1 Session 21 Implementing JIT Manufacturing Session 21 Implementing JIT Manufacturing John Striebich...

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Session 21 Session 21

Implementing JIT ManufacturingImplementing JIT Manufacturing

John Striebich

Copeland Corporation

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CopelandCopeland

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Copeland WorldwideCopeland WorldwideCopeland WorldwideCopeland Worldwide

5 Plants 14 Plants 5 Plants

Belgium

Berlin,Welkenraedt,England

Thatcham,

Kolin,

Germany

Cookstown, N. Ireland

Reynosa,

Brantford,Ontario

Rushville,Indiana

Lebanon, Missouri

Ava, Missouri

MexicoHartselle,Alabama

Shelby,N. Carolina (2)

Sidney,

Ohio (4)

Fishers, Indiana

Natchitoches, Louisiana

Shenyang,ChinaShenyang,China

Atit, IndiaAtit, India

Karad, IndiaKarad, India

Rayong,ThailandRayong,Thailand

Suzhou,ChinaSuzhou,China

75 Suppliers75 Suppliers 300 Suppliers300 Suppliers 300 Suppliers300 Suppliers

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Planning and Scheduling Lean OperationsPlanning and Scheduling Lean OperationsCopeland CorporationCopeland CorporationPlanning and Scheduling Lean OperationsPlanning and Scheduling Lean OperationsCopeland CorporationCopeland Corporation

Current Environment (FY99)

• MRP II System – Home Grown/Customized• Weekly MRP Runs• Nightly Batch Updates Of Transactions• No Long Term Capacity Planning• Short Term Capacity Planning – Push Out Orders• Forecast Driven Suppliers• Inventory Management – Hold PO’s At Month End

Performance Customer Metrics Requirements

Delivery 70-90% 98+%Lead Time 3-5 Weeks ConsignmentInventory 5-6 Turns Double in 5 Years

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Market Environment

• Customer Consolidation

• More Competitive Environment• Competition Offering Consignment• Pricing/Profit Pressure

• Customer’s Customers Waiting Until Last Minute To Order• Tight Capital Spending Market

We Had To Change To Meet These Requirements - Lean Was The Only Way - Priorities:

1. Stabilization2. Responsiveness

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Stabilization And Responsiveness

• Sales And Operations Planning

• Stabilization – Use Of Pull Systems

• Manufacturing Cycle Time (MCT)/ Lead-time Reduction

• Supply Chain Management

• Metrics

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Sales and Operations Planning

Sales and Operations Planning

Material CapacityPlan from Supplier

Forecast

Manpower Constraints/Flex

EquipmentConstraints/Flex

Resource AnalysisMarketing Forecast

Plant Part Forecasts

Inputs

Available to PromiseReport

Auto-AcknowledgeTakt Times/ Line Rates

And Inv Plan

Metrics

Outputs

MarketingFeedback

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Sales And Operations Planning

• Define Capacity/Resource Constraints

• Develop High Level Plan To Meet Forecasted Demand• Within Constraints• With Upside “Flex” Potential• Use Planned Inventory Build-Up If Needed

• Develop Tactics And Obtain Approval For: - Labor Plan - Planned Line Rates (Set Takt Times) - Sales Programs, Promos, Etc.

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Forecasts

• Forecasts Are Inaccurate (Fact or Fiction?)• Some Forecasts Are Accurate• Customers Have To Schedule/Plan Lines• Emergencies, New Demand, Surprises Will Still Occur

• Communication/Collaboration With Customers Is Key

• Mix Model Forecasting• Stable Business – Repeatable, Predictable• New Business – Volatile Demand, Unpredictable

• Small As % Of Total Business• Minimal Impact To Overall Forecast

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Stabilization

• Develop System To Eliminate Need For Expediting•Expediting Needed:

- Customers Needed Product Inside of Planned LT - Customers Didn’t Order What Was Forecast - Plants Were Not Building What Customers Needed - Material Needed by Customers Not Available - Available Capacity Not Being Used Efficiently

• Pull System Established To Order Material Consumed - Stock Maintained To Support Most Customer Demand

• Purchased Part Ordering Decoupled From Customer Orders• Key To Responsiveness

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Stabilization

• Sub-Assemblies - Sub-Assemblies Previously Scheduled By MRP - Heavily Forecast Dependent - Forecast Is Never Right - Extra Changeovers Needed When Forecast Wrong

- Sub-Assemblies Now Scheduled By Pull Systems - Simplified Scheduling Of Subs - Shortages Virtually Eliminated, Less WIP - Visual Scheduling – Passed to Supervisor/Operator - Productivity Improved, MCT reduced - More Responsive, More Flexible

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Customers Demanding Shorter Lead-Times

• Step 1 – Change Customer Ordering Practices - MRP Frequency - Quantity Price Breaks - Communicate The Correct Lead-Time - Confidence In Delivery - Freight Issues Limit Responsiveness

• Once Customer Makes Changes, Reduce Lead-Time - Document The Value Generated

- Customers Do Not Always Know- Can We Get Some Value In Return?

- Use Metrics To Track Performance

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Benefits From Shorter Lead-Times

• Lower Customer Inventory - Less Storage/Handling Costs, Less Obsolescence, Etc

• Less Variability Impacting Delivery, Problems Resolved Faster

• Better Response Capability To Customer’s Customer

• Potentially More Business Opportunities In Supply Chain

• Fewer Changes To Schedules, Less Maintenance

• Productivity Improvements Possible

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Example - Three Tier Supply Chain (Internal)

CustomerOrder Distribution Manufacturing Manufacturing

CustomerOrder

Distribution Manufacturing Manufacturing

Monthly ScheduleDaily Pass ThroughDaily Orders

12 Days20 Days

5 Days MCT 7 Day MCT 20 Day MCT

Daily Orders Daily Pull Signals Daily Pull Signals

5 Day MCT 1 Day MCT 5 Day MCT6 Days 10 Days

64 Days

27 Days

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Metrics

• On-Time Delivery• Cost Per Piece• MCT (Manufacturing Cycle Time)• Lead Time • First Pass Yield• Inventory Turnover/ WIP Levels• Shortage Tracking• Purchase Exceptions

Generally Metrics Are More Customer Focused

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Summary

• Customers Are Demanding More Value, Faster Response

• Competitive Pressures High To Offer More Value To Customers

• Stability Eliminates Many Costs Associated With Shortages

• Stability In Supply Enables More Responsiveness

• Responsiveness Increases Customer Satisfaction/ Loyalty

• Customers Value Shorter Lead-Times

1 Session 21 Implementing JIT Manufacturing Session 21 Implementing JIT Manufacturing John Striebich...

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