Post on 06-May-2018
Copyright LeanCor Supply Chain Group
Your Presenter: Ashley Yentz
Director - Account Management
LeanCor Supply Chain Group
ayentz@leancor.com
Career Focus Areas:
Responsibilities in vision creation and deployment, project coordination, team leadership, detailed data analysis and forecast modeling, also conducting core functions within several operational disciplines. Skilled in coaching organizations through their lean logistics implementation: strategy deployment, culture change, process standardization
Prior Roles:
•Kaizen Leader, Strategic Planning - Toyota Motor Sales U.S.A. •Continuous Improvement Leader - Toyota’s Parts Operation Supply Chain •Transportation Analyst - Hilti, Inc.
Copyright LeanCor Supply Chain Group
Who Is LeanCor Supply Chain Group?
• Lean, supply chain, six
sigma, and leadership
courses that develop
people capability and
problem solving skills
while building a culture of
operational excellence
Project-based, end-to-
end supply chain
solutions that improve
your processes, reduce
inventory and Total Cost,
and optimize your
network
Custom, outsourced
transportation
management and
warehousing
solutions that optimize
material flow and exceed
your business goals
Advancing the World’s Supply
Chains
Trusted supply chain partner that specializes in lean principles to
deliver operational improvement. Three divisions:
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Supply Chain: Understanding the Challenges
• 80% of supply chain activities are invisible to those
accountable
• Multiple suppliers, multiple customers, multiple third
parties
• High variability in material behavior, transportation modes
• High variability in lead time, supply and demand
• High variability in supplier performance and capability
• The extended network is not always visible
• Data are not always abundant
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Supply Chain & Logistics Management
Logistics are sections of the orchestra
Supply Chain Management is the conductor who sets the rhythm for all logistics functions
Trying to optimize each logistics function independently will sub optimize the supply chain
Optimize the supply chain by enabling the logistics functions to work systematically
Logistics
Supply Chain Management
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Words Have Meaning, Names Have Power
Supply Chain
• Supply:
– Supplier Focused
– EOQ’s
• Chain:
– Only touch points
– Each link independent
– Strong as it’s weakest
link
– Prone to kinking
Fulfillment Stream
• Fulfillment
– Customer Focused
– Takt Time Quantities
• Stream
– Flows smoothly
– Flows evenly
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Guiding Principles of the Lean Supply Chain
Visibility Real time visibility to material and information flow
Value Stream Thinking Internal and external End to End collaboration to manage
total cost
Lead Time Reduction Flow, velocity, pull, JIT, and leveling
Quality at the Source Standardization, error proofing, and first time quality of
core processes
Complexity Management Supply Chain centric decision making to manage planned
complexity
Performance Management Clear targets, PDCA, and continuous improvement
The ultimate supply chain would have everyday look the same.
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Concept Application: Guiding Principles
• Discuss at your table each of the LFS principles the
implications to your workplace.
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The Ultimate Business Model
Build to order = No overproduction so what’s the problem?
Supply LT MLT + OL
+ < Customer LT
= BTO
Supply LT MLT + OL
+
<
Customer LT
= Forecast
LT = Leadtime MLT = Mfg Leadtime
OL = Outbound Logistics BTO = Build to order
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Lead Time is Only Made of Two Things!
Lead Time = Value + Waste
Valu
e
Valu
e
Waste
Valu
e
Valu
e
Waste Waste
Custom
er C
onsum
es
Manufacture
Product D
esign
Supplier Build
10
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Lean FS & Systems Thinking
11
The defining
characteristic of a
system is that it
cannot be understood
as a function of its
isolated components.
First, the behavior of
the system doesn't
depend on what each
part is doing but on
how each part is
interacting with the
rest ...
Kofman and Senge,
1993
What we need are more sales promotions !
I love it when a plan comes together…did it ?
All New Products every year with 100% new components…
You’re a fool if you don’t focus on BOM costs
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What Are You Tolerating?
Taking Responsibility for System Wide Results
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Inventory Paradigms Mental Model 1
Inventory is Waste
Strategic Focus:
1. Eliminate all inventory
Mental Model 2
Right-sized inventory as competitive strength
Strategic Focus:
1. Flow, Cost, Visibility and Lead Time
2. On Time In Full (OTIF), First Time Quality….focus on the Customer.
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1. Customer Service – Fill Rate Policies
2. Production Lot Sizes
3. Transportation Economies
4. Purchasing Economies & Hedging
5. Demand Variability: Seasonality, Spikes, New Product Launches
6. Cycle Stock ; Buffer Stock: Safety Stock: Raw Material: WIP: FG
a) Lead Time
b) Supplier Dependability
c) Transportation Dependability
d) Customer Dependability
Is a retail store a warehouse? Imagine if everything we buy is built to order….No grocery store, no box store…how would this effect our daily lives?
Why? Purpose of Inventory
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Totally
Unstable!
Guessing Game
Reasonably
Stable
Stable!
Stability and Inventory
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Stability and the Ultimate Goal
The lean operation would have everyday look the same
A Lean operation exposes problems. A problem is a deviation from the
standard, or more simply, a deviation from what we expected to happen
(The Plan in PDCA). Therefore, the ultimate goal is have everyday look the
same… stable and predictable. While we may never get there…this is the
goal.
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The “Pull” Supermarket
• Called a supermarket because we withdraw
inventory from the “shelf” and it is
replenished in the exact quantity
• Replenishment is “fixed delivery frequency”
and “variable quantity”
• Replenishment happens only when there is
consumption from the supermarket
• The amount of inventory in the supermarket
is planned and controlled
What is the difference between a pull
supermarket and a min-max system?
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Inventory Supermarket Sizing
Which factors increase inventory?
1. Cycle Stock: frequency in which you receive from suppliers/production.
2. Buffer Stock: purpose of product (service level), variation in demand,
frequency in which you receive from suppliers/production.
3. Safety Stock: Total lead time to order and get inventory from supplier,
globalization, risk for damage, supplier risks, transportation risks
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Application Question • You realize that Velocity is a big part of implementing Lean in
the fulfillment stream. While nobody would ever disagree that speed is good, you are not sure everybody on the team understands the impact of speed. You ask the team a few questions. 1. What does velocity even mean? 2. How does velocity impact the fulfillment stream? 3. What are the tactical techniques to increase velocity (speed) in the fulfillment stream?
Copyright LeanCor Supply Chain Group
Lean Logistics Concept 1 of 3:
Lot Size
Customer Daily Requirements = x75
100
25
75 100
Day 5
75 100
25
75 75 75 75 75
Day 1 Day 2 Day 5 Day 3 Day 4
Order Lot Size = 25
Day 1 Day 3 Day 4 Day 2
Order Lot Size = 50
What Happens Here? What are the Implementation Challenges?
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Fri 1 /week Mon Tues Wed Thr
500 SQ/FT
4PM 1 /day 8AM 10AM 12PM 2PM
100 SQ/FT
4PM 8AM 10AM 12PM 2PM
25 SQ/FT
4 /day
What is the effect on inventory? What is the obvious challenge?
Lean Logistics Concept 2 of 3:
Frequency
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Increased Delivery Frequency
Fri 1 /week Mon Tues Wed Thr
500
SQ/FT
4PM 1 /day 8AM 10AM 12PM 2PM
100
SQ/FT
Monthly Weekly Daily 2X Day 4X Day
Delivery Frequency (One Part or SKU #)
Space Used for Inventory (SQ Feet) 2000 500 100 50 25
Average Days on Hand (Days Inventory) 10 2.5 0.5 0.25 0.125
Minimum Order Lead Time 1 month 1 week 1 day 12 hours 6 hours
Percent Improvement from Increased Frequency
Space Used for Inventory (SQ Feet) 75% 80% 50% 50%
Average Days on Hand (Days Inventory) 75% 80% 50% 50%
Minimum Order Lead Time 75% 80% 50% 50%
Delivery Frequency Analysis
1 Truck Load = 1 Week Store / Distribution Center Requirements
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7AM
9AM
11AM
1PM 3PM
One Shift Material Handling
Where can we use this concept tomorrow?
Lean Logistics Concept 3 of 3:
Level Flow
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Entropy & Pressure
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Second Law of Thermodynamics
In a system, a process that
occurs will tend to increase the
total entropy of the universe.
Second law of thermodynamics
System: A group of interacting, interrelated, or interdependent
elements forming a complex whole.
Entropy: A measure of the disorder or randomness in a closed system
What does this have to do with Problem Solving?
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Use Lean Logistics Measurement Systems To enable you to collaborate and develop supply chain partners
• Purpose: • Create metrics that add
value to monitoring and improving processes.
• Outcomes: • Identify key metrics that
can be collected to monitor performance and identify gaps.
• Establish key targets for metrics that maintain, promote, or make visible instability or stability.
• Define purpose for each metric, that purpose should drive action.
On-Time Pickup and Delivery: Cost impact: prevents overtime on loading/shipping docks, increases customer satisfaction and prevents line-down scenarios, stability in this metric leads to reduced inventory
Pickup/Delivery Frequency: Cost impact: can lead to increased logistics cost, must be paired with decreases in inventory
Trailer Utilization: Cost impact: full trucks lead to fewer trucks, reduces transportation cost
Examples:
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Thank You! Questions?
Ashley Yentz
ayentz@leancor.com
925.899.9725
Let’s connect on