Bob Stahl & Bill Kerber The S&OP/Lean Connection Making Lean work with demand variability...

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Transcript of Bob Stahl & Bill Kerber The S&OP/Lean Connection Making Lean work with demand variability...

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Bob Stahl & Bill Kerber www.tfwallace.com The S&OP/Lean Connection Making Lean work with demand variability Bob Stahl Bill Kerber October 20-24, 2008 Toronto, Canada AME TOTONTO 2008 From Good to Great AME TOTONTO 2008 From Good to Great Slide 2 Bob Stahl & Bill Kerber www.tfwallace.com Who are We? Bob Stahl Bill Kerber Slide 3 Bob Stahl & Bill Kerber www.tfwallace.com The 4P Model of the Toyota Way Problem Solving (Continuous Improvement & Learning) People & Partners (Respect, Challenge, & Growth) Process (Eliminate Waste) Philosophy (Long-Term Thinking) Our Focus The Toyota Production System [TPS] is the basis for much of the lean production movement that has dominated manufacturing trends for the last 10 years or so. Jeffrey Liker The Toyota Way Slide 4 Bob Stahl & Bill Kerber www.tfwallace.com... many businesses in America are rushing to a build-to-order model of production. They want to make just what the customers want when they want it -- the ultimate lean solution. Unfortunately, customers are not predictable and actual orders vary significantly from week to week and month to month. Jeffrey Liker The Toyota Way... many businesses in America are rushing to a build-to-order model of production. They want to make just what the customers want when they want it -- the ultimate lean solution. Unfortunately, customers are not predictable and actual orders vary significantly from week to week and month to month. Jeffrey Liker The Toyota Way Schedule (to dealer orders/ forecast) Schedule (to dealer orders/ forecast) Push Linearity Toyota Flow Model Toyota Assembly Customers Dealers Demand Pull FG Inv. Buffer FG Inv. Buffer Variable Demand Variable Demand Suppliers Plant There is nothing illegal, immoral, or fattening with this approach, but many (most) companies cant afford, or simply cant follow, this approach to creating linearity with very large finished goods inventory. For Toyota, as we all know, it has worked very very well! Slide 5 Bob Stahl & Bill Kerber www.tfwallace.com LEIs Interpretation LEIs Seven Characteristics of a Lean Value Stream: 1.Takt 2.Finished goods strategy 3.Flow 4.Pull where cant flow 5.Scheduling at one point 6.Pitch 7.EPEI James P. Womack Danie T. Jones Slide 6 Bob Stahl & Bill Kerber www.tfwallace.com Master Schedule definition... The tool that balances demand and supply at the product level, as opposed to Executive S&OP which balances demand and supply at the aggregated Product Family level. It is the source of customer order promising, via its Available-to- Promise capability, and contains the anticipated build schedule for the plant(s) in the form of the Master Production Schedule. Slide 7 Bob Stahl & Bill Kerber www.tfwallace.com An Inconvenient Truth... (with apologies to Al Gore) In general, when you try to apply the Toyota Production System [TPS], the first thing you have to do is to even out or level the production. Leveling the production schedule may require some front- loading of shipments [push to dealers] or postponing [delaying] of shipments and you may have to ask some customers [dealers] to wait for a short period of time. Once the production level is more or less the same or constant for a month, you will be able to apply pull systems and balance the assembly line. But if production levels the output vary from day to day, there is no sense in trying to apply those other [pull] systems, because you simply cannot establish standardized work under such circumstances. Fugio Cho Toyota President Slide 8 Bob Stahl & Bill Kerber www.tfwallace.com Big Fat Question(s)... What if it impossible or unaffordable to have FG Inventory as a buffer? How do you do Lean, if not exactly the Toyota Way? Thats why were here! Slide 9 Bob Stahl & Bill Kerber www.tfwallace.com Agenda... 1)Introduction The many tools for improving effectiveness Lean focus versus S&OP focus 2)How does the Toyota Production System work? 3)What are the problems? Market Forecast versus Production Leveling FG Inventory as the only buffer 4)What are the solutions? Solve the Family Feud Buffer without Finished Goods Inventory Backlog buffer (Lead Time) Component Inventory - Postponement Flexible resources 5)Questions and Answers. Slide 10 Bob Stahl & Bill Kerber www.tfwallace.com The New World of Manufacturing The New World of Manufacturing High Quality Low Cost (Low Inventory) Customer Service Quick Response Reliability Wide Variety Best in Class Getting to AND... Diminishing OR Slide 11 Bob Stahl & Bill Kerber www.tfwallace.com The Many Tools for Improving Effectiveness Increase Reliability Enhance Coordination Reduce Waste & Time Total Quality, Six Sigma, Poka-Yoke, ISO + others Lean Mfg., Just-In-Time, Quick Changeover (SMED), Flow + others Sales & Operations Planning, ERP, Kanban, VMI, + others XX X Slide 12 Bob Stahl & Bill Kerber www.tfwallace.com The Many Tools for Improving Effectiveness Increase Reliability Enhance Coordination Reduce Waste & Time Total Quality, Six Sigma, Poka-Yoke, ISO + others Lean Mfg., Just-In-Time, Quick Changeover (SMED), Flow + others Sales & Operations Planning, ERP, Kanban, VMI, + others XX X X Slide 13 Bob Stahl & Bill Kerber www.tfwallace.com The Many Tools for Improving Effectiveness Increase Reliability Enhance Coordination Reduce Waste & Time Total Quality, Six Sigma, Poka-Yoke, ISO + others Lean Mfg., Just-In-Time, Quick Changeover (SMED), Flow + others Sales & Operations Planning, ERP, Kanban, VMI, + others Blur the boundaries X Slide 14 Bob Stahl & Bill Kerber www.tfwallace.com Lean & Executive S&OP Do Different (Necessary) Things Lean Manufacturing Lean is a basic approach to manufacturing that emphasizes/focuses on flow. It also has a focus on eliminating waste from processes Strong on execution Short future horizon Drives improvements to the operating environment Flow works best with stable and linear demand Executive S&OP Tools for forward decision-making Strong on planning Long future horizon Balances demand and supply across the supply chain Executive Forum for establishing relevant strategy, policy, and risk Can be used in many different environments In a broad sense, they both get at culture! They work best when they work together! Slide 15 Bob Stahl & Bill Kerber www.tfwallace.com Agenda... 1)Introduction The many tools for improving effectiveness Lean focus versus S&OP focus 2)How does the Toyota Production System work? 3)What are the problems? Market Forecast versus Production Leveling FG Inventory as the only buffer 4)What are the solutions? Solve the Family Feud Buffer without Finished Goods Inventory Backlog buffer (Lead Time) Component Inventory - Postponement Flexible resources 5)Questions and Answers. Slide 16 Bob Stahl & Bill Kerber www.tfwallace.com Production Strategies Level - Most often associated with Make to Stock. To achieve a level production, a buffer against variable demand must be used. Chase - Most often Make to order. Also could be called variable capacity. Hybrid - A combination. Slide 17 Bob Stahl & Bill Kerber www.tfwallace.com Toyota Strategy Part A Slide 18 Bob Stahl & Bill Kerber www.tfwallace.com Toyota Strategy Part B Slide 19 Bob Stahl & Bill Kerber www.tfwallace.com Why This Works? Toyotas high quality and market acceptance allows limited variety With a limited number of end items: Schedule by end item Dont configure (finish) to order Alignment of markets and resources Slide 20 Bob Stahl & Bill Kerber www.tfwallace.com Product Environment In this shape a few end items are made from many parts, materials, and components. An example would be an equipment manufacturer such as automobiles, lawn mowers, capital equipment, etc. This shape lends itself to making to stock. Levels # of Parts Slide 21 Bob Stahl & Bill Kerber www.tfwallace.com Product Environment Scheduling is done here Replenish Finished Goods Customer Lead Time Slide 22 Bob Stahl & Bill Kerber www.tfwallace.com Linearity Toyota Flow Model Toyota Assembly Customers Dealers Demand Pull Schedule (to dealer orders/ forecast) Schedule (to dealer orders/ forecast) FG Inv. Buffer FG Inv. Buffer Variable Demand Variable Demand Suppliers Plant Push Slide 23 Bob Stahl & Bill Kerber www.tfwallace.com Demand-Supply Alignment (A second issue) Markets Large Trucks Small Trucks Large Cars Small Cars Line #1 Large Trucks Line #1 Large Trucks Production Line #2 Small Trucks Line #2 Small Trucks Line #3 Large Cars Line #3 Large Cars Line #4 Small Cars Line #4 Small Cars Slide 24 Bob Stahl & Bill Kerber www.tfwallace.com Takt Time... Takt is a German word for rhythm or meter. Takt is the rate of customer demand -- the rate at which the customer is buying product.... Takt can be used to set the pace of production. Continuous flow and takt time are most easily applied in repetitive manufacturing... Jeffrey Liker The Toyota Way Slide 25 Bob Stahl & Bill Kerber www.tfwallace.com Takt time... Demand rate? or Production Rate? Slide 26 Bob Stahl & Bill Kerber www.tfwallace.com Agenda... 1)Introduction The many tools for improving effectiveness Lean focus versus S&OP focus 2)How does the Toyota Production System work? 3)What are the problems? Market Forecasting versus Production Leveling FG Inventory as the only buffer 4)What are the solutions? Solve the Family Feud Buffer without Finished Goods Inventory Backlog buffer (Lead Time) Component Inventory - Postponement Flexible resources 5)Questions and Answers. Slide 27 Bob Stahl & Bill Kerber www.tfwallace.com A primer on S&OP... Plant Scheduling/Pull MS Exec. S&OP / Rough Cut PTF 24 Months Time Most DetailAggregate Only Exac Config...Precise Matl...# People...Capital Equip...Factory Space Volume Mix Detailed Forecasting & Master Scheduling Lost in the woods- Detail Engage Top Management? Added Little Value