1 Lean Supply Strategies: Applying 5S Tools to Supply Chain Management Kimball Bullington, Ph.D....

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Lean Supply Strategies: Applying 5S Tools to Supply Chain Management

Kimball Bullington, Ph.D.Professor of Supply Chain

ManagementMiddle Tennessee State University

Presentation Expectations

• Not a lean operations sales pitch

• 5S is necessary, but not sufficient

• Supply strategies should be consistent with operations strategy – this may not be for you

Outline

• What is 5S?

• What is a Supply Strategy?

• What is Lean Supply?

• Developing a Supply Strategy Using 5S

Five S

• An organizational method for lean operations

• A pillar of the visual workplace

• A system for workplace housekeeping

Why Use 5S as a Model?

• It is a simple model and easy to understand and communicate.

• It uses a familiar vocabulary in a lean system.

• It helps to communicate the reasons for SCM activities such as consolidation and segmentation to those outside of supply management.

Five S

• Sort (seiri)

• Set in Order (seiton)

• Shine or purity (seiso)

• Standardize (seiketsu)

• Sustain (shitsuke)

5S

Five S

• Sort

• Set in Order

• Shine

• Standardize

• Sustain

REDTAG

If it doesn’t belong, If it isn’t being used,If it is in the way – get rid of it.

Set in Order

• A place for everything and everything in its place.

• Tool cutouts

• Taped outline on floor or bench

• Color coding

Five S

• Sort

• Set in Order

• Shine

• Standardize

• Sustain

Input

Output Tape enforces “Set in Order”

Shine

• Keep everything clean and swept

• System maintenance and inspection

• Problems are more easily spotted when the workplace is in order

• It promotes discipline

Standardize

• Standardize ensures that your progress in 3S implementation is not wasted.

• Procedures, schedules, practices

Sustain

• Deming’s point number 1: Constancy of purpose

• Golden Broom Award

Outline

• What is 5S?

• What is a Supply Strategy?

• What is Lean Supply?

• Developing a Supply Strategy Using 5S

What is a Supply Strategy?

• Strategy – A plan for achieving

organizational goals.

• 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

Outline

• What is 5S?

• What is a Supply Strategy?

• What is Lean Supply?

• Developing a Supply Strategy Using 5S

Lean Supply

• Supply in a Lean Operations environment

• Supply that supports Lean Operations

• Supply with little waste

• Supply consistent with lean principles

Lean Operations

• The latest incarnation of JIT

• Based on Toyota Production System.

• Waste elimination

• Widely used in automotive mfg & repetitive mfg.

• Gaining popularity in all mfg. as well as services

Outline

• What is 5S?

• What is a Supply Strategy?

• What is Lean Supply?

• Developing a Supply Strategy Using 5S

Why Use 5S as a Model for Supply Strategy?

• It is a simple model and easy to understand and communicate.

• It uses a common language in a lean system.

• It communicates the reason for consolidating and segmenting to those outside of supply management.

Five S Supply Strategy

• Sort

• Set in Order

• Shine

• Standardize

• Sustain

Five S Supply Strategy

• Sort

• Set in Order

• Shine

• Standardize

• Sustain

REDTAG

If they don’t belong, If they aren’t being used,If they are in the way – get rid of them.

Five S Supply Strategy

• Sort

• Set in Order

• Shine

• Standardize

• Sustain

RedConsolidat

eTagIf they don’t belong,

If they aren’t being used,If they are in the way – get rid of them.

How do we make improvement when the restraining forces offset the driving forces?

Consolidation

Restraining Forces Driving Forces

Progress

Forces Driving Consolidation

• 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

• Is consistent with lean production!

Forces Opposing Consolidation

• Fear of loss of competition• Doubtful savings• Lack of understanding of motivation• Lack of commitment to the selection process• Pets

Improvement by Reducing Restraining Forces

Consolidation

Progress

Five S Supply Strategy

• Sort

• Set in Order

• Shine

• Standardize

• Sustain

Set in Order

• Segmentation– Risk value– Spend value– Design value– Time value– Location value

How Can I Be Successful? Evaluation of Current Supply Base

• Number of Suppliers• Breakdown by Commodity• Skills / Process Evaluation• Performance Evaluation

Critical 2: Special Situations

Critical 1:Long-term Relationship

Non-Critical 1:Contractual

High

Low High

Ris

k

Annual Spend

Supplier Segmentation Matrix

Non-Critical 2:Transactional

Consolidate

ConsolidateRisk reduce &Consolidate

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10

0 1 2 3 4 5 6 7 8 9 10

Need / Opportunity for Lean

Ne

ed

fo

r E

ng

ine

eri

ng

In

vo

lve

me

nt

Pipe

Boards

Service

Machine

Housing

Weld

Fitting

Design

Lean

Design & Lean

Supply Base Segmentation

Five S Supply Strategy

• Sort

• Set in Order

• Shine

• Standardize

• Sustain

Shine

• Keeping machines clean helps us to spot problems

• Keeping our supply base “clean” (i.e., orderly, measured) helps us to spot problems or opportunities

• Working with suppliers on ongoing development opportunities

Shine

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

SWOT AnalysesCommon 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

Shine – Reduce Entropy

Entropy – a measure of the degree of disorder in a system: entropy always increases in a closed system.

Disorder – more suppliers, unknown number of suppliers, late deliveries, lost discounts, poor quality, suppliers treated inappropriately, etc.

Five S Supply Strategy

• Sort

• Set in Order

• Shine

• Standardize

• Sustain

Standardize

• Include in personal plans

• Make the status visible (e.g., # of suppliers)

• Assign audit responsibilities

• Ticklers

Standardize: Problems Avoided

• Growth of supplier base• Size of supplier base unknown• Segmentation deteriorates • Suppliers not visited regularly• Surveys conducted informally or with renegade

processes• Development efforts delayed / neglected

Five S Supply Strategy

• Sort

• Set in Order

• Shine

• Standardize

• Sustain

Sustain

• Deming’s point number 1: Constancy of purpose• The leadership of supply is responsible for

sustaining the process.• Supplier day – annual reviews• Ongoing strategy implementation monitoring,

review, and revision• Supplier database

Five S Supply Strategy

• Sort – supplier consolidate

• Set in Order - segment

• Shine – survey, SWOT, & development

• Standardize – 3S scheduled

• Sustain – sustaining leadership

Five S is the foundation of lean operations and it can be the foundation of lean supply.

Five S References

1. James P. Womack and Daniel T. Jones, Lean Thinking , 1996.)

2. Hiroyuki Hirano, 5S for Operators: 5 Pillars of the Visual Workplace (Productivity Press, 1996.)

3. Hiroyuki Hirano, 5 Pillars of the Visual Workplace (Productivity Press, 1990.)

4. Kimball Bullington, 5S Supply Base Maintenance, Quality Progress, Jan., 2003

5. Hau Lee, The Triple-A Supply Chain, Harvard Business Review, October, 2004.

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Lean Supply Strategies: Applying 5S Tools to Supply Chain Management

Kimball Bullington, Ph.D.

Professor - MTSU

kimballb@mtsu.edu