Lean Tools and Techniques for Supply Chain
- 1. Lean Tools and Techniques for Supply Chain Start Now By : Muhammad Adeel Business Prsentation Optimizing Efficiency and Reducing Waste in Supply Chain Operations
- 2. Introduction to Lean Thinking • Definition of Lean: Lean is a methodology focused on improving efficiency by eliminating waste, enhancing value, and streamlining processes. • Origin: Originated in the Toyota Production System (TPS) and is now widely used across various industries, including supply chain management. Lean manufacturing is particularly related to the operational model implemented in the post-war 1950s and 1960s by the Japanese automobile company Toyota called the Toyota Production System
- 3. Introduction to Lean Thinking Goals: • Reduce waste This encompasses all forms of waste like excess inventory, unnecessary movement, waiting time, defects, overproduction, and inefficient processes. . • Improving process flow To create a smooth and continuous flow of work through the production process, minimizing bottlenecks and delays. . • Improve quality By identifying and addressing potential issues early on, Lean aims to produce consistent high-quality products with fewer defects.
- 4. Introduction to Lean Thinking Goals: • Increase efficiency • Boosting productivity Streamlining processes and eliminating waste leads to increased output with the same or fewer resources. • Customer satisfaction Delivering products or services on time, meeting customer needs, and improving responsiveness through efficient processes.
- 6. The 7+1 Types of Waste (Muda) 1.Transport Long, unnecessary transport routes within a production hall can generate expenses. Inefficient material flows can also occur during storage, retrieval and transfer. 2. Inventory Excessive material and inventory levels tie up space and thus capital. This can mean manufacturing products as well as raw materials and supplies. 3. Motion Long walking distances, search times, and inefficiently set up work stations where employees have to awkwardly reach around or walk around machines fall under waste due to motion.
- 7. The 7 +1 Types of Waste (Muda) 4. Waiting Waiting times mean downtime in production. Machine downtime, long setup times, and the previously mentioned types of waste can lead to long, non-value-added waiting periods. 5. Overproduction Overproduction occurs mainly due to poor planning. However, quality deficiencies can also lead to surplus. In this case, more is produced "as a precaution". 6.Overprocessing In this case, one also speaks of "over engineering". Processes are artificially inflated or too complex and thus lead to unnecessary resource commitment.
- 8. The 7 Types of Waste (Muda) 7. Defects Production errors lead to scrap production. This type of waste is the most obvious and, of course, to be avoided. But often it is not immediately obvious at first glance where the fault lies. 8. Unused employee potential Employee knowledge and qualifications are misused. Employees who are not deployed according to their qualifications and whose valuable experience is not drawn upon are wasted potential.
- 9. Lean Principles in Supply Chain Value Stream Mapping (VSM) 1.A tool used to visually map the flow of production. Shows the current and future state of processes in a way that highlights opportunities for improvement. 2.A visual representation or flowchart that maps out all the steps, from raw materials to the final product or service delivery, including both value-adding and non-value-adding steps. 3.It highlights the flow of materials and information through the process, identifying bottlenecks and waste.
- 10. Lean Principles in Supply Chain Value Stream Mapping (VSM) Key Components: 1. Process Steps: Represent the stages involved in production or service delivery. 2. Material Flow: The movement of materials through the process. 3. Information Flow: The flow of information that drives the process. 4. Inventory: Raw materials, work-in-progress, and finished goods at each stage. 5. Lead Time & Cycle Time: Measure the time taken for the entire process and individual steps.
- 12. Step Current State Timeframe Future State Timeframe Value- Adding Bottlenecks/Improvements Need Identification 1-2 days 1 day Yes Streamlined process Requisition Approval 2-3 days 1-2 days Yes Implement automated approvals Supplier Search 3-5 days 1-2 days Yes Use supplier database RFQ and get Quote 3-5 days 1-2 days Yes Standardized templates Supplier Evaluation 3-5 days 2-3 days Yes Criteria checklist PO Creation 2 days 1 day Yes Automated PO generation PO Approval 1-2 days 1-2 days Supplier Confirmation 1-2 days 1 day Yes Faster confirmations Goods Receipt 7-10 days 3-5 days Yes Improved logistics coordination Invoice Processing 5-7 days 2-3 days Yes Streamlined verification Payment 15 days 10 days Yes Automated payment systems
- 13. Lean Principles in Supply Chain Value Stream Mapping (VSM) How to Implement VSM in Procurement? 1. • Map the Current State: Start by documenting the current procurement flow (from requisition to supplier delivery). 2. • Identify Bottlenecks and Waste: Look for steps where there are delays, excess inventory, or unnecessary tasks. 3. • Create the Future State: Design an optimized version of the process where waste is reduced, and flow is improved. 4. • Implement Changes: Based on your findings, make targeted improvements and track progress. 5. • By using VSM, procurement teams can see where improvements are most needed and act systematically to enhance overall efficiency and reduce costs.
- 14. Lean Principles in Supply Chain 5S of Kaizen 1.Sort: 2.Set in Order: 3.Shine: 4.Standardize: 5.Sustain:
- 16. Lean Principles in Supply Chain Continuous Improvement (Kaizen) The Kaizen process typically follows a cycle of steps that align with the Plan-Do-Check-Act (PDCA) model, which is commonly used for continuous improvement. 1.Plan: 2.Do: 3.Check: 4.Act: This cycle continues to repeat, ensuring that continuous improvement is embedded in the organization's operations.
- 17. Lean Principles in Supply Chain Key Principles of Kaizen • •Incremental Improvement: Kaizen emphasizes small, manageable changes that gradually improve processes. These improvements can involve adjustments in efficiency, quality, or cost. • Employee Involvement: It encourages the active participation of all employees, from top management to front-line workers, in identifying areas for improvement and offering solutions.
- 18. Lean Principles in Supply Chain Key Principles of Kaizen • Problem-Solving: Focus is placed on identifying and solving problems at their root cause rather than treating symptoms. • Continuous Progress: It operates on the belief that improvement is an ongoing journey, not a one-time effort. There is always room for progress, no matter how small the improvement might be.
- 19. Lean Principles in Supply Chain Just-in-Time Just-in-time ( JIT) is an inventory management strategy that aims to reduce waste and increase efficiency. It involves receiving goods from suppliers only when they are needed.
- 20. Lean Principles in Supply Chain Just-in-Time Benefits of Just-in-Time • Cost Reduction • Improved Cash Flow • Higher Efficiency and Productivity • Quality Improvement Challenges of Just-in-Time • Supply Chain Vulnerability • Complex Coordination • Risk of Stockouts
- 21. Lean Principles in Supply Chain Just-in-Time vs. Traditional Inventory Management: Traditional Inventory Management: In traditional systems, companies often maintain large inventories of raw materials, work-in-progress, and finished goods, based on forecasts of demand. This approach can lead to overstocking, higher storage costs, and the risk of unsold goods. Just-in-Time: In contrast, JIT focuses on producing only what is needed, when it’s needed, based on real- time demand, thus reducing the amount of inventory in the system.
- 22. Feature Push System Pull System Definition Production based on forecasts Production based on actual demand Production Trigger Forecasts and schedules Customer orders Inventory Levels Typically higher inventory Generally lower inventory Lead Times Longer lead times Shorter lead times Flexibility Less responsive to demand changes More responsive to demand changes Waste Higher risk of excess stock and waste Minimizes excess and waste Example Seasonal clothing production Restaurant meal preparation Control Method Centralized control based on forecasts Decentralized control based on demand Push System Vs Pull System
- 23. Lean Principles in Supply Chain Kanban Kanban is a visual framework used to manage work and improve efficiency in various processes, especially in project management, software development, and manufacturing. • Visual Board (Kanban Board) • Work In Progress (WIP) Limits • Flow and Continuous Improvement • Pull System
- 24. Lean Principles in Supply Chain Kanban • Visual Board (Kanban Board): This board is divided into columns that represent different stages of the workflow. For example, in a software development process, columns could include "To Do," "In Progress," and "Done." Tasks or work items are represented by cards, which move across the board from left to right as they progress through the stages.
- 25. Lean Principles in Supply Chain Kanban • Work In Progress (WIP) Limits Kanban emphasizes limiting the number of tasks in progress at each stage to avoid bottlenecks and ensure that work flows smoothly through the system. For example, you may limit the "In Progress" column to a maximum of 3 tasks at a time.
- 26. Lean Principles in Supply Chain Kanban • Flow and Continuous Improvement The goal is to improve the flow of work and reduce waste (such as delays, excess inventory, or bottlenecks) by continuously monitoring the system and making adjustments. Teams are encouraged to evaluate the system regularly and make improvements based on feedback and performance.
- 27. Lean Principles in Supply Chain Kanban • Pull System • Work is "pulled" into the next stage only when there is capacity, rather than being "pushed" onto the team or process. This helps to prevent overloading team members and ensures that work is completed efficiently.
- 29. Backlog To Do In Progress Review Completed Supplier evaluations Create purchase orders Inventory management Review shipping terms Shipments delivered Demand forecasting Schedule deliveries Order fulfillment Audit inventory levels Payments processed Monitor lead times Analyze supplier performance Managing logistics Supplier performance review Restock completed Assess risks Update shipping schedules Tracking shipments Cost analysis Reports generated
- 30. Lean Supply Chain Benefits • Reduced Lead Times: • Lower Costs: • Improved Quality: • Increased Customer Satisfaction: • Greater Flexibility: Conclusion Recap of Lean in Supply Chain: Lean tools and techniques can significantly improve supply chain efficiency by reducing waste, improving quality, and increasing responsiveness to customer demands.