Measuring Modeling and Managing Supply Chain Capacity

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  • 1. Measuring Modeling and Managing Supply Chain Capacity
  • 2. Approach for understanding and Managing Capacity
  • 3. Capacity Planning Plan Do Check Act • Plan – – – – Establish operating plan Assess current capacity Define demand Identify sufficiency plan to close gap • Do – Implement actions • Check – Measure performance • Trend, Pareto • Act – Use 8 D to resolve problems 2
  • 4. Value Stream Perspective • Holistic view of – Capacity and capability – Internal and external • Current State and Future State – Plan, Do, Check and Act • Identify constraint(s) • What can you Influence or Control 3
  • 5. Understand the 5 Ms and Effect on Capacity • • • • • Measurement (OEE and OAE) Machinery (Capability…Gross, Eng., Actual) Methods (Lean Tools…SMED, TPM) Manpower (Standard work and Training) Material (Right…Place, Time, Amount) 4
  • 6. Perspective Customer versus Supplier Customer • Demand based on contracted agreement • Operating plan… – APW/LCR 5 Days – MPW/MCR 6 days Supplier • Demand based on market forecasts • Operating plan… – 6 to 7 days per week • Shutdown losses limited • Shutdown losses for extended holidays. • Forever requirement APW=Average Production Week MPW=Maximum Production Week LCR=Lean Capacity Rate MCR=Maximum Production Rate 5
  • 7. Measuring Capacity
  • 8. Align Measures OPERATIONS PERFORMANCE METRICS MANAGEMENT PROBLEM DEFINITION TIME PERIOD DATA TYPE Management or 1 EXECUTIVE Business Process / Year / Month Aggregate $ Systems Product / Workshop Product Line / Asset Allocation 2 DIRECTOR Month / Weekly Function ($ / %) 3 MANAGER Process / Work centers Weekly / Daily 4 SUPERVISOR Group Workflow 5 OPERATOR Individual Workflow Process / Material Allocation ($ / %) ANALYSIS & REPORTING FOCUS Financial Data Driven Reports / Directional Analysis Policy Trend Charts (Material, Resources, Business Processes / Timing) Interdisciplinary Systems Workshop Resource Pareto / Trend Charts (Material Flow Capability / Capacity / / Quality) Flexibility Work and Material Flow Charts / Standardize Work Waste Elimination (Kaizen) Material / Quality Statistics & Daily / Hourly Analysis Material / Quality Attributes (5S Hourly Status to Target (RYG) G0/NO GO) Quality 7
  • 9. Capacity and Time • Gross – 24 hours day x 7 days week – Cycle time has significant impact on gross pieces • Operating Plan – Gross minus time not scheduled • Run Time – Operating minus planned downtime • Availability %= – (Run time – documented lost time) /Run time • Efficiency % – Ideal cycle time/(Available time/Total pieces) • First Time Yield % – Good pieces/Total pieces 8
  • 10. Measurement • Overall Equipment Effectiveness (OEE) – Availability x Efficiency x First Time Yield – Measure of Production Team • Overall Asset Effectiveness (OAE) – ((Op Plan– Planned DT)/Op Plan)) x OEE – Measure of Operations Team • Total Equipment Performance (TEP) – ((Gross Hrs.- Not Scheduled)/Gross Hrs)). x OAE x OEE – Measure of Executive Team performance 9
  • 11. Measure to Plan • Visual management of the constraint • Variance to plan WHY? Why? 10
  • 12. Measurement Goal, Actual and Plan • Trend, Pareto, and Sufficiency Plan 11
  • 13. Modeling Capacity
  • 14. Capacity Analysis Workbooks Strengths • Simple to use/understand – Production processes – Static data • Internal processes • Based on data from actual production runs – PPAP 300 piece – Run at Rate • Identifies constraints • Mandated by OEMs Weaknesses • Minimizes effect of non value added processes – Buffers, Material movement • Data isn’t dynamic – Time between failures – Time to Repair • Focused on individual process not the production system. • Focus on up level BOM • Not good at what if? 13
  • 15. MRP System Strengths • Plans internal and external processes. • Considers Machinery, Manpower, Methods, Material • Demonstrates capacity versus demand overtime • Analysis of BOM • Identifies constraints Weaknesses • Uses static data sets – Cumbersome to maintain • Analysis of planned to actual generally performed through spread sheets. • Reliant on accurate production reporting 14
  • 16. Value Stream Mapping Strengths • Identifies throughput improvement opportunities • Provides a visual for understanding product and information flow • Working document • Captures process data • Future State Maps Weaknesses • Static Data • Manual process requires team involvement to be effective 15
  • 17. Production Simulation Strengths • Considers the interrelationship of all processes. • Includes machinery, methods, material, manpower. • Considers variation • Evaluates capacity overtime • Validates Production System Weaknesses • Must have software license • People must be trained in usage • Models are unique to flow 16
  • 18. Manage Capacity
  • 19. Capacity Management • • • • Identify product families Value Stream Map product families Collect process flow and information flow data Use value stream and associated data to develop simulation of the process flow • Validate capacity plan with simulation model • Use Kaizen to improve constraint throughput – Question all reasons for losses • Why? • Can the lost event time and /or frequency be reduced • Update VSM and simulation 18
  • 20. Deploy Theory of Constraints • Only by increasing flow through the constraint can overall throughput be increased. • Assuming that demand has been defined the steps are: – Identify the system's constraint(s) – Decide how to exploit the system's constraint(s) (how to get the most out of the constraint) – Subordinate everything else to the above decision (align the whole system or organization to support the decision made above) – Elevate the system's constraint(s) (make other major changes needed to increase the constraint's capacity) – Warning! If in the previous steps a constraint has been broken, go back to step 1, but do not allow inertia to cause a system's constraint 19
  • 21. Summary • • • • • • • Define Product Family Value Steam Understand 5 Ms of the Production System Assure demand is accurate Collect and Analyze operational data Base capacity on historical performance Deploy Theory of Constraints Validate improvements with appropriate models 20