The document is a presentation by Marek Piatkowski on supply chain management strategy and materials management strategy based on lean transformation principles. It discusses traditional issues with materials handling, purchasing, inventory management and production practices. It proposes implementing a materials management strategy and organization based on 5 key principles: control and command, inventory control using plan for every part, supermarket-style inventory storage, engineered delivery routes, and production/delivery based on a pull signal. The objectives are to produce what customers want when they want it with minimal waste and inventory costs.

1. 1Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Supply Chain Management
Materials Management Strategy
Marek Piatkowski – November 2016
Thinkingwin, Win, WIN

2. 2Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Introduction - Marek Piatkowski
 Professional Background
 Toyota Motor Manufacturing Canada (TMMC) - Cambridge, Ontario from
1987-1994
 TPS/Lean Transformation Consulting - since 1994
 Professional Affiliations
 TWI Network – John Shook, Founder
 Lean Enterprise Institute (LEI) – Jim Womack
 Lean Enterprise Academy (LEA) – Daniel Jones
 CCM/CAINTRA – Monterrey, Mexico
 SME, AME, ASQ, CME
 Lean Manufacturing Solutions - Toronto, Canada
http://twi-network.com

3. 3Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN

4. 4Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
 Suppliers are individuals or organizations that provide inputs (materials) to the
process. These can be internal (e.g. department, division, or individuals) or external
(e.g. vendors, government, or individuals)
 Inputs are materials and information that are required by the process to produce
the outputs – finished or semi-finished products
 Process are key manufacturing steps and their sequence that convert raw
materials and purchased parts into finished or semi-finished products
 Outputs are typically finished or semi-finished products that are produced as a
result of the process execution
 Customers are those who receive the process output and who placed the order

5. 5Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Purchased Parts Management
 In a traditional material handling system, large quantities of purchased parts arrive
at the receiving dock, typically on pallets or in large boxes
 They are either stored in the warehouse or delivered directly to the production
floor by hand or by forklift trucks in a poorly defined manner
 Quite often quantities delivered are much larger than the quantities required by
production. Parts are delivered on pallets or containers that make very little sense
from parts presentation point of view
 As a result of this system the shop floor becomes a mini-warehouse with multiple
storage locations and excess inventory.

6. 6Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Finished Goods
 Parts are produced not based on what the Customer orders, but based on sales
forecasts or on “economical quantities” that meet manufacturing efficiency
objectives
 This results in not meeting Customer’s expectations when it comes to lead time or
the price. In order to compensate for this we carry large amounts of finished goods
inventories
 So we produce parts, put them in Finished Goods inventory warehouses, hoping
that one day the Customer will call and place an order
 These methodologies create conflicting priorities and confusion among
departments and individuals responsible for what we call Material Flow

7. 7Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
WIP – Work in Process Inventory
 In many operations the ownership of production, transportation and storage of
WIP components and sub-assemblies is in hands of Production Supervisors
 Their priority is to produce parts in the most efficient and easiest way for them
 Once parts are produced they are being “pushed” to the parts warehouse or to the
next manufacturing process
 In many instances the overproduce or change the sequence of production schedule
dues to parts shortages or other reasons
 Management of WIP inventory becomes a secondary priority.

8. 8Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Inventory
 Common problems that we see with such traditional systems include:
 Unnecessary high levels of inventories
– too much of what you do not need and not enough of what you need
 Difficulty knowing how much inventory we have in our warehouse
 Difficulty knowing where to find parts in a warehouse
 Difficulty knowing how many purchased parts are on the floor
 Confused and frustrated Suppliers
 Parts shortage – production lines running out of parts
 Production operators unable to sustain cycle times because they are searching
for parts
 Less than 100% on time deliveries
 And more …

9. 9Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Inventory – the Necessary Evil
How much inventory you need to operate your business on daily basis?
 We do not usually “manage” inventories
 We reduce it or cut it, but we do not manage it
 Maybe we do not know how?
 Who in your Organization is responsible for inventory levels?
 How do you manage your inventories?
 We do not manage inventories the same way we manage money
 You need capital to operate – you also need inventories to operate
 This is not about having too much or not enough inventories
 Can you answer that question for every part?

10. 10Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Materials Management Strategy
 Materials Management Strategy based on Lean Transformation principles offers a
solution to all these problems
 The solution is to replace traditional material-handling and inventory management
systems with lean Materials Management Systems based on five key
implementation principles:
1. Control and Command - a single Materials Management Organization
2. Inventory Control through a use of Plan-For-Every-Part (PFEP)
3. Inventory storage systems based on principles of a Supermarket
4. Engineered delivery routes – times based or replenishment based routes
5. Production or delivery instructions based on a pull signal
Material Flow generates Information Flow

11. 11Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Material Strategy Objectives
 Produce what the Customer wants when the Customer wants it
 Reduce the lead time from the Customer order to delivery
 Introduce flexible manufacturing – small lot production
 Minimize the cost of materials by eliminating sources of waste in the delivery of
material, receiving, storage, production flow and shipping
 Gain control of inventory costs
 Eliminate costs associated with parts shortages and schedule changes
 Improve the flow of material

12. 12Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Materials Management Strategy
 It is not uncommon to achieve:
 Double digit improvements in inventory terms
 Significantly reduce storage space requirements
 Minimize operating costs
 Totally eliminated line stops due to parts shortage
 Achieve 100% on time customer deliveries
 Minimize lead times

13. 13Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
EXAMPLE

14. 14Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Part Number Description Consumption -
Weekly Volume
LAST 6 MONTHS
Quantity per
bag
# of Parts in the
Warehouse on
July 18, 03
Cost per
Part - $$$
Cost of
Inventory on
July 18, 03
Maximum
Inventory in the
Stock Room
Target (Max)
Cost of
Inventory
1 Containers =
days of
Inventory
1B0457 TERM FERRULE 15 750 2,712 $0.33 $894.96 750 $247.50 250
1B0797 FILL FERRULE 9738 10,000 2,935 0.34 $997.90 20,000 $6,800.00 5
1B0799 TERM.FERRULE 9788 10,000 6,345 0.44 $2,791.80 20,000 $8,800.00 5
1B1449 TERM FERRULE 339 4,981 0.23 $1,145.63 500 $115.00 5
1B1720 FILL FERRULE 157 3,500 0 0.45 $0.00 3,500 $1,575.00 111
1B1920 TERM FERRULE 160 3,000 257 0.33 $84.81 3,000 $990.00 94
1B3554 FILL FERRULE 58 2,750 1,479 0.37 $547.23 2,750 $1,017.50 237
1B3555 TERM FERRULE 58 1,500 760 0.55 $418.00 1,500 $825.00 129
1B3644 TERM FERRULE 0 7,875 277 0.54 $149.58 500 $270.00 5
1B3664 FILL FERRULE 5018 7,975 4,256 0.34 $1,447.04 15,950 $5,423.00 8
1B3821 TERM FERRULE 324 2500 6,393 0.55 $3,516.15 2,500 $1,375.00 39
1B4806 TERM FERRULE 3950 3280 8,947 0.33 $2,952.51 9,840 $3,247.20 4
1B6324 TERM FERRULE 14 0 2,710 0.44 $1,192.40 500 $220.00 5
1B0360 LID 0 450 4,981 0.43 $2,141.83 500 $215.00 5
1B0743 LID 15 450 0 0.45 $0.00 450 $202.50 150
1B0779 LID 0 500 0 0.36 $0.00 500 $180.00 5
1B1019 LID 544 900 0 0.33 $0.00 1,800 $594.00 8
1B1067 LID 0 6,738 0.33 $2,223.54 500 $165.00 5
1B1530 LID 0 450 0 0.33 $0.00 500 $165.00 5
1B1556 LID 39 250 5,500 0.37 $2,035.00 250 $92.50 32
1B1606 LID 0 250 0 0.76 $0.00 500 $380.00 5
1B1632 LID 0 277 35,912 0.65 $23,342.80 500 $325.00 5
1B1644 LID 0 500 0 0.45 $0.00 500 $225.00 5
1B1734 LID 494 500 0 0.56 $0.00 1,000 $560.00 5
1B1761 LID 438 950 0 0.56 $0.00 950 $532.00 11
1B1831 LID 0 900 5,558 0.55 $3,056.90 500 $275.00 5
1B1990 LID 0 500 0 0.34 $0.00 500 $170.00 8
1B2216 LID 0 14,722 0.55 $8,097.10 500 $275.00 8
1B2218 LID 0 2,663 0.33 $878.79 500 $165.00 8
1B2220 LID 157 4,031 0.44 $1,773.64 500 $220.00 1
1B2549 LID 11 1,000 0 0.43 $0.00 1,000 $430.00 455

15. 15Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Part Number Description Consumption -
Weekly Volume
LAST 6 MONTHS
Quantity per
bag
# of Parts in the
Warehouse on
July 18, 03
Cost per
Part - $$$
Cost of
Inventory on
July 18, 03
Maximum
Inventory in the
Stock Room
Target (Max)
Cost of
Inventory
1 Containers =
days of
Inventory
1B5961 LID 226 450 58,019 0.65 $37,712.35 900 $585.00 10
1B6150 LID 316 473 41,037 0.45 $18,466.65 946 $425.70 7
1B1632 LID 0 277 35,912 0.65 $23,342.80 500 $325.00 5
1B3418 LID 95 28,337 0.34 $9,634.58 500 $170.00 5
1B4944 LID 38 500 23,433 0.34 $7,967.22 500 $170.00 66
1B6665 LID 0 21,990 0.44 $9,675.60 500 $220.00 5
1B4983 LID 18 465 21,467 0.55 $11,806.85 465 $255.75 129
1B6676 LID 0 17,738 0.45 $7,982.10 500 $225.00 5
1B3834 LID 0 16,226 0.37 $6,003.62 500 $185.00 5
1B2216 LID 0 14,722 0.55 $8,097.10 500 $275.00 8
1B4391 LID 0 665 9,648 0.65 $6,271.20 500 $325.00 5
1B4806 TERM FERRULE 3950 3280 8,947 0.33 $2,952.51 9,840 $3,247.20 4
1B2846 LID 0 8,338 0.45 $3,752.10 500 $225.00 7
1B4867 LID 0 1164 7,608 0.55 $4,184.40 500 $275.00 5
1B1067 LID 0 6,738 0.33 $2,223.54 500 $165.00 5
1B3393 LID 0 6,497 0.55 $3,573.35 500 $275.00 5
1B3821 TERM FERRULE 324 2500 6,393 0.55 $3,516.15 2,500 $1,375.00 39
1B0799 TERM.FERRULE 9788 10,000 6,345 0.44 $2,791.80 20,000 $8,800.00 5
1B1831 LID 0 900 5,558 0.55 $3,056.90 500 $275.00 5
1B1556 LID 39 250 5,500 0.37 $2,035.00 250 $92.50 32
1B1449 TERM FERRULE 339 4,981 0.23 $1,145.63 500 $115.00 5
1B0360 LID 0 450 4,981 0.43 $2,141.83 500 $215.00 5
1B6675 LID 0 277 4,950 0.43 $2,128.50 500 $215.00 5
1B3732 LID 281 460 4,299 0.33 $1,418.67 920 $303.60 8
1B3664 FILL FERRULE 5018 7,975 4,256 0.34 $1,447.04 15,950 $5,423.00 8
1B2220 LID 157 4,031 0.44 $1,773.64 500 $220.00 1
1B5234 LID 101 900 3,540 0.33 $1,168.20 900 $297.00 45
1B3952 LID 353 750 3,421 0.76 $2,599.96 750 $570.00 11
1B6253 LID 450 860 3,410 0.56 $1,909.60 1,720 $963.20 10
1B6385 LID 1293 950 3,257 0.55 $1,791.35 2,850 $1,567.50 4
1B0797 FILL FERRULE 9738 10,000 2,935 0.34 $997.90 20,000 $6,800.00 5

16. 16Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Part Number Description Consumption -
Weekly Volume
LAST 6 MONTHS
Quantity per
bag
# of Parts in the
Warehouse on
July 18, 03
Cost per
Part - $$$
Cost of
Inventory on
July 18, 03
Maximum
Inventory in the
Stock Room
Target (Max)
Cost of
Inventory
1 Containers =
days of
Inventory
1B1720 FILL FERRULE 157 3,500 0 0.45 $0.00 3,500 $1,575.00 111
1B0743 LID 15 450 0 0.45 $0.00 450 $202.50 150
1B0779 LID 0 500 0 0.36 $0.00 500 $180.00 5
1B1019 LID 544 900 0 0.33 $0.00 1,800 $594.00 8
1B1530 LID 0 450 0 0.33 $0.00 500 $165.00 5
1B1606 LID 0 250 0 0.76 $0.00 500 $380.00 5
1B1644 LID 0 500 0 0.45 $0.00 500 $225.00 5
1B1734 LID 494 500 0 0.56 $0.00 1,000 $560.00 5
1B1761 LID 438 950 0 0.56 $0.00 950 $532.00 11
1B1990 LID 0 500 0 0.34 $0.00 500 $170.00 8
1B2549 LID 11 1,000 0 0.43 $0.00 1,000 $430.00 455
1B5651 LID 437 500 35 0.45 $15.75 1,000 $450.00 6
1B5636 LID 595 500 120 0.43 $51.60 1,500 $645.00 4
1B5883 LID 0 970 125 0.37 $46.25 500 $185.00 5
1B6642 LID 0 240 0.38 $91.20 500 $190.00 5
1B6220 LID 9 950 250 0.56 $140.00 950 $532.00 528
1B1920 TERM FERRULE 160 3,000 257 0.33 $84.81 3,000 $990.00 94
1B3644 TERM FERRULE 0 7,875 277 0.54 $149.58 500 $270.00 5
1B5758 LID 891 1000 449 0.36 $161.64 2,000 $720.00 6
1B5920 LID 865 900 741 0.76 $563.16 1,800 $1,368.00 5
1B3555 TERM FERRULE 58 1,500 760 0.55 $418.00 1,500 $825.00 129
1B3090 LID 461 900 1,006 0.36 $362.16 1,800 $648.00 10
1B3126 LID 58 1,173 0.56 $656.88 500 $280.00 7
1B4542 LID 0 1,296 0.56 $725.76 500 $280.00 5
1B4467 LID 206 460 1,392 0.45 $626.40 460 $207.00 11
1B3554 FILL FERRULE 58 2,750 1,479 0.37 $547.23 2,750 $1,017.50 237
1B6632 LID 0 472 1,500 0.55 $825.00 500 $275.00 5
1B6384 FINISHED LID 1,642 0.36 $591.12 500 $180.00 5
1B4637 LID 0 800 2,006 0.56 $1,123.36 500 $280.00 5
1B3558 LID FINISHED 27 2,013 0.55 $1,107.15 500 $275.00 5
1B3298 LID 3407 950 2,409 0.56 $1,349.04 7,600 $4,256.00 7

17. 17Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Part Number Description Consumption -
Weekly Volume
LAST 6 MONTHS
Quantity per
bag
# of Parts in the
Warehouse on
July 18, 03
Cost per
Part - $$$
Cost of Inventory
on July 18, 03
Maximum
Inventory in the
Stock Room
Target (Max)
Cost of
Inventory
1 Containers =
days of
Inventory
1B0743 LID 15 450 0 0.45 $0.00 450 $202.50 150
1B0779 LID 0 500 0 0.36 $0.00 500 $180.00 5
1B6476 LID 69 500 2,751 0.34 $935.34 500 $170.00 36
1B5368 LID 2233 500 2,831 0.44 $1,245.64 4,500 $1,980.00 5
1B3952 LID 353 750 3,421 0.76 $2,599.96 750 $570.00 11
1B5234 LID 101 900 3,540 0.33 $1,168.20 900 $297.00 45
1B2220 LID 157 4,031 0.44 $1,773.64 500 $220.00 1
1B3664 FILL FERRULE 5018 7,975 4,256 0.34 $1,447.04 15,950 $5,423.00 8
1B3732 LID 281 460 4,299 0.33 $1,418.67 920 $303.60 8
1B4867 LID 0 1164 7,608 0.55 $4,184.40 500 $275.00 5
1B2846 LID 0 8,338 0.45 $3,752.10 500 $225.00 7
1B4806 TERM FERRULE 3950 3280 8,947 0.33 $2,952.51 9,840 $3,247.20 4
1B4983 LID 18 465 21,467 0.55 $11,806.85 465 $255.75 129
1B6665 LID 0 21,990 0.44 $9,675.60 500 $220.00 5
1B4944 LID 38 500 23,433 0.34 $7,967.22 500 $170.00 66
1B3418 LID 95 28,337 0.34 $9,634.58 500 $170.00 5
1B1632 LID 0 277 35,912 0.65 $23,342.80 500 $325.00 5
1B6150 LID 316 473 41,037 0.45 $18,466.65 946 $425.70 7
1B5961 LID 226 450 58,019 0.65 $37,712.35 900 $585.00 10
TOTALS 427,351 $208,351.36 133,301 $56,249.95 2,619
Actual $208,351.36
Target (Max) $56,249.95
Variance (Savings) -$152,101.41

18. 18Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
EXAMPLE

19. 19Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Komora "411" / Cavity "411"
0
200
400
600
800
1000
1200
1400
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39
Zapas[szt]/Stock[pcs]
Supermarket Inventory Reduction

20. 20Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Komora "321" / Cavity "321"
0
200
400
600
800
1000
1200
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39
Zapas[szt]/Stock[pcs]
Supermarket Inventory Reduction

21. 21Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Wszystkie komory / All cavities
0
1000
2000
3000
4000
5000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
Zapas[szt]/Stock[pcs]
Charts of inventory in supermarket
> 50% Reduction
of Inventory

22. 22Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Do you have
Materials Management System
in place in your Organization?

23. 23Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Materials Strategy - Future Vision
 Centralized Materials Management Organization
 Plant layout to facilitate Material Flow
 One Purchased Parts Supermarket near receiving
 One Finished Goods Supermarket near Shipping
 Mini WIP markets at point of manufacture
 Controlled Material Delivery Traffic
 Flexible production planning – link manufacturing to Customer orders
 100% on time deliveries
 No backorders
 No Line stops dues to parts shortages
 Visual Management

24. 24Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Vision for Flow
Create a Vision for Flow of Materials

25. 25Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Material Flow Plan - Year One
 A new Materials Management Organization
 Create Materials Flow inside the Plant
 One purchased parts Supermarket near receiving
 One finished goods Supermarket near shipping
 Supermarkets/Mini WIP markets located along isles to facilitate a timed delivery
System
 Mini WIP markets at “Point of Manufacture” - parts delivered directly from the
Supermarket to operator’s fingertips
 Control Material Delivery Traffic
 Dedicated Material Handling Team
 Standardized delivery routes set up to replenish only what has been consumed
 One Way Aisles and Super Highways
 Forklifts Restricted to Shipping/Receiving Area only

26. 26Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Material Flow Plan - Year One
 Create Flow in Manufacturing
 Design and Implement Production Cells (CCF)
 Operator Flow
 Material Flow Internal To Cells
 Position work cells to facilitate Material Delivery
 Standardized Work
 Develop Flow between Cells (MMF)
 Create Flow Throughout the Facility
 Material Flow from Raw Supermarket to Cells
 Material Flow between Cells (WIP)
 Information Flow between Manufacturing and Materials

27. 27Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Material Flow Plan - Year Two
 Expand Material Flow activities
 Link manufacturing to Customer orders
 Pull to Distribution Center or Finished Goods Supermarket
 Level Scheduling
 JIT - Pick, Pack and Ship
 Schedule production for a single point - Pacemaker
 Just-in-Time and sequential production
 Implement advanced IT systems
 MRP
 Bar Code technology
 E-Kanban

28. 28Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Material Flow Plan - Year Three
 Implement Flow between Suppliers and The Plant
 Connect Suppliers to Internal Supermarket
 Kanban
 Milk Runs
 Supplier Ratings
 Sourcing Strategy
 Establish Flow from Manufacturing through Distribution to Customers
 Move towards paperless technology

29. 29Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Material Strategy Objectives
 Produce what the Customer wants when the Customer wants it
 Reduce the lead time from the Customer order to delivery
 Introduce flexible manufacturing – small lot production
 Minimize the cost of materials by eliminating sources of waste in the delivery of
material, receiving, storage, production flow and shipping
 Gain control of inventory costs
 Eliminate costs associated with parts shortages and schedule changes
 Improve the flow of material

30. 30Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
Changing the World. One Transformation at a time
This presentation is an intellectual property of W3 Group Canada Inc.
No parts of this document can be copied or reproduced
without written permission from:
Marek Piatkowski
W3 Group Canada Inc.
iPhone: 416-235-2631
Cell: 248-207-0416
Marek.Piatkowski@rogers.com
http://twi-network.com

31. 31Marek.Piatkowski@Rogers.com
Supply Chain
Management Strategy
Thinkingwin, Win, WIN
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