every product every cycle across the supply chain

Lean Enterprise Academy www.leanuk.org

David Brunt 5th June 2007

Lean Enterprise Academy Supply Chain Forum

Every Product Every Cycle Across the Supply Chain



Seeing the Whole Extended Value Stream

PurposeTo help you understand the difference between batch and flow logic To understand the process of value stream mapping across the supply chainIntroduce “Every Product Every Cycle” in a hands-on manner across the supply chainDevelop your ability to see the flow


Objectives of Mapping Extended Value Streams


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 streamLearn how a value stream team with representatives from every firm can envision a series of Future States & an Ideal State for their shared value streamLearn how the team can progressively implement:

A Future State 1 in which smooth, levelled pull & flow are introduced within every facility touching the value streamA 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 theprocess)An Ideal State (providing a North Star for collectively steeringtowards the perfect value stream with zero waste) by compressingthe 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


Agenda

IntroductionLean Thinking & starting the projectMapping the flows

Deciding what to mapEvery Product Every Cycle

ManufacturingWarehousing

Developing the Future State


Lean ThinkingA 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


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 arriveIt 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)


Value Stream Improvement & Process Improvement

Company 1 Company 2 Company 3

CUSTOMER

RawMaterial

FinishedProduct

Necessary but non value adding35%

Value adding5%

Non value adding60%

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




CUSTOMER

RawMaterial

FinishedProduct

PROCESS PROCESS PROCESS


Value adding5%

Non value adding60%

Focus of “traditional”efficiency improvements





CUSTOMER

RawMaterial

FinishedProduct

PROCESS PROCESS PROCESS


Value adding5%

Non value adding60%

Focus of LEANimprovement




“Seeing the Whole” Methodology


Toyota Production System

Jidoka

-Andon

-Poka-Yoke

-Visual control

-5S, etc.

Just-in-time

-Flow production

-Takt time

-Pull system

Customer service

Continuous Improvement

ThroughPeople

Lead TimeCostQuality

Heijunka Standardized Work Kaizen

Equipment Stability

Goal: Highest Quality, Lowest Cost, Shortest Lead Time

Purpose


Step 1: Select a Team from Across the Chain

Michigan Steel

Sales Manager

Gamma Stampers

Value Stream

Manager

Beta Wipers

PlantManager

ProductLine

Manager

Alpha Motors

Head of Supplier

Development(Team Leader)

One or two people from each organisation


Contact Lens Example

ManufacturingPlant

Plant Manager

LeanManager

EuropeanDistribution

Centre

DistributionManager

LeanManager

RetailerHead Office

ProjectManager

CategoryBuyer

RetailerHigh Street

BranchManager

Optician

PlanningManufacturing

OutboundLogistics

Goods InInventory MgmtOrder Processing

Pick/Pack/Ship

OrderingPromotions

OrderingDelivery

Consumption


Workshop

Discuss who you would want to be on the team that maps the supply chain?What skills/attributes do they need?You have 15 minutes


Who Should be on the Team?

Responsibility for part or all of supply chain activityPeople who can take a view beyond their functional siloPeople 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


Alpha MotorsPlatform A

ApexWheels

Beta wipers

EpsilonFuel Pumps

CosmicBrakes

EclipseEngine

Computers

Gamma Stampers

AmpersandMagnets

UtopiaCastings

MichiganSteel

OdysseyFasteners

Smith HeatTreatment

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


Glenday Sieve & Product Family Analysis

Process Steps & Equipment

LH Steering Bracket

RH Steering Bracket

InstrumentPanel Brace

SeatRail

BumperBrackets

Electronic TestFixtures

AssyRobot Weld Flash Remove Paint Manual AssySpot Weld

X X XX

X X XX

XXX X

XX

XXX

Prod

ucts

BLUES

95%

6%50%

Cumulative % Product RangeCumulative % of Sales

Last 1%


The Glenday Sieve

BLUES

95%

50%


Last 1%


The Glenday Sieve: Greens

BLUES

95%

6%50%


Last 1%

Illustrative Example

Develop a fixed sequence for the Green Stream

Make the Greens FLOW

Value stream map these to unravel the spaghetti pathwaysResults in shorter throughput times & continuous flow on the greens


The Glenday Sieve: Yellows

BLUES

50%95%

6%50%


Last 1%


Target for understanding betterMove into green stream as capacity increasesRemove causes of variability where possible


The Glenday Sieve: Blues

BLUES

50%95%

6%50%


Last 1%


“Blue” productsnon-value adding complexity= “institutional waste”


The Glenday Sieve: Reds

BLUES

50%95%

6%50%


70%Last 1%


Typically 30% of the product range but just 1% of sales


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


Step 3: Data Collection

Go and see ----- GEMBA All the team ---- Walk all of the chainRecord 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 invaluableUse the data collected to construct a Current State map for each facility


Steel mill

StampingCompany

Wiper AssemblyCompany

Car Assembly

Car Distributor

Current State MapFor the Complete Value Stream


Lean Consumption & the Supply Chain

Effective supply chain management must start with the customer

We now understand that Production (including design and supplier management) is a process.

A series of actions manufacturers must perform in the proper sequence to create value for customers

Consumption is also a process

A series of actions consumers must perform in the proper sequence to obtain the value they seek

Provision is a third process

The actions that someone must perform between the factory and the customer to achieve the objectives of both parties

There is a yawning gap betweenConsumption & Provision!


Principles of Lean Consumption

Solve the consumers problemcompletelyDon’t waste the consumer’s (or the provider’s) timeProvide exactly what the customer wantsDeliver it where it is wantedSupply it when it is wantedContinually aggregatesolutions to reduce the consumers time and hassle

Contact Lens Consumption & ProvisionContact Lens Consumption & ProvisionC

onsu

mer

Pro

vide

r

Value Creating Time

Wasted Time

Day 1 Day 21Day 2

1.Book Appointment

2.Arrive/Greet 4.Wait for Optometrist

5.Opto-metrist check

1.Answer phone

4.Optometrist sight check5.Handover

6.Contact lens check7.Fit lens

11.Fitting advice

12.Arrange next appointment

8.Wait for Service Advisor

5 minutes

5 minutes 5 minutes

2.Pre-examination

10 minutes 30 minutes

20 minutes

10 minutes


3.Pre-examination

3.Hand over to Optometrist

6.Wait for Contact Lens Optician7.Contact Lens check

8.Do paperwork

9.Check lens

10.Handover

9.Contact Lens advice

10.Return home

12.Wait for Contact Lens Optician13.Receive aftercare

16.Pay

5 minutes 30 minutes 10 minutes14.Wait for Contact Lens Optician15.Contact Lens check

14.Aftercare 16.Customer service17.Organise payment

18.Lens received19.Lens re-packed

5 minutes 10 minutes 30 minutes 15 minutes13.Receive customer

11.Arrive/Greet

15.Handover

17.Return home

20.Lens mailed to customer

Day 24

18.Receive lens

Box Score:Customer Time = 160 minProvider Time = 115 minValue Creating Time = 80 min2 Trips to Store +Fulfiment = 50% RFTOT


Handovers

StockControl

Rework(Questions)

Fulfilment

StandardWork

LevelOrders


Demand Amplification The Forrester Effect

Small changes in end-user demand become amplified as

they are passed upstream along the chain


Demand AmplificationThe Bull-Whip Effect

Customer Demand, Retailer OrdersDistributor OrdersFactory Production

Time

Demand[units]

40% increase

10% increase


Constructing a Demand Amplification Map

Major decision areasCustomer forecastYour business plan - volumesYour forecast/scheduleYour weekly plan

Final assemblyFeeder operations

Actual production numbersSupplier forecastSupplier ordersActual deliveries

Produce line chartsDate


Current State Summary

Quality & Delivery

Demand Amplification

Consumption Map

Geography etc.

Purpose Select Product FamilySupply Chain Network & VS Selection


ApexWheels

Beta wipers

EpsilonFuel Pumps

CosmicBrakes

EclipseEngine

Computers

Gamma Stampers

AmpersandMagnets

UtopiaCastings

MichiganSteel

OdysseyFasteners

Smith HeatTreatment

Current State by FacilityPRODN.

CONTROL

Weekly

Schedule

Prod’nPlan

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 pieces2 Day

300 pieces1 Day

30 sec2 days

90 sec1 day

Total lead time 3 daysVA time 2 mins

LH Steering Bracket

RH Steering Bracket

InstrumentPanel Brace

SeatRail

BumperBrackets

X X XX

X X XX

XXX X

XX

XXX

Prod

ucts

BLUES95%50%


Last 1%

Supply Chain Current State


Workshop

For each of your firms:Describe your supply chain networkWhich product family would you selectHas anyone in your organisation created:

A Consumption Map?Quantified Demand Amplification

What is the Quality & Delivery performance of the chain?You have 15 minutes


Questions for Creating Level Pull

Matching production system capability to demand1. Which products should you hold in finished-goods inventory &

which should you produce only to a confirmed order?2. How much of each product should you hold in finished goods?3. How will you organise & control the finished goods store?

Creating the Pacemaker4. Where will you schedule the value stream?5. How will you level production at the pacemaker?6. How will you convey demand to the pacemaker to create pull?

Controlling production upstream7. How will you mange information & material flow upstream from

the pacemaker?8. How will you size your markets & trigger withdrawal pull?9. How will you control batch processes upstream from the market?

Expanding the system10. How will you expand your level pull system across the facility?

Sustaining & Improving11. How will you sustain your level pull system?12. How will you improve your level pull system?


Heijunka box

Forecast

1. Replenishment Pull System Concept

Key PointsEach process has a supermarket which holds the product it produces The easiest of all pull systems to start with to implementEach process replenishes the market in front of the processPace 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

ProductionControl


2. Sequential Pull System Concept

Heijunka Box

OrderSequence

List

SupplierParts

Key Points1. The sequence of production is dependant upon actual orders from the customer2. Production instruction is sent to an upstream process in the value stream, often in the form of a “sequence list" or instruction kanban3. Each following process normally produces in the sequence of the item deliveredFIFO of individual products must be maintained throughoutWithout 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

ProductionControl


Heijunka box

Order

Scheduling

3. Mixed pull system concept

Key PointsBoth 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 lowrunners 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 orderor service parts) ordersTwo 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


How will you level production mix at the pacemaker?

Key conceptLeveling concept & SMEDLeveling options


Level Production Mix Concept & Effect

Days 0 10 20 30

X Y Z

1,200 per lot

"Large batch"

Case - 1

30

40 per lot

0 10 20

X

Z

Y

"Small batch"

Case - 3

Repeat schedule

0 10 20 30

X Y Z

400 per lot

"Medium batch"

Case - 2

Repeat schedule

Illustrative example

3 lots of 1,2003 changeovers10 day build

10 day avg. inventory10 to 21 day lead time

9 lots of 4009 cha3.3 day build

90 lots of 40 90 changeovers3 items per day build (EPED)

1 day avg. inventory1 day lead time

ngeovers

3.3 day avg. inventory3.3 to 6.6 day lead time


Change Over Reduction (SMED)

= External= Internal

10 minutes E I6. Standardize and improve the new changeover procedure over time

E I10 minutes5. Reduce the external elements

E I 20 minutes20 minutes4. Reduce and eliminate the internal elements, adjustments, etc.

E I 40 minutes20 minutes3. Strip out external elements and pullthem forward before the machine stops

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

I10

I10

I5

I5

Step Pre-workDuring machine

shutdown60 Minutes1. Measure total changeover time

20 minutes

10 minutes

E4

I10

E3

E3

E7

E3

EI


Leveling Options – Two Scenarios

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

2. Flexible Assembly: Calculate pitch Intervals

3530

Machine 1 Machine 2

40 hours

AllowableC/O Time

RunTime

Time available ÷ Pitch = Intervals

450 min. ÷ 9 min. = 50 intervals


Determine Time Available for non-production Work

(1 Machine) Average

scrap rateAverage

changeover time

Required run time per day

Cycle time Per piece

Average demand per day* (pieces)

Part #

703 min.1,000

1.5%55 min.339 min.40 sec.50015489

1.3%55 min.228 min.45 sec.30015488

1.5%55 min.136 min.40 sec.200 15487

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

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


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


Leveling Demand with Respect to Pitch Intervals

50 intervals=9 min.÷450 min.

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

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).


Leveling Demand with Pitch Intervals (Continued)

Step 1 – Basic Level

90 min. / 100 items10 reserved for Cs=20%x50 intervals

90 min. / 100 items10 reserved for Bs=20%x50 intervals

270 min. / 300 items30 reserved for As=60%x50 intervals

Equivalent time & quantityIntervals per item=% of production mixxTotal 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)


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


Future State 1Flow & Pull within Plants

Create CellsLevel orders

Link through Pull


Impact of Internal Changes on Whole Value Stream KPI’s

Current State Future State 1

Total Lead Time 44days

23.9days

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


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 reasonsAs few transport links as possible between the steps in the production processAs little information processing as possible with pure signal and no noise in the information flows that remainShortest possible lead timeChanges introduced to smooth flow, eliminate inventories /transport/lead-times should involve the least possible or even zero cost

AssemblyWipersStamping

SteelDist. Centre

Amplification%

40

30

20

10

0

GO GP BO BP AO AP

Quality & Deliveryppm

2000

1500

1000

500

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

%

10

5

0

Future State 2

Eliminate Non Value Adding FacilitiesIntermediate warehouses

& handling points

Amplification

F E D C B A

%

40

30

20

10

0


2000

1500

1000

500

0

F E C A

%

10

5

0

Future State 2Flow and Pull between Plants


SteelDist. Centre

16d55m

398

Steps

Time

Levelled Pull system between

plants with Kanbans

Frequent Milk round logistics

F E D C B A

DELTA STEEL

GAMMA STAMPING BETA WIPERS ALPHA MOTORS

%

40

30

20

10

0

ppm

2000

1500

1000

500

0

Amplification Quality & Delivery

F E C A

%

10

5

0

Future State 2Flow and Pull between Plants

F E D C B A


SteelDist. Centre

Simplify & straighten order flows

Disconnect MRP from

daily planning


Future State 2:Value Stream KPI’s

Current State

Future State 1

Future State 2

Ideal State

Total Lead Time Value

% of time VA Steps

%Inventory

TurnsQuality ScreenDelivery Screen

Demand Amp’Index

Product travel distance

15.8days

23.9days

44days

0.08%

12 %

5

400

8

0.6%

7

0.16%

15%

9

200

8

7

21%

14

50

3

5300 5300

5

4300

I. BASIC CONCEPTJIT: RIGHT QUANTITY OF THE RIGHT PARTS AT THE RIGHT TIMEThe 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/day1pc/day

Part

sSu

pplie

r

New parts logistic concept: Target

OrderTaking

InventoryControl

StoragePick-CheckPack-Dely

StockReplenishment

ReceivingBinning

OEM

DealerRetail Needs

ServiceNeeds

StockPolicy

+

=

Small lot & frequent & periodical due date ordering

FrequentPlannedDelivery

Due DateDiagrammed

Shipment

Small lot periodicaldue date ordering

Desired State

Small lot frequent receiving

Prioritisation of receipt

P to P processingPlanned cyclic opsImplementation 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


The Ideal State

So far we have been looking at how to improve the process with existing assets, facilities & systemsDare to DreamWhat would a really lean chain look like if we were not constrained by existing assets, in existing locations etcWhat 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


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

Ideal StateValue Stream Compression

Dist. Centre

3d55m

308

Steps

Time

Amplification

F E D C B A

%

40

30

20

10

0


2000

1500

1000

500

0

F E C A

%

10

5

0

F E D C B A

Assembly

ALPHA MOTORSSUPPLIER PARK

WiperCell

StampingCell

Suppliersco-located

Flow & Pull

Frequent Water-spider

loops

Right sized equipment

Capacity proportional to

VS needs

Amplification

F E D C B A

%

40

30

20

10

0


2000

1500

1000

500

0

F E C A

%

10

5

0


Dist. Centre

3d55m

308

Steps

Time

Assembly


WiperCell

StampingCell

Steel

NEW JERSEYSteel Service Centre

Alternative closer raw

materialsupplier

F E D C B A

Amplification

F E D C B A

%

40

30

20

10

0


2000

1500

1000

500

0

F E C A

%

10

5

0


Dist. Centre

3d55m

308

Steps

Time

Steel

NEW JERSEYSTEEL

Assembly


WiperCell

StampingCell

F E D C B A


Ideal State:Value Stream KPI’s

Current State

Future State 1

Future State 2

Ideal State

Total Lead Time Value

% of time VA Steps

%Inventory

TurnsQuality ScreenDelivery Screen

Demand Amp’Index

Product travel distance

2.8days

15.8days

23.9days

44days

0.08%

12 %

5

400

1.5%

8

0.6%

7

0.16%

15%

9

200

27%

8

7

21%

14

50

3

5300

79

2.5

5300

5

4300

1

1

525


The Ideal State

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


Summary

Supply Chain Ideal StateFuture State by Facility

Quality & Delivery

Demand Amplification

Consumption Map

Geography etc.

Purpose Select Product Family

Supply Chain Network & VS Selection


ApexWheels

Beta wipers

EpsilonFuel Pumps

CosmicBrakesEclipseEngine

Computers

Gamma Stampers

AmpersandMagnetsUtopia

Castings

MichiganSteel

OdysseyFasteners

Smith HeatTreatment

Current State by Facility

PRODN. CONTROL We

ekly

Schedule

Prod’nPlan

ForecastDaily

Call In

ForecastWeekly

Call InWeekly

Suppliers Customer

Mon.+ Wed.

PRESS ASSEMBLY SHIPI IC/T = 30 sec.

C/O = 30 min.

3 shifts

2% Scrap

C/T = 90 sec.

C/O = 5 min.

2 shifts

3% Scrap

600 pieces2 Day

300 pieces1 Day

30 sec2 days

90 sec 1 dayTotal lead time 3 daysVA time 2 mins

LH Steering BracketRH Steering BracketInstrument

Panel BraceSeatRailBumper

Brackets

X X XXX X XX

XXX XXXXXXPr

oduc

ts

BLUES95%50%

Cumulative % Product Range

Cumulative % of Sales

Last 1%

Supply Chain Current State

Supply Chain Future State Action Plan


David Brunt 5th June 2007



every product every cycle across the supply chain

Education