A Lean Logistic Framework: Applications in the Wood Fiber Supply Process

Transcription

1 A Lean Logistic Framework: Applications in the Wood Fiber Supply Process Henry Quesada Paula Fallas Brian Bond Virginia Tech WSRI Annual Meeting Charleston, South Carolina

2 Background Lean Thinking Logistics WSRI Literature Review 2

3 Lean Thinking 01 Overproduction 02 Transportation 03 Inventory 04 Motion Waste Reduction 05 Waiting 06 Overprocessing 07 Defects 3

4 Logistics Logistics are the activities required in order to comply effectively with the quantity need of products in the place and time it is need by the customer. It is the link between manufacture and consumption of a product or between suppliers and production, all separated by distance and time" (Kazandijan & Norton, 1999). 4

5 Logistics and Supply Chain Inbound Logistics Outbound Logistics Supplier collaborations Shipping, receiving and procurement Customer Collaborations 5

6 Logistics and Supply Chain Analyzed from Stumpage to Log Yard. Supplier s Inventory Stumpage Outbound Logistics Transportation Customer Log Yard Inventory Point 6

7 Goal: Integration of Lean and Logistics through VSM. Lean Logistics Value-streamed Mapping (VSM) Lead time Fulfillment cost Perfect execution 7

8 Main Metrics Performance metrics in sectored logistics operation capacitates the company in quick response if required action is necessary Lead Time Inventory (ADOH) 2-4 days 20 days Value Inventory $234,323 Carrying Cost %51,551 Batch size MOQ 5,000 BF 500 BF Perfect-order execution 68% Right quantity 85% Right product 98% Right place 98% Right Source 90% Right cost 98% Right service 95% Supplier Collaboration Inbound Logistics Shipping, receiving and trailer-yard management Outbound Logistics Customer Collaboration 8

9 Objectives Goal: To develop a lean logistic framework for the Wood Fiber Supply Chain Specific objectives: 1. To map and determine lean metrics for the wood fiber supply chain processes from stumpage to log yards at selected processing sites 2. To implement value stream mapping (VSM) for the wood fiber supply chain including cost fulfillment, operational, and fulfillmentstream performance indicators. 3. To disseminate the lean logistic framework to the industry related to the wood fiber supply chain. 9

10 Industry Visits 10

11 Case Study A. Wood Procurement Team Supplier/Logger Lead Time Inventory (ADOH) Inbound Logistics/Transportation Transit Time Inventory (ADOH) Receiving Operations/Log Yard Transit Time (Yard to Line) Inventory (ADOH) Value Inventory Carrying Cost Value of Inventory Carrying Cost Delivery frequency Planned order frequency Value of Inventory Carrying Cost Lot Size Delivery frequency Planned order frequency Demand Performance Metrics Right Quantity (% Quota Fulfillment) Right Quality (% of Cull) 11

12 Case study: Company B (Loggers Perspective) Standing Timber/Inventory Point Inventory (ADOH) Value of Inventory Carrying Cost Outbound Logistics/Transportation Transit Time Inventory (ADOH) Value of Inventory Carrying Cost Delivery frequency Planned order frequency Customer/Receiving Operations Ordering Processing Time Value of Inventory Carrying Cost Lot Size Delivery frequency Planned order frequency Demand Performance Metrics Right Cost for Stumpage 12

13 Case Study C. Stumpage to Yard Supplier/Logger Lead Time Inventory (ADOH) Inbound Logistics/Transportation Transit Time Inventory (ADOH) Receiving Operations/Log Yard Transit Time (Yard to Line) Inventory (ADOH) Value Inventory Carrying Cost Value of Inventory Carrying Cost Delivery frequency Planned order frequency Value of Inventory Carrying Cost Lot Size Delivery frequency Planned order frequency Demand Performance Metrics 13

14 Fulfillment cost Customer collaborations Inbound logistics Personnel $15,000 Inbound from supplier transportation 42,900 Overhead expenses $5,000 Personnel $25,000 $20,000 Overhead $25,000 $92,900 Outbound logistics Supplier Collaboration Customer related transportation 22,880 Personnel $20,000 Distribution center: operating expense $55,000 Overhead $15,000 Distribution center: space expenses $125,000 $35,000 Personnel $35,000 Overhead expenses $35,000 Inventory carrying costs $2,351,333 $272,880 Cost of capital (8% per year) $188,107 Shipping, receiving and trailer yard-mgmt Inventory damages (3%) $70,540 Shipping personnel $125,000 Insurance on inventory (45) $94,053 Receiving personnel $75,000 Inventory obsolescence (4%) $94,053 Overhead for material handling $25,000 Inventory shrinkage (3%) $70,540 Equipment for material handling $35,000 Total carrying cost $517,293 Shunt driver labor $15,000 Shunt driver equipment $12,000 Material ordering Storage trailers $12,500 Personnel $35,000 $299,500 Overhead $6,650 $41,650 Total cost of fulfillment $1,279,223 Total cost of fulfillment as % of sales 12.54% 14

15 Gap Matrix Metric Current VSM Future VSM Improvement Lead time days days 65.6%-60.3% Inventory 83.5 days 33.5 days 59.8% Total lead time days 39 to 47 days 60.8%-60% Value of inventory Inventory carrying costs Perfect-order execution $2,351,333 $750, % $517,293 $165, % 13.7% 49.0% 35.3 % points 15

16 Project Timeline 16

17 Conclusions Lean Logistics Wood Fiber Supply Chain 17

18 Conclusions The implementation of this framework could effectively identify improvement opportunities in logistic operations in the Wood Fiber Supply Chain industry leading to a general cost decrement traceable to a specific operation in a value stream. This tool achieves a holistic view of logistic activities enabling all entities involved up and down VS to have the same perspective in lean, cost, fulfilment, logistics, customer service, etc. The lean logistic VMS provides internal and external bench marketing opportunities in logistic operations. $ $ $ $ $ $ 18

19 Acknowledgement: Research funded through a grant from the Wood Supply Research Institute (WSRI) and by the Department of Sustainable Biomaterials at Virginia Tech 19