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8/3/2019 Topic 4 Supply Chain JIT Kanban Lean Students Handout
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OperationsManagement
Topic 4 Supply ChainTopic 4 Supply ChainManagement, JIT, KanbanManagement, JIT, Kanbanand Lean Manufacturingand Lean Manufacturing
UiTM Shah AlamUiTM Shah Alam
Lecturer: Pn. Noriah YusoffLecturer: Pn. Noriah Yusoff
T1-A16-6CT1-A16-6C
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Learning Objectives
When you complete this chapter youshould be able to:
1.1. Explain the strategic importance ofExplain the strategic importance of
the supply chain or what is the supplythe supply chain or what is the supplychain managementchain management
2.2. Able to discuss the need and benefitsAble to discuss the need and benefitsof Supply Chain Managementof Supply Chain Management
Example of Supply Chain in DardenExample of Supply Chain in DardenRestaurantsRestaurants
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Darden Restaurants
Largest publicly traded casualLargest publicly traded casualdining company in the worlddining company in the world
Serves over 300 million mealsServes over 300 million mealsannually in more than 1,400annually in more than 1,400restaurants in the US and Canadarestaurants in the US and Canada
Annual sales of $2.4 billionAnnual sales of $2.4 billion
Operations is the strategyOperations is the strategy
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Darden Restaurants
Sources food from five continentsand thousands of suppliers
Four distinct supply chains Over $1.5 billion spent annually in
supply chains
Competitive advantage achievedthrough superior supply chain
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The Supply Chains StrategicImportance (What is Supply Chain
Management)
Supply chain management is theSupply chain management is the
integration of the activities thatintegration of the activities thatprocure materials and services,procure materials and services,transform them into intermediatetransform them into intermediategoods and the final product, andgoods and the final product, and
deliver them to customersdeliver them to customersCompetition is no longer betweenCompetition is no longer between
companies; it is between supply chainscompanies; it is between supply chains
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Supply Chain Management
1.1. Transportation vendorsTransportation vendors
2.2. Credit and cash transfersCredit and cash transfers
3.3. SuppliersSuppliers
4.4. DistributorsDistributors
5.5. Accounts payable and receivableAccounts payable and receivable
6.6. Warehousing and inventoryWarehousing and inventory7.7. Order fulfillmentOrder fulfillment
8.8. Sharing customer, forecasting, andSharing customer, forecasting, andproduction informationproduction information
Important activities include determiningImportant activities include determining
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Supply Chain Requirements inGlobal Environment
React to sudden changes in parts availability,React to sudden changes in parts availability,
distribution, or shipping channels, importdistribution, or shipping channels, importduties, and currency ratesduties, and currency rates
Use the latest computer and transmissionUse the latest computer and transmissiontechnologies to schedule and manage thetechnologies to schedule and manage the
shipment of parts in and finished productsshipment of parts in and finished productsoutout
Staff with local specialists who handle duties,Staff with local specialists who handle duties,freight, customs and political issuesfreight, customs and political issues
Supply chains in a global environmentSupply chains in a global environmentmust be able tomust be able to
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Benefits of Supply Chain
Management Lower inventoriesLower inventories
Higher productivityHigher productivity
Greater alertnessGreater alertness
Shorter lead timesShorter lead times
Higher profitsHigher profits
Greater customer loyaltyGreater customer loyalty
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Creating an Effective Supply Chain
Develop strategic objectives andDevelop strategic objectives andtacticstactics
Integrate and coordinate activities inIntegrate and coordinate activities inthe internal supply chainthe internal supply chain
Coordinate activities with suppliers andCoordinate activities with suppliers andcustomerscustomers
Coordinate planning and executionCoordinate planning and executionacross the supply chainacross the supply chain
Form strategic partnershipForm strategic partnership
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Managing the Supply Chain
Mutual agreement on goalsMutual agreement on goals
TrustTrust
Compatible organizational culturesCompatible organizational cultures
There are significant management issues inThere are significant management issues incontrolling a supply chain involving manycontrolling a supply chain involving manyindependent organizationsindependent organizations
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Factors in Choosing a
Supplier Quality and quality assuranceQuality and quality assurance
FlexibilityFlexibility
LocationLocation
PricePrice
Product or service changesProduct or service changes
Reputation and financial stabilityReputation and financial stability
Lead times and on-time deliveryLead times and on-time delivery
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Outsourcing
Transfers traditional internalTransfers traditional internalactivities and resources of a firm toactivities and resources of a firm to
outside vendorsoutside vendors Utilizes the efficiency that comesUtilizes the efficiency that comes
with specializationwith specialization
Firms outsource informationFirms outsource informationtechnology, accounting, legal,technology, accounting, legal,logistics, and productionlogistics, and production
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E-Procurement
Uses the internet to facilitateUses the internet to facilitatepurchasingpurchasing
Electronic ordering and fundsElectronic ordering and fundstransfertransfer
Electronic data interchange (EDI)Electronic data interchange (EDI)
Advanced shipping noticeAdvanced shipping notice
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E-Procurement
Online catalogsOnline catalogs
Catalogs provided by vendorsCatalogs provided by vendors
Catalogs published byCatalogs published byintermediariesintermediaries
Exchanges provided by buyersExchanges provided by buyers
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Internet Trading Exchanges
Health care products ghx.comHealth care products ghx.com
Retail goods gnx.comRetail goods gnx.com
Defense and aerospace products Defense and aerospace products exostar.comexostar.com
Food, beverage, consumer productsFood, beverage, consumer products transora.com transora.com
Steel and metal products Steel and metal products metalsite.commetalsite.com
Hotels avendra.comHotels avendra.com
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E-Procurement
AuctionsAuctions
Maintained by buyers, sellers, orMaintained by buyers, sellers, orintermediariesintermediaries
Low barriersLow barriersto entryto entry
Increase inIncrease in
the potentialthe potentialnumber ofnumber ofbuyersbuyers
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E-Procurement
RFQs
Can make requests for quotes
(RFQs) less costly Improves supplier selection
Real-time inventory tracking
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Learning Objectives for JIT
Be able to understand the concept ofJIT,TPS and Lean Production
Able to discuss the elements andbenefits of JIT
Able to link the application of Kanban inJIT systems
Able to discuss the steps in transitioninto JIT systems
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Just - in -Time (JIT)
A highly coordinated processing systemin which goods moving through thesystem, and services are performed, just
as they are needed. JIT is a pull demand system The ultimate goal of JIT is a balanced
system
Achieves a smooth, rapid flow ofmaterials through the system
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Just-In-Time (JIT)
Powerful strategy for improving operations Materials arrive where they
are needed when they are
needed Identifying problems anddriving out waste reducescosts and variability andimproves throughput
Requires a meaningfulbuyer-supplier relationship
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Just-In-Time, TPS, and
Lean Operations JIT is a philosophy of continuous andJIT is a philosophy of continuous and
forced problem solving via a focus onforced problem solving via a focus on
throughput and reduced inventorythroughput and reduced inventory TPS emphasizes continuousTPS emphasizes continuous
improvement, respect for people, andimprovement, respect for people, andstandard work practicesstandard work practices
Lean production supplies theLean production supplies thecustomer with their exact wants whencustomer with their exact wants whenthe customer wants it without wastethe customer wants it without waste
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Benefits of Just-In-Time Systems
Reduced inventory levelsHigh qualityFlexibility
Reduced lead times Increased productivity Increased equipment utilizationReduced scrap and rework
Reduced space requirementsReduced setup costsPressure for good vendor relationships
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Elements of JIT
1. Product Design
2. Process Design3. Personnel/organizational elements
4. Manufacturing planning and control
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Product Design
Standard parts
Modular Design Highly capable production systems
Concurrent engineering
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Process Design
Small lot sizes
Setup time reduction
Manufacturing cells Limited work in process
Quality Improvement
Production flexibility
Little inventory storage
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Personnel/organizational elements
Workers as assets
Cross-trained workers
Continuous improvement
Cost accounting
Leadership/project management
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Manufacturing planning and control
Level loading
Pull System
Visual Systems Kanban
Close vendor relationships
Reduced transaction processing
Preventive maintenance
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Kanban
Kanban is the Japanese word for cardKanban is the Japanese word for card(signal or visible record)(signal or visible record)
The card is an authorization for the nextThe card is an authorization for the nextcontainer of material to be producedcontainer of material to be produced
A sequence of kanbansA sequence of kanbanspulls material throughpulls material throughthe processthe process
Many different sorts ofMany different sorts ofsignals are used, butsignals are used, butthe system is still calledthe system is still calleda kanbana kanban
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Kanban
1.1. User removes aUser removes astandard sizedstandard sizedcontainercontainer
2.2. Signal is seen bySignal is seen bythe producingthe producingdepartment asdepartment asauthorization toauthorization to
replenishreplenish
Part numbersPart numbers
mark locationmark location
Signal markerSignal markeron boxeson boxes
Figure 16.8Figure 16.8
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Advantages of Kanban
Allow only limited number of faulty orAllow only limited number of faulty ordelayed materialdelayed material
Problems are immediately evidentProblems are immediately evident
Puts downward pressure on badPuts downward pressure on badaspects of inventoryaspects of inventory
Standardized containers reduceStandardized containers reduceweight, disposal costs, wasted spaceweight, disposal costs, wasted spaceand laborand labor
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Transitioning to a JIT System
Get top management commitmentGet top management commitment
Decide which parts need most effortDecide which parts need most effort
Obtain support of workersObtain support of workers
Start by trying to reduce setup times @Start by trying to reduce setup times @costscosts
Gradually convert operationsGradually convert operations
Convert supplier to JITConvert supplier to JIT
Prepare for obstacles commitmentPrepare for obstacles commitmentsupplier resistantsupplier resistant