Copyright 2011 The McGraw-Hill Companies, All

Rights Reserved

Background
Product Life Cycle
Supply Chain Management

Industrial Ecology: a systematic organizing framework

for the many facets of environmental
management..industrial world as a natural system - a
part of the local ecosystems and the global biosphere ...
offers a fundamental understanding of the value of
modeling the industrial system on ecosystems to
achieve sustainable
environmental
performance (Lowe,
Industrial
Ecosystem Boundary
1993).

Energy
and
Limited
Resources

Materials Extractor
or Grower

Materials Processor
or Manufacturer

Waste Processor

Consumer

Limited
Waste

What is it? Lots of definitions.

Heres one Management of Materials and Resources
from Suppliers to Manufacturer/Service
Provider to Customer and Back, with the
Natural Environment Explicitly Considered
(hopefully in a conscientious manner).
The Operational Instantiation of Industrial
Ecosystems

External
Transportatio
n

Raw and
Virgin
Material

Closed-Loop
Manufacturing,
Demanufacturing,
Source Reduction
TQEM

Internal
Transportation
Inventory
Management

Selection

Vendors

New
Component
s and Parts

Recycled,
Reused
Material
and Parts

Location Analysis,
Inventory Management,
Warehousing
Transportation
Packaging

Fabrication

Stora
ge

Stora
ge

Disposal

Customer Relationships
Green Marketing
Product Stewardship

Distribution,
Forward
Logistics

USE

Assembly

Purchasing,
Materials
Management,
Inbound
Logistics

Product/Proces
s Design

Engineerin
g

Energy

Energy

Energy

Waste

Marketing

Production

Waste

Outbound
Logistics

Waste

Energy

Reusable,
Remanufacturable,
Recyclable
Materials and
Components
Reverse
Logistics

Waste

Logistics, Procurement have become strategic

Organizations outsourcing, forming partnerships,
alliances
Product environment becoming more complex
Time based competition requires time
compression
Managing suppliers and customer relationships
necessary
Competition shifting from company vs. company
to
Supply Chain vs. Supply Chain

Supplier
Suppliers

Relationships

Organizational
Processes

Customer
Relationships

Customers

Continuous Improvement Loops

Supply Chain Elements

Supply Chain Supply Cycles

Lean and Sustainable Supply

Chains

1.

2.
3.

4.

5.

6.

Describe how Green and Lean can

complement each other.
Explain how a production pull system works.
Understand Toyota Production System
concepts.
Summarize important attributes of a lean
supply chain.
Analyze a supply chain process using value
stream mapping.
Know the principles of supply chain design.

Lean production: an integrated set of

activities designed to achieve high-volume
production using minimal inventories (raw
materials, work in process, and finished goods)
Lean Production also involves the elimination of
waste in production effort
Lean Production also involves the timing of
production resources (i.e., parts arrive at the
next workstation just in time)

LO 1

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 customers perspective

LO 1

Lean is based on the logic that nothing will

be produced until it is needed
A sale pulls a replacement from the last
position in the system
This triggers an order to the factory
production line
Each upstream station then pulls from the
next station further upstream

LO 1

Here
Herethe
thecustomer
customerstarts
starts
the
theprocess,
process,pulling
pullingan
an
inventory
inventoryitem
itemfrom
fromFinal
Final
Assembly
Assembly
Then
Thensub-assembly
sub-assembly
work
workis
ispulled
pulled
forward
forwardby
bythat
that
demand
demand

Customers

Vendor

Fab

Vendor

Fab

Vendor

Fab

Vendor

Sub

Final
Assembly

The
Theprocess
processcontinues
continues
throughout
throughoutthe
theentire
entire
production
productionprocess
processand
and
supply
supplychain
chain

Fab

Sub

1.
2.

LO 3

Elimination of waste
Respect for people

1.
2.
3.
4.
5.
6.
7.

LO 3

Waste from overproduction

Waste of waiting time
Transportation waste
Inventory waste
Processing waste
Waste of motion
Waste from product defects

Lifetime employment for permanent

positions
Maintain level payrolls even when business
conditions deteriorate
Company unions
Bonuses
View workers as assets

LO 3

Value stream: the value-adding and nonvalue-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 4

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 4

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 4

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 5

LO 5

LO 5

LO 5

Lean layouts

1.

a. Group technology
b. Quality at the source
c. JIT production

Lean production schedules

2.

a. Uniform plant loading

b. Kanban production control system

Lean supply chains

3.

a. Specialized plants
b. Work with suppliers
c. Building a lean supply chain

LO 6

Plant layout designed to ensure balanced

work flow with a minimum of WIP inventory
Preventive maintenance is emphasized to
avoid downtime

Operators perform much of the maintenance

LO 6

Group technology: a philosophy in which

similar parts are grouped into families
The processes required to make the parts
are arranged in a manufacturing cell
Eliminated movement and queue time
between operations, reduces inventory, and
reduces employees

LO 6

LO 6

Quality at the source: do it right the first

time and if something goes wrong, stop the
process immediately
Workers become their own inspectors
Workers are empowered to do their own
maintenance

LO 6

JIT production: producing what is needed

when needed and nothing more
Anything over the minimum is waste
Typically applied to repetitive
manufacturing
Idea lot size is one
Vendors ship several times a day
JIT exposes problems otherwise hidden by
inventory

LO 6

LO 6

Level schedule: one that requires material

pulled in a pattern uniform enough to allow
production to respond to pull signals
Freeze windows: that period of time during
which the schedule is fixed and no changes are
possible
Backflush: where parts that go into each unit
are periodically removed from inventory and
accounted for paged on production
Uniform plant loading: smoothing the
production flow to dampen the reaction waves
that normally occur from schedule variations

LO 6

Kanban means sign or instruction card

in Japanese
Cards or containers are used
Make up the kanban pull system

LO 2

Worker takes the first part A from a full container

Worker takes the withdrawal kanban from the container,
and takes the card to the machine center storage area
In machine center, worker finds a container of part A
Worker removes the production kanban, and replaces it
with the withdrawal kanban
This authorizes the movement of the container to the
assembly line

The freed production kanban is placed on a rack by the

machine center, which authorizes the production of
another lot of material
A similar process is followed for part B

The cards on the rack become the dispatch list for the
machine center

LO 2

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

Machine
Center

Withdrawal
kanban

Storage
Part A

Production kanban
The process begins by the Assembly
Line people pulling Part A from Storage
LO 2

Storage
Part A

This puts the

system back
were it was
before the item
was pulled

Assembly
Line

Material Flow
Card (signal) Flow

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 2

LO 6

Specialized plants
Small specialized plants rather than large
vertically integrated manufacturing facilities
Can be constructed and operated cheaper

Work with suppliers

Important part of process
Share projections with suppliers
Link with suppliers online

LO 6

Value must be defined jointly for each product

family based on the customers perception
All firms along the value stream must make an
adequate return on their investments
Firms must work together to eliminate waste so
overall target cost and ROI targets are met
When cost targets are met, the firms will
conduct new analyses to identify remaining
waste and set new targets.
Every participating firm has the right to
examine every activity relevant to the value
stream as part of the joint search for waste

LO 6