1. Lean and Sustainable Supply Chains
Chapter 13
Lean and Sustainable Supply Chains

2. Learning Objectives
Describe how Green and Lean can complement each other.
Explain how a production pull system works.
Understand Toyota Production System concepts.
Summarize important attributes of a lean supply chain.
Analyze a supply chain process using value stream mapping.
Know the principles of supply chain design.

3. Lean Production
Lean production: an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods)
Lean Production also involves the elimination of waste in production effort
Lean Production also involves the timing of production resources (i.e., parts arrive at the next workstation “just in time”)
LO 1 3

4. Lean Production Continued
Value chain: each step in the supply chain should create value
If it does not create value, it should be removed
Customer value: something for which the customer is willing to pay
Waste: anything that does not add value from the customer’s perspective
LO 1

5. Lean Logic
Lean is based on the logic that nothing will be produced until it is needed
A sale pulls a replacement from the last position in the system
This triggers an order to the factory production line
Each upstream station then pulls from the next station further upstream
LO 1

6. Lean Production Pull System
LO 2

7. Features of Lean Production Management philosophy
“Pull” system through the plant
WHAT IT IS
Attacks waste
Exposes problems and bottlenecks
Achieves streamlined production
WHAT IT DOES
Employee participation
Industrial engineering/basics
Continuing improvement
Total quality control
Small lot sizes
WHAT IT REQUIRES
Stable environment
WHAT IT ASSUMES

8. The Toyota Production System (TPS)
Based on two philosophies
Elimination of waste
Respect for people
Rules of TPS
All work shall be highly specified as to content, sequence, timing, and outcome
Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses
The pathway for every product and service must be simple and direct
Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization
LO 3 5

9. Elimination of Waste
Waste from overproduction—producing more or faster than needed
Waste of waiting time—idleness, e.g., doctor’s office
Transportation waste—conveyors
Inventory waste
Processing waste—avoidable processing
Waste of motion—avoidable movements
Waste from product defects
LO 3 6

10. Elimination of Waste Focused factory networks Group technology
Quality at the source
JIT production
Uniform plant loading
Kanban production control system
Minimized setup times

11. Respect for People Lifetime employment for permanent positions
Maintain level payrolls even when business conditions deteriorate
Cooperative employee unions
Equitable distribution of bonuses
View workers as assets
Quality circles (Small Group Improvement Activities (SGIA))
LO 3

12. Lean Supply Chains
Value stream: the value-adding and non-value-adding activities required to design, order, and provide a product or service
Waste reduction: the optimization of the value-adding activities and the elimination of non-value-adding activities
LO 4

13. Components of a Lean Focused Supply Chain
Lean suppliers
Able to respond to changes
Lower prices
Higher quality
Lean procurement
Key is automation (e-procurement)
Suppliers must see into the customers’ operations and customers must see into their suppliers’ operation
Lean warehousing
Eliminate non-value-added steps and waste in storage process
LO 4

14. Components of a Lean Focused Supply Chain Continued
Lean logistics
Optimized mode selection and pooling orders
Combined multi-stop truckloads
Optimized routing
Cross docking
Import/export transportation processes
Backhaul minimization
Lean customers
Understand their business needs
Value speed and flexibility
Establish effective partnerships with suppliers
LO 4

15. Value Stream Mapping
Value stream mapping: a special type of flowcharting tool for development of lean processes
Used to visualize product flows through various processing steps
Need a full understanding of the business including production processes
LO 5

16. Manufacturing Process Map
LO 5

17. Value Stream Mapping Symbols
LO 5

18. Lean Supply Chain Design Principles
Lean layouts
Group technology
Quality at the source
JIT production
Lean production schedules
Uniform plant loading
Kanban production control system
Lean supply chains
Specialized plants—better control, less bureaucratic
Work with suppliers
Building a lean supply chain
LO 6

19. Lean Layouts
Plant layout designed to ensure balanced work flow with a minimum of WIP inventory
Preventive maintenance is emphasized to avoid downtime
Operators perform much of the maintenance
LO 6

20. Group Technology
Group technology: a philosophy in which similar parts/machines are grouped into families/cells
The processes required to make the parts are arranged in a manufacturing cell
Eliminated movement and queue time between operations, reduces inventory, and reduces employees
LO 6

21. Group Technology versus Departmental Specialty

22. Quality at the Source
Quality at the source: do it right the first time and if something goes wrong, stop the process immediately
Workers become their own inspectors
Limited use of QC departments
Workers are empowered to do their own maintenance
Quality before quantity
LO 6

23. JIT Production
JIT production: producing what is needed when needed and nothing more
Anything over the minimum is waste
Typically applied to repetitive manufacturing
Idea lot size is one
Vendors ship several times a day
JIT exposes problems otherwise hidden by inventory
LO 6

24. Inventory Hides Problems
LO 6

25. Lean Production Schedules
Level schedule: one that requires material pulled in a pattern uniform enough to allow production to respond to pull signals
Freeze windows: that period of time during which the schedule is fixed and no changes are possible
Backflush: where parts that go into each unit are periodically removed from inventory and accounted for paged on production
Uniform plant loading: smoothing the production flow to dampen the reaction waves that normally occur from schedule variations
LO 6

26. Plant Loading (heijunka)
Uniform
Plant Loading (heijunka)
Suppose we operate a production plant that produces a single product. The schedule of production for this product could be accomplished using either of the two plant loading schedules below.
Not uniform Jan. Units Feb. Units Mar. Units Total
1,200 3,500 4,300 9,000 or
Uniform Jan. Units Feb. Units Mar. Units Total
3,000 3,000 3,000 9,000
How does the uniform loading help save labor costs?

27. Kanban Production Control Systems
Kanban means “sign” or “instruction card” in Japanese—signaling system
Cards or containers are used
Make up the kanban pull system
Authority to produce comes from downstream
It is a form of information system
Production kanban—can be single card if move distance is short
Move (withdrawal, conveyance) kanban
LO 2

28. Kanban Production System
Objectives
Lead time reduction
Lot size reduction
Waste elimination
One of several tools of Lean Mfg.
Ineffective without others
Prerequisites must be met

29. Rules of Kanban Production System Withdraw only the quantity needed
Produce only the quantity given by kanban
Kanban is withdrawal/production authority
Move only good parts
Smooth and level production
Decrease number of cards to reduce inventory

30. Kanban Pull System Worker takes the first part A from a full container
Worker takes the withdrawal kanban from the container, and takes the card to the machine center storage area
In machine center, worker finds a container of part A
Worker removes the production kanban, and replaces it with the withdrawal kanban
This authorizes the movement of the container to the assembly line
The freed production kanban is placed on a rack by the machine center, which authorizes the production of another lot of material
A similar process is followed for part B
The cards on the rack become the dispatch list for the machine center
LO 2

31. CUTTING ANY CELL WAREHOUSE SUPPLIER CUSTOMER BOX UPPER/LOWER COMBO
P-KANBAN
STATION
W-KANBAN
STATION
SUPPLIER
W-KANBAN
STATION
CUTTING
P-KANBAN
STATION
ANY CELL
W-KANBAN
STATION
P-KANBAN
STATION
CUSTOMER
UPPER/LOWER
COMBO
BOX

32. Other Approaches
Kanban squares: marked spaces on the floor to identify where material should be stored
Container system: the container is used as a signal device
Colored golf balls: appropriate golf ball signals production
LO 2

33. Determining the Number of Kanbans Needed
Setting up a kanban system requires determining the number of kanbans cards (or containers) needed
Each container represents the minimum production lot size
An accurate estimate of the lead time required to produce a container is key to determining how many kanbans are required
LO 2 16

34. The Number of Kanban Card Sets
LO 2 17

35. Example
A switch assembly is assembled in batches of 4 units from an “upstream” assembly area and delivered in a special container to a “downstream” control-panel assembly operation
The control-panel assembly area requires 5 switch assemblies per hour
The switch assembly area can produce a container of switch assemblies in 2 hours
Safety stock has been set at 10% of needed inventory

36. Example: continued
Always round up!

37. Minimized Setup Time
Reductions in setup and changeover times are necessary to achieve a smooth flow
Kanban significantly reduces the setup cost
The organization will strive for a lot size of one
LO 2

38. Minimized Setup Time Consequences of long setup times?
Long manufacturing/service lead times
Increased cost
Reduced capacity
A requirement for small-lot-size, mixed-model production?
Practice more setups to reduce time/setup
Fixed production quantity—improves setup
SMED

39. Relationship between Lot Size and Setup Cost

40. Lean Supply Chains Specialized plants Work with suppliers
Small specialized plants rather than large vertically integrated manufacturing facilities
Can be constructed and operated cheaper
Work with suppliers
Important part of process
Share projections with suppliers
Link with suppliers online
LO 6

41. Building a Lean Supply Chain
Value must be defined jointly for each product family based on the customer’s perception
All firms along the value stream must make an adequate return on their investments
Firms must work together to eliminate waste so overall target cost and ROI targets are met
When cost targets are met, the firms will conduct new analyses to identify remaining waste and set new targets.
Every participating firm has the right to examine every activity relevant to the value stream as part of the joint search for waste
LO 6

42. Lean Services Organize problem-solving groups Upgrade housekeeping
Upgrade quality
Clarify process flows
Revise equipment and process technologies
Level the facility load
Eliminate unnecessary activities
Reorganize physical configuration
Introduce demand-pull scheduling
Develop supplier networks
LO 6

43. Performance Measurement
Lean
Performance Measurement
Quality levels
Customer satisfaction
Equipment effectiveness
Supplier performance
Throughput time
Inventory levels
Setup/lead time reduction
Layout efficiency

44. Other Tools: Visual Control (5s)
Sort—Seiri (organization; find what’s not needed)
Set in order—Seiton (place for everything)
Shine—Seiso (cleanliness)
Standardize—Seiketsu (develop/maintain standards.)
Sustain—Shitsuke (self-discipline)