Copyright 2001, 2002 by Kimball E. Bullington, Ph.D. 1 Lean Supply Strategies: Applying the 5S Tools to Supply Management Nashville Chapter - NAPM October 9, 2001 Kimball Bullington, Ph.D., MTSU

2 Outline What is a Supply Strategy? What is Lean Supply? What is 5S? Developing a Supply Strategy Using 5S

3 What is a Supply Strategy? Strategy – A plan for achieving organizational goals.

4 The Supply Strategy should support the Corporate Strategy. The Supply Strategy should support the Operations Strategy. The Supply Strategy should give our customers confidence in the quality, reliability, and safety of our products. Supply Strategy Constraints

5 Small Company Supply Environment Dominant cost driver High level of outsourcing Low purchasing volumes Difficult to predict high growth rate High level of engineering change Limited supply management resources

6 Outline What is a Supply Strategy? What is Lean Supply? What is 5S? Developing a Supply Strategy Using 5S

7 Lean Supply Supply in a Lean Production environment Supply that supports Lean Production Supply for diet food manufacturing

8 Lean Production The latest incarnation of JIT Based on Toyota Production System. Waste elimination Widely used in automotive manufacturing & other repetitive mfg.

9 Outline What is a Supply Strategy? What is Lean Supply? What is 5S? Developing a Supply Strategy Using 5S

10 Five S An organizational method for lean production. A pillar of the visual workplace. Housekeeping

11 Five S Sort (seiri) Set in Order (seiton) Shine or purity (seiso) Standardize (seiketsu) Sustain (shitsuke) 5S

12 Five S Sort Set in Order Shine Standardize Sustain RED TAG

13 Sort Supplier consolidation or rationalization –Reduces waste of working with wrong suppliers –Focuses efforts of selection, evaluation, and improvement on a few suppliers –Reduces transaction waste –Increases opportunity for partnering and leverage

14 Five S Sort Set in Order Shine Standardize Sustain

15 Set in Order A place for everything and everything in its place. Tool cutouts Taped outline on floor or bench

16 Set in Order Segmentation –Risk value –Spend value –Design value –Time value –Location value

17 Critical 2: Special Situations Critical 1: Long-term Relationship Non-Critical 1: Contractual High Low High Risk Annual Spend Supplier Characterization Matrix Non-Critical 2: Transactional Consolidate Risk reduce & Consolidate

18 Design JIT Design & JIT Supply Base Segmentation

19 Five S Sort Set in Order Shine Standardize Sustain

20 Shine Keep everything clean and swept System maintenance and inspection Problems are more easily spotted when the workplace is in order

21 Shine Inspection of suppliers implies surveys or audits –Site surveys –Supplier self-assessment –Remote surveys –3 rd party certification surveys –3 rd party quality awards

22 SWOT Analyses-Common Themes Strengths –Current supplier provides product for process mkt. Weaknesses –We are a small customer with little leverage –Lack of management depth for small suppliers Opportunities –Setup reduction –Cost reduction Threats –Loss of technology leadership

23 Shine “Sometimes you just have to show up and make something happen.” Danner

24 Five S Sort Set in Order Shine Standardize Sustain

25 Standardize Standardize ensures that your progress in 3S implementation is not wasted. Procedures, schedules, practices

26 Standardize Include in personal plans Make the status visible (e.g., # of suppliers) Assign audit responsibilities Ticklers

27 Standardize: Problems Avoided Growth of supplier base Size of supplier base unknown Segmentation deteriorates – classification unknown Suppliers not visited regularly Surveys conducted informally or with renegade processes

28 Five S Sort Set in Order Shine Standardize Sustain

29 Sustain Deming’s point number 1: Constancy of purpose The leadership of supply is responsible for sustaining the process.

Copyright 2001, 2002 by Kimball E. Bullington, Ph.D. 30 Lean Supply Strategies: Applying the 5S Tools to Supply Management Nashville Chapter - NAPM October 9, 2001 Kimball Bullington, Ph.D., MTSU