SCM 8: Process Management

The Eight Wastes

"DOWN TIME" 1. Defects 2. Overproduction 3. Waiting 4. Non-Utilized Talent 5. Transportation 6. Inventory 7. Motion 8. Extra-Processing

LEAN History (1910's)

- Ford's mass production line used continuous assembly and flow systems - considered a first breakthrough

3 elements of LEAN

- LEAN manufacturing - total quality mgmt - respect for people

LEAN History (1990s)

- SCM combined: quick response, efficient consumer response, just-in-time, and keiretsu relationships to make LEAN manufacturing and Six Sigma

LEAN History (1940's)

- Toyota Production System = Ford's production system + other techniques

value

- anything for which the customer is willing to pay - product's inherent worth is judged by customer and reflected in the selling price and market demand

Problem--> leading to Uniform Plant Loading

- demand > capacity at points in planning horizon - if match production plan to demand exactly -> inefficient + waste

Six Sigma

- enterprise and supply chain-wide philosophy that emphasizes a commitment toward excellence - focuses on reducing defects and variations - encompasses suppliers, employees and customers

What does LEAN result in

- large cost reductions - improved quality - increased customer service

Respect for People

- must exist for an organization to be its best -flatter hierarchy than traditional organization -ordinary workers given great responsibility -SC member work together in cross functional teams

LEAN

- operating philosophy of waste reduction and value enhancement - focuses on eliminating wastes and improving efficiency - created by Toyota - not a tool box of methods, ideas, or methodologies - a culture that provides value for customers through efficiency - standard in many industries

non-value added process

- take time, resources, or space but don't add value to a product/service

LEAN History (1988)

- term LEAN coined by John Krafcik

value added process

- transforms/shapes a product/service which is eventually sold to a customer

Elements of LEAN Manufacturing: 1. Waste (Muda) Reduction

-Firms reduce costs and add value by streamlining & eliminating waste from the productive system

Role of Management Duties

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

LEAN Green Practices

-Reduce the cost of environmental management --> improved environ. performance -Increase the possibility that firms will adopt more advanced environmental management

Small Lot Production Benefits

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

LEAN Manufacturing (simplified)

-The Pull System -Visual Signals -Small Lot Production -Uniform Plant Loading

How does SCM incorporates LEAN?

-cross- training -satisfy customer demand -quick moving products -communicating demand & production schedules -optimize inventory levels -channel integration (extend alliances to suppliers' suppliers and customers' customers)

Elements of LEAN Manufacturing: 5. Small Batch Scheduling

-drives down costs (bc- reducing purchased, WIP, and finished goods inventories, make firm more flexible to meet customer demand) -use kanbans

The Five-S's

5 S's Japanese Terms 1. Seiri= Sort= Organization 2. Seiton = Set in order = Tidiness (for efficient workflow) 3. Seiso = Shine = Purity 4. Seiketsu = Standardize = cleanliness 5. Shitsuke = Sustain = Discipline (standards)

Elements of LEAN Manufacturing: 3. LEAN Layouts

-move people and materials when and where needed asap -visual w/ operators at processing centers at one place and monitoring work at other -manufacturing cells (process similar parts, U-shaped structure)

Benefits of LEAN

-reduced cycle times - greater throughput - better productivity - improved quality - reduced costs

Elements of LEAN Manufacturing: 2. LEAN Supply Chain Relationship

-suppliers & (esp key) customer work together for mutual dependency and benefits -JIT purchasing (= delivering right, smaller quantities, right time, right locations) -

Uniform Plant Loading Solution

/"front-loading" the plan or "leveling" the plan -plans up to capacity in earlier time pds to meet demand later -production schedule is frozen in up-front time pd (ie. month) -helps suppliers better plan production

Elements of LEAN Manufacturing

1. Waste Reduction 2. LEAN Supply Chain Relationships 3. LEAN Layouts 4. Inventory and Setup Time Reduction 5. Small Batch Scheduling 6. Continuous Improvement 7. Workforce Empowerment

Elements of LEAN Manufacturing: 4. Inventory and Setup Time Reduction

1. excess inventory = waste 2. reduce inventory levels --> production problems 3. detected problems --> solve 4. result: smoother running org w/ less inventory investment

LEAN Manufacturing

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

Visual Signals

Communications btwn workstations Kanban: -authorize demand for parts to next workstation -"signal" / "card" in Japanese -contain info passed btwn stations

Respect for People: Role of Management

Create cultural change needed for LEAN to succeed

Respect for People: Role of Supplier

LEAN builds long-term supplier relationships: -partner w/ suppliers -Improve process quality -Information sharing -Goal to have single-source suppliers

Elements of LEAN Manufacturing: 7. Workforce Commitment

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

Respect for People: Role of Workers

Perform different tasks actively pursue company goals Work in Teams: Quality Circles

Small Lot Production

Small amount of product produced at any 1 time

Role of Worker Duties

Worker duties: Improve production process, Monitor quality, Correct quality problems

Elements of LEAN Manufacturing: 6. Continuous Improvement (Kaizen)

to reduce process, delivery, and quality problems ie) machine breakdown problems

The Pull System

traditionally = "push" systems Pull = Each stage in the supply chain requests quantities needed from the previous stage. -No excess inventory generated. -Reduced inventory exposes problems.