Welcome

Supply Management

and

Lean Manufacturing

Supply Chain Management

ref: “Designing and Managing the Supply Chain”, Simchi-Levi et al., 2000. Chapters 1, 4 and 8.

Supply Chain ManagementThe term supply chain was first introduced by

Houlihan (1984), and has since been defined in different ways:

• "A supply chain is a system through which organizations deliver their products and services to their customers." (Poirier and Reiter, 1996).

• "A supply chain is an integrated process wherein raw materials are manufactured into final products, then delivered to customers (via distribution, retail, or both)." (Benita, 1999).

A Simple Supply Chain Model

Supplier

Distribution

Manufacturing

Customer

Complexity of Supply Chains

Likely to be complex due to:• The large mesh of inter-linked suppliers,

manufacturers and distributors.• The fact that each participant (supplier,

manufacturer and distributor) may be a member of a large number of other supply chains.

• The dynamic nature of the supply chain.

Supply Chains• It takes a cereal carton more than three months to

move from the factory to supermarkets (Simchi-Levi et al. 2000).

• In 1997 supply chain issues in the United States consumed 10 percent of the U.S. Gross National Product (GNP)

• Lead time reduction of increasing importance:– reduced inventory levels– reduced obsolescence– improved response to customers

Supply Chain Example

Johnson Controls

Chrysler FordGeneralMotors

Canadian Fab

Douglas &Lomason

Technotrim

Milliken &Company

Lear Favesa

Collins & Aikman

Textileather

Soft Trim Suppliers

Dudek &Bock Spring

Rockford SpringR. R. Spring

Specialty Screw

Excel/Atwood

Hardware Suppliers

Supply Chains Chrysler

30%Chrysler

70%Supply Chain

Cost in the Average New Vehicle?

Trend

Lean Manufacturing

PERFECTION

PULL FLOW

VALUE STREAM

VALUE

Lean Guiding Principles

Types of Waste

Waiting- Time spent waiting on items required to complete task (i.e., Information, material, supplies, etc.)Unnecessary Motion- Any motion that does not add value to product or service.Processing- Effort and time spent processing information or material that is not adding value Inventory- Material or information that is waiting for processingMoving items- Transporting information or material by mail, cart, conveyor, or foot travelMaking too much -Producing more information or product than the ultimate customer requiresFixing defects- Time spent repairing or reworking material or information

Lean Toolkit

• Workload Leveling• Flow Processes• Pull Systems• Standard Work• Visual Controls• Error Proofing

Lean Tools

• Enables the process to run as efficiently as possible, using the minimum number of people

• Maximizes the utilization of each person• Makes a process more predictable

Workload Leveling

Lean Toolkit

Workload Leveling

TT

Worker A B C D

Won’t Make Plan

Worker A B C D

Lots Of Free TimeTT

TT

Worker A B C D

Poor Balance

Worker A B C D

TT100 100

Only 22 Sec. More ToSave 25% On Labor

Lean Toolkit

• A basic principle of Lean is to make value flow as quickly as possible through the Value Stream– Must have quick decisions, made at the lowest

possible level• Eliminate approvals

– Must have information available to the “new” decision makers

Establishing Flow and Pull

Lean Toolkit

Flow Processes• All operations within a process should be

rearranged in a sequential fashion with minimal distance between operations– Isolated functional activities should be co-located as much as

possible with the rest of the process activities– Office layouts should be process/activity oriented versus functional– Isolated machines should be moved and incorporated into the line

as much as possible

• Flow assumes that material/products will not be stagnant at any point and time from receiving to the shipping of finished products

• The intent of continuous flow is to increase the velocity of and make the cycle time predictable

Lean Toolkit

Pull Systems• A Pull System is a way to manage the Lean

Enterprise System• Pull System vs. Push System

– A Pull System occurs when the previous process produces only as many products that are consumed by the following process

– A Push System produces just as many units as it can and sends them to the next process whether the next process needs them or not

• Pull Systems minimize waste• Strive for Single-Piece Flow, to minimize wait

times & queues

Lean Toolkit

Pull Vs. PushPROCESS

CPROCESS

BPROCESS

A

PROCESSC

PROCESSB

PROCESSA

Lean Toolkit

Pull Vs. Push in Product DevelopmentVerificationDesign/

CodeRequirements

Definition

VerificationDesign/Code

RequirementsDefinition

This engineer could be helping with requirements definition

This pile of system requirements goes through the process like a rat through a snake.

• Represents the current best, easiest, and safest way to do a job– Documented processes constantly change as employees

make continuous improvements

• Preserves know-how and expertise• Provides a way to measure performance• Provides a means for preventing recurrence of

errors and minimizing variability• Improves schedule compliance, customer

satisfaction, productivity, and cost competitiveness

Standard Work

Lean Toolkit

• Takt Time (Available Work Time / Daily Demand)

• Work Sequence (Sequence of Tasks performed)• Standard WIP (The minimum number of parts

in a process that are required for work to progress)

Note: To apply these in the office environment, the process must be:• Observable• Repetitive

Elements of Standard Work

Lean Toolkit

• Visual Controls are means, devices, or mechanisms that help us manage our processes in order to:

• Use Visual Controls to:– Make the problems, abnormalities, or deviation

from standards visible to everyone so that corrective action can be taken

– Display the process status in an easy to see format

– Provide instruction– Convey information– Provide immediate feedback to the team

Visual Control & Visual Management

Lean Toolkit

• “How we are doing” at a glance— What we are working on– The level of performance

• Providing information immediately to people working in the area

• Promotes communication

Visual Control - The Concept

Visual Management - The Concept“The ability to manage a system or process by metrics

that are visual to the workplace”

Lean Toolkit

Error Proofing• Error Proofing is a way to prevent an error from being

created or potentially passed to the next operation of a process– Allows people to concentrate on their work without paying unnecessary

attention to preventing mistakes

• Error proofing techniques include:– Use of different colored paper for different processes– Colored files/binders– Checklists– Log sheets– Screen prompts

Lean Toolkit

Early Detection of Errors Lowers Costs

Defects Own Next End of Final End user’sFound at: Process Process Line Inspection Hand

Cost to $1 $10 $100 $1000 $10000the Company:

Impact to Very Minor Rework/ Significant Warranty

the Company: Minor Delay Reschedule Rework Reputation Delay Lost Market

Lean Toolkit

Successive Checks

ProcessB

CheckA

CheckB

ProcessC

ProcessA

SW Engineer A SW Engineer B SW Engineer C

Process AProblems1.2.3.

Process BProblems1.2.

Lean Toolkit

Review Participation

Successive Checks in Product Development

SoftwareDesign

Peer Review

Peer Review CodeRequirements

Definition

Systems Engineer

Software Engineer

Software Team Member

Engineers work with producers and customers of their processes in order to ensure a quality result.

Systems Participation

Verification Engineer

…

Prevent problems at end of development cycle.

Also work with other experts and key end consumers to ensure that critical tasks can be accomplished. Verification, for example.

Lean Toolkit

Successful Lean Tool Implementations

■ Travel Expense Reporting— Single-piece flow, process standardization, error proofing— 50% reduction in cycle time — 48% productivity improvement— 60% reduction in travel distance

Lean Toolkit