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Source : Oracle
Transitioning to Lean with Oracle Flow Manufacturing
Lean Manufacturing Strategies is also known as:
Lean Manufacturing Strategies,
Oracle Business Intelligence,
Oracle Lean Manufacturing,
Theory Of Constraints,
Supply Chain Management,
Lean Manufacturing Seminars,
Lean Manufacturing Classes,
Lean Manufacturing Certification,
Oracle Lean Manufacturing Simulation,
Lean Manufacturing ERP,
Lean Manufacturing Simulation,
Lean Manufacturing Inventory,
Transitioning To Lean ,
Kanban Systems Lean Software,
Transitioning Lean Kanban Development,
Lean Flow Technology,
Continuous Flow Lean,
Lean Flow Consulting,
Lean-Flow Certification,
Lean Manufacturing Flow,
Kanban Lean Manufacturing,
Lean Manufacturing Value Stream Mapping,
Lean Manufacturing Inventory,
Lean Manufacturing Certification.
INTRODUCTION
This white paper focuses on lean execution strategies within the enterprise and
across the supply chain, and highlights the advanced capabilities of Oracle's Flow
Manufacturing module in lean execution and enabling the transition from a
discrete, push based manufacturing environment to a flow, pull-based one. These
are discussed in the following topics:
The Competitive necessity of Lean
Covering the increasing pressures on Manufacturers today to cut costs and become
more efficient with increasingly global competition and higher customer
expectations.
The Power of Lean
How adopting Lean techniques can dramatically reduce cycle times, improve
quality, reduce waste and improve the bottom line.
Transitioning to Lean
Covers the typical steps that companies go through when transitioning from a
discrete to a Lean environment and how Oracle's mixed mode manufacturing
capabilities can ease the transition. The following functions from Oracle Flow
Manufacturing suite are highlighted:
- Graphical Kanban Workbench ' combines kanban setup, kanban planning,
pull sequence definition, and planning simulation all in one graphical
interface.
- Line Design and Balancing - the Graphical Line designer and Mixed Model
Map functions enable visual line design and line balancing by highlighting
resource constraints and other bottlenecks in the production process.
- Scheduling & Sequencing ' Create Flow Schedules directly from Sales orders
or Planned orders and sequence production using rules based on attributes
(of the Sales order, Flow schedule) and constraints (including group by,
order by, required/forbidden transitions).
- Feeder Line Synchronization / Outbound Broadcast sequencing ' Functions
which takes the sequenced flow schedules and synchronize your feeder lines
and components to the main assembly line.
- Flow Execution Workstation ' Intuitive and configurable user interface for
managing production execution.
THE COMPETITIVE NECESSITY OF LEAN
Manufacturers today face a variety of challenges long lead times, too much or too
little inventory, inconsistent product quality, and the inability to adapt to changing
demand. As globalization has extended the supply chain, the need to identify waste
and reduce costs, not only in the manufacturing process, but also in the whole
supply chain, has become essential for Manufacturers to compete in the face of
global competition. Additionally, the advance of the internet and the increased
expectations of consumers to be able to customize their order, track it real time and
have it delivered at'web speed' has forced manufactures to look at ways to be more
demand driven, provide advanced customization capabilities and, at the same time,
reduce cycle times, improve quality and lower costs. The outdated approach of
push based, high volume manufacturing ensures that machine utilization is high but
can lead to excess inventory, poor quality and an inability to respond to shifting
demand patterns. One only has to look at Toyota as a prime example of a company
that has been using lean initiatives for more than 50 years and managed to increase
it's global market share and adapt quicker to changing consumer demand (such as
hybrid models) than it's other competitors.
These are some of the main factors that are driving Manufacturers to look at Lean
techniques, which promises a triple win for consumers ' better quality at lower cost
with more variety.
THE POWER OF LEAN
At the end of World War II, Sakichi Toyoda, founder of Toyoda Spinning and
Weaving Company, dreamed of providing cars for the general public, much like
Henry Ford's dream thirty years earlier. He chartered Taiichi Ohno to put in place
an efficient production system to produce high quality automobiles. Over the next
three decades, Ohno developed the Toyota Production System, now known
worldwide as Lean Manufacturing. The foundation of Ohno's system was the
absolute elimination of waste and Ohno discovered that the combination of built in
quality, rapid product flow, simple work instructions and the use of inventory
supermarkets (or kanbans) for material replenishment led to the lowest cost,
shortest lead time and highest quality products possible.
Some of the main characteristics of Lean Manufacturing are:
- Elimination of waste ' Including overproduction (excess Inventory), waiting
(including non-value added setup and move time), defects (requiring
additional rework or scrap) and ignoring knowledge (not taking advantage of
the employee knowledge base).
- Work with suppliers to improve quality and deliver smaller shipments more
often with the ultimate goal to deliver directly to the line. Typically blanket
purchase orders are negotiated with suppliers with kanbans as the actual
material pull request.
- Just-in-time processing: a part moves to a production operation, is processed
immediately, and moves immediately to the next operation minimizing WIP.
- Production based on actual demand rather than inaccurate forecasts.
- Quick changeovers of machines and equipment allow different products to
be produced with one-piece flow in small batches.
- Defect prevention rather than inspection and rework by building quality in
the process and implementing real time quality feedback procedures.
- Pull based material replenishment via kanban cards or electronic kanbans.
As Lean has expanded to other industries where the demand can be less stable and
the consumer may be offered a broad range of product options, additional
techniques, such as those used by Demand Flow Technology (developed by John
Constanza in the early 80s) can determine the best, most optimal mix of a family of
products appropriate to a particular line or cell. Here, demand is typically
aggregated by line, which allows for both the line design and the management of
the flow line to be accommodated with a changing mix of products on a daily basis
thus minimizing the impact of seasonal or cyclic fluctuations in customer demand.
Additionally, operators are trained and certified for specific work and can flex up
and down the line to allow maximum flexibility in meeting variable demand and
production changes.
Nowadays, virtually all major manufacturing companies have some form of lean
initiative underway. The power of lean lies in its ability to reduce costs in all areas
by challenging every step that does not add value to the customer. Business
processes that may have been taken for granted for decades are candidates for
elimination and are reviewed during Kaizen (continuous improvement) events,
which are attended, by the owners and operators of a process to make incremental
improvements to that process. Most companies (including lean leaders like Toyota
and Pella Corporation, a major American window and door manufacturer), will tell
you that these kind of continuous improvements never stop and that kaizen can be
applied to virtually any part of the supply chain, including collaboration with
suppliers and customers. Additionally most companies will combine Lean
Manufacturing techniques with other initiatives such as Six Sigma (focuses on the
statistical methods to put in place a parts-per-million performance metric), 5S
(focuses on discipline, tracking, organization, housekeeping and consistency) and
tracking of lean metrics (such as linearity, 1st pass yield etc) to help sustain the
change.
Benefits of implementing lean and Oracle Flow Manufacturing
The benefits of successfully implementing lean and Oracle Flow Manufacturing can
be dramatic:
Pella Corporation (a leading door and windows manufacturer) - Reduced
Purchase order costs by 50% and processing time by 27%.
Thermo King (a leader in transport temperature control equipment) ' increased
plant production by 33% and reduced vendor and receiving activities by 33%.
IMMI (a leading producer of commercial safety systems) ' cycle times down
over 90%, reduced inventory by 25% and reduced customer returns by 52%.
TRANSITIONING TO LEAN
Although the benefits of Lean Manufacturing are dramatic, the transition to Lean
can sometimes be a daunting task for any company. Oracle's Discrete
Manufacturing solution is designed to help enable the transition by supporting
mixed mode Manufacturing and therefore allowing you to gradually move to a
more flow based approach while maintaining your existing manufacturing
processes. Oracle's Work in Process product uses discrete jobs to drive production
with built in quality plans, flexible shop floor control and resource and transaction
tracking. Oracle's Shop Floor Management product enables complex lot
transactions, dynamic routing, end-to-end genealogy and the modeling and tracking
of operation yield costs. In conjunction with Oracle Flow Manufacturing, Oracle
supports the entire build-to-order manufacturing process, including make-to-stock,
configure-to-order, discrete-repetitive, assemble-to-order, and engineer-to-order.
Since Lean is a journey where, by definition, there is always room for improvement,
the following steps are one approach to moving to a demand driven, pull-based
environment while minimizing the inherent risks involved in any change:
1) Implement a Kanban pull system
A company will achieve the most dramatic results if they take the time and energy
to redesign their production into dedicated lines or cells that can build a mix of
products pulled from customer demand, as described in section two of this paper.
However, many companies have been able to achieve tangible results simply by
implementing a kanban pull system on products or components with relatively
consistent demand patterns. Further improvements to the kanban system can be
made as the manufacturing floor transitions to a line or cell approach.
The kanban system is based on the simple principle of replenishment. When final
assembly uses components and sub-assemblies, internal kanban signals are sent to
replenish material from stores or to initiate feeder line production. External kanban
signals are sent either to suppliers or to another business unit (in the form of an
interunit transfer). Even customer orders, whether you supply directly to a
consumer or another distributor, can be thought of as a form of kanban, pulling
product from final assembly. Kanbans can take many forms, from physical kanbans
cards to empty containers or visual indicators (such as light signals) to indicate that
material is required or that production should begin.
One of the main benefits of a kanban system is that it puts a limit on inventory
build up i.e. when a kanban is full, no additional product should be made or
material replenished. By limiting inventory, less cash is tied up, less space is used
and WIP inventory is dramatically reduced thereby reducing your product's lead
times.
Since Kanban sizing is usually calculated based on dependent demand for the
material and replenishment lead time, it is important to have a good understanding
of your product (or product families) demand patterns in order to accurately size
your kanbans correctly.
Pick components that have reasonably stable demand to start with ' remember that
even though the product family demand may vary, the dependent demand may be
stable due to common components. Also, you will want to negotiate blanket
purchase orders with your suppliers, have them deliver to you more frequently
(preferably multiple times per day) and monitor supplier quality with the ultimate
goal of delivering directly to the production line.
The kanban signals themselves (whether physical cards or e-kanbans) will be the
actual pull request to the supplier and the total pull amount should be allowed to
'flex' up or down based on a pre-specified tolerance i.e. if the line goes down then
the number of kanbans requested for the next delivery will be less than the normal
pull amount.
The Graphical Kanban Workbench is part of Oracle's Flow Manufacturing suite
and combines kanban setup, kanban planning, pull sequence definition, and
planning simulation all in one interface.
Kanban pull sequences define the replenishment chain ' the relationship between
an item, its' point of use and its point of supply (another stores location, a supplier,
a feeder plant or feeder line). For example, I may pull from RIP (line side location)
to Stores and then from Stores to a Supplier. Each link in the chain could have a
different kanban size (or number of containers), based upon the differences in
replenishment times and other factors.
Once the pull sequences have been defined, a kanban plan can be created to
determine the kanban sizes or number of kanban cards. Typically kanban sizes are
calculated when setting up a Flow line initially and are based on a forecast. The end
assembly demand is exploded through the bill of material, the component demand
at each location calculated and, using the pull sequence information, the kanban
sizing calculated.
As well as driving a kanban plan from forecast it is also possible to drive it from
planning or from actual production and then compare the plans to see if there are
any potential kanban shortages. The production kanban plan can optionally be
updated with any changes and non-replenishable (one time use) kanbans can be
created to satisfy any short-term demand spikes.
Additionally, the workbench can be used to monitor demand patterns, track kanban
statuses and replenish kanbans.
In summary, kanbans are the way that customer demand, production and your
suppliers and extended supply chain all stay in sync.
2) Implement a Flow line
The biggest impact in manufacturing cycle times and inventory levels will be seen
when the production floor is redesigned into dedicated lines or cells that can build a
mix of product. Ideally these lines or cells should be able to handle one-piece flow
of product down the line. This is not always possible due to machine setups, but
the goal should be to get as close to a one piece flow as possible by implementing
setup reduction programs like SMED which can reduce setup and changeover
times from hours to minutes.
Start with the final assembly process (closest to the customer) and with parts that
have a reasonably stable demand. Begin by mapping out the process for each
product in its current state, while identifying what steps are value added and which
are not, as well as which are critical to quality (value stream mapping). Eliminate as
many of the non-value added steps as possible now, and mark the rest as targets for
future Kaizan (continuous improvement) events.
Next, group those products into product families that share a relatively common
process flow. Then, determine if there is commonality of processes across product
families such that multiple families could be built on the same line (the more
products that can be built on one line, the more flexible your process will be).
Once the products per line are determined, calculate the TAKT time, or operational
cycle time, for your line based on the projected average daily demand for the
products on that line. This time represents the frequency with which product
needs move down the line in order to meet your demand at capacity.
This information is used with your process map to determine how to group work
into operations balanced to your TAKT time, or customer demand. Once this is
done, you can physically re-arrange the shop floor to create the balanced operations
in consolidated line.
Often, after the line is started, there will be minor adjustments needed as actual
parts flow through the line and operations where inventory is building up become
apparent. Shift resources, move activities from one station to another or implement
'In process' Kanbans (buffer stock located on either side of a constrained resource)
to help balance the line.
Oracle Flow Manufacturing uses the Graphical Line Designer and Mixed Model
Map tools to define the process map and resource details, identify non-value added
steps, calculate the TAKT time and balance the line based on available resources.
If the line has already been created and balanced on paper or using spreadsheets,
the Graphical Line designer provides a simple way, using drag-and-drop techniques,
to select and associate line operations with events to build your balanced line. This
tool enables you to link operations to each other as primary, feeder, and/or rework
processes and to assign resources, attachments (work instructions etc) and
components to events within the operations.
Once the line is balanced and production is under way, Oracle's Mixed Model Map
function can be run using actual production as the driver. In this way, any resource
or other production bottlenecks created by today's schedule can be identified and
worked around. For a more in depth discussion on Oracle Flow Manufacturing's
Line design and balancing capabilities, the white paper "Line Design in Oracle Flow
Manufacturing" should be reviewed.
Once you have a pilot line complete, you can decide to implement more lines at
once. Start with other final assembly products, and then work progressively
backwards in the production process till you have mapped out the whole process.
Once your internal shop is lean, you can extend the same principles to your
suppliers and distribution chain.
In addition, implementing 5S principles, which focus on workplace safety, order
and cleanliness will produce higher quality product sand more efficient working
environment.
3) Streamline the order to delivery process
Companies aren't solely looking to reduce cycle times or waste at the plant, but
additionally are looking to be more demand-driven, and to be able to redirect
resources to profitable opportunities faster than their competitors can.
In a Flow environment, products are made to customer demand. Sales orders
(including configured orders) are used to drive the production schedule with level
loading and heijunka techniques used to create an optimal mix for the day. The
impact of varying demand or engineering changes is minimized because the cycle
times are reduced and a smaller mix of products is made (rather than a large batch
of one product).
Oracle's Line Scheduling Workbench uses Sales orders or Planned orders as
demand and, based on the scheduling rules selected (including mixed model and
level loading), will create flow schedules with an associated build sequence for the
day and constrained to the line rate. This schedule represents a list of what you
need to build in the order in which you need to build it, tied directly to the
customer order. The system can also move any additional load on to an alternate
line.
The workbench gives a view of production on the line by item for the week and the
linearity (scheduled vs. actual production) with the ability to drill down into the
flow schedule details.
If a more complex mix of products is required on the line, Oracle Flow
Manufacturing has a powerful constraint based sequencing engine, which allows
sequencing rules to be created based on attributes and constraints. The sequencing
attributes include Sales Order dates, Sales Order properties (such as customer
priority etc), Flow Schedule properties, Item properties (weight) and Component
(color). The constraints include component availability, forbidden or required
transitions (i.e. black must follow white), spacing and order by (ascending or
descending). These user defined rules are then used to model the logical and
physical constraints of the production lines as demand is scheduled to ensure the
effective use of resources and provide the best, most optimal mix of products.
Once the main assembly line production sequence has been established, feeder lines
can be synchronized to the main line using the Feeder Line Synchronization
function in Flow Manufacturing. This ensures that the feeder schedules arrive just
in time to supply the main assembly line. Additionally, for sub-assemblies or
components which cannot be ordered until exact configuration of the parent is
known, there is a process called Outbound Broadcast Sequencing which creates
one time kanbans which are communicated to a supplier with the build sequence
specified so that the supplier can load their truck in reverse sequence and deliver
the components / sub-assemblies to the main line exactly when required
Operation method sheets (work instructions) are used to ensure that standard
procedures are being followed and are typically broken into work content,
verification steps and quality control steps (each indicated by a different color and
shape in the instructions). Oracle's Flow Execution Workstation can enable a
paperless shop floor by providing your operators all the information they need to
perform and record their work in an easy to use, HTML based interface.
It is used on the shop floor by operators to view electronic work instructions,
record assembly and component serial / lot numbers, record component qty
changes or substitutes, view ECO's, capture quality information and complete the
schedule or (optionally) complete at the operation level. The user interface and
business flows are completely configurable so only the information and processes
required by your business are displayed and transacted. Serial and shipping labels
can be printed automatically and, for those components that are not kanban
controlled because they are too large or because component kits are required, pick
plans can also be automatically generated upon operation completion.
The Flow schedule number can be wanded directly into the workstation and serial
and lot or component qty change information recorded at each line operation (so
they can be captured as they occur on the line) or a simple express completion
transaction can be done at the end of the line. The components are then
backflushed from the RIP locations and, if there is a sales order associated to the
flow schedule, the sales order will be automatically reserved and a notification sent
via workflow allowing the order to be shipped directly from the production line.
Shipping labels and ASNs can also be generated at this time.
Quality information can be captured directly within the workstation itself and
quality plans defined as mandatory so that operators cannot move forward with the
completion step unless the relevant quality data is entered. You can collect data
either by direct data entry or in the background, as well as retain any quality data
associated with lot and serial numbers. Once you associate a collection plan with
the work orderless or flow operation completion transaction, it automatically
transfers contextual data from the transactions into the quality collection plan. The
use of collection plans and quality tasks reduces rework and scrap and produces a
higher quality product.
Pella Corporation, who use Oracle Flow Manufacturing extensively, make use of a
technique called'pulsing' in which they focuses on specific cells to compare the
scheduled operation cycle time to the actual cycle time. The operator scans to
indicate that they have completed an operation and as the actual operation time
begins to move outside of the scheduled TAKT time, different types of music are
played to highlight this problem and three large LCD screens over the shop floor
display the specific cells that are being tracked to show if the actual cycle time for
those operations are moving into the red.
Since part of the Flow mantra is to work as a team it is very useful to have these
highly visible (or audible) indications when there are problems on the line so that
the rest of the team are aware of the issues and can work together to solve them
through Kaizen events. In summary, the order to delivery process should be as
streamlined and low touch as possible creating a truly demand driven and agile
environment.
THE LEAN SUPPLY CHAIN AND BEYOND
The same techniques used to identify waste and non-value added steps in the
manufacturing production process could be extended out beyond the four walls of
the plant to the rest of the supply chain. From working with customers and
marketing to help smooth demand, working with suppliers to improve quality and
deliver more frequently, and working with fulfillment, receiving and transportation
to reduce non-value added steps, implement built in quality and introduce
continuous improvement processes, Lean Manufacturing methodologies can be
applied to the supply chain to achieve improved quality, reduced cycle times,
improved customer satisfaction and supply chain agility.
Coupled with other initiatives such as six sigma, 5S, value stream costing and the
tracking of Lean metrics such as linearity, throughput, and on time delivery, the
transformation to a demand driven Lean supply chain can be achieved. And, with
Oracle's Lean enabling applications, you can take your initiatives to the next level,
accelerate the transformation and sustain the gains.