Lean Supply Strategies: Applying the 5S Tools to Supply Management

1
Lean Supply StrategiesApplying the 5S Tools to
Supply Management

• ISM International Conference
• Modified November 15, 2004
• Kimball Bullington, Ph.D., P.E.
• MTSU

2
Outline

• What is a Supply Strategy?
• What is Lean Supply?
• What is 5S?
• Developing a Supply Strategy Using 5S

3
What is a Supply Strategy?

• Strategy A plan for achieving
• organizational goals.

4
Supply Strategy Constraints

• The Supply Strategy should support the Corporate
  Strategy.
• The Supply Strategy should support the Operations
  Strategy.
• The Supply Strategy should give our customers
  confidence in the quality, reliability, and
  safety of our products.

5
Outline

• What is a Supply Strategy?
• What is Lean Supply?
• What is 5S?
• Developing a Supply Strategy Using 5S

6
Lean Supply

• Supply in a Lean Production environment
• Supply that supports Lean Production
• Supply for diet food manufacturing

7
Lean Production

• The latest incarnation of JIT
• Based on Toyota Production System.
• Waste elimination
• Widely used in automotive manufacturing other
  repetitive mfg.

8
Outline

• What is a Supply Strategy?
• What is Lean Supply?
• What is 5S?
• Developing a Supply Strategy Using 5S

9
Five S

• Yet another acronym
• An organizational method for lean production .
• A pillar of the visual workplace.
• Housekeeping

10
Five S

• Sort (seiri)
• Set in Order (seiton)
• Shine or purity (seiso)
• Standardize (seiketsu)
• Sustain (shitsuke)

5S
11
Five S

• Sort
• Set in Order (Sweep)
• Shine (Straighten)
• Standardize
• Sustain

RED TAG
12
Sort Supplier consolidation or rationalization

• Reduces waste of working with wrong suppliers
• Focuses efforts of selection, evaluation, and
  improvement on a few suppliers
• Reduces transaction waste
• Increases opportunity for partnering and leverage

13
Barriers to Consolidation

• Fear of loss of competition
• Doubtful savings
• Dilbert
• Lack of commitment to the selection process
• Pets

14
Five S

• Sort
• Set in Order
• Shine
• Standardize
• Sustain

15
Set in Order

• A place for everything and everything in its
  place.
• Tool cutouts
• Taped outline on floor or bench

16
Set in Order

• A place for everything and everything in its
  place.
• Tool cutouts
• Taped outline on floor or bench

17
Set in OrderSegmentation

• Risk value
• Spend value
• Design value
• Time value
• Location value

18
How Can I Be Successful? Evaluation of Current
Supply Base

• Number of Suppliers
• Breakdown by Commodity
• Skills / Process Evaluation
• Performance Evaluation
• Location of Suppliers

19
Supplier Characterization Matrix
High
Critical 2 Special Situations
Critical 1 Long-term Relationship
Risk
Non-Critical 2 Transactional
Non-Critical 1 Contractual
Low
High
Annual Spend
20
Supplier Characterization Matrix
High
Critical 2 Special Situations
Critical 1 Long-term Relationship
Risk
Non-Critical 2 Transactional
Non-Critical 1 Contractual
Consolidate
Low
High
Annual Spend
21
Supplier Characterization Matrix
High
Critical 2 Special Situations
Critical 1 Long-term Relationship
Consolidate
Risk reduce Consolidate
Risk
Non-Critical 2 Transactional
Non-Critical 1 Contractual
Low
High
Annual Spend
22
Supplier Characterization Matrix
High
Critical 2 Special Situations
Critical 1 Long-term Relationship
Consolidate
Risk reduce Consolidate
Risk
Non-Critical 2 Transactional
Non-Critical 1 Contractual
Consolidate
Low
High
Annual Spend
23
(No Transcript)
24
Supply Base Segmentation
Design JIT
Design
JIT
25
Uncertainty Framework
Hau Lee, 2002
High
Hydro-electric power, some food products
Telecom, high-end computers, semiconductor
Grocery, basic apparel, food, oil and gas
Fashion apparel, computers, pop music
Supply Uncertainty
Low Functional Products
High Innovative Products
Demand Uncertainty
26
Uncertainty Framework
Hau Lee, 2002
High
Hydro-electric power, some food
products Risk-hedging SC
Telecom, high-end computers, semiconductor Agile
SC
Grocery, basic apparel, food, oil and
gas Efficient SC
Fashion apparel, computers, pop music Responsive
Supply Uncertainty
Low Functional Products
High Innovative Products
Demand Uncertainty
27
Supply Chain StrategiesHau Lee

• Efficient Supply Chains cost-focused
• Risk-Hedging Supply Chains risk-focused
• Responsive Supply Chains demand-focused
• Agile Supply Chains demand-focused but
  risk-conscious

28
Five S

• Sort
• Set in Order
• Shine
• Standardize
• Sustain

29
Shine

• Keep everything clean and swept
• System maintenance and inspection
• Problems (e.g., oil leaks) are more easily
  spotted when the workplace is in order

30
ShineInspection - Surveys

• Site surveys
• Supplier self-assessment
• Remote surveys
• 3rd party certification surveys
• 3rd party quality awards

31
SWOT AnalysesCommon Themes

• Strengths
• Current supplier provides product for process
  mkt.
• Weaknesses
• We are a small customer with little leverage
• Lack of management depth for small suppliers
• Opportunities
• Setup reduction
• Cost reduction
• Threats
• Loss of technology leadership

32
Shine

• Sometimes you just have to show up and make
  something happen.
• Danner

33
Five S

• Sort
• Set in Order
• Shine
• Standardize
• Sustain

34
Standardize

• Standardize ensures that your progress in 3S
  implementation is not wasted.
• Procedures, schedules, practices

35
Standardize

• Align supply chain partner incentives
• Include in personal plans
• Make the status visible (e.g., of suppliers)
• Assign audit responsibilities
• Ticklers

36
Standardize Problems Avoided

• Growth of supplier base
• Size of supplier base unknown
• Segmentation deteriorates classification
  unknown
• Suppliers not visited regularly
• Surveys conducted informally or with renegade
  processes

37
Five S

• Sort
• Set in Order
• Shine
• Standardize
• Sustain

38
Sustain

• Demings point number 1 Constancy of purpose
• The leadership of supply is responsible for
  sustaining the process.
• MBWA
• Prepare contingency plans for crises

39
Five S

• Sort supplier consolidate
• Set in Order - segment
• Shine - survey
• Standardize 3S scheduled
• Sustain sustaining leadership
• Five S is the foundation of lean manufacturing
  and it can be the foundation of lean supply.

40
Five S References

1. James P. Womack and Daniel T. Jones, Lean
   Thinking , 1996.)
2. Hiroyuki Hirano, 5S for Operators 5 Pillars of
   the Visual Workplace (Productivity Press, 1996.)
3. Hiroyuki Hirano, 5 Pillars of the Visual
   Workplace (Productivity Press, 1990.)
4. Kimball Bullington, 5S Supply Base Maintenance,
   Quality Progress, Jan., 2003
5. Hau Lee, The Triple-A Supply Chain, Harvard
   Business Review, October, 2004.

41
Lean Supply StrategiesApplying the 5S Tools to
Supply Managementn

• Modified from 2003 ISM International Conference
  Presentation
• November, 2004
• Kimball Bullington, Ph.D., P.E.
• MTSU