lean and agile scm

Lean and Agile Logistics and Supply Chain

By:

Iman Tabari 85125047

Hamid reza Kia 85125030

Instructer:

Dr.Farahani

Spring 2007

What is ‘Lean’ ? [1]

� A set of tools to reduce waste ?

� A philosophy based on lead time reduction from customer

order to delivery ?

� A state of mind ?

� An operational model based on continuous improvement ?

� A manufacturing method based on customer demand?

� An organizational methodology designed to create a

Learning Organization ?

� All of the above ?

� What else is it ?

Lean [2]

�Lean is the set of ‘TPS’ of tools that assist in the identification and then steady eliminationof waste (Muda), quality is improved, production time and costs are reduced

� It is a hot topic in management science in the first decade of the 21st century.

Toyota Production System (TPS)

� IS the philosophy which organizes manufacturing and logistics at Toyota

� including the interaction with suppliers and customers.

�The main goals of the TPS are to design out overburden (Muri), smooth production (Mura) and eliminate waste (Muda)

WHAT LEAN SUPPLY CHAIN IS? [1]

�A lean supply chain process has been streamlined to reduce and eliminate waste (Muda) or non-value added activities to the total supply chain flow and to the products moving within the supply chain .

The purpose of a lean supply chain is to meet

the 8R's is [1]

�Right Materials

�Right Quantity

�Right Time

�Right Place

�Right Source

�Right Service

�Right Price

�Right Quality

JidokaJIT

Lean House

Teamwork

1. Collaboration

2. Best Practices

3. Go See

4. Time and Motion

1. Pull

2. Flow

3. Leveled Flow

4. Frequency

5. Lot Size

6. Lead Time

7. Returnables

8. Integration

1. Plan vs. Actual

2. Visual Control

3. Poka -Yoke

4. Five W’s

5. Five Why’s

6. Shewhart cycle

7. No Muda

Standardization – Standardized Work, 5S

Stability – Variation reduction - TPM

Customer Focus: Hoshin Planning, Takt, Teamwork, Kaizen

Hoshin Planning (Hoshin Kanri )

� a strategic planning methodology that uses a

Shewhart cycle to create goals

� assign them measurable milestones

� and assess progress against those milestones

The discipline of Hoshin Kanri help an organization:

� Focus on a single goal

� Communicate that goal to all leaders

� Involve all leaders in planning to achieve the goal

� Create measurable deliveries (eg. "5 sales this

quarter" instead of "more sales")

� Hold participants accountable for setting realistic

goals and achieving them.

Takt

� Takt time can be defined as the maximum

time allowed to produce a product in order

to meet demand.

• T = TAKT Time,

• Ta = Net Available Time to Work

• Td = Total demand (Customer Demand)

d

a

T

TT =

Kaizen

� the English translation is "continuous

improvement“.

� Kaizen aims to eliminate waste , through

standardized work

Jidoka [3]

� meaning automation with a human touch

� It is a quality control process used in the Toyota Production System which applies the following four principles :

• Detect the abnormality.

• Stop.

• Fix or correct the immediate condition.

• Investigate the root cause and install a countermeasure.

Just In Time (JIT) [3]

� is an inventory strategy implemented to improve the return on investment of a business by reducing in process inventory and its associated costs

� ‘just-in-time’ focus will include:

• Methods

• Manpower

• Packaging

• Equipment

• Visual Workplace

• Project Management

Poka-yoke [4]

� avoiding ( yokeru) inadvertent errors ( poka).

� The concept was originated by Shigeo Shingo as part of the Toyota Production System .

� a method of preventing errors by putting limits on how an operation can be performed in order to force the correct completion of the operation.

Shewhart cycle(PDCA )

� was named for Walter Shewhart, who discussed

the concept in his Statistical Method from the

Viewpoint of Quality Control book.

� It is the continuous improvement cycle of Plan,

Do, Check, Act (PDCA).

� also referred to as the Deming Cycle.

Muda (Waste)

� is a Japanese term for activity that is

wasteful and doesn't add value.

�Waste (Muda) reduction is an effective

way to increase profitability.

5S

� Seiri : tidiness, organization.

� Seiton : orderliness.

� Seiso : cleanliness.

� Seiketsu : standards.

� Shitsuke : sustaining discipline .

Total Productive Maintenance (TPM)

� TPM is “deterioration prevention” and

"maintenance reduction", not fixing machines.

� also referred to as the"Total Productive

Manufacturing" or "Total Process Management ".

TPM has five goals:

� Maximize equipment effectiveness.

� Develop a system of productive maintenance for

the life of the equipment,

� Involve all departments that plan, design, use, or

maintain equipment in implementing TPM.

� Actively involve all employees.

� Promote TPM through motivational management.

Lean Logistics Concept 1 of 3 – Lot Size [1]

Lean Logistics Concept 2 of 3 – Frequency [1]

Lean Logistics Concept 3 of 3 – Level Flow [1]

� One of the biggest challenges facing organizations today is the need to respond to ever increasing levels of volatility in demand.

� To meet this challenge the organization needs to focus its efforts upon achieving greater agility such that it can respond in shorter time-frames both in terms of volume change and variety change

What is agility?

� Agility is a business-wide capability that embraces organizational structures, information systems, logistics processes and, in particular, mindsets.

� A key characteristic of an agile organization is flexibility

� Indeed the origins of agility as a business concept lie in flexible manufacturing systems (FMS).

What is agility?

� Later this idea of manufacturing flexibility was extended

into the wider business context and the concept of

agility as an organizational orientation was born.

� Agility should not be confused with ``leanness'‘.

What is agility?

� The lean approach is level scheduling combined with the

elimination of muda.

� lean approach is for those markets where cost is the

primary order winning criteria.

� there are many other markets where the order winner is

availability

What is agility?

� Webster's Dictionary:

it defines lean as ``containing little fat'‘

whereas agile is defined as ``nimble'

� Naylor et al.:

Agility means using market knowledge and a virtual

corporation to exploit profitable opportunities in a

volatile market place.

Leanness means developing a value stream to

eliminate all waste and to ensure a level schedule.

What is agility?

The agile supply chain

Agile SC

Market

sensitive

Virtual

Process

integration

Network

based

� market sensitive is meant that the supply chain is capable of reading and responding to real demand.

� The use of information technology to share data between buyers and suppliers is, in effect, creating a virtual supply chain. Virtual supply chains are information based rather than inventory based.

� Electronic Data Interchange (EDI) and now the Internet have enabled partners in the supply chain to act upon the same data.

The agile supply chain

� Shared information between supply chain partners can only be fully leveraged through process integration.

� process integration is meant collaborative working between buyers and suppliers, joint product development, common systems and shared information.

� This idea of the supply chain as a confederation of partners linked together as a network provides the fourth ingredient of agility.

� the route to sustainable advantage lies in being able to leverage the respective strengths and competencies of network partners to achieve greater responsiveness to market needs.

The agile supply chain

Market qualifiers, market winners, Total value

� Hill (1993):

it is important for every business to understand

what the baseline is for entering into a

competitive arena these are the ``order qualifiers‘

To actually win the order requires specific

capabilities and these are the ``order winners'

� We can borrow from these important ideas to

develop a wider supply chain oriented concept of

``market qualifiers'' and ``market winners'

Market qualifiers, market winners, Total value

� When businesses in a supply chain focus upon the

end-user there are many metrics that can be

considered

� they may be aggregated as Service, Quality, Cost and

Lead-time

Market qualifiers, market winners, Total value

Lean SC And Agile SC

� the lean paradigm is most powerful when the

winning criterion is cost.

� when service and customer value enhancement

are prime requirements for market winning then

the likelihood is that agility will become the

critical dimension.

Lean SC And Agile SC

Which paradigm?

1. Use of market knowledge:

• The nature of the end-user or market sector as a whole

will have a direct impact upon which paradigm will be

the most apt for any supply chain or part of a supply

chain

2. Integrated supply chain/value stream/virtual corporation

• Businesses must work together to form an integrated

supply chain focusing on meeting the demands of the

end-user or final customer.

• With the integrated supply chain both the information

and material flows will be simplified, streamlined and

optimized reducing waste and lead times.

Characteristics of equal importance

Characteristics of equal importance

3. Lead time compression:

• Leanness calls for the elimination of all waste or in

lean terminology `muda

• agile manufacturing requires a responsive supply

chain This also calls for lead time compression in

terms of information flow as well as material flow.

Characteristics of equal importance

Characteristics of similar importance

1. Eliminate muda:

• Lean manufacturing is called lean as it uses less, or the

minimum, of everything required to produce a product

or perform a service

• Quite clearly the agile manufacturer would also aim to

eliminate as many non-value adding activities as

possible

• in an agile system there will have to be a careful

consideration of stock and/or capacity requirements to

ensure the supply chain is robust to changes in the end

users‘ requirements

Characteristics of similar importance

2. Rapid reconfiguration:

• Agile manufacturing means that the production process

must be able to respond quickly to changes in

information from the market

• Therefore, the ability to rapidly reconfiguration the

production process is essential.

• In lean manufacturing the ability to change products

quickly is also key as any time wasted in changing over

to a new product is muda and therefore should be

eliminated

Characteristics of different importance

1. Robustness:

• An agile manufacturer must be able to withstand

variations and disturbances and indeed must be in a

position to take advantage of these fluctuations to

maximize their profits.

2. Smooth demand/level scheduling:

• Lean manufacturing by its very nature tends to reduce

demand variation by simplifying, optimizing and

streamlining the supply chain.

Characteristics of different importance

Characteristics of different importance

Comparison of lean supply with agile supply:

the distinguishing attributes

• Here are three proven ways in which the

paradigms have been brought together to provide

available and affordable products for the end

customer:

1. The Pareto Curve Approach

2. The De-coupling Point Approach

3. Separation of “Base” and “Surge” Demands

Practical Ways of Marrying the Lean and Agile

Paradigms

• Typically an analysis of the business will show that

the 80/20 (or similar) rule holds.

The Pareto Curve Approach

• decoupling point separates the part of the supply

chain that responds directly to the customer from the

part of the supply chain that uses forward planning

and a strategic stock to buffer against the variability

in the demand of the supply chain.

• The positioning of the decoupling point therefore

depends upon the longest lead time an end-user is

prepared to tolerate and the point at which

variability in product demand dominates

The De-coupling Point Approach

• Downstream from the decoupling point all products

are pulled by the end-user, that is, they are market

driven.

• Upstream from the decoupling point the supply

chain is initially forecast driven.

• A parallel concept to the ‘material’ de-coupling point

described above is that of the ‘information’

decoupling point

The De-coupling Point Approach

The De-coupling Point Approach

• Base demand can be forecast on the basis of past

history whereby surge demand typically cannot.

• Base demand can be met through classic lean

procedures to.

• surge demand is provided for through more flexible,

and probably higher cost, processes.

• Strategies such as these are increasingly being

employed in the fashion industry where the base

demand can be sourced in low cost countries and the

surge demand ‘topped up’ locally nearer to the

market.

Separation of “Base” and “Surge” Demands

Practical Ways of Marrying the Lean and Agile

Paradigms

References

1. Robert Martichenko, Lean Logistics,ppt,sit LeanCor LLC

2. Ronald G. Askin and Jeffrey B. Godberg, 2002, deisign and

Analysis of lean production systems , wiley

3. Donald waters, 2003, Inventory control and

management,Wiley,2nd.

4. Nikkoan kogyo shimbun,Ltd. 1988, -yoke: improving product

quality by preventing defects,productivity press .