Lean Supply Chains
Operations Management
Lean Production
In the context of supply chain, lean production refers to a focus on eliminating as much waste as possible.
Lean Production. �Integrated activities designated to achieve high-volume, high-quality production using minimal inventories of raw materials, work-in-process and finished goods.
Lean Production
Some consultants in industry have coined the phrase value chain to refer to the concept that each step in the supply chain processes that deliver products and services to customers should create value.
If a step does not create value, it should be removed from the process.
The basis of lean thinking came from the �just-in-time (JIT) production concepts pioneered �in Japan at Toyota.
Lean Production
Customer value.
In the context of lean production, something for which the customer is willing to pay.
Waste
Anything that does not add value from the customer’s perspective.
Lean Production
Waste | Description |
1. Defective products | The result of not getting the job done right the first time. |
2. Overproduction | Overproduction ties up production facilities and surplus inventory is simply idle. |
3. Inventories | The waste associated with the expense of idle inventory, plus the extra storage and handling requirements necessary to maintain it. |
4. Excess motion | As a result of inefficient design of the workplace and the location of tools and materials. |
5. Processing steps | The traditional notion of waste, exemplified by leftovers that often result from poor product or process design. |
6. Transportation | The time and effort spent transporting products around the factory as a result of poor distribution. |
7. Waiting | Allowing queues to build up between operations, resulting in longer lead times and more work in progress. |
Lean Production
Manufacturing operations, compared to service operations, are far more controllable. Uncertainty does result from material and labor inputs, but those can be anticipated and controlled to a great extent.
In contrast, services operate in a sea of uncertainty and variability that are much harder to control.
Lean Production
Concept | Definition |
Uncertainty in task times. | The nature of service products is that the execution of each service delivery has some uniqueness. This variability typically leads to a negative exponential distribution of task times. |
Uncertainty in demand. | While service demand can be forecasted, no forecast is 100 percent perfect. Manufacturers can buffer this forecast uncertainty with some finished goods inventory. |
Customers’ production roles. | Both of the previous uncertainties have much to do with customer involvement in service operations. Because customers typically have some role to play in the production of a service, variability is introduced based on how well the service provider performs his or her role. |
Lean Production
Lean is also based on the logic that nothing will be produced until it is needed.
To enable this pull process to work smoothly, lean production demands high levels of quality at each stage of the process, strong vender relations, and a fairly predictable demand for the end product.
The Toyota Production System
The Toyota Production System was developed to improve quality and productivity and is predicated upon two philosophies central to the Japanese culture:
Elimination of waste.
Waste is anything that is not �absolutely essential to production.
Respect for People.
Respect for people is key to the Toyota Production System. They have traditionally striven to ensure lifetime employment for permanent positions and to maintain level payrolls even when business conditions deteriorate.
Lean Supply Chains
Lean Supply Chains
The focus of the Toyota Production System is on elimination of waste and respect for people. As the concept have evolve and become applied to the supply chain, the goal of maximizing customer value has been added.
The value stream consists of the value-adding and non-value-adding activities required to design, order, and provide a product or service from concept to launch, order to delivery, and raw materials to customers.
Lean Supply Chains
When applies to supply chains, waste reduction relates to the optimization of the value-adding activities and the elimination of non-value-adding activities that are part of the value stream.
Lean Supply Chains
The different components of a supply chain and what would be expected using lean focus.
Concept | Definition |
Lean Suppliers | Lean Suppliers are able to respond to changes. Deliver on time and their culture is one of continuous improvement. To develop lean suppliers, organizations should include them in their value stream planning. |
Lean Procurement | A key to lean procurement is: Automation: Automatic transactions using Web based applications. Visibility: Suppliers must be able to “see” into the customers’ operations and customers must be able to “see” into their suppliers’ operations. |
Lean Manufacturing | Lean manufacturing systems produce what the customer want, in the quantity they want, when they want it, and with the minimum resources. |
Lean Supply Chains
The different components of a supply chain and what would be expected using lean focus.
Concept | Definition |
Lean Warehousing | This relates to eliminating non-value-added steps and waste in product storage processes. Waste can be found in many warehousing processes. Including shipping defects, overproduction. |
Lean Logistics | Lean concepts can be applied to the functions associated with movement of material through the system. |
Lean Customers | Lean customers have a great understanding of their business needs and specify meaningful requirements. They value speed and flexibility and expect high levels of delivery performance. |
The benefits of a lean supply chain primarily are in the improved responsiveness to the customer.
Lean Supply Chains
Building a lean supply chain involves taking a systems approach to integrating the partners.
Value Stream Mapping
Value Stream Mapping
Value stream mapping (VSM) is a special type of flowcharting tool that is valuable for the development of lean processes.
The technique is used to visualize product flows through various processing steps. To create a lean process, one needs to have a full understanding of the business, including production processes, material flows, and information flows.
Value Stream Mapping
In the context of a production process such as a manufacturing plant, the technique is used to identify all the value-adding, as well as non-value-adding, processes that materials are subjected to within a plant, from raw material coming into the plant through delivery to the customer.
Value Stream Mapping
Value Stream Mapping symbols are somewhat standardized but there are many variations.
These symbols are categorized as:
Value Stream Mapping
Value stream mapping is a two-part process – first depicting the “current state” of the process and second a possible “future state”.
The map has been annotated using Kaizen bursts that suggest the areas for improvement.
Kaizen is the Japanese philosophy that focuses on continuous improvement.
Lean Supply Chain Design Principles
Lean Supply Chain Design Principles
Looking for ways to improve supply chain processes should be based on ideas that have been proven over time.
A set of key principles that can guide the design of lean supply chains.
The first two set of principles relate to internal production processes. The third category applies lean concepts to the entire supply chain.
Lean Concepts
Lean requires the plant layout to be designed to ensure balanced workflow with a minimum of work-in-process inventory. Each workstation is part of a production line, whether or not a physical line actually exists.
Capacity is balanced using the same logic for an assembly line, and operations are linked through a pulls system.
Lean Concepts
The system designer must visualize how all aspects of the internal and external logistics system tie to the layout:
Preventive maintenance. Is emphasized to ensure that flows are not interrupted by downtime or malfunctioning equipment. Preventive maintenance involves periodic inspection and repair designed to keep a machine reliable.
Lean Concepts
Group technology. Is a philosophy in which similar parts are grouped into families, and the processes required to make the parts are arranged in a manufacturing cell.
Lean Concepts
Quality at the source. Means do it right the first time, and when something goes wrong, stop the process or assembly line immediately.
Factory workers become their own inspectors, personally responsible for the quality of their output.
Lean Concepts
JIT (just-in-time). Means producing what is needed when needed and no more. Anything over the minimum amount necessary is viewed as waste because effort and material expended for something not needed now cannot be utilized now.
When inventory levels are low, quality problems become very visible.
If the water in a pond represent inventory, the rocks represent problems that could occur in a firm. A high level of water hides the problems.
Lean Production Schedules
Lean Production Schedules
Lean production requires a stable schedule over a lengthy time horizon.
This is accomplished by:
Lean Production Schedules
A level schedule is one that requires material to be pulled into final assembly in a pattern uniform enough to allow the various elements of production to respond to pull signals.
The term freeze window refers to that period of time during which schedule is fixed and no further changes are possible.
Lean Production Schedules
The concept of backflush is used where the parts that go into each unit of the product are periodically removed from inventory and accounted for based on the number of units produced.
For example, if 1,000 road bicycles are made, 1,000 of the appropriate handlebars, 2,000 tires, 1,000 seat, and so on are automatically removed from on-hand inventory.
Lean Production Schedules
Underutilization and overutilization of capacity are controversial features of lean production. Conventional approaches use safety stocks and early deliveries as a hedge against production problems.
The excess capacity in labor and equipment that results is much cheaper than carrying excess inventory. When demand is greater that expected, overtime must be used.
During idle periods, personal can be put to work �on other activities.
Lean Production Schedules
Smoothing the production flow to dampen the reaction waves that normally occur in response to schedule variation is called uniform plant loading.
When a change is made in a final assembly, the changes are magnified throughout the line and the supply chain.
The only way to eliminate the problem is to make adjustments as small as possible by setting a firm monthly production plan for which the output rate is frozen.
Lean Production Schedules
A Toyota example is shown in the next table. Monthly car style quantities are reduced to daily quantities (20-days month) in order to compute a model cycle time. The cycle figure is used to adjust resources to produce the precise quantity needed.
The speed of equipment or of the production line is adjusted so only the needed quantity is produced each day.
Lean Production Schedules
Kanban Production Control System
A Kanban control system uses a signaling device to regulate JIT flows.
Kanban means “sign” or “instruction card” In Japanese. In a paperless control system, containers can be used instead of cards.
The cards or containers make up the Kanban pull system. The authority to produce or supply additional parts comes from downstream operations.
Lean Production Schedules
The machine center makes two parts, A and B. These two parts are stored next to the machine center. Each container next to the assembly line has a withdrawal Kanban, and each container next to the machine center has a production Kanban. This is often referred to as a two-card Kanban system.
Lean Production Schedules
Lean Production Schedules
The following are some other possible approaches:
Lean Production Schedules
Setting up a Kanban control system requires determination of the number of Kanban cards (or containers) needed.
K= Expected demand during lead time + Safety stock
Size of the container
Lean Production Schedules
The reductions in setup and changeover times are necessary to achieve a smooth flow. Under the Kanban approach, setup cost is significantly reduced, and the corresponding optimal order quantity is reduced
Lean Services
Many lean techniques have successfully applied by service firm. The suitability of each technique and the corresponding work steps depend on the characteristics of the firm’s market, production and equipment technology, skill sets, and corporate culture.
Successfully techniques applied to service companies:
Sustainable Supply Chain Management
Businesses all across the globe are talking about sustainable supply chain management. Although name or practices may differ, but the aim is to reduce the pressure on environment in an economical way, which is operationally viable and useful for the society.
There are many ways to define and explain Sustainable Supply Chain Management (SSCM). The most common way is to look at all supply chain partners, all processes and all customers so that three sustainability dimensions (economic, environmental and social) are achieved in the best possible way.