lean in the supply chain! - minnesota section...

Advance your supply chain

Lean in the Supply Chain! MNASQ 10/12/2015

Copyright LeanCor Supply Chain Group

Your Presenter: Ashley Yentz

Director - Account Management

LeanCor Supply Chain Group

[email protected]

Career Focus Areas:

Responsibilities in vision creation and deployment, project coordination, team leadership, detailed data analysis and forecast modeling, also conducting core functions within several operational disciplines. Skilled in coaching organizations through their lean logistics implementation: strategy deployment, culture change, process standardization

Prior Roles:

•Kaizen Leader, Strategic Planning - Toyota Motor Sales U.S.A. •Continuous Improvement Leader - Toyota’s Parts Operation Supply Chain •Transportation Analyst - Hilti, Inc.

mailto:[email protected]



Who Is LeanCor Supply Chain Group?

• Lean, supply chain, six

sigma, and leadership

courses that develop

people capability and

problem solving skills

while building a culture of

operational excellence

Project-based, end-to-

end supply chain

solutions that improve

your processes, reduce

inventory and Total Cost,

and optimize your

network

Custom, outsourced

transportation

management and

warehousing

solutions that optimize

material flow and exceed

your business goals

Advancing the World’s Supply

Chains

Trusted supply chain partner that specializes in lean principles to

deliver operational improvement. Three divisions:


Supply Chain: Understanding the Challenges

• 80% of supply chain activities are invisible to those

accountable

• Multiple suppliers, multiple customers, multiple third

parties

• High variability in material behavior, transportation modes

• High variability in lead time, supply and demand

• High variability in supplier performance and capability

• The extended network is not always visible

• Data are not always abundant


Supply Chain & Logistics Management

Logistics are sections of the orchestra

Supply Chain Management is the conductor who sets the rhythm for all logistics functions

Trying to optimize each logistics function independently will sub optimize the supply chain

Optimize the supply chain by enabling the logistics functions to work systematically

Logistics

Supply Chain Management


Words Have Meaning, Names Have Power

Supply Chain

• Supply:

– Supplier Focused

– EOQ’s

• Chain:

– Only touch points

– Each link independent

– Strong as it’s weakest

link

– Prone to kinking

Fulfillment Stream

• Fulfillment

– Customer Focused

– Takt Time Quantities

• Stream

– Flows smoothly

– Flows evenly


Guiding Principles of the Lean Supply Chain

Visibility Real time visibility to material and information flow

Value Stream Thinking Internal and external End to End collaboration to manage

total cost

Lead Time Reduction Flow, velocity, pull, JIT, and leveling

Quality at the Source Standardization, error proofing, and first time quality of

core processes

Complexity Management Supply Chain centric decision making to manage planned

complexity

Performance Management Clear targets, PDCA, and continuous improvement

The ultimate supply chain would have everyday look the same.


Concept Application: Guiding Principles

• Discuss at your table each of the LFS principles the

implications to your workplace.


The Ultimate Business Model

Build to order = No overproduction so what’s the problem?

Supply LT MLT + OL

+ < Customer LT

= BTO

Supply LT MLT + OL

+

<

Customer LT

= Forecast

LT = Leadtime MLT = Mfg Leadtime

OL = Outbound Logistics BTO = Build to order


Lead Time is Only Made of Two Things!

Lead Time = Value + Waste

Valu

e

Valu

e

Waste

Valu

e

Valu

e

Waste Waste

Custom

er C

onsum

es

Manufacture

Product D

esign

Supplier Build

10


Lean FS & Systems Thinking

11

The defining

characteristic of a

system is that it

cannot be understood

as a function of its

isolated components.

First, the behavior of

the system doesn't

depend on what each

part is doing but on

how each part is

interacting with the

rest ...

Kofman and Senge,

1993

What we need are more sales promotions !

I love it when a plan comes together…did it ?

All New Products every year with 100% new components…

You’re a fool if you don’t focus on BOM costs


What happens when we forget about the system?


What Are You Tolerating?

Taking Responsibility for System Wide Results


Total Cost of Ownership Decision Where would you buy?


TCO Sourcing Decision


Focus on Total Cost


The Costs of Carrying Inventory


Inventory Paradigms Mental Model 1

Inventory is Waste

Strategic Focus:

1. Eliminate all inventory

Mental Model 2

Right-sized inventory as competitive strength

Strategic Focus:

1. Flow, Cost, Visibility and Lead Time

2. On Time In Full (OTIF), First Time Quality….focus on the Customer.


1. Customer Service – Fill Rate Policies

2. Production Lot Sizes

3. Transportation Economies

4. Purchasing Economies & Hedging

5. Demand Variability: Seasonality, Spikes, New Product Launches

6. Cycle Stock ; Buffer Stock: Safety Stock: Raw Material: WIP: FG

a) Lead Time

b) Supplier Dependability

c) Transportation Dependability

d) Customer Dependability

Is a retail store a warehouse? Imagine if everything we buy is built to order….No grocery store, no box store…how would this effect our daily lives?

Why? Purpose of Inventory


Totally

Unstable!

Guessing Game

Reasonably

Stable

Stable!

Stability and Inventory


Stability and the Ultimate Goal

The lean operation would have everyday look the same

A Lean operation exposes problems. A problem is a deviation from the

standard, or more simply, a deviation from what we expected to happen

(The Plan in PDCA). Therefore, the ultimate goal is have everyday look the

same… stable and predictable. While we may never get there…this is the

goal.


The “Pull” Supermarket

• Called a supermarket because we withdraw

inventory from the “shelf” and it is

replenished in the exact quantity

• Replenishment is “fixed delivery frequency”

and “variable quantity”

• Replenishment happens only when there is

consumption from the supermarket

• The amount of inventory in the supermarket

is planned and controlled

What is the difference between a pull

supermarket and a min-max system?


Inventory Supermarket Sizing

Which factors increase inventory?

1. Cycle Stock: frequency in which you receive from suppliers/production.

2. Buffer Stock: purpose of product (service level), variation in demand,

frequency in which you receive from suppliers/production.

3. Safety Stock: Total lead time to order and get inventory from supplier,

globalization, risk for damage, supplier risks, transportation risks


Supermarket Size Decision


Application Question • You realize that Velocity is a big part of implementing Lean in

the fulfillment stream. While nobody would ever disagree that speed is good, you are not sure everybody on the team understands the impact of speed. You ask the team a few questions. 1. What does velocity even mean? 2. How does velocity impact the fulfillment stream? 3. What are the tactical techniques to increase velocity (speed) in the fulfillment stream?


Lean Logistics Concept 1 of 3:

Lot Size

Customer Daily Requirements = x75

100

25

75 100

Day 5

75 100

25

75 75 75 75 75

Day 1 Day 2 Day 5 Day 3 Day 4

Order Lot Size = 25

Day 1 Day 3 Day 4 Day 2

Order Lot Size = 50

What Happens Here? What are the Implementation Challenges?

http://www.google.com/url?sa=i&rct=j&q=3+amigos&source=images&cd=&cad=rja&docid=qadJWnya0vZPkM&tbnid=SIPvlndlhuJXkM:&ved=0CAUQjRw&url=http://www.empowernetwork.com/BandFlea/blog/three-amigos-save-the-day/&ei=iuRIUcP1J-aa0QGO0YH4DQ&bvm=bv.44011176,d.dmg&psig=AFQjCNHSaAVoVtNzWqBLVAVcom3E5aJ1AQ&ust=1363817992322406


Fri 1 /week Mon Tues Wed Thr

500 SQ/FT

4PM 1 /day 8AM 10AM 12PM 2PM

100 SQ/FT

4PM 8AM 10AM 12PM 2PM

25 SQ/FT

4 /day

What is the effect on inventory? What is the obvious challenge?


Frequency



Increased Delivery Frequency

Fri 1 /week Mon Tues Wed Thr

500

SQ/FT

4PM 1 /day 8AM 10AM 12PM 2PM

100

SQ/FT

Monthly Weekly Daily 2X Day 4X Day

Delivery Frequency (One Part or SKU #)

Space Used for Inventory (SQ Feet) 2000 500 100 50 25

Average Days on Hand (Days Inventory) 10 2.5 0.5 0.25 0.125

Minimum Order Lead Time 1 month 1 week 1 day 12 hours 6 hours

Percent Improvement from Increased Frequency

Space Used for Inventory (SQ Feet) 75% 80% 50% 50%

Average Days on Hand (Days Inventory) 75% 80% 50% 50%

Minimum Order Lead Time 75% 80% 50% 50%

Delivery Frequency Analysis

1 Truck Load = 1 Week Store / Distribution Center Requirements


7AM

9AM

11AM

1PM 3PM

One Shift Material Handling

Where can we use this concept tomorrow?


Level Flow



Entropy & Pressure

http://www.google.com/url?sa=i&rct=j&q=pressure+and+diamonds&source=images&cd=&cad=rja&docid=X7GL_wtqJIz6qM&tbnid=QOUBJyERid7oDM:&ved=0CAUQjRw&url=http://followme.org/articles/foundations/comfort/becoming-a-diamond-it-takes-a-lot-of-pressure&ei=-ziRUc6wHpDm9gSvm4GoDw&psig=AFQjCNFjjxVgzLufaOf8swCOOG-a0n2tEQ&ust=1368558183044612

http://fchafir.blogspot.com/


Second Law of Thermodynamics

In a system, a process that

occurs will tend to increase the

total entropy of the universe.

Second law of thermodynamics

System: A group of interacting, interrelated, or interdependent

elements forming a complex whole.

Entropy: A measure of the disorder or randomness in a closed system

What does this have to do with Problem Solving?


Putting Pressure on Logistics Processes


Use Lean Logistics Measurement Systems To enable you to collaborate and develop supply chain partners

• Purpose: • Create metrics that add

value to monitoring and improving processes.

• Outcomes: • Identify key metrics that

can be collected to monitor performance and identify gaps.

• Establish key targets for metrics that maintain, promote, or make visible instability or stability.

• Define purpose for each metric, that purpose should drive action.

On-Time Pickup and Delivery: Cost impact: prevents overtime on loading/shipping docks, increases customer satisfaction and prevents line-down scenarios, stability in this metric leads to reduced inventory

Pickup/Delivery Frequency: Cost impact: can lead to increased logistics cost, must be paired with decreases in inventory

Trailer Utilization: Cost impact: full trucks lead to fewer trucks, reduces transportation cost

Examples:


Thank You! Questions?

Ashley Yentz

[email protected]

925.899.9725

Let’s connect on




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