Lean And Agile Scm
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Lean and Agile Logistics and Supply Chain Instructer: Dr.Farahani
By: Iman Tabari Hamid reza Kia
Spring 2007
85125047 85125030
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 elimination of 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
Lean House Customer Focus: Hoshin Planning, Takt, Teamwork, Kaizen JIT
Jidoka
1. Pull 2. Flow
1. Plan vs. Actual
Teamwork
3. Leveled Flow 4. Frequency
1. Collaboration
5. Lot Size
2. Best Practices
6. Lead Time
3. Go See
7. Returnables
4. Time and Motion
8. Integration
Standardization – Standardized Work, 5S Stability – Variation reduction - TPM
2. Visual Control 3. Poka -Yoke 4. Five W’s 5. Five Why’s 6. Shewhart cycle 7. No Muda
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.
Ta T = Td • T = TAKT Time, • Ta = Net Available Time to Work • Td = Total demand (Customer Demand)
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]
What is agility?
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.
The agile supply chain Market sensitive
Virtual
Agile SC
Process integration
Network based
The agile supply chain 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.
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?
Characteristics of equal importance 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 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
Practical Ways of Marrying the Lean and Agile Paradigms • 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
The Pareto Curve Approach • Typically an analysis of the business will show that the 80/20 (or similar) rule holds.
The De-coupling Point 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
Separation of “Base” and “Surge” Demands • 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.
Practical Ways of Marrying the Lean and Agile Paradigms
References 1. 2. 3. 4.
Robert Martichenko, Lean Logistics,ppt,sit LeanCor LLC Ronald G. Askin and Jeffrey B. Godberg, 2002, deisign and Analysis of lean production systems , wiley Donald waters, 2003, Inventory control and management,Wiley,2nd. Nikkoan kogyo shimbun,Ltd. 1988, -yoke: improving product quality by preventing defects,productivity press .
By: Iman Tabari Hamid reza Kia
Spring 2007
85125047 85125030
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 elimination of 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
Lean House Customer Focus: Hoshin Planning, Takt, Teamwork, Kaizen JIT
Jidoka
1. Pull 2. Flow
1. Plan vs. Actual
Teamwork
3. Leveled Flow 4. Frequency
1. Collaboration
5. Lot Size
2. Best Practices
6. Lead Time
3. Go See
7. Returnables
4. Time and Motion
8. Integration
Standardization – Standardized Work, 5S Stability – Variation reduction - TPM
2. Visual Control 3. Poka -Yoke 4. Five W’s 5. Five Why’s 6. Shewhart cycle 7. No Muda
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.
Ta T = Td • T = TAKT Time, • Ta = Net Available Time to Work • Td = Total demand (Customer Demand)
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]
What is agility?
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.
The agile supply chain Market sensitive
Virtual
Agile SC
Process integration
Network based
The agile supply chain 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.
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?
Characteristics of equal importance 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 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
Practical Ways of Marrying the Lean and Agile Paradigms • 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
The Pareto Curve Approach • Typically an analysis of the business will show that the 80/20 (or similar) rule holds.
The De-coupling Point 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
Separation of “Base” and “Surge” Demands • 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.
Practical Ways of Marrying the Lean and Agile Paradigms
References 1. 2. 3. 4.
Robert Martichenko, Lean Logistics,ppt,sit LeanCor LLC Ronald G. Askin and Jeffrey B. Godberg, 2002, deisign and Analysis of lean production systems , wiley Donald waters, 2003, Inventory control and management,Wiley,2nd. Nikkoan kogyo shimbun,Ltd. 1988, -yoke: improving product quality by preventing defects,productivity press .
