APICS Conexus Luncheon Presentation

Advancing Productivity, Innovation, and Competitive Success

Hot Trends to Fire Up Your Production and Inventory

Management

Jim MalonePresident

APICS-CINDCentral Indiana Chapter

www.apics.org


Since 1957, individuals and companies have relied on APICS for its superior training, internationally recognized certifications,

comprehensive resources, and worldwide network of accomplished industry professionals.

The global leader and premier source of the body of knowledge in operations management, including

production, inventory, supply chain, materials management, purchasing, and logistics.



Chapter Background


Central Indiana

•CIND geography covers much of Central Indiana.

•Viewed as One of the Top Chapters in North America

• A Platinum Award Winning Chapter (consistent performance)

• ~ 450 Professional Members Regular Chapter Meetings

• Monthly Dinner Meetings

•Plant Tours

•Seminars

•A Strong Instructor Base

APICS: Central Indiana Chapter


APICS Chapters in Indiana

• 4 Chapters serve Indiana– Michiana– Fort Wayne– Central

Indiana– Ohio Valley

Michiana

Fort Wayne

Central Indiana

Ohio Valley


APICS Districts

APICS' more than 250 local chapters are divided into 9 geographic districts that span North America.


Outside North America, APICS is represented by two types of organizations:

International Associates (IA): International Associates are non-profit membership organizations, who provide APICS certification exams and related products, and membership services such as local meetings, networking opportunities, and conferences in every region of the globe.

Authorized Education Providers (AEP): Authorized Educational Providers teach APICS courses and provide consulting based on the APICS body of knowledge in every region of the world.

Currently there are over 90 APICS International Associates


Membership in APICS-CIND

The real value in APICS-CIND membership is the fact that you are “connected” to a community of . . .

. . .nearly 40,000

professionals

worldwide….


Setting the record straight: Manufacturing & Logistics Report Card

Conexus of Indiana Report• Conexus releases an annual

Manufacturing & Logistics Report Card, assessing our strengths and weaknesses

• The 2009 Report Card shows solid performance –

– Manufacturing and logistics are major components of Indiana’s economy

– Our global position is strong – foreign investment & exports

– Pro-growth business climate

Human capital is our biggest barrier to success


• APICS –CIND was founded in the 1960’s– and is committed to the development of Indiana’s workforce by helping

build the knowledge and skills in operations management, including production, inventory, supply chain, materials management, purchasing, and logistics.

• APICS-CIND offers localized services including:

– Professional Development Meetings– Educational programs – Certification review courses – Career placement opportunities – Plant Tours & Seminars

• APICS –CIND supports 4 College Student Chapters


The Indiana Alliance of Professional Societies, IAPS, is an alliance of local Indiana Chapters of national organizations recognized for being the authorities in their respective fields and providers of Professional Bodies of Knowledge. These professional organizations share a core foundation and vision in building knowledge and skills, advancing learning and knowledge exchange opportunities, to improve business and help their members and organizations successfully compete and build a stronger local and global economy.

As a member of the Indiana Alliance of Professional Societies, (IAPS), participating professional associations recognize the advantages of co-venturing with complimentary professional associations with the purpose of sharing resources and ideas in order to broaden their scopes within operations, logistics, and supply chain management.

APICS-CIND A Founding Member of the I.A.P.S.


INVENTORY AND PRODUCTION MANAGEMENT

SUPPLY CHAIN 101


The Supply Chain can and will destroy your Career and maybe

your Company

SUPPLY CHAIN STORIES


Supply Chain Story

In the mid-1990s, the Swedish car manufacturer Volvo found itself with excessive stocks of green cars. To move them along, the sales and marketing departments began offering attractive special deals, so green cars started to sell. But nobody had told the manufacturing department about the promotions. It noted the increase in sales, read it as a sign that consumers had started to like green, and ramped up production.

Source: Chain reaction, The Economist, Jan 31, 2002

On Internal communication and collaboration


Supply Chain Story

US auto man.Supplie

rs

Suppliers

Toyota“Toyota helped us dramatically improve our production system. We started by making one component, and as we improved, [Toyota] rewarded us with orders for more components. Toyota is our best customer.”

-Senior executive, supplier to Ford, GM, Chrysler, and Toyota, July 2001**

“The Big Three [US automakers] set annual cost-reduction targets [for the parts they purchase]. To realize those targets, they’ll do anything. [They’ve unleashed] a reign of terror, and it gets worse every year. You can’t trust anyone [in those companies]”

-Director, interior systems supplier to Ford, GM, and Chrysler, October 1999*

* And ** Source: Building Deep Supplier Relationships, HBR, December 2004

Arm’s Length

Partnership


Supply Chain Management at Work

• The Opportunity– $13.5 m in Inventory– 4 Inventory turns per

year– Stock Outs of FGI– Location Inventory

accuracy of 56%– Global Inventory

accuracy of 89%– $75 K in obsolete

inventory each year

• The Results– $6.18 m in Inventory– 7 Inventory turns per

year– 100 % Order fulfillment– Location Inventory

accuracy of 98.6%– Global Inventory

accuracy of 99.39%– $20 K in obsolete

inventory each year


Supply Chain Management at Work

• Inventory Accuracy

• Benchmarking Tach Time

• Establish Kanban for all inventory (min/max)

• 100% Shipping attainment


Evolution of Operations and Supply Chain Management

• Supply chain management– management of the flow of information, products, and services

across a network of customers, enterprises, and supply chain partners


Evolution of Operations and Supply Chain Management


Key Performance Indicators

• Metrics used to measure supply chain performance– Inventory turnover

– Total value (at cost) of inventory

– Days of supply

– Fill rate: fraction of orders filled by a distribution center within a specific time period

inventory of valueaggregate Average

sold goods ofCost turnsInventory

) item e(unit valu) itemfor inventory (averageinventory of valueaggregate Average ii

days) sold)/(365 goods of(Cost

inventory of valueaggregate Average supply of Days


Positioning the Supply Chain

• Cost

• Speed

• Quality

• Flexibility


Positioning the Supply Chain: Cost

• Waste elimination– relentlessly pursuing the

removal of all waste

• Examination of cost structure– looking at the entire cost

structure for reduction potential

• Lean production– providing low costs

through disciplined operations


Positioning the Supply Chain:Speed

• Fast moves, Fast adaptations, Fight linkages

• Internet– conditioned customers to expect

immediate responses

• Service organizations– always competed on speed

• Manufacturers– time-based competition: build-to-

order production and efficient supply chains


Positioning the Supply Chain : Quality

• Minimizing defect rates

• Conforming to design specifications

• Please the customer

• Six Sigma, ISO, TS, QMS


Positioning the Supply Chain:Flexibility

• Ability to adjust to changes in product mix, production volume, or design

• Disasters – Natural– Man Made

• Political/Labor Unrest

• Economic


TLS

LEAN

SIX SIGMA

THEORYOF

CONSTRAINTS


• Strategy– Provides direction for achieving a mission

• Five Steps for Strategy Formulation– Defining a primary task

• What is the Organization in the business of doing?• What is the Organization not in the business of doing

(Outsourcing)?– Assessing core competencies

• What does the Organization do better than anyone else?– Determining order winners and order qualifiers

• What qualifies an item to be considered for purchase?• What wins the order?

– Positioning the Organization• How will the firm compete?

– Deploying the strategy

Strategy and Operations Of the Supply Chain


Supply Chain Improvement Tools

Theory of Constraints is based on the premise that the rate of goal achievement is limited by at least one constraining process. Only by increasing flow through the constraint can overall throughput be increased. Assuming the goal of the organization has been articulated the steps are:

– Identify the constraint– Decide how to exploit the constraint– Subordinate all other processes to the above decision – Elevate the constraint – If, as a result of these steps, the constraint has moved, return to Step 1 and

repeat the process. Don't let inertia become the constraint.

The end goal for Supply Chains using this tool is to move from using a forecast model in determining inventory and manufacturing levels to a replenishment to consumption model



• Lean manufacturing or lean production, often simply, "Lean," is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful and should be eliminated. Working from the perspective of the customer who consumes a product or service, "value" is defined as any action or process that a customer would be willing to pay for. There are 7 areas of waste:

– Transport (moving products that is not actually required to perform the processing) – Inventory (all components, work in process and finished product not being processed) – Motion (people or equipment moving or walking more than is required to perform the

processing) – Waiting (waiting for the next production step) – Overproduction (production ahead of demand) – Over Processing (resulting from poor tool or product design creating activity) – Defects



• Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization ("Black Belts", "Green Belts", etc.) who are experts in these methods.

– Continuous efforts to achieve stable and predictable process results – Manufacturing and business processes have characteristics that can be measured,

analyzed, improved and controlled

– Achieving sustained quality improvement requires commitment from the entire

organization, particularly from top-level management – A clear focus on achieving measurable and quantifiable financial returns – An increased emphasis on strong and passionate management leadership – Special infrastructure of "Champions," "Master Black Belts," "Black Belts," "Green

Belts",


Thank You


www.apics-cind.org

APICS Conexus Luncheon Presentation

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