Ch 14 - Lean Supply Chain

Question 1

What is lean manufacturing?

Answer 1

In the context of supply chains, lean production refers to a focus on eliminating as much waste as possible. Moves that are not needed, unnecessary processing steps, and excess inventory in the supply chain are targets for improvement during the leaning process.

If a step does not create value, it should be removed from the process.

“Integrated activities designed to achieve high-volume, highquality production using minimal inventories of raw materials, work-in-process, and finished goods.”

Lean is also based on the logic that nothing will be produced until it is needed.

Question 2

What is customer value and waste?

Answer 2

Customer value, in the context of lean production, is defined as something for which the customer is willing to pay. Value-adding activities transform materials and information into something the customer wants. Non–value-adding activities consume resources and do not directly contribute to the end result desired by the customer. Waste, therefore, is defined as anything that does not add value from the customer’s perspective. Examples of process wastes are defective products, overproduction, inventories, excess motion, processing steps, transportation, and waiting.

Waste arise in a service process too, however, the process is more uncertain.

Question 3

How does uncertainty arise in the manufactoring and service process?

Answer 3

It arises from material and labor imput. The variability and uncertainty is harder to control in the service process. SEtvice processes can be standardized to some extent, but not fully due to that the processes hard to repeat perfectally,

Question 4

What are some sources of uncertainty? (especially in service processes)

Answer 4

• Uncertainty in task times. - negative distribution of task times.
• Uncertainty in demand - no forecast is perfect. Can be affected by disruptions such as storms.
• Customers’ production roles. - customers involvment in the process.

Question 5

The Toyota Production System

Answer 5

The lean manufacturing was pioneered by Toyota in JApan.

The Toyota Production System was developed to improve quality and productivity and is predicated upon two philosophies central to the Japanese culture: elimination of waste and respect for people.

Question 6

Two philosophies central to the Japanese culture: Waste

Answer 6

Waste is anything that is not absolutely essential to production. An expanded lean definition identifies seven prominent types of waste to be eliminated from the supply chain:

(1) waste from overproduction,
(2) waste of waiting time,
(3) transportation waste,
(4) inventory waste,
(5) processing waste,
(6) waste of motion, and
(7) waste from product defects.

Question 7

Two philosophies central to the Japanese culture: Respect for people

Answer 7

Company unions at Toyota, as well as elsewhere in Japan, exist to foster a cooperative relationship with management. All employees receive two bonuses a year in good times. Employees know that if the company performs well, they will get a bonus. This encourages workers to improve productivity. Management views workers as assets, not as human machines. Automation and robotics are used extensively to perform dull or routine jobs so employees are free to focus on important improvement tasks.

Question 8

LEAN SUPPLY CHAINS

Answer 8

The focus of the Toyota Production System is on elimination of waste and respect for people. As the concepts have evolved and become applied to the supply chain, the goal of maximizing customer value has been added. Therefore, value stream and waste reduction are central concepts in this philosophie.

Question 9

What does the value stream consist of?

Answer 9

These are the value-adding and non–value-adding activities required to design, order, and provide a product from concept to launch, order to delivery, and raw materials to customers.

Question 10

What is value reduction when applied to to supply chain?

Answer 10

The optimization of valueadding activities and elimination of non–valueadding activities that are part of the value stream.

Question 11

What are the different components of a supply chain?

Answer 11

• Lean Suppliers Lean suppliers are able to respond to changes. Their prices are generally lower due to the efficiency of lean processes, and their quality has improved to the point that incoming inspection at the next link is not needed
• Lean Procurement A key to lean procurement is automation. The term e- procurement relates to automatic transaction, sourcing, bidding and auctions using Web-based applications, and the use of software that removes human interaction and integrates with the financial reporting of the firm.
• Lean Manufacturing Lean manufacturing systems produce what the customers want, in the quantity they want, when they want it, and with minimum resources.
• Lean Warehousing This relates to eliminating non–value-added steps and waste in product storage processes. Typical functions include the following: receiving material; putting-away/storing; replenishing inventory; picking inventory; packing for shipment; and shipping.
• Lean Logistics Lean concepts can be applied to the functions associated with the movement of material through the system. Some of the key areas include optimized mode selection and pooling orders; combined multistop truckloads; optimized routing; cross-docking; import/export transportation processes; and backhaul minimization.
• Lean Customers Lean customers have a great understanding of their business needs and specify meaningful requirements. They value speed and flexibility and expect high levels of delivery performance.

Question 12

What are the benefits of a lean supply chain?

Answer 12

The benefits of a lean supply chain primarily are in the improved responsiveness to the customer. As business conditions change, the supply chain adapts to dynamic needs. The ideal is a culture of rapid change with a bias for change when it is needed.

Question 13

What is Kaizen?

Answer 13

Kaizen is the Japanese philosophy that focuses on continuous improvement. The Kaizen bursts identify specific short-term projects (often referred to as “Kaizen events”) that teams work on to implement changes to the process. In this exhibit, we see a totally redesigned process where the individual production operations have been combined into a workcell operated by three employees. In addition, rather than “pushing” material through the system based on weekly schedules generated by production control, the entire process is converted to a pull system that is operated directly in response to customer demand. Note that the lead time in the new system is only 5 days, compared to the 34-day lead time with the old system.

Question 14

In the following, we review a set of key principles that can guide the design of lean supply chains. We divide our design principles into three major categories. The first two sets of principles relate to internal production processes. These are the processes that actually create the goods and services within a firm. The third category applies lean concepts to the entire supply chain. These principles include

Answer 14

1. Lean Layouts
   a. Group technology
   b. Quality at the source
   c. JIT production
2. Lean Production Schedules
   a. Uniform plant loading
   b. Kanban production control system
   c. Determination of number of Kanbans needed
   d. Minimized setup times
3. Lean Supply Chains
   a. Specialized plants
   b. Collaboration with suppliers
   c. Building a lean supply chain

Question 15

A supply chain is the sum total of organizations involved—from raw materials firms through tiers of suppliers to original equipment manufacturers, onward to the ultimate distribution and delivery of the finished product to the customer. Womack and Jones, in their seminal work Lean Thinking, provide the following guidelines for implementing a lean supply chain:

Answer 15

• Value must be defined jointly for each product family, along with a target cost based on the customer’s perception of value.
• All firms along the value stream must make an adequate return on their investments related to the value stream.
• The firms must work together to identify and eliminate muda (waste).
• When cost targets are met, the firms along the stream will immediately conduct new analyses to identify remaining muda and set new targets.
• Every participating firm has the right to examine every activity in every firm relevant to the value stream as part of the joint search for waste.

Question 16

Many lean techniques have been successfully applied by service firms. Just as in manufacturing, the suitability of each technique and the corresponding work steps depend on the characteristics of the firm’s markets, production and equipment technology, skill sets, and corporate culture. Service firms are no different in this respect. Here are 10 of the more successful techniques applied to service companies:

Answer 16

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