On Time, In Full: Achieving Perfect Delivery with Lean Thinking in Purchasing, Supply Chain, and Production Planning PDF
Preview On Time, In Full: Achieving Perfect Delivery with Lean Thinking in Purchasing, Supply Chain, and Production Planning
ON TIME, IN FULL Achieving Perfect Delivery with Lean Thinking in Purchasing, Supply Chain, and Production Planning ON TIME, IN FULL Achieving Perfect Delivery with Lean Thinking in Purchasing, Supply Chain, and Production Planning By Timothy McLean TXM Lean Solutions Pty. Ltd. CRC Press Taylor & Francis Group 6000 Broken Sound Parkway NW, Suite 300 Boca Raton, FL 33487-2742 © 2017 by Taylor & Francis Group, LLC CRC Press is an imprint of Taylor & Francis Group, an Informa business No claim to original U.S. Government works Printed on acid-free paper International Standard Book Number-13: 978-1-4987-6864-1 (Paperback) International Standard Book Number-13: 978-1-138-63218-9 (Hardback) International Standard eBook Number-13: 978-1-4987-6867-2 (eBook) This book contains information obtained from authentic and highly regarded sources. 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Identifiers: LCCN 2016045364| ISBN 9781498768641 (pbk. : alk. paper) | ISBN 9781138632189 (hardback : alk. paper) | ISBN 9781498768672 (eBook) Subjects: LCSH: Lean manufacturing. | Business logistics. | Production planning. Classification: LCC HD58.9 .M436 2017 | DDC 658.5/03--dc23 LC record available at https://lccn.loc.gov/2016045364 Visit the Taylor & Francis Web site at http://www.taylorandfrancis.com and the CRC Press Web site at http://www.crcpress.com For Katerina Contents Foreword ..................................................................................................xiii Acknowledgments ...................................................................................xv Introduction ...........................................................................................xvii About This Book .....................................................................................xix Author ......................................................................................................xxi 1 It Should Be So Simple— Why We Fail to Deliver ........................1 What You Will Learn in This Chapter ........................................................1 So What Is the Problem? .............................................................................1 Six Reasons Why Companies Have Too Much Stock and Can’ t Deliver ...3 Reason 1: The Customer Cannot Forecast Accurately ...........................3 Reason 2: Long Lead Times ....................................................................4 Reason 3: Big Batch Sizes and Big Shipment Quantities .......................4 Reason 4: Material Shortages ..................................................................6 Reason 5: Poor Factory Performance .....................................................7 Reason 6: Poor Warehouse and Logistics Practices ...............................8 Summary .....................................................................................................8 Key Points in Chapter 1 ..............................................................................9 2 Understanding Your Supply Chain ............................................11 What You Will Learn in This Chapter ......................................................11 What Is a Supply Chain? ...........................................................................12 The Most Important Supply Chain Metric: Delivery in Full on Time .....13 Lead Time: The Key Driver of DIFOT .....................................................15 Takt Time: Keeping Track of Whether You Are Keeping up with Demand .....................................................................................................17 Push, Pull, and Flow .................................................................................17 Understanding Your Supply Chain with a Value Stream Map .................19 vii viii ◾ Contents Summary ...................................................................................................25 Key Points in Chapter 2 ............................................................................27 3 Understanding the Future— The Mystery of Forecasting ..........29 What You Will Learn in This Chapter ......................................................29 The Promise of Forecasting ......................................................................29 Can We Tell the Future? ............................................................................30 Forecasting and the Weather ....................................................................31 Importance of Significance .......................................................................32 Building a Forecast ...................................................................................32 Forecasting Raw Material Requirements ..................................................34 Low-Volume Products and Materials ........................................................36 Generating the Forecast ............................................................................36 Try Sensitivity Analysis .............................................................................37 Forecasting Tools ......................................................................................38 Demand Management: Maintaining the Forecast ....................................38 Key Points in Chapter 3 ............................................................................39 4 Can We Do It? Effective Sales and Operations Planning ...........41 What You Will Learn in This Chapter ......................................................41 Matching Capacity to Demand: The Foundation for On-Time Delivery ....41 Cycle Time and Takt Time: Developing a Simple Rough-Cut Capacity Model ..........................................................................................43 More Advanced Capacity Models .............................................................45 Only Analyze Capacity at the Bottleneck Process ...................................46 Sales and Operations Planning Process ...................................................49 Demand Review ........................................................................................51 Supply Review ...........................................................................................52 Sales and Operations Planning Meeting ..................................................53 Overview of S&OP ...................................................................................55 Key Points in Chapter 4 ............................................................................55 5 Managing Inventory— If You Do Not Have It, You Cannot Sell It .........................................................................................57 What You Will Learn in This Chapter ......................................................57 Do You Need Inventory?...........................................................................57 The Other Finished Goods Strategy: Make-to-Order ..............................58 Managing Your Finished Goods Strategy .................................................59 How Much Inventory Do You Need of Make-to-Stock Items? ................60 Calculating Safety Stock ............................................................................61 Contents ◾ ix Avoiding the Knee-Jerk Response to a Shortage .....................................64 Types of Pull Replenishment ....................................................................65 Kanban Cards ............................................................................................67 Other Forms of Pull Systems ....................................................................70 Virtual Kanban ..........................................................................................71 Stock-Outs: A Leading Indicator of On-Time, In-Full Performance ........71 Inventory Record Accuracy .......................................................................72 Managing Make-to-Order Supply to Achieve On-Time, In-Full Delivery .....................................................................................................72 Summary ...................................................................................................74 6 What Should We Make Next? The Keys to Production Scheduling .................................................................................77 What You Will Learn in This Chapter ......................................................77 What to Do Next: The Planning Question ...............................................78 Typical Production Planning Scenario .....................................................79 Managing Production Flow with a Pacemaker ........................................81 Finding the Correct Unit of Measure and Pitch Interval .........................82 Using a Load Leveling Box .......................................................................82 How Long Should the Pitch Interval Be? .................................................84 Overview of Pacemakers and Pitch .........................................................86 Deciding What Product to Make Next at the Pacemaker ........................87 Understanding Your Product Mix and Building the Product Cycle ........87 Running the Cycle .....................................................................................90 Leveling the Product Mix ..........................................................................91 Product Wheels .........................................................................................91 Summary ...................................................................................................92 7 Managing Your Inbound Supply Chain .....................................95 What You Will Learn in This Chapter ......................................................95 So Why Do Material Shortages Occur? ....................................................97 Deciding the Right Level of Material Inventory .......................................98 Why Do Shortages Occur? ......................................................................100 Reducing the Replenishment Interval ....................................................100 Reducing Supplier Lead Time .................................................................103 Reducing Demand and Supply Variability .............................................106 Summary .................................................................................................107 8 Making Your International Supply Chain Work ......................109 What You Will Learn in This Chapter ....................................................109
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