproducing-Unnecessary production to maintain high utilization Waiting- excess idle machine and operator and inventory wait time Transportation- excess movement of materials and multiple handling Over-processing- non-value adding manufacutring, handling, inspection, and other activities Excess Inventory-Storage of excess inventories Excess Movement-Unnecessary movements of employees in when working Scrap and Rework- Scrap materials and rework due to poor quality

Stages of Supply Chain Management Evolution

Stage 1- Firm is internally focused & functions managed separately. Silo effect is reactive & short-term goal oriented. Stage 2- Firm integrates efforts & resources among internal functions. Stage 3- Firm links suppliers/customers with firm's processes. Stage 4- Firm broadens supply chain influence beyond immediate or first-tier suppliers & customers.

The Elements of Lean Production

Waste Reduction Continuous Improvement (Kaizan) Workforce Empowerment Lean Layouts Inventory & Setup Time Reduction Small Batch Scheduling

DMAIC Improvement Cycle

Define-Identify "critical to achieve" requirements Measure- what and how to Analyze- charts and diagrams Improv- design and implement imporvement plans Control-monitor performance levels

3. Workforce Commitment

Managers must support Lean Production by providing subordinates with the skills, tools, time, & other necessary resources to identify problems & implement solutions.

The Five S's

Seiri- Organization Seiton-Tidiness *Eliminate searching for parts/tools, avoid using wrong tools Seiso-Purity *clean area Seiketsu-Cleanliness *reduce process variablitlity Shitsuke-Discipline *develop work habits

Elements of Six Sigma

Yellow Belt- Basic understanding, team member on process improvement project Green Belt- a trained team member allowed to work on small, carefuly defined six sigma projects, requiering less than a black belt's full-time commitment Black Belt- thorough knowledge of six sigma philosophies and principles. Coaches successful project teams. Identifies projects and selects project team members Mast Black Belt- a proven mastery of process variability reduction, waste reduction and growth principles and can effectively present training at all levels

More on Stat Tools of Quality

Acceptance Sampling When shipments are received from suppliers, samples are taken and measured against the quality acceptance standard. Shipment is assumed to have the same quality. Sampling is less time-consuming than testing every unit but can result in errors. Producer's risk- A buyer rejects a shipment of good quality units because the sample quality level did not meet standards (type-I error). Consumer's risk- Buyer accepts a shipment of poor-quality units because the sample falsely provides a positive answer (type-II error).

2. Continuous Improvement (Kaizan)

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

Lean Six Sigma (Lean Six)

Describes the melding of lean production and Six Sigma quality practices. Both use: High quality input materials, WIP, and finished goods Continuous Improvement (Kaizen) Lean Production and Six Sigma use complementary tool sets and are not competing philosophies

SCM uses LEAN by...

Eliminating waste in the supply chain satisfying customer demand quickly moving products through the system communicating demand forecasts & production schedules up the supply chain optimizing inventory levels across the supply chain extending alliances to suppliers' suppliers & customers' customers (Channel integration)

5. Inventory & Setup Time Reduction

Excess inventory is a waste and hides other problems (safety stock covers inefficiencies) By reducing inventory levels you can highlight production problems to be solved Bottlenecks, idle time, unbalanced flow... The end result is a smoother running production process with less inventory investment.

1. Waste (Muda) Reduction

Firms reduce costs & add value by eliminating waste from the productive system. Waste encompasses wait times, inventories, material & people movement, processing steps, variability, any other NON-VALUE-adding activity.

Statistical Tools of Quality

Flow Diagrams- Annotated boxes representing process to show the flow of products or customers. Check Sheets- to determine frequencies for specific problems (statistics). Pareto Charts- for presenting data in an organized fashion, indicating process problems from most to least severe. Cause-and-Effect Diagrams (Fishbone or Ishikawa diagrams)- used to aid in brainstorming & isolating the causes of a problem. 4 M's (Material, Machinery, Methods, Manpower) Allows firms to: visually monitor process performance compare the performance to desired levels or standards take corrective action Firms: gather process performance data create control charts to monitor process variability then collect sample measurements of the process over time and plot on charts.

4. Lean Layouts

Lean layouts are very visual (lines of visibility are unobstructed) with operators at one processing center able to monitor work at another. A quality or bottleneck can be quickly identified and corrected. Move people & materials when & where needed to achieve smooth product flow Manufacturing cells Sub assembly process for similar parts or components saving duplication of equipment & labor Positioned close to the manufacturing line to feed the line directly vs building inventories to be stored

Variations in Process Can Be

Natural variations: expected and random (can't control) Assignable variations: have a specific cause (can control) Sample data collected can be Variable data: weight, time, length (measurable) Attribute data: indicate some attribute such as color, satisfaction, or beauty.

Six Sigma

Near quality perfection (the statistical likelihood of non-defects 99.99966% of the time) or 3.4 defects in every million Pioneered by Motorola in 1987 A statistics-based decision-making framework designed to make significant quality improvements in value-adding processes Especially useful in manufacturing with a large number of parts

Joseph Juran's Quality Trilogy

Quality Planning- Identify internal/external customers & their needs, develop products that satisfy those needs. Mangers set goals, priorities, & compare results Quality Control- Determine what to control, establish standards of performance, measure performance, interpret the difference, & take action Quality Improvement- Show need for improvement, identify projects for improvement, implement remedies, provide control to maintain improvement.

Small Batch Scheduling

Small batch scheduling can drive down costs by: Reducing raw materials, WIP, & finished goods inventories Makes the firm more flexible to meet customer demand. Small production batches are accomplished with the use of kanbans (Cards). Kanbans generate demand for parts at all stages of production creating a "pull" system. Production Kanban tells a manufacturing cell to produce to refill an empty container Withdrawal Kanban is used to tell previous cells that more parts are needed

Lean Supply Chain Relationships

Suppliers & customers work to remove waste, reduce cost, & improve quality & 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 & benefits occur among these partners. Reserve greater level of capacity for their larger, steady customers

Phillip Crosby's Four Absolutes of Quality

The definition of quality is conformance to requirements - do it right the first time The system of quality is prevention - take preventative action Performance standard is zero defects - commit to eliminate defects The measure of quality is the price of nonconformance - the loss from poor materials and workmanship