Topic 4 Supply Chain JIT Kanban Lean Students Handout

8/3/2019 Topic 4 Supply Chain JIT Kanban Lean Students Handout

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OperationsManagement

Topic 4 Supply ChainTopic 4 Supply ChainManagement, JIT, KanbanManagement, JIT, Kanbanand Lean Manufacturingand Lean Manufacturing

UiTM Shah AlamUiTM Shah Alam

Lecturer: Pn. Noriah YusoffLecturer: Pn. Noriah Yusoff

T1-A16-6CT1-A16-6C


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Learning Objectives

When you complete this chapter youshould be able to:

1.1. Explain the strategic importance ofExplain the strategic importance of

the supply chain or what is the supplythe supply chain or what is the supplychain managementchain management

2.2. Able to discuss the need and benefitsAble to discuss the need and benefitsof Supply Chain Managementof Supply Chain Management

Example of Supply Chain in DardenExample of Supply Chain in DardenRestaurantsRestaurants


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Darden Restaurants

Largest publicly traded casualLargest publicly traded casualdining company in the worlddining company in the world

Serves over 300 million mealsServes over 300 million mealsannually in more than 1,400annually in more than 1,400restaurants in the US and Canadarestaurants in the US and Canada

Annual sales of $2.4 billionAnnual sales of $2.4 billion

Operations is the strategyOperations is the strategy


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Darden Restaurants

Sources food from five continentsand thousands of suppliers

Four distinct supply chains Over $1.5 billion spent annually in

supply chains

Competitive advantage achievedthrough superior supply chain


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The Supply Chains StrategicImportance (What is Supply Chain

Management)

Supply chain management is theSupply chain management is the

integration of the activities thatintegration of the activities thatprocure materials and services,procure materials and services,transform them into intermediatetransform them into intermediategoods and the final product, andgoods and the final product, and

deliver them to customersdeliver them to customersCompetition is no longer betweenCompetition is no longer between

companies; it is between supply chainscompanies; it is between supply chains


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Supply Chain Management

1.1. Transportation vendorsTransportation vendors

2.2. Credit and cash transfersCredit and cash transfers

3.3. SuppliersSuppliers

4.4. DistributorsDistributors

5.5. Accounts payable and receivableAccounts payable and receivable

6.6. Warehousing and inventoryWarehousing and inventory7.7. Order fulfillmentOrder fulfillment

8.8. Sharing customer, forecasting, andSharing customer, forecasting, andproduction informationproduction information

Important activities include determiningImportant activities include determining


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Supply Chain Requirements inGlobal Environment

React to sudden changes in parts availability,React to sudden changes in parts availability,

distribution, or shipping channels, importdistribution, or shipping channels, importduties, and currency ratesduties, and currency rates

Use the latest computer and transmissionUse the latest computer and transmissiontechnologies to schedule and manage thetechnologies to schedule and manage the

shipment of parts in and finished productsshipment of parts in and finished productsoutout

Staff with local specialists who handle duties,Staff with local specialists who handle duties,freight, customs and political issuesfreight, customs and political issues

Supply chains in a global environmentSupply chains in a global environmentmust be able tomust be able to


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Benefits of Supply Chain

Management Lower inventoriesLower inventories

Higher productivityHigher productivity

Greater alertnessGreater alertness

Shorter lead timesShorter lead times

Higher profitsHigher profits

Greater customer loyaltyGreater customer loyalty


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Creating an Effective Supply Chain

Develop strategic objectives andDevelop strategic objectives andtacticstactics

Integrate and coordinate activities inIntegrate and coordinate activities inthe internal supply chainthe internal supply chain

Coordinate activities with suppliers andCoordinate activities with suppliers andcustomerscustomers

Coordinate planning and executionCoordinate planning and executionacross the supply chainacross the supply chain

Form strategic partnershipForm strategic partnership


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Managing the Supply Chain

Mutual agreement on goalsMutual agreement on goals

TrustTrust

Compatible organizational culturesCompatible organizational cultures

There are significant management issues inThere are significant management issues incontrolling a supply chain involving manycontrolling a supply chain involving manyindependent organizationsindependent organizations


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Factors in Choosing a

Supplier Quality and quality assuranceQuality and quality assurance

FlexibilityFlexibility

LocationLocation

PricePrice

Product or service changesProduct or service changes

Reputation and financial stabilityReputation and financial stability

Lead times and on-time deliveryLead times and on-time delivery


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Outsourcing

Transfers traditional internalTransfers traditional internalactivities and resources of a firm toactivities and resources of a firm to

outside vendorsoutside vendors Utilizes the efficiency that comesUtilizes the efficiency that comes

with specializationwith specialization

Firms outsource informationFirms outsource informationtechnology, accounting, legal,technology, accounting, legal,logistics, and productionlogistics, and production


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E-Procurement

Uses the internet to facilitateUses the internet to facilitatepurchasingpurchasing

Electronic ordering and fundsElectronic ordering and fundstransfertransfer

Electronic data interchange (EDI)Electronic data interchange (EDI)

Advanced shipping noticeAdvanced shipping notice


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E-Procurement

Online catalogsOnline catalogs

Catalogs provided by vendorsCatalogs provided by vendors

Catalogs published byCatalogs published byintermediariesintermediaries

Exchanges provided by buyersExchanges provided by buyers


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Internet Trading Exchanges

Health care products ghx.comHealth care products ghx.com

Retail goods gnx.comRetail goods gnx.com

Defense and aerospace products Defense and aerospace products exostar.comexostar.com

Food, beverage, consumer productsFood, beverage, consumer products transora.com transora.com

Steel and metal products Steel and metal products metalsite.commetalsite.com

Hotels avendra.comHotels avendra.com


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E-Procurement

AuctionsAuctions

Maintained by buyers, sellers, orMaintained by buyers, sellers, orintermediariesintermediaries

Low barriersLow barriersto entryto entry

Increase inIncrease in

the potentialthe potentialnumber ofnumber ofbuyersbuyers


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E-Procurement

RFQs

Can make requests for quotes

(RFQs) less costly Improves supplier selection

Real-time inventory tracking


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Learning Objectives for JIT

Be able to understand the concept ofJIT,TPS and Lean Production

Able to discuss the elements andbenefits of JIT

Able to link the application of Kanban inJIT systems

Able to discuss the steps in transitioninto JIT systems


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Just - in -Time (JIT)

A highly coordinated processing systemin which goods moving through thesystem, and services are performed, just

as they are needed. JIT is a pull demand system The ultimate goal of JIT is a balanced

system

Achieves a smooth, rapid flow ofmaterials through the system


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Just-In-Time (JIT)

Powerful strategy for improving operations Materials arrive where they

are needed when they are

needed Identifying problems anddriving out waste reducescosts and variability andimproves throughput

Requires a meaningfulbuyer-supplier relationship


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Just-In-Time, TPS, and

Lean Operations JIT is a philosophy of continuous andJIT is a philosophy of continuous and

forced problem solving via a focus onforced problem solving via a focus on

throughput and reduced inventorythroughput and reduced inventory TPS emphasizes continuousTPS emphasizes continuous

improvement, respect for people, andimprovement, respect for people, andstandard work practicesstandard work practices

Lean production supplies theLean production supplies thecustomer with their exact wants whencustomer with their exact wants whenthe customer wants it without wastethe customer wants it without waste


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Benefits of Just-In-Time Systems

Reduced inventory levelsHigh qualityFlexibility

Reduced lead times Increased productivity Increased equipment utilizationReduced scrap and rework

Reduced space requirementsReduced setup costsPressure for good vendor relationships


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Elements of JIT

1. Product Design

2. Process Design3. Personnel/organizational elements

4. Manufacturing planning and control


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Product Design

Standard parts

Modular Design Highly capable production systems

Concurrent engineering


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Process Design

Small lot sizes

Setup time reduction

Manufacturing cells Limited work in process

Quality Improvement

Production flexibility

Little inventory storage


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Personnel/organizational elements

Workers as assets

Cross-trained workers

Continuous improvement

Cost accounting

Leadership/project management


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Manufacturing planning and control

Level loading

Pull System

Visual Systems Kanban

Close vendor relationships

Reduced transaction processing

Preventive maintenance


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Kanban

Kanban is the Japanese word for cardKanban is the Japanese word for card(signal or visible record)(signal or visible record)

The card is an authorization for the nextThe card is an authorization for the nextcontainer of material to be producedcontainer of material to be produced

A sequence of kanbansA sequence of kanbanspulls material throughpulls material throughthe processthe process

Many different sorts ofMany different sorts ofsignals are used, butsignals are used, butthe system is still calledthe system is still calleda kanbana kanban


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Kanban

1.1. User removes aUser removes astandard sizedstandard sizedcontainercontainer

2.2. Signal is seen bySignal is seen bythe producingthe producingdepartment asdepartment asauthorization toauthorization to

replenishreplenish

Part numbersPart numbers

mark locationmark location

Signal markerSignal markeron boxeson boxes

Figure 16.8Figure 16.8


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Advantages of Kanban

Allow only limited number of faulty orAllow only limited number of faulty ordelayed materialdelayed material

Problems are immediately evidentProblems are immediately evident

Puts downward pressure on badPuts downward pressure on badaspects of inventoryaspects of inventory

Standardized containers reduceStandardized containers reduceweight, disposal costs, wasted spaceweight, disposal costs, wasted spaceand laborand labor


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Transitioning to a JIT System

Get top management commitmentGet top management commitment

Decide which parts need most effortDecide which parts need most effort

Obtain support of workersObtain support of workers

Start by trying to reduce setup times @Start by trying to reduce setup times @costscosts

Gradually convert operationsGradually convert operations

Convert supplier to JITConvert supplier to JIT

Prepare for obstacles commitmentPrepare for obstacles commitmentsupplier resistantsupplier resistant

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Topic 4 Supply Chain JIT Kanban Lean Students Handout