General Principles of Intellectual Property: Concepts of Intellectual Proper...
Every Product Every Cycle Across the Supply Chain
1. Lean Enterprise Academy www.leanuk.org
David Brunt 5th June 2007
Lean Enterprise Academy
Supply Chain Forum
Every Product Every Cycle
Across the Supply Chain
2. Lean Enterprise Academy www.leanuk.org
Every Product Every Cycle
Across the Supply Chain
Seeing the Whole Extended Value
Stream
Purpose
To help you understand the difference between
batch and flow logic
To understand the process of value stream
mapping across the supply chain
Introduce “Every Product Every Cycle” in a
hands-on manner across the supply chain
Develop your ability to see the flow
3. Lean Enterprise Academy www.leanuk.org
Objectives of Mapping Extended
Value Streams
Seeing the Whole Extended Value Stream
Raise consciousness in every firm & function touching the
value stream of the enormous waste of time, effort &
movement
Typical current state 9 out of 10 steps & 99% of elapsed time are
wasted
Raise consciousness in every firm & function of the effect of its
actions on every other firm & function touching the value
stream
Learn how a value stream team with representatives from
every firm can envision a series of Future States & an Ideal
State for their shared value stream
Learn how the team can progressively implement:
A Future State 1 in which smooth, levelled pull & flow are
introduced within every facility touching the value stream
A Future State 2 in which smooth, levelled pull & frequent
replenishment loops are introduced between every facility touching
the value stream (eliminating warehousing & cross docking in the
process)
An Ideal State (providing a North Star for collectively steering
towards the perfect value stream with zero waste) by compressing
the value stream & introducing right-sized technologies
Learn how value stream teams can share costs & gains to
create win-win-win outcomes for every value stream
participant
4. Lean Enterprise Academy www.leanuk.org
Agenda
Introduction
Lean Thinking & starting the
project
Mapping the flows
Deciding what to map
Every Product Every Cycle
Manufacturing
Warehousing
Developing the Future State
5. Lean Enterprise Academy www.leanuk.org
Lean Thinking
A Refresher
Specify what creates value from
the customers perspective
Identify all steps across the
whole value stream
Make those actions that create
value flow
Only make what is pulled by the
customer just-in-time
Strive for perfection by
continually removing successive
layers of waste
6. Lean Enterprise Academy www.leanuk.org
The Essence of Lean
Thinking
Where is the time in your value stream?
e.g. A U.K. customer has to wait on average
48 days for their custom-built vehicle to
arrive
It takes under 30 hours to produce in the
factory!!!
“All we are doing is looking at the time line
- from the moment the customer gives us
an order to the point where we collect the
cash. And we are reducing that time line by
removing the non-value-added wastes”
Ohno (1988-ix)
7. Lean Enterprise Academy www.leanuk.org
Value Stream Improvement
& Process Improvement
Company 1 Company 2 Company 3
CUSTOMER
Raw
Material
Finished
Product
Necessary but non value adding
35%
Value adding
5%
Non value adding
60%
VALUE STREAM: All the steps, VA & NVA, required to bring the
product from raw material to customer
8. Lean Enterprise Academy www.leanuk.org
Value Stream Improvement
& Process Improvement
Company 1 Company 2 Company 3
CUSTOMER
Raw
Material
Finished
Product
PROCESS PROCESS PROCESS
Necessary but non value adding
35%
Value adding
5%
Non value adding
60%
Focus of “traditional”
efficiency improvements
VALUE STREAM: All the steps, VA & NVA, required to bring the
product from raw material to customer
9. Lean Enterprise Academy www.leanuk.org
Value Stream Improvement
& Process Improvement
Company 1 Company 2 Company 3
CUSTOMER
Raw
Material
Finished
Product
PROCESS PROCESS PROCESS
Necessary but non value adding
35%
Value adding
5%
Non value adding
60%
Focus of LEAN
improvement
VALUE STREAM: All the steps, VA & NVA, required to bring the
product from raw material to customer
10. Lean Enterprise Academy www.leanuk.org
Lean Enterprise Academy
Supply Chain Forum
“Seeing the Whole”
Methodology
11. Lean Enterprise Academy www.leanuk.org
Objectives of Mapping Extended
Value Streams
Seeing the Whole Extended Value Stream
Raise consciousness in every firm & function touching the
value stream of the enormous waste of time, effort &
movement
Typical current state 9 out of 10 steps & 99% of elapsed time are
wasted
Raise consciousness in every firm & function of the effect of its
actions on every other firm & function touching the value
stream
Learn how a value stream team with representatives from
every firm can envision a series of Future States & an Ideal
State for their shared value stream
Learn how the team can progressively implement:
A Future State 1 in which smooth, levelled pull & flow are
introduced within every facility touching the value stream
A Future State 2 in which smooth, levelled pull & frequent
replenishment loops are introduced between every facility touching
the value stream (eliminating warehousing & cross docking in the
process)
An Ideal State (providing a North Star for collectively steering
towards the perfect value stream with zero waste) by compressing
the value stream & introducing right-sized technologies
Learn how value stream teams can share costs & gains to
create win-win-win outcomes for every value stream
participant
12. Lean Enterprise Academy www.leanuk.org
Toyota Production System
Jidoka
-Andon
-Poka-Yoke
-Visual control
-5S, etc.
Just-in-time
-Flow production
-Takt time
-Pull system
Customer service
Continuous
Improvement
Through
People
Lead TimeCostQuality
Heijunka Standardized Work Kaizen
Equipment Stability
Goal: Highest Quality, Lowest Cost, Shortest Lead Time
Purpose
13. Lean Enterprise Academy www.leanuk.org
Step 1: Select a Team from
Across the Chain
Michigan
Steel
Sales
Manager
Gamma
Stampers
Value
Stream
Manager
Beta
Wipers
Plant
Manager
Product
Line
Manager
Alpha
Motors
Head of
Supplier
Development
(Team Leader)
One or two people from each organisation
14. Lean Enterprise Academy www.leanuk.org
Contact Lens Example
Manufacturing
Plant
Plant
Manager
Lean
Manager
European
Distribution
Centre
Distribution
Manager
Lean
Manager
Retailer
Head Office
Project
Manager
Category
Buyer
Retailer
High Street
Branch
Manager
Optician
Planning
Manufacturing
Outbound
Logistics
Goods In
Inventory Mgmt
Order Processing
Pick/Pack/
Ship
Ordering
Promotions
Ordering
Delivery
Consumption
15. Lean Enterprise Academy www.leanuk.org
Workshop
Discuss who you would want to be
on the team that maps the supply
chain?
What skills/attributes do they
need?
You have 15 minutes
16. Lean Enterprise Academy www.leanuk.org
Who Should be
on the Team?
Responsibility for part or all of supply chain
activity
People who can take a view beyond their
functional silo
People who are sufficiently senior and have
sufficient authority & respect to drive through
changes across functional boundaries
People who can take a strategic perspective
People who have a ‘willingness to learn ’
The people who are going to do the improving
– do the mapping
17. Lean Enterprise Academy www.leanuk.org
Alpha Motors
Platform A
Apex
Wheels
Beta wipers
Epsilon
Fuel Pumps
Cosmic
Brakes
Eclipse
Engine
Computers
Gamma
Stampers
Ampersand
Magnets
Utopia
Castings
Michigan
Steel
Odyssey
Fasteners
Smith Heat
Treatment
Step 2:
Select a Key Value Stream for
the Pilot Improvement Project
The companies in
the target value
stream
The specific
product or
product family
for analysis
18. Lean Enterprise Academy www.leanuk.org
Glenday Sieve & Product
Family Analysis
Process Steps & Equipment
LH Steering Bracket
RH Steering Bracket
Instrument
Panel Brace
Seat
Rail
Bumper
Brackets
Electronic Test
Fixtures
Assy
Robot Weld Flash Remove Paint Manual AssySpot Weld
X X XX
X X XX
XXX X
XX
XXX
Products
BLUES
95%
6%50%
Cumulative % Product RangeCumulative % of Sales
Last 1%
19. Lean Enterprise Academy www.leanuk.org
The Glenday Sieve
BLUES
95%
50%
Cumulative % Product RangeCumulative % of Sales
Last 1%
20. Lean Enterprise Academy www.leanuk.org
The Glenday Sieve: Greens
BLUES
95%
6%50%
Cumulative % Product RangeCumulative % of Sales
Last 1%
Illustrative Example
Develop a fixed sequence for the Green
Stream
Make the Greens FLOW
Value stream map these to unravel the
spaghetti pathways
Results in shorter throughput times &
continuous flow on the greens
21. Lean Enterprise Academy www.leanuk.org
The Glenday Sieve: Yellows
BLUES
50%95%
6%50%
Cumulative % Product RangeCumulative % of Sales
Last 1%
Illustrative Example
Target for understanding better
Move into green stream as capacity
increases
Remove causes of variability where
possible
22. Lean Enterprise Academy www.leanuk.org
The Glenday Sieve: Blues
BLUES
50%95%
6%50%
Cumulative % Product RangeCumulative % of Sales
Last 1%
Illustrative Example
“Blue” products
non-value adding complexity
= “institutional waste”
23. Lean Enterprise Academy www.leanuk.org
The Glenday Sieve: Reds
BLUES
50%95%
6%50%
Cumulative % Product RangeCumulative % of Sales
70%Last 1%
Illustrative Example
Typically 30% of the product range but
just 1% of sales
24. Lean Enterprise Academy www.leanuk.org
Lisbon
Birmingh
am
Mila
n
Rome
Stockhol
m
Helsinki
Vienn
a
Manches
ter
Warsaw
Madrid
Bas
el
2005 European Daily Volume
over 10,000 packages on 24/48 hrs
delivery
Os
lo
Athens
Pari
s
Marseille
Bruss
els
Osnabrüc
k
Customer Distribution Chart
25. Lean Enterprise Academy www.leanuk.org
Step 3: Data Collection
Go and see ----- GEMBA
All the team ---- Walk all of the chain
Record all the steps in the process & the
time taken for each – Process Activity
Map
Classify each step as Value Adding (VA)
or Non–Value Adding (NVA)
It may seem time consuming – but it is
invaluable
Use the data collected to construct a
Current State map for each facility
26. Lean Enterprise Academy www.leanuk.org
Steel mill
Stamping
Company
Wiper
Assembly
Company
Car
Assembly
Car
Distributor
Current State Map
For the Complete Value Stream
27. Lean Enterprise Academy www.leanuk.org
Lean Consumption & the
Supply Chain
Effective supply chain management must start with the customer
We now understand that Production (including design and supplier
management) is a process.
A series of actions manufacturers must perform in the proper
sequence to create value for customers
Consumption is also a process
A series of actions consumers must perform in the proper
sequence to obtain the value they seek
Provision is a third process
The actions that someone must perform between the factory and
the customer to achieve the objectives of both parties
There is a yawning gap between
Consumption & Provision!
28. Lean Enterprise Academy www.leanuk.org
Principles of Lean
Consumption
Solve the consumers problem
completely
Don’t waste the consumer’s (or
the provider’s) time
Provide exactly what the
customer wants
Deliver it where it is wanted
Supply it when it is wanted
Continually aggregate
solutions to reduce the
consumers time and hassle
29. Contact Lens Consumption & ProvisionContact Lens Consumption & Provision
ConsumerProvider
Value Creating Time
Wasted Time
Day 1 Day 21Day 2
1.Book
Appointment
2.Arrive/Greet 4.Wait for
Optometrist
5.Opto-
metrist check
1.Answer
phone
4.Optometris
t sight check
5.Handover
6.Contact
lens check
7.Fit lens
11.Fitting
advice
12.Arrange
next
appointment
8.Wait for
Service
Advisor
5 minutes
5 minutes 5 minutes
2.Pre-
examination
10 minutes 30 minutes
20 minutes
10 minutes
15 minutes 10 minutes
3.Pre-
examination
3.Hand over to
Optometrist
6.Wait for
Contact Lens
Optician
7.Contact
Lens check
8.Do
paperwork
9.Check lens
10.Handover
9.Contact
Lens advice
10.
Return
home
12.Wait for
Contact Lens
Optician
13.Receive
aftercare
16.Pay
5 minutes 30 minutes 10 minutes
14.Wait for
Contact Lens
Optician
15.Contact
Lens check
14.Aftercare 16.Customer
service
17.Organise
payment
18.Lens
received
19.Lens re-
packed
5 minutes 10 minutes 30 minutes 15 minutes
13.Receive
customer
11.Arrive/Greet
15.Handover
17.
Return
home
20.Lens
mailed to
customer
Day 24
18.
Receive
lens
Box Score:
Customer Time = 160 min
Provider Time = 115 min
Value Creating Time = 80 min
2 Trips to Store +
Fulfiment = 50% RFTOT
30 minutes 30 minutes
Handovers
Stock
Control
Rework
(Questions)
Fulfilment
Standard
Work
Level
Orders
30. Lean Enterprise Academy www.leanuk.org
Objectives of Mapping Extended
Value Streams
Seeing the Whole Extended Value Stream
Raise consciousness in every firm & function touching the
value stream of the enormous waste of time, effort &
movement
Typical current state 9 out of 10 steps & 99% of elapsed time are
wasted
Raise consciousness in every firm & function of the effect of its
actions on every other firm & function touching the value
stream
Learn how a value stream team with representatives from
every firm can envision a series of Future States & an Ideal
State for their shared value stream
Learn how the team can progressively implement:
A Future State 1 in which smooth, levelled pull & flow are
introduced within every facility touching the value stream
A Future State 2 in which smooth, levelled pull & frequent
replenishment loops are introduced between every facility touching
the value stream (eliminating warehousing & cross docking in the
process)
An Ideal State (providing a North Star for collectively steering
towards the perfect value stream with zero waste) by compressing
the value stream & introducing right-sized technologies
Learn how value stream teams can share costs & gains to
create win-win-win outcomes for every value stream
participant
31. Lean Enterprise Academy www.leanuk.org
Demand Amplification
The Forrester Effect
Small changes in end-user
demand become amplified as
they are passed upstream
along the chain
32. Lean Enterprise Academy www.leanuk.org
Demand Amplification
The Bull-Whip Effect
Customer Demand,
Retailer Orders
Distributor Orders
Factory Production
Time
Demand
[units]
40% increase
10% increase
36. Lean Enterprise Academy www.leanuk.org
Constructing a Demand
Amplification Map
Major decision areas
Customer forecast
Your business plan - volumes
Your forecast/schedule
Your weekly plan
Final assembly
Feeder operations
Actual production numbers
Supplier forecast
Supplier orders
Actual deliveries
Produce line charts
Date
37. Lean Enterprise Academy www.leanuk.org
Current State Summary
Quality & Delivery
Demand Amplification
Consumption Map
Geography etc.
Purpose Select Product FamilySupply Chain Network & VS
Selection
Alpha Motors
Platform A
Apex
Wheels
Beta wipers
Epsilon
Fuel Pumps
Cosmic
Brakes
Eclipse
Engine
Computers
Gamma
Stampers
Ampersand
Magnets
Utopia
Castings
Michigan
Steel
Odyssey
Fasteners
Smith Heat
Treatment
Current State by Facility
PRODN.
CONTROL
Weekl
y
Sched
ule
Prod’n
Plan
Foreca
st
Daily
Call In
Foreca
st
Weekl
y Call
In
Weekly
Suppliers Customer
Mon.
+ Wed.
PRESS ASSEMBLY SHIP
I I
C/T = 30 sec.
C/O = 30 min.
3 shifts
2% Scrap
C/T = 90 sec.
C/O = 5 min.
2 shifts
3% Scrap
600 pieces
2 Day
300 pieces
1 Day
30 sec
2 days
90 sec
1 day
Total lead time 3 days
VA time 2 mins
LH Steering Bracket
RH Steering Bracket
Instrument
Panel Brace
Seat
Rail
Bumper
Brackets
X X XX
X X XX
XXX X
XX
XXX
Products
BLUES
95%
50%
Cumulative % Product RangeCumulative % of Sales
Last 1%
Supply Chain Current State
38. Lean Enterprise Academy www.leanuk.org
Workshop
For each of your firms:
Describe your supply chain network
Which product family would you select
Has anyone in your organisation
created:
A Consumption Map?
Quantified Demand Amplification
What is the Quality & Delivery
performance of the chain?
You have 15 minutes
39. Lean Enterprise Academy www.leanuk.org
Objectives of Mapping Extended
Value Streams
Seeing the Whole Extended Value Stream
Raise consciousness in every firm & function touching the
value stream of the enormous waste of time, effort &
movement
Typical current state 9 out of 10 steps & 99% of elapsed time are
wasted
Raise consciousness in every firm & function of the effect of its
actions on every other firm & function touching the value
stream
Learn how a value stream team with representatives from
every firm can envision a series of Future States & an Ideal
State for their shared value stream
Learn how the team can progressively implement:
A Future State 1 in which smooth, levelled pull & flow are
introduced within every facility touching the value stream
A Future State 2 in which smooth, levelled pull & frequent
replenishment loops are introduced between every facility touching
the value stream (eliminating warehousing & cross docking in the
process)
An Ideal State (providing a North Star for collectively steering
towards the perfect value stream with zero waste) by compressing
the value stream & introducing right-sized technologies
Learn how value stream teams can share costs & gains to
create win-win-win outcomes for every value stream
participant
40. Lean Enterprise Academy www.leanuk.org
Questions for
Creating Level Pull
Matching production system capability to demand
1. Which products should you hold in finished-goods inventory &
which should you produce only to a confirmed order?
2. How much of each product should you hold in finished goods?
3. How will you organise & control the finished goods store?
Creating the Pacemaker
4. Where will you schedule the value stream?
5. How will you level production at the pacemaker?
6. How will you convey demand to the pacemaker to create pull?
Controlling production upstream
7. How will you mange information & material flow upstream from
the pacemaker?
8. How will you size your markets & trigger withdrawal pull?
9. How will you control batch processes upstream from the market?
Expanding the system
10. How will you expand your level pull system across the facility?
Sustaining & Improving
11. How will you sustain your level pull system?
12. How will you improve your level pull system?
41. Lean Enterprise Academy www.leanuk.org
Heijunka box
Forecast
1. Replenishment Pull System
Concept
Key Points
Each process has a supermarket which holds the product it produces
The easiest of all pull systems to start with to implement
Each process replenishes the market in front of the process
Pace and order of replenishment at the pacemaker can be controlled
by a Heijunka box (discussed later in more detail)
Scheduling needs to calculate average demand quantity, the right mix
for the line to produce and continually watch inventory to reconcile
what is actually taken away. (Caution: If you have the line produce
exactly what is taken away you may wind up with an “un-level pull”
system)
Customer
Production
Control
42. Lean Enterprise Academy www.leanuk.org
2. Sequential Pull System Concept
Heijunka Box
Order
Sequence
List
Supplier
Parts
Key Points
1. The sequence of production is dependant upon actual orders from
the customer
2. Production instruction is sent to an upstream process in the value
stream, often in the form of a “sequence list" or instruction kanban
3. Each following process normally produces in the sequence of the
item delivered
FIFO of individual products must be maintained throughout
Without WIP inventory to act as a buffer rigid adherence to
lead-time and on-time delivery of supplier components
becomes absolutely critical
Customer
F I F O F I F O
Production
Control
43. Lean Enterprise Academy www.leanuk.org
Heijunka box
Order
Scheduling
3. Mixed pull system
concept
Key Points
Both Supermarket replenishment and Sequential type pull systems
may be used concurrently. Such a mixed system works well when and
a small number (perhaps 20%) of parts comprise the majority
(perhaps 80%) of daily production volume, and there are many low
runners that are required at much less frequency
Demand segmentation analysis is required to break products up into
high runners, medium, low, and infrequent (perhaps special order
or service parts) orders
Two schedule points (i.e. pacemaker) exist which can cause
problems which I will demonstrate later in the simulation game
Customer
F I F O F I F O
44. Lean Enterprise Academy www.leanuk.org
How will you level production
mix at the pacemaker?
Key concept
Leveling concept & SMED
Leveling options
45. Lean Enterprise Academy www.leanuk.org
Level Production Mix
Concept & Effect
Days 0 10 20 30
X Y Z
1,200 per lot
"Large batch"
Case - 1
30
40 per lot
0 10 20
X
Z
Y
"Small batch"
Case - 3
Repeat
schedule
0 10 20 30
X Y Z
400 per lot
"Medium batch"
Case - 2
Repeat
schedule
Illustrative example
3 lots of 1,200
3 changeovers
10 day build
10 day avg. inventory
10 to 21 day lead time
9 lots of 400
9 cha
3.3 day build
90 lots of 40
90 changeovers
3 items per day build (EPED)
1 day avg. inventory
1 day lead time
ngeovers
3.3 day avg. inventory
3.3 to 6.6 day lead time
46. Lean Enterprise Academy www.leanuk.org
Change Over Reduction
(SMED)
= External
= Internal
10 minutes
E I
6. Standardize and improve the new
changeover procedure over time
E I10 minutes5. Reduce the external elements
E I 20 minutes20 minutes4. Reduce and eliminate the internal
elements, adjustments, etc.
E I 40 minutes20 minutes3. Strip out external elements and pull
them forward before the machine
stops
2. Identify internal vs. external elements
and calculate individual time
I
10
I
10
I
5
I
5
Step Pre-work
During machine
shutdown
60 Minutes1. Measure total changeover time
20 minutes
10 minutes
E
4
I
10
E
3
E
3
E
7
E
3
E
I
47. Lean Enterprise Academy www.leanuk.org
Leveling Options – Two
Scenarios
1. Batch Machines:
Set number of
changeovers and
determine best EPEI
interval
2. Flexible Assembly:
Calculate pitch
Intervals
35
30
Machine 1 Machine 2
40 hours
Allowable
C/O Time
Run
Time
Time available ÷ Pitch = Intervals
450 min. ÷ 9 min. = 50 intervals
48. Lean Enterprise Academy www.leanuk.org
Determine Time Available for
non-production Work
(1 Machine)
Average
scrap rate
Average
changeover
time
Required run
time per day
Cycle time
Per piece
Average
demand
per day*
(pieces)
Part #
703 min.1,000
1.5%55 min.339 min.40 sec.50015489
1.3%55 min.228 min.45 sec.30015488
1.5%55 min.136 min.40 sec.20015487
Total 1-shift production time available (net breaks and
lunch)
450 min.
Number of shifts x 2
Time available for production on 1 machine 1 day = 900 min.
Time required per day to meet average demand* - 703 min.
Net time available for set up and changeovers per day = 197 min.
* Taken from above chart on basic machine data
*Your situation may require calculating demand per week or month as required
49. Lean Enterprise Academy www.leanuk.org
Set the Number of Change
Over Events per Interval
30 min.-Average downtime (not including set-up and changeover times)
197 min.Non-production time available
3.04=Possible number of changeovers per day
55 min.÷Average changeover time
167 min.=Time available for changeover work on 1 machine 1 day
With 3 part numbers and 3 possible changeovers per day -
Every part every day (EPED) is a good interval to start with in this instance
50. Lean Enterprise Academy www.leanuk.org
Leveling Demand with
Respect to Pitch Intervals
50 intervals=9 min.÷450 min.
Possible intervals (on a
Heijunka Box)=Pitch÷Time available
Pitch (54” x 10 items) = 540 seconds
(9 minutes)
Assume in this example:
60% of production equals high-runner A items
(of which there are 5).
20% of production equals medium-runner B items
(of which there are 5).
20% of production equals low-runner C items
(of which there are 15).
51. Lean Enterprise Academy www.leanuk.org
Leveling Demand with Pitch
Intervals (Continued)
Step 1 – Basic Level
90 min. / 100 items10 reserved for Cs=20%x50 intervals
90 min. / 100 items10 reserved for Bs=20%x50 intervals
270 min. / 300 items30 reserved for As=60%x50 intervals
Equivalent time &
quantity
Intervals per item=% of production mixxTotal interval
Assume average order quantity of 50 units the best you would
practically accomplish is making:
Each of the 5 A items in quantity of 60
(or every part every day)
2 of the 5 B items per shift in quantity of 50
(or every part every 2.5 days)
2 of the 15 C items per shift in quantity of 50
(or every part every 7.5 days)
52. Lean Enterprise Academy www.leanuk.org
Leveling Demand with Pitch
Intervals (Continued)
Step 2 – More Detailed Level (EPES)
6.6 pieces per C part number=15 Cs÷100
20 pieces per B part number=5 Bs÷100
60 pieces per A part number=5 As÷300
Intervals per product number=
Number of products
per category
÷Category
53. Lean Enterprise Academy www.leanuk.org
Objectives of Mapping Extended
Value Streams
Seeing the Whole Extended Value Stream
Raise consciousness in every firm & function touching the
value stream of the enormous waste of time, effort &
movement
Typical current state 9 out of 10 steps & 99% of elapsed time are
wasted
Raise consciousness in every firm & function of the effect of its
actions on every other firm & function touching the value
stream
Learn how a value stream team with representatives from
every firm can envision a series of Future States & an Ideal
State for their shared value stream
Learn how the team can progressively implement:
A Future State 1 in which smooth, levelled pull & flow are
introduced within every facility touching the value stream
A Future State 2 in which smooth, levelled pull & frequent
replenishment loops are introduced between every facility touching
the value stream (eliminating warehousing & cross docking in the
process)
An Ideal State (providing a North Star for collectively steering
towards the perfect value stream with zero waste) by compressing
the value stream & introducing right-sized technologies
Learn how value stream teams can share costs & gains to
create win-win-win outcomes for every value stream
participant
54. Lean Enterprise Academy www.leanuk.org
Future State 1
Flow & Pull within Plants
Create Cells
Level orders
Link through Pull
55. Lean Enterprise Academy www.leanuk.org
Impact of Internal Changes on
Whole Value Stream KPI’s
Current State Future State 1
Total Lead Time
44
days
23.9
days
Value
% of time
0.08% 0.16%
VA Steps as
% of total steps
12% 15%
Inventory
Turns
5 9
Quality
Screen
400 200
Delivery
Screen
8 8
Demand Amp’
Index
7 6
Product travel distance 5300 5300
56. Lean Enterprise Academy www.leanuk.org
Objectives of Mapping Extended
Value Streams
Seeing the Whole Extended Value Stream
Raise consciousness in every firm & function touching the
value stream of the enormous waste of time, effort &
movement
Typical current state 9 out of 10 steps & 99% of elapsed time are
wasted
Raise consciousness in every firm & function of the effect of its
actions on every other firm & function touching the value
stream
Learn how a value stream team with representatives from
every firm can envision a series of Future States & an Ideal
State for their shared value stream
Learn how the team can progressively implement:
A Future State 1 in which smooth, levelled pull & flow are
introduced within every facility touching the value stream
A Future State 2 in which smooth, levelled pull & frequent
replenishment loops are introduced between every facility touching
the value stream (eliminating warehousing & cross docking in the
process)
An Ideal State (providing a North Star for collectively steering
towards the perfect value stream with zero waste) by compressing
the value stream & introducing right-sized technologies
Learn how value stream teams can share costs & gains to
create win-win-win outcomes for every value stream
participant
57. Lean Enterprise Academy www.leanuk.org
What makes the Extended
Value Stream Lean?
Everyone in the entire VS should be aware of
the rate of end-customer demand
Very little inventory - & the inventory that
does exist is the right amount, in the right
place in the VS, for the right reasons
As few transport links as possible between the
steps in the production process
As little information processing as possible with
pure signal and no noise in the information
flows that remain
Shortest possible lead time
Changes introduced to smooth flow, eliminate
inventories /transport/lead-times should
involve the least possible or even zero cost
59. Amplification
F E D C B A
%
40
30
20
10
0
Quality & Delivery
ppm
2000
1500
1000
500
0
F E C A
%
10
5
0
Future State 2
Flow and Pull between Plants
AssemblyWipersStamping
Steel
Dist. Centre
16d
55m
39
8
Steps
Time
Levelled Pull
system between
plants
with Kanbans
Frequent
Milk round
logistics
F E D C B A
DELTA
STEEL
GAMMA
STAMPING BETA WIPERS ALPHA MOTORS
60. %
40
30
20
10
0
ppm
2000
1500
1000
500
0
Amplification Quality & Delivery
F E C A
%
10
5
0
Future State 2
Flow and Pull between Plants
F E D C B A
AssemblyWipersStamping
Steel
Dist. Centre
Simplify & straighten
order flows
Disconnect
MRP from
daily planning
61. Lean Enterprise Academy www.leanuk.org
Future State 2:
Value Stream KPI’s
Current
State
Future
State 1
Future
State 2
Ideal
State
Total Lead
Time
Value
% of time
VA Steps
%
Inventory
Turns
Quality
Screen
Delivery
Screen
Demand Amp’
Index
Product travel
distance
15.8
days
23.9
days
44
days
0.08%
12 %
5
400
8
0.6%
7
0.16%
15%
9
200
8
7
21%
14
50
3
5300 5300
5
4300
62. I. BASIC CONCEPT
JIT: RIGHT QUANTITY OF THE RIGHT PARTS AT THE RIGHT TIME
The ideal state of JIT physical distribution is where high frequency
replenishment is carried out at the speed determined by consumers
purchases
TMC
DIST
DLR
1pc/day
1pc/day
1pc/day
Parts
Supplier
New parts logistic concept: Target
Order
Taking
Inventory
Control
Storage
Pick-Check
Pack-Dely
Stock
Replenishment
Receiving
Binning
OEM
Dealer
Retail
Needs
Service
Needs
Stock
Policy
+
=
Small lot & frequent &
periodical due date ordering
Frequent
Planned
Delivery
Due Date
Diagrammed
Shipment
Small lot periodical
due date ordering
Desired State
Small lot frequent
receiving
Prioritisation of
receipt
P to P processing
Planned cyclic ops
Implementation of
PULL system
6 points of Toyota
storage technique
Enhanced
regularity control
Reserve location
control
Empty location
control
Small lot frequent
& staggered order
receipt
Irregularity check
& control
Planning order
separation
Diagrammed,
staggered high
frequency
operations based on
delivery diagram
Establishment of
small lot standard
batch cyclic ops
based on PULL
High frequency,
small lot staggered
delivery based on
delivery diagram
Consideration of
loading efficiency
Shortest & most
economic
transportation
Receiving Storage Order Taking Pick/Check/Pack Delivery
63. Lean Enterprise Academy www.leanuk.org
Objectives of Mapping Extended
Value Streams
Seeing the Whole Extended Value Stream
Raise consciousness in every firm & function touching the
value stream of the enormous waste of time, effort &
movement
Typical current state 9 out of 10 steps & 99% of elapsed time are
wasted
Raise consciousness in every firm & function of the effect of its
actions on every other firm & function touching the value
stream
Learn how a value stream team with representatives from
every firm can envision a series of Future States & an Ideal
State for their shared value stream
Learn how the team can progressively implement:
A Future State 1 in which smooth, levelled pull & flow are
introduced within every facility touching the value stream
A Future State 2 in which smooth, levelled pull & frequent
replenishment loops are introduced between every facility touching
the value stream (eliminating warehousing & cross docking in the
process)
An Ideal State (providing a North Star for collectively steering
towards the perfect value stream with zero waste) by compressing
the value stream & introducing right-sized technologies
Learn how value stream teams can share costs & gains to
create win-win-win outcomes for every value stream
participant
64. Lean Enterprise Academy www.leanuk.org
The Ideal State
So far we have been looking at how to improve
the process with existing assets, facilities &
systems
Dare to Dream
What would a really lean chain look like if we
were not constrained by existing assets, in
existing locations etc
What would be the gains?
Would it be worth fundamentally changing the
structure of the chain to avoid the on-going costs of a
sub-optimal process
It may not all be feasible – but it gives a North
Star towards which to aim
65. Lean Enterprise Academy www.leanuk.org
Compress the Value
Stream in Time & Space
Locate all manufacturing facilities
as close together as possible
Locate production as close as
possible to the consumer
If close location involves extra cost
– this should be weighed against
time savings
66. Ideal State
Value Stream Compression
Dist. Centre
3d
55m
30
8
Steps
Time
Amplification
F E D C B A
%
40
30
20
10
0
Quality & Delivery
ppm
2000
1500
1000
500
0
F E C A
%
10
5
0
F E D C B A
Assembly
ALPHA MOTORSSUPPLIER PARK
Wiper
Cell
Stamping
Cell
Suppliers
co-located
Flow &
Pull
Frequent
Water-spider
loops
Right sized
equipment
Capacity
proportional to
VS needs
67. Amplification
F E D C B A
%
40
30
20
10
0
Quality & Delivery
ppm
2000
1500
1000
500
0
F E C A
%
10
5
0
Ideal State
Value Stream Compression
Dist. Centre
3d
55m
30
8
Steps
Time
Assembly
ALPHA MOTORSSUPPLIER PARK
Wiper
Cell
Stamping
Cell
Steel
NEW JERSEY
Steel Service Centre
Alternative
closer
raw
material
supplier
F E D C B A
68. Amplification
F E D C B A
%
40
30
20
10
0
Quality & Delivery
ppm
2000
1500
1000
500
0
F E C A
%
10
5
0
Ideal State
Value Stream Compression
Dist. Centre
3d
55m
30
8
Steps
Time
Steel
NEW JERSEY
STEEL
Assembly
ALPHA MOTORSSUPPLIER PARK
Wiper
Cell
Stamping
Cell
F E D C B A
69. Lean Enterprise Academy www.leanuk.org
Ideal State:
Value Stream KPI’s
Current
State
Future
State 1
Future
State 2
Ideal
State
Total Lead
Time
Value
% of time
VA Steps
%
Inventory
Turns
Quality
Screen
Delivery
Screen
Demand Amp’
Index
Product travel
distance
2.8
days
15.8
days
23.9
days
44
days
0.08%
12 %
5
400
1.5%
8
0.6%
7
0.16%
15%
9
200
27%
8
7
21%
14
50
3
5300
79
2.5
5300
5
4300
1
1
525
70. Lean Enterprise Academy www.leanuk.org
The Ideal State
The next new product generation
may the time to introduce the Ideal
State
71. Lean Enterprise Academy www.leanuk.org
Summary
Supply Chain Ideal State
Future State by Facility
Quality & Delivery
Demand
Amplification
Consumption Map
Geography etc.
Purpose Select Product
Family
Supply Chain Network &
VS Selection
Alpha Motors
Platform A
Apex
Wheels
Beta wipers
Epsilon
Fuel Pumps
Cosmic
Brakes
Eclipse
Engine
Computers
Gamma
Stampers
Ampersand
Magnets
Utopia
Castings
Michigan
Steel
Odyssey
Fasteners
Smith Heat
Treatment
Current State by Facility
PRODN.
CONTROL
We
ekl
y
Sc
he
dul
e
Pro
d’n
Pla
n
For
eca
st
Dai
ly
Call
In
For
eca
st
We
ekl
y
Call
InWeekly
Suppliers Customer
Mon.
+ Wed.
PRESS ASSEMBLY SHIP
I I
C/T = 30 sec.
C/O = 30 min.
3 shifts
2% Scrap
C/T = 90 sec.
C/O = 5 min.
2 shifts
3% Scrap
600 pieces
2 Day
300 pieces
1 Day
30 sec
2 days
90 sec
1 day
Total lead time 3 days
VA time 2 mins
LH Steering
BracketRH Steering
BracketInstrument
Panel BraceSeat
RailBumper
Brackets
X X XX
X X XX
XXX X
XX
XXX
Products
BLUES
95%
50%
Cumulative % Product
Range
Cumulative % of
Sales
Last 1%
Supply Chain Current State
Supply Chain Future State Action Plan
72. Lean Enterprise Academy www.leanuk.org
David Brunt 5th June 2007
Lean Enterprise Academy
Supply Chain Forum
Every Product Every Cycle
Across the Supply Chain