Basics of Supply Chain Management

Session 9
Lean and Quality Systems

APICS Certified in Production and Inventory Management (CPIM)

9©• APICS
1 Confidential
© and Proprietary
APICS Confidential and Proprietary
Basics of Supply Chain Management
1. 2. 3. 4. 5.
Capacity
Introduction to Material Management
Demand Master
Supply Chain Requirements and
Management Planning Production
Management Planning
Activity Control

Aggregate Purchasing Lean and

Item Inventory Quality Theory of
Inventory and Physical
Management Systems Constraints
Management Distribution

6. 7. 8. 9. 10.

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Learning Objectives

 Productivity and Quality Systems

− Identify the four phases in the product and quality
cycle.
− Identify four objectives of productivity and quality
systems.
 Focus on the Customer
− Identify six requirements customers have for
products.
− Explain the use of quality function deployment to set
technical requirements based on customer input.

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Learning Objectives (cont.)

 Lean
− Identify eight types of waste.
− Explain the use of kanban in a pull system.
− Differentiate between functional and cellular layouts.
− Explain the concept and goals of total productive maintenance.
− Explain the importance of supplier partnerships.
 Total Quality Management (TQM)
− Explain the role of specification limits in assessing manufacturing
quality.
− Identify two main types of quality-related costs.
− Explain the seven quality control tools.
− Explain the major concepts of six sigma and DMAIC.
− Differentiate between special and common causes of variation.

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 Session 9
Lean and Quality Systems

Productivity and
Quality Systems

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Product and Quality Cycle
Ensure Product Quality from the perspective of the customer

1. Product
definition

Marketplace

4. Product
consumption 2. Product
(use) design

3. Product
manufacturing

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Objectives
Product quality

From
Product Design Manufacturing
customer
definition process and packaging
perspective

 Performance
 Features
 Conformance
 Warranty
 Sustainability

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Systems and Methodologies
Used through out the product and the quality cycle

Systems and methodologies can vary across the product life cycle.

There are many choices of systems and methodologies.

Systems and methodologies can

complement each other.

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Example Systems

 Lean
 Total quality management
− problem-solving tools
− costs of quality
− quality function deployment
− employee empowerment
− continuous process improvement
− process capability and control
− six sigma
− benchmarking

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Principles, Practices, and Tools
Product and quality cycle
Lean, six sigma, TQM
practice or tool Define Design Manufacture Consume
Customer focus/value        

QFD        

Improvements        

Eliminate waste        

Flow        

Pull systems        

Work cells        

Process flexibility        

Total production maintenance        

Employee focus        

Supplier partnerships        

Quality-related costs        

Quality tools        

Statistical process control        

Six sigma        

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 Session 9
Lean and Quality Systems

Focus on the Customer

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Focus on the Customer
Org focusing on quality are dedicated to meet and exceed customer needs

 Customer requirements:
− quality
− flexibility
− service
− short lead time
− consistency
− cost savings

Source: Arnold et al., Introduction to Materials Management, 7th ed. Reprinted by Permission of Pearson Education

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Value of a Product to the Customer
What is an ideal product?

 From customer’s point of view:

− meets or exceeds expectations
 From manufacturing point of view:
− does not waste material or labor
− has short setup time and low cost
− is already being manufactured
 From design point of view:
− has features that add value for the customer

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Customers Dictate Technical Specs
Methodology designed to ensure that all major requirements are identified and met

QFD house of quality

Correlation matrix
technical
Technical design
features / characteristics
requirements

Competitor B performance
Competitor A performance
Customer importance

Importance weighting
Relationship matrix
Customer between
central
(or relationship)
customer requirements
requirements matrix
and
design requirements

Voice of the Technical priority

“
customer

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 Session 9
Lean and Quality Systems

Lean

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The House of Toyota
Framework of lean developed at Toyota

Best quality, lowest cost, shortest lead time

by eliminating waste
Just-in-Time (JIT) Culture of Jidoka
continuous
• Takt time • Manual or
improvement
automatic line
• One-piece flow stop
• Pull systems
Respect for • Separate
people operator and
• safety machine
activities
• morale • Mistake-proofing
• In-station
process control

Operational stability
Leveling Standard work Kaizen

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Lean Focus: Eliminate Waste

1. Process
2. Movement How can these
be eliminated
3. Methods through
continuous
4. Product defects improvement?

5. Waiting time
6. Overproduction
7. Excess inventory
8. Unused people skills

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Continuous Flow Production
Used IN lean
 Production matches customer demand rate (takt time).
 Items are processed directly from one step to the next.
 Optimal is one-piece (one-at-a-time) flow.
 Little inventory is held.
 Demand pulls product through the system.

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Example Pull System with Kanban
TheMaterial handler
material handler (or
(or Operator
Operator # 2) kanban
2) brings
to brings kanban
Workstation to hangs
1 and
Workstation
it on the board.1 Operator 2 begins
Operator #
Operator 11removes
removes and hangs it on work, detaches
kanban
kanban from board,
from board,
B kanban, and places
hangs
hangs it
it on
on empty
empty it for collection.
container, and
container, and
begins
begins work.
work. C A

Process 1 Inventory Process 2

Containerwith
withcard
card Kanban move next Full containers
Container
isismoved
movedbybymaterial
material Kanban board Pull
handlerororOperator
handler Operator#11
Kanban card
totoinventory
inventoryposition.
position. D

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Process Layout
Operation Grouped by function or process layout

Lay out the plant by departments using similar equipment.

 Process layout is used

Finishing Sanding by discrete
department department manufacturers.
 It is a silo-type layout.
Cutting  Individual processes are
department
physically separated.
Sawing  Batches move through,
department creating WIP inventory.

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Cellular Layout
Inside a work sell , operations can be grouped by product family

 Cellular layout is used in a

flow production line.
Cutting Sawing  Products move through,

Sanding
one at a time, from station
to station, with limited WIP
inventory in between.
 This layout reduces waste
Finishing of excess floor space,
unnecessary motions,
transportation, and
handling.

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Benefits of Cellular Layout
It leads to elimination of waster

 The use of work cells can result in

− reduced queue
− simplified production activity control
− reduced floor space and walking
− reduced material movement
− immediate feedback.
 These advantages can lead to
− greater production flexibility
− smaller lot sizes
− improved quality.

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Process Flexibility
Companies needs to be agile to be successful

 Process flexibility
− can swiftly change volume/mix
− requires
• flexible machinery
• cross-trained employees
• quick changeovers.

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Total Productive Maintenance (TPM)
Lost Production time and loosing customer service !!

 The goals of TPM are to

− ensure production machinery is ready to perform
tasks
− create uninterrupted flow.
 Schedule preventive maintenance before problems
occur.
 Train and empower operators to perform routine
maintenance on their equipment.
 Operators assume a sense of responsibility for their
machines and downtimes are reduced.

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Continuous Improvement
Definition

 Improves productivity
 Eliminates waste
 Involves teams

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Employee Involvement and Empowerment
Important aspect of sustaining quality

First time right

 Involve employees in
quality and process
improvement.
Lot-size Lead-time
 Empower them to make reduction reduction
Quality
decisions.
at the
 Use jidoka or line stop for source
defects.

WIP
reduction

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Lean Tools and Techniques

 Value stream Value stream map

mapping Purchase orders Production
Production Forecasts Information
Supplier schedule
Schedule Retailer flow
 Heijunka
 5S Paint
Paint Assemble
Assemble Ship
Ship Material
− sort flow

− simplify C/T 60
200
C/T 30
200
C/T 20
Process
− scrub
C/O= 180
2 Shifts
C/O = 0
2 Shifts
C/O = 0
2 Shifts
data
− standardize 1 day 2 days 1 day 4 days

− sustain 1 hour 1 hour

 Hoshin planning

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Supplier Partnerships

 Supplier is viewed as an upstream work center

to the plant.
 Customers and suppliers share information.
 Suppliers must
− have reliable quality
− be able to produce and make small, frequent
deliveries.

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 Session 9
Lean and Quality Systems

Total Quality Management

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What is Quality?

 quality—Conformance to requirements or fitness for

use.
—APICS Dictionary

 As a minimum, all parts must be within specification

and the less variation from the center of the
specifications, the better.

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Product Quality
From manufacturing perspective ..falling within limits

Dowel dimensions
Lower Upper
8
specification specification
limit Mean limit
7

6
Frequency

0
0.90 0.91 0.92 0.93 0.94 0.95 0.96 0.97 0.98 0.99 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10

Dowel dimensions (inches)

Spec = 1" ± 0.10"

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Problem 9.1

5
4
3
3
1
100 110 120 130 140 150 160 170 180
Milligrams

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Problem 9.1 Solution

5 X
4 X X X
3 X X X
2 X X X
1 X X X X X
100 110 120 130 140 150 160 170 180
Milligrams

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Quality-Related Costs

Costs of failure Costs of controlling quality

Internal Prevention

External Appraisal

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Quality Control Tools

Flowchart
Cause
Scatter
and
diagram
effect

Quality
Control
Pareto
charts

Check
Histogram
sheet

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Flowchart
Receive part

Paint

Accept? No
Rework

Yes

Package

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Cause-and-Effect Diagram

Environment People Materials

Disorder Not properly trained Inconsistent

Unclean Not paying attention Acceptance criteria vary

Poor
packaging
No calibration requirements No standards Not calibrated

No standards Complex procedures Vendors vary

Measurement Methods Machine

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Control Charts
Common way to visualize and measure variation
Upper control limit

Lower control limit

Upper control limit

X is the average for a small sample.

R is the highest reading minus the lowest for the sample.

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Statistical Process Control (SPC)
Applies statistical teq. Such as control charts

 Goal is to reduce defects and achieve customer

satisfaction.
 SPC has two objectives:
− Select processes capable of producing the required
quality products.
− Monitor processes to ensure they continue to produce
the required level of quality.

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Process Capability
Refers to the ability of the process to produce parts to conform to specs
Mean

Lower Upper
specification specification
limit limit

Source: Arnold et al., Introduction to Materials Management, 7th ed. Reprinted by Permission of Pearson Education

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SPC Versus Product Inspection

 SPC monitors processes against statistical control limits.

 SPC:
− adds value for the customer
− spots changes in variation so that corrective action can be taken to
prevent defects

 Product inspection assesses products against a specification.

 Product inspection:
− does not add value for the customer
− catches defects after they occur
− is expensive and usually considered waste
− may not result in correction of defect root cause

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Check Sheet

Product
A B C
Wrong lot 9

Dented 8

Broken 6

9 9 5

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Histogram
Graph illustration that represents frequency distribution

Defects by type

10
9
Percentage defective

8
7
6
5
4
3
2
1
0
Broken Wrong lot Dented
Defect type

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Pareto Chart
Customer complaints

45

40

35
Percent of complaints

30

25

20

15

10

0
Poorly Late delivery Did not meet Defective Other
packaged expectations

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Scatter Diagram

160

140
Number of goods packaged

120

100

80

60

40

20

0
0 5 10 15 20 25 30
Day of the month

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Six Sigma

 Major concepts:
− It is important to understand what the customer
wants.
− Variation causes defects.
− The output of a process is a function of its inputs.
 Lean six sigma
− Process improvement
− Problem solving

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Causes of Variation
Variations causes defects

 special causes—A source of variation in a process

that can be isolated, especially when its significantly
larger magnitude or different origin readily
distinguishes it from random causes of variation.
 common causes—Causes of variation that are
inherent in a process over time. They affect every
outcome of the process and everyone working in the
process.
──APICS
Dictionary

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Six Sigma Project Phases—DMAIC

 Define
 Measure
 Analyze
 Improve
 Control

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Benchmarking

 Benchmarking is a systematic method by which

organizations compare their performance to a best-
in-class organization.
 Benchmarking steps:
1. Select the process or processes to benchmark.
2. Identify an organization that is best-in-class in
performing the process you want to study.
3. Study the benchmarked organization.
4. Analyze the data.

Source: Arnold et al., Introduction to Materials Management, 7th ed. Reprinted by Permission of Pearson Education

9 • 49 © APICS Confidential and Proprietary

Summary

Define Design Make Consume

Systems can vary across the product and quality cycle.

Lean TQM Six sigma Lean six sigma

There are many choices of systems.

Systems can complement each

other, but their common goal is to
satisfy the customer.

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Learning Objectives

 Productivity and Quality Systems

− Identify the four phases in the product and quality
cycle.
− Identify four objectives of productivity and quality
systems.
 Focus on the Customer
− Identify six requirements customers have for
products.
− Explain the use of quality function deployment to set
technical requirements based on customer input.

9 • 51 © APICS Confidential and Proprietary

Learning Objectives (cont.)

 Lean
− Identify eight types of waste.
− Explain the use of kanban in a pull system.
− Differentiate between functional and cellular layouts.
− Explain the concept and goals of total productive maintenance.
− Explain the importance of supplier partnerships.
 Total Quality Management (TQM)
− Explain the role of specification limits in assessing manufacturing
quality.
− Identify two main types of quality-related costs.
− Explain the seven quality control tools.
− Explain the major concepts of six sigma and DMAIC.
− Differentiate between special and common causes of variation.

9 • 52 © APICS Confidential and Proprietary

 Session 9
Lean and Quality Systems

Wrap-Up and
Homework

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Vocabulary Check Performance Check

7. g 1. b 7. d
1. e
8. a 2. d 8. d
2. b
9. j 3. c 9. b
3. h
10. d 4. a 10. c
4. l
5. c 11. i 5. b

6. k 12. f 6. b

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