Lean Supply Chain Management Lecturer: David Holman Summer School 2015 ŠKODA AUTO University Mladá Boleslav Czech Republic

Lecture Content TOYOTA Production System Introduction – History, Why System Lean management. Why lean? When did it start? Principles Lean Supply Chain Management in Automotive JIS – Just In Sequence deliveries – the leanest process in automotive (cockpit example)

Toyota Production System From weaving loom to luxury car “Lexus” production and World Number 1 Mio Sold Cars 9,0 1930 1950 1990 2008 8,4

Because it works only as the complete system ? Why The House Because it works only as the complete system

TPS and LEAN difference TPS – Toyota Production System developed by Taichi Ohno (1950 – now) LEAN – Lean thinking book by J. Womack, D. Ross, D.T. Jones (1991) Describes TPS and analyse its productivity (comparing to other OEM):

Production value added vs logistics value added in SCM Production VA processes - PVA Transformation of physical and nonphysical production resources into final product or service, which is customer willing to pay for Logistics VA processes - LVA Optimal availability of physical and nonphysical resources in the whole supply chain from withdrawing of raw material to delivery to final customer in Supply Chain Final Producer PVA Supplier PVA LVA Supplier PVA LVA LVA EDI, RFID, ECR, bar codes transport, manipulation, packaging, warehousing, crossdocking, forecasting, etc.

Mass supply chain management Lean supply chain management in automotive What exists before Lean ? MassSCM Logistics relevant KPI Mass supply chain management Frequency of deliveries (Max.- Min.) Weeks – days Warehouse level (Max.-Min.) Accuracy of deliveries (loading, unloading) Days Communication Limited Information flow Directive Level of standardisation Low

Waste in mass supply chain management Waste, non value added activities: Value added activites: WASTE 95% 5%

Insufficient communication Typical kinds of waste Overproduction Inventory Waiting Low ergonomics of work Motion Transport Insufficient communication Extra processing Defects

Lean supply chain management Elimination of Waste in Mass SCM – Lean SCM Inbound logistics Inhouse logistics Supplier Supplier Mass supply chain management Lean supply chain management Frequency of deliveries (Max.- Min.) Weeks - days Days – hours Warehouse level (Max.-Min.) Days - hours Accuracy of deliveries (loading, unloading) Days Minutes Communication Limited Regular Information flow Directive Co-operative Level of standardisation Low High LEAN SUPPLY CHAIN MANAGEMENT, David Holman, 9. 9. 2014

The leanest supply chain in the automotive industry Typical process chains in the automotive industry JIS – Just in Sequence Delivery in time and sequence according to production scale of customer JIT – Just in Time Delivery in exact time slots based on customer demand (EDC) Standard delivery Standard delivery to the warehouse without exact timeslots and based on long-term call off from customer

JIS – Just in Sequence delivery detail Production at the assembly line Call off Supplier Forwarder

JIS in numbers One car has around 2,500 parts JIS parts are 15 – 20 It is the biggest parts – 70% of volume of final car (cockpit, frontend, wheels, seats, roof panel, front and back bumper, door panel etc.) There are hundreds and thousand of variants (cockpit more than 1,000) There is a difference between delivery in sequence and production in sequence.

Examples of JIS deliveries cockpit roof panel front bumper

Practical example – deliveries of cockpit – JIS production

Comparison of productivity in 2013 Profit Margin – Net profit / Revenue

Thanks for your attention