Download Production and Operations Management: Manufacturing and Services

CHAPTER 13
LEAN and Sustainable
Supply Chains
Learning Objectives
1.
2.
3.
4.
5.
6.
Describe how Green and Lean can complement
each other.
Explain how a production pull system works.
Understand Toyota Production System concepts.
Summarize important attributes of a lean supply
chain.
Analyze a supply chain process using value stream
mapping.
Know the principles of supply chain design.
What is Lean?
Is it skinny?
Is it less people?
Is it working
harder?
Is it making less?
What is
Lean?
What is Lean?
Why no Sir! Lean is none of
those things. Lean is an
ever evolving philosophy
based on proven principles
and practices aimed at the
elimination of wastes.
What is Lean?
Lean is a continuing process of
change involving everyone in
the organization.
Designing processes for your
business
1.
2.
3.
4.
5.
Deliver exactly what the customer needs (defect
free)
Be able to deliver customized value to each
individual customer
Deliver on demand exactly as requested
Respond immediately to problems or changes
Have no waste
LEAN in general

Value chain: each step in the supply chain
should create value



Continued
If it does not create value, it should be removed
Customer value: something for which the
customer is willing to pay
Waste: anything that does not add value from
the customer’s perspective
LO 1
Activity
Understanding Value-Added
Understanding Value-Added
What would you be willing to pay for when
ordering a hamburger?
___ Meat
___ Dough
___ Cost of radio, TV, web
ads
___ Ketchup
___ Cost of delivery truck
signs
___ Electricity to run ovens
___ Cost of store manager
___ Electricity to run outdoor
lights left on accidentally
___ Cost of cleaning
___ Person paid to inspect takeout orders
___ Employee training
___ Cost of hamburgers not
sold
___ Distribution Center
___ Cost of menus
___ Profit
TOYOTA PRODUCTION
SYSTEM
The “4P” model
PROBLEM SOLVING
(Continuous Improvement
And Learning)
1P
2P
3P
4P
The “4P” model
1P
PROCESS
(Eliminate Waste)
2P
3P
4P
The “4P” model
1P
PEOPLE AND PARTNERS
(Respect, Challenge, and
Grow Them)
2P
3P
4p
The “4P” model
PHILOSOPHY
1P
(Long-Term Thinking)
2P
3P
4P
Understanding Waste
Waste: anything that adds cost or time
without adding value
Understanding Waste
Overproduction – producing work prior to
it being required is waste and is the greatest
of all the wastes
• Producing reports no one reads or needs
• Making extra copies
• E-mailing, faxing same document
• Entering repetitive information on
documents
• Ineffective meetings
multiple
Understanding Waste
Waiting – for people, signatures, and
information is waste. This is “low hanging
fruit” which is easy to reach and ripe for the
taking.
• Excessive signatures or approvals
• Dependency of others to complete tasks
• Delays in receiving information
• Computer program revision problems
• Cross-departmental resource commitments
• Not a priority for someone to complete
Understanding Waste
Motion - any movement of people, paper,
electronic exchanges that does not add value
is waste
• Searching for computer files
• Searching for documents in file cabinets
• Repeatedly reviewing manuals for information
• Hand carrying paper to another process
• Cross-departmental resource commitments
• Not a priority for someone to complete
Understanding Waste
Transport - affects the time of delivery of
any work within an office
• Delivering unneeded documents
• Excessive filing of work documents
• Over-addressed e-mail distribution lists
• Hand-carrying paper to another process
• Cross-departmental resource commitments
• Mis-prioritization
Understanding Waste
Overprocessing - putting more work or
effort into the work required by internal or
external customers is waste
• Duplicative reports or information
• Repetitive data entry
• Incorrect information being shared
• Constantly revising documents
• Ineffective meetings and no agendas
• Duplicative documentation
• Lack of accurate project planning
Understanding Waste
Inventory (Time) - work piles, excessive
supplies, and excessive signature
requirements are waste
• Files awaiting signatures or approvals
• Work awaiting task completion by others
• Obsolete files
• Obsolete office equipment
• Not sufficient training of back-ups
• Purchasing excessive office supplies.
Understanding Waste
Defects (or mistakes) - refers to all
processing required creating a defect or
mistake and the additional work required to
correct it
• Data entry errors
• Pricing errors
• Forwarding incomplete documentation
• Incorrect information on document
• Inefficient file system on PC or in cabinet
• Not appropriate staffing to service customer
Understanding Waste
Underutilization of People - is a result
of not placing people where they can (and
will) use their knowledge, skills, and abilities
to the fullest (8th Waste)
• Project deadlines not being met.
• Work loads not evenly balanced due to lack of cross-training
• High absenteeism and turnover
• Inadequate performance management system
• Incomplete job skill assessment prior to hiring
JIT PULL SYSTEM
Minimizing Waste: Kanban Production Control Systems
Once the Production kanban is
received, the Machine Center
produces a unit to replace the
one taken by the Assembly Line
people in the first place
Machine
Center
Withdrawal
kanban
Storage
Part A
Production kanban
The process begins by the Assembly Line
people pulling Part A from Storage
Storage
Part A
This puts the
system back
were it was
before the item
was pulled
Assembly
Line
Material Flow
Card (signal) Flow
Other Approaches



Kanban squares: marked spaces on the
floor to identify where material should be
stored
Container system: the container is used as
a signal device
Colored golf balls: appropriate golf ball
signals production
LO 2
Determining the Number of
Kanbans Needed



Setting up a kanban system requires
determining the number of kanbans cards (or
containers) needed
Each container represents the minimum
production lot size
An accurate estimate of the lead time
required to produce a container is key to
determining how many kanbans are required
LO 2
The Number of Kanban Card
Sets
k

Expected demand during lead time  Safety stock
Size of the container
DL (1  S )
C
k  Number of kanban card sets (a set is a card)
D  Average number of units demanded over some time period
L  lead time to replenish an order (same units of time as demand)
S  Safety stock expressed as a percentage of demand during leadtime
C  Container size
LO 2
Minimized Setup Time



Reductions in setup and changeover times
are necessary to achieve a smooth flow
Kanban significantly reduces the setup cost
The organization will strive for a lot size of
one
LO 2
Work Center 1
Work Center 2
Flag or
signal
marker
Container
with 2 parts
(lot size = 2)
Work
Center 3
JIT ‘Pull’ System Simulation
© 1997 Prentice-Hall, Inc.
11- 20
Lean Supply Chains


Value stream: the value-adding and nonvalue-adding activities required to design,
order, and provide a product or service
Waste reduction: the optimization of the
value-adding activities and the elimination of
non-value-adding activities
LO 4
Components of a Lean
Focused Supply Chain

Lean suppliers




Lean procurement



Able to respond to changes
Lower prices
Higher quality
Key is automation (e-procurement)
Suppliers must see into the customers’ operations and
customers must see into their suppliers’ operation
Lean warehousing

LO 4
Eliminate non-value-added steps and waste in storage
process
Components of a Lean
Focused Supply Chain

Lean logistics







Continued
Optimized mode selection and pooling orders
Combined multi-stop truckloads
Optimized routing
Cross docking
Import/export transportation processes
Backhaul minimization
Lean customers



LO 4
Understand their business needs
Value speed and flexibility
Establish effective partnerships with suppliers
Value Stream Mapping

Value stream mapping: a special type of
flowcharting tool for development of lean
processes


Used to visualize product flows through various
processing steps
Need a full understanding of the business
including production processes
LO 5
ART of OBSERVATION
“If you can't describe what you are doing
as a process, you don't know what you're
doing.”
W. Edwards Deming
Clip
Manufacturing Process Map
LO 5
Service Process
Current
Map
SUPPLIERS
INFORMATION FLOW
PROCESS STEPS
DATA COLLECTION
CUSTOMERS
Lean Implementation Requirements: Total Quality
Control

Worker responsibility

Measure SQC

Enforce compliance

Fail-safe methods

Automatic inspection
Lean Implementation Requirements: Work with Vendors

Reduce lead times

Frequent deliveries

Project usage requirements

Quality expectations
Any Questions?