Lean Deployment in Supply Chain: Materials. Presentation Objectives Foundation: Lean Thinking A...

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Lean Deployment in Supply Chain: Materials

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  • Lean Deployment in Supply Chain: Materials

  • Presentation ObjectivesFoundation: Lean ThinkingA Culture Shift The Lean Journey In Supply ChainHighlights of the Transformations at CPS Energys Materials TeamOur Future State - Relentless Pursuit of Perfection

  • Foundation: Lean Thinking

  • What is LeanThe term Lean is an outside term to describe the Toyota Production SystemIt is a philosophy based on eliminating waste and defining value from the customers perspective.Lean is rooted in observation go and see, analyze the situation and ask why the problem occurs.It is a philosophy of continuous improvement and learning.Lean means dependence on people.

  • The FoundationThe foundation to Lean is to gain an understanding of a few key principles:WasteStandardizationVisual ManagementStrategy DeploymentContinuous ImprovementThe Pillars JIT and JidokaThe goal is to improve quality, reduce lead time and reduce cost

  • The Seven WastesThe main restriction to profitability, efficiency and flexibility:Defects, Mistakes, CorrectionsOverproduction (over acquisition)TransportationWaitingInventoryMotionOver Processing

  • The Cost PrincipleThe cost principle is based that in a competitive market, the customer sets the price:Price Cost = Profit

    Price [VA + NVA + Waste] = Profit

    Value added work is what the customer is willing to pay for all else is a form of waste (cost).

  • StandardizationStandardization is the essential if you are going to have any form of improvementStandardization can be obtained by finding best practices and applying them as the way to do the workThis is true until another best practice or a better method is found, therefore, becoming the new standard

  • Visual Management SystemIt is key to measure and monitor your operationsThis must be displayed where all can see and understandStrategies, improvements, problems and goals are displayed

  • Strategy DeploymentIt is important to get the team involved in strategy deploymentOur Supply Chain Director has to main strategy objectives:Reduce Lead TimeImprove QualityThe Materials groups strategy must support Supply Chains strategyThe Supervisors strategy must support the Material groups strategyThis is the nature of goal alignment bottom up

  • Continuous ImprovementContinuous improvement is not an event, but way of doing businessIt is key to train your managers and supervisors on how to solve problemsRoot cause analysis becomes part of their role

  • JIT and JidokaThe Pillars of LeanPeopleProcessTechnology

  • Culture Shift: The Lean Journey

  • Lean Supply ChainPerfect first-time quality: quest for zero defects, revealing & solving problems at the source.Building and maintaining relationships with suppliers: collaborative risk sharing, cost sharing, and information sharing arrangements.Continuous improvement: reducing costs, improving quality, increasing productivity and information sharing.

  • Go to the GembaGemba in Japanese means where the truth can be found.As Lean practitioners, we must go and see where the problem occurs to thoroughly understand the situation.Supervisors and team members must be intimately involved in quality issues.Going to the Gemba (actual place) will increase the speed of resolution of problems.

  • Importance of StandardizationStadardization is backbone of Lean.It consists of three elements:Pace of customer demandSequence of doing things or sequence of processesHow much inventory or days on hand is needed to accomplish the workIt is impossible to improve any process until it is standardized.

  • Waste CreationMudaWasteMuraUnevennessMuriOverburden

  • Building the FoundationTrain employees to identify wasteBuild a culture of stopping to fix problemsGet quality right the first timeStandardize work processes and tasksTrain employees to solve problems and work together towards common goalsGo and See mentalityBecome a learning organization

  • The Lean Supply ChainCustomerSupplierOrder ManagementCustomer MgtSupplier MgtLogisticsEngineeringPlanning &SchedulingConstructionPlanned SystemEvent ManagementPull ReplenishmentReduced Lead TimeCross DockingYard ControlReceiving ScheduleDelivery FrequencyPick Up FrequencyPick Up VerificationSupplier ComplianceFeedback MechanismsCustomer ComplianceFeedback MechanismShared AccountabilityBOM AccuracySchedule Accuracy

  • Total Cost of OwnershipEasier to Identify

    Harder to Identify, Measure and Relate to Purchase

  • Total Cost of OwnershipTCO is the cornerstone of the Lean Supply Chain.TCO encompasses all the costs associated with the acquisition, use, and maintenance of a good or service.In theory, TCO may include all costs originating with the conception of a construction/service idea, all the way through rework once the product or service has been provided to the end customer.So what is the paradigm shift that is required in CPSEnergy today?

  • Manifestation of CostsAlthough many of the TCO costs are hard to see and quantify.. Where do they manifest themselves?

  • Inventory Carrying CostsAdministrative Overheads2%Cost of Capital9%Damage5%Insurance2%Transfers4%Obsolescence5%Shrinkage3%Space to Handle ExcessiveInventory5%Storage Systems%

  • So the focus is not on inventory.But rather how we manage our excessive inventory!!

  • Highlights of the TransformationSupply Chain: Materials Management

  • Breaking Down the WallsOur department was segregated into 4 groups:MRP Buyers Stores SalvageWe introduced a customer first team where we combined and reclassified departments into teams:MA Team Warehouse Team CustomerMaterial FlowInformation Flow

  • Are Key Strategies for FY09Lead Time Reduction Baby A3Lean Warehousing ImplementationReverse Logistics Group FormationQuality Improvement with Fleet (Beginning Stages)Inventory Reduction Project: Milk Runs with Techline (Beginning Stages)

  • Lead Time Reduction

  • Value Stream Perspective

  • Lean Warehousing

  • Reverse Logistics

  • Right Direction?

    Chart1

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    Lead Time

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    Sheet1

    Performance, Gaps, and TargetsThis Year's Action Plan

    GoalsActivitiesFMAMJJASONDJ

    Contract ManagemetRecreate reports; run rates, expiration dates, and identifying contract candidates

    Develop Audit Report to track progess

    Second Sweep Contract II Project

    Develop Process & Guidelines for; mtls sent to Standards, establishing & maintaining contracts

    Contract establishment on critical spare parts for GENCO

    Develop processes for MRP notification on contract establishment

    Value Stream ProjectsZNB $15k

    Target: End of FY09 Lead Time Below 15ZNB $15k $50k

    NB

    Reflection on Last Year's ActivitiesWK

    Supplier ManagementDevelop report based on Follow on documents and GR. Hold suppliers to negotiated lead times

    ActivityG/BKey Results / Issues

    Contract EstablishmentG900+ contracts established for 3 yr terms

    Buyers doing more expeditingYBuyers more responsible, more neededDevelop criteria & establishing supplier Tiering system

    Early Warning ReportGReduce stockouts due to PR not timely

    MRP moving to power plantGAssist Genco with workloadDevelop SQM

    Automation of e-fax, RQ, Contracts and P.O.sGReduce Lead TimeDevelop report mechanism & process for auditing partial & late deliveries

    Reduction in '4' files by ClerksGReduce work load

    Morale ImprovedYWalls reduced and increase communicationWork Instructions for Buyer Supplier Mgt

    Terms & Conditions no longer cut & pasteGReduce non-value added activity

    MRP project to upload parameters & standardizeYTX shuttle is needed to upload into SAP

    processesnot standardized yet

    Late deliveries, 50+ pages of open P.O.sRNeed to own P.O. from creation to closing

    Proactive communication to suppliersRMay be based on work vol, but has decreased

    MEW Value Stream MappingYGained insight, need to involve whole team early

    Analysis / Justification to this Year's Activities

    Justification

    To improve customer service, insuring materials are on time, be more flexible to change in customer demands. Less inventory to cover lead time. Less materials held in stock, reduce carrying losses, reduce space. Free up time for buyers to focus on stra

    Followup/ Unresolved Issues

    Analysis

    SC2: Contract Releases - 13 days - 1000/moSC1: Contract Releases - 2 daysData from BW is not accurate. Must recreate the Lead Time graph to capture true data.

    SC2: Purchase Orders - 29 days - 600/moSC1: Purchase Orders - 15 daysReviews main focus, kick offs delayed

    SC1: WK - 23 days - 290/moMay Value Stream Mapping training for Supervisors

    SC1: MK - 12 daysChief status may delay overall lead times; Supervisors not official in system yet

    Contract Releases:

    PR 2 days NB 11 days GR1000/moCycle Time 13 days

    PR RQ 15 days P.O. 14 days GR600/moCycle Time 29 days

    &L&"Arial,Bold"&12&G&C&"Arial,Bold"&24Lead Time Improvement&R&"Arial,Bold"&12Focus:Lead Time, Overprocessing, On Time Delivery

    &L&F&D&RRevision: 1

    Sheet1

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    Data

    MonthLead TimeTarget

    Feb-073215

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    May-073615

    Jun-072915

    Jul-072615

    Aug-072615

    Sep-072515

    Oct-072315

    Nov-072215

    Dec-072015

    Jan-081815

    Data

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    Sheet3

  • Future StatePursuit of Perfection

  • Visualizing the Supply ChainRight MaterialsRight QuantityRight TimeRight PlaceRight SourceRight PriceRight QualityRight ServiceCan we answer these questions?What process are in place?What are the moments of truth?What are the failure modes?

  • Value Stream MappingLean ThinkingSpecify Value by ProductIdentify the Value StreamMake the Product FlowAt the Pull of the CustomerIn Pursuit of PerfectionLearning to SeeHow Does the Process Work?Can we Agree on Performance?Can we be Involved?How will we Improve?

  • Mapping the Supply ChainThe challenges 80% of the supply chain activities are invisible to those accountableMultiple suppliers, multiple customers, multiple third partiesHigh variability in material behavior, transportation modesHigh variability in lead time, supply and demandHigh variability in supplier performance and capabilityThe extended enterprise is not always visibleData is not always abundant

  • The Future StateWhat are the customers expectations?What is the rate of customer demand?What processes are non value added?Where is the First Time Quality an issue?Where is availability an issue?Where are excessive inventories?Where can we implement flow and pull?Where do we go and see?What can we see? What can we do?What projects must be prioritized?

  • Questions or Comments?