Logistics and material flow management have been an age-old issue in driving operational improvement. Compared with manufacturing, there are not too many tools that could be effectively used. On the other hand, there are many proven models, standards and best practices, ‘baptized by fire’, which is the topic of this part of the LEAN Academy. A particular place in the ‘logistic challenge’ is taken by Production Control, or production planning. Nowadays, companies are faced with high variability in customer demand and are requested to be highly responsive to any changes that may happen at any time. This often causes tremendous cost to the organization. Because of this the expectations to control production resources and ensure stable production are continuously growing. In this module we will become familiar, amongst other things with the rules of production. Levelling to secure optimum planning and utilization of manufacturing resources over a defined period. Thereafter, creating the MPS: Master Production Schedule – a short term (weeks) tactical and operating plan Followed by the S&OP: Sales & Operations Plan which is the medium-term (months) strategic plan to drive all the manufacturing resources to be used as effectively as possible.

1. © Lean & Mean Consulting. All rights reserved. 2015© Lean & Mean Consulting. All rights reserved. 2016
04/ 16
Production Control &
Logistics
Automotive Standards & Best Practices
Material Flow Management & Organization /
Production Planning Strategy (PC&L)
World-Class Standards & Best Practices of Operational Excellence

2. 2
Training Objectives
 Understand the function and philosophy of the PC&L
 Learn how to anticipate variability in demand and ensure high
responsiveness to any changes in schedules
 Learn why leveling production is needed to optimize utilization
of the resources
 Get familiar with key elements of the production control: S&OP
and MPS
 Learn the standards and best practices of the material flow
organization
 Learn the principles of leveling supplies and optimizing logistic
organization

3. 3
1. Introduction to PC&L
2. Customer Relationships & Production Leveling
 Production Levelling
 Sequencer & Withdrawal Plan
 Master Production Schedule (MPS)
 The Sales & Operation Plan (SOP
3. Internal Flow Management
 Reception Area
 Flat Storages & Overflow Stock Management
 Line Supply with Small Train
 Flow Racks
 Withdrawals, Shipment Preparation & Pool Stock
 Handling Operation Standardization
4. Supply Leveling & Logistics Optimization
 Supply Leveling
 Stabilize the suppliers
 Increase the deliveries frequency
 Use of small containers
Agenda

4. 4
1. Withdrawal organized by the customer
2. Stocks are located by the supplier site
3. Frequent delivery with mix of references
4. Standardize processes in the logistics
5. „Leveling” of customer needs at medium and long term
Understand the PC&L function
5 main PC&L principles

5. 5
 Leveling of Production
 Leveling of Supplies
Control the Lead-Time
The Leveling
Objective: Constant level of production, and
NOT constant level of stocks!
Stock
RM&BOP
Filter:
FGshop-stock+
pool-stock
Our plant
Supplier Customer
Leveled production
Leveled orders High demand variability

6. 6
 Major components of Lead Time that generate stocks:
1. Overproduction
2. Lack of flexibility
3. Lack of reliability
4. Poor organization of the Production and the PC&L
5. Quality Problems
6. Irregular Withdrawals and Deliveries
 Exceptional risks
 Which ones?
Understand PC&L function
Reduction of the Lead Time

7. 7
Reduction of the Lead Time (1)
Overproduction
1 – Production over needed demand
 Gap between
production and
customer needs
 Unstable production
rhythm
= NO respecting the rules of
TAKT-TIME
 Pull System + Production Leveling

8. Material Flow Management & Organization / Production Planning Strategy (PC&L)
Module. 04

9. 9
Simulation game
The Batch Size / Withdrawal Frequency
Stage 1.
• You produce three products: yellow triangles, green circles and blue squares
• Production batch size for the first stage is 4
• You have three options for delivery / withdrawals frequency:
• 1 / day
• 2 / day
• 4 / day
Task:
• Calculate the maximum stock before loading any truck (how many pieces in
total).
• Fill in just the grey fields only.
Note:
• Truck load reflects customer order and must be respected.
• Trucks come to pick up parts in due times (at 9.00, 12.00, 15.00 and 18.00)
• Depending on batch size and withdrawal frequency, you may need to have some
stock available before production begins (safety stock)

10. 10
Simulation – S1
The batch size / Withdrawal frequency
Max stock
before loading
Stock needed at the
beginning of the day
Stock before
loading
4 deliveries / day
Stock before
loading
2 deliveries / day
1 delivery / day
Stock before
loading
Batch size : 4

11. 11
Production Control & Logistic (PC&L)
Customer Relationship & Production Leveling
GROSSDOCK
Customer Relationship &
Production Leveling

12. 12
Production leveling
The principles to stabilize the Production (1)
Sequencer
A
stabile
TT
TT
Customer
TPA
Constraints!
Variability departure time due to potential issues related to:
- Customer
- Forwarder
6h 8h 10h 12h 14h
C1 C2 C3
Truck Schedule

13. 13
Production leveling
The principles to stabilize the Production (2)
A
Customer
We need a
stabile Takt-
Time
Sequencer
The demand mix and
quantities fluctuate!
Constraints!
To absorb
Variations of
Qties/refPool stock
TPA

14. 14
 Shares the workload over the day / shift
 Generates frequent withdrawal from Shop-stock & brings the
customer demand information to the production lines
(Takt Time transmission)
 Organizes truck preparation area ( TPA )
 Manages the flows to and from Pool Stock
 Initiates Indirect Labor Standardization (handling)
The Sequencer
A mean to express a mixed and leveled Customer Demand

15. 15
The Master Production Schedule: MPS
Customer Demand Treatment & Leveling
CC C C C
BBBBB
W1
AAAAA
W5W4W3W2
M
ccccc
B BBBB
A A A AA
T W T F
ZOOM
Decided Production
A
A
A
A
A
B
BB
B
B
C
C
C
C
C
W1 W2 W3 W5W4
Customer demand
leveling

16. 16
 Decide the Production (Part N° & Quantities) for the ongoing
week.
 Satisfy 4 Constraints (sorted according priority):
 Achievable
 Answer the Customer Order
 Respect the SOP
 Leveling the production activity
 Maintain constant production level with FG stocks fluctuating
between „min-max” levels.
The Master Production Schedule: MPS
Objectives

17. 17
Which time horizon?
 The horizon should be longer than longest lead-time of one of the critical resources. For instance:
 Human Resources: recruitment time, necessary training, etc.
 Space for production: time for construction or extension, adaptation, equipment, etc.
 Machines: time for capital availability (CAPEX), delivery lead-time, assembly, run & rate, testing, validation
 Raw materials: suppliers capacity, flexibility, delivery lead-time, etc.
 Benchmark: 12/18 months (min. 6 months)
What is S&OP?
S&OP - Sales & Operations Plan
is a cross-functional business plan that involves sales
and operations:
 Sales represent Demand
 Operations represent Supply

18. 18
Sales & Operations Planning
What are the inputs and outputs of the S&OP process?
From Market:
•Marketing Forecast
•Customer Forecast
From Exterior:
•Suppliers Capacity
From Operations:
•New Product Launches
•Plant Capacity
•Human Resources Capacity
•Previous S&OP
•Initial Inventory Level
From Finance:
•Financial Targets
•Budget
To Customer
•Shipment plan
To Exterior
•Procurement plan
To Operations
•Operations plan
•Load balance between sites
•Inventories plan
•Resources plan
•Action plans
To Finance
•Revenue plan
•Budget (once a year)
STANDARD
S&OP PROCESS
• current month S&OP
• compared to prior S&OP
• compared to budget
• goal : 95% for each
section, every month
• one set of figures
„input”
„output”

19. 19
 To anticipate & to adapt: medium term vision & plant steering
 Vision of volumes over 6 months (or longer) by product family
 To define the level of production (by family)
 Customers Consumption (volumes, start-up & end of production)
 Capacity Equipment
 To define the plant’s organization at medium term
 Define the working calendar according to customer calendar ( working days in a
month)
 Plans for repairing, renovation and necessary technical downtime - maintenance
(TPM)
 Identify the necessary human resources (number of operators + staff (indirect))
 The supply of critical resources (raw materials and materials, but also the demand
on the media) and to take into account the constraints and their Lead-Time
Sales & Operations Plan: SOP
Objectives

20. 20
Production Control & Logistic (PC&L)
Material Flow Organization
CROSS-DOCK
Internal Flow
Management

21. 21
Agenda:
 Internal Flows: General Organization of the Layout
 Reception Area
 Flat Storages & Overflow Stock Management
 Line Supply with Small Train
 Flow Racks
 Withdrawals, Shipment Preparation & Pool Stock
 Handling Operation Standardization
Production Control & Logistics
Internal Flow Management

22. 22
Material Flow Organization
Lay-out & Flow
Emptypackaging
Sequencer
TPAzones
Shop-stock
N°1
N°2
N°3
Heavy
equipment
truck
1
truck
2
truck
…
queue
LineA
LineB
LineC
LineD
Frontal feeding by small
train
Oftenandregularpicking
Incoming zone
Supermarket
Shop-
stock
Shop-
stock
Pool-stock
Finishgoodsflow

23. 23
Reception area
Flow & lay-out of the Flat Storage / Supermarket
Train for supply
Train 2
Emptypackaging
Dock 1 Dock 2 Empty packagingEmpty packaging
Train of reception
Train 1
Incoming
Inspection

24. 24
Supermarket Management (1)
Supermarket Organization: dynamic racks supply
SUPERMARKET
SUPERMARKET
Pallets loaded on small train
Small train feeds the supermarket
With small boxes
Overflow stock
Pallets that do not fit in the supermarket
are stacked in the overflow stock
Reception area
Transport of
Small boxes
Transport of
pallets

25. 25
Line supply with small train (1)
Small train Cycle
SUPERMARKET
SUPERMARKET
Small train feeding the line with
small boxes and evacuating
empty boxes
Freq.: 30 – 50’
The small train replenishes the
line thanks to withdrawal
Kanbans
The small train driver can decant
a few components from their
boxes if:
- There is time-gain
- No quality risks
The capacity of assembly
line flow racks is about
twice the small train cycle
time

26. 26
 Optimize the standard work time:
 Make the time measurements of the work elements (movements,
handling).
 Reduce movements.
 Eventually, line several loops together (ex: with removal of rubbish).
 Use one train to supply several lines.
 Loops organized by the logistics.
 After a HOSHIN workshop the train activity must be reviewed
and adjusted.
Line supply with small trains
Characteristics

27. 27
Small train. Few examples

28. 28
 Search for the best locations for components.
 Reduce variability:
 Reduce useless movements, blockages, catching, difficulties.
 Optimize the supply of components (distance, sliding in the flow racks).
 Optimize the “flow rack” capacity according the cycle of small
train.
 Progress step by step & optimize continuously
Flow Rack
Application of Kaizen in line supply

29. 29
Flow racks - Benchmarking

30. 30
Withdrawals & Shipment Preparation (1)
Withdrawal flow of FG & WIP
The withdrawal train takes the WK
from the Sequencer to pick the containers
out of the Shop Stock
(Frequency to be decided on. In a Lean
factory it takes between 15’ to 30’)
The forklift truck or small train brings the
products into the TPA (Truck Preparation
Area) or into the Pool Stock according to
the WK. Decision is made by Logistics
through placing the right WK in the
Sequencer
Shop Stock Shop Stock Shop Stock
POOL STOCK
Sequencer
WK
WK
WK
WK
TPA

31. 31
 „A full for an empty”
 No empty runs
 No handling inside the production lines
 Leveling of workload
 Standardization allows the optimization (organization = cost)
Handling operation standardization
Principles

32. 32
Training Modules of PC&L
GROSSDOCK
Supplies Leveling &
Logistics Optimization

33. 33
 The Transport Scheme (TSc) defines:
 The route (main route et sub route) followed by each carrier from
Supplier to the factory
 The assignment of the docks to the routs
 The Transport Program (TP) defines:
 The delivery times
 The number of trucks
 The workload of the trucks drivers
 Firm 1 month, horizon 6 month
Supply Leveling
Establish the Transport Scheme and the Transport Program
A B C
1-6-X
Main route
The factory

34. 34
 Manifest (pick-up sheets, loading list):
 It is the truck packing list expressed by part Number in packaging units (PU).
 It is as well the document to check-up loading & shipment. It is used to keep
tracks off any shortage.
 It is expression of a firm order
 It is the proof of loading
 It is the transport documentation (Delivery Note)
 It is reception document (physical or computerized)
 The manifest allows to control the BOP physical flow
Stabilize the Suppliers
Manifest

35. 35
 Check deliveries against manifest
 Report shortage
 Appraise suppliers MPM
 Repot MPM towards Suppliers
 Follow up action plan
Stabilize the Suppliers
Deliveries Follow Up

36. 36
Increase the deliveries frequency
Current situation for RM & BOP transportation
The Factory
Customer
A
B
C
D
E
1-1-X
1-1-X
5-3-X
5-2-X
5-3-X
1-3-X
CURRENT SITUATION
Separated Flows, few deliveries: loss of synergies and of
savings
Suppliers

37. 37
 Project Management structure driven by PC&L with
purchasing involvement
 S&OP / MPS / SP / TP
 Supply Leveling & Manifest Management
 „E” (Ex-works)-group of incoterms transportation
 Needs expressed in packaging units
 12h access to supplier shipping area
 Knowledge of the nationals laws
Increase the deliveries frequency
Establishing a Milk Run: Requisite

38. 38
The aim is to supply the line work stations in small
containers.
 Purchasing negotiates, with support from the material planners,
the transition to small containers.
 Use reusable (returnable) containers.
 HOWEVER, In some cases it is more reasonable to:
 Repack. Only a small container may enter the supermarket.
 Supply in disposable (one-time) containers. In this case, the supply to work stations
without loss of time and waste removal must be guaranteed.
Use of small containers
Principles

39. 39
Use of small containers (1)
Recommendations
1. The box has at least one "standard" side measuring 200, 300 or 400mm (enable to
standardize the width of supermarkets and flow racks)
2. The height and the other side (see 1st criteria) of the box, are designed to optimize
the ratio "Number of Parts / Box Volume"
3. The surface of a standard pallet can be exactly filled with a set of boxes
4. One part number per box (left and right detached)
5. Full box weight does not exceed 12 kg (and meets Health & Safety criteria)
6. The box is stackable
7. The box is solid enough to do project life time rotations
8. The box has plain walls (recommended)
9. The box has a flat bottom

40. 40© Lean & Mean Consulting. All rights reserved. 2016