lean supply chain
DESCRIPTION
Lean Supply Chain. The History, Application, and Life after Live. Agenda. Introductions Lean Definitions History of Lean Practical approach to Lean – Supply Chain deployment Deployment discussion Wrap up and questions. Introductions. - PowerPoint PPT PresentationTRANSCRIPT
Lean Supply Chain
The History, Application, and Life after Live
Agenda
–Introductions
–Lean Definitions
–History of Lean
–Practical approach to Lean – Supply Chain deployment
–Deployment discussion
–Wrap up and questions
Introductions• Why have a Chief Operating Officer of a Human Resource Consulting Company
speak on Lean and Supply Chain?
– Background
– Principles created from desire to improve Manufacturing Operations
– Finite ability to streamline operations• Systems• Measure results
– Continuous Improvement initiatives
– Examples
Lean Definitions
It is not Supply chain on a diet
It is not a stand alone process
Requires a cultural change within most organizations
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Lean Definitions
Lean*Production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination
*Wikipedia definition
ValueAny action or process that a customer would be willing to pay for
Create “More Value with Less Work”
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Traditional vs. Lean
•Some defects are acceptable•Errors will be caught by inspectors•Defects are fixed later•Higher quality = higher cost•Suppliers are adversaries•Quality results from inspection•Buy from lowest bidder•Low quality is caused by people
•Quality is a function of the shop floor•Quality is the responsibility of QC•Management must discover problems•Statistics constitute a complex tool
Traditional Perspective
•Defects are never acceptable•Employees catch mistakes•Defects are fixed now•Higher quality = higher profits/lower costs•Suppliers are trusted team members•Quality built into the product/process•Buy for quality/reliability•Low quality is caused by poor process management•Quality is a function of all functions•Quality is everyone's responsibility•Employees discover problems•Statistics can be used by anyone
Lean Perspective
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Why deploy Lean?
By focusing on the Value Proposition your organization has to offer in the marketplace, the reward is virtually unlimited
Inventory Turns 15 50 333On-time ship % 97 99.99 3Customer order ship time 8 4 50Sales Base$ Base X2$ 100Defects (PPM) 50 2 96Data entry (hrs/week) y .25y 75PO release Hours 1 Min 99Mat’l Mgt work week (hrs) 60+ 40+ 33
Base year Base +5 % improvement
Automotive manufacturing company results from a 5 year period
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History of Lean - Summary
• Foundation built in United States in early 1900’s
• After world war II concepts expanded in Japan – Toyota
• Industrial Revolution in United States masked impending quality and cost Tsunami
• 1980’s saw the rebirth of the United States quality programs
• Late 1990’s early 2000’s began Holistic movement of quality to back office operations
• Key concept:Lean is focused on getting the RIGHT things to the RIGHT place at the RIGHT time in the
RIGHT quantity – while minimizing waste and implementing continuous improvement
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Lean & Supply Chain Key Tenet
• Key Tenet of Lean is Elimination of Waste
• To eliminate – Must first understand
• Shigeo Shingo noted• Only the last turn of the bolt tightens it – the rest is just
movement
• Toyota defined 3 types of waste– Muri– Mura– Muda
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Types of WasteDefined
• Muri• Unreasonable work management imposes on people and machines• Ask for higher performance than person or machine can achieve with out taking
shortcuts• Usual cause of variations in product quality and output• Focuses on the preparation and planning of the process – what work can be avoided
by design
• Mura• Focus on implementation of work design• Elimination of fluctuations at scheduling or operations level – i.e. quality or volume
• Muda• Results of the design and implementation of the process (Muri & Mura)• Managements role to investigate causes of variations caused by Muri and Mura• Feedback to the Muri
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Typical Example
• Quarter end – – “make the numbers” edict comes out– Demand is increased to make plan (Mura)– System is stressed causing extra capacity to be squeezed from the process
• Standards relaxed• Short-cuts taken
– Muri – Focus on shipping product at all cost - leading to downtime, mistakes, waiting, rework - Waste
– Leads to Muda• Transportation (Moving products not required to perform the process)• Inventory (not all WIP being processed)• Motion (excess movement of people and materials)• Waiting (Queue times extend)• Overproduction ( build to stock)• Over Processing ( equipment & process not geared for increased volume)• Defects (Increase in rework and inspection)
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Waste Elimination
Three underlying Waste Elimination methods
• Pull SchedulingMake what the customer is buying today
• Takt timeChange processes to run at rate which output is required
• Flow ProductionRearrange processes to eliminate batch processingStrive for most efficient way to process one (1)
Best In ClassMisperception
• Best in Class Companies*
– 96% of orders delivered to customers complete and on time– 96% of orders received from suppliers complete and on
time– Decreased by 3% total landed costs per unit in past year– Decreased by 3% supply chain execution cost relative to
revenue
*Aberdeen Group
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Focus shift
KaizenAcquisitionProduct Line ProfitabilityInventory OptimizationSupplier Relationship
PricingCost EliminationMulti-sourcingFunding
Releasing purchase ordersExpeditingQuality tracking and reporting
Transactions
Analysis
Consulting
A true transformation of activities
Consulting
Analysis
Transactions
Supply Chain Personnel Today
* Taken from Jean Cunningham's Real Numbers
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Guiding Principles For Implementation
Stepping back – Why are we interested in Lean Supply Chain?
• In business to maximize profits by selling what the customer wants
• Timely – Accurate - Meaningful – Actionable information
• How do we do that? – 5 Principles1. Value 2. Value Stream3. Flow4. Pull 5. Perfection
5 Guiding Principles
1. Value • Everything that a company does must add value• Every activity must be aligned or changed or
eliminated• Set in marketplace –
• Not cost plus markup to get selling price• i.e. Postal Service vs FedEx
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5 Guiding Principles(Cont.)
2. Value Stream• All items from raw materials to customer delivery• Determined at Product/Service design• Includes Invoicing – field service – etc….• When Lean is implemented – traditionally this is where folks begin
3. Flow• Products & Information should flow from inception to completion
with no stops• Prime example of non continuous flow – leaf floating down a
mountain stream• One Piece Flow• Control systems must be updated when moving from Job-shop
(batch) to flow – i.e. no longer have materials sitting in queues – no standard lot sizes – etc….
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5 Guiding Principles(Cont.)
4. Pull• Traditional ERP systems (Push) build to forecast (Inventory build)• Only build what Customers want – (small inventory)• Dynamic re-assignment of personnel to other tasks not related to
building products• Will require change to performance benchmarks
– Efficiency & Utilization become obsolete terms– One of the quickest ways to “Kill” a lean implementation
• All downstream processes are driven by upstream demand
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5 Guiding Principles(Cont.)
5. Perfection• Perfect quality
– No inventory buffers– can’t afford defects– Quality programs and Lean Programs go hand-in-hand– Not just physical product quality – but right product at right place at
right time (subassemblies) – Toyota Tundra plant – door glass example
• Continuous improvement– Goes beyond the shop floor– Focus on driving waste out of the “system”
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How do we do it?
• Starts with the product and/or service being offered
• People are the foundation – Empowered employee program must be underway
• 5s methodology in-place• Sort• Set in Order• Shine• Standardize• Sustain
• Just in Time manufacturing based only on customer demand• Quality designed into product and processes – not inspected in• Suppliers included in design process • Visual performance tracking• Continuous improvement• Cells vs traditional work centers
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Some Common Misconceptions Regarding Lean
• It is a management program to lay off workers
• It is a management ploy to bust the union
• It is a management ploy to make workers work harder for same pay
• Management will lose control of the operation
• It is to difficult to put in
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Analyze the work flow
2nd Floor
8th Floor
1st Floor
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Redesign the workplace/process
3rdFloor3rdFloor3rdFloor
Measure & Refine Metrics
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Deploying Lean• I’ve captured the low hanging fruit – now what?
• The vision is to drive down transaction processing costs, while driving the work towards more value added analysis
• Reduce overproduction with end goal to eliminate it• High setup costs• Making the numbers• Poor quality – high scrap rates• “Clean the plate” mentality• Everything is running well – hate to stop
• Work to drive production cycle times to match customer consumption• Make versus Buy analysis on every component• Attempt to Continuous flow everything• Be selective in areas where inventory buffers are created• Tie customer trigger to pacing manufacturing item• Educate the customers on your activities to help normalize demands• Educate your suppliers to reduce variations and minimize outages
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Post Deployment Discussion
• Continuous process – does not end
• Be Patient Earth wasn’t made in a day
Act Plan
DoCheck
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Post Deployment Discussion
• Remember why you are in business• To make a profit• Lean implementations tend to become self serving
• Tools are a means to the end – not the end• Over measurement – not every variable is important• Tendency to take tools beyond their practical application
• i.e. value stream mapping good at flows, but poor in metrics
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Post Deployment Discussion
• Management Techniques
– Cultural change – employees must pull change not management push
– Train the management team – then the employees– Get buy in at mid management level – hardest for them to
give up authority– Practice what you preach
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Deployment Discussion
• Have we communicated to all involved parties? - are they committed?• Senior Management• Board of Directors• Shareholders• Employees• Unions• Banks/financial institutions/Investment community• Auditors• Suppliers• Customers
• Do we have a clear vision of why we want to implement Lean? – “program of the day”
• Who is going to lead down in the trenches?
• Where and how much help will we need?
• Are we in it for the long haul?
Things to consider
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Wrap up
Questions?
