Supply Chain Ch 8

5 S's Process steps:

Seiri/Sort:Keep only necessary items in the workplace, eliminate the rest Seiton/Straighten-Organize and arrange items to promote an efficient workflow Seiso/Shine: Clean the work area so it is neat and tidy Seiketsu/ Standardize: Schedule regualr cleaning and maintenance Shtsuke/Sustain: Stick to the rules. Maintain and review the standards "There is a place for everything, and everyhting should be in its place

Keiretsu Relationships

which involve companies both upstream and downstream of a manufacturing process, remaining independent, but working closely together for mutual benefit

Lean often results in

• Large cost reductions • Improved quality • Increased customer service

LEAN manufacturing is a natural fit within the discipline of supply chain management as all of the LEAN goals and objectives help to facilitate an efficient and effective supply chain. Supply chain management strives to incorporate LEAN elements by:

• Satisfying internal as well as external customer demand • Communicating demand forecasts and production schedules up and down the supply chain, to reduce/eliminate the bullwhip effect • Quickly moving products into and through the production process • Optimizing inventory levels across the supply chain (internally and externally) • Increasing the value, capabilities, and flexibility of the workforce through cross-training • Extending collaboration and alliances beyond just first-tier suppliers and customers to include second- and third-tier suppliers and customers as well

What is 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 further defined as anything for which the customer is willing to pay

Pull Approach:

Each stage in the supply chain requests quantities needed from the previous stage. No excess inventory generated. Reducing inventory levels can also uncover production problems.

Six Sigma

is an enterprise and supply chain-wide philosophy that emphasizes a commitment toward excellence, encompassing 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.

Changeover time

is 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

is the time taken to prepare and format the manufacturing equipment and systems for production.

After Waste is removed

processes are more efficient, streamlined, and take less time to complete, resulting in more satisfied customers

Quick Response-

rapid replenishment of a customer's stock by a supplier with direct access to data from the customer's point of sale; emphasizes speed and flexibility.

Efficient Consumer response (ECR)

strategy to increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers

Traditional Approach:

supply chains work as a push system, where inventory is carried to cover up problems. Reducing inventory levels can also uncover production problems. Refer to the following analogy. • The water represents inventory. When the water level is high, you don't see the rocks beneath the water, and don't know they are there. • The rocks represent hidden obstacles, problems, and issues. These dangers are hiding just beneath the surface. • Inventory can hide the underlying problems, but they are still there and can potentially create major issues in the supply chain.

Respect for all people must exist for an organization to be at its best

The goal regarding the workforce is NOT to reduce the number of people in an organization, but to use the people resources more wisely and more efficiently

1) Waste Reduction

Waste reduction is the number one objective of LEAN. Waste is the expenditure of one or more resources for no purpose or value. Companies can reduce costs and add value by eliminating waste from the production system. Waste can occur in many forms. Refer to figure for the eight categories of waste, and use the mnemonic "DOWN TIME" to remember them.

Setup Time NOTES

While setting up the equipment is a necessary function, if the setup 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

Role of Workers

Workers are given greater responsibility and their expanded duties include improving the production process, monitoring quality, and correcting quality problems. Workers often work in teams and form quality circles to facilitate these expanded responsibilities

Just in Time(JIT)

inventory strategy to decrease waste by receiving materials only when and as needed in the production process, thereby reducing inventory costs; re- quires and accurate demand forecast to be effective

Concept of Five S's

systematic process of workplace organization. It is a discipline designed to help build a quality work environment, both physically and mentally. 5-S is also considered part of the broader idea known as visual control, visual workplace, or visual factory.

Non Value Added Process

d process steps take time, resources, and/or space, but do not actually add val- ue to the product or service. Example: the process step of moving the component parts to the assembly equipment does not actually add value to the product. The overall process would be better and more efficient if this step could be minimized or eliminated.

2) Lean Layouts

-Involve moving people and materials when and where needed, and as soon as possible -Lean layouts are very visual, meaning that the lines of visibility are unobstructed, with operators at one processing station or workcenter able to monitor the progress of work at another workcenter. -

Lean is _______, Lean is NOT _______. Lean provides _______. Lean is _________

-Lean is a culture, it is not a toolbox of methods or ideas. - LEAN provides value for customers through the most efficient resources possible. -LEAN is standard in many industries

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!!

(3) 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 levels 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.

The Seven Elements of LEAN Manufacturing

1. Waste reduction 2. Lean layouts 3. Inventory, setup time, and changeover time reduction 4. Small batch scheduling and uniform plant loading 5. Lean supply chain relationships 6. Workforce empowerment and respect for people 7. Continuous improvement

D.O.W.N.T.I.M.E

Defects- anything that does not meet criteria Overproduction-production before needed or excess of customer requirements. Providing unneeded service. 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

(7) Continuous Improvement (Kaizen)

In the context of LEAN manufacturing, continuous improvement is a method for identifying opportunities for streamlining work and reducing waste. Continuous im- provement can be viewed as a formal prac- tice or an informal set of guidelines. Con- tinuous improvement helps to streamline workflows; and efficient workflows save time and money, allowing the company to reduce wasted time and effort. • The continuous improvement approach helps to reduce process, delivery, and quality problems such as machine breakdown problems, setup problems, and internal quality problems

Elements of Lean

LEAN is composed of three elements working in unison: -LEAN Manufacturing -Total Quality Management -Respect for People

Setup Time and Changeover Time

are both considered waste as they are intervals when the equipment is not performing its intended function—that is, producing product.

Value Added Process

process steps actually transform or shape a product or service that is eventually sold to a customer. Example: a process step that actually assembles component items into a finished product, adds value to the product.

Before Waste is removed

processes are less efficient, generally take longer to complete, and are often scattered, which can negatively affect customers.

Manufacturing cells

sets of machines are grouped together or in close proximity to one another based on the products or component parts they produce, saving duplication of equipment and labor. • Lean layouts are often U shaped to facilitate easier operator and material movements

Small batch scheduling can be facilitated through the use of Kanbans:

"Signal" or "Card" in Japanese used for communication (e.g., visual signal) between workstations Contains information passed between stations. Authorizes production or the movement of materials to the next workstation. Could be conducted through the use of a computer software program, i.e., ERP system.

Leann Hisory

-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.

Role of Suppliers:

A key element of LEAN is to build lean supply chain relationships with suppliers over the long term. Suppliers are expected to help improve process quality and share information. The goal is to have fewer but more strategic supply partner Partner with suppliers. Improve process quality. Information sharing. Goal to have single-source suppliers.

LEAN & SIX SIGMA

Both are philosophies - mindsets Complement one another -LEAN focuses on eliminating wastes and improving efficiency -Six Sigma focuses on reducing defects and variations

Uniform Plant Loading: Problem

In a manufacturing environment, unless demand is perfectly flat, or capacity is highly variable, it is likely that demand will exceed capacity, not reach capacity, or both, at various points in the planning horizon. Matching the production plan to follow demand exactly can contribute to inefficiency and waste.

Notes on Pull System

Lowering inventory will help to expose the hidden problems. Once the problems are de- tected, they can be solved. The end result will be a smoother running supply chain with less inventory investment

Role Of managment

Management must create the cultural change needed for LEAN to succeed. They provide an atmosphere of cooperation, empower workers to take action based on their ideas, and develop incentive systems to encourage and reward lean behaviors.

6) Workforce Commitment and Respect for People

People are the most valuable resource in any company. Without good people the business will not succeed. When people do not feel respected themselves, they tend to lose respect for the company. This can become a major problem at any time but particularly when you are trying to implement LEAN. Most people want to perform well in their jobs. They want to feel like they have contributed to the company goals. A company that respects people will appreciate their workers' efforts and keep them in high regard. Some of the more basic ways a company can ensure that their people know they are respected include frequent communication, actively listening to their ideas, praising good performance, and providing help and support when necessary

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

Small Batch Scheduling

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. 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, reduce costs and eliminating or minimizing waste in the system. The company can also get the product to the customer more quickly. Shortens manufacturing lead time and the actual time it takes to produce a product, however, setup time must be low so that it is easy to switch from producing one type of product to another.

In the 1990s, Supply Chain Management combined:

Quick Response Efficient Consumer response (ECR) -Just in Time(JIT) -Keiretus Relationships

(5) 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.

(4) 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.