LEAN SUPPLY

CHAINS

Chapter Fourteen
McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives

 LO14–1: Explain what lean concepts are.

 LO14–2: Apply lean concepts to
production processes.
 LO14–3: Apply lean concepts to service
processes.

14-2
Read book & discuss

 FOR LEAN FACTORIES, NO BUFFER

(v2014)
 Just in Time by Toyota: The Smartest Pro
duction System in The World – YouTube
 Toyota–New Global Architecture (v2020)
 Origin of Just In Time (JIT) TOYOTA Produc
tion System – YouTube
3
Introduction

 Lean Supply Chain Fundamentals

 https://www.youtube.com/watch?v=6I-f1
p5jnLU
 Lean in Administration
 https://www.youtube.com/watch?v=d31
RXl9mOO4
 Get Lean in 90 Seconds
 https://www.youtube.com/watch?v=wfsR 4
Lean Production

Lean production - to achieve high-

volume production while using
minimal inventories

To eliminate all wastes in

production

“Just in time” (i.e., parts arrive at

the next workstation)
14-5
Lean Production

Value chain - each step in the

supply chain should create value

Customer value - something for

which the customer is willing to
pay

Waste - If it does not create value,

it should be removed
14-6
 Lean Logic
Nothing will be produced until
it is needed.
A sale pulls a replacement
from the last position in the
system.
This triggers an order to the
factory production line.
Each upstream station then
pulls from the next station
further upstream.
14-7
Lean Production – Pull
System

14-8
 Toyota Lean Production
System
Elimination of Waste Respect for People
1. Waste from 1. Lifetime employment for
overproduction permanent positions
2. Waste of waiting time 2. Maintain level payrolls
3. Transportation waste even when business
conditions are not good
4. Inventory waste
3. Company unions
5. Processing waste
4. Bonuses
6. Waste of motion
5. View workers as assets
7. Waste from product
defects
How Toyota Changed The Way We Make Things - YouTube
14-9
 Lean-Focused Supply Chain Components

2. Lean
1. Lean 3. Lean
procureme
suppliers production
nt

4. Lean
5. Lean 6. Lean
warehousin
logistics customers
g

14-10
Lean-Focused Supply Chain Components

1. Lean suppliers
Able to respond to
changes
Lower prices
Higher quality
14-11
Lean-Focused Supply Chain Components

2. Lean
procurement
Key is automation (e-
procurement)
Suppliers must see into the
customers’ operations and
customers must see into their
suppliers’ operation
14-12
Lean-Focused Supply Chain Components

3. Lean production
Producing what customers want

Producing with minimum resources

Lower costs, higher quality

14-13
Lean-Focused Supply Chain Components

4. Lean
warehousing
Eliminate non-
value-added steps
and waste in
storage process
14-14
Lean-Focused Supply Chain Components

5. Lean logistics
Optimized mode selection and pooling
orders
Combined multi-stop truckloads
Optimized routing
Cross docking
Import/export transportation processes
Backhaul minimization

14-15
Lean-Focused Supply Chain Components

6. Lean customers
Understand their business needs

Value speed and flexibility

Establish effective partnerships

with suppliers

14-16
Lean customers
 Lockheed case
 https://www.youtube.com/watch?v=syER3G
QB8SE&t=120s

 Which component got leaned in this

case?

17
Principles of Lean Supply Chain Design

Lean Group technology

Layouts Quality at the source
JIT production
Lean Uniform plant loading
Producti Kanban production control system
on
Minimize setup time
Schedul
es
Lean Specialized plants
Supply Work with suppliers
Chains
Building a lean supply chain

14-18
Lean Concepts

 Plant layout is designed to ensure

balanced workflow with a minimum of
work-in-process (WIP) inventory (review
Chap 7)

14-19
Lean Concepts

 Group technology (GT):

 The processes required to make the
parts are arranged in a manufacturing
cell.
 Eliminates movement and queue time
between operations, reduces inventory,
and reduces employees.
14-20
 Lean Concepts
Instead of specialized work GT manufacturing cells
centers

14-21
Lean Concepts

 Quality at the source: do it right the

first time and if something goes wrong,
stop the process immediately
 Workers are personally responsible for the
quality of their output.
 Workers become their own inspectors.
 Workers are empowered to do their own
maintenance. 14-22
Lean Concepts

 Preventive maintenance is
emphasized to avoid downtime.
 Total productive maintenance (TPM)
 https://www.youtube.com/watch?v=4F3os3
WmEQI&t=64s

23
Just-in-Time (JIT) Production

 JIT production: producing what is

needed when needed and nothing more
 Anything over the minimum is waste.
 Typically applied to repetitive
manufacturing.
 Ideal lot size is one.
 Vendors ship several times a day.
14-24
 Inventory Hides Problems
JIT exposes problems otherwise hidden by inventory.

14-25
Just-in-Time (JIT) Production

 Lean Manufacturing - Pull Systems

 https://www.youtube.com/watch?v=9OL
7BMBa4ys

26
 Lean Production Schedules
Freeze windows – the
Level schedule – pulls period during which the
material into final schedule is fixed, and no
assembly at a constant further changes are
rate possible

Lean

Backflush – calculation of Uniform plant loading –

how many of each part smoothing the production
were required to produce flow to dampen schedule
the actual quantity of variation (see exhibit
finished products built 14.4)
14-27
Kanban Systems

 Kanban means “sign” or “instruction

card” in Japanese
 Cards or containers are used
 Make up the Kanban pull system: use a
signaling device to regulate flows in an
inventory or production control system

14-28
Kanban Systems

 Kanban Visual Systems Explained in 4

stages
 https://www.youtube.com/watch?v=zG0wBJQJa
K8

29
 Kanban Systems
Worker takes the first part A from a full container.
Worker takes the withdrawal Kanban from the
container and takes the card to the machine center
storage area.
In machine center, worker finds a container of part A.

Worker removes the production Kanban and replaces it

with the withdrawal Kanban.
The freed production Kanban is placed on a rack by the
machine center, which authorizes the production of
another lot of material.
The cards on the rack become the dispatch list for the
machine center.
14-30
Kanban Systems in the real
life
 Kanban Cards - for Inventory Control
 https://www.youtube.com/watch?v=9hBE97ybD
-8

 Lean Manufacturing – Kanban

(computer system)
 https://www.youtube.com/watch?v=ngeEVPG5Z
Ho

31
Lean Supply Chains

1. Specialized 2. Collaboration
plants with suppliers

3. Building a Lean
Supply Chain

14-32
 Lean Supply Chains

Small specialized plants rather than large

ed plants
Collaboratio Specializ

vertically integrated manufacturing

facilities
Can be constructed and operated more
cheaply
1.

Share projections with suppliers

Link with suppliers online
suppliers
n with
2.

14-33
 Lean Supply Chains
Value must be added for each product family
3. Building a Lean Supply

based on the customer’s perception.

All firms along the value stream must make an

adequate return on their investments.

Firms must work together to eliminate waste.

When cost targets are met, firms will conduct

new analyses to identify remaining waste and
set new targets.
Chain

Every participating firm has the right to examine

every activity relevant to the value stream as
part of the joint search for waste.
14-34
Service Operation Waste

Uncertaint Uncertaint
y in task y in
times demand
Customer
s’
productio
n roles
14-35
Lean Services (Read book)
(10 of successful
techniques)
1. Organize problem-solving groups
2. Upgrade housekeeping
3. Upgrade quality
4. Clarify process flows
5. Revise equipment and process technologies
6. Level the facility load
7. Eliminate unnecessary activities
8. Reorganize physical configuration
9. Introduce demand-pull scheduling
10. Develop supplier networks 14-36