Lean Manufacturing

Andrew W. Dalziel Product Director - SCM Intentia International [email protected]

Page 1

Agenda – Lean Manufacturing

 Introduction – The Challenge  Why Lean Manufacturing Makes Sense  What is Lean Manufacturing?

 How Does Technology Support Lean?

 Intentia and Lean Manufacturing  The Benefits of Lean Manufacturing  Example of Where to Start the Lean Journey  Summary Page 2

The Challenge – Low Cost Competition

Companies Increased Competition on Costs

% of respondents facing competitive challenges •

>70%

facing some or significant low cost competition •

95%

of customers demanding lower prices •

50%

say competitors are producing higher valued added goods Page 3

The Challenge – Manufacturing Costs

Manufacturers Look Abroad

% of companies employing competitiveness strategy •

45%

planning to or have outsourced manufacturing abroad •

30%

planning to or have invested abroad to replace capacity Page 4

Why Lean Manufacturing Makes Sense

 Western manufacturers under cost pressure from low-cost countries  Customers are demanding greater product variety and highly customized products  Customers are demand more new products  Customers demanding shorter delivery lead-times and lower prices  Increasing transactional volumes  Worker motivational issues  Stricter Health & Safety rules  Cash flow issues with working capital tied up in inventory  Competitive global environment - advantage through delivering greater added value  ….

Page 5

Adoption of Lean Manufacturing

Use of Lean as Improvement Methodology 90 80 70 60 50 40 30 20 10 0 US UK Country An ARC Group strategy report written by Simon Bragg (2004) suggests that “Today 36 percent of US manufacturers and 70 percent of UK manufacturers are using lean as their primary improvement methodology.” Page 6

Defining Lean Manufacturing

Lean manufacturing is essentially a philosophy that focuses on customer value-adding activities and the systematic identification and elimination of waste , as well as continuous improvement in flow manufacturing environments to increase productivity.

Page 7

Five Core Elements of Lean Thinking

1. Value 2. Value stream 3. Flow

Identify and deliver value to the customer Identify the value stream to see what is necessary Make value flow

4. Pull 5. Perfection

Make as needed. Customer demand driven manufacturing Continuous improvement in pursuit of perfection Page 8

How Technology Can Support Lean Manufacturing

 Product data management for managing exploding product variety  Electronic kanban offers many advantages over physical kanbans – Avoids problems of loss or sabotage of physical kanbans – Quicker transfer of information between production areas and partners – Faster and easier to resize kanbans – Easier to phase in new products  Supplier and customer portals for kanban control or JIT call-offs  Ability to support complex algorithms for Theory of Constraints planning  Databases and powerful analytics tools to identify customer value and support continuous improvement  Elimination of waste in administration, such as order entry, order management, invoicing, etc.

Page 9

Intentia Support for Lean Manufacturing

Lean Manufacturing Examples of Lean Techniques Examples of Intentia Support Value Analysis Value Stream - Mapping Flow Levelled Scheduling Flow - Lean Material Planning Flow - Total Productive Maintenance Pull - Product Configuration Pull Theory of Constraints Pull - JIT/ Kanban Pull Repetitive Scheduling Perfection Continuous Improvement Business Process Design Tool Production Rate Plant Maintenance Product Configurator TOC Drum Buffer Rope Customer Delivery Schedules Forecasting Lean Material Planning Order Initiation Orderless Production Materials Back flushing Electronic & Physical kanbans EDI/XML Supplier Call-Offs iBrix based Customer and Supplier Portals Enterprise Performance Measurement EDI=Electronic Data Interchange Opportunity Analyzer Page 10

Value – Enterprise Performance Management

“In competitive terms, value is the amount buyers are willing to pay for what the firm provides them. Value is measured by total revenue, a reflection of the price a firms product commands, and the units it can sell.” Michael Porter Page 11

Flow – Total Productive Maintenance (TPM)

 Advanced enterprise asset management options increase equipment reliability and thus: – Improve availability – Reduce downtime – Reduce product scrap and wasted time managing that scrap – Increase machine tolerances and thereby increase quality  Diagnostics management features automatically identify situations where the current maintenance strategy is not working and trigger a continuous improvement review.

 Support for reliability centered maintenance (RCM), which can underpin the TPM strategy  Synchronized maintenance and production planning maximizes the available production time  Contributes towards throughput and OEE and supports simulation Ultimately, provides focused support for reducing the “big six” TPM losses.

Page 12

Pull – Product Configurator

 Enables customers to configure their ‘perfect order’  Added value for the customer  Web-enabled Page 13

Pull – Kanban

    Support physical and electronic kanban systems One-card and two-card systems – production and transportation kanbans External kanban requirements from customers and for call-offs to suppliers Manual or automatic dimensioning of kanban chain (number of cards in system) Physical Kanban System Production kanban KAN-001 Kanban item KANBAN11 Order Quantity .

85 10/08/05 Electronic Kanban System Page 14

Pull – Theory of Constraints Production Planning

     Makes value flow through the bottleneck (and factory) Easy to communicate and intuitive for the planner to use Does not require high data quality 50% of the time and effort to implement of an advanced production planning solution Can result in less inventory overall than when using kanban Remaining buffer on a non-bottleneck resource Page 15

Some Benefits of a Lean Manufacturing Philosophy

For the CEO

 Focus on customer value-adding activities  Elimination of activities that do not contribute directly to customer value and built-in quality  Support or pull-based manufacturing with quick response to customer orders

For the CFO

  Reduced waste -> removal of unnecessary activities and cost Removal of stock and work in progress (WIP) -> improved inventory turns and less working capital employed in the business  Improved return on capital employed (ROCE )

For the Operations Director

 Shorter production cycle times and greater agility    Productivity and quality improvements Increased employee motivation (through teams and empowerment) Promotes continuous improvement Page 16

Example: Lean Manufacturing in F&B – Where to Start?

Supplier Raw Material Warehouse Mixing Filling Line Baking/ Cooking Temporary Storage Packing Lines Finished Goods Warehouse Shipping

Pull

Supplier Agreements with JIT call off or Supplier Managed Inventory Order-less Production with Back-flushing of Raw Materials Still need to forecast Decoupling Point

Pull

Pack or Label-to-order or using Electronic Kanban or TOC

VMI

At customer DC

Future

Move decoupling point upstream, e.g., fill and bake-to-order Page 17

Summary – What’s the Issue?

ISSUE

Maximizing customer value TO Protect and grow market share

PROBLEM

Demanding customers AND Cash tied up in inventory AND Cost pressures

VALUE

Increased customer value AND Elimination of waste AND Continuous improvement

SOLUTION

Adoption of a lean manufacturing philosophy WITH Intentia as a partner for lean solutions Page 18

Thank You for Your Time and Questions

Page 19