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08-01-2014
1
Lean Inventory
Management
Girish BhatnagarDirector General - Indian Railways Institute of Logistics and Materials Management
� Speed To Market� Competitive Superior Value� New Products & Services� New Channels of Distribution� Completely Visible Supply Chain� Superior Customer Service� Savings in Capital due to Less Inventory, Space,
Staff, Machines, System Costs� Economies of Faster & Simplified Systems� Better Leakage Control
• Kanban card contains the product details and other relevant information. Just enough Cards available on coloured board system (heijunka box) - Inventory
• factory floor Bin empty – move to store
• store moves full bin to factory floor + kanban card.
• PRODUCE AND DELIVER FINISHED GOODS JUST INTIME TO BE SOLD, FABRICATED PARTS JUST INTIME TO GO INTO SUB-ASSEMBLIES ANDPURCHASED PARTS JUST IN TIME TO BETRANSFORMED INTO FABRICATED PARTS.
• THE PURPOSE OF JIT IS PRODUCTION OF THESMALLEST POSSIBLE QUANTITY AT THE LATESTPOSSIBLE TIME USING A MINIMUM OF RESOURCESAND ELIMINATION OF WASTE IN THEMANUFACTURING PROCESS.
• THE OBJECTIVE OF JIT IS THE CREATION OFSMOOTH AND RAPID FLOW OF ALL PRODUCTSFROM THE TIME THE RAW MATERIAL ISPURCHASED TO THE TIME THE FINAL PRODUCT ISSHIPPED TO THE CUSTOMERS WITH ZERODEFECTS.
• JUST IN TIME IS A PHILOSOPHY OF ORGANISINGWORK WITH THE ULTIMATE AIM OF INCREASINGPRODUCTIVITY AND FLEXIBILITY THROUGHELIMINATION OF WASTE AND CONSEQUENTIMPROVEMENT IN QUALITY.
• planned elimination of all waste: "any activity that does not add value to the good or service in the eyes of the consumer."
• continuous improvement of productivity • have only the required inventory when needed; • to improve quality to zero defects; • to reduce lead times by reducing setup times,
queue lengths, and lot sizes; • to eliminate all forms of uncertainty• accomplish these activities at minimum cost.
• Objective▫ Defect should not get generated in the system▫ If by any chance they do get generated, they should not pass
down to the customer• Methodology
▫ Identifying vendors to be audited▫ Carrying out the Audits & deciding Countermeasures with time-
frames.▫ Verifying Countermeasures & monitor Quality performance.▫ Taking up with vendor for further improvement.
• Vendor identification▫ Component Class – A Category, Vital▫ Vendor ISO Certification Status & last Audit rating▫ Warranty & Quality ratings▫ Chronic problems with the vendor.
• Teams comprising members of supply chain, product engineering, quality, cost mgmt dept., supplier, supplier’s collaborator visit the supplier’s factory for 2-3 day cost workshop and brainstorm together.
• At the end of the session, cost reduction ideas are selected and action points frozen.
• These ideas are fed into the database and monitored by top management.
• Joint scheme made involving Bank, Supplier and Buyer
• Pre-shipment working capital made available to suppliers (specially small suppliers) at better rates.
• Scheme gives banks high comfort without recourse to Buyer
• Reduced cost of funds for suppliers by 40 to 50%• Program helps in streamlining suppliers' cash flow• MUL: Total savings Rs 4 Crore, achieved across 31 suppliers, availing about Rs 120 Crore in Working Capital limit
• Monthly Scheduling - Traditional system of scheduling. Vendors given orders for monthly requirement. No date specified for delivery
• Advanced Shared scheduling system
• Daily Instruction (DI) System - Vendors given firm fortnightly requirement and daily production plan. Date of delivery specified.
• Electronic Shared Scheduling System - Vendors given daily production plan. Date and time of delivery specified
• Supply schedule generated and communicated electronically and automatically to all vendors each day for next day’s supplies, every two hours for supplies through the day.
• Supply timings spaced out equally to maintain uniform flow.
• Bar Code based document processing to minimize document handling cost and time
• Reduced Inventory• Better Planning for Vendors• Reduced Manpower• Reduced Vendor Personnel• Fewer Production Disruptions• Space Saving• Improved Quality• Reduction in Inventory Variance• Near Zero Obsolescence• Agility – Improved Responsiveness to Market
Fluctuations• Better Distribution of Business for Common Parts
• Old system - One invoice per component. Manual document entry.
• New system -One invoice for multiple components. Automated data updation in the system. Stock receipt documents generation automated
• Benefits of the new system▫ Ease of document generation by vendor▫ Reduce no of invoices in the system▫ Reducing total time taken at entry gate▫ Paper movement minimized▫ Instantaneous receipt acknowledgement