LEAN and Sustainable Supply Chains

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Learning Objectives

1. Describe how Green and Lean can complement each other.

2. Explain how a production pull system works.

3. Understand Toyota Production System concepts.

4. Summarize important attributes of a lean supply chain.

5. Analyze a supply chain process using value stream mapping.

6. 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?

WhatWhat is Lean? 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.

WhatWhat is Lean? is Lean?

Lean is a continuing process of change involving everyone

in the organization.

WhatWhat is Lean? is Lean?

Designing processes for your business

1. Deliver exactly what the customer needs (defect free)

2. Be able to deliver customized value to each individual customer

3. Deliver on demand exactly as requested

4. Respond immediately to problems or changes

5. Have no waste

LEAN in general Continued

Value chain: each step in the supply chain should create value 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 1LO 1

Understanding Value-Added

Activity

Understanding Value-AddedWhat would you be willing to pay for when

ordering a hamburger?___ Meat

___ Dough

___ Ketchup

___ Electricity to run ovens

___ Electricity to run outdoor lights left on accidentally

___ Person paid to inspect take-out orders

___ Cost of hamburgers not sold

___ Distribution Center

___ Cost of radio, TV, web ads

___ Cost of delivery truck signs

___ Cost of store manager

___ Cost of cleaning

___ Cost of menus

___ Employee training

___ Profit

TOYOTA PRODUCTION SYSTEM

The “4P” model

1P

2P

3P

4P

PROBLEM SOLVING(Continuous ImprovementAnd Learning)

The “4P” model

1P

2P

3P

4P

PROCESS

(Eliminate Waste)

The “4P” model

1P

2P

3P

4p

PEOPLE AND PARTNERS

(Respect, Challenge, and Grow Them)

The “4P” model

1P

2P

3P

4P

PHILOSOPHY

(Long-Term Thinking)

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 multiple documents• Ineffective meetings

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 WasteInventory (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 WasteUnderutilization 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

Storage Part A

Storage Part AMachine

Center Assembly Line

Material Flow

Card (signal) Flow

Withdrawal kanban

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

This puts the system back were it was before the item was pulled

The process begins by the Assembly Line people pulling Part A from Storage

Production kanban

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 2LO 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 2LO 2

The Number of Kanban Card Sets

sizeContainer C

leadtime during demand of percentage a as expressedstock Safety S

demand) as timeof units (sameorder an replenish to timelead L

period timesomeover demanded units ofnumber Average D

card) a isset (a sets cardkanban ofNumber k

)(1

container theof Size

stockSafety timelead during demand Expected

C

SDL

k

LO 2LO 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 2LO 2

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Work Center 1 Work Center 2

WorkCenter 3

Containerwith 2 parts(lot size = 2)

Flag orsignalmarker

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End SimulationEnd Simulation

Lean Supply Chains

Value stream: the value-adding and non-value-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 4LO 4

Components of a Lean Focused Supply Chain

Lean suppliers Able to respond to changes Lower prices Higher quality

Lean procurement Key is automation (e-procurement) Suppliers must see into the customers’ operations and

customers must see into their suppliers’ operation Lean warehousing

Eliminate non-value-added steps and waste in storage process

LO 4LO 4

Components of a Lean Focused Supply Chain Continued

Lean logistics Optimized mode selection and pooling orders Combined multi-stop truckloads Optimized routing Cross docking Import/export transportation processes Backhaul minimization

Lean customers Understand their business needs Value speed and flexibility Establish effective partnerships with suppliers

LO 4LO 4

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 5LO 5

“If you can't describe what you are doing as a process, you don't know what you're doing.”

W. Edwards Deming

ART of OBSERVATION

Clip

Manufacturing Process Map

LO 5LO 5

Service Process Current Map CUSTOMERS

SUPPLIERS

INFORMATION FLOW

PROCESS STEPS

DATA COLLECTION

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?