Cost reduction strategies

Cost Reduction Strategies
&
Industry 4.0 Road Map
Dr.Lütfi Apilioğulları
Sep/ 2018
116.9.2018

www.lutfiapiliogullari.com
Agenda 1. The Speed of Change
• Where we are?
• Operational Excellence
2. Strategic Sourcing
 Right Supplier
 JIT Purchasing
 Total Cost Approach
3. Operational Efficiency
• Production Strategies
• Hibrid Model
• TPM & TQM
• Standards / Skills
4. Industry 4.0
• Industry 4.0 Road Map
5. Q&A

The speed of Change?
2006 2032 20562043
11 year
50 year
69.000 km/h
321.000 km/h
Voyager
XXX
Start Arrival
Start BackSpeed km /h
Time
We will go later in the future, to arrive earlier
1 2 3 4 5

Industry 4.0: Where we are?
…..
Industry1.0 Industry 2.0 Industry 3.0 Industry4.0
TR Industry WCM
 Lack of investment in human and system, focus on growth.
 Traditional management model, far from innovation, reluctant to
delegate authority.
 The strategy of making every business in the body, not being able to
specialize resources.
1 2 3 4 5

Key Factors for Success
.....
Current Account Deficit
(Cari Açık) CAUSE SOLUTION
Productivity Waste (Muda) LEAN
Speed
Quality
Uncertainty
Variability
AGILE
6 SIGMA
1 2 3 4 5

Operational Excellence
Productivity QualitySpeed
PROFIT
WASTE VARIABLESUNCERTAINTY
OPERATIONAL EXECLLENCE
PRINCIPALS
LEAN MANAGEMENT
 Value
 Value Chain
 Pull
 Flow
 Excellence
STRATEGY
AGILE MANUFACTURING
 Market Sensitivity
 Virtual Network
 Process Integration
 Network Management
METHODOLGY
SIX SIGMA
 Zero Defect
 Design Quality
(DFSS)
1 2 3 4 5

Strategic Sourcing / Right Supplier
Switching Cost
Supplier Manufacturer
OTD / Quality
Wrong Supplier Means
• Stock Increase
• Cost Increase
• Revenue Decrease
1 2 3 4 5

Use science to select your partner!
Heuristic
• Cheapest
• Closest
• Friend
• ..
• ...
Analytic Approach
Best Supplier
Criteria
1. Quality 2. Delivery 3. Cost 4. Speed 5. Flexibility
AHP / ANP
1 2 3 4 5

Heuristic
• Cheapest : Sup-A
• Top Quality: Sup-D
• ...
• ...
• ...
• Best : Sup- B
Analytic Approach
Kalite Teslimat Maliyet Hız Esneklik Ağırlık
Kalite 1,00 2,00 1,50 3,00 4,00 0,36
Teslimat 0,50 1,00 0,75 1,50 2,00 0,18
Maliyet 0,67 1,33 1,00 2,00 3,00 0,25
Hız 0,33 0,67 0,50 1,00 1,50 0,12
Esneklik 0,25 0,50 0,33 0,67 1,00 0,09
Ağırlık Ted-A Ted-B Ted-C Ted-D Ted-E
Kalite 36% 75 93 80 95 75
Teslimat 18% 87 75 85 75 90
Maliyet 25% 100 90 95 95 95
Hız 12% 85 90 85 85 85
Esneklik 9% 65 75 80 50 70
Toplam Skor 83,72 87,08 85,23 86,26 83,46
81,00
82,00
83,00
84,00
85,00
86,00
87,00
88,00
Ted-A Ted-B Ted-C Ted-D Ted-E
Heuristic
Analytic
1 2 3 4 5

Strategic Sourcing / JIT Purchasing
Today, Supply Chains compete, not companies!
JIT Purchasing
Supplier Park
Milk Run
• Strategic Alliance with Suppliers
• Limited # of Suppliers
• Milk Run & JIT-Purchasing
• Improve Communication (Reduce
BW Effect / VH Integration)
• Eliminate Averaging Effect
 Reduce Lead Time & Inventory
 Improve Cash to Cash Cycle
1 2 3 4 5

Strategic Sourcing / PLM
Critical phase of PLM: Decline Pont
Giriş
(Introduction)
Büyüme
(Growth)
Azalma
(Decline)
Olgunluk
(Maturity)
MRP
Kanban
MTO / CTO MRP
Decline
Point
Wrong Point
E/O Stock
Supplier- B
Supplier- A
1 2 3 4 5

Strategic Sourcing / Total Cost Approach
EOQ Quantity
Cost
Ordering Cost100
200
300
400
500
600
5.000 10.000 15.000
0
Total Cost Carrying Cost Ordering Cost
2KD
hc
Q =
K: Demand
D: Ordering Cost
hc: Holding Cost
Reduce Total Cost, not only ordering cost!
1 2 3 4 5

Strategic Sourcing / Total Cost Approach
Reduce Total Cost, not only ordering cost!
N = 35
N = 4
4.500
520
Total Cost Aproach Traditional Aproach
EOQ = 520
TC = CC + OC
2.080 = 1.040 + 1.040
EOQ = 4.500
TM = CC + SVM
9.120 = 9.000 + 120
1 2 3 4 5

 Duration of product life cycle
 Time Window for delivery
 Volume
 Variety
 Variability
Product Characteristic
1. Make to Stock
2. Configure to Order
3. Make to Order
4. Engineering to Order
Define PDP
DWV^3
AGILELEAN
Production Strategies
Product
Standard Innovative
One size does not fit all!
Operational Efficiency / Production Strategy
1 2 3 4 5

Operational Efficiency / Hibrid Model
Raw MaterialSupplier
Injection
WIP FG
Planning
MTS : Make to Stock
5L, Sarı
WO
KKK
Painting
Lead Time: 0
Kanban SignalKanban SignalKanban Signal
Ürün Strateji (PDP)
MTS: Make to Stock
CTO: Configure to Order
MTO: Make to Order
ETO: Engineering to Order
Teslim Süresi
(LT)
0
1h
2h
3h
1 2 3 4 5

Injection
WIP FG
Planning
CTO : ConfigureTo Order
5L, Siyah
WO
KK
Painting
Lead Time: 1h
Kanban SignalKanban Signal
MTS: Make to Stock
MTO: Make to Order
Teslim Süresi
(LT)
0
1h
2h
3h
1 2 3 4 5

Injection
WIP FG
Planning
MTO : MakeTo Order
10L, Siyah
WO
K
Painting
Lead Time: 2h
Kanban Signal
MTS: Make to Stock
MTO: Make to Order
Teslim Süresi
(LT)
0
1h
2h
3h
1 2 3 4 5

Injection
WIP FG
Planning
ETO : EngineeringTo Order
20L, Siyah
WO
Painting
Lead Time: 3h
MTS: Make to Stock
MTO: Make to Order
Teslim Süresi
(LT)
0
1h
2h
3h
1 2 3 4 5

Production Montage Innovative Prd.
Ayrışım Noktası
(Decoupling Point)
Yalın (Lean) Çevik (Agile)
Cost: A + N
Component SM
Standard Prod. Cost: A
A Group proructs
1 2 3 4 5

Operational Efficiency / TPM
Performance
Quality
Breakdown
C/O
Speed Loss
Minor Stp.
Scrap
Start-up
OEE
SIX Big Losses
 Zero
 Min
 Zero
 Zero
 Zero
 Min
Major TPM Pillars
 Kobetsu Kaizen
 Autonomous Maintenance
 Planned Maintenance
 5S
Maintenance
Operator
Equipment
Aut.Maint.
You do it,
You fix it!
I do it, You
fix it!
Availability
1 2 3 4 5

Operational Efficiency / TQM
Quality at the Source Jidoka Poka & Yoke
Do & Check Stop at any
abnormality
Mistake proofing
Quality is the Customer’s return, not the product!
1 2 3 4 5

Set the standards Apply the standards
I do my job by looking at the
instructions. If there is no
instruction, I do what I
know.
Where there is no Standard, there can not be Kaizen (Ohno)
The Definition of Problem is
deviation from standard. So,
my job is to create the
standards.
Operational Efficiency / Standards
1 2 3 4 5

Key factor for success is factory citizenship.
1. Kaizen: Small but Continual
2. OPL (One Point Lesson): For each task
3. ASAKAI: Every day
4. Core Training (Process):Deep knowledge.
5. Rotation: For multi skill
In order to apply
the standards
correctly, I need to
be trained.
Operational Efficiency / Skills
1 2 3 4 5

Process Design
PDP (Product Delivery Process)
Supplier
Standard
Product
Innovative
Product
Moduler
Product
Lean Agile Hibrid
ERP
CustomerHorizontal
Integration
Ver
Integration
MES Industry 3.0 / FABRİKA
1
2
3
4
FAZ 1: STANDART
FAZ 2: Preperation
Industry 2.0 / ATÖLYE
Not to make the mistake
faster;
- First: Set standards (3.0)
- Next: Implement 4.0
Industry 4.0: The Road Map
1 2 3 4 5

Industry 4.0: The Road Map
Today’s oil is DATA
ERP
MES
Cloud
BDA
Cyber Security
Right,
Real Time Info
Smart Things
Value
Vertical / Horizontal Integration Simulation
Augmented Reality Autonomous Robots
3D Printing
IoT
Cloud BDA CS
Ind 3.0 Ind 4.0
Standards
Lean & Agile
1 2 3 4 5

Change: How long does it take?
Change Management is not a project.
Turkey Average
4 Sigma : 6200 ppm
Excellence
6 Sigma : 3.4 ppm
How long does it take?
3.4 = 6200 (1- A)
x
A : Improvement rate (%)
x : Total years to achieve
excellent
A= 25% x= 26 Year
A= 50% x= 11 Year
A= 75% x= 5 Year
1 2 3 4 5

Think Globally, Act Locally!
A person who does not make any mistakes, never makes any try.
Singapore China S. Korea
Segmentation in
Industry
Training from
Sensei /Japan
Innovation
(Try Storming)
Past:
Montage Industry
Now:
Manufacturing
& Innovation
Industry
Transfer best
professors from
World.
1 2 3 4 5

Thank You…
Q&A
1 2 3 4 5

Cost reduction strategies

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Cost reduction strategies

Similar to Cost reduction strategies (20)

More from Dr. Lutfi Apiliogullari

More from Dr. Lutfi Apiliogullari (20)

Recently uploaded

Recently uploaded (20)

Cost reduction strategies