Spring Conference & Supplier Showcase © Robert Menard MCMLXXXV-MMXIV, all rights reserved Lean...

Spring Conference Spring Conference && Supplier ShowcaseSupplier Showcase

© Robert Menard MCMLXXXV-MMXIV, all rights reserved

Lean Principles and Sustainability

(Purchasing too)

Robert MenardRobert Menard

Author of

You’re the Buyer-

You Negotiate It!

and

Green Purchasing and Sustainability


Workshop TourWorkshop Tour

HOW Purchasing, Lean, and Sustainability interconnect

Tips, techniques, and practices

Speak up to participate

NOT dive deep into theory

Spot exercises © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Value of PurchasingValue of Purchasing


Nothing happens until a sale purchase is made

The contribution of purchasing to profit dwarfs that of sales… Purchasing is the most efficient profit generator in business. ((p.viip.vii))

Cost Reduction &Profit Cost Reduction &Profit (p.vii)(p.vii)

Sales $1,000,00

0

Sales 10%

$1,100,000

Costs 10%

$1,000,000

Material

$450,000 $495,000 $405,000

Labor $450,000 $495,000 $405,000

Total $900,000 $990,000 $810,000

Profit

Effect

$100,000

Base

$110,000

Plus 10%

$190,000

Plus 90%


Does Price = Cost ? (Chap. 2)

The cord on the right was a price bargain …until a few seconds ago!

Best Value = lowest TCO © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Lean = Waste Lean = Waste (Cost) (Cost) ReductionReduction


JIT - father of Lean (?)

Six Sigma – 4 defects per million

TQM – W. Edwards Deming

ISO - family of standards

The Five Principles of LeanThe Five Principles of Lean


1. Value to customer

2. Identify processes

3. Enhance/shrink

flow

4. Less WIP

5. Kaizen

Major Contributors

Henry Ford


Ben Franklin

Eli Whitney

Kiichiro Toyoda

8 Wastes of Lean8 Wastes of Lean

The “extra” one


ExamplesExamples

Waiting: Process mapping

Motion: WIP, down time, ROBOTICS

Defects: Six Sigma, TQM

Talent: Educatiion and Trainig

Overprocessing: Diminishing returns

Overproduction: SOP © Robert Menard MCMLXXXV-MMXIV, all rights reserved

InventoryInventoryJust In Time (JIT)Vendor Managed Inventory (VMI)Vendor Owned Inventory (VOI)ABCs: 5%, 20%, 75%SKU LOC: Parts by venueOptimization: Unexpected, predictable and seasonal demand


TransportationTransportation

Supplier selection: HOW?Define “Delivery” (p.360 Law)

Define FOB, origin, destinationDefine FAS, origin, destinationInbound/Outbound (?)Fuel & Productivity: UPS (p.42)


Spot ExerciseSpot Exercise

If you are pursuing Lean:1.What has prompted Lean?2.What are your initiatives?3.How do you measure results?

If you are new to Lean:1.What are your motivations?2.What are your goals?3.Which are the most likely successes?


SustainabilitySustainability

1.People, Planet, Profitability

2.Social, Environmental,

Financial

3.Economical, Educational,

Educational

What is your definition?What is your definition? © Robert Menard MCMLXXXV-MMXIV, all rights reserved

The Five Values of The Five Values of SustainabilitySustainability


1. Energy

2. Reduce/Reuse/

Recycle3. Construction &

Facilities4. Chemical &

Environmental

5. CSR

How?How?

Pick a Lean/Sustainable project

• How does it relate to Purchasing

• How is it Lean• How is it Sustainable• How will it reduce costs• How will you implement it?


““How-to”s How-to”s EEnergy (p.28)


Rank Fuel Btu value Approx. unit price

Btu/$

9 Electricity 3,413/kWh$0.12/kwh Utility

28,500

8Oil #1 (kerosene)

135k/gal $2.75/gal by C/L 49,100

7 Gasoline 125k/gal $2.50/gal by T/L 50,0006 Propane 91.5k/gal $1.75/gal by T/L 52,3005 Oil #2 (diesel) 140k/gal $2.25/gal by T/L 62,200

4Oil #6 (industrial)

150k/gal $2.00/gal by T/L 75,000

3 Wood (average) 16Mil/cord$200.00/cord by

T/L80,000

2 Natural Gas 100k/Mcf $12.00/Mcf by P/L 83.300

1Coal (anthracite)

22Mil/ton $50.00/ton by C/L 440,000

““How-to”s How-to”s ElectrictyElectricty

E = IR (Ohm’s Law, (p.22)E x I = Watts (Power)

• 120V (house), 120W bulb, Amps = ?

Heat loss (high V, X-frmrs)Rebates (p.24)Demand, soft starts (p.23)Solar, LED, Energy Star

(Kohls, p. 109, many others) © Robert Menard MCMLXXXV-MMXIV, all rights reserved

““How-to”s How-to”s 3Rs 3Rs (p.63)(p.63)

1,000 catalogs @ 2#/each1,000 catalogs @ 2#/each•34-62 trees•14,000 gallons water•920 gallons oil•1,180 lbs of GHG emissions•6 CY landfill waste•8,200 kWh energy


““How-to”s How-to”s 3Rs3Rs

COSTCOST 1,000 catalogs @ 2#/each•50 trees @ $15/ea = $375•14k gal water @$0.25 = $3,500•920 gal oil @ $2.00 = $1,840•1,180 lbs GHG @ $1 = $1,180•6 CY landfill @ $500 = $3,000•8,200 kWh @ $0.12 = $984

TOTAL $10, 879


Water Water (pp. 77-81)(pp. 77-81)

Gray, Runoff, Rain, Process, ...

• Xeriscaping (irrigation)• In situ collection (fire,

process)• Pervious pavement• Low Impact Development

(LID) • Retention/Detention ponds• Cooling, 3R-ed, © Robert Menard MCMLXXXV-MMXIV, all rights reserved

HeatHeatWaste heat• Compressors• Process heatInfrared• Heats maass, not air• Ideal for production linesHVAC, econo-miserLighting – Home Depot

(P.91) © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Corp. Social Corp. Social ResponsibilityResponsibility

Wal-Mart (pp.125-129) leaderMcDonalds (p.132)The Limited (p.133)Data Centers (p.136)• Is print or digital more

sustainable? (Hmmm)Writing the Green Purchasing

Plan (Chap. 7)


www.RobertMenardRobertMenard.com

Thanks!Thanks!

[email protected]


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