Well its getting to be that time of year again… What did I promise to deliver this year, what do we need to do next year?
The annual operating plan sometimes is developed and displayed using the X-Matrix. Establish the results of goals for next year, take the strategies and tie them to tactics, make sure the tactics can be measured (targets) and have individuals assigned ownership of tactics and targets.
Little gets done without marching orders, i.e. a Charter. The basic document of the hoshin process is the team charter. The A3 format connects the targets (goals) to the tactics and provides another level of critical thinking about execution. The team charter is a contact between the company to provide support and resources and the team and team members to do the hard work of problem solving, applying the scientific method, and running experiments on the management operating system.
What gets measured gets better, and so we set plans and track key performance indicators.
Ready to make your hoshin for next year?
Kanban is a system that supports level production by helping maintain stable supply and efficient operations. The question of how many kanban are needed is at the core of designing and running a kanban system. If your business process performs mostly standard, repeated operations the number of kanban can be calculated as follows:
Number of kanban = (Daily Demand * (Replenishment Time + Safety Margin))/Standard Container Quantity
- Daily Demand = monthly orders / work days in the month;
(Can use historical actual orders if demand is stable, may need to use current booked orders or forecast)
- Replenishment Time = sum of all the processing, transportation, handling, and queue times from freshly empty container to full container back to empty again
- Safety Margin = either a statistical calculation to accommodate variation in demand and/or supply, or an intuition to add zero to a few extra days
(Regardless of which approach you pick, once up and running begin removing kanban one at a time until you’ve gone too far, then add one back and spend some time to figure out the cause – i.e. lower the water level and expose a few rocks.)
- Standard Container Quantity is where we often have the greatest latitude. We usually can’t change the daily demand. Speeding up the replenishment time takes time. Selecting the right size container we can do right now. Sometimes we’ll turn the equation around and instead of solving for the number of kanban we’ll pick the number of kanban and then determine the right container size, like so …
Standard Container Quantity = (Daily Demand * (Replenishment Time + Safety Margin))/Number of Kanban
Rule of thumb: try to keep the number of kanban between 2 and 10 by adjusting the size of the kanban container.
Let’s see, DMADV should work …
| Define |
Form a small team and agree on the goals of the project in a written charter with the sponsor, customers, and stakeholders. The overall intent should be clear. Deliverables and milestones should be established. Cross functional turf issues should be addressed up front. |
| Measure |
Quantify the customer needs as well as the goals of management. Determine “What will project success look like and how will we know?” |
| Analyze |
Each of the cost categories of Price, Transportation, Customs, Inventory, Overhead, and Risks need to be mapped and taken to another level of detail. For each element we need to study the inputs, outputs, alternatives, existing reporting processes to determine the accuracy and timeliness. |
| Design |
Create, test,and document the new data collection and reporting process |
| Verify |
Confirm by sensitivity testing, simulation or otherwise, the performance of the total landed cost reporting design and its ability to meet the target needs |
Here are a few more lean and six sigma tools that can be applied in supply chain. Have any additions, comments, or examples to share?
Lean Sigma Tools for Supply Chain
| Lean Sigma Tool |
Definition |
Supply Chain Application |
| Location Checksheet |
A common visual quality data display in manufacturing is to take a product drawing and make a mark or place a sticky dot on the location of a defect or touch up. After a period of time you’ll often see clusters. Then we use good old Pareto and focus our team based problem solving skills on the areas of interest. |
Plotting the physical location of inventory accuracy errors can often be a clue for getting to the bottom of and eliminating a significant source of wasted time. Similarly marking the location of packaging damage can help identify problems with overhang, pallet specification, strapping, and handling. |
| Sampling |
Manufacturing process and quality engineers have been taking product and process samples for over 50 year as a routine part of statistical process control or designed experiments. 100% inspection is actually less accurate in quality control than is a well designed sampling plan and the use of descriptive statistics. As an aside the US Census could stand to use more sampling and less door to door canvasing. |
A full physical inventory count or ’stock take’ is also less accurate that a well designed cycle counting program. But even a cycle counting program is a waste of time if the errors discovered aren’t studied for root cause and permanent corrective action taken. Whether its an annual full inventory or a daily cycle count if all we do is adjust ‘the book’ then we aren’t doing anything to improve our future. |
| Statistical Distributions |
The widely known ‘bell shaped curve’ of the normal distribution is often a good approximation of the spread we find in machining operations. Paint thickness, electrical resistance, tensile strength can vary plus or minus around a mean or average. Descriptive statistics such as mean and standard deviation help us understand and describe the behavior of the systems we are studying. |
Caution Will Robinson. Playing with statistics without the proper training can be dangerous. Real example: when calculating safety stock and expected inventory we often need to consider the supplier lead time. Like any variable measurement there is always some spread, the expected 10 days could be 9 days or 15. Lead time is almost never bell shaped. Suppliers are rarely early. So which distribution to use? Find a good black belt and give’m a job. |
| Control Charts |
Control Charts are how we display the behavior of a process and help process operators decide when to make an adjustment, stop the process, or start an investigation. We plot data taken from periodic samples and then follow SPC rules to determine if there has been a change in the process since the last sample. |
Kanban are containers or cards used to control the replenishment, supply, production of product. The number of Kanban in circulation can be calculated based on the average consumption, replenishment time, and container size. A single card or container then has an expected lifecycle from empty to empty. By periodically sampling the time the container last passed through a ‘tollgate’ we can get an early warning on shifts in demand or replenishment time, hopefully in time to avoid a stock out. |
| 5 Whys |
First impressions are sometimes wrong, so when we are brainstorming or investigating a situation we’ll ask about the cause of the cause of the cause. A method for pushing our thinking beyond superficial solutions that don’t really solve the problem. |
Took 20 minutes to get started picking this morning. Why? Because the printer was jammed? Why was the printer jammed? I guess the rollers were dirty. Why where the rollers dirty? … You get the idea? We keep asking Why until we get to something we can do something about like adding a weekly printer maintenance task to our TPM schedule and assigning responsibility for doing it. |
| Pull Systems |
Trying to predict (forecast) what to make and when is tough to do in many industries. Toyota found great advantage in only making what was needed when needed, that is to replenish only what was consumed. Ideally a supplying operation would hand off one piece at a time to the down stream consuming operation. But when supplier and customer can’t be in close physical proximity we need some way to communicate what is needed and when. 2 Bin, kanban, FIFO flow lanes are just a few types of pull systems common in manufacturing. |
Some have tried using pull thinking in distribution inventory management, only replacing stock at customer facing warehouses when product is shipped out (Toyota accessories for example). The traditional approach is to forecast the demand and then make or buy a batch large enough to cover the future demand, and hope you didn’t plan too much or too little. Pull works well in some industries and not at all in others. Most warehouses regardless of industry can use pull techniques for resupply of packaging, fresh pallets, wave picking period. |
Lean Sigma Tools for Supply Chain, part 1
Not all of the lessons from Toyota and Motorola translate well into health care, project management, product development, services but many easily do. Here’s a partial list for supply chain. Have any additions, comments, or examples to share?
Lean Sigma Tools for Supply Chain
| Lean Sigma Tool |
Definition |
Supply Chain Application |
| Brainstorming |
Generate a wide range of ideas around any topic. |
Why not get the warehouse pickers together from time to time to engage them in a discussion on safety, accuracy, or productivity improvements? |
| Affinity diagrams |
Sort the post-its in to logical groups, and give each cluster a name. |
Start or end of shift crew meetings can have a team problem or improvement board. Sorting suggestions, brainstorm ideas, or process defects in a public forum is a great way to engage the warehouse or office. |
| Multivote |
One way to prioritize or narrow down a list of alternatives. |
Instead of the squeaky wheel, or the boss’ mandate, allowing the folks to set their own priorities for continuous improvement is one way to foster engagement and buy-in. |
| Process mapping |
Come in a variety of styles: flow charts, swimming lanes, spaghetti, etc. A visual model of the process. |
Helpful training aid. For many a flow chart is easier to comprehend than a standard operation procedure text. |
| Process observation |
Gain a deep understanding of a process in action by planning what you want to capture and how you plan on doing it. Most processes have too much going on all at one to be able to ’see’ what’s really happening, so we focus on one ‘actor’ at a time and usually start by watching what happened to the product or service, then is a separate session observe the machines or technology, and then only after really understanding product and process to we observe the people and what they are doing. Reason? People are almost always victims of the processes and products others designed. |
In supply chain there are a number of challenges. First hurdle is recognizing that there is a process. What is the product or service supply chain provides? Is it movement of goods or processing of information or both? |
| SIPOC |
Supplier, Inputs, Process, Outputs, Customer – a visual table or chart to help define process boundaries and stakeholders. |
Every new WMS or TMS project should start with a charter, project plan and a SIPOC to get all the players calibrated on who is who and why. Surprising the confusion often found around understanding who the customer is and what happens up and down stream. |
| Spaghetti map |
Stable yourself to a order or component and follow it through the process, always enlightening, often embarrassing when plotted on a facility layout |
Pick path maps often show problems: location inaccuracies, split lots, poor slotting. Your WMS may direct traffic, even if it does it can be worthwhile to follow a picker around and watch for dead ends, reversals, treasure hunts. |
| Swim lanes |
Flow chart arranged with rows or columns to show functional handoffs. |
From customer order through sourcing, planning, scheduling, receiving, putaway, pick, pack, ship the number of times the order and product are touched, adjusted, queued, handed off, and acted on is the start at recognizing waste and variation in supply chain management. |
| VA Analysis |
Breaking down a process into activities and then deciding if the customer would think each task was valuable. |
Most of Supply Chain is non value added. Just moving product from here to there doesn’t change the product. Some will argue that the end customer is willing to pay to move product, so any activity that doesn’t move the product closer to the customer is waste. Does the customer care if you have to inspect the paperwork, or put the pallet in and out of a rack? |
| 7 Wastes |
A way to categorize non value-added activities and help us see waste: overproduction, defects, transportation, waiting, inventory, motion, processing. Also known as ‘muda’. |
Overproduction – unnecessary packaging Defects – inventory record errors, shipping damage, mislabeled Transportation – shipping from the wrong DC Waiting – queuing up orders Inventory – excess, slow moving, obsolete Motion – rearranging a split pallet, reaching for supplies Processing – unnecessary tasks |
| Check sheets |
Simply a list of tasks, hopefully unambiguous and logically sequenced. A memory aid. |
Wouldn’t want an airplane pilot to take off with out running through the preflight checklist, why conduct a physical inventory without one? |
| Frequency plot |
Also known as a histogram. Helps to see the distribution of a set of data. A statistical tool. |
More picking errors on small orders or large, or early in the shift or at the end? Collect some data and plot it to find out. |
| Measurement System Analysis |
Statistical study to determine if the accuracy of an measure is adequate. |
Many warehouses have labor productivity goals or standards. How accurate and reliable is the record keeping? If the case pick to powered pallet jack is standard 52 lines an hour should a picker be concerned about achieving only 50, or feel great about hitting 54? |
| Total Productive Maintenance |
An approach to maximizing the effectiveness of facilities used within a business. Total productive maintenance, or TPM, aims to improve the condition and performance of particular facilities through simple, repetitive maintenance activities. Based on a culture of teamwork and consensus, TPM teams are encouraged to take a proactive approach to maintenance. A team is made up of operators and those involved in the setting up and maintenance of the facilities. |
Got to keep the lifts running, batteries charged, printers printing … Does equipment downtime ever become an excuse? Don’t let the equipment decide when to take a break, schedule the maintenance on your own terms. Factories have figured this out why not the warehouses? |
| DMAIC |
Project planning mnemonic – define, measure, analyze, improve, and control |
Why not use this outline on any change initiative? |
| FMEA |
Failure Modes and Effects Analysis – often used in postmortem, best used to prevent. |
Better to anticipate what could go wrong with the new WMS installation than to have to deal with the clean up after the meltdown. |
| Gemba |
Go see. Don’t theorize from the front office, instead to to where the issue, problem, value lives and look at it. |
Looking in the racks, using the white glove test (how thick is the dust on the slow moving stock?), observing the housekeeping is all part of the visual management and servant leadership culture of lean sigma in supply chain. |
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