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JIT training

JIT training



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Ojt0423a Ojt0423a Presentation Transcript

  • Supply Chain Inventory Management & JIT 2009-04-23, Hebei Mill
  • Understanding Supply Chain Inventory
    • Types of Inventory
      • Raw material and semi-finished Items
      • Work-in-Process
      • Finished Goods
      • Maintenance,Repair,and Operating Supplies
      • Pipeline/In-Transit
  • Understanding Supply Chain Inventory
    • Inventory-related costs
      • Unit costs
      • Ordering costs
      • Carrying costs
    View slide
  • Understanding Supply Chain Inventory
    • Inventory-related costs
      • Quality costs
    • How to look at inventory investment
        • Asset ?
        • Liability?
        • Both?
    ? ? ? View slide
  • Understanding Supply Chain Inventory
  • Understanding Supply Chain Inventory
  • The Right Reasons for Inventory Investment
    • Support Production Requirements
    • Support Operational Requirements
    • Support Customer Service Requirements
    • Hedge Against Marketplace Uncertainty
    • Take Advantage of Order Quantity Discounts
  • The Wrong Reasons for Inventory Investment
      • Poor Quality and Material Yield
      • Unreliable Supplier Delivery
      • Extended Order-Cycle Times
      • Inaccurate or Uncertain Demand Forecasts
      • Specify Custom Items for Standard Applications
      • Extended Material Pipelines
      • Inefficient Manufacturing Processes
      • So, what is the right viewpoint
      • for inventory investment?
  • Coffee Time!
  • Managing Inventory Investment Volume Value Velocity Volume pertains to the amount of physical inventory a firm owns at any given time across the supply chain Key Question: How much and what types of inventory do we own? Key Measures: Total units, total pounds Activities Affecting Volume: Improved forecasting techniques; supplier-provided consignment inventory Value pertains to the unit cost and total value of inventory; Key Question: What’s the unit cost/total value of the different types of inventory we own? Key Measures: Total dollars; period-by-period unit value changes; ratio of sales to working capital? Activities Affecting Volume: Product simplification/standardization Velocity pertains to how quickly raw material/WIP become finished goods that accepted and paid by customer; Key Question: How fast do me move inventory to the customer? Key Measures: Inventory turns, order to cash cycle, Activities Affecting Volume: Made-to-order production, Lean supply chain practices;
  • Powerful Ways to Manage Inventory
    • Achieve Perfect Record Integrity
    • Improve Product Forecasting
    • Leverage companywide Purchase Volumes
    • Use Suppliers for On-Site Inventory Management
    • Reduce Supplier-Buyer Cycle Times
      • Expanded electronic capability
      • Supplier development support
      • Order-cycle time measurement
      • Focus on second and third-tier suppliers
  • Creating the Lean Supply Chain
    • What is lean?
      • “ A philosophy that seeks to shorten the time between the customer order and the shipment to customer by eliminating waste”
    • Three primary elements
      • Just-in-time Purchasing
      • Just-in-time Transportation
      • Just-in-time Production
    • “ Just-in-time” is a management philosophy, not technique,
    • and the philosophy is simple - inventory is defined to be waste
  • JIT Purchasing
    • Characteristics of JIT Purchasing—
      • Purchase in small lots with frequent deliveries
      • Mutual, consistent improvement by the buyer and supplier
      • Collaborative efforts between buyer and supplier
      • Efficient point-to-point communication linkages
      • The “rights”--
        • right quantity
        • right time
        • right quality
  • Differences between JIT & Traditional Purchasing JIT Purchasing Smaller lot sizes More frequent deliveries No rejection from the supplier Long-term contracts Buyer decides delivery schedule Innovation encouraged Minimal paper work Less formal communication Traditional Relatively large lot sizes Less deliveries at higher quantities 2% rejection from supplier Lowest price is main objective Time consuming, formal paperwork Formal communication
  • Point-to-Point Communication Linkages Engineering Quality Control Production Planning Transportation Engineering Quality Control Production Planning Transportation Purchasing Sales