Lean Supply Chain Systems Engineering


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Lean Supply Chain : A Systems Engineering Approach
by Prasanna Chilukamarri
MS Systems Engineering

Published in: Automotive, Technology, Business
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Lean Supply Chain Systems Engineering

  1. 1. Lean Supply Chain: A Systems Engineering Approach By: Prasanna Chilukamarri
  2. 2. LEARNING OBJECTIVES <ul><li>Importance of Supply Chain </li></ul><ul><li>Importance of Lean in Supply Chain </li></ul><ul><li>Systems Engineering implementation towards Lean & Supply Chain </li></ul><ul><li>Lean Supply Chain in Automotive /manufacturing industries </li></ul><ul><li>Systems Engineering approach towards Lean Supply Chain </li></ul><ul><li>Where is Lean Supply Chain with Systems Engineering being implemented </li></ul>
  3. 3. IMPORTANCE OF SUPPLY CHAIN <ul><ul><ul><li>What is Supply Chain? </li></ul></ul></ul><ul><ul><ul><li>‘ Supply Chain’ consists of all parties involved, directly or indirectly, in fulfilling a customer request. The supply chain not only includes the manufacturer & suppliers, but also transporters, retailers & even customers themselves. </li></ul></ul></ul><ul><ul><ul><li>How important in Supply Chain in every industry? </li></ul></ul></ul><ul><ul><ul><li>The key objective for any industry lies in satisfying the customer needs. The entire process involved i.e. procuring materials & delivering to the customer involves supply chain and could give a negative affect if a part of the chain is disrupted. </li></ul></ul></ul>
  4. 4. IMPORTANCE OF SUPPLY CHAIN <ul><ul><ul><li>Supply Chain disruptions and how it affects the entire industry: </li></ul></ul></ul><ul><ul><ul><li>Cisco Case Study: </li></ul></ul></ul><ul><ul><ul><li>In August 2001, the San Jose, California based, computer networking company, Cisco Systems Inc. (Cisco) surprised industry observers by announcing its first ever negative earnings in more than a decade. In the third quarter of fiscal 2001, the company’s sales had decreased by 30%. Cisco had to write off inventory worth $2.2 Billion and lay off 8,500 people. </li></ul></ul></ul><ul><ul><ul><li>Problem: </li></ul></ul></ul><ul><ul><ul><ul><li>According to analysts, Cisco systems failed to model what would happen if one critical assumption –growth- was removed from their forecasts. Cisco’s supply chain management system failed to show the increase in demand, which representing overlapping orders. Eventually , inventory cycle rose from 53.9 days to 88.3 days. </li></ul></ul></ul></ul><ul><ul><ul><li>Solution: </li></ul></ul></ul><ul><ul><ul><ul><li>Group of engineers had to work on ‘E-hub’ remedial program that used a technology called Partner Interface Process (PIP) that indicated the document requires a response or not. </li></ul></ul></ul></ul>
  5. 5. IMPORTANCE OF SUPPLY CHAIN <ul><ul><ul><ul><li>Takata Case Study: </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Takata is a company of Japanese capital and it was under an expansion process of its facilities in Frontera, with an investment of 6-7 million dollars for the production of materials for automobile's airbags. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Problem: </li></ul></ul></ul></ul><ul><ul><ul><ul><li>(Translated from Mexican News) The explosions, in containers loaded with a material called &quot;propellant&quot;, left at least a dozen workers injured; these were the result of a fire in a wing in construction. </li></ul></ul></ul></ul>
  6. 6. IMPORTANCE OF SUPPLY CHAIN <ul><ul><ul><ul><li>Whirlpool Case Study: </li></ul></ul></ul></ul><ul><ul><ul><ul><li>The supply chain at Whirlpool in 2000 was broken. Indeed, a manager there at the time quip that among the four major appliance makers in the U.S., Whirlpool ranked fifth in delivery performance. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Problem: </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“ We had too much inventory, too little inventory, wrong inventory, right inventory/wrong place, any combination of those things,” says J.B. Hoyt, who was then supply chain project director.  </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Solution: </li></ul></ul></ul></ul><ul><li>A homegrown production scheduling system, the Whirlpool Manufacturing Control System (WMCS), which was developed in the mid-1980s and extensively modified over the years. </li></ul><ul><li>SAP's R/3 ERP system, which was installed in 1999 and used for transaction-processing applications such as accounting and order processing. </li></ul><ul><li>i2 Technologies' Demand Planner (now called Demand Manager), which was installed in 1997 and used for demand forecasting. </li></ul><ul><li>A system for distribution planning that was custom-developed for Whirlpool in the 1980s that used optimization software from ILOG. </li></ul>
  7. 7. IMPORTANCE OF LEAN IN SUPPLY CHAIN <ul><ul><ul><li>Role of Lean Manufacturing in Supply Chain: </li></ul></ul></ul><ul><ul><ul><li>According to  Lean Thinking  by Womack and Jones, the five principles of lean are: 1. Specify Value 2. Identify the Value Stream 3. Flow 4. Pull 5. Perfection </li></ul></ul></ul><ul><li>Lean production uses less of everything—half the human effort in the factory, half the manufacturing space, half the investment in tools, half the engineering hours to develop a new product in half the time. Lean production is connected with “zero inventory” and just in time approach. </li></ul>
  8. 8. IMPORTANCE OF LEAN IN SUPPLY CHAIN <ul><ul><ul><li>How to Develop Lean Supply Chain? </li></ul></ul></ul><ul><ul><ul><ul><li>‘ Kaizen’ small changes for the better on an ongoing basis- this is commonly called  continuous improvement </li></ul></ul></ul></ul><ul><li>Practicing kaizen means eliminating waste. Toyota's Taichi Ohno identified the &quot;seven wastes&quot; of manufacturing as: </li></ul><ul><ul><li>Overproduction </li></ul></ul><ul><ul><li>Waiting </li></ul></ul><ul><ul><li>Processing </li></ul></ul><ul><ul><li>Motion </li></ul></ul><ul><ul><li>Inventory </li></ul></ul><ul><ul><li>Transportation </li></ul></ul><ul><ul><li>Defects </li></ul></ul>
  9. 9. IMPORTANCE OF LEAN IN SUPPLY CHAIN <ul><li>Lean , Agile & Leagile of Supply Chain: </li></ul><ul><li>Agile: </li></ul><ul><li>In 1991, the Iaccoca Institute of Lehigh University put forward the concept of agile manufacturing, which focus on the ability to respond rapidly to changes in demand, both in terms of volume and variety. </li></ul>
  10. 10. IMPORTANCE OF LEAN IN SUPPLY CHAIN <ul><li>DELL Case Study: </li></ul><ul><li>Michael Dell is a college dropout and a computer nerd who puts together PCs cheaply and sells them by phone or through the Internet. In the mid-1980s, he founded Dell which leads the sector with annual growth rates of 30 to 40 per cent. Now the company valued at $100 billion. </li></ul><ul><li>Dell produces custom-made computers “just in time” for orders received directly from the customer. </li></ul><ul><li>The general rule for production is first in, first out, and Dell typically plants to ship all order no latter than five days after receipt. </li></ul><ul><li>Dell collapses the value chain and eliminates two significant cost components: 1) The retailer’s mark-up and 2) the costs and risks associated with carrying large inventories of finished goods. </li></ul><ul><li>The Dell model relies on demand side pull rather than supply side push, no computer is produced unless there is corresponding demand in the marketplace. </li></ul>
  11. 11. Systems Engineering implementation towards Lean & Supply Chain <ul><li>What is Systems Engineering? </li></ul><ul><ul><li>Systems engineering  is an interdisciplinary field of engineering that focuses on how complex engineering projects should be designed and managed. Issues such as ” logistics’’, the coordination of different teams, and automatic control of machinery become more difficult when dealing with large, complex projects. Systems engineering deals with work-processes and tools to handle such projects, and it overlaps with both technical and human-centered disciplines such as control engineering and project management. </li></ul></ul><ul><ul><ul><ul><li>How is Systems Engineering related to Lean & Supply Chain? </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>SE and Lean have overlaps and differences, but both represent processes that evolved over time with the common goal of delivering product or system lifecycle value to the customer. SE has emphasized technical performance and risk management of large, integrated complex systems. Lean has emphasized waste minimization and flexibility in the production of high quality affordable products with short development and production lead times. </li></ul></ul></ul></ul></ul>
  12. 12. Systems Engineering implementation towards Lean & Supply Chain <ul><ul><ul><ul><li>Systems Engineering in the Automotive Industry: </li></ul></ul></ul></ul><ul><ul><ul><ul><li>The exploded view of the figure shows how a system is involved with the subsystems and components . Every system has sub-systems and then divided to components. If there is a problem with a component or a sub-system the entire system can be flawed. </li></ul></ul></ul></ul>
  13. 13. Systems Engineering implementation towards Lean & Supply Chain <ul><ul><ul><ul><li>Lean Supply Chain In the Automotive Industry: </li></ul></ul></ul></ul><ul><ul><ul><ul><li>It was motivated in part by prior research that had shown that high-performing Lean automakers in Japan had successfully used commonality as a way to reduce cost and cycle time. </li></ul></ul></ul></ul>
  14. 14. Systems Engineering approach towards Lean & Supply Chain Kneepads
  15. 15. Where is Lean Supply Chain with Systems Engineering being implemented?? LSEWG
  16. 16. References: <ul><li>Research on Lean, Agile and Leagile Supply Chain -Fan Qi, Xu Xuejun & Gong Zhiyong </li></ul><ul><li>Cisco Systems : The Supply Chain Story </li></ul><ul><li>Diffusing Lean Production through Supply Chain </li></ul><ul><li>Lean Systems Engineering: Research Initiatives in Support of a New Paradigm. </li></ul><ul><li>Case Study: Supply chain whirl </li></ul><ul><li>Faurecia Interior Systems,SC </li></ul>