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www.leanuk.org David Brunt November 10 th 2011 Seeing the Whole: Creating Lean Supply Chains UK Lean Summit: Solving Business Problems Lean Enterprise Academy 1

Seeing the Whole - Creating Lean Supply Chains

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By David Brunt of Lean Enterprise Academy shown at the Lean Summit 2011 - Solving Business Problems on 10/11 November 2011

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Page 1: Seeing the Whole - Creating Lean Supply Chains

www.leanuk.org

David Brunt November 10th 2011

Seeing the Whole: Creating Lean Supply Chains

UK Lean Summit: Solving Business Problems

Lean Enterprise Academy 1

Page 2: Seeing the Whole - Creating Lean Supply Chains

www.leanuk.org Lean Enterprise Academy

Creating Lean Supply Chains Seeing the Whole Extended Value

Stream Plenary Theme:   3. What can we learn from compressing lean supply chains?

  As low-wage globalisation unwinds how to rebuild and manage a lean supply base in each region to bring jobs back and respond to customers cost effectively in high wage locations.

This Session:   How do you analyze the opportunities from compressing

value streams?

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Page 3: Seeing the Whole - Creating Lean Supply Chains

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Objectives of Mapping Extended Value Streams

Seeing the Whole Extended Value Stream   Raise consciousness in every firm & function touching the value

stream of the enormous waste of time, effort & movement   Typical current state 9 out of 10 steps & 99% of elapsed time are

wasted   Raise consciousness in every firm & function of the effect of its

actions on every other firm & function touching the value stream   Learn how a value stream team with representatives from every

firm can envision a series of Future States & an Ideal State for their shared value stream

  Learn how the team can progressively implement:   A Future State 1 in which smooth, levelled pull & flow are introduced

within every facility touching the value stream   A Future State 2 in which smooth, levelled pull & frequent replenishment

loops are introduced between every facility touching the value stream (eliminating warehousing & cross docking in the process)

  An Ideal State (providing a North Star for collectively steering towards the perfect value stream with zero waste) by compressing the value stream & introducing right-sized technologies

  Learn how value stream teams can share costs & gains to create win-win-win outcomes for every value stream participant

3

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Agenda

  Introduction   Lean Thinking & starting the project  Mapping the flows

 Deciding what to map

 Every Product Every Cycle  Manufacturing  Warehousing

 Developing the Future State

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Lean Thinking A Refresher

  Specify what creates value from the customers perspective

  Identify all steps across the whole value stream

  Make those actions that create value flow

  Only make what is pulled by the customer just-in-time

  Strive for perfection by continually removing successive layers of waste

Lean Enterprise Academy 5

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The Essence of Lean Thinking

  Where is the time in your value stream?   e.g. A U.K. customer has to wait on average 48

days for their custom-built vehicle to arrive   It takes under 30 hours to produce in the

factory!!!

“All we are doing is looking at the time line - from the moment the customer

gives us an order to the point where we collect the cash. And we are reducing that time line by removing the non-

value-added wastes” Ohno (1988-ix)

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Value Stream Improvement & Process Improvement

Company 1 Company 2 Company 3

CUSTOMER

Raw Material

Finished Product

VALUE STREAM: All the steps, VA & NVA, required to bring the product from raw material to customer

Necessary but non value adding 35%

Value adding 5%

Non value adding 60%

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Value Stream Improvement & Process Improvement

Company 1 Company 2 Company 3

CUSTOMER

Raw Material

Finished Product

PROCESS PROCESS PROCESS

VALUE STREAM: All the steps, VA & NVA, required to bring the product from raw material to customer

Necessary but non value adding 35%

Value adding 5%

Non value adding 60%

Focus of “traditional” efficiency improvements

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Page 9: Seeing the Whole - Creating Lean Supply Chains

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Value Stream Improvement & Process Improvement

Company 1 Company 2 Company 3

CUSTOMER

Raw Material

Finished Product

PROCESS PROCESS PROCESS

VALUE STREAM: All the steps, VA & NVA, required to bring the product from raw material to customer

Necessary but non value adding 35%

Value adding 5%

Non value adding 60%

Focus of LEAN improvement

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Page 10: Seeing the Whole - Creating Lean Supply Chains

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“Seeing the Whole” Methodology

Seeing the Whole: Creating Lean Supply

Chains

Lean Enterprise Academy 10

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Objectives of Mapping Extended Value Streams

Seeing the Whole Extended Value Stream   Raise consciousness in every firm & function touching the

value stream of the enormous waste of time, effort & movement   Typical current state 9 out of 10 steps & 99% of elapsed time

are wasted   Raise consciousness in every firm & function of the effect of

its actions on every other firm & function touching the value stream

  Learn how a value stream team with representatives from every firm can envision a series of Future States & an Ideal State for their shared value stream

  Learn how the team can progressively implement:   A Future State 1 in which smooth, levelled pull & flow are

introduced within every facility touching the value stream   A Future State 2 in which smooth, levelled pull & frequent

replenishment loops are introduced between every facility touching the value stream (eliminating warehousing & cross docking in the process)

  An Ideal State (providing a North Star for collectively steering towards the perfect value stream with zero waste) by compressing the value stream & introducing right-sized technologies

  Learn how value stream teams can share costs & gains to create win-win-win outcomes for every value stream participant

11

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Toyota Production System

Jidoka

-Andon

-Poka-Yoke

-Visual control

-5S, etc.

Just-in-time

-Flow production

-Takt time

-Pull system

Customer service

Continuous Improvement

Through People

Lead Time Cost Quality

Heijunka Standardized Work Kaizen

Equipment Stability

Goal: Highest Quality, Lowest Cost, Shortest Lead Time

Purpose

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Analysis

Countermeasures

Plan

Follow-up

Background

Goal

  Purpose: What is the business reason for choosing this issue?  Overall Situation: What is the strategic, operational, historical or organizational context of the situation?

Theme: Review Questions For Problem Solving A3s

Ref: Developed from Sobek & Smalley 2008 pp 50 & David Verble

Current Situation

  What is the Problem or Need- the Gap in Performance?  What is happening now versus what needs to be happening or hat you want to be happening?  What are the specific conditions that indicate you have a problem or need, where and how much?  Show the facts visually with charts, graphs, maps

  Is there a clear goal or target (gap?)   What, specifically, is to be accomplished?   How will this goal be measured or evaluated?   What will improve, by how much, and when?

  What are the options for addressing the gaps & improving performance in situation?   How do they compare in effectiveness, feasibility & potential impact?   What are their relative costs and benefits?   Which do you recommend and why?   Show how your proposed actions will address the causes of the gaps or constraints in the situation.

  What will be main actions & outcomes in the implementation process & in what sequence?   What support & resources will be required?   Who will be responsible for what, when & how much?   When will progress & impact be reviewed & by whom?   Use a Gantt chart to display actions, steps, outcomes, timelines & roles.   How will you measure the effectiveness of the countermeasures?   Does the check item align with the previous goal statement?

  When and how you will know if plans have been followed & the actions have had the impact needed?  What related issues or unintended consequences do you anticipated & what are your contingencies?  What processes will you use to enable, assure & sustain success

  What do the specifics of the issues in related work processes (location, patterns, trends, factors) indicate about why the performance gap or need exists?   What conditions or occurrences are preventing you from achieving the goals?   Use the simplest problem analysis tool that will suffice to show cause-effect down to root cause. From 5 Whys, to 7 QC tools (fish-bones, analysis trees, Pareto charts) to sophisticated SPC or other tools as needed.

What are you talking about & why?

Where do things stand now?

What specific outcome is required?

Why does the problem or need exist?

What do you propose & why?

Specifically how will you implement?4Ws1H

How will you assure ongoing PDCA?

Page 14: Seeing the Whole - Creating Lean Supply Chains

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Michigan Steel

Sales Manager

Gamma Stampers

Value Stream

Manager

Beta Wipers

Plant Manager

Product Line

Manager

Alpha Motors

Head of Supplier

Development (Team Leader)

One or two people from each organisation

Step 1: Select a Team from Across the Chain

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Manufacturing Plant

Plant Manager

Lean Manager

European Distribution

Centre

Distribution Manager

Lean Manager

Retailer Head Office

Project Manager

Category Buyer

Retailer High Street

Branch Manager

Optician

Contact Lens Example

Planning Manufacturing

Outbound Logistics

Goods In Inventory Mgmt Order Processing

Pick/Pack/ Ship

Ordering Promotions

Ordering Delivery

Consumption

15

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Who Should be on the Team?

  Responsibility for part or all of supply chain activity   People who can take a view beyond their

functional silo   People who are sufficiently senior and have

sufficient authority & respect to drive through changes across functional boundaries

  People who can take a strategic perspective   People who have a ‘willingness to learn ’   The people who are going to do the improving – do

the mapping

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Alpha Motors Platform A

Apex Wheels

Beta wipers

Epsilon Fuel Pumps

Cosmic Brakes

Eclipse Engine

Computers

Gamma Stampers

Ampersand Magnets

Utopia Castings

Michigan Steel

Odyssey Fasteners

Smith Heat Treatment

Step 2: Select a Key Value Stream for the

Pilot Improvement Project

The companies in the target value

stream

The specific product or

product family for analysis

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Page 18: Seeing the Whole - Creating Lean Supply Chains

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Glenday Sieve & Product Family Analysis

Process Steps & Equipment

LH Steering Bracket

RH Steering Bracket

Instrument Panel Brace

Seat Rail

Bumper Brackets

Electronic Test Fixtures Assy Robot Weld Flash Remove Paint Manual Assy Spot Weld

X X X X

X X X X

X X X X

X X

X X X

Prod

ucts

BLUES 95%

6% 50%

Cumulative % Product Range Cumulative % of Sales

Last 1%

18

Page 19: Seeing the Whole - Creating Lean Supply Chains

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Lisbon

Birmingham

Milan

Rome

Stockholm

Helsinki

Vienna

Manchester

Warsaw

Madrid

Basel

2005 European Daily Volume

over 10,000 packages on 24/48 hrs delivery

Oslo

Athens

Paris

Marseille

Brussels

Osnabrück

Customer Distribution Chart

19

Page 20: Seeing the Whole - Creating Lean Supply Chains

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Step 3: Data Collection

  Go and see ----- GEMBA   All the team ---- Walk all of the chain   Record all the steps in the process & the

time taken for each – Process Activity Map   Classify each step as Value Adding (VA) or

Non–Value Adding (NVA)   It may seem time consuming – but it is

invaluable   Use the data collected to construct a

Current State map for each facility

20

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Global System Map

Lean Enterprise Academy 21

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Steel mill

Stamping Company

Wiper Assembly Company

Car Assembly

Car Distributor

Current State Map For the Complete Value Stream

22

Page 23: Seeing the Whole - Creating Lean Supply Chains

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Objectives of Mapping Extended Value Streams

Seeing the Whole Extended Value Stream   Raise consciousness in every firm & function touching the

value stream of the enormous waste of time, effort & movement   Typical current state 9 out of 10 steps & 99% of elapsed time

are wasted   Raise consciousness in every firm & function of the effect of

its actions on every other firm & function touching the value stream

  Learn how a value stream team with representatives from every firm can envision a series of Future States & an Ideal State for their shared value stream

  Learn how the team can progressively implement:   A Future State 1 in which smooth, levelled pull & flow are

introduced within every facility touching the value stream   A Future State 2 in which smooth, levelled pull & frequent

replenishment loops are introduced between every facility touching the value stream (eliminating warehousing & cross docking in the process)

  An Ideal State (providing a North Star for collectively steering towards the perfect value stream with zero waste) by compressing the value stream & introducing right-sized technologies

  Learn how value stream teams can share costs & gains to create win-win-win outcomes for every value stream participant

23

Page 24: Seeing the Whole - Creating Lean Supply Chains

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Demand Amplification The Forrester Effect

Small changes in end-user demand become amplified as they are passed

upstream along the chain

Lean Enterprise Academy 24

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Demand Amplification The Bull-Whip Effect

Customer Demand, Retailer Orders Distributor Orders Factory Production

Time

Demand [units]

40% increase

10% increase

25

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Page 29: Seeing the Whole - Creating Lean Supply Chains

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Constructing a Demand Amplification Map

  Major decision areas   Customer forecast   Your business plan - volumes   Your forecast/schedule   Your weekly plan

  Final assembly   Feeder operations

  Actual production numbers   Supplier forecast   Supplier orders   Actual deliveries

  Produce line charts Date

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Page 30: Seeing the Whole - Creating Lean Supply Chains

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Quality & Delivery

Demand Amplification

Consumption Map

Geography etc.

Current State Summary

Purpose Select Product Family Supply Chain Network & VS Selection

Alpha Motors Platform A

Apex Wheels

Beta wipers

Epsilon Fuel Pumps

Cosmic Brakes

Eclipse Engine

Computers

Gamma Stampers

Ampersand Magnets

Utopia Castings

Michigan Steel

Odyssey Fasteners

Smith Heat Treatment

Current State by Facility PRODN. CONTROL

Weekly Schedul

e Prod’n Plan

Forecast

Daily Call In

Forecast

Weekly Call In

Weekly

Suppliers Customer

Mon. + Wed.

PRESS ASSEMBLY SHIP

I I

C/T = 30 sec.

C/O = 30 min.

3 shifts

2% Scrap

C/T = 90 sec.

C/O = 5 min.

2 shifts

3% Scrap

600 pieces 2 Day

300 pieces 1 Day

30 sec 2 days

90 sec 1 day

Total lead time 3 days VA time

2 mins

LH Steering Bracket

RH Steering Bracket

Instrument Panel Brace

Seat Rail

Bumper Brackets

X X X X

X X X X

X X X X

X X

X X X

Prod

ucts

BLUES 95% 50%

Cumulative % Product Range Cumulative % of Sales

Last 1%

Supply Chain Current State

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Page 31: Seeing the Whole - Creating Lean Supply Chains

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Workshop

For each of your firms:   Describe your supply chain network   Which product family would you select   Has anyone in your organisation created:

  A Consumption Map?   Quantified Demand Amplification

  What is the Quality & Delivery performance of the chain?

  You have 15 minutes

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Page 32: Seeing the Whole - Creating Lean Supply Chains

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Objectives of Mapping Extended Value Streams

Seeing the Whole Extended Value Stream   Raise consciousness in every firm & function touching the

value stream of the enormous waste of time, effort & movement   Typical current state 9 out of 10 steps & 99% of elapsed time

are wasted   Raise consciousness in every firm & function of the effect of

its actions on every other firm & function touching the value stream

  Learn how a value stream team with representatives from every firm can envision a series of Future States & an Ideal State for their shared value stream

  Learn how the team can progressively implement:   A Future State 1 in which smooth, levelled pull & flow are

introduced within every facility touching the value stream   A Future State 2 in which smooth, levelled pull & frequent

replenishment loops are introduced between every facility touching the value stream (eliminating warehousing & cross docking in the process)

  An Ideal State (providing a North Star for collectively steering towards the perfect value stream with zero waste) by compressing the value stream & introducing right-sized technologies

  Learn how value stream teams can share costs & gains to create win-win-win outcomes for every value stream participant

32

Page 33: Seeing the Whole - Creating Lean Supply Chains

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Heijunka box

Forecast

1. Replenishment Pull System Concept

Key Points

  Each process has a supermarket which holds the product it produces

  The easiest of all pull systems to start with to implement

  Each process replenishes the market in front of the process

  Pace and order of replenishment at the pacemaker can be controlled by a Heijunka box (discussed later in more detail)

  Scheduling needs to calculate average demand quantity, the right mix for the line to produce and continually watch inventory to reconcile what is actually taken away. (Caution: If you have the line produce exactly what is taken away you may wind up with an “un-level pull” system)

Customer

Production Control

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Page 34: Seeing the Whole - Creating Lean Supply Chains

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Heijunka Box

Order Sequence

List

Supplier Parts

2. Sequential Pull System Concept

Key Points

  1. The sequence of production is dependant upon actual orders from the customer

  2. Production instruction is sent to an upstream process in the value stream, often in the form of a “sequence list" or instruction kanban

  3. Each following process normally produces in the sequence of the item delivered

  FIFO of individual products must be maintained throughout

  Without WIP inventory to act as a buffer rigid adherence to lead-time and on-time delivery of supplier components becomes absolutely critical

Customer

F I F O F I F O

Production Control

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Heijunka box

Order

Scheduling

3. Mixed pull system concept

Key Points

  Both Supermarket replenishment and Sequential type pull systems may be used concurrently. Such a mixed system works well when and a small number (perhaps 20%) of parts comprise the majority (perhaps 80%) of daily production volume, and there are many low runners that are required at much less frequency

  Demand segmentation analysis is required to break products up into high runners, medium, low, and infrequent (perhaps special order or service parts) orders

  Two schedule points (i.e. pacemaker) exist which can cause problems which I will demonstrate later in the simulation game

Customer

F I F O F I F O

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How will you level production mix at the pacemaker?

 Key concept  Leveling concept & SMED  Leveling options

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Level Production Mix Concept & Effect

Days 0 10 20 30

X Y Z

1,200 per lot

3 lots of 1,200 3 changeovers 10 day build

10 day avg. inventory 10 to 21 day lead time

"Large batch"

Case - 1

30

40 per lot

0 10 20

X

Z

Y

90 lots of 40 90 changeovers 3 items per day build (EPED)

1 day avg. inventory 1 day lead time

"Small batch"

Case - 3

Repeat schedule

0 10 20 30

X Y Z

400 per lot

9 lots of 400 9 changeovers 3.3 day build

3.3 day avg. inventory 3.3 to 6.6 day lead time

"Medium batch"

Case - 2

Repeat schedule

Illustrative example

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Change Over Reduction (SMED)

= External = Internal

10 minutes E I 6. Standardize and improve the new

changeover procedure over time

E I 10 minutes 5. Reduce the external elements

E I 20 minutes 20 minutes 4. Reduce and eliminate the internal elements, adjustments, etc.

E I 40 minutes 20 minutes 3. Strip out external elements and pull them forward before the machine stops

2. Identify internal vs. external elements and calculate individual time

I 10

I 10

I 5

I 5

Step Pre-work During machine

shutdown 60 Minutes 1. Measure total changeover time

20 minutes

10 minutes

E 4

I 10

E 3

E 3

E 7

E 3

E I

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Leveling Options – Two Scenarios

1.  Batch Machines: Set number of changeovers and determine best EPEI interval

2.  Flexible Assembly: Calculate pitch Intervals

Time available ÷ Pitch = Intervals

450 min. ÷ 9 min. = 50 intervals

35 30

Machine 1 Machine 2

40 hours

Run Time

Allowable C/O Time

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Determine Time Available for non-production Work

(1 Machine)

Lean Enterprise Academy 40

Total 1-shift production time available (net breaks and lunch)

450 min.

Number of shifts x 2

Time available for production on 1 machine 1 day = 900 min.

Time required per day to meet average demand* - 703 min.

Net time available for set up and changeovers per day = 197 min.

* Taken from above chart on basic machine data

703 min. 1,000

1.5% 55 min. 339 min. 40 sec. 500 15489

1.3% 55 min. 228 min. 45 sec. 300 15488 1.5% 55 min. 136 min. 40 sec. 200 15487

Average scrap rate

Average changeover

time

Required run time per day

Cycle time

Per piece

Average demand per day* (pieces)

Part #

*Your situation may require calculating demand per week or month as required

Page 41: Seeing the Whole - Creating Lean Supply Chains

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Set the Number of Change Over Events per Interval

30 min. - Average downtime (not including set-up and changeover times)

197 min. Non-production time available

3.04 = Possible number of changeovers per day

55 min. ÷ Average changeover time

167 min. = Time available for changeover work on 1 machine 1 day

With 3 part numbers and 3 possible changeovers per day - Every part every day (EPED) is a good interval to start with in this instance

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50 intervals = 9 min. ÷ 450 min.

Possible intervals (on a Heijunka Box) = Pitch ÷ Time available

Leveling Demand with Respect to Pitch Intervals

  Pitch (54” x 10 items) = 540 seconds (9 minutes)

Assume in this example:   60% of production equals high-runner A items

(of which there are 5).   20% of production equals medium-runner B items

(of which there are 5).   20% of production equals low-runner C items

(of which there are 15).

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Leveling Demand with Pitch Intervals (Continued)

Step 1 – Basic Level

90 min. / 100 items 10 reserved for Cs = 20% x 50

intervals

90 min. / 100 items 10 reserved for Bs = 20% x 50

intervals

270 min. / 300 items 30 reserved for As = 60% x 50

intervals

Equivalent time & quantity Intervals per item = % of production

mix x Total interval

  Assume average order quantity of 50 units the best you would practically accomplish is making:

  Each of the 5 A items in quantity of 60 (or every part every day)

  2 of the 5 B items per shift in quantity of 50 (or every part every 2.5 days)

  2 of the 15 C items per shift in quantity of 50 (or every part every 7.5 days)

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Leveling Demand with Pitch Intervals (Continued)

Step 2 – More Detailed Level (EPES)

6.6 pieces per C part number = 15 Cs ÷ 100

20 pieces per B part number = 5 Bs ÷ 100

60 pieces per A part number = 5 As ÷ 300

Intervals per product number =

Number of products per

category ÷ Category

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Objectives of Mapping Extended Value Streams

Seeing the Whole Extended Value Stream   Raise consciousness in every firm & function touching the value

stream of the enormous waste of time, effort & movement   Typical current state 9 out of 10 steps & 99% of elapsed time are

wasted   Raise consciousness in every firm & function of the effect of its

actions on every other firm & function touching the value stream   Learn how a value stream team with representatives from every

firm can envision a series of Future States & an Ideal State for their shared value stream

  Learn how the team can progressively implement:   A Future State 1 in which smooth, levelled pull & flow are introduced

within every facility touching the value stream   A Future State 2 in which smooth, levelled pull & frequent replenishment

loops are introduced between every facility touching the value stream (eliminating warehousing & cross docking in the process)

  An Ideal State (providing a North Star for collectively steering towards the perfect value stream with zero waste) by compressing the value stream & introducing right-sized technologies

  Learn how value stream teams can share costs & gains to create win-win-win outcomes for every value stream participant

45

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Future State 1 Flow & Pull within Plants

Create Cells Level orders

Link through Pull

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Impact of Internal Changes on Whole Value Stream KPI’s

Current State Future State 1

Total Lead Time 44 days

23.9 days

Value % of time 0.08% 0.16%

VA Steps as % of total steps 12% 15%

Inventory Turns 5 9

Quality Screen 400 200

Delivery Screen 8 8

Demand Amp’ Index 7 6

Product travel distance 5300 5300

47

Page 48: Seeing the Whole - Creating Lean Supply Chains

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Objectives of Mapping Extended Value Streams

Seeing the Whole Extended Value Stream   Raise consciousness in every firm & function touching the value

stream of the enormous waste of time, effort & movement   Typical current state 9 out of 10 steps & 99% of elapsed time are

wasted   Raise consciousness in every firm & function of the effect of its

actions on every other firm & function touching the value stream   Learn how a value stream team with representatives from every

firm can envision a series of Future States & an Ideal State for their shared value stream

  Learn how the team can progressively implement:   A Future State 1 in which smooth, levelled pull & flow are introduced

within every facility touching the value stream   A Future State 2 in which smooth, levelled pull & frequent replenishment

loops are introduced between every facility touching the value stream (eliminating warehousing & cross docking in the process)

  An Ideal State (providing a North Star for collectively steering towards the perfect value stream with zero waste) by compressing the value stream & introducing right-sized technologies

  Learn how value stream teams can share costs & gains to create win-win-win outcomes for every value stream participant

48

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What makes the Extended Value Stream Lean?

  Everyone in the entire VS should be aware of the rate of end-customer demand

  Very little inventory - & the inventory that does exist is the right amount, in the right place in the VS, for the right reasons

  As few transport links as possible between the steps in the production process

  As little information processing as possible with pure signal and no noise in the information flows that remain

  Shortest possible lead time   Changes introduced to smooth flow, eliminate

inventories /transport/lead-times should involve the least possible or even zero cost

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Assembly Wipers Stamping

Steel Dist. Centre

Amplification

GO GP BO BP AO AP

%

40

30

20

10

0

Quality & Delivery ppm

2000

1500

1000

500

0 M-G G-B B-A A-A

%

10

5

0

Future State 2

Eliminate Non Value Adding Facilities Intermediate warehouses

& handling points

50 Lean Enterprise Academy

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Assembly Wipers Stamping

Steel Dist. Centre

16d 55m

39 8

Steps

Time

Amplification

F E D C B A

%

40

30

20

10

0

Quality & Delivery ppm

2000

1500

1000

500

0

F E C A

%

10

5

0

F E D C B A

DELTA STEEL

GAMMA STAMPING BETA WIPERS ALPHA MOTORS

Future State 2 Flow and Pull between Plants

Levelled Pull system between

plants with Kanbans

Frequent Milk round

logistics

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Assembly Wipers Stamping

Steel Dist. Centre

Amplification

F E D C B A

%

40

30

20

10

0

Quality & Delivery ppm

2000

1500

1000

500

0

F E C A

%

10

5

0

Future State 2 Flow and Pull between Plants

Simplify & straighten order flows

Disconnect MRP from

daily planning

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Future State 2: Value Stream KPI’s

Lean Enterprise Academy 53

Current State

Future State 1

Future State 2

Ideal State

Total Lead Time

44 days

23.9 days

15.8 days

Value % of time 0.08% 0.16% 0.6%

VA Steps % 12 % 15% 21%

Inventory Turns 5 9 14

Quality Screen 400 200 50

Delivery Screen 8 8 3

Demand Amp’ Index 7 7 5

Product travel distance 5300 5300 4300

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Seeing the Whole: Creating Lean Supply Chains

Examples

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Global System Map Current State

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Global System Map Future State

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Wiper Current State Map

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Wiper Future State Map

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Candyman Current State Map

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Candyman Future State Map

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I. BASIC CONCEPT JIT: RIGHT QUANTITY OF THE RIGHT PARTS AT THE RIGHT TIME The ideal state of JIT physical distribution is where high frequency replenishment is carried out at the speed determined by consumers purchases

TMC

DIS

T

DLR

1pc/day

1pc/day 1pc/day

Par

ts

Sup

plie

r

New parts logistic concept: Target

Order Taking

Inventory Control

Storage Pick-Check Pack-Dely

Stock Replenishment

Receiving Binning

OEM

Dealer Retail Needs

Service Needs

Stock Policy

+

=

Small lot & frequent & periodical due date ordering

Small lot periodical due date ordering

Frequent Planned Delivery

Due Date Diagrammed

Shipment

Desired State

Small lot frequent receiving  Prioritisation of receipt  P to P processing  Planned cyclic ops  Implementation of PULL system

 6 points of Toyota storage technique  Enhanced regularity control  Reserve location control  Empty location control

 Small lot frequent & staggered order receipt  Irregularity check & control  Planning order separation

 Diagrammed, staggered high frequency operations based on delivery diagram  Establishment of small lot standard batch cyclic ops based on PULL

 High frequency, small lot staggered delivery based on delivery diagram  Consideration of loading efficiency  Shortest & most economic transportation

Receiving Storage Order Taking Pick/Check/Pack Delivery

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The Ideal State

  So far we have been looking at how to improve the process with existing assets, facilities & systems

  Dare to Dream   What would a really lean chain look like if we were

not constrained by existing assets, in existing locations etc

  What would be the gains?   Would it be worth fundamentally changing the structure

of the chain to avoid the on-going costs of a sub-optimal process

  It may not all be feasible – but it gives a North Star towards which to aim

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Compress the Value Stream in Time & Space

  Locate all manufacturing facilities as close together as possible

  Locate production as close as possible to the consumer

  If close location involves extra cost – this should be weighed against time savings

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Ideal State Value Stream Compression

Dist. Centre

3d 55m

30 8

Steps

Time

Amplification

F E D C B A

%

40

30

20

10

0

Quality & Delivery ppm

2000

1500

1000

500

0

F E C A

%

10

5

0

F E D C B A

Assembly

ALPHA MOTORS SUPPLIER PARK

Wiper Cell

Stamping Cell

Suppliers co-located

Flow & Pull

Frequent Water-spider

loops

Right sized equipment Capacity

proportional to VS needs

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Ideal State Value Stream Compression

Dist. Centre

3d 55m

30 8

Steps

Time

Amplification

F E D C B A

%

40

30

20

10

0

Quality & Delivery ppm

2000

1500

1000

500

0

F E C A

%

10

5

0

F E D C B A

Assembly

ALPHA MOTORS SUPPLIER PARK

Wiper Cell

Stamping Cell

Steel

NEW JERSEY Steel Service Centre

Alternative closer raw

material supplier

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Ideal State Value Stream Compression

Dist. Centre

3d 55m

30 8

Steps

Time

Amplification

F E D C B A

%

40

30

20

10

0

Quality & Delivery ppm

2000

1500

1000

500

0

F E C A

%

10

5

0

F E D C B A

Steel

NEW JERSEY STEEL

Assembly

ALPHA MOTORS SUPPLIER PARK

Wiper Cell

Stamping Cell

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Ideal State: Value Stream KPI’s

Lean Enterprise Academy 67

Current State

Future State 1

Future State 2

Ideal State

Total Lead Time

44 days

23.9 days

15.8 days

2.8 days

Value % of time 0.08% 0.16% 0.6% 1.5%

VA Steps % 12 % 15% 21% 27%

Inventory Turns 5 9 14 79

Quality Screen 400 200 50 2.5

Delivery Screen 8 8 3 1

Demand Amp’ Index 7 7 5 1

Product travel distance 5300 5300 4300 525

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The Ideal State

 The next new product generation may be the time to introduce the Ideal State

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Supply Chain Ideal State

Future State by Facility

Summary

Quality & Delivery

Demand Amplification

Consumption Map

Geography etc.

Purpose Select Product Family

Supply Chain Network & VS Selection

Alpha Motors Platform A

Apex Wheels

Beta wipers

Epsilon Fuel Pumps

Cosmic Brakes Eclipse Engine

Computers

Gamma Stampers Ampersand Magnets Utopia Castings

Michigan Steel

Odyssey Fasteners

Smith Heat Treatment

Current State by Facility

PRODN. CONTROL

Weekly Schedule

Prod’n

Plan

Forecast Daily

Call In

Forecast Weekly Call In

Weekly

Suppliers Customer

Mon. + Wed.

PRESS ASSEMBLY SHIP

I I C/T = 30 sec.

C/O = 30 min.

3 shifts

2% Scrap

C/T = 90 sec.

C/O = 5 min.

2 shifts

3% Scrap

600 pieces 2 Day

300 pieces 1 Day

30 sec 2 days

90 sec 1 day Total lead time 3 days VA time

2 mins

LH Steering Bracket RH Steering Bracket Instrument

Panel Brace Seat Rail Bumper

Brackets

X X X X X X X X

X X X X X X X X X Pr

oduc

ts

BLUES 95% 50%

Cumulative % Product Range

Cumulative % of Sales

Last 1%

Supply Chain Current State

Supply Chain Future State Action Plan

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David Brunt November 10th 2011

Seeing the Whole: Creating Lean Supply Chains

UK Lean Summit: Solving Business Problems

Lean Enterprise Academy 70