Table Of ContentD
Supply Chain Management / Logistics
r
eK
Presenting an alternate approach to supply chain management, Lean Supply Chain ce
kr
Management Essentials: A Framework for Materials Managers explains why the traditional sb
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materials planning environment, typically embodied by an Enterprise Resource Planning (ERP) ar
g
system, is an ineffective support system for a company that wants to adopt Lean practices.
e
It begins by defining supply chain management basics, including roles, objectives, and
responsibilities from a traditional framework. Next, it describes Lean basics and explores the
conflicts between Lean and the traditional framework.
L
The book focuses on the materials management aspects of Lean, such as leveling work into the
e
value stream, heijunka scheduling, standard work, and the concept of intervals, including Every a
n
Part Every Interval (EPEI). By combining traditional materials management tools, such as Sales
and Operations Planning (S&OP), with Lean manufacturing approaches and applying them to S
different manufacturing environments, the authors clarify the logic behind why you are doing u
what you’re doing with Lean components and how they fit together as a system. Specifically, they p
p
explain how to:
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• Determine which leveling strategy to use to smooth production
C
• Calculate interval to determine lot sizes in various production environments
• Apply Lean to purchasing, warehouse, and logistics areas h
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• Use your value stream map for green initiatives and risk management
i
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• Replace capacity planning and shop floor control with visual factory, operator balance
charts, EPEI, and plan for every part M
a
Illustrating why balancing demand and capacity is better than trying to balance supply and
n
demand, the book includes a definitive chart that matches Lean tools to the planning and control
a
charts that have served as the model for ERP systems. It integrates the principles learned from
g
Toyota’s fifty-plus-year journey with Lean principles to provide the up-to-date understanding e
m
required to approach the application of Lean to your supply chain with a methodology that
allows for experimentation, learning, and continuous improvement. e
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K11892
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ISBN: 978-1-4398-4082-5
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9 781439 840825
www.productivitypress.com
K11892 cvr mech.indd 1 2/15/11 1:23 PM
Lean Supply Chain
Management Essentials
A Framework for Materials Managers
Lean Supply Chain
Management Essentials
A Framework for Materials Managers
Bill Kerber and Brian J. Dreckshage
CRC Press
Taylor & Francis Group
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Boca Raton, FL 33487-2742
© 2011 by Taylor and Francis Group, LLC
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To my wife, Joan—the one and only true love of my life.
Bill
To three people who have helped me over the years:
My wonderful wife, Suzanne, who has enriched my life, Art Lundgren, who
started me on my Lean journey, and to my good friend, Bill Kerber, who got
me involved with supply chain management and who always made me laugh.
Brian
Contents
IntroductIon xiii
chapter 1 Lean BasIcs 1
Materials Management 1
Traditional Planning and Control Framework 2
Enterprise Resource Planning (ERP) 2
Problems with ERP in Make-to-Order Environments 4
What Is at Issue? 4
Five Lean Principles 6
Specify What Creates Value from the Customer’s Perspective 7
Identify All Steps across the Whole Value Stream 7
Make Those Actions That Create Value Flow 7
Only Make What Is Pulled by the Customer Just in Time 7
Strive for Perfection by Continually Removing Successive Layers of Waste 7
Lean Focuses on Three Major Areas of Waste 9
House of Toyota Framework 9
House of Toyota: Operational Stability 10
House of Toyota: Just in Time 11
House of Toyota: Jidoka 12
House of Toyota: Goals 12
House of Toyota: Improvement and Respect 13
Lean: Additional Considerations 14
A Toyota Leader’s View of the Toyota Production System 15
Technical 16
Management 16
Philosophy/Basic Thinking 17
Planning and Control Hierarchy 17
Lean Planning and Control Chart 18
Leveling Production 20
Pull Systems 21
Flow 21
Interval as Lot Size 22
vii
viii Contents
chapter 2 executIve s&op, ForecastIng, and customer
reLatIonshIps 23
Executive Sales and Operations Planning 23
Role of Executive S&OP in Lean 23
Lean Manufacturing 24
Executive S&OP 24
What Is Executive S&OP? 24
Executive S&OP Focus 25
Executive S&OP Process 26
Product Families 28
Aligning Families and Resources 29
Takt Time and Executive S&OP 30
What Does Takt Time Do? 31
Forecasting 31
Forecasting Perspective 32
Forecasting Basics 32
Demand Patterns 33
Dependent vs. Independent Demand 33
What Should Be Forecast? 33
General Methods of Forecasting 33
Qualitative Techniques 34
Quantitative Techniques 34
Extrinsic Techniques 35
Pyramid Forecasting 35
Forecasting as a Process 36
Ways to a Better Forecast 37
An Alternative to Forecasting: Supplier Partnerships 37
Developing Suppliers as Partners 38
Partners vs. Vendors 38
chapter 3 LeveLIng and heIjunka 41
Leveling Value Streams 41
Mix and Volume Variability Definitions 43
Buffer with Finished Goods Inventory (a la TPS): Make to Stock 43
Stock Amount 43
Bill of Materials Shape Helps Dictate Strategy 44
How Lean Fits In: Make to Stock 45
Leveling Production Mix vs. Sales Mix: Heijunka Scheduling 46
Leveling Mix 47
Leveling Mix in a High-Product-Mix Environment 48
Buffer Demand Variability with Lead Time (Backlog): Make to Order 52
BOM Shape 52
How Lean Fits In 53
Managing Backlog 53
Chase 54
Takt Time and Chase 55
Hybrid 56
BOM Shape 56
How Lean Fits In: Postponement 57
MPS and Heijunka 57
Master Production Schedule 57
The Master Schedule 58
Contents ix
Heijunka 59
Work Like the Tortoise, Not the Hare 59
Concluding Observations 62
chapter 4 dependent demand materIaLs 65
Benefits of Creating Flow 66
Batch Manufacturing 67
Lean Process Flow 67
Operator Balance Chart 69
Batch Flow 71
One-Piece Flow 72
First-in–First-Out Flow 73
Typical FIFO Lane Rules 74
Material Planning 74
Material Planning Horizons 74
Long-Term Planning 75
Short-Term Planning 76
Execution 81
Mix Issues 82
chapter 5 capacIty management and shop FLoor controL 83
Issues with Traditional Capacity Planning 87
Capacity Planning in Lean 88
Value Stream Loops 89
Capacity and Pull 93
Standardized Work in Process 99
Shop Floor Control 100
Heijunka, Flow, and Visual Control as Shop Floor Control 102
Staffing and Takt Time 104
Operator Balance Chart 105
chapter 6 Inventory management 107
Traditional Inventory Management 108
The Importance of Inventory Management: Customer Satisfaction and
Company Financials 108
Concepts of Traditional Inventory Management 109
Order Quantity 112
When to Order 112
Lean Inventory Management 114
Inventory as Waste 114
Inventory Management in Lean 115
Visual Control 115
Approaches to Reducing Inventories 116
Supermarket Sizing as a Way to Reduce Inventory 117
Kanban Sizing 118
Constant Quantity, Nonconstant Cycle (Timing) 118
Constant Cycle, Nonconstant Quantity 118
Supermarket Sizing 119
WIP Inventory: FIFO Management 119
Reducing Pipeline Inventory: Kanban—Visual Card 120
Inventory Reduction through Reducing Lot Sizes 121
Point of Sale Data 123
