Managing a Lean Supply Chain

Transcription

1 Managing a Lean Supply Chain Valve Manufacturers Association Waterloo, Iowa April 2010 Michael Kuta, Partner

2 bulldoze the barriers! (wasn t this way 20 years ago) 10 Mergers, divestitures, acquisitions, bankruptcies, off shore competition, globalization, housing market tanks, the big 3 slip and slide, financial abuse and the world s economy goes in the tank!! End of vertical integration The reality of customization and Lean production Go Green Go Green Go Green X

3 agenda What s a Supply Chain anyway Managing the Lean Supply Chain Focus: extending Lean to suppliers Top 5 Supply Chain strategic imperatives A strategy for competitive advantage: the Supply Chain Quiz Summary

4 Delivering products and services quickly to the end customer with minimum waste.

5 the supply/value chain Your suppliers supplier Your supplier You Your customer Your customers customer

6 in the beginning Ultimate success of your business will be decided by your customers; Customers buying decisions are based on quality, service, price and availability; Customers expectations will change over time; Must clearly define value and add value to what the customers perceive adds value!

7 Do you have standards? Do you adhere to them?

8 What is a Supply Chain anyway? A Supply Chain is an integrated set of key business processes involved in the sourcing, procurement, and logistics activities from end user through original suppliers within and across companies that add value to customers and stakeholders. this includes integration, coordination and collaboration with channel partners: suppliers, intermediaries, third party service providers, and customers. It s a lot. Source: Council of Supply Chain Management Professionals and goldsby OSU

9 Initial Suppliers Consumers/End-customers the Supply Chain: the new domain Tier 3 to Initial suppliers Tier 2 Suppliers 1 Tier 1 Suppliers Tier 1 Customers Tier 2 Customers 1 Tier 3 to Consumers/ End-Customers 2 2 n 1 1 n 1 n n 2 3 n 3 n n 1 2 n 1 n The OEM Company Members of the OEM s Supply Chain thanks to Tom Goldsby and The Ohio State University

10 what are we trying to do? To have the right products in the right quantities at the right place at the right moment at minimal cost translating into customer satisfaction.

11 making supply match demand D I C Where: D = Demand P = Plan P I = Inventory C = Capacity keep in mind: balance is more easily achieved with a shorter board not only can the boxes be altered but so can the position of the fulcrum thanks to Tom Goldsby and The Ohio State University

12 Initial Suppliers Consumers/End-customers who hears the demand signal? n 1 1 n 1 n n 2 3 n 3 n n 1 2 n 1 n P U S H Guess thanks to Tom Goldsby and The Ohio State University P U L L Know

13 Resiliency Natural disasters Terrorist attacks The economy Piracy Swine Flu

14 Volatility An exception or The Norm or Self induced

15 What happens when the signal is suppressed? Retail orders from customers +10% Distributors orders from retailers +16% DC orders from distributors +28% Manufacturing output +40% Baseline forecast Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Time Source: Forrester, Jay W. (1958), Industrial Dynamics, Harvard Business Review, Vol. 36 (July-August), p. 43.

16 hey, buffer s aren t bad things! Design compartments into ships Circuit breakers into electrical networks Minimum reserve requirements for banks Air reserve in a SCUBA tank Spare tire in trunk

17 so Supply Chain Management...is the planning, management, and integration of key business processes involved in the sourcing, procurement, and logistics activities from end user through original suppliers within and across companies that add value to customers and stakeholders. this includes integration, coordination and collaboration with channel partners: suppliers, intermediaries, third party service providers, and customers. Source: Council of Supply Chain Management Professionals and goldsby OSU

18 agenda What s a Supply Chain anyway Managing the Lean Supply Chain Focus: extending Lean to suppliers Top 5 Supply Chain strategic imperatives A strategy for competitive advantage: the Supply Chain Quiz Summary

19 The practical realities

20 Cash is King

21 Nobel Prize winning economist agree A primary function of a company is reducing or eliminating transaction cost. Financial Times 2008

22 Consider this How do you make money? How do you spend money? Where s the contribution? Where s the improvement focus?

23 does the right hand know? unknown internet source

24 know your cost and there are a lot! Insurance Depreciation Maintenance Terminal Supervision Office Labor Fuel Licenses Driver Labor Utilities Yard Labor Dock Labor Claims processing Maintenance Marketing Billing Handling Unloading Pickup Customer F Customer G Others Customer A Local delivery Rehandling Scheduling Linehaul TL Delivery Accessorial LTL Delivery Customer E Customer D Customer C Customer B

25 managing the chain much to consider Financial Planning Item Planning Catalog Planning Web Planning Promotion Planning Business Intelligence Production Planning Lean Production Extended Lean Demand Management Demand Planning Promotion Forecast Replenishment Vendor Manage Inv. Audit, Payment, Claims IT solutions Cust. Relationship Mgmt. Sup. Relationship Mgmt. Prod. Develm t. Mgmt. Returns Mgmt. Distribution Mgmt. Warehouse Mgmt. Billing Mgmt. Labor Yard Mgmt. Transportation Mgmt. Fleet Mgmt. Carrier Mgmt. Reverse Logistics

26 The Lean Enterprise TECHNICAL FLOW PULL MARKET IN Value Adding Transformation Process MARKET OUT SOCIAL RESPONSE AND FEEDBACK LOOP

27 managing the chain Strategic Focus Product flow Information flow Material flow Financial flow Location Production Inventory Logistics

28 managing the chain Supplier Relations Open communication of expectations plan, alignment, and deployment a direct communication program A series of standardized processes waste elimination ideal and reliable methods experimentation Building capabilities

29 managing the chain Supplier Relations expectations: Supplier Qualification Standardized assessment of capabilities Supplier Performance Requirements KPI s: quality, lead time, total cost, and participation Supplier Development OEM enablers to enhance competitive advantage

30 Do you have standards? Do you adhere to them?

31 managing the chain Supplier Relations building capabilities Strive for perfect quality Reduce cost of quality Provide prompt feedback Increase flexibility Deliver supplies frequently Lean = Zero waste Make money DFM/DFA/DFC Stable configurations Shorter lead times Zero incoming testing Minimized reporting Lean = Zero waste Make money

32 agenda What s a Supply Chain anyway Managing the Lean Supply Chain Focus: extending Lean to suppliers Top 5 Supply Chain strategic imperatives A strategy for competitive advantage: the Supply Chain Quiz Summary

33 The Extended Lean Enterprise Capital Suppliers Regulatory Bodies Consortium Companies TECHNICAL Environment and Energy FLOW PULL MARKET IN Value Adding Transformation Process MARKET OUT SOCIAL RESPONSE AND FEEDBACK LOOP

34 an Extended Lean improvement perspective...supply chain continuous improvement to cost, quality, delivery, and capability through the progressive identification and elimination of all non-value adding waste with the involvement of stakeholders at all levels: employees, customers, and suppliers

35 The Supplier s Supplier Extended Value Chain Buffer Tier 2 Buffer Target Tier 1 Buffer The OEM Buffer Current State The Customer

36 A Lean Transfusion

37 a common theme Activities All work shall be highly specified as to content, sequence, timing and outcome. Reliable, ideal methods. Embed a test in every activity that signals if an activity has been performed in a non-standard way. Connections Every customer-supplier connection must be direct and their must be an unambiguous yes-or-no way to send requests and receive responses. Embed a test in every connection that signals that a delivery did not match customer request. Flows The pathway for every product and service must be simple and direct. Embed a test in every pathway that signals when someone other than an expected supplier does a task. Learning All improvements must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization. Embed a test in every learning to show evidence of cause and effect.

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40 66% of started Projects fail Poorly defined deliveables and scope Poor buy-in and sponsor support Poor resource allocation Not linked to key objectives

41 Importance of project management Your business is comprised of projects varying in scope and complexity Customer satisfaction is directly tied to project performance Company profits are directly tied to project performance All projects must align with strategic intent Achieve standard work

42 the attack waste anything that adds cost without adding value the target collapse the time it takes to monitor, order, receive, process products, provide services, complete transactions, make decisions, and deliver the goods

43 waste out: upstream-downstream Employee Involvement Value Stream Management 5S - Visual Display & Control Quick Changeover TPM/Equipment Reliability Mistake Proofing Cell Design Process Flow Kanban Lean Administration Variation Reducton Process/Product Engineering High Performance Work Place Scientific Method Cause & Effect Standard Work A common theme: all lean methods and techniques are scientific and reliable, based upon the principles of system, feedback, and local control.

44 Making things

45 Doing things

46 Moving things

47 Scientific Method Identify opportunity Determine measures Determine targets Gather & analyze data Generate hypotheses Test countermeasures Standardize Integrate Adhere

48 6S Sort Shine Set in order Standardize Sustain Safety

49 Visual Display and Control

50 Quick Changeover The principles target the value stream Changeover reduction controls WIP increases flexibility Do more changeovers, make-ready, set-up s enhance system utilization allows Lean flow to happen Observed START 1st TARGET Level Target OUTCOME

51 Mistake-Proofing Builds automatic feedback loops into critical, difficult, dirty, or dangerous operations Automates corrective action limit switch 1 limit switch 2 buzzer Switch 1 confirms beginning of drilling Switch 2 confirms penetration

52 Cell Design Process Flow Value Adders control product flow to takt time A linked chain of value adding operations. C B Product Flow A D E

53 Kanban Literal translation is sign board. In the context of production, it refers to the signal or authorization from a customer to a supplier to produce. Material moves only when the customer signals a need. what s a supermarket? A supermarket ties together two separate processes with a pull system. It controls and levels production upstream. It is used when continuous flow is broken due to distance and/or process technology limitations, and right-sizing is not an option. Downstream customers withdraw items from the front of each supermarket; upstream suppliers replenish the supermarket from behind. The supermarket prevents over-production by upstream processes and replaces costly and inaccurate MRP systems.

54 Lean Administration The lean office goal: to flow the processes and reduce the probability of variances that prevent the organization from achieving its value adding objectives. A systemic approach to integrating people, systems, processes, tasks, procedures, instructions, equipment, physical layouts, and the environment to reflect and build-off each other.

55 Product/Process Engineering A systematic approach to creating a product design that considers all elements of the product life cycle from conception throughout disposal. Multidisciplinary teams co-design all desired product characteristics producing a more robust design that is tolerant of manufacturing and use variation at a higher quality and at a lesser cost.

56 CEDAC Variation Reduction CATEGORY Opportunity PDCA DMAIC FMEA Target: < 50% Fact Idea Analysis Must experiment and have scientific methods for getting to root cause

57 Standard Work Standardization of policy, sequence, timing, flows, method, skills, learning and outcomes for all we do Rules defining standards for how work is to be performed Improvement in the workplace begins with adherence to standard A standard is the documented expression of the best method known at a given point in time; it enforces that method until a better one comes along.

58 waste out: upstream-downstream Employee Involvement Value Stream Management 5S - Visual Display & Control Quick Changeover TPM/Equipment Reliability Mistake Proofing Cell Design Process Flow Kanban Lean Administration Variation Reducton Process/Product Engineering High Performance Work Place Scientific Methods - Cause & Effect Standard Work A common theme: all lean methods and techniques are scientific and reliable, based upon the principles of system, feedback, and local control.

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60 agenda What s a Supply Chain anyway Managing the Lean Supply Chain Focus: extending Lean to suppliers Top 5 Supply Chain strategic imperatives A strategy for competitive advantage: the Supply Chain Quiz Summary

61 the top 5 supply chain strategic imperatives

62 supply chain strategic imperatives 1) Strategic alignment theme: change ready and risk robust focus: demand driven value network balance: people, profits, planet systemic approach to planning and deployment project management

63 supply chain strategic imperatives 2) B2B technology and software controlled use of RFID, GPS, and Voice [Speech] Recognition general Purpose ERP supply Chain Network Modeling internet technology seamless cross-referencing and integration of data o order processing to cash collection: buy signal, entry, requisition, schedule, production, logistics, warehousing radio frequency ID technology and global positioning systems

64 supply chain strategic imperatives 3) Carbon management green work place: up-stream and down-stream inter and intra transportation [logistics] production and packaging warehousing and distribution utilities green metrics on every manager s scorecard

65 Green Supply Chain Management "the process of using environmentally friendly inputs and transforming these inputs into outputs that can be reclaimed and re-used at the end of their lifecycle thus, creating a sustainable supply chain.

66 supply chain strategic imperatives 4) Production flexibility and execution enterprise wide Lean capabilities focus: activities, connections, flows and learning readiness for mass customization modular production

67 supply chain strategic imperatives 5) Extended lean enterprise globalization and localization risk management and assessing supplier health inventory visibility and responsiveness mantra: cost reduction and control through waste elimination o information flow, material flow, process flow

68 The top 5 supply chain strategic imperatives 1) Strategic alignment 2) B2B technology and software 3) Carbon Management 4) Production flexibility and execution 5) Extended lean enterprise

69 billion The million X dollar Supply Chain question: what is it going to take to stay a head of the competition? answer: Plenty Thanks, mike donovan, donovan asso., framingham, ma

70 agenda What s a Supply Chain anyway Managing the Lean Supply Chain Focus: extending Lean to suppliers Top 5 Supply Chain strategic imperatives A strategy for competitive advantage: the Supply Chain Quiz Summary

71 The Supply Chain Quiz 10 attributes to competitive advantage Consider the alternatives!

72 agenda What s a Supply Chain anyway Managing the Lean Supply Chain Focus: extending Lean to suppliers Top 5 Supply Chain strategic imperatives A strategy for competitive advantage: the Supply Chain Quiz Summary Thanks, mike donovan, donovan asso., framingham, ma

73 The top 5 supply chain strategic imperatives 1) Strategic alignment 2) B2B technology and software 3) Carbon Management 4) Production flexibility and execution 5) Extended lean enterprise

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75 managing the chain much to consider Financial Planning Item Planning Catalog Planning Web Planning Promotion Planning Business Intelligence Production Planning Lean Production Extended Lean Demand Management Demand Planning Promotion Forecast Replenishment Vendor Manage Inv. Audit, Payment, Claims IT solutions Cust. Relationship Mgmt. Sup. Relationship Mgmt. Prod. Develm t. Mgmt. Returns Mgmt. Distribution Mgmt. Warehouse Mgmt. Billing Mgmt. Labor Yard Mgmt. Transportation Mgmt. Fleet Mgmt. Carrier Mgmt. Reverse Logistics

76 managing the chain Supplier Relations Open communication of expectations plan, alignment, and deployment a direct communication program A series of standardized processes waste elimination ideal and reliable methods experimentation Building capabilities

77 Our Supply Chain attributes Our company has developed Supply Chain Management to a core competency level. Yes No Thanks, mike donovan, donovan asso., framingham, ma

78 an Extended Lean improvement perspective...system-wide continuous improvement to cost, quality, delivery, and capability through the progressive identification and elimination of all non-value adding waste with the involvement of stakeholders at all levels: employees, customers, and suppliers

79 agenda What s a Supply Chain anyway Managing the Lean Supply Chain Focus: extending Lean to suppliers Top 5 Supply Chain strategic imperatives A strategy for competitive advantage: the Supply Chain Quiz Summary

80 Managing a Lean Supply Chain Valve Manufacturers Association Waterloo, Iowa April 2010 Michael Kuta, Partner