The Roadmap to Lean and Beyond

Kevin Farley – CPQP South East Asia

For organizations planning to implement lean within their supply chain process it’s important to remember that ‘lean is a journey and not a destination’ and that the leaning of the supply chain is a ‘continuous improvement’ initiative!

Vision and Lean Training
Communicating ‘lean thinking’ effectively throughout the organization is vital in its successful implementation. Effective communication has to begin at corporate and senior management level in the company. So, it is vital to begin the roadmap to lean implementation by gaining top-level vision and support for lean. In the competitive global economy, management must appreciate and understand the financial opportunity and long-term business benefits of converting from traditional batch operations and structures to a streamlined lean process in such critical areas as manufacturing, supply chain, and administration.
The conversion to lean requires an understanding of all its components and principles for their integration from supplier to customer. For example, the supply chain is activated in a plant by developing products, securing supplies, ensuring a quality manufacturing performance, and making timely shipments to customers. Key stakeholders must know the tools that can introduce lean to the entire supply chain flow. A learning organization must be established with embedded knowledge so that the transition to lean can continue even if key people leave. Formal Lean Train and Certification demonstrates an organizations professionalism of the total overall lean approach and willingness to invest in its people.

Take a Structured Approach
Without a structured system to make things happen, a conversion to lean is doomed. Two layers of councils or management committees are recommended to drive the conversion to lean throughout the organization, and to set and evaluate relevant performance metrics:

Lean Improvement Management Council - Consists of the dedicated Lean Champion / Kaizen Facilitator who is responsible for identifying and implementing improvement opportunities. They are also responsible for prioritizing the opportunities and maintaining the schedule of continuous improvement in the form of Kaizen events.

Senior Management Council - Assures that the resources are made available and provides the organization’s strategic goals whilst setting and reviewing key performance metrics allowing for progress reviewing of the Lean Improvement Management Council.

Indentify the Value Stream
Lean cannot be solely focused on manufacturing operations. Implementing lean requires a total business strategy review – from the first tier supplier through to the manufacturing operation, and finally to the end customer. By identifying the total supply chain product flow in terms of time and time constraints, the road map of priority actions required to reduce cycle time and eliminate waste can be identified. The value stream provides the overall tactical guidance that the entire organization can use to determine what to do next.

Getting Quick Wins
In any organization, it is important to demonstrate some results quickly. A well-provenmechanism is training followed by action with continuous improvement (Kaizen) events. Kaizen produces quick improvements in order entry, demand planning, product development and any administrative areas by applying the appropriate lean tools. Many companies initially implement lean within the production areas. Results and improvements in such areas are easily visible for all to see. Attaining visible improvements helps to convince staff of the merits associated with lean and allows for a smoother roll out within the wider functions of the organization. 

Lean the entire Supply Chain
To be a lean operation, an organization will require the support of both its suppliers and customers. To attain lean, an organization must partner with its major suppliers, and each supplier must adopt a lean implementation strategy where improved quality standards and flow production are achieved and delivered through lean logistics. Achieving a smooth flow of the entire supply chain is the most essential step towards becoming a lean operation.

Maintaining the momentum
Management’s strategic vision for maintaining the momentum for change must include rewarding people for buying into continuous improvement. That’s why celebrations, credentials, and rewards are crucial to the process. Recognition and gain-sharing programs embedded in the organization’s culture will provide a bridge to ongoing continuous improvement, even in the face of high management turnover.

It’s important to remember that perfection is an ideal and therefore anything and everything can be improved upon!

Beyond Lean – Operational Excellence
The leaning of the supply chain typically targets the easier to get ‘low hanging’ fruit, whilst another set of tool ‘Six Sigma’  allows organizations to target the ‘high hanging’ harder to get fruit.

Typically Six Sigma combats more technical issues and is mostly used to improve process capability and reduce process variations by means of enhanced design tools (Design for Six Sigma) and a Six Sigma generic problem solving tool.

A combination Lean and Six Sigma ultimately give organizations the powerful tools that is necessary to allow successful development of World Class products and services.

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Value Stream Mapping of the Supply Chain Process

 Wayne Johnston, CPQP South East Asia

Having last week taken a look at the Lean Tools used to enhance value and eliminate waste this week we take a closer look at the Value Stream Mapping process.

A common complaint from Senior Management is the lack of ‘vision’ on whats actually happening within their supply chain process. Value Stream Mapping, or VSM as its more commonly known, is the tool that provides that vision.

VSM is a core tool used to implement lean and provides the techniques required to document and improve the entire system, including both information and material flows. The concept of VSM is to draw a comprehensive visual "map" or of the flow of material through production and the flow of information from the customer back to each production process and back through to raw material. We then carry out an in-depth analysis and review of each individual action within in that stream. Value Stream Mapping allows management to gain greater visibility into each of the activities and identify what is value-added, non-value-added but necessary and what is waste in their drive toward a World Class operation. Ultimately VSM provides the impetus for change within an organization.

It is imperative to apply VSM to only one product family at a time in order to keep the activity within specific boundaries. If the entire plant or operation is tackled at the same time, VSM will not be carried out effectively. Lean is often implemented through a team effort. It is vital that a value stream manager, with appropriate experience in lean transition techniques, be appointed to steer this team.

Developing a ‘Current’ State Map
Before embarking on the ‘Leaning’ of the supply chain it is important to recognize the enterprise’s current state map of operations. The current state map provides a detailed account on how the supply chain currently functions. For the current state map to be accurate the gathering of process attributes of material, cycle time, manpower and machine must be true and representative. Once a current state map has been developed, the information that it provides is used to analyze the organization’s supply chain process, as well as the strengths and weaknesses of its production flow.

Develop a ‘Future’ State Map
Based on what the production process ‘Takt time’, the rate of customer demand for a product, the VSM team needs to examine its processes and inventory levels to see how it can build or produce to attain this customer demand figure in the most efficient way.

To develop the future state map, the value stream manager and team need to update the current state map by aligning customer and supplier information and modifying existing process, information, and material flow where necessary through the use of production leveling and Kanban systems. Once the process, material, and information flow have been updated for the future state map, the team needs to define and add lightening strikes where appropriate. Lightening strikes are comments added into the future state map and specify any sub-projects that needs to be carried out to help attain the future state.

eVSM ‘Lean View’ Methodology
Value stream maps, current and future state, are typically made up of mapping icons that represent various elements in the value stream and supply chain process.
VSM Icons are universal thus ensuring that they provide a common approach and methodology for teams that are implementing lean improvements.
The drawing of the map was historically a pencil and paper manual process and therefore time consuming but with the evolvement of VSM software the whole drawing of the map process is drastically speeded up. In addition the software links the electronic map seamlessly to spread sheet, presentational and timing plan formats so that a concept future Value Stream Map can be evaluated virtually without the need for one piece of current process to be disturbed. Once an ideal ‘Lean view’ future map concept has been prepared the improvements forecast data can be approved by the senior management team.

Value Stream Mapping Benefits:
- VSM identifies activities and information that impacts the lead-time of your value stream
- Improves the decision-making process of all work teams by helping team members to understand and accept your company's current practices and future plans.
- Creates a common language and understanding among employees through the use of standard value stream mapping symbols.
- Provides a way for employees to easily identify and eliminate areas of waste.

To attain the aspirations outlined in the future state map, it is vital that an organization formulates an effective value stream plan that has top management approval and is implemented by dedicated team with relevant experience.

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Supply Chain Management - Lean Tools and Practices

Wayne Johnston – CPQP International

Having last week discussed the introduction of lean methodology into the Supply Chain this week we will be looking at some of the ‘lean tools’ that can be utilized within the Supply Chain.

A number of lean tools and techniques have been developed to support the lean philosophy, to enable organizations to apply the ideas and implement change. Many of these emerged from the Toyota Production System (TPS) - hence the large number of Japanese terms in the Lean vocabulary while others have since been developed by research organizations. The lean practitioner has some 18 generally recognized ‘lean elements’ and today we will take a look at some of these elements.

5 S
5S is a methodology focused on cleaning and organizing the workplace to enable workers to carry out their daily tasks in as efficient a manner as possible. By establishing an order in the workplace, 5S helps improves conditions for employees by making things tidier, cleaner, brighter, and safer. This in turn helps develop a more pleasant work environment for employees, thus improving morale and, as a consequence, productivity.

The 5S methodology originated in Japan and is based on five stages which need to be implemented in the following order:

1. Sort (Seiri) - Cleaning up and eliminating any materials that are not required

2. Set in Order (Seiton) - Organizing the work area so everything as a place and a place for everything

3. Shine (Seiso) - Eliminating substances such as dirt or oil

4. Standardize (Seiketsu) - Making all aspects and places the same

5. Sustain (Shitsuke) - This is the final stage and is ongoing. It is aimed at maintaining continued compliance of the 5S standards and practices that have been developed.

Visual Management systems
Visual Management goes far beyond having a clean and well organized factory. Visual management provides real time information and feedback regarding the status of the plant. It is a company wide "nervous system" that allows all employees to understand how they affect the factory's overall performance. The objective of visual management is you get employee involvement and motivation, open communication, quality and productivity improvement, faster decision process, and finally a decreased level inventory.

Kaizen (Japanese for continuous improvement)
Kaizen involves everyone in an organization working together to make improvements without large capital investments." The operative phrase here is 'without large capital investments'. Instead of sinking more money in buying machinery or running them for a longer duration, Kaizen veers an organization towards paying attention to small but significant details. Managers are encouraged to improve the efficiency of existing infrastructure instead of investing in more of the same. In essence, that translates into something of a corporate 'back to basics' philosophy where the product is actually manufactured, which could mean the assembly line in a manufacturing plant or the place where employees interact with customers in the service sector. It is "the place where the real work is done"

Kanban (Japanese for Card)
Kanban is a system where production is authorized from downstream operations, based on physical consumption. It is based on a pull material replenishment system, with the principle that material is pulled through the production process based on actual usage requirements. Kanban systems provide only the parts that are required at a particular time. Parts are pulled from the supplier as they are needed. Kanban systems use visual signals - card, flag, or verbal sign – to move material through the value chain. A downstream worker sends a signal to an upstream worker that they are ready to receive parts to process. As material is consumed, it is reordered. If the Kanban quantity is less than the previous batch size, the process can still continue.

One-piece Flow
A core principle of lean manufacturing, one piece flow is the processing of 1 part at a time at each step of the process.  When operations within a process are balanced, the product flows continuously, parts movement is minimized, wait time between operations is reduced, inventory is reduced and productivity increases. Another benefit is that quality problems quickly surface and as a result the problem can be determined before large amounts of defective products are made.

Total Productive Maintenance (TPM)
TPM brings maintenance into focus as a necessary and vitally important part of the business. It is no longer regarded as a non-profit activity. Down time for maintenance is scheduled as a part of the manufacturing day and, in some cases, as an integral part of the manufacturing process. It is no longer simply squeezed in whenever there is a break in material flow. TPM is the philosophy and practice of preventing the loss of productive machine time.

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Lean Thinking

Kevin Farley – CPQP International

Having last week discussed the opportunities that exist in improving supply chain performance by the application of ‘Lean’. This week we continue by looking at ‘Lean Thinking’ and the opportunities that exist within the supply chain

Lean Thinking is defined as the dynamic, knowledge driven, and customer-focused process through which people in a defined enterprise continuously eliminate waste with the goal of creating value. It is now an established fundamental approach for the world-class manufacture, distribution, and service sectors.

Lean thinking started in the 1960s in Japan with the development of the Toyota Production System (TPS), and was quickly established as a highly effective method for the production of cars and related engineered components. Lean thinking is now well established in the complex and sophisticated world of aerospace and aircraft manufacture. Hence, the belief that all other industries can benefit from this approach. The concept of lean thinking has spread to pharmaceutical, medical, electronics, and a whole host of related industries within the supply chain.

The fundamentals of lean thinking:
Any transformation process that the ultimate customer would be prepared to pay for is classed as ‘value’ whilst the ‘value stream’ is the end-to-end collection of processes that create value for the customer. The key to lean thinking is the optimization of the activities and processes within the value stream into the most efficient combinations to maximize value-added content while minimizing waste. Essentially the stagnation of work in between processes is eliminated and the actual customer demand is pulled through the process which effectively drives the supply chain. It is a system based on a cascading supply chain from downstream to upstream activities in which nothing is produced by the upstream supplier until the downstream customer signals a need.  It is essentially a paradigm shift from a forecast driven to a demand driven model.

Perfection is also a fundamental of lean thinking and refers to any ongoing activity that is aimed at achieving better results. Perfection is an ‘ideal’ so anything and everything can be improved.

Lean Thinking Goals
There are five core goals associated with lean thinking:

1) Identifying and enhancing process value streams

The core objective of any company’s strategy in providing a product or service must be to add value to raw materials or goods. To be value-added the customer must be willing to pay for the activity which must somehow change the product or service in a particular way.

2) Track down waste and reduce or eliminate it
Waste can be defined as any element of production that adds time, effort, and cost but no value. Waste within any process is costly, and impacts directly on profitability and resources. It means staff time is used inefficiently. This can have a negative effect on staff motivation if employees perceive such work as being ineffective.

3) Make all processes flow smoothly to meet customer demand
Lean thinking also strives to ensure a smooth continuous flow of information and materials across all departments. Production schedules critically are based on a pull system where materials and resources are pulled through the system as needed by the customer order schedule, rather than a push system where materials are pushed through the system to suit operational needs or simply because capacity requirements are available. The principle of this thinking needs to be spread throughout the organization. If you are thinking that “the pull system is not appropriate for us” think again. Boeing for example are now assembling their aircraft whilst they are constantly moving slowly on a track through their plant at the rate of their customer demand!

4) Strive for continuous improvement and perfection in all processes
Having identified areas for improvement, there is a need to capture this data and train staff in areas relevant to the lean model. Many multinationals are committed to the ideal of continuous improvement, and incorporate it as a part of their organization structure. The focus of these activities is to organize the workplace in order to make it more productive. This helps drive personal discipline and organization within the company across all functions. 

5) Seek seamless integration with all parties in the supply chain
Truly world-class companies are competing in terms of supply chain by developing sophisticated and efficient linkages with their suppliers and sub-suppliers. Access to long-term forecasting, demand patterns, and future plans are disclosed in a collaborative proactive approach.

A Lean Supply Chain is one that produces just what and how much is needed, when it is needed, and where it is needed. The most important thing to remember is that lean is not simply about eliminating waste - it is about eliminating waste and enhancing value

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The 'Leaning' of the Supply Chain

Kevin Farley - CPQP International

 This week we begin a new series on Supply Chain Management and the opportunities that exist with the application of ‘Lean’ methodology within the supply chain.
With the supply chain becoming more and more global with significant business being carried out on the worldwide stage and, in particular, the increasing number of products being manufactured in the Low Cost Regions of Asia, the ‘Leaning’ of the Supply Chain is now widely being regarded seen as a key element for both global competitiveness and long term sustainability.

Lean is a systematic approach to identifying and eliminating waste or non-value-added activities in a supply chain through continuous improvement. It is recognized that typically 80-90% of the Value Stream (from raw material to finished customer delivered product) for any given product is waste.  That is, non value adding activity but which is still ultimately paid for by the end customer.

World Class companies such as Coca Cola & DELL Corporation have already embraced the ‘Lean’ concept and transformed their supply chains with remarkable results and have therefore set the precedent for others to follow.

A Supply Chain can be defined as a linked set of resources and processes that begins with the sourcing of raw materials and extends through to the delivery of end use items to the final customer. Supply chains are essentially made up of two-tiers –internal and external. The internal and external aspects typically combine to make up an overall integrated supply chain. Modern supply chains are very dynamic and are characterized by constantly changing relationships / configurations. Supply Chain Management (SCM) integrates and co-ordinates all of the associated processes, enablers, and resources of a supply chain. SCM also manages the flow of material, information, and funds across an organization.

There are a number of factors, decisions, costs, and drivers that can influence the performance of a supply chain. Factors that influence a supply chain include quality, technology, logistics, information technology, consumer, organization structure, and globalization.  Strategic, tactical, and operational decisions also affect supply chain performance. Supply costs involve all of the people, facility, and equipment costs associated with the Buy, Make, Move, and Sell elements.

Typical supply costs include processing, procurement, production, inventory holding, as well as warehousing, transportation, and distribution.

A successful supply chain ensures that an organization is efficient, effective, and retains a competitive advantage. As the supply chain is not one dimensional, there are several building blocks to achieving a supply chain competitive advantage. The key drivers for improving supply chains are Competitiveness, Cost, Quality, Service and Environment.

The ultimate aim in ‘Leaning’ is to add more value to product at a lower cost, at a faster rate than the competition.  There are different ways to add value to a product and help a supply chain gain a competitive advantage. These are outlined below, related to each of the key drivers:

Competitiveness (Commoditization)
- Relentless pursuit of standardization and market power
- Having products or services that are innovative
- Breaking out of the commodity trap

Cost
- Products must be low cost to survive
- Costs must be low to support necessary R&D
- Costs must deliver year on year reductions

Quality
- Products must not disappoint on premium quality promise
- Compliance with increasing Good Manufacturing Process (GMP) regulatory requirements

Service
- Manufacturing processes must respond to the needs of the customer
- Supply chains must be capable of responding to sudden demand peaks

Environment
- Increase focus on reusing and recycling goods
- Increase awareness of the effect of industrial work practices
- Pressure to adopt environmental friendly practices and minimize environmental impact

It is seen that “in the future, it will be ‘Supply Chains’ and not organizations that will compete”.  Companies embracing this challenge will gain a significant competitive advantage over their rivals. A method to enhance the performance of supply chain can be its “leaning” through Integration.

 Lean in the broadest sense looks at the elimination of wasteful activities across a supply chain. It focuses on this from the perspective of the customer and establishes what can add value to the product or service and what cannot.

Typically, ‘Lean’ is achieved by enabling the flow of a product or service at the ‘pull’ (demand) of the customer in the pursuit of perfection!  Next week, we will be looking at ‘Lean Thinking’ and at the key elements of lean thinking whilst demonstrating the influences on production systems and the wider Supply Chain Management process.

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The intent of this article is to provide the reader with an overview of Lean, primarily from a production point of view, but understanding that the principles of Lean apply to any and all areas of the Enterprise. While this is not an exhaustive study of Lean, it does offer the basics of lean, along with examples of how lean implementation has helped real companies.
Lean production is focused on eliminating waste in processes. This includes waste in work in process (WIP), finished goods, and inventories – the tenets of mass production. Lean is not about eliminating people, but rather about expanding capacity by reducing costs and shortening cycle times between when the customer places an order and when the product is shipped. The idea is to build what the customer has ordered as soon as possible, and the lead-time is as short as possible. The process of getting to this ‘Lean way of thinking’ is the process of ‘becoming lean’.
The philosophy of Lean actually comes from the Toyota Production System (TPS), where Lean production is a way of life. Toyota has evolved to a way of thinking that focuses on making a product flow through production without interruption, a pull system that cascades back from customer demand by replenishing what the next operation takes away at short intervals, and in an environment where everyone works to continuously improve.

Lean is typically implemented in five key steps: (from lean.org)

1. Specify Value – define value from the perspective of the customer.  Express value in terms of a specific product, which meets the customer’s needs at a specific price and at a specific time.
2. Map –   , the set of all specific actions required to bring a specific product through the three critical management tasks of any business: the problem-solving task, the information management task, and the physical transformation task. Create the map of the Current State and the Future State of the value stream, Identify and categorize waste in the Current State, and eliminate it.
3. Flow – Make the remaining steps in the value stream flow. Eliminate functional barriers and develop a product-focused organization that dramatically improves lead time
4. Pull – Let the customer pull the products as needed, eliminating the need for a sales forecast
5. Perfection – There is no end to the process of reducing effort time, space, cost, and mistakes. Return to the first step and begin the next lean transformation, offering a product, which is ever more nearly what the customer wants.

A Lean Enterprise is a Company that continues to improve all it’s processes from Administration - Sales - Engineering - Manufacturing by eliminating ALL Non Value Added steps or WASTE, using the Lean 18 elements as a frame work for methodology and consistency throughout the Enterprise.
Many companies don’t get started with Lean because the management is stuck on some false notions:

• Anxiety – I’m afraid I can’t do it
• Loss of power
• Anger over having your expertise made irrelevant
• Doubts about the long-term success of the new way to do things
• Jealousy because someone is better at the new way than I am

Problems of mass production: an example........
In the early days of automobile manufacturing, when Ford’s special conditions did not exist, it was only possible to run volume manufacturing with large buffers (lots of extra parts and assemblies in inventory), long throughput times and by working to sales forecasts. This exacerbated quality problems and created the world of General Motors and mass production. The same thought process applied to all goods and services across the economy.
Toyota became something different. Realizing that the state of mass production would only lead to waste and poor quality, Toyota evolved to flow production, the use of flexible tools, short product lives and a wide product variety, first-time quality (not just quality assurance after the fact), and work to demand. This came to be known as the Toyota Production System (TPS), and is an advanced example of Lean. Today this includes self-directed teams for product development and operations, cellularization of tasks, partnerships with suppliers & distributors – long tem contracts that allow the suppliers to produce in small, high quality quantities -, Just In Time (JIT) deliveries, ISO 9000 certification (everything is well documented), and business process re-engineering.
The fundamental objective of Lean is to shift the focal plane of management to differentiate value from waste, starting with primary actions affecting each product, rather than organizations technologies and assets. Value is specified by product, from the standpoint of the ultimate customer – not from the standpoint of firms, departments, or functions. Ultimate customers want solutions to their problems more than they want goods and services.

Lean Thinking: the value stream
A value stream is all the steps in a process, both value-added and non-value added, in order to bring a product or service through the main flows essential to producing that product or service: the production flow from raw material into the arms of the customer; the design flow from concept to launch. Taking a value stream perspective means working on the big picture, not just individual processes, and improving the whole, not just optimizing the parts.
The value stream can be identified, running all the way from concept to launch; from order to delivery, and from raw materials into the arms of the customer. The Lean key is to eliminate steps, which create no value, but cause waste: make the product flow continuously with no detours, no backflows, no scrap, and no waiting. Here, flow means the average velocity and total throughput time, and to produce at the pull of the customer – in other words, make only what is needed when it’s wanted.

Lean thinking: the pursuit of perfection
Perfection is the complete elimination of waste so that every action and asset creates value for the ultimate customer. Obviously we never truly achieve this, but Lean Thinking always strives in this direction. This is achieved through evolution (Kaizen) or Revolution (Kaikaku). A key metric of perfection is your rate of improvement in eliminating wasted steps and defects, speeding flow, reducing inventories and volatility, and cutting management time involved in fire fighting.
Some world-class benchmarks in Lean thinking are to improve product quality by 50% per year, to increase productivity by 20% per year, and to decrease lead time to less than ten time the value-added time in production.

Here’s an example, taken from the automotive industry:

Pull at Toyota, Spare Parts

                                     USA 1994          USA 1996           Japan

Response Time                 7 Days              1 Day            <2 Hours
Service Rate                       98%                98%               >98%
Stock Index                        100                 33                   19
Throughput Time            10 Months         8 Weeks          4 Weeks

Tying this together, we specify value by product, identify the value stream and remove wasteful steps, make the product flow at the pull of the customer – in pursuit of perfection.

The 18 elements of Lean
Striving for Lean manufacturing, Lean production, the Lean Enterprise, all require addressing performance against the 18 key elements of Lean. After reading through the above, this should begin to make some sense. Here they are, with brief descriptions:

• 8 Kinds of waste:  processing, transportation, rework, inventory, waiting, over production, motion, and people utilization.

• Management by sight: the objective of management by sight (sometimes referred to as visual control) is to provide an easy method to exercise control of the plant and provide quick feedback by simply using your eyes to view the status of operations

• 5S: Sort, Set in Order, Shine, Standardize, Sustain

• Team Based Performance

• Kaizen: the continuous implementation of small improvement activities involving everyone and very little expense

• One-Piece Flow: a core principle of lean manufacturing, one-piece flow means that one part is processed at each step at a time

• Multi-Process / Multi-Machine: improves the flow of processes, raising operator productivity ( Multi-process: 50-100%, Multi-machine: 30-50%), eliminating temporary storage between processes, eliminating wasteful motion, and stabilizing manpower requirements

• Quick Set-up: in lean manufacturing it is a key to flexibility. Unfortunately, set-up reduction is not actively supported in most plants. 

• TAKT Time:  ‘Takt’ is a German word which means ‘beat’ or ‘count’, like the baton the conductor uses to lead an orchestra. Takt time is the ratio of production required to satisfy customer demand and the production time available; the pace at which the product must be produced to meet customer demand.

• Standardized Work: the objective of standardized work is to develop stability so that continuous improvement is possible. The key elements of standardized work are cycle time, work sequence, and work-in-process (WIP). Standard work is not simply something management demands and operators comply with for fear of losing their job.

• Kanban: a tool to achieve J-I-T (Just In Time) production. Simply put, the Kanban system is used to signal production when to make a product and where to move it to after it is complete.

• WIP Management / FIFO: buffer stock is used only to ameliorate the effects of variation in customer demand, equipment reliability, and teammate productivity. Employs downstream operation: pull material only when needed; opportunities for improvement are identified and made through Kaizen activity

• Poka-Yoke:  mistake-proofing. One of the most important elements of the lean system; a mindset based on the belief that quality can be assured more accurately when it is built into the manufacturing process, allowing for feedback at the source of the defects.

• Line Stop: teammates must be allowed to stop the product according to agreed upon criteria. Production does not continue until the appropriate counter-measures are implemented and verified. Machinery is fitted with automatic line stop capability for both safety and quality issues.

• Root Cause Analysis and Problem Solving: all problems, large and small undergo rigorous root-cause analysis using the seven tools of quality: graphs, pareto diagrams, fishbone charts, check sheets, histograms, control charts, and scatter diagrams.

• TPM Total Predictive Maintenance: predictive maintenance is a critical support system in the lean environment. The goal is simply to anticipate machine failure and as a result eliminate all machine breakdowns and troubles

• Heijunka Scheduling (True Level Loading): production fluctuations are a major source of waste in the manufacturing environment. To prevent this waste, fluctuations in the final assembly schedule must be eliminated (at the very least minimized). Production is leveled by making one model, then another, then another, etc. This is the most advanced lean concept; in a fully operational Heijunka scheduling system every product is manufactured everyday, in the quantity needed for that day, and no more!

• Ergonomic: simplify – “all we are doing is looking at the timeline… from the moment the customer gives us an order to the point at which we collect the cash.” (Taiichi Ohno)
   

Conclusion
Lean is all about the elimination of waste in a system. A Lean transformation follows five key steps: define value from the perspective of the customer; identify and map every element in the value stream; make the remaining steps in the value stream flow and eliminate functional barriers; let the customer pull the products as needed; and strive for perfection – there is no end to the process of reducing effort time, space, cost, and mistakes. Return to the first step and begin the next lean.

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So how can Thailand compete with China?

Kevin Farley, CPQP International

 It’s hard to keep up with China in terms of Manufacturing so why would Businesses want to move a Production Plant or Source anywhere else? It’s impossible to compete.  Or is it?
When a company decides it wants to move a plant to Asia many immediately head, along with countless others, for China without fully realizing the alternatives.  China’s unskilled labour is 10-15% cheaper for sure, but in the case of a New Plant Start Up other regions in South East Asia are just as attractive if not more so. The Government Board of Investment (BoI) here in Thailand, for example, have pulled together an incentive package which makes for a serious alternative to China.  When you compare like for like such as:

• Land Costs – yes, they are the same but China only offers a 50 year lease whereas in Thailand the company can buy outright. In China, your factory can be 55-60% of the plot coverage but here in Thailand 85%.
• Taxes - Thailand BoI zone 3 approved projects offer 8 years exemption plus 5 years at 50%, meanwhile China does not come close in its offer with 2 year and 3 year at 50%.
• Intellectual property - often undermined and Thailand is significantly stronger in its enforcement where as China is very weak. Acer, Foxconn, and HP recently withdrew China R&D back to Taiwan.
• Domestic Market - a force in itself, China is vast with 1.4 billion people. But with Thailand as the hub of South East Asia and its 500 million people and imminent FTA with the US and others looming, it makes a weighty case for the medium and long term.

The Chinese themselves have realized the benefits of doing business in Thailand and have recently taken advantage of the BoI schemes in the Textile Industries.  The BoI is sensibly targeting Specific business types for investment in the region such as Automotive, Electronics + ICT, and high value services such as R&D and logistics which will mutually benefit people in the Kingdom through the training and skills such businesses bring.
Global Sourcing is easy! Source your product from China, labour is cheaper so it’s a fast way to save costs!  Speed and low costs are key elements of supply chain management but what about Global Competitiveness and Sustainability? All manufacturers have to make sustainable global competitiveness a strategic goal. It is no longer possible to base a business simply on cheap labour. Sustainability calls for the source to be Agile to sudden demand or change, Adaptable as the markets continue to re-shape over time, and to be Aligned to the interests of all parties.

How to be Agile?
Keep supply chain partners bang up to date on changes in supply and demand so that they can respond promptly. Collaborate with suppliers and customers to redesign processes, components and products in ways that give you a head start over rivals. Transform your business into a Lean Enterprise that gives you the flexibility necessary.
How to be Adaptable?
Track economic changes in Low Cost Countries and use the local knowledge to select reliable vendors. Create flexibility by ensuring standardization of components and processes utilized i.e. the product designer must consider at the outset that the point in the process that a product becomes different must be as late as possible. Create different supply chains for different product lines.
How to be Aligned?
Provide all partners with equal access to forecast and plan data. Clarify roles and responsibilities to avoid conflict. Define partnership terms to share risks, costs and rewards for improving supply chain performance. Ensure incentives so that players maximize overall supply chain performance therefore maximizing the return from the partnership.

The companies that are doing business in China have and will get what they ‘wanted’ in cost terms, but have they got what they really ‘needed’ for Sustainable Global Competitiveness? The answer in many cases is no, leaving many companies exposed. US giants Wal-Mart and Dell Computer have harnessed this supply chain management methodology with great success and will continue to be market leaders because of this initiative. Thai Manufacturers wanting a slice of the Global Sourcing market must be aware of their own Global Competitiveness position and that they are suitably represented in International circles to convey that message.
Whilst not denying it, in the whole, China is and will continue to be a major success story. It has not, however, been without its problems and this offers a great opportunity for Thailand.

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Revitalizing the U.S. Tool and Die industry

Frank Martin  - CPQP International / Gary Gathan - GCorp


 The U.S. tooling industry has received quite a bit of press in the past few years documenting its demise. Many people believe the rise of lower-cost tooling industries in foreign countries is the main culprit.
Unfortunately, it's not that simple. The U.S. tooling industry's future is precarious, but before we place the blame on globalization, let's consider how the industry arrived at its current state.

Understanding Root Causes

If offshoring has not been the sole cause of the industry's troubles, what has been, and what realizations must be faced as we move forward? Part of the decline in demand has been because of productivity improvements.
Unfortunately, over the last 20 years, productivity improvements were slow in coming, because the industry did not view them as required. Later in the decade, this perception changed as Tier 1 customers demanded supplier consolidation and improvement as they merged.
Four major factors have affected demand in the tool and die industry.

1.   Fewer or delayed product launches. The automotive product cycle has changed significantly—changes are less frequent, and design platforms are consolidated.

2.   Increased reliability and a reduction in redundant tooling. As the automotive industry became more confident in the capability and reliability of its tooling, many OEMs reduced the quantity of their safety tools. In most cases, redundant tooling was completely eliminated.

3.   Part consolidation. Combining multiple parts into one resulted in a reduction in the number of tools needed. While these tools may have become larger and more complex, overall the sum of the parts resulted in less tooling. Also, the use of common parts on more than one vehicle or vehicle platform resulted in less tool building.

4.   End-user productivity improvements. While the tooling industry was increasing productivity, so were its end users. By increasing throughput at their facilities, OEMs were able to provide the same output with fewer tools.
 

According to Figure 1a by compounding demand reductions over the last 14 years, in 2004 the industry needed only 52 percent of the tooling that was needed in 1990. If the industry once again decreases demand by 2 percent in 2004, the demand in 2005 will fall to 51 percent of what was needed in1990.

It's Time to Reorganize!

To minimize the risk of offshore sourcing of tooling, U.S. tool- and diemakers should consider taking these steps:

Recognize the Need to Add Value. Shops must identify specific products or services their customers will view as value-added. Once these items are identified, the shop should evaluate realistically in-house capabilities. If there are value-added shortfalls, the shop must complete an analysis to determine whether it can obtain the required resources.
The difficult aspect of customer analysis is determining if customers understand the value of value-added services or products. When selling added value, shops should emphasize services such as product design, low-run production support, program management, and material development expertise.
Shorten Lead-Times. By significantly reducing lead-times, U.S. tool- and diemakers can create a competitive advantage that offshore competitors will find difficult to match. Offshore shops will be forced to expedite tooling, which increases their cost of doing business and raises their prices.
Identify Productivity Improvements. Any organization can make significant productivity improvements, which decrease costs. Many tool- and diemakers argue that concepts such as lean, one-piece flow, and cellular manufacturing are unworkable in the tooling industry. Not so.
How can a company reduce its lead-time by 50 percent without significant productivity improvements? For most companies within the industry, a 50 percent reduction in lead-time can be accomplished within three iterations of tooling. While the first tool may actually cost more, the savings realized by the second iteration reduces costs to become comparable with a normal delivery. By the third tool, costs are reduced, and the tool is delivered in half the time it took to create the first. Remember, time is money.
Scrutinize Wages and Benefits. Although the tool and die industry has always been accustomed to ups and downs, when the demand was there, it knew it could count on good wages, regular overtime, and a good benefits package. Wages and benefits were good as companies competed to maintain a trained work force. With so many shops to choose from, employees knew that if one company didn't provide the overtime and wages desired, they could go down the street and get them from another company. Now the labor force must come to the realization that their livelihood is at stake. Significant changes are required to allow U.S. shops to compete on the world stage. Unfortunately, the labor force must share in these changes. New wage scales, new work rules, new benefits packages, skill enhancement, acceptance of change, and desire to compete will require all employees to modify the way they look at the industry.
Increase Demand. How can toolmakers increase demand when the business environment seemingly is doing everything it can to push the industry into the grave? Unfortunately, they can't. By changing and changing significantly, improving productivity, adding value, reducing lead-times, restructuring labor costs, and, yes, reducing prices will the industry be able to slow the escalating offshore sourcing trend.

U.S tool- and diemakers must start thinking differently. Those who have the wherewithal to step up and are willing to offer added value to their customers will succeed.

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Global Purchasing and Supply Chain Strategies

Frank Martin-CPQP International -
Business Briefing - Corporate Report - Technology & Services

Company Description: CPQP International – Your global development partner. Over 25 years of hands-on global experience with teams in the US, Mexico, Asia, India, Western and Eastern Europe

CPQP International’s Capabilities:

Supply Chain Transformation:  Low-cost region sourcing  - Value stream optimisation - Supplier development - Logistic performance
Lean Enterprise Migration: Transformation planning  - Hands-on training and implementation -  Focus on results
Low Cost Operations Relocation: Planning and budgeting - Plant and equipment commissioning  - Employee training - Lean manufacturing and six sigma

Effective Supply chain
Supply chain improvements must be a business strategic priority to succeed in a global environment. A well-balanced supply chain with low cost region (LCR)-qualified suppliers providing the lowest cost possible is a must for business growth. CPQP International not only qualifies LCR sources, but provides the lean manufacturing knowledge to continuously improve the supply base, as well as engineering, equipment, machinery and quality support. Total optimisation process also includes transportation, border clearance and distribution.

The General Benefits of Low Cost sourcing are:
- reduced total supply cost
- access to a broader supply base of qualified foreignsources
- a global view of future markets and competition
- an established buying presence in international markets
- leverage to the domestic supply base

Value stream mapping techniques provide a current view of the supply chain and serve as the baseline to identify improvement opportunities, trans