Upload
shahzadhasan
View
114
Download
1
Embed Size (px)
Citation preview
CUSTOMER FULFILLMENTPlanning and Logistics Group
Using TOC, Lean, and Six SigmaUsing TOC, Lean, and Six Sigmato Improve Supply Chain to Improve Supply Chain
Operations Operations
C. Grant Lindsay, CSCP, JonahC. Grant Lindsay, CSCP, Jonah
Scott Edwards, JonahScott Edwards, Jonah
2 CUSTOMER FULFILLMENTPlanning and Logistics Group
ObjectiveObjective
Demonstrate how using TOC, Lean, and Six Sigma together can deliver fast measurable results in distribution operations
THIS PRESENTATION CONTAINS THE GENERAL INSIGHTS AND OPINIONS OF INTEL CORPORATION (INTEL). THE INFORMATION IN THIS PRESENTATION IS PROVIDED FOR INFORMATION ONLY AND IS NOT TO BE RELIED UPON FOR ANY OTHER PURPOSE THAN EDUCATIONAL. USE AT YOUR OWN RISK! INTEL MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE ACCURACY OR COMPLETENESS OF THE INFORMATION IN THIS PRESENTATION. INTEL ACCEPTS NO DUTY TO UPDATE THIS PRESENTATION BASED ON MORE CURRENT INFORMATION. INTEL IS NOT LIABLE FOR ANY DAMAGES, DIRECT OR INDIRECT, CONSEQUENTIAL OR OTHERWISE, THAT MAY ARISE, DIRECTLY OR INDIRECTLY, FROM THE USE OR MISUSE OF THE INFORMATION IN THIS PRESENTATION.
3 CUSTOMER FULFILLMENTPlanning and Logistics Group
40 Years of Experience 40 Years of Experience
From our founding in 1968, we’ve grown into the world’s leading silicon innovator with around 86,000 employees, approximately 300 facilities in 50 countries, and over $38 billion in revenues.
4 CUSTOMER FULFILLMENTPlanning and Logistics Group
IntelIntel’’s Supply Chains Supply Chain
SupplierSupplier
FabFab
FactoryFactory
WarehouseWarehouseOperationsOperations
ShipmentShipmentDeliveryDelivery
CustomerCustomer
5 CUSTOMER FULFILLMENTPlanning and Logistics Group
Worldwide Manufacturing Worldwide Manufacturing OperationOperationWarehouse NetworkWarehouse Network
Amsterdam
6 CUSTOMER FULFILLMENTPlanning and Logistics Group
Warehouse and distribution operations have to ship the right orders to the right place at the right time
7 CUSTOMER FULFILLMENTPlanning and Logistics Group
This is our journey using TOC, Lean, and Six Sigmato improve distribution operations
8 CUSTOMER FULFILLMENTPlanning and Logistics Group
Understanding the SystemUnderstanding the System
Current Reality Tree
Value Stream Map
9 CUSTOMER FULFILLMENTPlanning and Logistics Group
Planning the change
““In the long run you In the long run you only hit what you only hit what you aim at.aim at.”” -- ThoreauThoreau
We started here
Identify thecorrect
organizationalgoals
Maintain astable
predictable operation
10 CUSTOMER FULFILLMENTPlanning and Logistics Group
Warehouse OperationWarehouse Operation
Receiving
WH OrderCreation Order Pick
OrderOrderProcessingProcessing
((WOrPWOrP)QA Order
Packing
OrderStaging
FACTORYFACTORY
InventoryStorage
ProcessingLines
ShipmentShipmentDeliveryDelivery
11 CUSTOMER FULFILLMENTPlanning and Logistics Group
Before we startedBefore we started……
• High WIP levels
• High Cycle Time at each site
• High Cycle Time Variability from site to site
• Difficult to determine site Output capability
• Balance capacity policy & staffing model
• Safety risks (due to high WIP levels)
12 CUSTOMER FULFILLMENTPlanning and Logistics Group
Improving Production Operations
DBROld Process New Process
Unbalance CapacityBalance Capacity
Balance FlowUnbalance Flow
It's not about keeping people busy; it's about keeping orders busy.
13 CUSTOMER FULFILLMENTPlanning and Logistics Group
Example: Single Site ResultsExample: Single Site Results
0
Dai
ly A
vg C
ycle
Tim
e
0 25 50 75 100 125 150 175 200 225Days
Before DBRDBR
Process
Dai
ly A
vg C
ycle
Tim
e
0Before DBR DBR
Process
UnEqual Variances
EstimateStd ErrorLower 95%Upper 95%
3.26633 0.33190 2.61004 3.92263
Difference 9.841
t Test137.528
DF <.0001Prob > |t|
14 CUSTOMER FULFILLMENTPlanning and Logistics Group
Pull for Lean & SPCWith an understanding of flow and managing constraints, people began to ask questions…
How do I know when the process is running well vs. when I need to fix it?
When do I need to react?
Are there tools available to help us get more out of the constraint?
15 CUSTOMER FULFILLMENTPlanning and Logistics Group
SPC and Buffer ReportsSPC and Buffer Reports
Cycle Time Cycle Time Control ChartControl Chart
Buffer ReportBuffer Report
16 CUSTOMER FULFILLMENTPlanning and Logistics Group
World Wide Cycle Time ResultsWorld Wide Cycle Time ResultsC
ycle
Tim
e
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48Months
Before DBRDBRImplementation
ProcessUCLUCL
LCLLCL
CLCL
UCLUCL
LCLLCLCLCL
75% Reduction across all
sites!
17 CUSTOMER FULFILLMENTPlanning and Logistics Group
Qualitative Results of DBRQualitative Results of DBR
BEFORE
• Operations metrics were not directly effected by daily activity
• Large unexplainable difference in cycle time from site to site
• Difficult order prioritization• Each operation/station was
focused on only their process
AFTER
• Clear link between operations performance and metrics
• Site to site differences are small and can be explained
• Easy order prioritization
• Increase in site team work
18 CUSTOMER FULFILLMENTPlanning and Logistics Group
Keeping the Momentum GoingKeeping the Momentum Going
• The fast and stable process drove many follow on projects that enabled increased performance– Next Generation Capacity Model– Boards and Systems warehouse implementations– Reduction to early Order Creation
19 CUSTOMER FULFILLMENTPlanning and Logistics Group
A New Capacity Model
The Old model
• Balanced capacity (resource efficiency)
• Each operation equal
• Numerous static point estimate inputs (9)
• Did not effectively account for variation
• Incomplete decision making (unable to quantify risk)
• Intensive model maintenance
The New Model
• Balanced flow (time efficiency)
• Prioritizes the constraint operation
• Few distribution inputs (3)
• Considers process variability
• More informed decision making (provides estimate of risk)
• Simplified maintenance
20 CUSTOMER FULFILLMENTPlanning and Logistics Group
Frequency Comparison
.000
.012
.025
.037
.050
50.00 118.75 187.50 256.25 325.00
5 Line Total Output
Demand
Overlay Chart
Frequency Comparison
.000
.012
.025
.037
.050
50.00 118.75 187.50 256.25 325.00
5 Line Total Output
Demand
Overlay Chart
“Next Generation Capacity Model”
INPUTS Monte Carlo Simulation
Simulation based Equations
=)( xf
OIM Operation Heuristics/Assumptions
Model OutputLine & HC
Recommendations
255075100125
Cou
nt
0 10 20 30
255075100125
Cou
nt
0 10 20 30
DN
s
0
100
200
300
400
500
2 3 4 5 6 7
Day
DN
s
0
100
200
300
400
500
2 3 4 5 6 7
Day
DNs per hour
Daily DN Demand
21 CUSTOMER FULFILLMENTPlanning and Logistics Group
Warehouse OperationWarehouse Operation
Receiving
FACTORYFACTORY
ProcessingLines
ShipmentShipmentDeliveryDelivery
WH OrderCreation Order Pick
OrderOrderProcessingProcessing
((WOrPWOrP)QA Order
Packing
OrderStaging
InventoryStorage
WH Process
22 CUSTOMER FULFILLMENTPlanning and Logistics Group
Before Six SigmaN
o st
anda
rd w
ork
Inventory co
nsumed early
Inventory on hold
Customer credit problems
Frequent order cancellations
23 CUSTOMER FULFILLMENTPlanning and Logistics Group
Identifying the Critical Variables
“Control Point”
Inventory HoldsY Y
Cycle Time CancellationsY Y
X
New Tool
Y = f (X)The “Control Point” variable (X) impacts all these metrics (Y)
24 CUSTOMER FULFILLMENTPlanning and Logistics Group
After Six Sigma…
• Cycle Time – 44% reduction to Mean (41% to St Dev)
• Cancellations – 2 sites tracking– Site 1 - 73% Reduction to Mean (44% St Dev)– Site 2 - 51% Reduction to Mean (70% St Dev)
• Holds– 30% Reduction to Mean (11% St Dev)
• Standardized process • No increase in H/C required• No additional investment required
25 CUSTOMER FULFILLMENTPlanning and Logistics Group
Bigger SystemBigger System……Bigger ValueBigger Value……
~$15M in inventory savings
26 CUSTOMER FULFILLMENTPlanning and Logistics Group
Combined Results SummaryCombined Results Summary
• Eight implementations in six countries• Mean cycle time reduction of 75% (over 75% st dev)• Warehouse WIP reduction of over 65%• Fast delivery of operations data (3 weeks to 1 hr)• Next Generation Capacity Modeling• $15M in inventory savings• Increased employee safety• No increase in operating expense• No investment required
27 CUSTOMER FULFILLMENTPlanning and Logistics Group
Overview of Process
Understand the system – TOC (TP) / Lean (VSM)
Define your scope – TOC (TP) / Lean (VSM)
Ensure proper measures are in place – TOC
Production Improvement
• Remove policy constraints – TOC (TP)
• Improve Production process – TOC (DBR) / Lean / SPC
Exploit the new process
• Next Generation Capacity Model – TOC / Simulation (MC)
• Early Order creation – TOC (TP and CCPM) / Six Sigma
Understanding and usingTOC, Lean, and Six Sigma together is the path to real improvement!
28 CUSTOMER FULFILLMENTPlanning and Logistics Group
29 CUSTOMER FULFILLMENTPlanning and Logistics Group
C. Grant Lindsay
C. Grant Lindsay, CSCP, Jonah is a Senior Industrial Engineer in the Supply Chain Strategy and Design department for the Intel Corporation. His professional experience has focused on manufacturing and supply chain process improvement for the semiconductor and aerospace industries. Mr. Lindsay holds a Bachelors Degree in Industrial Engineering from Arizona State University and a Masters Degree in Engineering Management from Washington State University. He is certified in Supply Chain Logistics and the Thinking Process from the Theory of Constraints International Certification Organization (TOC-ICO) and is a member of the TOC-ICO Fundamentals Exam Committee. Mr. Lindsay received his “Jonah” recognition from Washington State University / Avraham Goldratt Institute, is a Certified Six Sigma Black Belt, and an APICS Certified Supply Chain Professional.
480-552-5678
30 CUSTOMER FULFILLMENTPlanning and Logistics Group
Scott J. Edwards
Scott J. Edwards is an Industrial Engineer in the Supply Chain Industrial Engineering and Statistics department at Intel Corporation. His professional experience includes process improvement, capacity planning and modeling, and network design in logistics/supply chain areas. Scott has a Bachelor of Science degree in Industrial and Management Systems Engineering from Arizona State University and a Masters degree in Business Administration from the University of Phoenix. He is also a certified Six Sigma Black Belt through Arizona State University’s Ira A. Fulton School of Engineering and received his “Jonah” recognition from Washington State University / TOCICO.
480-552-1064
31 CUSTOMER FULFILLMENTPlanning and Logistics Group
Related Papers
Edwards, Scott and Lindsay, C. Grant “Capacity Modeling with Monte Carlo Simulation for Finished Good Warehouses”. Crystal Ball User Conference, Denver, Colorado May 2006
Lindsay, C. Grant, “TOC in the DC” Institute of Industrial Engineers (IIE), Industrial Engineer magazine, Jun 2005