1 Production Logistics February, 14 th 2008 Hessel Visser Lecture 4/5 Course Logistics 08 Production Logistics Course Overview • Introduction from Production Orientation to Customer Relations • Just in time effects film from Push to Pull by Hewlett Packard • The way to Lean Manufacturing • The case MOBA egg sorters Overview PRoduction Logistics course
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Production LogisticsProduction Logistics
February, 14th 2008 Hessel Visser
Lecture 4/5
Course Logistics 08
Production Logistics Course Overview
• Introduction from
Production Orientation to Customer Relations
• Just in time effects film from Push to Pull by Hewlett Packard
• The way to Lean Manufacturing• The case MOBA egg sorters
Overview PRoductionLogistics course
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Henry Ford: You can get any color as long as it is black
T-Ford
Brief History of the Model TAfter 20 years of experimentation, Henry Ford finally saw the fruits of his labour in October of 1908 with the Model T. This was the vehicle he had wanted to build since his first Model A in 1903
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In October of 1913, mass production of the automobile began. Ford had previously organized workers and components to enhance the production of the Model T, but the moving assembly line quickly improved the speed of chassis assembly from 12 hours and 8 minutes to
1 hour and 33 minutes.
In 1914 Ford produced 308,162 cars, which was more than all other auto manufacturers combined. It was also in 1914 that the Model T, in the interest of streamlining the production process, was no longer available in black, red, blue, green or grey; it was now available in "any colour so long as it is black."
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Mass production did allow for flexibility in the price tag. Henry Ford introduced the Model T at $850 for the Touring Car, but by October of 1924, he was able to offer the Runabout for as low as $260. Few things other than the price ever changed on the Model T
time1909 1926
2.000.000/Year
1.000.000/Year$ 850.-
$ 260.-
FordFactory
The Vision of “Lean” in the USA• Perhaps best stated
by James Womack, and Daniel Jones in two popular books…
1 The Machine That Changed the World (1990)
2 Lean Thinking
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What has been changed in car industry?
SIC
MRP
MRP II
ERP
SCM
1960 1970 1980 20001990
Evolution of manufacturing systems
Statistic Inventory Control
Material Requirement Planning
Manufacturing Resources Planning
Enterprise Resources Planning
Supply Chain Management
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View on logistical organization.......in the early sixties functional organization
Goods flow
Pur
chas
ing
Pro
d. D
ept.
1
Pro
d. D
ept.
2
Pro
d. D
ept.
3
Dis
tribu
tion
Purc
hasi
ng
Prod
. Dep
t. 1
Prod
. Dep
t. 2
Prod
. Dep
t. 3
Dis
trib
utio
nProduct Market Combination 1
Product Market Combination 2
Product Market Combination 3
Suppliers CustomersNowadays we try to streamline it in a flow
S S
Incoming goods and expedition
sow (S) + cut (C) mill (M)
storehouse (S)
S S S S
assembly (A)
A A
A A
W W
W W
W W
weld (W)
F F
fitting (F)
M M
F FC C
C C
S S
Example of a functional lay out
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The Customer Order Decoupling Point CODP
Parts Assembly
Customer Order
Anonymous production
Customer driven production
Processbefore
the CODPProcess
after the CODP
Customer order
Down stream
CODP inventory
point
Up stream
Product
Production
People
Control
Risk
Productivity
Anonimous production Customer order driven production
Standardisation
High volume
Specialist
Forecast
Unsaleable
Efficiency
Option possibilities
Flexibility
Generalist
Orders
Throughput time / Capacity
Effectiveness
Different aspects before and afterthe Customer Order Decoupling Point
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parts assembly installation
purchase production distribution sales
suppliers
CODP1
CODP2
CODP3
CODP4
CODP5
make for local supply
make to central supply
assembly to order
make to order
purchase and engineer to order customer order
Client Order Decoupling Point concept (CODP): how far does a customer order penetrate?
activ
ities bas
ed
on planning
activ
ities bas
ed on customers
Customer Order Decoupling Point positions represent five control concepts (Source: Hoekstra & Rome, 1993)
complying with delivery obligations
inventories
fixed assets
risk
cost
s
CODP 5 CODP 4 CODP 3 CODP 2 CODP 1
The entrepreneurial risk, related to the choice of CODP
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Damen shipyards Gorinchem
Visit toDamen
miningblast-
furnaceengine factory
natural resources
materials single products
assembled products
installations
mineralspetroleum
agriculturalproducts
metalschemicals
wood
wirespressed products
cast work
carsaudio equipment
instruments
sea shipsdrilling derrick
airplanes
shipyard
pressing mill
electronics factory
foundry
wire rolling-
mill
instruments factory
Examples of flows of goods in production companies
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continuous production
group production
functional production
Basic shapes of production
people and materials
station1
raw materials
finishedproduct
station2
station3A
station4
station3B
station3C
station3D
Continuous production in production line
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The F16 Plant
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I
II
III
IV
employeeactivities in station A to D
activity coordination
1 drill frames
2 seal and rivet skin
3 drill and chamber skin
4 place fitting
5 place brackets
6 final inspection
I
III
III
IV
IVIII
IV
1 2 3 4 5 6 7 8
throughput time in daysdelivery interval 2 days1 man
1 day
Example of a bar chart
machine 450 to 453, station A to D
1 2 3 4 5 6 7 8 9 10 11 12 13 14
startingline
station453 A
452 B
451 C
450 D
V
III
VI
IIIIV
finish line
interval2 days
throughput time in days
personnel 6 men
Example of group coordination
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Ssow C M F Wcut mill fitting weld
S C M F W
production cel 3
incominggoods
S C M W
production cel 2
C M F
production cel 3
A
assembly (A)
expedition
A
Example of group lay out
A pick car, example of an assembled productraw materials
and purchase parts
parts welding parts CODPcompositions
end products
incominggoodscontrol
partsproduction
purchase
weld sub-assembly
end-assembly
Basic shape of a construction company
Fron Design to Process
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paint RAL 902purchase partlitre F
blind rivetpurchase partbox 100 pcs E
push barpartpieces D
wheels setassemblypieces C
tube profile 30×2purchase partmetre K
wheel fasteningpurchase part pieces J
wheelpurchase partpieces I
trayassemblypieces G
tube profile 30×2purchase partmetre K
blind rivetpurchase partbox 100 pcs.E
bottom platepurchase partm2 M
profile 30×30×2purchase part0,8 metre N
profile 30×30×2purchase part0,6 metre N
pick carwheel fasteningpieces A
weld assemblyassemblypieces B
1× 4× 1× 0,1× 0,4×
2× 4× 1× 1× 1×
1× 1× 0,2× 1×framepartpieces L
2× 2×
Low Level Code (LCC) = 0
KOOP LLC = 1
LLC = 2
LLC = 3
LLC = 4purchase partsparts / production partswelding partssub assemlby partsend assembly parts
supportspartpieces H
Identical parts
Product structure of a pick car
Name Number Unity Buy or Delivery time Cumulative
make part in weeks delivery time
Pick car pieces M 1 1
Weld compositons 1 pieces M 1 2
Tray composition 2 pieces M 2 4
Tray frame 1 pieces M 1 5
profile 30 × 30 × 2 × 0,6 m 2 pieces B 3 8
profile 30 × 30 × 2 × 0,8 m 2 pieces B 3 8
Bottom plate 0,48 m2 B 2 6
Blind rivets 20 pieces B 6 10
Support bars 4 pieces M 1 3
Tube 30 × 2 1,3 metre B 4 7
Wheel composition 4 pieces M 2 3
Wheel 1 pieces B 8 11
Wheel fastening 1 pieces B 5 8
Push bar 1 pieces M 2 2
Tube 30 × 2 1,2 metre B 4 6
Blind rivets 12 pieces B 6 7
Paint Ral 9022 0,4 litre B 2 3
Product number
low level code
0 1 2 3 4
A
B
G
L
N
O
M
E
H
K
C
I
J
D
K
E
F
The product structure in list form
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time scale related to completeness in weeks
E E E E E EM M
O O ON N N
LG G
BA
HK K K K
C CI I I I I I I
J J J J J
D DK K K KE E E E E E
F F
I
2030
3020
1520
20
5
205
302012
106
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CODP
11 10 9 8 7 6 5 4 3 2 1 0= costs made per product
The product structure at a 90º angle with delivery times
I II III IV V VIP Name Costs Cumulative Delivery Week Costs
per financial time in from madeproduct obligation weeks start
The average planned stock of week 0 to 10 amounts to 159 pieces.
In stock (Iv) 220 piecesSecurity stock (Sv) 90 piecesDelivery time (Dt) 1 weekOrdering quantity (Qv) 150 pieces
Table 8.2 MRP-I scheme of product number A: pick carwith security stock
= planned stock (P)
= security stock + ordering quantity (SV + QV)
= average planned stock
= security stock (SV)
250
225
200
175
150
125
100
750 1 2 3 4 5 6 7 8 9 10
time weeks
num
bero
f par
ts
+ + + + + + + + + + +
× × × × × × × × × × ×
• • • • • • • • • • •
•×+
Grafics of flow of stock
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per assembly
1
4
A
B
H
per assembly
number of parts
number of parts
product parts list
Figure 8.9 Part of the product structure of the pick car
Week number 0 1 2 3 4 5 6 7 8 9 10
Gross need 180 210 100 230 50 120 130 50 100 250In order 100 50 0 0 0 0 0 0 0 0Planned stock 220 140 130 180 100 200 230 100 200 100 150Planned receipt order 0 150 150 150 150 150 0 150 0 300Planned release order 150 150 150 150 150 0 150 0 300 300Too late 0The average planned stock is 159 eenheden at € 271,– = € 43.114,–
MRP-scheme product number A: Pick car LLC = 0In stock 220 pieces Note: we assume that the needSecurity stock 90 pieces remains constant from week 10Delivery time/throughput time 1 weekOrdering quantity 150 pieces
Week number 0 1 2 3 4 5 6 7 8 9 10
Gross need 150 150 150 150 150 0 150 0 300 300In order 0 0 0 0 0 0 0 0 0 0Planned stock 250 100 250 100 250 100 100 250 250 250 250Planned receipt order 0 300 0 300 0 0 300 0 300 300Planned release order 300 0 300 0 0 300 0 300 300 0Too late 0The average planned stock is 195 units at € 140,– = € 27.364,–
Gross need 1200 0 1200 0 0 1200 0 1200 1200 0In order 800 0 0 0 0 0 0 0 0 0Planned stock 250 650 650 250 250 250 650 650 250 650 650Planned receipt order 800 0 800 0 0 1600 0 800 1600 0Planned release order 0 800 0 0 1600 0 800 1600 0 800Too late 800The average planned stock is 159 units at € 110,– = € 17.490,–
Total average inventory costs A, B en H: € 87.879,–
MRP-scheme product number H: Support bar LLC = 2In stock 250 piecesSecurity stock 200 piecesDelivery time/throughput time 1 weekOrdering quantity 800 pieces
Figure 8.3 MRP-scheme of products A, B en H
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21
stock replenishment
system MRP-I
Stock replenishment system MRP-1
one planned new order
parameters
demand forecast
product structure
parameters
time fased plannednew orders
desired alterationsoutstanding orders
Stock information
order information
stockinformation
order information
Differences between stock replenishment systems and MRP-I
routing
stock status
product structures
capacity req.planning
material req.planning
master productionschedule
productionplanning
product enmarket planning
organizational goals
dispatch
production
purchasing
planningfeasible
no
yes
meansavailable
no
yes
strategical level
tactical level
operational level
goals
market demand
means
products
materials
people andmachines
parts
hoursdeliveryreliability
F e e d b a c k
Figure 8.11 Basic principle of manufacturing resources planning (MRP-II)
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input / output planning and control
organizationalgoals
product enmarket planning
productionplanning
master productionscheduling
(MPS)
materialrequirements
planning (MRP)
productionactivity control
(PAC)
purchasingplanning and
control
capacityrequirements
planning (CRP)
rough-cut capacityplanning(RCCP)
planning of means
organizationalforecasts
demandmanagement
distributionrequirements
planning (DRP)
final assemblyscheduling
(FAS)
financialplanning
short term(operational)
mid term(tactical)
long term(strategical)
Figure 8.12 MRP-II; control model for planning and control in production organizations
Stockless ProductionFrom Push to Pull
• At HP there was in 1983 a division which wanted to make a change over from Push to Pull.
• It was the Greely Colorada Division• They made Disc Units• Their goal was to get a batch quantity of
one piece
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Their idea behind the change was:
Out of balance
Scrap
Unreliable deliveries
The Film Stockless Production
Be aware of the problems in this simulated production line.Don’t look only to the working procedures.Watch to the people themselves.Write down all what you find remarkable.
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Produce and Package the Box
To stickerTo Stitch Tape it To Pack
Halve a box
Box in the Box
Box with sticker
Box with wire stich
Sticker on box
QualityProblems
Rework
Cycle timeLead time
Work on Hand
Space
Pull1 piece
Pull3 pieces
Push6 pieces
MethodMeasurement
Performance-Indicators 1
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HiddenQualityProblems
26 piecesRework
3:17 minute
Cycle timeLead-time
30 piecesWork on Hand
2 tablesSpace
Pull1 piece
Pull3 pieces
Push6 pieces
MethodMeasurement
Performance-Indicators 2
VisibleHiddenQualityProblems
3 pieces10 pieces26 piecesRework
0:19minute
1:40 minute
3:17 minute
Cycle timeLead-time
4 pieces12 pieces30 piecesWork on Hand
1 tables2 tables2 tablesSpace
Pull1 piece
Pull3 pieces
Push6 pieces
MethodMeasurement
Performance-Indicators 3
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Results at HP
Before2,8 months4000 m2
5 days
100%
After1,2 months2000m2
2,5 days
115%
SubjectInventorySpace
Work on Hand
Productivity
processI
processII
order board order board(2)(4)
container
container
Inbound stock point
product H (5)outbound-stock point
container
container
product B
(6)
(3) container
container
product B
(7)
(1)
container
container
container
end product A
= production kanban
= transportation kanban
= route production chart product B
= route transportation chart product B
= route production chart product A
Operation of the kanban system
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aimed at customertotal quality carerobotsproduction circlesuggestion boxautomationwork area disciplineTPM (total productivemaintenance)
kanbanquality improvementjust-in-time0-faultactivities of small groupscooperation of management andemployeesimproving productivitydevelopment of new products
K A I Z E N
The Kaizen umbrella
The “fixed-position stop system”
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29
30
31
From
To
32
Opel Factory
CASE MOBA egg-sorters
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World-wide egg grading market
800 billion eggs/year
800 billion eggs/year
Asia 57% (China 24%)N. America 14%Europe 19%Rest of the world 10%
• World-wide market leader in egg grading equipment
• Market share > 60%• Export > 90%• Major markets:
– Europe– Asia & Australia– Japan
Company information
• Founded 1947• Main office
Barneveld• 43,000 m²• Subsidiaries in USA,
UK, Asia and Japan• 280 employees• 50 employees R&D• € 60 million revenue• PBT > 10%
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Company information
• Marketing & Sales• Research & Development• Engineering• Manufacturing• Assembly• Service
Products
• Automatic graders up to 180,000 eggs/h• Auto candling technology• Farm packers• Container handling • Automatic packaging• Software for track and trace
Misfit between market requirements and internal capabilities:
– time to market unacceptable (R&D) – customer specific configurations tend to be
more complex (from machine to system)– delivery times very long– high warranty costs
=> Monopolist behaviour <=
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Situation early 2000
• Centralised organisation• Responsibilities diffuse• Bad mentality and de-motivated crew• Outdated production equipment• Dirty working places• Implementation BaaN very complex and
time and labour consuming• Inflexible planning and control
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What do I need when?How much does it cost?
5 Key Elements of Lean
Value Value Stream Flow Pull Perfection
Ensure WASTEdoes not
creep back into my VALUE
STREAM.
Determine what my
Customer Values
and what my
Customer considers WASTE.
Ensure that only those
products and services that
my customers
immediately want are
FLOWINGthrough my
VALUE STREAM.
Determine the Steps I go through to design,
make, and/or
deliver my product or service to
my Customer and where VALUE is created in
these steps.
Reduce the WASTE
and shorten the cycle-time
in the steps of my
VALUESTREAM.
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Seven Categories of Waste
1. Overproduction2. Waiting and Queues3. Unnecessary Transport4. Bad Processes5. Inventories 6. Unnecessary Personal
Movements7. Lack of Quality
What does 5 S mean?
The 5 S are translated from Japanese to English and Dutch:1. Seiri /Sort / Selecteren en Scheiden2. Seiton /Set in order / Schikken en Sorteren3. Seiso /Shine / Schoonmaken en Schrobben4. Seiketsu/ Standardise / Systematiseren,
Standaardiseren en structureren5. Shitsuke /Sustain / Stimuleren en Stijlvol werken/
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This is the way how it can be done too.
Make a picture• What is
the oldsituation?
• After the renovation make a newpicture.
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Before and after 5S
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The old machines
The old batch process
45
A lot of work in the stockroom
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Storage in the assembly area
The turn around: Make it (in a) flow
47
From Push to Pull
Lead time reductionover 90% and alsoQuality Innovations
As it was
As it is
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The stockroom
As it was
As it is
Let it be colourful
49
Every one does understand this
The difference at the same place
As it was As it is
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Total results at MOBA
• Sheet metal lead time 9 weeks tot 1• Less space in stock room from• 4200m2 to 1700m2
• 40 % shorter lead time overall• Better quality: almost no scrap• Easier handling• More profit