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LEAN SUPPLY CHAIN

• Change is needed to increase competitiveness

LEAN SUPPLY CHAIN

• If we stand still, our competitors will pass us by

LEAN SUPPLY CHAIN

• In hard economic conditions, only the fittest will survive

LEAN SUPPLY CHAIN

• Reducing costs and providing the highest value to our customers is crucial for success

LEAN SUPPLY CHAIN

•“Lean” is one way forward

A process management

philosophy

Derived mostly from the Toyota

Production System (TPS)

A set of principles with the goal of cost

reduction through the elimination of waste

Known for its focus on reducing

waste

Can be applied anywhere

– Production

– Distribution

– Office and administration

– Anywhere that work exists

Waste is everywhere

• Companies have traditionally worked to maximize shop floor efficiency

Waste is everywhere

• Companies have ignored the importance of functions outside the shop floor

Non-manufacturing tasks in the supply chain represent from 50%

to 80% of the total lead-time, from receiving the request for products through to delivery

These tasks consist of as much as 95% non-value

added time and represent more than 25% of the

operational costs

Value

• Any action that enhances the fit, form or function of a product or service in accordance with customer requirements

• What the customer is prepared to pay for

Waste

• Any action that does not enhance the fit form or function of a product or service in accordance with customer requirements

• What the customer doesn’t want to pay for

T for Transportation-Movement of goods or information that is not required to perform the processing

I for Inventory -Components, work-in-process and finished product not being processed

M for Motion -People or equipment moving more than is required to perform the processing

Expediting of late orders

Correction of billing errors

Returns and warranty costs

Write-down and disposal of excess

inventory

Rework of purchased

material

Parts inspection and

testing

Re-keying data into multiple

systems

Export and manual

analysis of data

Kaizen

Process reengineering

Value stream mapping

Kanban Poka-yoke

Measurement of outputs

Each output in the chain must add value

Focus on customer requirements

Management of tasks to achieve outputs

Inputs

Task Task Task

CustomerRequirements

Output s

Why do we accept failure in other processes as being less

important?

What would be the result if 99% of orders arrived successfully?

Consistency99% is not good enough—would you fly in airplanes if they landed

safely 99% of the time?

What happens if requirements are exceeded?

Can you think of an example of a requirement being

exceeded that would not be favourable?

Precision

Must meet requirements exactly

Process time typically comprises less than x % of the cycle time

Value is only added during the process time

Cycle time is the elapsed time to complete a single cycle of work

Process time is the working time within the cycle

The goal is to get cycle time to equal

process time

1. Select team members

2. Prepare a value stream map

3. Identify process requirements

4. Collect process statistics

– Volumes

– Cycle times

– Process times

– Staffing

5. Identify waste

– Conduct a detailed walk-through

– Determine if requirements are met

– Classify each task as adding value

or waste

6. Develop solutions to eliminate waste

7. Implement solutions

– Test

– Document

– Train

– Implement

8. Repeat. Go back to step 5 and

select another area to work on

9. As success takes hold, go back to

step 1 and create new teams to look

at other processes in the business

A timber trading company facilitates deals between buyers in one country and sellers in another country

A total of 100,000 such transactions is processed each year

An analyst has prepared a value stream process map on the following page

The cycle time (“CT”) per order is 20 hours, 5 minutes plus shipping

The process time (“PT”) per order is 1 hour, 18 minutes

Reduce the time to enter orders

Reduce the wait time for a back-office process

Shorten the lead time to obtain raw materials

Automate production of shipping documentation

Redesign a job to reduce walking distances

Create a lean work cell for an assembly or production process

Reduce excess work-in-process inventory

Reduce the elapsed time to pick, pack and ship an order

‘Fail-safe’ a process to

eliminate errors or defects

Eliminate double entry of

information into spreadsheets