Enabling Lean Manufacturing through ERP
1Enabling Lean manufacturing through ERP- CII - TGD
T.G.DhandapaniGroup CIO – Sundaram-Clayton Limited
11/28/2008
Agenda
• Introduction• Digitizing Lean in ERP
• Ecosystem• Problem and baseline metrics• Digitized Pull system• Digitized TPM• Benefits
• InteractionsEnabling Lean manufacturing through
ERP- CII - TGD 211/28/2008
Technology
“The first rule of any technology used in business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency”
- Bill GatesEnabling Lean manufacturing through ERP- CII - TGD 311/28/2008
Power of Digitization
• Lean your process – improve, eliminate and automate steps
• Manage by exception• Automate information flow from P2E
and E2E• Integrate people and their roles and
functions
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Power of Digitization
• Customize to individual work styles and decision making
• Manage and audit production process more effectively and consistently
• Share production best practices and collaborate on process
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What is Lean?• Balanced use of people, equipment and
material that gives lowest manufacturing cost
• Lowest manufacturing cost assumes all wastes is eliminated
• Supply of material as per customer requirement as and when required with specified quality and quantity
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Lean = management of Waste
Drivers of LeanCost element Drivers
Material cost •Value engineering •Value addition
Processing cost
•Energy, logistics, consumables, equipment maintenancePersonal cost •Low cost automation, people
Finance cost •Inventory asset
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TQM journey and RecognitionsTQM journey and Recognitions
1987 1990 1994 1998 2002
TQM
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Deming Prize
TQM - Group’s TQM Journey
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Business ecosystem
• Single supplier
• Variety complexity
• Varying demand
• High value propriety products
• Non propriety small vendorsEnabling Lean manufacturing through
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Problem and base level metrics
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Key performance areas Measure
Customer complaints per month 7
Delivery service level 70%
Premium dispatches pa 721
Stock in pipeline 20 croresNonmoving stock in transporters godown for > 60 days 3.30 crores
Line stopper due to supplier parts -% man hours lost 3.5%
Value added per employee 19
Inventory turn 2311/28/2008
Lean journey in TVS M
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Seven step approach for Lean manufacturing
Steps Metrics
Step 1: Value stream mapping Process ratio in percentage
Step 2: Create a flow Single piece flow
Step 3: Balance to takt time Ratio between cell bottleneck time and takt time
Step 4: Stabilize the production - TPM
OLE of the cell, Lost cost tree
Step 5: Improve flow Percentage of missed cards per shift, service level, inventory turnover
Step 6: Zero defect PPM
Step 7: Leveled production Every part every day / every shift / every hour
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Seven step approach for Lean manufacturing
Steps Metrics SAP tools/modulesStep 1: Value stream mapping - Process ratio in percentage
Step 2: Create a flow Single piece flow
Step 3: Balance to takt time - Ratio between cell bottleneck time and takt time
Routing
Step 4: Stabilize the production - loss elimination through TPM
OLE of the cell, Lost cost tree
PM, CO
Step 5: Improve flow - paced withdrawal pull system
Percentage of missed cards per shift, service level, inventory turnover
XI, PP, electronic Kanbhan, ITS server
Step 6: Zero defect – poka yoke ,
Kaizen, PM analysisPPM QM / PM
Step 7: Leveled production - Every part every day / every shift / every hour
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Pull system using SAP
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PurchaseSupplier
Production Marketing Customer
Units SWHStores
AssemblyM/c shop
WIP Transfer
I
Netting withMin.norms
GenerateMRP
MRPMRPSchedule
Produce
Resource planning
Produce Produce
Issue Order
2 weeks - daily4 weeks – Ten.
Pull system in manufacturing
Pull
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Replenishment signal in a “pull system”
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Vendor
Strategic buffer – on site
6 days vendor lead time
3 Days Manufacturing lead time
Strategic buffer –WH near customer
JIT supply to customer
Consumption
Replenishment signal “PO”
Replenishment signal for Mfg”
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• Kanban card for triggering production
• Identification label
• Documentation of production confirmation
• Documentation of back-flushing
• Delivery document creation
• FIFO control
SCL - Multi purpose bar coded cards
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e Kanban status for vendors
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Vendor Kanban details on-line display in WEB
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TPM through SAP Plant Maintenance module
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TPM Targets
P – Productivity - Achieve 85% OEE minimum
Q – Quality - Reduce rejections by 50%. Zero defect products to customer.
C – Cost - Reduce manufacturing cost by 20%.
D – Delivery - Supply 100% as per customer requirement
S – Safety - Achieve Zero accident
M – Man - Achieve 30 suggestions per employee per year
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Plant Maintenance
Equipment & FunctionalLocation maintenance
PM plans &Check list
Work order management for preventive and
breakdown maintenance
Linkage to MM and FI for Purchasing and cost centre-wise
tracking
Mean Time Taken to Repair (MTTR) / Mean Time between
Failures (MTBF)Notification
analysis
Breakdown analysis
Why-Why analysis
Breakdown matrix
SMS alerts Horizontal deployment
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Internet
SMS messageOnline printing
SMS alerts on breakdown
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Performance measurement
• Key measurement task– Define measurement variables– Perform baseline measurement– Perform final measurement– Analyze results and calculate benefits
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If you can’t measure, you can’t manage it
– Andy
If you can’t measure, you can’t manage it
– Andy Enabling Lean manufacturing through ERP- CII - TGD11/28/2008
Lost cost tree in TPM
Link the benefits intobusiness results
Prepare loss cost tree forplant
Link the losses with financial elements
Identify & implement projects to reduce the losses – Pillar wise
Review the project implementation
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Loss due to Equipment effectiveness
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Break up of availability loss
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Break Up of Quality Loss
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Stratification –manufacturing unit wiseStratification –manufacturing unit wise
Measurements• Focused• Deployable• Simple• Visible
Measurements• Focused• Deployable• Simple• Visible
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Stratification –warehouse wiseStratification –warehouse wise
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360 degree view of inventory
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The more inventory a company has, less likely they are of what they need
………Taiichi Ohno11/28/2008
Inventory analysisRed, Gray, Green
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Performance measure in indirect areas
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2882
4926 32 41 16
0
750
1500
2250
3000
0-4 5-9 10-20 20-49 50-100 >100
GRN creation time for local supplies
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Reduce Information systems downtime
Bette
r
UOM : PPM Downtime
Performance measurement for IT in PPM
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Over all business results
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Key performance areasBase level
Measure
Measure after LEAN
%
Customer complaints per month 7 2 > 100%
Delivery service level 70% 90% 30%
Premium dispatches pa 721 174 76%
Stock in pipeline 20 cr 10 cr 50%
Nonmoving stock in transporters godown for > 60 days
3.30 crores 0 >100%
Line stopper due to supplier parts - % man hours lost 3.5% 0.45% 87%
Value added per employee 19 28 37%
Inventory turn 23 26 22%11/28/2008
Summing up………
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• IT plays a critical role in Lean manufacturing as business driver• Gateway to success comes out of:
•“Lean” physical processes thro TQM • Integrating business processes thro IT solutions – ERP• Extending IT support to supply partners • Instituting performance measures for
• Continuous improvements• Sustained controls on
• Inventories• Productivity measures• Assets utilization• Wastes and non value adds
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Question and answers
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