LEAN presentazione

Titolo PRODUCTION
IN NON REPETITIVE
sottotitoloCOMPANIES
This material and what the
Milano, XX mese 20XX Professors say in class are
Alberto PORTIOLI STAUDACHER intended for didactical use
Dipartimento Ing. Gestionale only and cannot be used
Politecnico di Milano ouside such context, nor to
Dep. Management, Economics and Industrial Engineering imply professors’ specific
alberto.portioli@polimi.it believes or opinion
 Research problem and objectives

• The Board of a non-repetitive company has decided to

implement the Lean principles.
• How should they modify the Management of the Operations of
their company accordingly?

• How the implementation of the Lean principles would affect

the management of Operations of a non-repetitive
company?
• Which advantages may be expected from the Lean
implementation in non-repetitive companies?
 Non-repetitive companies

Literature tends to associate to these companies 3 main

characteristics:

• Customized and quite complex products (MTO or ETO)

• Typically SMEs companies
• Functional organization and generally low level of vertical integration
in the supply chain
 Which peculiarities in comparison with repetitive companies?

• Satisfying customer orders involves both shop floor activities and office
activities.
• High variability and unpredictability in these contexts.
• Long queues between the different stages to absorb variability.
• Local efficiency logic due to the functional organization.
• High coordination efforts required to match due dates, and low integration
between the different stages.
 The non-repetitive companies production planning and control
framework

POOL OF
ORDERS
SUPPLY CHAIN
Arrival of Order release Job departure /
confirmed order Job delivery

ORDER ENTRY POOL ORDER RELEASE

PHASE
• Pre-shop poolMANAGEMENT
decouples
PHASE
the PHASE
company from market variability.

ORDER REVIEW AND RELEASE PRODUCTION CONTROL

• Pre-shop pool contains all the confirmed orders that can be released
to the supply chain.
Pool of Orders’ Supply Chain
throughput time throughput time Delivery
• Usually the release of orders is carried out with a load limiting logic
(upper bound) with a very high
GROSS upper bound.
THROUGHPUT TIME
 The non-repetitive
POOLcompanies
OF production planning and control
framework ORDERS
SUPPLY CHAIN
Arrival of Order release Job departure /
confirmed order Job delivery
POOL OF
ORDERS
SUPPLY CHAIN
ORDER ENTRY
Arrival of POOL ORDER RELEASE
Order release
PHASE MANAGEMENT PHASE Job departure /
confirmed order Job delivery
PHASE

ORDER REVIEW AND RELEASE PRODUCTION CONTROL

ORDER ENTRY POOL ORDER RELEASE
PHASE MANAGEMENT PHASE
PHASEPool of Orders’ Supply Chain
throughput time throughput time Delivery
ORDER REVIEW AND RELEASE PRODUCTION CONTROL
GROSS THROUGHPUT TIME
Pool of Orders’ Supply Chain
throughput time throughput time Delivery

Usually, the Gross Throughput Time is roughly equivalent to the

GROSS THROUGHPUT TIME
Supply Chain Throughput time.
 Operations management in non-repetitive companies

Supply chain of non repetitive companies

Activity Planning & control

External
Design Purchasing Assembly Testing
supplier

Single stage Single stage Single stage Single stage Single stage
planning activity planning activity planning activity planning activity planning activity

• Long Lead times

• Variable lead times
• High coordination efforts and low integration
Current state map of non-repetitive companies
 How far from lean is the current situation of non-repetitive
companies?

• Flow

• Takt

• Pull

• Zero Defects
Future state map of non-repetitive companies

CUSTOMERS

Request for tender

and acceptance

Tender OPERATIONS &

SUPPLY CHAIN

Interaction for due

date estimation

Product
due date

MARKETING
& SALES

DESIGN PURCHASING ASSEMBLY TESTING SHIPPING

FIFO
FIFO FIFO
EXTERNAL FIFO FIFO
SUPPLIER

Release
 Guidelines for achieving Lean in non-repetitive companies

• Protect the system from external variability with a buffer upstream the first stage
(in this case Design).

• Collect orders’ processing times (if the precise information is not available, use
classes of times (e.g. low/medium-low/medium/medium-high/high).

• Plan the flow in a single point (1 single actor plans the system).

• Level production by releasing constant amounts of workload for the different

stages: Balance the Flow.

• Regulate the release of orders depending on the rhythm of the activities the
along the supply chain in order to maintain the workload level in the supply
chain stable (pull production).

• Try to maintain the flow between the stages of the supply chain. In order to
maintain the sequence of orders, work to remove the causes of blocks and the
causes of variation in the sequencing of the orders (e.g. set-ups).
Guidelines for achieving Lean in non-repetitive companies

CUSTOMERS

Request for tender

and acceptance

Tender OPERATIONS &

SUPPLY CHAIN

Interaction for due

date estimation

Product
due date Buffer variability at the
beginning of the flow
MARKETING
& SALES

Single scheduling point

DESIGN PURCHASING ASSEMBLY TESTING SHIPPING
FIFO
FIFO FIFO
EXTERNAL FIFO FIFO
SUPPLIER

Release
Guidelines for achieving Lean in non-repetitive companies

CUSTOMERS

Request for tender

and acceptance

Tender OPERATIONS &

SUPPLY CHAIN

Interaction for due

date estimation

Product 1. Level production: Balance the Flow.

due date 2. Set the release of orders according to the
rhythm of the activities throughout the
MARKETING supply chain.
& SALES

DESIGN PURCHASING ASSEMBLY TESTING SHIPPING

FIFO
FIFO FIFO
EXTERNAL FIFO FIFO
SUPPLIER

Release
Guidelines for achieving Lean in non-repetitive companies

CUSTOMERS

Request for tender

and acceptance

Tender OPERATIONS &

SUPPLY CHAIN

Interaction for due

date estimation

Product
due date
Work to maintain the flow among the
stages. Work to eliminate the causes
MARKETING
& SALES of block and variability.

DESIGN PURCHASING ASSEMBLY TESTING SHIPPING

FIFO
FIFO FIFO
EXTERNAL FIFO FIFO
SUPPLIER

Release
Traditional managerial approach

Order entry:
Accept orders in order to
maintain the System Workload
constant

Order release:
Upper bound release
(Worklaod Limiting approach)
with high Load Limits

Dispatching logic:
As to increase the local
efficiency of the single stage
 Lean managerial framework

CUSTOMERS
Order entry:
Request for tender Accept orders as to maintain
and acceptance
the System Workload
constant
Tender OPERATIONS &
SUPPLY CHAIN

Interaction for due

Order release:
date estimation
Balance the flow
Product
due date

MARKETING Dispatching logic:

& SALES
FIFO
DESIGN PURCHASING ASSEMBLY TESTING SHIPPING
FIFO
FIFO FIFO
EXTERNAL FIFO FIFO
SUPPLIER

Release
Framework adopted (from workload control theory)

System Workload (pipeline)

POOL OF
ORDERS
SUPPLY CHAIN
POOL OF
Arrival of Order release Job departure /
ORDERS
confirmed order Job delivery
SUPPLY CHAIN
Arrival of Order release Job departure /
confirmed order Job delivery
ORDER ENTRY POOL ORDER RELEASE
PHASE MANAGEMENT PHASE
PHASE
ORDER ENTRY POOL
Accept / reject Which ordersORDER RELEASE
Dispatching /
PHASE ORDER REVIEW
MANAGEMENT
AND RELEASE PHASE PRODUCTION CONTROL
Orders toPHASE
release? Sequencing

Pool
ORDER REVIEW AND of Orders’
RELEASE Supply Chain
PRODUCTION CONTROL
throughput time throughput time Delivery

Pool of Orders’ Supply Chain

GROSStime
throughput THROUGHPUT throughput
TIME time Delivery

GROSS THROUGHPUT TIME

Orders release method

CUSTOMERS

Request for tender

and acceptance

Tender OPERATIONS &

SUPPLY CHAIN

Interaction for due

date estimation

Product
due date

MARKETING
& SALES

DESIGN PURCHASING ASSEMBLY TESTING SHIPPING

FIFO
FIFO FIFO
EXTERNAL FIFO FIFO
SUPPLIER

Release
Guidelines for achieving Lean in non-repetitive companies

Target Supply Chain

Workload

Latest
Release date

Three days
from today Workload to be released in the next period on:
External
Design Purchasing Supplier Assembly Testing
Workload to be
released
Day after Workload to be released at each stage:
Tomorrow (Target Supply Chain Workload – Total Initial Load)
Number of Stages

Balanced Release
(i.e. release of the same amount of workload for
each stage)
Tomorrow
Initial Load

Testing
EXTERNAL
DESIGN PURCHASING ASSEMBLY TESTING
SUPPLIER

Today Assembly

Total Initial Load

Pool of Orders
to be released
External
Supplier

Purchasing

Design
Impact on performances

Processing time variability 35%

44
Gross Throughput Time (hours)

43
42
41
40 UBR- System Workload
12500 minutes
39
38 BLR - System Workload
12500 minutes
37
36
0 10 20 30 40

Supply Chain Throughput Time (hours)

Best point for running the system

Lean allows to achieve better performances and function at a much lower

WIP level à with much higher level of orders in the pre-shop pool to choose from
 Impact on performances

For Lean approch it is therefore possible to lower the level of orders in the pre-shop pool
and still have an output that is not lower than the benchmark, thus decreasing even
further the Gross Throughput Time
Workload distribution

Traditional system

HIGH OVERALL
HIGH WORKLOAD WORKLOAD LEVEL
LEVEL and LEAD TIME
LOW
WORKLOAD
LEVEL

Lean system

HIGH LOW OVERALL

WORKLOAD LOW WORKLOAD WORKLOAD
LEVEL LEVEL and LEAD
LEVEL
TIME
Pre shop pool Supply chain Whole System
 Conclusions

• Lean managerial framework is particularly suitable for non-repetitive

companies.
• Focus on the flow and on considering the entire supply chain as a unique
system to be optimized at a global level – a flow shop in this case –.
Balance the flow!
• Focus on maintaining the flow among the different stages and on avoiding
the causes of blocks and the causes of variation.
• Managers in Lean companies can exploit the System Workload (in particular
the extra-amount of non-released orders) to choose the best mix of
performances for their company.
• System Workload in Lean non-repetitive companies can be seen at some
extent as a lever, not only a mere consequence of the variability as it is in
the Traditional non-repetitive companies.