By: admission.edhole.com
Nov 17, 2014
By:admission.edhole.com
APICS/NAPMOctober 20, 2004
Bruce FischerElmhurst College
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What’s Right and How Do They Fit Together in a Lean World?
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Highly Competitive Dynamic – Fluid – Ever Changing Companies Require -
responsiveness flexibility profitability/consistent cash flow
Lean Manufacturingadmission.edhole.com
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Enterprise Resource Planning
A system of interconnected data tables (usually using the general
ledger as its ‘backbone’) driven by an MRP/MRPII calculation engine.
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Material Requirements Planning
A system for determining the quantity and timing requirements for
materials used in a production operation.
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Manufacturing Resource Planning
An expanded system for determining manufacturing resource
requirements and for scheduling production.
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Just-in-Time
A system for producing and delivering the right items at the right time in the right amounts
Key elements of Just-in-Time are flow, pull, standard work, and takt time
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A precise description of each work activity specifying cycle time, takt time, the work sequence of specific tasks, and the minimum inventory of parts on hand needed to conduct the activity.
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An important concept in pacing operations The “heartbeat” of a lean system Takt time =
(available production time) / (rate of customer demand)
Example: Customer demand is eight widgets per day. The plant operates 16 hours per day. Takt time is two hours (16/8 = 2).
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A card attached to boxes of parts that regulates pull in the Lean System by signaling
upstream production and delivery.
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A system of cascading production and delivery instructions from downstream to upstream activities in which nothing is produced by the upstream supplier until the downstream customer signals a need.
Nothing is produced without a signal from the next station in the line.
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Single piece flow Eliminate bureaucracy,
departmentalization Eliminate batch and queue
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Tear out conveyors (moving warehouses) Adopt a just-do-it mindset Focus on value
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Created by the producer May be hard for producers to define Can only be defined by the final customer
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The irreducible minimum set of activities needed to design, order, and make a machine – flowing smoothly, continuously, and rapidly
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Raw material to finished good Order to delivery Concept to launch
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Any activity that consumes resources but creates no value is waste (muda)
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Mistakes Unneeded inventories Unnecessary steps Idle workers Unnecessary moves Goods and services that don’t meet
customer needs
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Arrange production by specific products Identify the value stream for each
product Make value flow without interruptions Let the customer pull value from the
producer Pursue perfection
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Don’t make anything until it is needed and then make it very quickly.
Schedule changes may be made almost instantaneously upon order receipt.
Quality improves as pull thinking is introduced.
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Don’t build inventory Right size tools to fit product lines Reduce set-up times Use statistical process control to achieve
zero defects Implement planned maintenance Get frequent deliveries from suppliers
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While periodic review of Kanban lot size is necessary and desirable, resizing lots to meet large fluctuations - highly variable demand and/or rapidly shifting supply chain uncertainty is difficult
Kanban doesn’t work well when
there in a highly variable system
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Forecast Customer orders MPS Exploded BOM MRP calculation
“X”% Leadtime*units-netable-on order Purchase analysis Order generation (PO) & order tracking
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Replenishment a non-value activity a gating factor to manufacturing a significant factor in cash flow management directly impacts profits
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ERP/MRP II MRP engine Push system
Reorder Point Kanban
Market signal driven Pull system
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Positives Quick, efficient
recalculation of requirements
Vendor & lot tracking
Enterprise visibility Auto updates
financial records
Negatives High overall effort
and maintenance Plan driven vs.
direct market input driven Susceptible to
forecast error MRPII machine
centers scheduled in series
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Positives Reduces point-of-
use effort Highly visible to
production
Negatives Creates need for
system entries in other areas of company
Reduced visibility throughout organization
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MRP Complex Fluctuating
Demand Auto adjusts req’s Robust system
reporting and analysis
Kanban Simple Linear Demand Kanban size
adjusted manually No system
reporting
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Uncouple the MRP engine from the ERP system using Kanban practices in place of MRP/MRPII to: trigger production move materials through plant
Continue to use ERP to: track vendors and/or lots update financials provide enterprise visibility make particular calculations
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Install/Configure ERP Kanban module To resize Kanban lots To calculate order quantities
Use ERP To print Kanban cards To auto update financials, material movement
and production status using barcode scans, RFID, etc.
To update vendor files
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Massive inventories Large batches Long machine changeovers Push production system Slow response to customers (long lead
times)
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Welding booth is given the daily schedule Empty parts tub with Kanban (signal
card) slides to stamping press from welding booth
When stamping press uses up blanks, empty parts tub is sent down the slide to the blanking press
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Blanking Stamping Welding FG
Blue Arrows = Movement of parts
Green Arrows = Circulation of Kanban
Circles = Machines/ Work Cell
Triangles = Buffers
Finished Goods Inventory
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MRP system had sent orders to every machine but expediting was always needed
WIP inventories used to get out of balance (e.g., Blanking would run to schedule even if Welding was down)
MRP system is no longer required to drive the system and becomes a calculation tool
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Shipping schedule drives production Takt time paces the lines Right sizing of equipment
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Long lead times Complex production processes Product variety Batch production Large WIP and finished inventories
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Master Schedule worked out by the Scheduling Dept. based on sales forecasts
Ever changing demands from the Sales Dept. intent on pleasing customers
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Sales tries to beat the system and enters orders based on speculation
Sales alters options requested when the real order is received
Expediters move through the plant with a “hot list” for overdue orders
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Company made money despite its weaknesses
•Suddenly, low priced competition entered the market
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Reorganization by standards or specials Team orientation Customer focus MRP system with real time data input
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Conversion from a batch and queue system to a flow organization
Single piece flow (no buffer stock) Value stream One machine, one design, one order at a
time
The Result: Production lead time reduced from 16 weeks to 14 hours
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MRP system retained for long-term ordering of materials
Day-to-day scheduling now run off a large whiteboard
Production day divided into slots by takt times
Orders written on the whiteboard as they are confirmed
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Nothing produced without a confirmed order
Management Information Systems department was eliminated
Parts within the plant are pulled to the next station automatically
Product and information are combined
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People missed the excitement of fire fighting
Lean operations revealed problems that had been covered up by high inventory levels
Deliveries of purchased components to the cells were not dependable
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Will the company honor its commitment to retain excess workers?
Will contributions to improvement activities be recognized and rewarded?
People ask, “What will the changes mean for my career?”
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Large inventories Enormous batches MRP system with 50% extra margin
added to safety stocks Machine maintenance neglected
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MPS used forecasts to ensure finished goods were on hand in a huge warehouse
Orders were processed in a batch mode Few orders were shipped complete Large customer service department was
required to keep track and expedite orders
Many potential sources for errors
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Implementation not understood Didn’t know how to reduce changeover
times Difficulty creating to a level schedule Large inventories had glossed over
problems Express freight to make deliveries Added customer service staff to explain
later deliveries
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Value creating jobs Non-value creating jobs – but currently
necessary to run the business Non-value creating and unnecessary jobs
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Fear of job loss can derail the conversion to lean – taking away fear of job loss is at the core of a lean conversion.
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Manager’s should personally lead the implementation activities
Manager’s need to go out to the shop floor to work hands-on making improvements
The more senior the better - They need to see the waste and understand where change is needed
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Assembly activity no longer dependent upon a department for material
Before, the master schedule generated by the MRP system might schedule other material than that needed by the line
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Order-receipt-to-ship time reduced from more that a week to less than a day
As shipper withdrew parts from finished stock racks, this became the signal to make more of a given part
Fewer people & fewer errors
Instead of one month batches, parts were produced every day
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Formerly kept track of the movements of individual parts
Now given the smaller task of long-term capacity planning
Also required to order parts from suppliers not yet on pull systems
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Just-do-it mind set Kaizen philosophy Group technology (cells) Work with HR Management involvement Improved maintenance Blend systems when & where appropriate
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Lean manufacturing can: simplify operations and improve control reduce inventories and improve cash flow reduce lead times
Set-up times must be reduced for lean to work to be able to reduce lot sizes
As internal issues are addresses – look to include vendors
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Lean manufacturing: offers greater responsiveness and therefore
better customer satisfaction identifies mistakes quickly helps to identify muda (waste) is applicable to other areas of the firm in
addition to production MRP still may be used to maintain
inventories, but in a reduced role
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