Seis sigma

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The lean transformation of your supply chain begins at home. The first ¡X and often
missed ¡X step in extending lean beyond the four walls of your facility is to segment your
facility into one of three categories, based on the complexity of your operations and
supply chain. Getting this step right will guide the implementation sequence at your
facility and at suppliers.
Companies in thefirst ¡X and simplest ¡X category typically are final assembly
operations, using purchased parts. They have little in the way of internal parts processing.
In this case, setting up your parts market for purchased parts is critical. Basically, the key
steps are:
„X Develop a plan for every part (PFEP), a basic database containing all the key data
on parts such as supplier names and locations,order frequencies, container types
and dimensions, shipment sizes, transit times, etc.
„X Organize the purchased-parts market to hold a controlled level of every part
purchased from suppliers.
„X Design delivery routes to get parts from the market to operators when needed and
in the quantities needed.
„X Implement pull signals with suppliers to keep inventory under control.
„X Coordinate thelogistics of the delivery from the supplier to maximize efficiency
in transportation.
„X Continuously strive to lower inventory and improve the system.
Companies in the second category must deal with more complexity. (For an in-depth case
study of a company in this category, see the Creating Level Pull workbook; Lean
Enterprise Institute, 2004.) You are in this category, if you have multipleinternal
processes making parts in addition to some purchased components. In this case, you want
to create the most efficient level and pull- based production system in conjunction with
your internal supplying processes and your external supplier processes. The situation
becomes even more complicated if you have a mix of standard as well as unique items to
build to satisfy customer demand.
Toimplement this type of system you must master each of the four main types of kanban:
in-process kanban for scheduling flow processes; signal kanban for scheduling batch
processes; interprocess kanban for internal parts withdrawal; and supplier kanban for
external parts withdrawal.
Replenishment occurs in very small quantities (preferably), or larger batches, depending
on the nature of theprocess and how good your changeover times are. Driving down
changeover time earns you the right to reduce inventory and build closer to customer
demand. The overall key items to focus on include:
„h Segment your demand into high runner, medium runner, and low runner items
„h Establish a finished goods market if you have high-runner standard products and
your lead-time to manufacture them is toolong to make them to order.
„h Level the daily build at the pacemaker process in terms of both quantity and type
produced. (The pacemaker, which is usually near the customer end of a value
stream, sets the pace or schedule for the stream. Don¡¦t confuse it with a bottleneck,
which constrains downstream process due to a lack of capacity.)
„h Create the discipline of building the medium andlow-runner items consistently in
addition to the high runners to satisfy customer demand.
„h Calculate the frequency with which different part numbers will be produced for
all your internal processes and set the size of your internal supply markets based
on this replenishment timing. (This recurring frequency is called EPE ¡Xevery
product, every interval. If a machine is changed over to make apart every three
days, then the part¡¦s EPE is three days.)
„h Be sure to adequately factor in safety and buffer stock margins unless you have
very high process uptime and consistently smooth customer demand.
„h Use the appropriate kanban types to signal replenishment when material has been
consumed from a market location.
„h Standardize conveyance routes to get material from the market to...
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