Lean Supply Chain Management Essentials : A Framework for Materials Managers book cover
1st Edition

Lean Supply Chain Management Essentials
A Framework for Materials Managers

ISBN 9781439840825
Published March 25, 2011 by CRC Press
274 Pages 118 B/W Illustrations

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Book Description

Presenting an alternate approach to supply chain management, Lean Supply Chain Management Essentials: A Framework for Materials Managers explains why the traditional materials planning environment, typically embodied by an Enterprise Resource Planning (ERP) system, is an ineffective support system for a company that wants to adopt Lean practices. 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.

The book focuses on the materials management aspects of Lean, such as leveling work into the value stream, heijunka scheduling, standard work, and the concept of intervals, including Every 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 different manufacturing environments, the authors clarify the logic behind why you are doing what you’re doing with Lean components and how they fit together as a system. Specifically, they explain how to:

  • Determine which leveling strategy to use to smooth production
  • Calculate interval to determine lot sizes in various production environments
  • Apply Lean to purchasing, warehouse, and logistics areas
  • Use your value stream map for green initiatives and risk management
  • Replace capacity planning and shop floor control with visual factory, operator balance charts, EPEI, and plan for every part

Illustrating why balancing demand and capacity is better than trying to balance supply and demand, the book includes a definitive chart that matches Lean tools to the planning and control charts that have served as the model for ERP systems. It integrates the principles learned from Toyota’s fifty-plus-year journey with Lean principles to provide the up-to-date understanding required to approach the application of Lean to your supply chain with a methodology that allows for experimentation, learning, and continuous improvement.

Table of Contents

Lean Basics
Materials Management
     Traditional Planning and Control Framework
Enterprise Resource Planning (ERP)
      Problems with ERP in Make-to-Order Environments
Five Lean Principles 
     Specify What Creates Value from the Customer’s 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 inTime
     Strive for Perfection by Continually Removing Successive Layers of Waste
Lean Focuses on Three Major Areas of Waste
House of Toyota Framework
     Operational Stability 
     Just in Time 
     Improvement and Respect
Lean: Additional Considerations
A Toyota Leader’s View of the Toyota Production System 
     Philosophy/Basic Thinking
Planning and Control Hierarchy
Lean Planning and Control Chart
     Leveling Production
     Pull Systems
     Interval as Lot Size

Executive S&OP, Forecasting, and Customer Relationships
Executive Sales and Operations Planning
Role of Executive S&OP in Lean
     Lean Manufacturing
     Executive S&OP
What Is Executive S&OP?
Executive S&OP Focus
Executive S&OP Process 
     Product Families
     Aligning Families and Resources
Takt Time and Executive S&OP
Forecasting Perspective
Forecasting Basics
Demand Patterns
General Methods of Forecasting
Forecasting as a Process
An Alternative to Forecasting: Supplier Partnerships

Leveling and Heijunka
Leveling Value Streams
Mix and Volume Variability Definitions
Buffer with Finished Goods Inventory (a la TPS): Make to Stock
Bill of Materials Shape Helps Dictate Strategy
How Lean Fits In: Make to Stock
Leveling Production Mix vs. Sales Mix: Heijunka Scheduling
Buffer Demand Variability with Lead Time (Backlog): Make to Order
Managing Backlog
How Lean Fits In: Postponement
MPS and Heijunka
Master Production Schedule
Concluding Observations

Dependent Demand Materials
Benefits of Creating Flow
Batch Manufacturing
Lean Process Flow
Operator Balance Chart
Batch Flow
One-Piece Flow
First-In-First-Out Flow
     Typical FIFO Lane Rules
Material Planning
     Material Planning Horizons
Mix Issues

Capacity Management and Shop Floor Control
Issues with Traditional Capacity Planning
Capacity Planning in Lean
Value Stream Loops
Capacity and Pull
Standardized Work in Process
Shop Floor Control
     Heijunka, Flow, and Visual Control as Shop Floor Control
     Staffing and Takt Time
     Operator Balance Chart

Inventory Management
Traditional Inventory Management
     The Importance of Inventory Management: Customer Satisfaction and Company Financials 
     Concepts of Traditional Inventory Management 
     Order Quantity 
     When to Order
Lean Inventory Management
     Inventory as Waste 
     Inventory Management in Lean 
     Visual Control 
     Approaches to Reducing Inventories 
     Supermarket Sizing as a Way to Reduce Inventory 
     Kanban Sizing
     WIP Inventory: FIFO Management 
     Reducing Pipeline Inventory: Kanban—Visual Card 
     Inventory Reduction through Reducing Lot Sizes 
     Point of Sale Data

Lot Sizing
Lot Sizing in Lean
One Piece
Every Part Every Interval (EPEI)
Why Should We Strive for Smaller Intervals?
So How Do We Determine the Interval?
An Example: Murphy’s Toys Trim Data
Interval and Capacity
     Balancing Work (Operator Balance Charts)
     Lot Sizing as Part of Scheduling
Applying the EPEI to Traditional Planning Systems: The Period Order Quantity
Mix Issues
Volume Variability
Mix Variability
Making Sense of High-Mix Value Streams
What Do We Gain by Increasing the Interval?
Interval as Goal Setting
     High-Mix Interval
Determining the Interval
Interval in Value Stream Loops

Warehousing and Logistics
Traditional Physical Control of Inventories
Traditional Relationships
     Packaging—Readying an Item for Shipment
     Overall Warehouse Setup and Item Locations
Traditional Logistics
     Logistics Skill
     Freight Cost
Distribution Requirements Planning
Lean Warehousing
Controlling Space
Controlling Labor
Lean Logistics
Inbound Logistics
Outbound Logistics
     Zone Skipping
Product Availability and Its Effect on Logistics
Visibility and Reliability

Quality Control
Lean Quality
Lean and Total Quality Management—Visual Control
Poka-Yoke Methods and Examples
Lean and Quality Control—Jidoka/Autonomation
Lean and Total Quality Control Management—Companywide
TS 16949
Seven Lean Quality Tools

Developing a Systems Perspective for Purchasing
Traditional Purchasing
Lean Purchasing
Lean Partnership
     Supplier Quality Audits
     Lean Purchasing and the China Price
Improving Delivery and Flexibility by Reducing Lead Times and Lot Sizes
     Reducing Supplier Base
     Keeping Critical Items Internal
     Measuring Delivery Performance
Technological Capabilities
     Design and Development

Lean System
Summary and Conclusions

The Myth of the Bell -Shaped Curve: Inventory Level and Customer Service
The Bullwhip Effect
Lean Implementation Methodology
Using your Value Stream Map for Green Initiatives and Risk Management


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Bill Kerber is a principal of High Mix Lean, a Lean Transformation consulting firm in Medford, New Jersey.

Brian J. Dreckshage is a Supply Chain Management Consultant currently working in Ballwin, Missouri.