lean fulfillment streams: responsive supply chain solutions to optimize order fulfillment at the...
TRANSCRIPT
Lean Fulfillment Streams: Responsive Supply Chain Solutions to Optimize Order Fulfillment at the
Lowest Total Costs
• What is Lean?• How Genysis Brand Solutions has applied
lean principles.• What these capabilities mean for our
Clients.
What is Lean?
Taiichi Ohno Shigeo Shingo
Musings from a Lean Thinker
Lean vs Mass ThinkingLean Order Fulfillment Mass Order Fulfillment
Build to order Make & sell
Economies of speed Economies of scale
Effective Efficient
Pull (from customer) Push (to customer)
Small & frequent orders Large & infrequent
Quick changeover Changeover unimportant
Production cells Functional silos
Right-sized machines Big, fast machines
Fast to respond Slow to change
Adaptive Ridged, inflexible
Primary Objectives
Pop QuizWhich waste is the most egregious?
Toyota’s 7 Wastes
Motion
Overproduction
Transportation Overprocessing
Defects
Inventory
Waiting
Overproduction
Answer
The Problem with OverproductionNo Cash
New Product Introduction?
Where is My Stuff!
Insurance
Wrong Location
Cost of Capitol
Scrap
Obsolescence
Shrinkage
Transactions
Inventory & WIP Crowds the Voice of the Customer
Why?I need 300
units of A and 100 units of B!
A B C
Genysis
?
Because People & Equipment are Busy Working on the Wrong Things
I need 300 units of A and 100 units of B!
A B C
Genysis
1 Min. 2 Min. 3 Min.
Goo
d F
low
- A
Poo
r F
low
- B
A B C
1 Min. 10 Min. 22 Min.
STOP!
Error at
Step A
A B C
Catch at Step
C
STOP!
The Method we Choose Makes a Difference
Large & infrequent orders vs small & frequent orders
Lean has Enabled New Capabilities for Genysis Brand
Solutions
2014 Key Objectives
Best-in-class quality
Industry-best lead times(PO to Delivery)
1 2 3
Mission Statement: Deliver best in class nutritional brand solutions in days, not weeks
Fastest product launches
How to Achieve Short Fulfillment Lead Times?
1Re-Organize By Value Stream
2Decouple
Procurement & Production
34 Week Lead Time (PO to Delivery –
Pull System)
4Increase Fulfillment
System Velocity (Reduce Working Capitol)
Small & Frequent Orders vs. Large & Infrequent Orders
Flour is More Valuable Than Cake– Taiichi Ohno
Case Studies
Since August 2014, delivered 1.7 million bottles 100% on time in less than 3 weeks
Shipped 46,185 units 100% on time with an average lead time 3.98 Weeks
Launched 214,000 units 100% on time with an average lead time of 6.4 weeks
What These Capabilities Mean for Our Clients
Why Brands CareAs the client, why do you care about reduced lead times and how does this model translate?
100% on-time, in-spec delivery
Reduced finished good inventory
Reduced GOGS
EXPIRE
DReduced risk
of obsolescenceOrder flexibility Shorter lead-times
50%reducti
on
Product Fulfillment Partnering
o Supply agreemento Stocking agreement
o Standard lead times are 8 weekso Sub 8 week lead times may require
stocking agreementso Genysis Fast Track delivers in
industry leading sub-4 weeks
o Performed by Supply Chain Analystso Determines threats to ship dateso Develops detailed action plan
Genysis Fast Track ProgramOur Fast Track program has been engineered to meet our client’s most important needs
AFTER Genysis Fast Track: Sub 4 Weeks
PO Placement Production Ready to Ship
BEFORE Genysis Fast Track: 8-10 Weeks
5-7 Weeks 2-4 Weeks
Stocking Program PO Placement Ready to Ship
2-4 Weeks
Procurement Period
(Removes procurement Period)
8-10 Weeks
8-10 Weeks
2-4 Weeks
2-4 Weeks
Production
Genysis Fast Track ROIAs the client, why do you care about reduced lead times? How does this program translate into a real benefits?
COST % OF ADOH
Cost of capital (as % of capital ADOH per annum) 5%
Warehouse costs 3%
Inventory damages 3%
Insurance on inventory 4%
Inventory obsolescence (write offs) 4%
Inventory shrinkage 3%
TOTAL CARRYING COSTS 22%
Genysis Fast Track ROIReducing inventory directly affects the total cost of fulfillment
1 FG Unit = $10Average Inventory Units = 50,000Average Inventory Carrying Cost = 20%o Consumption = 4,000 units per weeko Ave. 8 week lead time = 32,000 Units on hando 4 week buffer stock = 16,000 units on hand
Carrying Cost: $500,000 X .20 = $100,000
EXAMPLE
Doors Open to ClientsWe want our clients to always have the insight they need into our production facility. We therefore invite clients in for audits and send out internal audit summaries