1. 3.2.4 Materials Management Process Roberts Tool Company June 13, 2011

2. Kaizen Process Assessment (System Performance) SCM Sales Order Lead-time, Material Daily Expedite Work Center Priority Management Matl Issue to Floor MBWA Product Realization Process Kaizen SIPOC OK...

3. 3.2.1 Materials Management Process SEA 2011 All Rights Reserved 3 The purpose of the material management process is to enable, support, and improve material management for the lean enterprise. 3.2.1 Material Management Process – How does your organization ensure the effectiveness of material management processes in support of its lean and flow manufacturing objectives? How does your organization maintain a high level of inventory accuracy? How do you maintain a high level of 6S in material storage areas? How are levels of obsolete, slow-moving and expedited material maintained at a minimum? How are material handlers, material planners and supervisors formally trained in material management methods? How does your organization integrate the requirements of a flow- based material process? How are “pull” methods such as material Kanbans, consumption-based ordering and min-max utilized? How are Kanban supermarkets integrated into factory floor operations? Preparation Communicate Implement Audit MATERIALS MANAGEMENT PROCESS Conduct regularly scheduled meetings Communicate status Communicate results Provide recognition Solicit feedback Prepare annual material flow improvement plan Set targets Objectives Metrics Select strategies Kitting Super Market Kanban Consumption-based pull 6S Conduct training and implement material flow improvement plan activities Weekly audit results go on materials scorecard PPT report Feedback Collect feedback and improve process Optional Areas Addressed

4. Preparation: Material Flow Improvement Plan Annual Strategy Meeting Continuous Improvement Plan 2011 –Joint project with major customer to resolve high NDT failure rates in castings and forgings –Kaizen: Mfg Order Closing Process –Kaizen: Mfg. Priority Management Process –Kaizen: Readiness Process (long-lead material) –Kaizen: Optimize inspection sampling plans –Engineering resources: Mfg package completeness –Automate / optimize wash process –Deburr capability in lathe department

5. Mark (Inspection) -Work to Rick’s Insp List -Re-direct other requests to Rick - Surge demand: Authorize OT Seek additional qualified personnel from Mfg Staff pool - COB: Issue report Juan (Shipping) -Work to Jose’s Ship List -Re-direct other requests to Jose - Surge demand: Authorize OT Seek additional qualified personnel from Mfg Staff pool In-process FAI’s are default priority #1 Receiving and OSP do not require prioritization Pat (Manufacturing) -Work to Rick’s Priority Lists Gen Mach / Finishing Ops PRB -Work to WC Priority Lists Cells -Re-direct other requests to Rick - Surge demand: Authorize OT Seek additional qualified personnel from other depts Rick (Expedite) -AM: Issue lists: Gen Mach Finishing Ops PRB Inspection -AM/PM: Review / move expedites -4:00 PM: Prepare draft priority lists Jose (Scheduling) -AM: Generate daily ship list Issue daily SHIP email -AM/PM: Manage MRP updates Issue MO’s -COB: Issue SHIP email update Edit Rick’s Inspection list Operations Priority Management Sales / Program Mgmt OSP Status Matl receipts trigger MO release Shipping Priorities Email requests in parallel Parts Movement / Resource Sharing Parts Movement / Resource Sharing

6. Communicate: Regularly Scheduled Meetings Annually: Strategy Meeting Continuous Improvement Plan Monthly: Sales and Operations Planning Meeting Backlog / Month Sales Plan / Purchasing / Mfg OTD / Quality / Inventory Review Daily: Shipments Priority Management Constraint Management

7. SalesShort-Term Brad (lead)What do we accept will not ship? RonWhat MUST ship? PaulWhere do we need more info? GerryLong-Term Pending Orders New Opportunities SuppliersShort&Long-Term Ron (lead)What deliveries will be late? Juan What deliveries are at risk? PrepareSummarize Present&Plan ManufacturingShort&Long-Term Jose (lead)Where are our bottlenecks? Jerry (Work Center Priority Report) PatWhat jobs will be late? Juan (Delinquent Jobs Report) S&OP Mtg. (1 hour) Present Summaries Negotiate Establish Priority Plan Sales and Operations Planning Process (S&OP) PN 23409 PN 20938 PN 02934 Pn 29387 PN 23409 PN 20938 PN 02934 Pn 29387 PN 23409 PN 20938 PN 02934 Pn 29387

8. Implement Training –Annual training to Work Instructions –Kaizen Events –Process Owner Reviews Continuous Improvement (see subsequent slides)

9. Audit and Feedback Supplier OTD Supplier Quality Outside Processor Assessment –Lead time –Responsiveness –Quality –Cost Inventory Turns

10. Audit Questions “How does your organization ensure the effectiveness of material management processes in support of its lean and flow manufacturing objectives? -Monthly Inventory Review -Target: 10 turns -24 hour dock to stock rules -Electronic pull to cells

11. Audit Questions “How does your organization maintain a high level of inventory accuracy?” -Training in Transaction Procedures -Mfg Order Close-Out Review -Cycle Counting Process

12. Audit Questions “How do you maintain a high level of 6S in material storage areas?” -Participation in monthly 6S audit “How are levels of obsolete, slow-moving and expedited material maintained at a minimum?” -Aggressive MRB disposition process -Inventory purge process -Understanding of the principle of sunk costs

13. Audit Questions “How are material handlers, material planners and supervisors formally trained in material management methods?” -Trained to internal Work Instructions -Continuous improvement of processes “How does your organization integrate the requirements of a flow-based material process?” -Drive toward minimal lot sizes -Single-piece flow in cells -“Cell-like disciplines” in general mill and lathe department -Visual priority management of queues

14. Audit Questions “How are “pull” methods such a material Kanbans, consumption-based ordering and min-max utilized?” -Consumable tools: Kanban -Materials: MRP Priority Reports -Internal electronic pull signals (material and tooling) -Finished Goods: Kanban / Min-Max implemented depending on customer capability

15. Audit Questions “How are Kanban supermarkets integrated into factory floor operations?” -“Issue” location -Material issued to supermarket upon material receipt -Material pulled from supermarket by cell - Shop floor: Queue locations only; outlined in yellow tape and labeled

16. Q & A