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Introduction to Lean Supply Chains What is a Lean Supply Chain? Components of Lean Supply Chains Benefits of Lean Supply Chains Moving Toward a Lean Supply Chain Seven Steps for Building a Lean Supply Chain Critical Success Factors Summary
COMPONENTS
Lean Suppliers
Lean Procurement Lean Manufacturing
Lean Warehousing
Lean Transportation Lean Customers
LEAN WAREHOUSING
Defective products which create returns Overproduction or over shipment of products Excess inventories that require additional space and reduce warehousing efficiency Excess motion and handling Inefficiencies and unnecessary processing steps Transportation steps and distances Waiting for parts, materials and information Information processes Each step in the warehousing process should be examined critically to see where unnecessary, repetitive, and non-valueadded activities might be so that they may be eliminated.
LEAN TRANSPORTATION
Core carrier programs Improved transportation administrative processes and automated functions Optimized mode selection and pooling orders Combined multi-stop truckloads Crossdocking Right sizing equipment Import/export transportation processes Inbound transportation and backhauls
The keys to accomplishing the concepts above include mapping the value stream, creating flow, reducing waste in processes, eliminating non-value-added activities and using pull processes.
COMPETITIVE WEAPON
A strong supply chain enables the member companies to align themselves with each other and to coordinate their continuous improvement efforts.
The synthesis enables even small firms to participate in the results of lean efforts Competitive advantage and leadership in the global marketplace can only be gained by applying lean principles to the supply chain These elements are required for success:
PATH FORWARD
The challenge is to bring all of these areas out of their traditional silos and make them work together to reduce waste and create flow.
Quality Distribution HR
Development
SEVEN STEPS
There are seven steps to developing lean supply chains.
Develop Systems Thinking Understand Customer Value Value Stream Mapping Benchmark Best Practices Design to Manage Demand Volatility Create Flow Performance Metrics
Just in Time
The right part at the right time in the right amount
Built in Quality
Line Stop - Manual - Automate Error Proofing Visual Control
Flexible, Capable, Highly Motivated People
Preconditions
Continuous Flow Pull System Takt Time Level Production
Operational Stability
Standardized Work Total Productive Maintenance Robust Products & Processes Supplier Involvement
SALES
Sales Price
Traditional View
Sales Price
Mfg. Cost
Profit
Profit Profit
Modern View
Sales Price
Mfg. Cost
Mfg. Cost
Mfg. Cost
is performed
- Minimize Number of Suppliers - Keep supply chain short as possible - Toyota is as strong as its weakest
supplier
LEAN APPROACH
Stock is held at multiple echelons, often based on organisational and legal ownership considerations Replenishment is driven sequentially by transfers from one stocking echelon to another Production is planned by discrete organisational units with batch feeds between discrete systems.
AGILE APPROACH
Stock is held at the fewest echelons, if at all, with finished goods sometimes being delivered direct from factory to customer Replenishment of all echelons is driven from actual sales/usage data collected at the customer interface Production is planned across functional boundaries from vendor to customer, through highly integrated systems, with minimum lead times Majority of stock is held as work in progress awaiting build/configuration instructions
Raw Material
Customer
Machining Assembly
Leveled Production Plan
Pull Schedule
Pull Schedule
Assembly Schedule
06/07/98
Find the best supplier and engage early in the design process Partner with key suppliers that have high capability for design and supply
Suppliers should be located in the country where you build your product
Shorten the supply chain by having suppliers close, frequent deliveries, and leveled production plans
Globalization : globalization has led to extremely fragile supply chains. Natural disasters, geopolitical turmoil, cyber security threats, and pandemics threaten ability of logistics providers to maintain a state of business continuity.
Leaner inventories
More outsourcing
Failure Mode
Description
Delay or unavailability of materials from suppliers, leading to a shortage of inputs that could paralyze the activity of the company. Delay or unavailability of the transportation infrastructure, leading to the impossibility to move goods, either inbound and outbound. Delay or unavailability of plants, warehouses and office buildings, hampering the ability to continue operations. Violation of the integrity of cargoes and products, leading to the loss or adulteration of goods (can be due either to theft or tampering with criminal purpose, e.g. smuggling weapons inside containers). Delay or unavailability of the information and communication infrastructure, either within or outside the company, leading to the inability to coordinate operations and execute transactions.
Disruption in communications
Disruption in demand
Delay or disruption downstream can lead to the loss of demand, temporarily or permanently, thus affecting all the companies upstream.
Build a resilient communication network Enterprise Resource Planning (ERP) Warehouse, Management Systems (WMS) Transport Management Systems (TMS).
Operational Strategy
Stockpile Inventory
Description
Hold inventory that can be used to fill customer demand even if supply is interrupted. Source product from multiplevendors/facilities so that a problem at one vendor/facility does not affect the entire supply. Have an emergency supplier (or logistics provider) that is not normally used but that can be activated in the event of a supply problem. Influence demand to better match the actual supply by, for example, adjusting prices or offering incentives to encourage customers to purchase products that are less supplyconstrained Work with suppliers to reduce the frequency and/or severity of supply problems.
Example(s)
In 2004, United Technologies Corporation temporarily increased its inventory buffer to protect against a potential supply disruption due to financial difficulties at a key supplier Nokias multiplesupplier strategy reduced the impact of the 2000 Philips Semiconductor disruption.Chiquitas multiple growerlocation strategy reduced the impact of the 1998 Hurricane Mitch disruption. Nokia responded to the Philips Semiconductor disruption by temporarily increasing production at alternative suppliers.New Balance responded to the 2002 westcoast dock disruption by rerouting ships to the east coast and by air freighting supplies. Dell responded to the disruption in memory supply caused by the 1999 Taiwanese earthquake by shifting customer demand to lowermemorycomputers.
Diversify Supply
Backup Supply
Manage Demand
Unlike its competitor Xilinx, Altera does not source from multiple semiconductor foundries but works closely with its foundry partner (UMC) to minimize yieldrelated supply disruptions.
The basic elements are waste elimination, continuous one piece workflow, and customer pull. Every system contains waste, i.e. something that does not provide value to your customer. Whether you are producing a product, processing a material, or providing a service, there are elements which are considered 'waste http://www.youtube.com/watch?feature=endscreen&v=oA_YS yBkhiM&NR=1 Lean supply chain management is for many companies. It is not just for manufacturers who practice lean management. It is also for non-manufacturers, wholesalers, distributors, retailers and others.
EXAMPLE: ENGINE PARTS CASTING SUPPLIER WORKED WITH CUSTOMER COMPANY TO ACHIEVE SYNCHRONIZED FLOW
Thank you