Lean Production Smoothing

The three elements of Lean Production smoothing are: customer requirements demand pull Customer TAKT determination; rate-based Operations TAKT determination; and mixed-model production scheduling. These work to support and in turn are supported by the other Lean Production practices to improve the volume and pacing characteristics of Lean Production.

During the evolution to MRP II and ERP, the processes of forecasting, business and production planning, and (later) S&OP were improved to include regular meetings, usually monthly, of senior managers from all functions of the company. The S&OP team makes decisions on how to allocate resources when projected demand and supply plans are out of balance, resolve any other issues (holiday or shutdown planning, etc.), and agree on a single operating plan. The S&OP process is utilized in many Lean Production environments to update the company's operating plan, projecting future demand and analyzing the company's resources and capacity. In the lean enterprise, S&OP is the planning tool that balances supply and demand across the future planning horizon and enables effective decision analysis at the aggregate level, while providing a "benchmark" for detail decisions about product families and eventually product SKUs. In a well-operated S&OP process, top management is engaged in the key process necessary to manage the enterprise, making the critical decisions necessary to integrate operating plans to the financial forward-planning processes. Key to planning for production in the lean commerce business model is that the S&OP/heijunka production smoothing processes are the basis for three elements of pacing: Customer TAKT, Operational TAKT, and engineered cycle time, also referred to as demonstrated capacity. Key to delivering product in a lean flow in the Lean Commerce model are three elements of production flow. The first is balanced production, in which all operations or cells produce at the same engineered cycle time, which is less than or equal to Operational TAKT. The sec-

AVAILABLE TO PROMISE INQUIRY

CURRENT ON-HAND

600

PAST DUE DEMAND

0

PAST DUE RECEIPTS

0

CURRENT ATP

0

FIRST ATP DATE 03-

6-07

FIRST ATP AMOUNT

FROM

02-26-07

03-26-07

04-30-07

05-28-07

06-25-07

07-02-07 07-09-07

03-25-07

04-29-07

05-27-07

06-24-07

FORECAST PLANNED

1200 1200 1200 1200 1200 1200 1200 1200 1200 1300 1300 1300 1400 1400 1400 1400 1400 1400 1400 1400

SCHEDULE

INVENTORY ATP

SCHEDULE

INVENTORY ATP

200

400

0

500

5000

5000

-100

0

1500

3400

0

500

2900

0

2400

5000

5000

500

0

500

0

0

3700

1300

200

600

5000

5000

700

200

300

400

200

200

200

200

3500

5000

5000

1700

1100

600

1100

1100

1100

1100

1100

1100

6100

RECEIPT DETAIL

SUBSTITUTION INQUIRY

ATP VS. PLANNED

ATP VS. FORECAST

MAINTAIN MPS

GO TO DATE

ROLL FORWARD

ROLL BACK

RETURN TO ORIGIN

Figure 4.3 Available to Promise Inquiry

LEAN COMMERCE MODEL SALES AND OPERATIONS PLANNER

Decision Time Fences

Data Drivers Inventory Cost

Manufacturing Schedules

Management and Financial Reporting and Management Decision Processes

LEAN COMMERCE MODEL SALES AND OPERATIONS PLANNER

Time Fence 1 Day 1 toDay 10

Time Fence 2 Day 11 to Day 20

Time Fence 3 Week 5 to Week 20

1

Business Plan Production Plan

Forecast Customer Orders

Business Plan Production Plan

Forecast Customer Orders

Business Plan Production Plan

Forecast Customer Orders

1

Selected Driver

Selected Driver or Greater of Selected Drivers

Selected Driver or Greater of Selected Drivers

1

S.O.P. Planner Level

S.O.P. Planner Level

S.O.P. Planner Level

1

2 -Level MPS Planning Bills

2 - Level MPS Planning Bills

2 - Level MPS Planning Bills

~jRough Cut Capacity Planning

~jRough Cut Capacity Planning

Production Smoothing for Balanced Rates of Manufacturing Flow and Pull

Figure 4.4 Lean commerce Model—Sales and operations Planner Level ond is that these operations and cells are in a balanced plant, where the capabilities of resources are balanced to Customer TAKT to produce an Operational TAKT that can produce at least the Customer TAKT quantity. The third is that the lean commerce business model employs a pacemaker process, which is any process along the product process stream that sets the pace for the entire stream. The pacemaker process is not the constraint or bottleneck process: these operations or cell processes should be balanced, not relied on to pace. The pacemaker process is usually near the customer contact to the process stream, where the customer pull is received. The pacemaker process is often the final assembly cell. See Figure 4.4 for an illustration of the Sales and Operations Planner Level of Lean Commerce.

The issue of TAKT time is perhaps the greatest point of dissent between the "techies" and the "leanies." A few definitions are in order so that a common baseline can be established between the two camps on the central question of TAKT: what it is, how we arrive at it, and what we do with it. TAKT time has several elements, each distinct and important to the effective use of TAKT to manage production. As stated above, TAKT-based planning and execution includes three primary elements of smoothed production planning built over the foundation of

I SOP PLANNER SCREEN |

PART # 12-33789-01

FROM

BACKLOG

02-26-07

02-27-07

02-28-07

03-01-07

03-02-07

03-05-07

03-06-07

TO

02-26-07

02-27-07

02-28-07

03-01-07

03-02-07

03-05-07

03-06-07

BUSINESS PLAN

600

600

600

600

600

3000

3000

FORECAST

1500

1500

1500

1500

1500

7500

7500

PLANNED ORDERS

1400

1400

1400

1400

1400

7000

7000

FIRM ORDERS

0

0

0

0

7500

7500

7500

SUGGESTED MPS

0

0

0

0

0

0

0

MASTER SCHEDULE

4800

10000

10000

10000

0

0

0

INVENTORY

1000

5800

15800

25800

35800

28300

20800

13300

DAYS ON HAND @ C/TAKT

0.03

0.19

0.53

0.86

1.19

0.94

0.92

0.89

PART # 12-33789-02

BACKLOG

02-26-07

02-27-07

02-28-07

03-01-07

03-02-07

03-05-07

03-06-07

FROM

02-26-07

02-27-07

02-28-07

03-01-07

03-02-07

03-05-07

03-06-07

TO

13000

13000

13000

13000

13000

65000

65000

BUSINESS PLAN

16000

16000

16000

16000

16000

80000

80000

FORECAST

16000

16000

16000

16000

16000

75000

75000

PLANNED ORDERS

28000

0

28000

0

28000

56000

0

FIRM ORDERS

0

0

0

0

0

0

0

SUGGESTED MPS

0

0

0

9500

19000

95000

95000

MASTER SCHEDULE

740000

46000

46000

18000

27500

18500

38500

53500

INVENTORY

0.53

0.41

0.41

0.21

0.33

0.29

0.38

0.46

DAYS ON HAND @ C/TAKT

AZ PRODUCT LINE TOTAL

FROM

BACKLOG

02-26-07

02-27-07

02-28-07

03-01-07

03-02-07

03-05-07

03-06-07

TO

02-26-07

02-27-07

02-28-07

03-01-07

03-02-07

03-05-07

03-06-07

BUSINESS PLAN

38000

38000

38000

38000

38000

190000

190000

FORECAST

40000

40000

40000

40000

40000

200000

200000

PLANNED ORDERS

37500

37500

37500

37500

37500

187500

187500

FIRM ORDERS

41000

40000

45000

39000

35000

200000

200000

SUGGESTED MPS

0

0

0

0

0

0

0

TOTAL PRODUCTION

39000

39000

39000

39000

39000

195000

195000

DAILY PRODUCTION

39000

39000

39000

39000

39000

39000

39000

INVENTORY

29100

289000

288000

282000

282000

286000

281000

276000

DAYS ON HAND @C/TAKT

0.35

0.34

0.34

0.30

0.30

0.33

0.30

0.28

CHANGE

TIME BUCKETS

SIMULATE MPS

MATERIAL AVAILABILITY

MPS INQUIRY

DISPLAY MPS ONLY

CUM TO DATE

ROLL FORWARD (PARTS)

ROLL BACK (PARTS)

ROLL FORWARD (TIME)

ROLL BACK (TIME)

figure 4.5 SOP Planner Screen three primary elements of balanced production execution. A final execution practice makes the system flow as customer requirements are met.

The first element of production smoothing (heijunka) is Customer TAKT, which is the frequency of customer demand and ultimately the frequency at which a product must be produced by the final physical process in order to meet that demand. If it hasn't been said often enough, there would be no need for production smoothing if the customer demand were to be rock-steady at a fixed quantity of demand for each period of execution. Alas, that is not and will not be the case, unless of course the planned economy ever takes root, and production and consumption are dictated by higher authority. Anyone who is familiar with the rise and fall of the planned economy of communism does not expect that to occur. In the S&OP in Lean Commerce, Customer TAKT is calculated from the sales forecast and customer orders, incorporating and allowing for adjustments that are inserted into the calculations through business plans, production plans, and the S&OP agreements themselves. Figure 4.5, showing the S&OP planner screen, illustrates how the data streaming into the production smoothing process is presented to the S&OP planner, where that data can be adjusted, and other data inserted by the S&OP planner.

These insertions include consideration for build and drain, seasonality, and other lumpy demand such as intermittent demand shifts, inventory adjustments for promotions and phase-outs, as well as planning for holidays and plant or facility shutdown periods.

In some cases, it is more accurate to say that, because Lean Commerce uses time fences in the demand calculations, the SOP planner screen displays the Customer TAKT per time fence. This figure represents the number of units that must be produced in order to meet the demand for that period and also be in an in-stock position sufficient to meet the Customer rate of demand in the following period without increasing or decreasing the Customer TAKT more than an agreed-upon percentage that can be accommodated by the Operations TAKT and engineered cycle time.

Customer TAKT per time fence is the demand pull rate determined by the SOP planner, as daily or more frequent review is performed of the key planning data displayed on the single SOP planner screen. Using the language of demand and supply, Customer TAKT is the demand for capacity, and Operational TAKT time is the supply of capacity and also the rate of production required to meet Customer TAKT. The Operational TAKT calculation is operating time divided by quantity required. For example, if customers require 240 items per day and the plant operates 480 minutes per day, Operational TAKT is 120 seconds. If the Customer TAKT for grommets is 240 grommets per day, and the grommet line operates 480 minutes per day, Operational TAKT is 2 minutes. To meet customer demand, sufficient resources, both in people and equipment, must be available to produce one unit every 120 seconds. The finishing operation for grommets needs an output rate, or engineered cycle time, of 120 seconds or less. Operational TAKT is the demand for capacity whereas engineered cycle time represents the supply of capacity. Engineered cycle time is the proven output rate from the cell or line or other resource involved. So, the simple proposition of Lean Commerce is this—Customer TAKT balanced to Operational TAKT balanced to engineered cycle time, running in a balanced work cell facility paced by a final assembly process that receives the signal to build via a customer "pull." The customer "pull" is either an actual customer order for immediate shipment or a stocking order for build of seasonal or otherwise lumpy demand considerations and coverage. Lean Commerce is all calculations and decision support available to both the SOP planners as well as the entire staff involved in the lean ERP processes, as well as the mixed-model and final assembly scheduling processes. Therefore, everyone is on the same page, with the same data, for the same objective. The SOP planner screen calculates Customer TAKT well into the future and displays this value on the screen. Whether business is increasing or decreasing, operations personnel can see future workload for months out into the future and concentrate on developing increased or decreased engineered cycle times (demonstrated capacity) to meet the increases or decreases in demand.

The SOP planner screen is the dashboard for producing a smoothed master production schedule (MPS). The MPS then flows into the MRP calculation to produce the detailed material requirements plan (MRP). The SOP planner screen displays all key planning parameters on a single screen, including customer demand (firm shipping orders, planning orders, and forecast separately displayed), business plan for the part, current master schedule, and the planned inventory in both units and average days of customer coverage on-hand. Whether planning at the product level or product family level, the screen displays the product family totals at the bottom of the screen so the planner can review the proposed MPS relative to the total Operational TAKT previously established. Planning at the product family level is usually accomplished by using planning or two-level planning bills, and the Lean Commerce model and SOP planner screen support this approach. In a planning bill, the common components in the family are structured on the planning bill along with each of the unique components. The modular structure of the planning bills allows over-planning of the unique components, which enables minimal buffer stocks to cover instances of finished demand variation. Utilizing this planning bill approach enables buffer coverage to be proportional to and time-phased with Customer TAKT, unlike safety stock or buffer stock at the finished good level, which is fixed and not drawn up or down as demand fluctuates.

Planning is performed in master production time-fence periods, with variable lengths for products and product families established in the part item masters so planning can be performed by part or family in daily or weekly time-fence periods in the near term and in weekly and monthly time-fence periods in the future time-fence periods. The Lean Commerce model uses time fences in the MPS, where a time fence is equal to a certain period of time that corresponds to a certain (selectable) demand source rule that will determine the demand accumulated to drive the demand input to the calculation.

A key consideration in the use of time fences is the separation of planning time fences from scheduling time fences. Planning involves putting in place the right level of resources, while scheduling does the optimum with the resources available now, with timely information about continually changing customer requirements available when and where it is needed to make decisions. The planning time fence is essentially a "push" driver to the manufacturing supply chain and to the manufacturing processes. It has larger time buckets, a longer horizon, and deals with products on an aggregate, usually family, basis. The scheduling time fence has daily time buckets, a short time horizon, and deals with finite products and resources. The order time fence is daily and immediate.

Time fences can also be viewed as rules that govern changes to the MPS. Beginning far in the future, beyond the cumulative lead-time of the parts being planned, requirements resemble a solid stream of fluid and difficult-to-differentiate forecasts and planned orders. At the far horizon, it is relatively easy to make planning changes at the product and product family levels.

Planning decisions become increasingly restrictive as the time of supply-chain production "pull" approaches. Within the cumulative lead-time boundaries, planners can and do make decisions and trade-offs that are reflective of capacity and material realities. The nearer to lead-time the customer changes demand, the more difficult it is to accommodate. As noted above, buffers and safety stocks have been planned by MPS/MRP processes in order to manage these fluctuations, but often proponents of pure lean advocate for "zero" buffer. This is a tricky proposition and is not to be embarked upon lightly. It is better to work down the buffers and safety stocks as lean transformation goes forward than to paralyze customers, suppliers, and operations with hard turns toward pure J-I-T before the operations are ready, or in cases where market and customer demand fluctuations simply won't allow this.

Operating with a "frozen period" is desirable but not always possible. The "front" or short time fence can be used to denote the frozen period, which should be a short-order activity period, perhaps equal to the final assembly/ship lead-time. If the frozen time fence is longer than the assembly/ship lead-time, it will cause frequent disruptions, reschedules, and expedites to accommodate customer (and management) last-minute inserts and changes. Short product lead-time, demand pulled production, and flexible lean mixed-model scheduling all work against a long frozen time fence. In an enterprise where throughput time is in minutes, the need for frozen periods is also in minutes.

The Lean Commerce model requires demand source rules that are selectable (hierarchical) at the system, product family, or part level and that allow selection of input from a variety of sources and levels of input, with only one input source per period, defined in the production smoothing process. The Lean Commerce model requires, for mixed-model scheduling, a calculation driver "T," where "T" is equal to a period of time that is selectable (hierarchical) at the system, product family, production line, or part level, and that represents the length of time over which customer orders are to be considered as the demand driver to the calculation. What results from these calculations is the Customer TAKT as presented to the lean producer by their customers, over time and across time fences. Toyota in North America utilizes a variation of this model today.

Loading and smoothing the demand data on a daily or more frequent basis provides an invaluable resource to the entire lean chain. The planned order output shows all eligible viewers exactly what we think is going to happen, based on all best available data and input, smoothed through our best flow calculations. The order pull from the customer that is fed to the pull point at the shipping location is the trigger for all square, signaling, two-bin or kanban lean visual management in the factory. The demand data, smoothed through the S&OP and MPS processes, and calculated by MRP, is also available for APS or line scheduling and balancing, with local Operational TAKT calculation. The flow of manufacturing orders that constitutes the major maintenance burden in most manufacturing systems is basically ignored, other than to use order records to flush inventory. The same order records, as I describe them below, can be used to generate kanban tickets, if desired, at BOM stocking points (although I prefer to call these BOM "release" points). By utilizing MRP generation to produce the e-kanbans, safety or "buffer" stock lot

LEAN COMMERCE MODEL LEAN ERP LEVEL

LEAN COMMERCE MODEL LEAN ERP LEVEL

Erp Lean Management

figure 4.6 Lean commerce Model—Lean ERP Level quantities or calculations can be utilized in order to provide the "smoothing" of safety, or buffer, quantities in a lumpy demand flow.

Used in conjunction with the time fence and demand source capabilities of most ERP-based MPS modules, the Lean Production smoothing process is customer focused, which helps align MPS planning orders and the (eventual) customer-pulled production requirements. The consumption rates developed through the Lean Production smoothing process provide supply-chain forecasts and schedules that are also more aligned with customer requirements pulled through the system. Rate-based planning aligns upstream component schedules also. Smoothness in the MPS improves the downstream component, supplier, and assembly processes, making them easier to manage and execute. As illustrated in Figure 4.6, Rough Cut Capacity Planning is available to review the plan prior to MRP execution.

Working further downstream, the MRP module of existing ERP software packages is used to develop production and supplier schedules, with mixed-model scheduling utilized to balance or smooth the final assembly schedule and upstream production flow.

The primary ERP assumption of the Lean Commerce model is "You can't get a makeable schedule from an ERP system, but you can get a pull-able plan." A make-able schedule is a schedule that contains all the customer order requirements for the period, as well as the production sequence supported by capacity and material availability to produce the customer requirements on schedule. They are so rare that sightings are almost never reported, and when reported they are usually discovered to be in error. Lean Commerce delivers a "this moment" makeable schedule to virtual enterprise partners and facilitates the kanban and visual adjustments to plan that commence as soon as the customer makes a change. Other drivers of adjustment to schedule include supplier failure or mistake, machine breakdown, and operator absence. A "pull" production environment with visual production control works to manage the fluctuations of shop floor control far better than an MRP-produced schedule that is wrong before it hits the floor.

At the Lean ERP level, a supplier plan is developed that is "broadcast" to enterprise suppliers to provide demand forecast and order information. As simple as this seems, all the virtual partners utilize supplier broadcast to "load" current and future requirements data across the virtual lean enterprise, daily or more frequently. The simple fact of the demand data driving the planning and execution, within lead-time, of the components consumed in the end-products of the virtual "chain" creates tremendous synergy of supply and demand, with each partner reacting to requirements as its Operational TAKT and engineered cycle prowess will allow. Although all demand requirements are presented for planning, suppliers deliver only when pulled by the consuming partner. When the MPS/MRP plan runs again, all partners are back in sync, and the process of planning and meeting partner requirements begins again.

After the SOP planner completes smoothing the MPS, MRP generates the recommended schedule and sequence for components and subassemblies. With the MPS process ensuring that all customer orders and forecasts are able to be fulfilled, the component and subassembly scheduling process is designed to sequence production efficiently and to prioritize production while maintaining the agreed-upon Operational TAKT. Figure 4.7 shows the assembly scheduling screen that enables orders to be arranged into the appropriate efficient sequence for the day's production.

Finally, mixed-model scheduling (smoothing) of the production sequence enables flexible balancing of the demand flow manufacturing processes and ensures a level demand-pull across component lines and through the supply chain. Mixed-model scheduling techniques are supported to allow line and shift prioritizing of production considering actual customer pull requirements and buffer component and finished good inventories. Product rotation and changeover based on production efficiencies is supported, and common information about requirements is present at both the planning and scheduling levels of the model. Planned component availability is utilized to enable J-I-T-triggered pull kanban practices to "pull" supply into production processes. Figure 4.8 illustrates the Factory Flow level of Lean Commerce.

The final assembly screen shown in Figure 4.9 provides simultaneous visibility of multiple assembly lines for a given day. This screen also provides a link to the MPS inquiry screen to allow for visible customer demand at all levels of planning and scheduling. Maintenance of MRP orders is abolished, with requirements slotted by line and part/quantity, and reporting is limited to backflushing of consumed inventories against completed customer shipments.

ASSEMBLY SCHEDULING SCREEN

PLANT

LINE

DATE

SHIFT

1

2

02-26-07

2

SEQUENCE

ORDER #

PRODUCT

CUSTOMER

QUANTITY TO BUILD

COMPLETED

1

4278

0402746973

MACK

24

2

4269

0402076770

NAVISTAR

16

3

4271

0402076767

DEERE

18

4

4279

0402776811

DEERE

16

5

4270

0402076773

NAVISTAR

10

6

4277

0402746972

MACK

40

7

4272

0402736837

CDC

24

8

4273

0402736840

CDC

32

9

4280

0402736844

CDC

24

10

4274

0402736842

CDC

56

11

4275

0402736843

CDC

24

12

4268

0402046860

NAVISTAR

40

TIME BUCKETS

SIMULATE MPS

MATERIAL AVAILABILITY

MPS INQUIRY

DISPLAY MPS ONLY

DISPLAY

CUM TO DATE

ROLL FORWARD (PARTS)

ROLL BACK (PARTS)

ROLL FORWARD (TIME)

ROLL BACK (TIME)

Figure 4.7 Assembly Scheduling Screen

LEAN COMMERCE MODEL FACTORY FLOW LEVEL

LEAN COMMERCE MODEL FACTORY FLOW LEVEL

Case Management Erp
Figure 4.8 Lean commerce Model—Factory Flow Level
Corporate Domination Tactics

Corporate Domination Tactics

Learning About Corporate Domination Tactics Can Have Amazing Benefits For Your Life And Success! Own The Corporate World And Be Your Own Man! Huge businesses like Wal-Mart have demonstrated to us all the mightiness of a corporation, now you as well may harness that might.

Get My Free Ebook


Post a comment