1. Lean Supply Chains Chapter 14
LO14–1: Explain what lean production is.
LO14–2: Illustrate how lean concepts can be applied to supply chain processes.
LO14–3: Analyze supply chain processes using value stream mapping.
LO14–4: Apply lean concepts to service processes.
08- 01

2. Lean-Focused Supply Chain Components
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
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

3. What is a Lean System? Lean Systems
Operations systems that maximize the value added by each of a company’s activities by removing waste and delays from them.

4. Lean Logic
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.

5. Toyota Production System
Elimination of Waste
Respect for People
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

6. Eight Types of Waste or Muda
Overproduction
Inappropriate Processing
Waiting
Transportation
Motion
Inventory
Defects
Underutilization of Employees
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

7. Principles of Lean Supply Chain Design
Lean Layouts
Group technology
Quality at the source
JIT production
Lean Production Schedules
Uniform plant loading
Kanban production control system
Lean Supply Chains
Specialized plants
Work with suppliers
Building a lean supply chain

8. Lean Concepts
Plant layout is 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 to keep equipment reliable.

9. Lean Concepts
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.
Eliminates movement and queue time between operations, reduces inventory, and reduces employees.
Instead of specialized workcenters
Group technology manufacturing cells

10. Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
Group Technology
Jumbled Flows without GT.
Lines Flows with 3 GT cells
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

11. One-Worker, Multiple Machines
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

12. Quality at the Source
Jidoka (line stop)
Poka-Yoke (mistake proofing)

13. Quality at the Source
Quality at the source: do it right the first time and if something goes wrong, stop the process immediately
Workers are personally responsible for the quality of their output.
Workers become their own inspectors.
Workers are empowered to do their own maintenance.

14. Just-in-Time (JIT) Production
JIT production: producing what is needed when needed and nothing more
Anything over the minimum is waste.
Typically applied to repetitive manufacturing.
Ideal lot size is one.
Vendors ship several times a day.
JIT exposes problems otherwise hidden by inventory.

15. Lean Production – Pull System

16. Inventory Hides Problems

17. Lean Concepts summary Pull Method of Workflow-
Customer demand activates the production of the
service or item.
Close Supplier Ties
Small Lot Sizes

18. Lean Concepts summary Flexible Workforce Automation 5S
Total Preventative Maintenance

19. 5S

20. What is a Value Stream Mapping?
a special type of flowcharting tool used to analyze where value is or is not being added as material flows through a process
Requires a full understanding of the business, including production processes.

21. VSM: A Two Part Process Value stream mapping is a two-part process:
Depict the “current state” of the process (see Exhibit 14.8: next slide)
Map of the same process with suggested improvements (Exhibit 14.10: see two slides over)
The “future state” map has been annotated using Kaizen bursts that suggest the areas for improvement. Kaizen bursts identify specific short-term projects that teams work on to implement changes to the process.
Exhibit is a totally redesigned process:
The individual production operations have been combined into a workcell operated by three employees.
In addition, rather than “pushing” material through the system based on weekly schedules generated by production control, the entire process is converted to a pull system that is operated directly in response to customer demand.
Lead time in the new system is only 5 days, compared to the 34 days in the old system.

22. Manufacturing Process Map: Current State of a Process (Exhibit 14.8)

23. Value Stream Mapping – Symbols

24. Manufacturing Process Map: Possible Future State of a Process (Exhibit 14.10)

25. Example a.

26. What is a Kanban?
Kanban
A Japanese word meaning “card” or “visible record” that refers to cards used to control the flow of production through a factory

27. Kanban Systems Kanban means “sign” or “instruction card” in Japanese
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.
The freed production Kanban is placed on a rack by the machine center, which authorizes the production of another lot of material.
The cards on the rack become the dispatch list for the machine center.
Kanban means “sign” or “instruction card” in Japanese
Cards or containers are used
Make up the Kanban pull system

28. Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
The Kanban System
Each container must have a card.
Assembly always withdraws from fabrication (pull system).
Containers cannot be moved without a kanban.
Containers should contain the same number of parts.
Only good parts are passed along.
Production should not exceed authorization.
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

29. The Kanban System Receiving post Kanban card for product 1
Storage area
Empty containers
Full containers
Assembly line 1
Assembly line 2
Fabrication cell O1 O2 O3

30. Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
The Kanban System
Receiving post
Kanban card for product 1
Storage area
Kanban card for product 2
Assembly line 1
Assembly line 2
Empty containers
Fabrication cell O1 O2 O3
Full containers
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

31. Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
The Kanban System
Receiving post
Kanban card for product 1
Storage area
Kanban card for product 2
Assembly line 1
Assembly line 2
Empty containers
Fabrication cell O1 O2 O3
Full containers
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

32. Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
The Kanban System
Receiving post
Kanban card for product 1
Storage area
Kanban card for product 2
Assembly line 1
Assembly line 2
Empty containers
Fabrication cell O1 O2 O3
Full containers
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

33. Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
The Kanban System
Receiving post
Kanban card for product 1
Storage area
Kanban card for product 2
Assembly line 1
Assembly line 2
Empty containers
Fabrication cell O1 O2 O3
Full containers
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

34. Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
The Kanban System
Receiving post
Kanban card for product 1
Storage area
Kanban card for product 2
Assembly line 1
Assembly line 2
Empty containers
Fabrication cell O1 O2 O3
Full containers
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

35. Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
The Kanban System
Receiving post
Kanban card for product 1
Storage area
Kanban card for product 2
Assembly line 1
Assembly line 2
Empty containers
Fabrication cell O1 O2 O3
Full containers
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

36. Determining the Number of Kanbans Needed
Setting up a Kanban system requires determining the number of Kanbans cards (or containers) needed.
Each container represents the minimum production lot size.
An accurate estimate of the lead time required to produce a container is key to determining how many Kanbans are required.
K = DL(1+S)/C
k = number of Kanban card sets
D = average number of units
demanded over a given time
period
L = lead time to replenish an
order (in same time units as
demand)
S = safety stock expressed as a
percentage of demand during
lead time
C = container size

37. Example 14.1
Average number of units demanded over a given time period (D ) = 8 per hour
Lead time to replenish an order (L ) = 4 hours
Safety stock (S ) = 10%
Container size (C) = 10 units
Round up to 4 containers

38. Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
Problem 11
Transmissions are delivered to the fabrication line 4 at a time. It takes 1 hour for transmissions to be delivered. Approx. 4 vehicles are produced each hour, and 50% of expected demand should be maintained as safety stock.
D = 4 transmissions per hour
L = 1 hour
S = .50
C = 4 transmissions
K = DL(1+S)/C
K = 4(1)(1+0.50) / 4 = 1.50  2 Kanban card sets
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

39. Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
Problem 12
D = 2,400 bottles every 2 hours
S= 0.1 of demand
L = 40 minutes
C= 120 bottles
Find K (number of Kanban cards needed)
K = DL(1+S)/C
D = 2,400 bottles/2 hours = 1200/60 minutes = 20 bottles per minute
K = 20(40)(1+0.10) / 120 = 7.33  8 Kanban cards
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

40. Setup Times
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.

41. Lean Supply Chains Specialized plants Collab-oration with suppliers
Small specialized plants rather than large vertically integrated manufacturing facilities
Can be constructed and operated more cheaply
Collab-oration with suppliers
Important part of process
Share projections with suppliers
Link with suppliers online

42. Lean Supply Chains Building a Lean Supply Chain
Value must be defined jointly for each product family based on the customer’s perception.
All firms along the value stream must make an adequate return on their investments.
Firms must work together to eliminate waste (muda).
When cost targets are met, 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.

43. Lean Services Organize problem-solving groups Upgrade housekeeping
Upgrade quality
Clarify process flows
Revise equipment and process technologies
Level the facility load
Eliminate unnecessary activities
Reorganize physical configuration
Introduce demand-pull scheduling
Develop supplier networks