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Lean-Six Sigma

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Prathamesh Dikshit

on 3 July 2014

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Transcript of Lean-Six Sigma

Lean-Supply Chain Management : Introducing Lean Six-Sigma in SCM
Analyze
Principle & Tools OF Lean Six Sigma
Lean Six Sigma
Measure
Improve
Control
Define
Define :-
Benchmarking
Failure Mode & Effects Analysis (FMEA)
Input-Process-Output Diagram
Value stream mapping
Project charter
Supplier-Input-Process-Output-Customer
Quality Function Deployment (QFD)
Voice of Customer
Measure:-
Collect Baseline Data
Confidence Intervals
Measurement system analysis
Paired comparison analysis
Process Capability analysis
Process Flow Diagram
Cost Measurement
Waste Analysis

Analysis:-
Fishbone Diagram
Performance measurement
Failure Mode & Effect Analysis
Histrogram
Hypothesis Testing
Pareto Charts
Reality Tree
Regression analysis
Quality Function Deployment
Tukey Quick Test
5 Whys

Improve:-
Visual Management
Design Of Experiment
Design For Six Sigma
Line Balancing
Process Flow(PF)-Cause Effect (CE)-Standard operation Procedure (SOP)-CNX
Poka Yoke
Standard Work
Takt time
Theory Of Constraint
Workcell Design
5 S
Control:-
Control Chart
Control Plan
Implementation Plan
Run Chart
Metrics
Standard operating procedure
Visual Process Control
Issues Present in Existing System
Evaluation Study
Evaluate Dell's As IS supply chain & logistics retail process.
Evaluate operational & Organizational aspects.
Comparing theoretical aspects about Dell's retail supply chain to the real life supply chain.
Implement Lean Six-Sigma for optimizing the process.

Lack of capable and robust quality program to prevent significant no. of products from being damaged during trailer loading process.
Customers not facing these problems because,
1. Mature online process.
2. High level of logistical capabilities.
Retailers faced huge problems because, damaged products were delivered to customer.
1 in 6 orders re manufactured for expedited delivery.
Because of damaged products, retail partners refusing entire truck loads worth $1 million or more.
Example: Wallmart

Fig.1 Picture taken by the researcher of desktop computers and servers stacked on top of laptop computers, causing damage. Trailers were bound to supply to wallmart distribution center
Fig.2 Deliveries made to two retailers; each load was refused by retailers, so product of was out of stock during a heavily advertised promotion of Dell's product
Defining the project goals using VSM of the as-is order-fulfillment process
Identifying bottlenecks or defects
Observing fulfillment processes specific to Supply Chain and Logistics
Collecting data related to costs and levels of service

DMAIC – Measure
Measuring the problem and process
By measurement system analysis framework within DMAIC to identify gaps between
1. Retail costs vs service level requirements
2. Actual cost vs performance of the as-is process
Using this data to create as-is process baseline

DMAIC – Analyze
Analyzing transportation and material costs and performance data
Applying the use of
- Root-cause analysis
- Pareto charts
- Performance measurement
- Time series graphs
- Cost of poor quality matrix
- QFD
To identify the root cause

DMAIC – Improve
Improving the supply chain and logistics fulfillment process by
- Using VSM analysis
- QFD to design and implement the to-be fulfillment process to remove identified defects
Results of the to-be design process to be incorporated as a part of overall to-be process design and implementation phase.

DMAIC – Control
Controlling the improvements made to the fulfillment process
Sustaining improvements by applying measurement-system analysis and performance metrics

Case Study - Dell Inc.
World class supply chain for online sales.
Online channel to place orders , until 2007.
Added a retail channel to place their orders in 2008 to meet customer demands.
Third party logistics services are being used for distribution of computers and laptops.

Identifying bottlenecks
/Defects
AS-IS Process
Define Phase Elements
Data collection
Docks of Dell's manufacturing facility
Focused on organizational, cultural, logistical , strategic and quality processes across supply chain
Dell's retail supply chain
No defects in ordering products online (FedEx, UPS)
Rejection leads to the expedite delivery
Bottlenecks found in distribution network
DMAIC - Define
Value per pallet.
Total value of refused load.
Transportation cost
Return transportation cost
Re manufacturing cost
Expedited transportation

* Figures are approximate
Root-Cause Analysis
Reduction in Refused Loads
Trailer loading playbook
Use of logistic beams to reduce damage
Eliminate adverse weight issues while while shipping fragile and high value freight
Trailer loading classes and certifications
LanTech machine to shrink wrap pallets completely for better stability
Fig. Logistic beams
Multiple stacking without pallets physically touching each other. Load capacity 2000 pounds
Fig. Inflatable air bags gently pushing pallets against sides of trailer locking them in place
Cross functional team
Factory Managers
Dock supervisor
Dock
Workers
Business improvement personnel
Representatives from Dell's retail Partners
Controlling Attributes
The Trailer Loading
Playbook
Supply Chain
Metrics
Implementation of Visual Aid: Loading Docks
Fig: Visual Aid of air bag hose reel By pilot factory
Utilize down stacking trailer for up to 3 skids.
Stack combination of pallets next to each other & front & behind as close as possible to the same height as possible.
Use air bags on top row of the trailer top to prevent tipping
Trailer Loading Playbook
For Tracking Supply chain performance
On time performance (minimum 98%)
Cost of transportation as a percetage of cos of goods sold
Customer delivery satisfaction (minimum 98%)
Missing, wrong and damaged (maximum 1%)
Percentage of correct label (minimum 98%)
Delivery to concentrated market (measure precision of deliveries)

Metrics (1 of 2)

Outbound freight costs as a percentage of net sales
Inbound freight costs as a percentage of purchases
Reverse logistic as percentage of freight costs
Percentage of truckload capacity utilized
On time pickups
Truck turnaround time
Mode selection versus optimal (all modes – ocean, rail, LTL, truckload, parcel)


Metrics (2 of 2)
After
Before
Prior to implementation of lean six sigma 40% of trailers delivered to customer were with some form of damage which lead to rejection.
After applying lean six- sigma damage were reduced to less than 1%
Before
After
Results
Customer Satisfaction increased from 60% to 96.8%
The expected decrease in shipping cost could go up to $6 million annually.
Network optimization , funneling more freight into lanes, Increasing density of palletized shipment
Cost Measurement

Prathamesh Dikshit 351846
Swapnil Joshi 351631
Saurabh Parandekar 351810

What is Lean? What is the Need?!
Lean definition: A systematic
approach to identifying and
eliminating waste through
continuous improvement by
following the product after
the pull of the customer in
pursuit of perfection

Lean thinking by producing
value to the customer as
desired by him.


What is lean supply chain management?
A lean supply chain can be defined as a set of organizations directly linked by upstream and downstream flow of products, services, finances and information that collaboratively work to reduce cost and eliminate waste by efficiently pulling what is needed to meet the needs of the individual customer.

Objective : To eliminate wastes & non value-added activities, existing in the flow of the overall value stream in the supply chain.

For operational and statistical decisions it uses internet enabled activities

Lean Supply Chain Tools
Attributes of Lean SCM
1. Lean supply chain management is a co-ordinated effort among partners to eliminate waste
and add value across the supply chain.

2. The challenge here is to bring all the supply chain partners and the support functions of the
supply chain like marketing, purchasing, distribution, out of their traditional silos and make
them work together to become lean.

3. The need to introduce lean in SCM was because of the following reasons-
a. Demand Management
b. Waste and Cost Reduction
c. Process and product standardization
d. Industry standard adoption
e. Cultural change competency
f. Cross Enterprise collaboration
What Is Supply Chain Management

Lean
Six Sigma
Jidoka
Poka-Yoke
Production
Work Cell
Kanban
SMED
TPM
5-S
ZQC
Select critical supply chain members to initiate part by part , the Critical suppliers are identified by the importance of products and the impact on overall production cost and time.

Assess the current state. Develop detailed value stream maps of critical products

Develop an overall value stream map for high-level view and establish a cross-organization assessment team to identify improvement opportunities

Develop a time line chart for detailed view
Develop future value stream maps of company level and supply chain level as guidance for improvement projects.

Implement improvement projects
and cycle back to 1.

Procedure to begin with Lean SCM
Building Blocks of Lean SCM
Transparent Information
Lean
Logistics
Monitored Performance
Full
Collaboration
Lean Supply Chain Ecosystem
To succeed and lead, the entire supply chain ecosystem must continuously adapt and adopt the following six mechanisms:
1. E-Information—Information accumulated, tracked, monitored and harnessed over the Internet
2. Supply chain synchronization
3. Supply chain collaboration
4. Optimization
5. Operations excellence
6. Connectivity and networking.
Lack of
awareness
Integration of disparate computer systems & Information Management
Globalization
of supply
chains
Greater inertia
than a single company
Challenges of Lean SCM
Variability in demand
Cost and profit allocation
Visibility versus security
Commitment
and trust
Benefits of lean SCM
1. Closed relationships must be established between all supply chain members, sharing gains and responsibilities.
2. Information needs to be transparent throughout the supply chain, including the end customers demands, opportunities and liabilities.
3. Elimination of waste.
4. High level of efficiency.
5. Quality Assurance.
6. Eliminate inventory level.
7. Shorten lead time.
8. Deliver stable qualities.
9. Reduce costs.
10. Customer satisfaction.

Recap
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Literature Survey
Lean Six Sigma for Supply Chain Management
Implementing Lean Six Sigma throughout the Supply Chain
Supply Chain Management and Lean Six Sigma in a Retail Environment
Management Summary
Lean Supply Chain:

1. The evolution of supply chain on the path of lean principles, where both these disciples converge can be termed as ‘Lean Supply Chain’.

2. This can be achieved by treating the whole network as one unified entity to which lean principles are to be applied.

Lean Six Sigma:

1. The combination of Lean and Six Sigma improvement methods are required as Lean cannot bring a process under statistical control and Six Sigma by itself cannot
noticeably improve process speed or reduce invested capital.

2. When combined they enable the reduction of complexity and cost which is an objective of all parties associated with supply chain management.
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Thank You!
Questions?
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References
a. James W. Martin, Lean Six Sigma for Supply Chain Management, Edition 2007

b. Elizabeth . Cudney, Rodney Ketle, Implementing Lean Six Sigma throughout the Supply Chain, Ediion 2011

c. Brittain Cliff Ladd, Supply Chain Managment and Lean Six Sigma in a retail environment, November 2012

d. Joseph Gruber, Impact of Lean Six Sigma on Supply Chain Management

e. Leonardo Rivera, Hung-da Wan, F. Frank Chen, and Woo Min Lee, Beyond Partnerships: The Power of Lean Supply Chains

f. Dan Jones, Jim Womack, Seeing The Whole, February 2003
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Agenda
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i. Management Summary ...5
ii. Literature Survey ...7
iii. What is supply chain management? ...8
iv. What is Lean? ...9
v. What is Lean Supply Chain Management? ...10
vi. Lean supply chain tools ...11
vii. Attributes of Lean SCM ...12
viii. Lean SCM procedure ...13
ix. Building blocks of Lea SCM ...20
x. Lean Supply Chain Ecosystem ...26
xi. Challenges of Lean SCM ...27
xii. Benefits of Lean SCM ...36
xiii. Principle and tools of Lean Six Sigma ...38
xiv. Dell Case Study ...52
xv. References ...102
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By,
October 12, 2012, the first trailers were loaded and shipped under the new processes and procedures to three of Dell’s retail clients located in Canada and the United States
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