Lean Supply Chain 1
La Lean Supply Chain
Lean Supply Chain 2
La Lean Supply Chain
Just in Time“le parti richieste al momento richiesto
nelle quantitàrichieste”
Precondizioni• Flusso Continuo
• Sistema Pull• Takt Time
• Produzione Livellata
Miglior Qualità – Costi Inferiori - Lead Time breviRiducendo il Production Flow Eliminando gli sprechi
“Qualitàintrinseca”
• Line Stop- Manual- Automate
• Error Proofing• Visual Control
Stabilità Operativa Lavoro Standardizzato Processi e Prodotti Robusti Total Productive Maintenance Coinvolgimento dei Fornitori
Manodopera Flessibile, abile,
Altamente Motivata
Lean Supply Chain 3
Lean Thinking
• The objective is to manage the business backwards from the consumer definition of value - not forwards from your organisation and your assets
• To create lean primary processes to design, deliver and support this value - with minimum wasted effort and time – and the necessary lean support processes
• And to build a lean management system to develop, sustain and improve these processes over time
• Be clear about consumer Purpose, before designing the Processes and then organising the People
Lean Supply Chain 4
Lean Principles• Specify value from the standpoint of the consumer -
(not from your assets and organisation)• Identify the value stream through the steps required to
create each product - from concept to launch and order to delivery - and remove the wasted steps
• Make the process of value creation flow smoothly and quickly to the customer
• But only in line with the pull of the consumer • While pursuing perfection by constantly improving the
product and the value stream
Lean Supply Chain 5
The Dynamics of Lean
To only one pacemaker
process
With just the rightStandard
Inventory of:-Cycle stock
Buffer stock andSafety stock
Uninterrupted flow back to the
customer’s point of use
No warehouses,only Cross-Docksand Mixed-model
Milk Runs
FIFOReflexive
Pull all the way back to raw materials
Every Product Every
Interval capability
Separate capacity planning from production
instructions
Production pulled from
every upstream step
Every step is:-ValuableCapableAvailableFlexible
and Adequate
Combine steps where you can
to flow
Demand signals direct from the
customer’s point of use
No createddemand
amplification
Levelled and released in
small quantities
Lean Supply Chain 6
Current State Value Stream
ShippingAssembly 2Assembly 1S. Weld 2S. Weld 1Stamping
Production Control
MRP
Weekly Schedule
Daily Ship Schedule
Production Lead Time = 23.5 daysValue Added Time = 184 secs
State StreetAssembly
Forecast
Daily Order
Daily
MichiganSteel
Forecast
Weekly Order
2 x Week
II I I I I
Future State Value Stream
Production Lead Time = 4.5 daysValue Added Time = 166 secs
Shipping
Production Control
State StreetAssembly
Forecast
Daily Order
Daily
Daily Order
Weld and Assembly CellStamping
MichiganSteel
Forecast
Daily Order
Daily
Ask the Ask the key key
questionsquestions
Implementing Lean
Value Stream PlanProduct Value PersonFamily Stream Measurable Monthly Schedule inBusiness Objective Goal ChargeObjective 1 2 3 4 5 6 7 8 9
ImproveProfitabilityIn Steering Brackets
V S Manager JimDate 03/02/2003
Product FamilySteering Brackets
Pacemaker *Continuous flow from
weld to assembly Zero WIP John*Kaizen to 168 secs < 168 s/t Dave*Eliminate weld
changeover < 30 sec c/o Sam*Uptime weld #2 100% Mike*Finished goods pull 2 days FG Sue*Materials handler Pull Schedule James
routesStamping*Stamping Pull 1 day inventory Fred
+ pull schedule*Stamping changeover batch size Tim
300/160 piecesc/o < 10 min
Supplier*Pull coils with daily delivery Graham
daily deliveryr < 1.5 days ofcoils at press
Check Check progress progress
and stabiliseand stabilise
Lean Supply Chain 7
Current State
44d55m
738
Steps
Time
Steel
DELTA STEEL
Stamping
GAMMA STAMPING
Warehouse Cross Dock
Wipers
BETA WIPERS
Assembly
Dist. Centre
Cross Dock
ALPHA MOTORS
Amplification
F E D C B A
%
40
30
20
10
0
F E D C B A
Quality & Deliveryppm
2000
1500
1000
500
0
F E C A
%
10
5
0
AssemblyWipersStamping
SteelDist. Centre
16d55m
398
Steps
Time
Amplification
F E D C B A
%
40
30
20
10
0
Quality & Deliveryppm
2000
1500
1000
500
0
F E C A
%
10
5
0
F E D C B A
DELTA STEEL
GAMMA STAMPING BETA WIPERS ALPHA MOTORS
Future State 2Flow and Pull between Plants
Time Time reduced reduced
from 44 to from 44 to 24 days24 days
Ideal StateValue Stream Compression
Dist. Centre
3d55m
308
Steps
Time
Amplification
F E D C B A
%
40
30
20
10
0
Quality & Deliveryppm
2000
1500
1000
500
0
F E C A
%
10
5
0
F E D C B A
Steel
EPSILON STEEL
Assembly
ALPHA MOTORSSUPPLIER PARK
WiperCell
StampingCell
Time reduced Time reduced from 24 to 3 from 24 to 3
daysdays
Across the Value Stream
Lean Supply Chain 8
Lean vs. Tradizionale
• Metà tempo per l’ingegneria• Metà tempo sviluppo prodotto• Metà investimento in macchine, utensili ed
equipaggiamenti• Metà impegno della manodopera in azienda• Metà difetti nel prodotto finito• Metà spazio in azienda a parità di output• Un decimo del WIP
Lean Supply Chain 9
Lean vs. Tradizionale
• 99,9% Customer Schedule Attainment• 15 PPM or Better• 4-6 Inventory Days of Supply• 92%+ Operational Availability• Leveled, Sequenced Production• Order to Customer Use - 4 1/2 Hours• Functioning Supplier Partnership• Strong Production Control Function
Lean Supply Chain 10
Changing Costing Methods
Principles of Cost Reduction: PROFIT = SALES PRICE - COST
ModernView
TraditionalView
ProfitProfit
Profit
Mfg.Mfg.CostCost
Mfg.Mfg.CostCost
Mfg.Mfg.CostCost
SalesPrice
SalesPrice
SALES
Profit
ProfitProfit
Mfg.Mfg.CostCost
Mfg.Mfg.CostCost
Mfg.Mfg.CostCost
SalesPrice
Principles of Cost Plus: SALES PRICE = COST+ PROFIT
Principles of Cost Reduction: PROFIT = SALES PRICE - COST
ModernView
TraditionalView
ProfitProfit
Profit
Mfg.Mfg.CostCost
Mfg.Mfg.CostCost
Mfg.Mfg.CostCost
SalesPrice
SalesPrice
SALES
Profit
ProfitProfit
Mfg.Mfg.CostCost
Mfg.Mfg.CostCost
Mfg.Mfg.CostCost
SalesPrice
Principles of Cost Plus: SALES PRICE = COST+ PROFIT
Lean Supply Chain 11
Lean Supply - Global Purchasing Strategies
• Common Strategy– Buy Cheapest in the world– Support with dual sourcing
• Toyota Strategy– Buy to achieve lowest total cost– Buy in country where manufacturing is performed– Minimize Number of Suppliers– Keep supply chain short as possible– Toyota is as strong as its weakest
supplier
Lean Supply Chain 12
Consequences of Cheapest Price
• Long Distance Supply– Long lead times– increases structural cost: people, travel, premium
freight, packaging, obsolete material, scrap due to handling damage
• Buying cheapest restricts buying from best supplier and achieving total lowest cost
vs• Buying from best supplier, then get lowest cost
Lean Supply Chain 13
Consequences of Long Supply Chains
• Long Value Streams Result in:• High Risk
– Quality Spills– Availability of Supply– Engineering Changes
• High Cost– Transportation (Premium and Standard)– Engineering Support/Supplier Development– Plant Overtime
Lean Supply Chain 14
The Lean Enterprise
TraditionalManufacturing
& Support Functions
Lean SupplyChain
Implemented
Full Benefits ofLean Supply Chain
Lean Enterprise Leap
Lean Enterprise Leap
Operations, PC&L, Engr
Operations, PC&L, Engr
Purchasing, Finance, Quality
Purchasing, Finance, Quality World Class
Lean Supply Chains are not just a MaterialsManagement Effort
TraditionalManufacturing
& Support Functions
Lean SupplyChain
Implemented
Full Benefits ofLean Supply Chain
Lean Enterprise Leap
Lean Enterprise Leap
Operations, PC&L, Engr
Operations, PC&L, Engr
Purchasing, Finance, Quality
Purchasing, Finance, Quality World ClassWorld Class
Lean Supply Chains are not just a MaterialsManagement Effort
Lean Supply Chain 15
Demand/Schedule VarianceCauses
All production operations receive same schedule
Planning/Scheduling System Mechanics: Push Scheduling
PRODUCTION FLOW
Supplier Machining Assembly CustomeCustomerr
ScheduleSchedule
ProductionProductionSchedulingScheduling
Schedule
Schedule Sch
edul
eS
ched
ule
Schedule
Schedule
Reaction to Changes Occurs Only Weekly
All production operations receive same schedule
Planning/Scheduling System Mechanics: Push Scheduling
PRODUCTION FLOW
Supplier Machining Assembly CustomeCustomerr
ScheduleSchedule
ProductionProductionSchedulingScheduling
Schedule
Schedule Sch
edul
eS
ched
ule
Schedule
Schedule
Reaction to Changes Occurs Only Weekly
Planning/Scheduling System Mechanics: Push Scheduling
PRODUCTION FLOW
Supplier Machining Assembly CustomeCustomerr
ScheduleSchedule
ProductionProductionSchedulingScheduling
Schedule
Schedule Sch
edul
eS
ched
ule
Schedule
Schedule
Reaction to Changes Occurs Only Weekly
Lean Supply Chain 16
OEM Tier# 1
Tier# 2
Traditional Scheduling Systems1. Demand and schedule are usually different2. Noise increases moving down stream3. Affected most by changes in order quantity, delivery time and lead time
Schedule
Actual Demand
Typical Demand/Scheduling Model
Lean Supply Chain 17
Decoupling points and strategic inventory
DrivenBy
DemandDriven
ByForecast
Plants DistributionCentres
Warehouses Depots
Lean Supply Chain 18
Two key de-coupling pointsForecast Driven Order Driven
Less uncertainty due to enrichment of undistorted data
Push Pull
Factory Assembler Finished goods Stock
Retailer
Market sales
Informationde-coupling
point
Direct market sales information
Material de-coupling
point
Lean Supply Chain 19
RawMaterial Machining Assembly
CustomerLeveled Production
Plan
Ship
Pull Schedule Assembly Schedule
Ship Ship
Pull Schedule
Lean Supply Chain - Pull Production System
Lean Supply Chain 20
Process: Smoothing Production to Reduce Supply Chain Cost
O.E. Tier 1 Tier 2Ship
PullSignal
PullSignal
Ship
Leveled SequencedProduction
Leveled SequencedProduction
1. Smooth production build and communicate plan to suppliers2. Maintain daily production levels as planned (maintains smooth flow)3. Minimize parameter changes in system (lot size, quantity, & lead time)4. Convert from push scheduling to pull scheduling5. Maintain open communications with supplier - Provide Supplier
access or view of actual demand
Action Steps-All Customers
OEM’s Lead Supply Chain Management Process
Lean Supply Chain 21
Takt Time = Time (Available seconds per working day)Volume (Daily production requirement)
Cycle Time = Actual time required for a worker to
complete one cycle of his job process
Sets pace of production tomatch pace of sales.
Takt Time Vs. Cycle Time -An Important Distinction
Lean Supply Chain 22
Implementing the Lean Supply Chain
• Level Sequenced Production– producing a repeatable pattern by volume
and mix within each day of the monthly production plan
– Characterized by:• a smoothed production plan over an
extended time• every model made every day• daily adjustment can be made• a predictable production process
Lean Supply Chain 23
Implementing the Lean Supply Chain
Summary– Find the best supplier and engage early in the
design process– Partner with key suppliers that have high
capability for design and supply– Suppliers should be located in the country where
you build your product– Shorten the supply chain by having suppliers
close, frequent deliveries, and leveled production plans
– Develop pull systems with suppliers– Know production capacity by comparing effective
cycle times with Takt times.
Lean Supply Chain 24
Impact ofAgileManufacture
Impact ofAgileLogistics
PostponedFulfillmentPostponedFulfillment
AgileSupply Chain
AgileSupply Chain
RapidReplenishment
RapidReplenishment
OrganisationalAgility
OrganisationalAgility
FlexibleResponseFlexible
Response
LeanProduction
LeanProduction
Economiesof Scale
Economiesof Scale
Standardisation/Modularisation
Standardisation/Modularisation
WasteReduction
WasteReduction
AgileSupplyAgile
Supply
VendorManagedInventory
VendorManagedInventory
SynchronisedOperations
SynchronisedOperations
ProcessManagement
ProcessManagement
CrossFunctional
Teams
CrossFunctional
TeamsDemandDriven
DemandDriven
Visibility ofReal Demand
Visibility ofReal Demand
ContinuousReplenishmentProgrammes
ContinuousReplenishmentProgrammes
Set-upTime Reduction
Set-upTime Reduction
QuickResponse
QuickResponse
Non-Value-AddingTime Reduction
Non-Value-AddingTime Reduction
Principles
Programmes
Actions
CapacityManagement
CapacityManagement
ProcessRe-engineering
ProcessRe-engineering
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