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NICE,FRANCE LEARN | INSPIRE | INNOVATE TECHNICAL CONFERENCE 2011

LEAN MANUFACTURING 2-ADVANCED APPLICATIONS (FLOW) CONRAD VOLKMANN SESSION CODE : BRK251 SENIOR PROGRAM MANAGER MICROSOFT CORPORATION

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Today we will show you… The role of production flows and activities Configuration of production flows and activities Integration of product configuration to Lean Manufacturing Costing for Lean Manufacturing Typical multi product Lean Manufacturing scenario

The five lean principles

Examples of Flow Inventory levels in supermarkets and Kanban sizes are < weekly demand Single piece Flow Physical Flow of handling units (i.e. Kanban) trigger registration of jobs EPEi – Every part every interval < 1 week, ideally < 1 day Material is always moving from machine output to next machine input – Work cell = a group of resources – Production lines = a sequence of work cells – JIT/JIS = Flow in the supply chain

Prepare for Flow - 5S CellInventorySuppliersCosting Sort Sort material, tooling, throw out all dead and excessive stock Throw out all dead and excessive stock Select the best two suppliers in each category Do you need all these costs and variances? Simplify Arrange machines in the best positions, simplify setup Arrange in the best positionsCut wasteful transactionsCut transactions, review report frequency Sweep Keep shop floor clean and transparent, remove waste Regularly review dated stock and ABC category changes, remove waste Improve supplier performance Audit the use of costing reports, transaction size and frequency Standardize Standard workInternal Milk-runs, Picking groups, Supermarkets Milk-runs, paymentsAdopt reporting standards Sustain Audit performance Review and reduce

Pains and challenges Pierre – Value stream manager Flows need to be transparent for Pierre Pierre needs consistency checks to validate the configuration of the activities and flow versions Pierre needs date effective versions and Kanban rules to plan and execute on process changes Emil – Product designer Needs separation of process design and product design Needs full support of product dimensions and product configuration in lean manufacturing Ken – Controller/Cost accountant BOM calculation needs Routes Needs a cost allocation object for lean manufacturing that replaces production orders Needs support to include WIP in inventory reporting for lean manufacturing Lars – Work Cell Supervisor Needs a common user interface to report jobs for material, semi-finished and finished goods Needs transparency into dependencies on upstream work

What did we do in this release? Implemented Production Flow and Activities to model Lean Manufacturing scenarios Implemented a new costing framework for Lean Manufacturing Production Flow versions and Kanban Rules support date effectiveness Support Lean Manufacturing for semi-finished products Integration of Product Configurator and Lean Manufacturing

Concepts and definitions Activity A single operation or a group of operations needed to provide a good or a service Process – With conversion Transfer – Without conversion Production Flow A plan, modeling a Flow of Activities needed to provide a product, service or good, from raw material to a customer Job Single occurrence of an activity for a specific signal (Kanban)

Components in action today

Lean Manufacturing - functions and features

Mixed Mode Manufacturing

Product demos #TitleKey Features 1.Order taking for Lean Manufacturing Concurrent sales channels pull different products from the same Production Flow Kanban line Event Kanbans 2.Order taking with product configurator Integration of Product Configurator to Lean Manufacturing Manual created sales events BOM cost calculation on Production Flow 3.Lean Manufacturing Material replenishment and picking Picking lists and supply status Dependencies in Production Flows

WIP Car speaker assembly Electrical Assembly Electrical Assembly Car Speaker Assembly Car Speaker Assembly Packaging Deliver Sets to OEM (Reusable boxes of 4 Speakers) Deliver Sets to OEM (Reusable boxes of 4 Speakers) Deliver Spare parts to Retailers (Retail packaging) Deliver Spare parts to Retailers (Retail packaging)

The BOM Structure

Sales and planning

Demo 1: Order taking for Lean Manufacturing 2 concurrent sales channels – OEM Customer through VMI (Event) – Retail spare parts though Sales Warehouse (Scheduled) Load the same Production Flow

Demo 1: Order taking for Lean Manufacturing

PersonaPain Points and ChallengesFeatures CoveredResults and Benefits Value stream Manager Supplying different sales channels with different replenishment strategies Production Flow Kanban line events 2 different supply models integrated in one single Production Flow Standard Work Sales order takerNeeds different sales processesSales Event Kanbans Pegging tree form Simple integration in sales process Default order settings 2 concurrent sales channels – OEM Customer through VMI (Event) – Retail spare parts though Sales Warehouse (Scheduled) Load the same Production Flow

Product Variant Technology and Lean Optimized Products – System Units/Platforms – Collaborative Engineering – Easy to assemble: Mistake proofing/Pokayoke Standardized processes – New Organizations: Subcontractors, Core Competences, Long term partnership – New Production facilities Single piece Flow Reduced setup times Decoupling points/buffers after critical operations (i.e. Paintshop) – Reduce Errors: 0 Error principle – Qualification – People

Demo 2: Order taking with Product Configurator Needed – Product Configuration Model – Matching Kanban Rule (Event or Scheduled)

Demo 2: Order taking with Product Configurator

Needed: – Product Configuration Model – Matching Kanban Rule (Event or Scheduled) PersonaPain Points and ChallengesFeatures CoveredResults and Benefits Value stream manager/sales order taker Product configuration technology could not be used with Lean Manufacturing Product Configurator Kanban Rules Product Configurator is integrated in Lean Manufacturing Takes product variant technology to the next level Cost accountantBOM Calculation for standard work not possible BOM Calculation with Production Flow instead of Route No Routes needed

Demo 3: Lean Manufacturing Multi-activity Production Flow – Manufacturing Kanbans – Process Activities Multi-activity Kanbans (Process and transfer) – Withdrawal Kanbans – Transfer Activities

Demo 3: Lean Manufacturing

PersonaPain Points and ChallengesFeatures CoveredResults and Benefits WaterspiderCheck for available materialCumulative Picking list + Supply status Pegging view Kanban quantity overview material Check the material situation for single or multiple jobs Simple overview of Kanban supermarket Warehouse worker/ Waterspider Registration of material replenishment Kanban board for transfer jobs Barcode integration Material replenishment is easy and transparent Machine OperatorToo much information on the forms Job selection parameters Fasttabs Kanban board design allows scalable usage

Absorption Costing for Lean Manufacturing Raw material Inventory Production flow Work In Progress Finished goods Inventory High level principle schematic

Subcontracting production flow example 30

Activity based subcontracting Separation of material flow from information flow related to the services (purchase process of the services) Subcontracting agreements for activities Calculation of standard cost using the subcontracting agreements of the activity Purchasing of subcontracted services – Service quantity calculation Calculate the required quantities of services based on the scheduled Kanban jobs – Generation of service receipts based on completed jobs – Integration of service receipts and invoices in costing for lean manufacturing

Subcontracting process example 32

Top 10 tips from the session 1.Use value stream mapping to map you current state value streams and develop the future state 2.Implement flow: Keep material moving, reduce security buffers, Kanban sizes and batch sizes 3.Implement cellular manufacturing: Group resources to work cells, remove buffer space 4.Configure production flows and activities as versions 5.Use withdrawal Kanbans to pull material to production from purchase, warehouse or pre-production 6.Use production flows to calculate standard cost instead of routes 7.Implement a new cost accounting strategy for material consumption, WIP and semi-finished products 8.Run back-flush costing periodically and assess the variances 9.Use product configuration in combination with sales event Kanbans 10.Use activity based subcontracting to separate material flow from the purchase and payment process related to the service

Related sessions BRK233 : Unifying the previously disparate concepts of Lean, MRP, Discrete and Process Manufacturing BRK235 : Materials Planning & Resource Scheduling - a New Approach BRK234 : The New Way of Configuring Products - The Constraint-Based Approach CHK220 : Lean Manufacturing for Dynamics AX 2012 Architecture CHK219 : Product Configuration - Deep Dive from a developer view point BRK250 : ​Introduction to Lean Manufacturing for Dynamics AX 2012: Kanban and pull based manufacturing BRK236 : Manufacturing Execution and Time & Attendance BRK244 : Investments in Process Manufacturing

Visit our Focus Rooms Evaluation of Implementation Proposals by Dynamics AX R&D Solution Architecture & Industry Experts Gain further insights on Dynamics AX Industry Solution Offerings Resolution Guidance on Solution Roadblocks Networking Risso 8A Risso 7B Risso 7A Risso 6C Risso 6A/B

© 2011 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows 7 and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries. The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.