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
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
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