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Lean Deployment in Supply Chain: Materials

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Highlights of the Transformations at CPS Energy's Materials Team ... Mura. Unevenness. Muri. Overburden. Building the Foundation. Train employees to identify waste ... – PowerPoint PPT presentation

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Title: Lean Deployment in Supply Chain: Materials


1
Lean Deployment in Supply Chain Materials

2
Presentation Objectives
  • Foundation Lean Thinking
  • A Culture Shift The Lean Journey In Supply
    Chain
  • Highlights of the Transformations at CPS Energys
    Materials Team
  • Our Future State - Relentless Pursuit of
    Perfection

3
Foundation Lean Thinking
4
What is Lean
  • The term Lean is an outside term to describe
    the Toyota Production System
  • It is a philosophy based on eliminating waste and
    defining value from the customers perspective.
  • Lean is rooted in observation go and see,
    analyze the situation and ask why the problem
    occurs.
  • It is a philosophy of continuous improvement and
    learning.
  • Lean means dependence on people.

5
The Foundation
  • The foundation to Lean is to gain an
    understanding of a few key principles
  • Waste
  • Standardization
  • Visual Management
  • Strategy Deployment
  • Continuous Improvement
  • The Pillars JIT and Jidoka
  • The goal is to improve quality, reduce lead time
    and reduce cost

6
The Seven Wastes
  • The main restriction to profitability, efficiency
    and flexibility
  • Defects, Mistakes, Corrections
  • Overproduction (over acquisition)
  • Transportation
  • Waiting
  • Inventory
  • Motion
  • Over Processing

7
The Cost Principle
  • The cost principle is based that in a competitive
    market, the customer sets the price
  • Price Cost Profit
  • Price VA NVA Waste Profit
  • Value added work is what the customer is willing
    to pay for all else is a form of waste (cost).

8
Standardization
  • Standardization is the essential if you are going
    to have any form of improvement
  • Standardization can be obtained by finding best
    practices and applying them as the way to do the
    work
  • This is true until another best practice or a
    better method is found, therefore, becoming the
    new standard

9
Visual Management System
  • It is key to measure and monitor your operations
  • This must be displayed where all can see and
    understand
  • Strategies, improvements, problems and goals are
    displayed

10
Strategy Deployment
  • It is important to get the team involved in
    strategy deployment
  • Our Supply Chain Director has to main strategy
    objectives
  • Reduce Lead Time
  • Improve Quality
  • The Materials groups strategy must support
    Supply Chains strategy
  • The Supervisors strategy must support the
    Material groups strategy
  • This is the nature of goal alignment bottom up

11
Continuous Improvement
  • Continuous improvement is not an event, but way
    of doing business
  • It is key to train your managers and supervisors
    on how to solve problems
  • Root cause analysis becomes part of their role

12
JIT and Jidoka
  • The Pillars of Lean

People Process Technology
13
Culture Shift The Lean Journey
14
Lean Supply Chain
  • Perfect first-time quality quest for zero
    defects, revealing solving problems at the
    source.
  • Building and maintaining relationships with
    suppliers collaborative risk sharing, cost
    sharing, and information sharing arrangements.
  • Continuous improvement reducing costs, improving
    quality, increasing productivity and information
    sharing.

15
Go to the Gemba
  • Gemba in Japanese means where the truth can be
    found.
  • As Lean practitioners, we must go and see where
    the problem occurs to thoroughly understand the
    situation.
  • Supervisors and team members must be intimately
    involved in quality issues.
  • Going to the Gemba (actual place) will increase
    the speed of resolution of problems.

16
Importance of Standardization
  • Stadardization is backbone of Lean.
  • It consists of three elements
  • Pace of customer demand
  • Sequence of doing things or sequence of processes
  • How much inventory or days on hand is needed to
    accomplish the work
  • It is impossible to improve any process until it
    is standardized.

17
Waste Creation
Muda Waste
Mura Unevenness
Muri Overburden
18
Building the Foundation
  • Train employees to identify waste
  • Build a culture of stopping to fix problems
  • Get quality right the first time
  • Standardize work processes and tasks
  • Train employees to solve problems and work
    together towards common goals
  • Go and See mentality
  • Become a learning organization

19
The Lean Supply Chain
Order Management
Customer
Supplier
Customer Mgt Supplier Mgt
Logistics
Engineering
Planning Scheduling
Construction
Planned System Event Management Pull
Replenishment Reduced Lead Time
Cross Docking Yard Control Receiving
Schedule Delivery Frequency
Pick Up Frequency Pick Up Verification Supplier
Compliance Feedback Mechanisms
Customer Compliance Feedback Mechanism
Shared Accountability BOM Accuracy Schedule
Accuracy
20
Total Cost of Ownership
  • Easier to Identify
  • Harder to Identify, Measure and Relate to
    Purchase

21
Total Cost of Ownership
  • TCO is the cornerstone of the Lean Supply Chain.
  • TCO encompasses all the costs associated with the
    acquisition, use, and maintenance of a good or
    service.
  • In theory, TCO may include all costs originating
    with the conception of a construction/service
    idea, all the way through rework once the product
    or service has been provided to the end customer.
  • So what is the paradigm shift that is required in
    CPSEnergy today?

22
Manifestation of Costs
  • Although many of the TCO costs are hard to see
    and quantify.. Where do they manifest themselves?

23
Inventory Carrying Costs
  • Administrative Overheads 2
  • Cost of Capital 9
  • Damage 5
  • Insurance 2
  • Transfers 4
  • Obsolescence 5
  • Shrinkage 3
  • Space to Handle Excessive
  • Inventory 5
  • Storage Systems ½

24
So the focus is not on inventory.
  • But rather how we manage our excessive inventory!!

25
Highlights of the Transformation
  • Supply Chain Materials Management

26
Breaking Down the Walls
  • Our department was segregated into 4 groups
  • MRP Buyers Stores Salvage
  • We introduced a customer first team where we
    combined and reclassified departments into teams
  • MA Team Warehouse Team Customer

Material Flow
Information Flow
27
Are Key Strategies for FY09
  • Lead Time Reduction Baby A3
  • Lean Warehousing Implementation
  • Reverse Logistics Group Formation
  • Quality Improvement with Fleet (Beginning Stages)
  • Inventory Reduction Project Milk Runs with
    Techline (Beginning Stages)

28
Lead Time Reduction
29
Value Stream Perspective
30
Lean Warehousing
31
Reverse Logistics
32
Right Direction?
33
Future State
  • Pursuit of Perfection

34
Visualizing the Supply Chain
  1. Right Materials
  2. Right Quantity
  3. Right Time
  4. Right Place
  5. Right Source
  6. Right Price
  7. Right Quality
  8. Right Service
  • Can we answer these questions?
  • What process are in place?
  • What are the moments of truth?
  • What are the failure modes?

35
Value Stream Mapping
  • Lean Thinking
  • Specify Value by Product
  • Identify the Value Stream
  • Make the Product Flow
  • At the Pull of the Customer
  • In Pursuit of Perfection
  • Learning to See
  • How Does the Process Work?
  • Can we Agree on Performance?
  • Can we be Involved?
  • How will we Improve?

36
Mapping the Supply Chain
  • The challenges
  • 80 of the supply chain activities are invisible
    to those accountable
  • Multiple suppliers, multiple customers, multiple
    third parties
  • High variability in material behavior,
    transportation modes
  • High variability in lead time, supply and demand
  • High variability in supplier performance and
    capability
  • The extended enterprise is not always visible
  • Data is not always abundant

37
The Future State
  • What are the customers expectations?
  • What is the rate of customer demand?
  • What processes are non value added?
  • Where is the First Time Quality an issue?
  • Where is availability an issue?
  • Where are excessive inventories?
  • Where can we implement flow and pull?
  • Where do we go and see?
  • What can we see? What can we do?
  • What projects must be prioritized?

38
Questions or Comments?
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