Understand lean concepts and terminology
The 10 basic lean terms that are used throughout the Lean manufacturing module in Supply Chain Management are:
- Value stream - The value stream is represented by one or multiple production flows. It can also be modeled as an operating unit for costing purposes.
- Kaizen - Japanese for "continuous improvement," kaizen is a management philosophy that emphasizes employee participation, where every process is continuously evaluated and reevaluated to eliminate waste.
- Work cell - A work cell is a resource group, where resources are grouped to run a process flow. The work cell represents the effective capability of all resources that are assigned to the cell. The internal structure of the cell is not documented in the system.
- Cycle time - The average cycle times for each activity of a production flow are determined at the validation of a production flow version based on the takt requirement of a production flow version. The actual cycle times are calculated for a defined period and compared to the average through the cycle time performance control.
- Takt time - The takt requirements are defined on a production flow version. For production flows that feed into other flows, the takt requirements can be calculated based on the target cycle times of the consuming activities.
- Supermarket - A supermarket is a central storage location where (raw) materials are stored near their point-of-use so customers (or consumers) can pull them as needed. Supermarkets are used to:
- Minimize transaction costs.
- Facilitate visual management.
- Establish the framework for a point-of-use kanban system (pull).
- Production flow - A production flow is linked to an operating unit that plays the role of the value stream. The flow of material and products throughout work cells and locations for a specific production or supply scenario can be described as a sequence or small network of process or transfer activities, called a production flow.
- Backflush costing - Backflush costing omits recording some or all of the journal entries that relate to the stages from the purchase of direct materials to the sale of finished goods. Because some stages are omitted, the journal entries for a subsequent stage use normal or standard costs to work backward to "flush out" the costs in the cycle for which journal entries were not made.
- Kanban - Japanese for "visible record," kanbans have been adopted by many industries as a method of controlling production and internal supply. A kanban can apply to a paper ticket or a physical container. A kanban is a pull signal that represents demand and triggers process and transfer activities for a unit of a specific item or item family.
- Heijunka leveling - A production leveling technique using either volume or product mix. In Supply Chain Management, the kanban schedule board is used as a heijunka board to level production load on a cell.
Cell and line design is a hierarchical process, from factory layout to detailed workstation ergonomics, that includes several processes and activities that come into play in lean manufacturing, such as the following:
- Product family or value stream identification
- Value stream mapping
- Strategy and subcontract issues
- Plant layout and location of supermarkets
- Activity timings and sampling
- Takt and sales cycle time calculation
- Constraint identification
- Paper kaizen
- Theoretical minimum activity times
- Theoretical minimum operators
- Cell reference costs and savings calculation
- Cardboard simulation
- Cell layout design
- Operator balancing
- Workstation ergonomics
- Pull system design
Identifying value for the customer
When identifying the value, you specify what creates value from the customer's perspective:
- The customer defines the value of product in a lean supply chain.
- Value-adding activities transform the product closer to what the customer actually wants.
- An activity that does not add value is considered waste.
Value stream
The value stream is the sequence of processes from raw material to final customer or from product concept to market launch. If possible, look at the whole supply chain.
The value stream is modeled as an operating unit in Supply Chain Management, which allows the use of the value stream as a financial dimension.
Value stream mapping is an important tool to help model the lean transformation. The value stream consists of activities that are required to design and make a family of products or services that are undertaken with a group of functions that are linked together. These linked functions chain processes from the point of customer specification to the raw material source, which is the lean manufacturer's inventory.
One objective of the value stream is to correctly specify value to the ultimate customer. Another objective is to analyze and focus so that it does everything from product development and production to sales and service in a way that actions that do not create value are removed and actions that do create value proceed in a continuous flow as pulled by the customer.
The future state value stream can be modeled in Supply Chain Management as a production flow. All processes of the value stream are modeled as process activities inside production flows. Many production flows can make up a value stream.
Therefore, the value stream, along with the production flow, is used to model the structure of lean manufacturing in Supply Chain Management.
Creating a production flow
Production flows are the flow of material and products throughout work cells and locations for a specific production or supply scenario. A production flow can also be described as a sequence or small network of process or transfer activities. In other words, it's creating flow wherever possible in the process.
You can use a one-piece flow by linking all the activities and processes into the most efficient combinations to maximize value-added content while minimizing waste. With this approach, the waiting time of work in progress between processes is eliminated; hence, adding value more quickly.
The term feeder flow is used when products of a production flow are used in another flow.
Production flows are introduced as essential components of lean manufacturing because they:
- Define the process and transfer activities of the value stream.
- Support the kanban rules in defining activities that a kanban goes through.
- Provide an activity-based context for the planning and production processes.
- Establish a cost context for the various kanban production scenarios.
To support continuous improvement, the production flows are implemented in time-effective versions. This implementation allows you to copy an existing production flow version, including all related kanban rules, to a draft version of the production flow and then model the future stay production flow before validating and activating it for production.
The activity-based model allows the setup of a wide range of scenarios, without adding complexity for the production (shop) floor workers, because all scenarios use the same activity-based user interface.
Introduction to kanbans
The word kanban means "visible record" in Japanese. Kanban has been adopted by many industries as a method of controlling production and internal supply.
When a kanban has been consumed, it should be passed or triggered to the source of supply to replenish it. This source of supply is defined through the production flow activities that the kanban is linked to, providing a definition of how the kanban is filled. Kanban rules in Supply Chain Management are important to production flows because they define the activities that a kanban goes through.
The value stream is different from the classical material requirements planning (MRP) approach where individual items are linked to individual and independent resources or resource groups such as work centers and workgroups. The value stream unifies the process for a product family in a top-down approach.
The diagram below shows the kanban process and how it is used.
