C2X

Chain
to
Excellence

Konseputo
The Gyan Capsule

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 INDEX
S.No. Topics Page No.
1 Supply Chain Management………………………………………………3
2 Production and Operations Management………………………..5
3 Logistics Management……………………………………………………..7
4 TPM……………………………………………………………………………….10
5 Kaizen……………………………………………………………………………14
6 JIT………………………………………………………………………………….15
7 Kanban………………………………………………………………………….15
8 Poka Yoke……………………………………………………………………..15
9 Andon……………………………………………………………………………16
10 Heijunka………………………………………………………………………..16
11 Jidoka……………………………………………………………………………16
12 Lean Manufacturing……………………………………………………..17
13 Cold supply…………………………………………………………………..19
14 Six sigma………………………………………………………………………18
15 Lead time……………………………………………………………………..19
16 SKU……………………………………………………………………………….19
17 EOQ………………………………………………………………………………19
18 Third Party Logistics……………………………………………………..19
19 5 S………………………………………………………………………………..20
20 Theory of constraints……………………………………………………21
21 RFID……………………………………………………………………………..23
22 ABC Classification…………………………………………………………23
23 Pareto Analysis…………………………………………………………….24
24 Reverse Logistics………………………………………………………….24
25 Make to order and make to stock………………………………..24
26 Postponement……………………………………………………………..24
27 Push and pull strategy………………………………………………….25
28 Vendor managed Inventory………………………………………….26
29 RFQ (Request for Quotation)…………………………………….….26
30 RFP (Request for Proposal)…………..………………………….…. 26
31 RFI (Request for Information)………………………………….…. 26
32 Bullwhip effect…………………………………………………………….26
33 Chase and level strategy………………………………………………26
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 SUPPLY CHAIN MANAGEMENT

Supply Chain Management involves the network of all the processes from the movement and
storage of raw materials, work-in-process inventory, and finished goods from point of origin to
point of consumption.

The supply Chain Management thus integrates all the processes that are involved in the
manufacture to the distribution of the goods. It is therefore a cross-functional approach that
includes the movement of raw materials into an organization and their processing, certain aspects
of the internal processing of materials into finished goods, and the movement of these finished
goods out of the business and towards the final consumer.

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Why Supply Chain?
In this age of competition where companies are trying their level best to improve their efficiency
so as to minimize the cost, supply chain plays a very vital role. Supply and logistics related costs
account for about 20-25% of a typical firm’s total cost. Supply Chain Management broadly tries
to address four issues involving the following which are namely-
1. Distribution Network Management- This involves the management of the various production
facilities and warehouses along with distribution centers. This is very vital because all
organizations tend to have numerous suppliers and distributers along with storage facilities and the
integration of all these is extremely essential
2. Distribution Channels- This involves the various strategies employed and involves method
such as cross docking, direct shipment, pull or push strategies, third party logistics etc. The various
distribution channels are encompassed under this method.
3. Information Channels- This involves the integration of the various systems and processes in
the supply chain for sharing valuable information and also involves predicting demand, forecasts,
inventory and transportation.
4. Inventory Management- This process involves managing the quantity and location of
inventory including raw material, work-in-process and finished goods from service providers to
consumers

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 PRODUCTION AND OPERATIONS MANAGEMENT

Production and Operations Management ("POM") is about the transformation of production and
operational inputs into "outputs" that, when distributed, meet the needs of customers.

The process in the above diagram is often referred to as the "Conversion Process".

POM incorporates many tasks that are interdependent, but which can be grouped under five main
headings:

PRODUCT
Marketers in a business must ensure that a business sells products that meet customer needs and
wants. The role of Production and Operations is to ensure that the business actually makes the
required products in accordance with the plan. The role of PRODUCT in POM therefore concerns
areas such as:
Performance
Aesthetics
Quality
Reliability
Quantity
Production costs
Delivery dates

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PLANT
To make PRODUCT, PLANT of some kind is needed. This will comprise the bulk of
the fixed assets of the business. In determining which PLANT to use, management must
consider areas such
as:
Future demand (volume, timing)
Design and layout of factory, equipment
Productivity and reliability of equipment
Need for (and costs of) maintenance
Health and safety
Environmental issues

PROCESSES
There are many different ways of producing a product. Management must choose the best
process, or series of processes. They will consider:
Available capacity
Available skills
Type of production
Layout of plant and equipment
Safety - Production costs
Maintenance requirements

PROGRAMMES
The production PROGRAMME concerns the dates and times of the products that are to be
produced and supplied to customers. The decisions made about programme will be
influenced by factors such as:
Purchasing patterns (e.g. lead time)
Cash flow
Need for / availability of storage
Transportation

PEOPLE
Production depends on PEOPLE, whose skills, experience and motivation vary. Key
people- related decisions will consider the following areas:
Wages and salaries
Safety and training
Work conditions
Leadership and motivation

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 LOGISTICS MANAGEMENT
It is planning, implementing, and controlling the physical flows of materials and finished
goods from point of origin to point of use to meet the customer’s need at a profit.
Some excellent examples of value adding logistics services are:
Dabbawalas of Mumbai: Reliable, fool proof logistics
system of delivering lunch boxes to over 5,00,000
office goers every day without letting the wrong
lunch box reaching the wrong office and also
ensuring the boxes reach on time.

The Indian Postal Services: One of the largest logistics

network in the world today, which delivers letters in the most cost effective manner
across six lakh villages, one hundred and twenty cities and several thousand of towns
covering the length and breadth of the country within twenty-four to forty-eight hours
and serving more than hundred and seventy countries with Indian source stations/
customers and/or destinations as mentioned earlier.

Purpose
1. Reduction of inventory
2. Economy of freight
3. Reliability and consistency in delivery performance
4. Minimum damage to products
5. Quicker and faster response

Functions
1. Order processing
2. Inventory planning and management
3. Warehousing
4. Transportation
5. Packaging

How does Logistic add Value?

Logistics delivers value to the customer through three main phases:
1. Inbound logistics: These are the operations, which precede manufacturing.
These include the movement of raw materials, and components for processing
from suppliers.
2. Process logistics: These are the operations, which are directly related to
processing.
These include activities like storage and movement of raw materials,
components within the manufacturing premises.
3. Outbound logistics: These are the operations, which follow the production
process, i.e. movement of finished goods to customers.

Various Logistics service providers –

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1. First Party Logistics – Companies which do their own logistics activities
2. Second Party Logistics – Companies which provide their own assets, such as
truck owners, warehouse operators, etc.
3. Third Party Logistics (3PL) – Companies which provide logistics services on behalf
on another company. 3PL's typically can provide transportation, warehousing, pool
distribution, management consulting, logistics optimization, freight forwarding,
transportation management, rate negotiations, cost evaluations, and contract
management services.
4. Fourth Party Logistics (4PL) – companies provide logistics solutions built around
the domain knowledge provided by third party logistics companies. Thus 4 PLs have
emerged out of the vacuum created by 3PLs. A 4PL is a supply chain manager &
enabler who assemblies and manages resources, build capabilities and technology
with those of complimentary service providers. They act as the first point for
delivering unique and comprehensive supply chain solutions. 4PL leverages
combined capabilities of management consulting and 3PLs. They act as an integrator
assembling the resources, capabilities, and technology of their own organization and
other organizations to design, build and run comprehensive supply chain solutions. 4
PL is an emerging trend and it is a complex model and offers greater benefits in
terms of economies of scale

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TPM-TOTAL PRODUCTIVE MAINTENANCE
Total Productive Maintenance (TPM) is a system of maintaining and improving the integrity of
production and quality-systems through the machines, equipment, processes and employees that
add business value to the organisation. It focusses on keeping all equipment in top working
condition to avoid breakdowns and delays in the manufacturing process.

It involves

Setting a goal to maximise equipment efficiency (overall efficiency).

Establishing a total system for Productive Maintenance for the entire life of equipment.
Participation by all departments, including equipment planning, operating and maintenance
departments.
Involving all personnel, including top personnel to first-line operators.
Achieving Zero losses through overlapping small groups

Benefits of TPM –
Direct Benefit –
1. Increase productivity and OPE (Overall Plant Efficiency) by 1.5 or 2 times.
2. Rectify customer complaints.
3. Reduce the manufacturing cost by 30%.
4. Satisfy the customers’ needs by 100 % (Delivering the right quantity at the right time, in the
required quality).
5. Reduce accidents.
6. Follow pollution control measures.

Indirect Benefit –
1. Higher confidence level among the employees.
2. Keep the work place clean, neat and attractive.
3. Favourable change in the attitude of the operators.
4. Achieve goals by working as team.
5. Horizontal deployment of a new concept in all areas of the organization.
6. Share knowledge and experience.
7. The workers get a feeling of owning the machine.

Eight Pillars of TPM

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Autonomous Maintenance –

Purpose:
• Training of operators proficient in equipment
• Protecting one’s own equipment by one’s staff
Activities:

Implementation of 7 steps

1. Initial clean-up

2. Countermeasures for the source of problems and measures for difficult-to- access locations

3. Creation of tentative autonomous maintenance standards

4. General inspection

5. Autonomous inspection

6. Standardization

7. All-out goals management

Focussed Improvement –
Purpose:
• Realize zero losses of all types, such as failure losses and defect losses
• Demonstrate ultimate production efficiency improvement
Activities:
• Understanding the 16 losses
• Calculating and settling goals for overall equipment efficiency, productivity and production
subsidiary resources
• Implementation of PM analysis
• Thorough pursuit of equipment and production “as it should be”.

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 Planned Maintenance –
Purpose:
• Improving efficiency of maintenance departments to prevent 8 major losses
Activities:
• Daily Maintenance
• Time Based Maintenance
• Condition Based Maintenance
• Improvement for increasing the service life expectancy
• Control of replacement parts
• Failure analysis and prevention of recurrence.
• Lubrication control

Quality Maintenance –
Purpose:
Achieve zero defects by supporting and maintaining equipment conditions
Activities:
• Verify quality characteristics standards; understand defect phenomena and performance
• Investigating the conditions for building in quality, unit processes and raw materials,
equipment and methods
• Investigating, analyzing and improving the conditions of malfunctions
• Setting 3M conditions; setting standard values for inspection
• Creation of standards that can be followed; trend management

Education and Training –

Purpose:
• Establishment of technical education for operations and maintenance workers
Activities:
• Basic process of maintenance
• Tightening nuts and bolts
• Aligning keys
• Maintenance of bearings
• Maintenance of conductive parts
• Prevention of leaks
• Maintenance of oil pressure and air pressure equipment
• Maintenance of electrical control equipment
Development Management –
Purpose:
• Reducing product development and prototyping time
• Reducing the development, design and fabrication time of equipment
• Improving 1-shot start-up stability of products and equipment
Activities:

• Setting development and design goals

• Ease of production
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 • Ease of QA Implementation
• Ease of use
• Ease of maintenance
• Reliability
• Investigate LCC
• Design release drawing
• Production: Identify problems in the prototype, trial run and initial-phase mass production
control stages.
Safety, Health and Environment –

Purpose:
• Achievement and support of zero failures
• Realization of a healthy and invigorating workplace that gives meaning to work
Activities:
• Measures to improve equipment safety
• Measures to improve work safety
• Improvement of work environment (noise, vibration and odors)
• Measures to prevent pollution
• Creation of healthy employees
• Promotion of invigorating activities

Office TPM –

Purpose:
• Achieve zero function losses
• Creation of efficient offices
• Implementation of service support functions for production departments
Activities:
• Autonomous maintenance activities

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 OPERATIONS JARGON
KAIZEN:
Kaizen is the philosophy that focuses on continuous improvement of processes.

Kaizen is a daily process whose purpose goes beyond simple productivity improvement. It strives
to eliminate overly hard work and teaches people to perform experiments on their work using
scientific methodology and to identify and eliminate waste in business processes.

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 JIT (Just in time):

Just in time is a production strategy that strives to improve business’ return on investment by
reducing in process inventory and associate carrying costs. JIT uses one simple philosophy,
order inventory as and when it is being used up in the process.

.Kanban: (Signboard in Japanese)

Kanban is a scheduling system used for lean and just in time manufacturing production. It is
essentially a system of cards that signal the members in a process flow to replenish the
following processes with inputs.
Kanban Explained:
https://www.youtube.com/watch?v=DdYdIMe0Sl8

4.Poka Yoke:

Poka Yoke is a Japanese term that means mistake proofing. Poka Yoke is any mechanism in a
lean manufacturing process that helps an equipment operator to avoid mistakes. The concept
was formalized as a part of the Toyota production system by Shigeo Shingo.

Eg: The USB port is a perfect example of Poka Yoke. The connector will only attach in one
direction, thereby eliminating the human error of attaching the cord wrongly.

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.Andon:

Andon is a manufacturing term referring to a system to notify management, maintenance and

other workers of a quality or process problem. It gives the worker the ability, and moreover the
empowerment, to stop production when a defect is found, and immediately call for assistance.
Andon is another system pioneered as a part of Toyota Production System and is therefore a
part of lean approach.

Andon Explained:
https://www.youtube.com/watch?v=B_nSvN_L4hc

Heijunka(Production Levelling):

Heijunka is a technique for reducing waste. The goal is to produce intermediate goods at a
constant rate so that further processing may also be carried out at a constant and predictable
rate. A heijunka box is a visual scheduling tool introduced by Toyota for achieving smoother
production flow.

Jidoka (Autonomation):

Jidoka may be described as “intelligent automation”. It is a quality control process that applies
the following principles:

Detect the abnormality

Stop
Fix or correct the immediate condition
Investigate the root cause and install a countermeasure
Autonomation aims to prevent the production of defective products, eliminate overproduction
and focus attention on understanding the problems and ensuring that they do not reoccur.

Jidoka Explained:
https://www.youtube.com/watch?v=Fgrx-PDqO8M

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Lean Manufacturing:

Lean manufacturing, lean enterprise, or lean production, often simply, "lean", is a production
practice that considers the expenditure of resources for any goal other than the creation
of value for the end customer to be wasteful, and thus a target for elimination. Working from
the perspective of the customer who consumes a product or service, "value" is defined as any
action or process that a customer would be willing to pay for.

Boeing 737 Production Line (An Example of lean manufacturing):

https://www.youtube.com/watch?v=9_9WyiPhoHA

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Six Sigma:

Six Sigma seeks to improve the quality of process outputs by identifying and removing the
causes of defects (errors) and minimizing variability in manufacturing and business processes. It
was developed by Motorola.
The maturity of a manufacturing process can be described by a sigma rating indicating its yield
or the percentage of defect-free products it creates. A six sigma process is one in which
99.99966% of the products manufactured are statistically expected to be free of defects (3.4
defective parts/million)

Lean Six Sigma follows two approaches:

1. DMAIC

2. DMADV

Six Sigma Explained: https://www.youtube.com/watch?v=tj8Saa1MbrI

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 Cold Chain:

A cold chain is a temperature controlled supply chain. Most common use is in the food and
pharmaceutical industries

Lead Time:

Lead time is the time lag between the initiation and completion of a process. In a
manufacturing industry, it is typically used to describe the amount of time taken between the
order and receipt of a product.

Economic Order Quantity:

The EOQ is the order quantity that minimizes total inventory holding costs and ordering costs.

SKU:
Stock Keeping Unit, is a distinct item, such as a product or service, as it is offered for sale that
embodies all attributes associated with the item and that distinguish it from all other items

Economies of Scale:

Economies of scale are the cost advantages that enterprises obtain due to size, output, or scale
of operation, with cost per unit of output decreasing with increasing scale as fixed costs are
spread out over more units of output.

Third Party Logistics:

A third-party logistics provider is (abbreviated 3PL, or sometimes TPL) is a firm that provides
service to its customers of outsourced (or "third party") logistics services for part, or all of
their supply chain management functions.
Majority of FMCG companies use 3PL in their supply chain

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5S:
5S is a system to reduce waste and optimize productivity through maintaining an orderly
workplace and using visual cues to achieve more consistent operational results. Implementation
of this method "cleans up" and organizes the workplace basically in its existing configuration,
and it is typically the first lean method which organizations implement.
The 5S pillars:
Sort (Seiri)
Set in Order (Seiton)
Shine (Seiso)
Standardize (Seiketsu)
Sustain (Shitsuke)
These pillars provide a methodology for organizing, cleaning, developing, and sustaining a
productive work environment. In the daily work of a company, routines that maintain
organization and orderliness are essential to a smooth and efficient flow of activities. This lean
method encourages workers to improve their working conditions and helps them to learn to
reduce waste, unplanned downtime, and in-process inventory.

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.Theory of Constraints
The Theory of Constraints states that every
system must have at least one constraint limiting
its output. This was developed by Dr. Eliyahu M.
Goldratt.

A constraint is -
• A process or process step that limits
throughput.
• Anything that limits a system from achieving higher performance versus its goal.
• A constraint is a factor that limits the system from getting more of whatever it
strives.

Consequences of the Theory:

1. The more complex the system, the less independent process paths exist, so the lower the
number of constraints. (Usually, complex systems have only one constraint at a given time.)
2. A system of optimum processes can’t be an optimum system.
3. An optimum system runs the constraint (or bottleneck) at optimum capacity (focused on
the goal of the system), and all other process steps must have excess capacity

TOC postulates that the goal is to make (more) money. It describes three avenues to this
goal:
Increase Throughput
Reduce Inventory
Reduce Operating Expense

In order to achieve the goal, there are also 5 Focusing Steps:

Identify the
constraints

Exploit the
Repeat the process
constraint

Elevate Subordinate and

performance of synchronise to the
the constraint constraint

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 Advantages:

Potential for tremendous increases in productivity with minimal changes to operations.

Most powerful and cost effective tool for increasing production capacity.
Very simple to communicate and apply, making it ideal for shop floor teams.
Great for fostering teamwork as different areas become aware of the constraint and the
need to work together to assist the constraint process.
Great process for kick starting improvement efforts as it provides immediate and very
tangible benefits.
Allows growth of turnover/productivity without the need for additional space or staff.
Provides a means to evaluate the true value of changes, and utilize this to select the best
options, and drive the right behaviour/decisions.

Disadvantages:

Can be difficult to apply if the constraint process is constantly moving (for example if
the nature of the work sees dramatically different and difficult to predict demands on
various production resources).
Can be difficult to apply in a jobbing environment (however it is still very applicable)

Example
To better understand the theory of constraints and non-constraints, consider a production
system that runs raw materials through three component processes and then turns them
into a finished product.

Within this system, each process is equivalent to a link in the production chain. Where is the
constraint in this chain?
Process B is the weakest link: Process B produces the least at only six units per day. Process A
and C are the non-constraints. Imagine that the manufacturer improves process B until it can
produce 18 units per day. Now, process C becomes the system constraint while the non-
constraints are everywhere else. If process improvements continue until all processes are
producing 18 units/day or higher, the system constraint becomes the marketplace, which
can accept only 15 units per day. At this point, internal constraints have been replaced by an
external constraint.
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the chain—the system constraint—and temporarily ignoring the non-constraints. In this
way, the theory has a profound impact on process improvement

RFID

RFID (radio frequency identification) is a technology that incorporates the use

of electromagnetic or electrostatic coupling in the radio frequency (RF) portion
of the electromagnetic spectrum to uniquely identify an object, animal, or
person. RFID is coming into increasing use in industry as an alternative to the
bar code. The advantage of RFID is that it does not require direct contact or
line-of-sight scanning.

ABC Classification

ABC classification is a ranking system for identifying and grouping items in

terms of how useful they are for achieving business goals.

The system requires grouping things into three categories:

A - extremely important

B - moderately important

C - relatively unimportant

ABC classification is closely associated with the 80/20 rule, a business metric
that proposes 80% of the outcomes are determined by 20% of the inputs. The
goal of ABC classification is to provide a way for a business to identify that
valuable 20% so that segment can be controlled most closely. Once the A’s,
B’s and C’s have been identified, each category can be handled in a different
way, with more attention being devoted to category A, less to B, and even less
to C.

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 Pareto Analysis
Pareto Analysis is a statistical technique in decision-making used for the
selection of a limited number of tasks that produce significant overall effect. It
uses the Pareto Principle (also known as the 80/20 rule) the idea that by doing
20% of the work you can generate 80% of the benefit of doing the entire job.

Reverse Logistics

Reverse logistics is for all operations related to the reuse of products and
materials. It is "the process of moving goods from their typical final destination
for the purpose of capturing value, or proper disposal.

E.g. Logistics in case of return or replacement.

Make to order and make to stock

MTO (Make to Order) is a manufacturing process in which manufacturing

starts only after a customer's order is received. Forms of MTO vary, for
example, an assembly process starts when demand actually occurs or
manufacturing starts with development planning.
Make to stock (MTS) is a traditional production strategy that is used by
businesses to match production and inventory with consumer demand
forecasts. The (MTS) method requires an accurate forecast of demand in order
to determine how much stock should be produced

Postponement
Postponement is a business strategy that maximizes possible benefit and
minimizes risk by delaying further investment into a product or service until
the last possible moment.
For e.g.Paint shops develop colors at their own shops with the help of
machines to increase customization at last step which reduces cist such as
inventory costs etc.

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Push and pull strategy

Push Strategy
A push promotional strategy involves taking the product directly to the
customer via whatever means, ensuring the customer is aware of your brand
at the point of purchase.

"Taking the product to the customer"

Examples of push tactics

Trade show promotions to encourage retailer demand
Direct selling to customers in showrooms or face to face
Negotiation with retailers to stock your product
Efficient supply chain allowing retailers an efficient supply
Packaging design to encourage purchase
Point of sale displays

Pull strategy
A pull strategy involves motivating customers to seek out your brand in an
active process.

"Getting the customer to come to you"

Examples of pull tactics

Advertising and mass media promotion
Word of mouth referrals
Customer relationship management
Sales promotions and discounts

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 Vendor managed Inventory
Vendor-managed inventory (VMI) is a family of business models in which the
buyer of a product (business) provides certain information to a vendor (supply
chain) supplier of that product and the supplier takes full responsibility for
maintaining an agreed inventory of the material, usually at the buyer's
consumption location (usually a store). A third-party logistics provider can also
be involved to make sure that the buyer has the required level of inventory by
adjusting the demand and supply gaps

RFQ (Request for Quotation)

A request for quotation (RFQ) is a standard business process whose purpose is
to invite suppliers into a bidding process to bid on specific products or services.
RFQ generally means the same thing as IFB (Invitation For Bid). An RFQ
typically involves more than the price per item.

RFP (Request for Proposal)

A request for proposal (RFP) is a document that solicits proposal, often made
through a bidding process, by an agency or company interested in
procurement of a commodity, service or valuable asset, to potential suppliers
to submit business proposals.

RFI (Request for Information)

A request for information (RFI) is a standard business process whose purpose
is to collect written information about the capabilities of various suppliers.
Normally it follows a format that can be used for comparative purposes.
An RFI is primarily used to gather information to help make a decision on what
steps to take next. RFIs are therefore seldom the final stage and are instead
often used in combination with the following: request for proposal (RFP),
request for tender (RFT), and request for quotation (RFQ).

Bullwhip effect
The bullwhip effect is a distribution channel phenomenon in which forecasts
yield supply chain inefficiencies. It refers to increasing swings in inventory in
response to shifts in customer demand as one moves further up the supply
chain.

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 Chase and level strategy
Chase Strategy

Companies that use the chase strategy, or demand matching strategy, produce only
enough goods to meet or exactly match the demand for goods. Think of this strategy in
terms of a restaurant, which produces meals only when a customer orders, therefore
matching the actual production with customer demand

Level Strategy

In a manufacturing company that uses a level production strategy, the company

continuously produces goods equal to the average demand for the goods. Scheduling
consistently arranges the same quantity of goods for production based on the total
demand for the goods.

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