Transcript AMETORONTO2008 From Good to Great The S&OP/Lean Connection Making Lean work with demand variability October 20-24, 2008 Toronto, Canada Bob Stahl & Bill Kerber Bob Stahl Bill Kerber www.tfwallace.com Who.

AMETORONTO2008
From Good to Great
The S&OP/Lean Connection
Making Lean work with demand variability
October 20-24, 2008
Toronto, Canada
Bob Stahl & Bill Kerber
Bob Stahl
Bill Kerber
www.tfwallace.com
Who are We?
Bob Stahl
Bill Kerber
Bob Stahl & Bill Kerber
www.tfwallace.com
The “4P Model” of the
Toyota Way
“The Toyota Production
System [TPS]
Problem
Solving
is the basis for much of the ‘lean
production’ movement that has
People & Partners
dominated manufacturing
trends for
the last 10 years or
so.”
Process
(Continuous
Improvement &
Learning)
(Respect, Challenge, & Growth)
(Eliminate Waste)
Jeffrey Liker
The Toyota Way
Philosophy
(Long-Term Thinking)
Bob Stahl & Bill Kerber
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Toyota Flow Model
Linearity
Push
Demand Pull
Customers
Schedule
FG Inv. Jeffrey
Variable
Liker
Demand
Way
well!Buffer The Toyota
(to dealer orders/
forecast)
has worked very very
Bob Stahl & Bill Kerber
Dealers
Toyota Assembly
Plant
Suppliers
“. . . many businesses in America are rushing
There
nothing illegal,
or
to aisbuild-to-order
modelimmoral,
of production.
They want
makeapproach,
just what the
fattening
withtothis
butcustomers
many
want when they want it -- the ultimate lean
(most) companies can’t afford, or simply
solution. Unfortunately, customers are not
can’t
follow, this
approach
creating
predictable
and actual
orderstovary
significantly
from
week
to week
and month
“linearity”
with
very
large
finished
goods
to month.”
inventory.
For Toyota, as we all know, it
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LEI’s Interpretation
LEI’s Seven Characteristics of a
Lean Value Stream:
1. Takt
2. Finished goods strategy
3. Flow
4. Pull where can’t flow
5. Scheduling at one point
6. Pitch
James P. Womack
Danie T. Jones
7. EPEI
Bob Stahl & Bill Kerber
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An Inconvenient Truth . . .
(with apologies to Al Gore)
“In general, when you try to apply the Toyota Production
System [TPS], the first thing you have to do is to even out or
level the production.
Leveling the production schedule may require some frontloading of shipments [push to dealers] or postponing
[delaying] of shipments and you may have to ask some
customers [dealers] to wait for a short period of time.
Once the production level is more or less the same or
constant for a month, you will be able to apply pull systems
and balance the assembly line.
But if production levels – the output – vary from day to day,
there is no sense in trying to apply those other [pull]
systems, because you simply cannot establish standardized
work under such circumstances.”
Fugio Cho
Toyota President
Bob Stahl & Bill Kerber
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Big Fat Question(s) . . .
What if it impossible or
unaffordable to have
FG Inventory as a buffer?
How do you do Lean, if not
exactly the Toyota Way?
That’s why we’re here!
Bob Stahl & Bill Kerber
www.tfwallace.com
Agenda . . .
1) Introduction
• The many tools for improving effectiveness
• Lean focus versus S&OP focus
2) How does the Toyota Production System
work?
3) What are the problems?
• Market Forecast versus Production Leveling
• FG Inventory as the only buffer
4) What are the solutions?
• Solve the Family Feud
• Buffer without Finished Goods Inventory
 Backlog buffer (Lead Time)
 Component Inventory - Postponement
 Flexible resources
5) Questions and Answers.
Bob Stahl & Bill Kerber
www.tfwallace.com
The New World
of Manufacturing
Best in Class
 High Quality
 Low Cost (Low Inventory)
 Customer Service
Quick Response
Reliability
Wide Variety
Getting to AND . . . Diminishing OR
Bob Stahl & Bill Kerber
www.tfwallace.com
The Many Tools for
Improving Effectiveness
Increase
Reliability
Total Quality, Six Sigma,
Poka-Yoke, ISO
+ others
X
Reduce Waste
& Time
Lean Mfg., Just-In-Time,
Quick Changeover (SMED),
Flow + others
Bob Stahl & Bill Kerber
X
X
Enhance
Coordination
Sales & Operations Planning,
ERP, Kanban, VMI,
+ others
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The Many Tools for
Improving Effectiveness
Total Quality, Six Sigma,
Poka-Yoke, ISO
+ others
Sales & Operations Planning,
ERP, Kanban, VMI,
+ others
Increase
Reliability
X
Reduce Waste
& Time
Bob Stahl & Bill Kerber
X
X
X
Lean Mfg., Just-In-Time,
Quick Changeover (SMED),
Flow + others
Enhance
Coordination
www.tfwallace.com
The Many Tools for
Improving Effectiveness
Increase
Reliability
X
Reduce Waste
& Time
Total Quality, Six Sigma,
Poka-Yoke, ISO
+ others
Sales & Operations Planning,
ERP, Kanban, VMI,
+ others
Lean Mfg., Just-In-Time,
Quick Changeover (SMED),
Flow + others
Enhance
Coordination
Blur the boundaries
Bob Stahl & Bill Kerber
www.tfwallace.com
Lean & Executive S&OP
Do Different (Necessary) Things
Lean Manufacturing
• Lean is a basic approach to manufacturing that
emphasizes/focuses on flow.
• It also has a focus on eliminating waste from processes
• Strong on execution
• Short future horizon
• Drives improvements to the operating environment
• Flow works best with stable and linear demand
Executive S&OP
•
•
•
•
•
Tools for forward decision-making
Strong on planning
Long future horizon
Balances demand and supply across the supply chain
Executive Forum for establishing relevant strategy,
policy, and risk
• Can be used in many different environments
In a broad sense, they both get at culture!
They work best when they work together!
Bob Stahl & Bill Kerber
www.tfwallace.com
Agenda . . .
1) Introduction
• The many tools for improving effectiveness
• Lean focus versus S&OP focus
2) How does the Toyota Production System
work?
3) What are the problems?
• Market Forecast versus Production Leveling
• FG Inventory as the only buffer
4) What are the solutions?
• Solve the Family Feud
• Buffer without Finished Goods Inventory
 Backlog buffer (Lead Time)
 Component Inventory - Postponement
 Flexible resources
5) Questions and Answers.
Bob Stahl & Bill Kerber
www.tfwallace.com
Production Strategies
• Level - Most often associated with Make to Stock.
To achieve a level production, a buffer against variable
demand must be used.
• Chase - Most often Make to order. Also could be
called variable capacity.
• Hybrid - A combination.
Bob Stahl & Bill Kerber
www.tfwallace.com
Toyota Strategy
Part A
F.G. Inventory = Variable
1800
1600
Unit Volume
1400
1200
1000
800
600
400
200
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov Dec
Jan
Feb
Mar
Apr
May
Jun
Months
Supply
Bob Stahl & Bill Kerber
Demand
Inventory
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Toyota Strategy
Part B
1400
8.00
1200
7.00
6.00
1000
5.00
800
4.00
600
3.00
400
2.00
200
1.00
0
Lead Time in
Weeks
Unit Volume
Backlog/Lead Time = Variable
0.00
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Months
Supply
Bob Stahl & Bill Kerber
Demand
Lead Time
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Why This Works?
• Toyota’s high quality and market
acceptance allows limited variety
• With a limited number of end items:
– Schedule by end item
– Don’t configure (finish) to order
• Alignment of markets and resources
Bob Stahl & Bill Kerber
www.tfwallace.com
Product Environment
Levels
# of Parts
In this ‘shape’ a few end items are made from
many parts, materials, and components.
An example would be an equipment
manufacturer such as automobiles, lawn
mowers, capital equipment, etc.
This shape lends itself to making to stock.
Bob Stahl & Bill Kerber
www.tfwallace.com
Product Environment
Scheduling
is done
here
Customer
Lead Time
Replenish
Finished
Goods
Bob Stahl & Bill Kerber
www.tfwallace.com
Toyota Flow Model
Bob Stahl & Bill Kerber
(to dealer orders/
forecast)
Customers
Schedule
Dealers
Demand Pull
Push
Toyota Assembly
Plant
Suppliers
Linearity
FG Inv.
Buffer
Variable
Demand
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Demand-Supply Alignment
(A second issue)
Production
Markets
Line #1
Large Trucks
Large Trucks
Line #2
Small Trucks
Small Trucks
Line #3
Large Cars
Large Cars
Line #4
Small Cars
Small Cars
Bob Stahl & Bill Kerber
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Takt Time . . .
“Takt is a German word for rhythm or meter.
Takt is the rate of customer demand -- the rate
at which the customer is buying product.
. . . Takt can be used to set the pace of
production.
Continuous flow and takt time are most easily
applied in repetitive manufacturing . . .”
Jeffrey Liker
The Toyota Way
Bob Stahl & Bill Kerber
www.tfwallace.com
Takt time . . .
Demand rate?
or
Production Rate?
Bob Stahl & Bill Kerber
www.tfwallace.com
Agenda . . .
1) Introduction
• The many tools for improving effectiveness
• Lean focus versus S&OP focus
2) How does the Toyota Production System
work?
3) What are the problems?
• Market Forecasting versus Production Leveling
• FG Inventory as the only buffer
4) What are the solutions?
• Solve the Family Feud
• Buffer without Finished Goods Inventory
 Backlog buffer (Lead Time)
 Component Inventory - Postponement
 Flexible resources
5) Questions and Answers.
Bob Stahl & Bill Kerber
www.tfwallace.com
A primer on S&OP . . .
24
Months
Time
Most Detail
Aggregate Only
Exac Config. . .Precise Mat’l. . .# People. . .Capital Equip . . .Factory Space
S&OP
/ Rough
Super
MSCut
DetailedExec.
Forecasting
&
Master
Scheduling
• Lost
in the woods- Detail
PTF
• Engage Top
Management?
• Added Little Value outside
the Planning Time Fence
Plant Scheduling/Pull
MS
Sales
Mix
Bob Stahl & Bill Kerber
Marketing
Volume
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The Four Fundamentals
of S&OP . . .
Volume
Supply
Demand
“Plan the Volume;
Schedule the Mix”
Bob Stahl & Bill Kerber
•How Much?
•Rates
•The Big Picture
•Families
•Strategy/Policy/Risk
•Monthly / 18 - 36 Mos
•Executive Resp.
Mix
•Which Ones?
•Timing/Sequence
•The Details
•Products/SKU’s/Orders
•Tactics/Execution
•Weekly/Daily 1-3 Mos
•Middle Mgt. Resp.
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Suicide Quadrant . . .
Detail
PTF
1
3
Building to Suicide
Customer Quadrant
Demand
2
Aggregate
Only
Quadrant
Exec.
S&OP
Horizon
Bob Stahl & Bill Kerber
www.tfwallace.com
Sales & Operations Planning
Executive S&OP
Volume
Demand
Planning
Demand
Supply
Supply
Planning
Mix
Master Scheduling
Pull Methods
Bob Stahl & Bill Kerber
www.tfwallace.com
Master Schedule definition . . .
“The tool that balances demand and supply at
the product level, as opposed to Executive
S&OP which balances demand and supply at
the aggregated Family level. It is the source of
customer order promising, via its Available-toPromise capability, and contains the
anticipated build schedule for the plant(s) in
the form of the Master Production Schedule.”
Sales & Opertations Planning-The How To Handbook, 3rd Edition
Wallace & Stahl, 2008
Bob Stahl & Bill Kerber
www.tfwallace.com
What is Executive S&OP?
Sales & Operations Planning
is a
Executive Decision-Making Process
to
Balance Demand & Supply
(at the volume level)
is
The forum for setting Relevant Strategy & Policy
and
Integrates Financial & Operating Plans
(update/validate the Annual Business Plan)
Top Management’s Handle on the Business
Bob Stahl & Bill Kerber
www.tfwallace.com
The Family Feud . . .
Markets
Segments
Channels
Customers
Sales &
Marketing
(Demand)
Mix Ratio
Assumptions &
Resource Req. Plan
//
Versus
Full Granularity
Resource
Department
Equipment
Supplier
Operations
(Supply)
Definition - Executive S&OP Families
A grouping of end items whose similarity allow the
markets to be best anticipated, and enables
resources to be planned.
Bob Stahl & Bill Kerber
www.tfwallace.com
Forecasting
Inputs -- Process -- Output
Current Customers
New Customers
Competition
Economic Outlook
Market Trends
New Products
Pricing Strategy
Promotions
Bid Activity
Management Directives
Intra-Company Demand
History (Data)
Other
Forecasts that are:
1. Reasoned
2. Reasonable
Process 3. Reviewed
Bob Stahl & Bill Kerber
Frequently
4. Represent
Total Demand
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Forecasting
Inputs -- Process -- Output
Current Customers
New Customers
Competition
Economic Outlook
Market Trends
New Products
Pricing Strategy
Promotions
Bid Activity
Management Directives
Intra-Company Demand
History (Data)
Other
Forecasts that are:
1. Reasoned
2. Reasonable
Process 3. Reviewed
Bob Stahl & Bill Kerber
Frequently
4. Represent
Total Demand
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Executive S&OP Focus
Volume
Marketing: 1-18 Mos
Customer
Centric
Market
Centric
POS
Markets
Shipments
Customers
Mfg. Company
Executive S&OP
Mix
Sales: 1-3 Mos
Master
Scheduling
Demand Pull
Bob Stahl & Bill Kerber
www.tfwallace.com
The Family Feud . . .
• S&OP Families -- In Executive S&OP, Families are
aggregate groups of products that are similar in the way
that customers and/or markets view their use.
Executive S&OP Families are used to develop a reasoned
and reasonable forecast based on market trends, grounded
in intrinsic and extrinsic leading indicators.
• Lean Families -- In Lean Manufacturing, the term
Families is used to mean the grouping of products
that are manufactured by the same resources.
This is often called a ‘value stream.’ The idea is to create a
‘synchronous flow’ in manufacturing that allows products to
be produced at a uniform and linear market driven rate –
known as Takt Time.
Bob Stahl & Bill Kerber
www.tfwallace.com
Conclusion . . .
• Executive S&OP families should
be market determined
• Lean families should be
manufacturing (process)
determined
• They are different because they
serve different purposes
Bob Stahl & Bill Kerber
www.tfwallace.com
Family Feud . . .
When are they the same?
Consumer Market
Small Widgets
Housing Market
Medium Widgets
Industrial Market
Large Widgets
Supply
Demand
World Wide Widget Company
Typically NOT!
Bob Stahl & Bill Kerber
www.tfwallace.com
Non-Aligned to Markets
Consumer Market
Small Widgets
Housing Market
Medium Widgets
Industrial Market
Large Widgets
Supply
Demand
World Wide Widget Company
How, then, do you do Lean; Takt time, etc?
Bob Stahl & Bill Kerber
www.tfwallace.com
Executive S&OP Process
Step #5
Heavy
Lifting
Executive
Meeting
Decisions &
Game Plan
Step #4
Pre-S&OP
Meeting
Step #3
Supply
Planning
Conflict Resolution,
Recommendations &
Agenda for Exec. Mtg.
Capacity constraints
2nd-pass spreadsheets
Step #2
Demand
Planning
Management Forecast
1st-pass spreadsheets
Step #1
Data
Gathering
End of Month
Sales Actuals,
Statistical Forecasts
&
Production Actuals
Bob Stahl & Bill Kerber
www.tfwallace.com
Exercise #1
• Determine the families
for Executive S&OP from
the data provided.
Bob Stahl & Bill Kerber
www.tfwallace.com
X
X
X
X
X
X
X X
X X
X X
X
X
X
X
X
X
X
No “market” data
provided
Bob Stahl & Bill Kerber
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Family
Paint
Plate
Notch
Sand
X X
X X
X X
Pack
Can’t do it ---
X
X
X
Final
Assembly
X
X
X
Trim
Lathe
Injection
Mold
Name
Plastic Wagon, Red
Plastic Wagon, Yellow
Plastic Wagon, Green
Wood Wagon, Red
Wood Wagon, Brown
Wood Wagon, Green
Plastic Sled 1
Plastic Sled 2
Plastic Sled 3
Wood Sled 1
Wood Sled 2
Wood Sled 3
Die Cast Vehicle; Car
Die Cast Vehicle; Airplane
Die Cast Vehicle, Bus
Die Cast Vehicle; Truck/Lorry
Deburr
P/N
MT1001
MT1002
MT1003
MT1004
MT1005
MT1006
MT2001
MT2002
MT2005
MT2010
MT2015
MT2020
MT2400
MT4005
MT4008
MT4100
Cast
Product/Process Matrix
www.tfwallace.com
Market Drivers
(Leading Indicators)
•
•
•
•
•
•
•
Birth Rate
Consumer confidence index
Housing starts
NASCAR TV ratings
Price of gasoline
Bob Stahl & Bill Kerber
www.tfwallace.com
Correlation Data
A correlation study revealed the following
results (1.0 = high correlation):
Wagons Sleds Vehicles
•Housing Starts
0.5
0.4
0.2
•Birth Rate
0.8 0.75
0.4
•New Unemp. Claims
-0.4 -0.6
-0.4
•Personal Income
0.5
0.4
0.6
•NASCAR Viewers
-0.2 -0.3
0.7
Bob Stahl & Bill Kerber
www.tfwallace.com
S&OP Families . . .
What are the S&OP Families?
•Wagons
•Sleds
•Vehicles
Bob Stahl & Bill Kerber
www.tfwallace.com
Families . . .
• S&OP Families -- In Executive S&OP, Families are
aggregate groups of products that are similar in the way that
customers and/or markets view their use. Executive S&OP
Families are used to develop a reasoned and reasonable
forecast based on market trends, grounded in intrinsic and
extrinsic leading indicators.
• Lean Families -- In Lean Manufacturing, the term
Families is used to mean the grouping of products that are
manufactured by the same resources. This is often called a
‘value stream.’ The idea is to create a ‘synchronous flow’ in
manufacturing that allows products to be produced at a
uniform and linear market driven rate – known as Takt
Time.
Bob Stahl & Bill Kerber
www.tfwallace.com
Determining Lean
product families
Create a Product Family Matrix:
 Separate processes based on capability
(ex. “The machines are the same, but
Part ‘A’ can only be produced on this
one.”)
 Look at the ‘Downstream’ processing
steps
 Approximately 80% of the similar
processing steps
 Custom products look ‘Upstream’ at the
fabrication steps
 Fill in Product Family Matrix with ‘X’
Bob Stahl & Bill Kerber
www.tfwallace.com
Product Process Matrix
Process Steps and Equipment
Spot
Spot
Products
Weld
Weld
Robot
Weld
Weld
Flash
Flash
Paint
Paint
Remove
Remove
Manual
Manual
Fixtures
Fixtures
Electronic
Electronic
Ass
Ass’’yy
Ass
Ass’’yy
Test
Test
LH Steering
Bracket
X
X
X
X
RH Steering
Bracket
X
X
X
X
Instrument
Panel Brace
X
X
X
Seat
Rail
X
Bumper
Brackets
X
Bob Stahl & Bill Kerber
X
X
X
www.tfwallace.com
Bob Stahl & Bill Kerber
X
X
X
X X
X X
X X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Family
Paint
Plate
Notch
X
X
X
X
X
X
X
X
X
X
X
X
X
X X
X X
X X
Pack
X
X
X
X
X
X
X
Sand
X
X
X
Final
Assembly
X
X
X
Trim
Lathe
Injection
Mold
Name
Plastic Wagon, Red
Plastic Wagon, Yellow
Plastic Wagon, Green
Wood Wagon, Red
Wood Wagon, Brown
Wood Wagon, Green
Plastic Sled 1
Plastic Sled 2
Plastic Sled 3
Wood Sled 1
Wood Sled 2
Wood Sled 3
Die Cast Vehicle; Car
Die Cast Vehicle; Airplane
Die Cast Vehicle, Bus
Die Cast Vehicle; Truck/Lorry
Deburr
P/N
MT1001
MT1002
MT1003
MT1004
MT1005
MT1006
MT2001
MT2002
MT2005
MT2010
MT2015
MT2020
MT2400
MT4005
MT4008
MT4100
Cast
Product/Process Matrix
www.tfwallace.com
Batch Manufacturing
Sand
Notch
Stock
Room


Die Cast






Paint
Room
Packaging
C

Plate
B

Injection Mold
A
Finished Goods




Deburr
Bob Stahl & Bill Kerber
Trim
Final Assembly
www.tfwallace.com
Exercise #2
• Determine the Lean
product families based
on the data given
Bob Stahl & Bill Kerber
www.tfwallace.com
Bob Stahl & Bill Kerber
X
X
X
X X
X X
X X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Family
Paint
Plate
Notch
X
X
X
X
X
X
X
X
X
X
X
X
X
X X
X X
X X
Pack
X
X
X
X
X
X
X
Sand
X
X
X
Final
Assembly
X
X
X
Trim
Lathe
Injection
Mold
Name
Plastic Wagon, Red
Plastic Wagon, Yellow
Plastic Wagon, Green
Wood Wagon, Red
Wood Wagon, Brown
Wood Wagon, Green
Plastic Sled 1
Plastic Sled 2
Plastic Sled 3
Wood Sled 1
Wood Sled 2
Wood Sled 3
Die Cast Vehicle; Car
Die Cast Vehicle; Airplane
Die Cast Vehicle, Bus
Die Cast Vehicle; Truck/Lorry
Deburr
P/N
MT1001
MT1002
MT1003
MT1004
MT1005
MT1006
MT2001
MT2002
MT2005
MT2010
MT2015
MT2020
MT2400
MT4005
MT4008
MT4100
Cast
Product/Process Matrix
www.tfwallace.com
Bob Stahl & Bill Kerber
Paint
Plate
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Family
X
X
X
X
X
X
X
X
X
X
Pack
X
X
X
X
X
X
X
X
X
X
Final
Assembly
X
X
X
X
X
X
Notch
Trim
Lathe
Injection
Mold
X
X
X
X
X
X
Sand
Wood Sled 1
Wood Sled 2
Wood Sled 3
Wood Wagon, Red
Wood Wagon, Brown
Wood Wagon, Green
Plastic Wagon, Red
Plastic Wagon, Yellow
Plastic Sled, Black
Plastic Sled, Orange
Plastic Wagon, Green
Plastic Sled, Blue
Die Cast Vehicle; Car
Die Cast Vehicle; Airplane
Die Cast Vehicle, Bus
Die Cast Vehicle; Truck/Lorry
Deburr
Name
Cast
Product/Process Matrix
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
1
1
1
1
1
1
2
2
2
2
2
2
3
3
3
3
www.tfwallace.com
Die Cast
B
Injection Mold
C
Lathe
Bob Stahl & Bill Kerber
Deburr
Plate
Final Assembly
Trim
Sand
Paint
Notch
Finished Goods
A
Packaging
Stockroom
Lean Process Flow
Paint
www.tfwallace.com
Lean Families . . .
What are the Lean (Value
Stream) Families?
• Plastic Toys
• Wooden Toys
• Die Cast Toys
Bob Stahl & Bill Kerber
www.tfwallace.com
Agenda . . .
1) Introduction
• The many tools for improving effectiveness
• Lean focus versus S&OP focus
2) How does the Toyota Production System
work?
3) What are the problems?
• Market Forecasting versus Production Leveling
• FG Inventory as the only buffer
4) What are the solutions?
• Solve the Family Feud
• Buffer without Finished Goods Inventory
 Backlog buffer (Lead Time)
 Component Inventory - Postponement
 Flexible resources
5) Questions and Answers.
Bob Stahl & Bill Kerber
www.tfwallace.com
Solving the Family Feud
Lean
Wagons
Plastic Toys
Sleds
Wooden Toys
Vehicles
Die Cast Toys
Supply
Demand
Exec. S&OP
Typically NOT!
Bob Stahl & Bill Kerber
www.tfwallace.com
Non-Aligned to Markets
Lean
Wagons
Plastic Toys
Sleds
Wooden Toys
Vehicles
Die Cast Toys
Supply
Demand
Exec. S&OP
Better than Job Shop!
Rough Cut on “Pacemaker” only!
Bob Stahl & Bill Kerber
www.tfwallace.com
Job Shop . . .
Aligned
Market
Families
A
B
Non-Aligned
C
D
4
Production
Resources
1
Bob Stahl & Bill Kerber
2
3
E
F
5
7
6
8
www.tfwallace.com
Market Forecasts to
Lean Production
Exec. S&OP
Lean
Wagons
Plastic Toys
Sleds
Wooden Toys
Vehicles
Die Cast Toys
Bob Stahl & Bill Kerber
www.tfwallace.com
Managing Assumptions . . .
(Control Charts)
Wooden Wagons
% of Total Wagons
35
30
25
20
Jan Feb Mar Apr May Jun
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Monthly History
Wooden Wagons
Bob Stahl & Bill Kerber
UC L
LCL
Linear (Wooden Wagons)
www.tfwallace.com
Demand Forecasts
Market Forecasts
1400
1200
Units
1000
800
600
400
200
0
Jan Feb Mar Apr May Jun
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Future Months
Wagon Forecast
Bob Stahl & Bill Kerber
Vehicle Forecast
www.tfwallace.com
Wooden Demand Rate
Wooden Capacity in Units
Volume in Units
1000
900
800
700
600
500
400
300
200
100
0
J an Feb M ar A pr M ay J un
J ul
A ug Sep O c t N ov D ec J an Feb M ar A pr M ay J un
Months
30% Wooden Wagons
Bob Stahl & Bill Kerber
60% Wooden Vehicles
www.tfwallace.com
Rough-Cut Capacity Planning
Wooden Capacity in Units
Volume in Units
1000
900
800
700
600
500
400
300
200
100
0
Jan
Feb M ar A pr M ay Jun
Jul
A ug Sep
O c t N ov D ec Jan
Feb M ar A pr M ay Jun
Months
Wooden Demo Capacity
30% Wooden Wagons
Bob Stahl & Bill Kerber
With Overtime
60% Wooden Vehicles
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Production Strategies
• Level - Most often associated with Make to Stock.
To achieve a level production, a buffer against variable
demand must be used.
• Chase - Most often Make to order. Also could be
called variable capacity.
• Hybrid - A combination.
Bob Stahl & Bill Kerber
www.tfwallace.com
Primer on Takt Time . . .
• Sets the “Beat” in the form of pitch for
production.
• Determines how many people work in
assembly jobs.
• Provides “the bar” for operator
balance charts for line balancing.
• For all of these, takt would be better
represented by the production rate
from S&OP.
Bob Stahl & Bill Kerber
www.tfwallace.com
Demand versus Production Rate?
• Current Lean definition has Takt time
as effective working time divided by
demand rate
• In most circumstances, we would be
better off making it effective working
time divided by Production rate (from
S&OP plan)
Bob Stahl & Bill Kerber
www.tfwallace.com
People vs. Takt Time
6
5 min
5
5 min
4
5 min
B
3
5 min
2
5 min
1
5 min
Balanced Line
In
Time = 480 min
Units = 16
Takt = 30 min
Operators = 2
A
7
5 min
8
5 min
9
5 min
10
5 min
11
5 min
12
5 min
Out
6
5 min
5
5 min
4
5 min
3
5 min
2
5 min
1
5 min
In
C
7
5 min
B
8
5 min
Bob Stahl & Bill Kerber
9
5 min
11
5 min
Balanced Line
Time = 480 min
Units = 24
Takt = 20 min
Operators = 3
A
10
5 min
Lead time = 60 min
12
5 min
Out
Lead time = 60 min
www.tfwallace.com
Operator Balance Chart
Values in Bars = Cycle Time; Takt Time = 1.78 Minutes
Example of
Unbalanced
Line
More
Improevment
Better
Improvement
2.5
1.78
1.5
1.25
0.5
Takt Time
1.75
Takt Time
1.78
1.78
1.78
0.21
Takt Time
1.78
1.78
1.78
1.78
Operator Operator Operator Operator Operator
1
2
3
4
5
Bob Stahl & Bill Kerber
www.tfwallace.com
Agenda . . .
1) Introduction
• The many tools for improving effectiveness
• Lean focus versus S&OP focus
2) How does the Toyota Production System
work?
3) What are the problems?
• Market Forecasting versus Production Leveling
• FG Inventory as the only buffer
4) What are the solutions?
• Solve the Family Feud
• Buffer without Finished Goods Inventory
 Backlog buffer (Lead Time)
 Component Inventory - Postponement
 Flexible resources
5) Questions and Answers.
Bob Stahl & Bill Kerber
www.tfwallace.com
Make-to-Order Flow
Schedule
(to forecast/customer order)
Bob Stahl & Bill Kerber
Backlog
Buffer
Customers
Order Backlog
Assembly
Unique Standard
Parts
Parts
Plant
Plant
Suppliers
Demand Pull
Variable
Demand
www.tfwallace.com
Market Demands
• In this ‘shape’ many end items are
made out of a few sub assemblies
or intermediates that are made out
of many unique raw materials and
parts.
• An example of this would be a
pharmaceutical manufacturer with
many package types from standard
product (aspirin), personal
computers, packaged chemicals
• This shape lends itself to a
postponement strategy.
Bob Stahl & Bill Kerber
www.tfwallace.com
How Lean fits in :
Postponement
Customer
Lead Time
Assemble
to order
Scheduling
Here
Pull or Schedule
Components based
on usage
Bob Stahl & Bill Kerber
www.tfwallace.com
Finish-to-Order
Flow
(Postponement)
Demand Pull
Schedule
Schedule
(to forecast)
(to Order)
Bob Stahl & Bill Kerber
Backlog
Buffer
Customers
Order Backlog
Assembly
Standard
Parts
Plant
Suppliers
Planning BOM’s
Variable
Demand
www.tfwallace.com
Agenda . . .
1) Introduction
• The many tools for improving effectiveness
• Lean focus versus S&OP focus
2) How does the Toyota Production System
work?
3) What are the problems?
• Market Forecasting versus Production Leveling
• FG Inventory as the only buffer
4) What are the solutions?
• Solve the Family Feud
• Buffer without Finished Goods Inventory
 Backlog buffer (Lead Time)
 Component Inventory - Postponement
 Flexible resources
5) Questions and Answers.
Bob Stahl & Bill Kerber
www.tfwallace.com
BOM Shape

In this ‘shape’ many end items are made from a
few raw materials.

An example would be an injection molding
company

This shape suggests a make to order strategy.
Bob Stahl & Bill Kerber
www.tfwallace.com
Make to
Order
Customer
Lead Time
Speed
How Lean fits in
Schedule here
You must make the lead time fit market requirements!
Bob Stahl & Bill Kerber
www.tfwallace.com
Chase Strategy
Production
Demand
Inventory (Backlog)
Bob Stahl & Bill Kerber
www.tfwallace.com
This requires:
• Cross training of everyone
• A way to know when to switch jobs during the
workday (controlling flow)
• Adding or subtracting labor by using
– Temporary employees
– Overtime
• Subcontractors
alternatively
• Staff for peak periods and work on improvements
when slow
Bob Stahl & Bill Kerber
www.tfwallace.com
Conclusion
S&OP and Lean
work best when
they work together!
Bob Stahl & Bill Kerber
www.tfwallace.com
Agenda . . .
1) Introduction
• The many tools for improving effectiveness
• Lean focus versus S&OP focus
2) How does the Toyota Production System
work?
3) What are the problems?
• Market Forecast versus Production Leveling
• FG Inventory as the only buffer
4) What are the solutions?
• Solve the Family Feud
• Buffer without Finished Goods Inventory
 Backlog buffer (Lead Time)
 Component Inventory - Postponement
 Flexible resources
5) Questions and Answers.
Bob Stahl & Bill Kerber
www.tfwallace.com
Thanks for Listening
Bob Stahl
[email protected]
508-226-0477
Bill Kerber
[email protected]
609-781-4830
Bob Stahl & Bill Kerber
www.tfwallace.com