Chen, F., Wan, H. y Lee, W. (2006).

Applying lean concepts to supply chains:the power from

effective partnership [diapositivas]. Recuperado de la base de datos de UESAN (037805)
Applying Lean Concepts to Supply Chains:
The Power from Effective Partnership
Lean Supply Chain Lean Consumption

Lean Enterprise

Lean Management

Lean
Manufacturing

Customer
Manufacturing
Floor
Purchase Use Warranty Repairs Disposition
Entire Company

Immediate Supply Chain Complete Customer Experience (Lean Consumption)

Extended Supply Chain

F. Frank Chen
John Lawrence Professor of Manufacturing Systems Engineering
Leonardo Rivera, Ph.D. Candidate & GRA
Hung-Da Wan,
Wan Ph.D. Candidate & GRA
Woo Min Lee, URA
Grado Department of Industrial and Systems Engineering
Virginia Tech
June 21, 2006

The main points of this presentation are:

Introduction The motivation for this presentation

Driving Supply Where and how Lean Thinking and

Chains toward Supply Chain Management converge
Leanness

Building Blocks of Basic Components of Lean Supply

Lean Supply Chain Chains

Challenges for LSC Obstacles for companies building a Lean

Implementation Supply Chain

Ideas for the Future Next wave of developments

Conclusions What we have learned

2
 Introduction

• Supply Chain Management (SCM) vs.

Lean Thinking
– SCM creates great network of companies
– Lean Thinking is effective in various
industries
– Next Step: Extend lean principles to the
whole supply chain
• Lean Supply Chain
– Integrates activities of all companies in the
network as a unified entity to provide end
customers with “offer of value”
• You will learn:
– How does lean thinking work with SCM?
– How to build a lean supply chain?
– What is the future of lean supply chains?

Driving Supply Chains toward Leanness

• Section Overview
– Lean thinking has significant impact on various
Introduction
industries.
– Lean implementation in an individual company is Driving Supply
Chains toward
constrained by business partners. Leanness

– Lean Supply Chain is a new opportunity for further

improvement in each of the individual companies Building Blocks of
Lean Supply Chain
and in overall supply chain.
Challenges for LSC
Implementation
• In this Section
– The Power of Lean Thinking Ideas for the Future
– Applying Lean Thinking in Supply Chain
Conclusions
Management
– Building a Lean Supply Chain

4
Historical Evolution of Lean Manufacturing

The Root:
• Henry Ford’s Highland Park manufacturing plan in
1913
– Interchangeable parts, standard work and assembly
flow line
The Best Learner:
• Kiichiro Toyoda & Taiichi Ohno from Toyota after
WWII
– Learned, adapted, and improved the Ford’s vision
– Established the Toyota Production System
The Interpreters:
• Womack, Jones and others from MIT
– The Machine that Changed the World (1990)
– Lean Thinking (1996)
– And more…
5

Principles of Lean Manufacturing

Lean Thinking (Womack & Jones, 1996)

• Let customers identify Value

Companies provide what customers really want
A product is not just an object, but a whole experience

• Identify the Value Stream

Value Stream: Sequence of all activities and resources
required to bring a product to customers

• Flow
Creates smooth and uninterrupted flow for products

• Pull
Operations are performed when needed, not before

• Perfection
Continuous improvement is a way of life
6
Implementation of Lean Manufacturing

Standard
Work
Flexible
Work JIT
Systems
Value Total
Stream SMED Productive
Mapping Maintenance
5S Heijunka

Jidoka

See the Organize the Design and implement Connect with supply
process house improved internal processes and demand

A Typical Lean Implementation Model. (Adapted From Groesbeck, 2005)

Lean Thinking in Supply Chain Management

• Local improvements vs. Global improvements

– Lean implementation is constrained by partners
– Local improvements may not have significant impacts on the whole
supply chain
• Example: Extended Value Stream Map

Process Process
#1 Warehouse #2
Total = 27.5 days
Current Transport: 1.0 day 0.5 day 1.0 day 1.0 day
In Plant: 2.0 day 1.0 day Value- 4505 sec.
State Value-added: 4200 sec 21.0 day 305 sec =
Added (75.1 min.)

Total = 25.6 days

Improved Transport: 1.0 day In Plant: 0.13 day
0.5 day 1.0 day
1.0 day
1.0 day
Value-added: 3950 sec 21.0 day Value- 4255 sec.
Process #1 305 sec =
Added (70.9 min.)

Production Lead Time Decreases 93.5% in Process #1; but Total Delivery Time
Decreases only 6.91%

8
 Lean Thinking in Supply Chain Management

• Impacts of Lean Thinking

– Stabilizes supply chain and facilitates
globalization
– Aligns capability/capacity of supply chain
members with customers’ demand
– Delivers significant influence on supply chain
integration

• Pressures urging supply chains to be lean

– Peer Pressure: Lean companies urge non-lean
partners to extend and integrate the Value
Streams for higher level of leanness.
– Top-down Pressure: Supply chain leaders urge
all members to establish collaborative
relationships to eliminate wastes at supply chain
level.

Building a Lean Supply Chain

• The Vision of Lean Supply Chain

Eliminate wastes, shorten lead time, lower
costs, deliver stable quality, and thus
achieve higher customer satisfaction level.

• Defining a Lean Supply Chain

“A set of organizations directly linked by
upstream and downstream flows of
products, services, finances, and
information that collaboratively work to
reduce cost and waste by efficiently
pulling what is needed to meet the needs
of the individual customer.” (Vitasek et al.,
2005)

10
Characteristics of Lean Supply Chains

• Full Collaboration
Foundation of all supply chain integration.
Share gains and responsibilities.
Transparent
• Transparent Information Information
Allow companies to see and align with
customers’ demand. Monitored
Lean
Logistics Performance
• Lean Logistics
Physically carry out lean thinking.
Full
Collaboration
• Monitored Performance
Sustain and improve performance
continuously

11

Procedure to establish a Lean Supply Chain

Select
Select critical
critical Current
Current State
State Current
Current State
State
supply
supply chain
chain Detailed
Detailed Value
Value Overall
Overall Value
Value
members
members Stream
Stream Map
Map Stream
Stream Map
Map

Future
Future Value
Value Timeline
Timeline
Implementation
Implementation Stream
Stream Map
Map Chart
Chart

12
Building Blocks of Lean Supply Chains

Introduction

• Lean Logistics Driving Supply

Chains toward
• Information Technology Leanness

• Performance Measurement and Continuous Building Blocks of

Improvement Lean Supply Chain

• Collaboration beyond Partnerships

Challenges for LSC
Implementation

Corresponds to lean supply chain characteristics.

Ideas for the Future

Conclusions
Transparent
Information

Lean Monitored
Logistics Performance

Full
Collaboration

13

Lean Logistics

• Lean logistics approaches carry out lean

concepts in physical product flows.
– Just-in-Time (JIT) Delivery
– Cross Docking
– Vender Managed Inventory (VMI)
– Milk Runs
– Third-Party Logistics (3PL)
– Supplier Parks
– Etc.

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/crossdocking.html
• These approaches are mutually
supporting and reinforcing.

14
 Lean Logistics (cont’d)

• Just-in-Time (JIT) Delivery

Approach: Pull system, leveled demand, rate-based production, and
smaller and frequent deliveries.
Effects: Smooth production rate, decreased WIP and lead time, and hence,
quicker responses.

• Cross Docking
Approach: Move goods directly from receiving dock to shipping dock
without intermediate storage.
Effects: Reduced in-transit inventory costs, storage space, handling costs
and order-cycle times, and improved inventory turnover and cash flow.

• Vender Managed Inventory (VMI)

Approach: Let a supplier manage the stock of an item at a customer’s site.
Effects: Pull system and improved communications; Allows suppliers to
know the actual demand of their products.

15

Lean Logistics (cont’d)

• Milk Runs
Approach: A routing of a supply or delivery vehicle to make multiple
pickups or drop-offs at different locations. (Womack and Jones, 1996)
Effects: Reduced inventory, predictable replenishment lead times, better
inventory visibility and improved supplier communications.

• Third-Party Logistics (3PL)

Approach: Includes 3PL providers as business partners.
Effects: Efficient transportation; Real-time tracking; Relieves a company
from the burden of managing transportation.

• Supplier Parks
Approach: Relocate and co-locate suppliers near the customers.
Effects: Further compress the overall value stream.

16
Information Technology

Information Technology for Supply Chain Management

• Not just for Information Flow

Three Flows of a Supply Chain

• Product/Service Flow Books, Music

, Image…

Information
• Information Flow Email, EDI, ERP, E-Kanban…
Technology
-scan…
a nk ing, Pay-on
• Financial Flow Online B

17

Information System Functionality

• Transactional Capabilities
Electronic Document Interchange (EDI)

• State of System Variables

Real-time information sharing among business
partners

• Flow and Pull

Transmitting pull messages; Real-time material System
tracking

• Forecasting and Data Manipulation

Functions
Access & process historical data for medium range
forecast

• Visibility and Security

Balance between access and security

18
Information Technology (cont’d)

Lean Supply Chain in INTERNET

the Internet Age Company 2

Company 4

– Open Standards XM
L XM
L

– Core Company Leads Central

System

Supply Chain
L XM
XM L
– “Middleman” is cut
Company 1 EXTRANET Company 3
– Interconnectivity

Architecture of the information system for

the lean supply chain

19

Performance Measurement and

Continuous Improvement

• What can be measured?

Performance metrics: Time, Cost, Efficiency, Effectiveness
• What should be measured?
Three Graphical Tools to identify problems.

1 2 3 4 5 6 7 8
1. Different Levels of
Contractor
Value Stream Maps (VSM) Forging
to identify wastes Assembler
Distributor

Business Process Time Non-Value-Added Time Value-Added Time

VSM at Supply
Chain Level A B C D

A
D
2. Timeline Chart
VSMs at
for Time-based Performance
Factory Level

20
 Performance Measurement and
Continuous Improvement (cont’d)

Wait

Accumulated Activity
Cost
3. Cost-Time Profile
Total
(CTP) Cost
to Identify Time-value
of Money Material
Time

• How do we use the measurements?

Continuously improve the performance
Monitor and sustain the improved performance
• Identifying Targets for Improvement
Future Value Stream Map
Future Cost-Time Profile (CTP)

21

Collaboration Beyond Partnerships

Creating Synergy from a network of lean companies

• Motivation to Build Lean Networks
Lean relationships are required for full collaboration

• Unity of purpose
Unified perception of Value and Purpose based on a
holistic view

• From Self-centered to Process-centered

Create harmonic flows based on integrated chains of
processes

• The glue to hold the network

Beyond contractual obligations: Commitment and Trust

22
 Collaboration Beyond Partnerships (cont’d)

• Elements of Lean Relationships

(Cooper & Slagmulder, 1999)

– Reduced Supplier Base for tighter linkages

– Level of Relationships: Links tighter with

suppliers of greater impact for final products.

– Nature of Relationships: Interdependence

– Organizational boundaries are blurred as

companies dynamically share resources

23

Introduction
Challenges for Lean Supply Chains
Driving Supply
Chains toward
Leanness

Building Blocks of
• Lack of Awareness Lean Supply Chain

Challenges for LSC

Implementation
• Cost and Profit allocation
Ideas for the Future

• Greater Inertia than a Single Conclusions

Company

• Globalization of Supply Chains

• Variability in Demand

24
Challenges for Lean Supply Chains (cont’d)

• Integration of Disparate

Computer Systems

• Information Management

• Visibility vs. Security

• Commitment and Trust

25

Ideas for the Future

Lean Supply Chain Lean Consumption

Lean Enterprise

Lean Management

Lean
Manufacturing

Customer
Manufacturing
Floor
Purchase Use Warranty Repairs Disposition
Entire Company

Immediate Supply Chain Complete Customer Experience (Lean Consumption)

Extended Supply Chain

The expansion of the scope of lean concepts

26
 Introduction
Ideas for the Future
Driving Supply
Chains toward
Leanness

Building Blocks of
• Six Lean Principles of Lean Lean Supply Chain

Consumption Challenges for LSC

Implementation
(Womack and Jones, 2005)
Ideas for the Future
Solve my problem completely
Conclusions
Don’t waste my time

Get me exactly what I want

Provide value where I want

Solve my problem when I want

Simplify solutions

27

In Conclusion:
Being a “Lean Island” is no longer lean enough
Introduction

Three Basic Building Blocks for Lean supply chains Driving Supply
– Lean logistic systems Chains toward
Leanness
– Information Systems
– Lean collaboration Building Blocks of
Lean Supply Chain

Performance must be monitored in real time

for quick action Challenges for LSC
Implementation

Challenges can be overcome with Ideas for the Future

commitment and effort
Conclusions

The Future
– “Consumption Lifecycle” brings the lean supply chain
closer to customers’ real needs.

Questions?
28
References

• Cooper, R and Slagmulder, R., 1999, Supply Chain Development for the Lean Enterprise
Interorganizatonal Cost Management, Productivity, Portland, OR.

• Groesbeck, R. (2005). Class Notes for the course in Production Systems Improvement, Virginia
Tech, Blacksburg, VA.

• Reeve, J. M., 2002, “The Financial Advantages of the Lean Supply Chain,” Supply Chain
Management Review, March/April, 42-49.

• Taylor, D., 2004, Supply Chains: A Manager’s Guide, Addison-Wesley, Boston, MA.

• Vitasek, K., Manrodt, K. B., and Abbott, J., 2005, “What Makes a Lean Supply Chain,” Supply
Chain Management Review, October, 39-45.

• Womack, J. P. and Jones, D. T., 1996, Lean Thinking, Simon and Schuster, New York, NY.

• Womack, J. P. and Jones, D. T., 2005, Lean Solutions, Free Press, New York, NY.

• Womack, J. P., Jones, D. T., and Roos, D., 1990, The Machine that Changed the World,
Macmillan, New York, NY.

29