MAN203

Logistics and Supply Chain

Management

Week 7
Lean Manufacturing
 Copyright Notice

COPYRIGHT
COMMONWEALTH OF AUSTRALIA
Copyright Regulations 1969
WARNING

This material has been reproduced and communicated to you by or on behalf of Kaplan Higher
Education pursuant to Part VB of the Copyright Act 1968 (the Act). The material in
this communication may be subject to copyright under the Act. Any further reproduction
or communication of this material by you may be the subject of copyright protection under the Act.

Do not remove this notice

2
 Today’s Big Idea

“Strapped by tight credit and plummeting sales,

businesses have overhauled the way they
manage supply chains, inventory, production
practices and staffing.”

Yellen, Janet L, 2009. ‘The Outlook for the Economy and Real Estate’. Presentation
to the Phoenix Chapter of Lambda Alpha International, Phoenix, AZ, November 10.
 Learning Objectives

• Define agile and lean manufacturing

• Examine the principles of agile and lean
manufacturing
• Gain an understanding of issues relevant to
implementing agile and lean manufacturing
 Agenda

 Defining Lean Management

• Agile vs Lean
• Implementing Lean Manufacturing
 Lean Manufacturing

• Mass production
– Batch production
• Lean production
– Just-in-time

Source: Melton, T. 2005.

 Benefits

Less
waste

Reduced Reduced
inventory Benefits lead-time

Less
rework

Source: Melton, T (2005)

 Principles
• Supply from a smaller 1st tier supply base
• Develop close partnerships with suppliers
• Select supplier based on performance
• Single or dual sourcing only
• Cost = market minus (not cost plus)
• Engage suppliers in new product initiatives
• Synchronise flexibility with suppliers
• Just-In-time delivery
• Incentive and reward alignment
• Willingness to share knowledge

Source: James, T (2014)

 Drivers

• Waste reduction
• Demand management
• Process standardisation
• Engaging people
• Collaboration
• Continuous improvement

Source: James, T (2014)

 Lean Thinking

• Value
• Waste
• Flow
• Knowledge management
• Continuous improvement

Source: Melton, T (2005)

 Customer Value

Source: Melton, T (2005)

 Eliminate Waste

Source: Melton, T (2005)

 Examine Flow

• One piece flow vs batch or queue

– Throughput
– Inventory
– Expense

Source: Melton, T (2005)

 An Example of Flow

Source: Melton, T (2005)

 Theory of Constraints

What is limiting flow:

– Processes
– People
– Culture

Source: Melton, T (2005)

Knowledge Management
Continuous Improvement
 Tools
• Value stream mapping
• Time-based process mapping
• Process activities mapping
• Supply chain response matrix
• Logistics pipeline map
• Production variety funnel
• Quality filter mapping
• Demand amplification mapping
• Value adding time profile

Source: James, T (2014)

 5S Method for Continuous
Improvement

• Sort: eliminate what you do not need

• Set in order: neatness, place
• Shine: cleanliness
• Standardise: rules, discipline
• Sustain: systemtise
 Activity 7.1

Watch video

Consider: What might be the main challenges for

implementing the 5S process?

Source: https://www.youtube.com/watch?v=F7hk_sMings
 Agenda

• Defining Lean Management

 Agile vs Lean
• Implementing Lean Manufacturing
 Agile vs Lean

Source: Wu, D 2014. Fundamentals of supply chain management,

Bookboon, p. 72
 Demand vs Supply

Source: Wu, D, 2014. Fundamentals of supply chain management,

Bookboon, p. 75
 Lean vs Agile

Source: Wu, D, 2014. Fundamentals of supply chain management,

Bookboon, p. 73
 Agile Supply Chain Framework

Source: Wu, D, 2014. Fundamentals of supply chain management,

Bookboon, p. 74
 De-Coupling Point

Source: Wu, D 2014. Fundamentals of supply chain management,

Bookboon, p. 75
 Build Inventory or
Respond to Demand

Source: Wu, D, 2014. Fundamentals of supply chain management,

Bookboon, p. 75
 Key Performance Indicators
• Design-to-market time
• Customer satisfaction and delight
• Production throughput
• Delivery lead time
• Product availability
• Capacity to synchronise and optimise
• Frequency of product upgrading
• Service innovation and flexibility

Source: Wu, D, 2014. Fundamentals of supply chain management,

Bookboon, p. 82
 Activity 7.2

Watch video

Consider: How important is agile manufacturing to

product design and customer satisfaction?

Source: https://www.youtube.com/watch?v=rcwniOmYGoA
 Agenda
• Defining Lean Management
• Agile vs Lean
 Implementing Lean Manufacturing
 Key Principles
1. Synchronise activities through shared
information
2. Work smarter, not harder
3. Partner with suppliers to reduce inbound lead
times
4. Seek to reduce complexity
5. Postpone the final
configuration/assembly/distribution of products
6. Manage processes not just functions
7. Utilise appropriate performance metrics
 Synchronise Activities Through
Shared Information
• Shared information and process alignment
allows for a single schedule along the supply
chain
• Web-based technology enables different entities
in a network to share information on real
demand.
 Work Smarter, not Harder

• Time is often spent on activities that create

cost but no benefit for the customer.
• Time spent in inventory is a classic example of
non-value adding time.
• Supply-chain mapping can reveal where idle
time occurs.
 Partner with Suppliers

• Suppliers often chosen on basis of price rather

than responsiveness
• Aids to adopt Vendor Managed Inventory (VMI)
practices
• Switches the responsibility for the
management/replenishment of inventory from
customer to supplier
 Reducing Complexity

• Generated through producing multiple variants

of the same product, frequent product changes,
cumbersome processes that involve many
different stages/handoffs
• Can lead to fragmentation of demand
• Simplification can be achieved through seeking
greater commonality of components
 Postpone Final Configuration

• The process by which final configuration is

delayed as long as possible

• The longer that products can remain as generic

‘works in progress’ then the more flexibility there
will be to ensure the ‘right product at the right
time’
 Manage Process not Just Function

• Too much of a focus on ‘distribution of labour’ –

a functionally-based organisational concept.
• Responding rapidly requires focusing on
‘processes’
 Utilise Appropriate Performance
Metrics
• Formal measurement systems may drive the
business
• Best to focus on metrics that increase the agility
of the business
• Includes: time-based metrics, customer-based
metrics
• Shift from efficiency to effectiveness
 Activity 7.3

Working in pairs, identify three types of companies

that might use:
• Lean manufacturing
• Agile manufacturing
• Traditional manufacturing
 Summary

• Storing inventory can be costly.

• Adopting lean or agile methods can improve

flexibility, responsiveness and cost.

• Manufacturing is a ‘system’ not ad hoc.

Any Questions?