Logistics & Supply Chain Management ( all inclusive)
FHNW BIT Logistic & supply chain management
FHNW BIT Logistic & supply chain management
What are Key questions when demanding sustainability from suppliers to integrating sustainability into procurement?
Questions in supplier selection
- Does the supplier have a publicly accessible sustainability strategy?
- Is the supplier certified (e.g. for environmental management according to ISO 14001)?
- Does the supplier offer transparency with regard to sustainability (e.g. reporting on the website)?
Measures before entering into a supply relationship
- Examination of sustainability promises through a document review, inspection / interviews
- Preparation of a deviation and initial audit report as a basis for decision-making
Measures in existing supplier management
- Constant dialogue (e.g. through annual meetings, suitable KPIs as part of the supplier scorecard)
- Permanent internal or external controls, inspections and questionnaires (e.g. through audits)
- Use of service providers such as https://www.riskmethods.net/
What are Key criteria's when demanding sustainability from suppliers to integrating sustainability into procurement?
The following criteria are usually checked or evaluated by auditors:
- Implementation of the requirements of the respective management system, e.g. ISO 26000 (document review, KPI / reporting)
- Implementation of the requirements in everyday life (interviews, inspections)
- Review the role of management (control of management processes)
- Awareness of all employees (interviews, inspections)
- Ability to adapt and improve the management system with respect to sustainability (e.g. through the PDCA cycle).
The following criteria can, but do not have to be, checked (depending upon the standard):
- Occupational safety (separate Health & Safety Audit), environmental protection (separate environmental audit)
The following criteria are usually not checked or evaluated by auditors:
- General Quality level of the supplier
What is linear economy (disposal vs. Recycling economy (recycling and/or reuse
Disposal
- Disposal characterizes the elimination of substances.
- In business terms, disposal usually means the final disposal of waste (rather landfilling, incineration and composting of waste).
- In the supply chain, disposal always means a redistribution from the point of origin of the materials to be disposed of (source) to disposal (sink).
- Cost-intensive processes often have to be carried out as scope of disposal:
- Collection and sorting (especially for non-hazardous substances)
- Separation (disassembly, filtration, magnetic/optical separation, often manual)
- Conversion (drained, crushing, solidification)
- Storage (hazardous substances!, thresholds for hazardous goods, observation, safety zones)
- Transport (dangerous goods!, safety regulations, transport restrictions)
Recycling
- Recycling refers to the return of materials and energy to the production process through use or recovery.
- Basic principle: «Avoidance before recycling (reuse or recovery) before disposal»
- Waste may only be disposed of if its reuse or recovery has been excluded.
- Waste includes:
- solid wastes (e.g. metal shavings, packaging)
- liquid wastes (e.g. from rinsing baths)
- gaseous wastes (e.g. exhausts), light, heat or sound
Illustration of the principle "avoidance before recycling before disposal"
Give an example for a checklist for creating a disposal and recycling concept
- Inventory of material, goods and waste flows
- Clarification of the legal and organisational responsibility for recycling and waste disposal
- Composition of waste materials and quantity determination
- Determination of cost and revenue potential (today and in the future)
- Development of alternatives and their financial evaluation (e.g. new technologies, new materials, new processes, new suppliers)
- Integration into existing processes (e.g. product development, production, customer communication)
- Agreement of deposit and return concepts with customers
- Supplier obligations for returns
- Use of recycling exchanges
- Continuous, systematic review of procedures and processes for further improvement potential
What is the strategic scope for action in the field of waste management?
- Product design to avoid disposal problems (e.g. longevity)
- Defining and procuring suitable materials and reducing the use of materials
- Avoidance of waste generation (e.g. secondary packaging)
- Systematic minimization of waste (e.g. in processes)
- Use of resource-saving alternatives (e.g. noise reduction)
- Re-use (e.g. reusable packaging)
- Continued use (e.g. use for new purposes such as Friday bags)
- Re-utilization (Recovery) (e.g. cans in tinplate production)
- Continued utilization (e.g. production of car parts from plastic waste)
- Energy recovery from processes that generate heat
Note: Savings potential generally increases over time (scarcity of resources).
Why does Packaging is a two sided system when it comes to sustainablity?
Packaging
- Special case: Packaging
- Packaging serves to protect goods and the outside world (new product and disposal).
- Packaging can exist as disposable or reusable systems.
- Single-use systems
- Pro: low production costs, low weight, not cleanable, customizable
- Con: Environmental pollution, disposable mentality
- Multiple use systems (e.g. certified wooden pallets, plastic pallets and collis)
- Pro: robust and reusable, standardized in handling, cost-efficient when used in a pool shared between several parties
- Con: high investment costs, higher administrative expenditure, cleaning and maintenance costs
What is the evaluation process of product carbon footprint?
Evaluation of the "CO2 footprint" of products and processes
- Step 1: Identify all greenhouse gas emissions along the (a) life cycle of products and processes in (b) each life cycle phase.
- Step 2: Convert all greenhouse gas emissions into CO2 equivalents.
- Step 3: Disclose, respectively report, in product or process specifications.
- Recalculation when there are changes in the supply chain (procurement, production, sales, ...)
- Provides companies a new KPI to be minimized in sustainable SCM
- Footprinting standards: ISO 14067, ISO 14026, GHG Protocol
Describe the Life cycle assessment in the supply chain
- The life cycle assessment examines all elements in the life cycle of a product for possible ecological risks and weak points, to identify optimization potential and options for actions.
- The life cycle assessment examines various criteria (land use, water pollution, health, ...)
- Standards: ISO 14040, ISO 14044
- Schematic approach:
What are requirements for the life cycle assessment?
- Compliance with accounting principles (completeness and clarity).
- Data collection in physical units: Kilograms (substances) and kilowatts (energy), if necessary with supplementary data (e.g. pieces or cubic metres).
- Standardisation and documentation of measurement and survey data (for comparability, location and time).
- Early entry of substance and energy data into an IT system (e.g. hazardous substance database).
- Clear definition of system boundaries (e.g. handling of data from corporate holdings and materials provided).
- Fix survey period and time (based on fiscal year, stock surveys are linked to physical inventory)
Video: What is "sustainable development"? Which three areas must interact?
- Three pillar model is based on
- Environmental,
- Clima protection,
- protection of resources
- Protection of biodiversity
- Food should be grown organically
- Use natural resources with caution
- Economic
- Business and industry
- Only find products which are in season on the shortes way possible (no flights)
- Social considerations
- Better education and training opportunities
- Equal right to men and women
- Fighting poverty
- Prosperity for the whole of humanity
- Environmental,
Video: What are the five critical elements respectively "Ps" of sustainable development?
- People: end poverty and hunger in all forms and ensure dignity and equality
- Prosperity: ensure prosperous and fulfilling lives in harmony with nature
- Peace: foster peacful just and inclusive societies
- Partnership: implement the agenda through a solid global partnership
- Planet: protect our planet's natural resourced and climate for future generation
What does sustainability mean in the context of supply chain management and digital business?
The three target dimensions need to be taken into account (ecolomic, ecological, social) in intercompany collaboration and in the management of material, information and financial flows so that actors in the supply chain must meet a minimum ecological and social standards.
What are the drivers of sustainability in supply chains?
- Social and governmental . Changing value in society and new laws and regulation
- Market significance. Customer demand for sustainability
- Company-related increased costs for disposal and recycling
- External drivers
- Market pressure
- Social pressure
- Regulatory pressure
- Internal drivers
- Corporate strategy
- Corporate culture
- Corporate resoources
What are the typical sustainability problems in supply chains?
The problem areas are economy (cost, quality), ecology (emission, clima) and social (child labor, occupational safety)
Most company's and customer first need to understand what sustainability menas in the supply chain. Then they need to firue out where and when problems with sustainability occur in the supply chain. Further actors in the supply chain have different perspective, motivations and possibilities and need to understand the whole concept and there are different powers that can make problems with influence and control when running through the suply chain to be sustainable.
What are the methods and instruments of sustainable supply chain management?
- Avoidance: elimination of root causes, generally do not act as first-mover (reactive approach)
- Deferment: reduction of root causes, posponement of logistics proesses (reactive approach)
- Hedging: limitation of main causes, currency hedging (preventive approach)
- Diversification: reduction of dependency, dual or triple sourcing (preventive approach)
- Transfer: risk-sharing, multiple user warehouse, aliances (proactive approach)
- Acceptance: Incur (but monitor) risks, accept fluctations in demand (proactive approach)
What perspectives are there on sustainability in supply chain management?
When a product is economically feasable, socially acceptable and environmental friendly then it is sustainable. The perspectives are Economy (cost reduction through), Ecology(reducing use of resources) and Soiety (minimum standards in occupational safety).
How can sustainability initiatives be classified in supply chains?
- Reactive strategy, damage containment upon occurrence of loss
- Defensive strategy
- Adapted strategy
- Proactive strategy, mitigation throuugh continuous risk management
What is meant by recycling management and how does it change SCM?
Recycling management does look at the waste produced by the supply chain, this waste includes solid wastes, liquid wastes and gaseous waste. Now the recyling managment tries to avoid as much waste as possible, if not avoidable tries to recycle waste and only if there is no further use, then dispose the waste. It concerns the supply chain management on every level. From product design to avoid disposal problems to packaging and enery recovery from generated heat.
Why is supply chain management predestined to take responsibility for sustainability?
Cause when using sustainabl techniques and resources, you also increase efficiency of buildings, vehicles and machinery at a significant cost saving over a longer timepreriod.
SCM decides on all the steps in a production and by choosing sustainable methods the product itself can get sustainable.
What is a Supply Chain
Supply Chain is a complex system of people, processes, and technologies engineered to deliver value to a customer
Supply Chain suggests that it covers all processes throughout the product lifecycle, including the physical, informational, financial and knowledge-based processes for moving products and services (from suppliers through to end users).
Includes all components that flow through the supply chain.
Goods and services, mainly to customers
Payments, mainly to suppliers
Data and information in both directions
What is the goal of Supply Chain?
The goal of every supply chain is to deliver the right product or service, to the right customer, at the right place, at the right time, to the right conditions for the lowest total cost
What is Supply Chain Management (SCM)
SCM represents an integrative functional area which is primarily responsible for the connection of the main business functions and processes within an organization, as well as those of other businesses that are involved in the supply chain, in oder to form a concept in the shape of a consisten and high-performing business model
In order to increase the efficiency of a supply chain, and thus added value, the entire flow of materials, services, information and financial resources must be monitored, measured and steered → Supply Chain Management
Give a few examples for digitalization within Supply Chain Management
- 3D printing
with 3D printing, production processes can be simplified and accelerated. It can also be used to produce personalized products for customer at lower cost. Complex shapes can be produced that could hardly be produced using conventional methods in the past.- Medical, printed titanium implants
- Mechanical engineering, printed castings
- Robotics automation
in production, robots on the assembly line have already greatly replaced humans. Now robots are beginning to take on more complex tasks and also also making decistion. Be it finding the fasttest route or reacting to human expressions.- Warehousing
- Care of elderly people
- Industry 4.0
the central aspect is the complete networking between the machines, the products manufactured or services offered and the environment and people- Completely flexible and networked manufacturing at FESTO
- Fully-networked railway infrastucture belonging to SBB, BLS, RHB
- Wokring and Fighting Machines
UAVs exand the possibities. Drones can be used as meaqns of transport, bus also as decision support. UAVs are particularly suitable for transporting short distances and time-critical goods. But they also can help in decision making by collectiong data from the air.- Transport drones employed by the Swiss Post
- Agricultural drones for soil analysis
What are the typical element of the supply chain?
Define Supply chain
from the supplier- & customer centric approach
Supplier-centric approach: Supply chain as a network of suppliers producing goods.
Customer-centric approach: a supply chain consists of all the levels required (direct or indirect) to fulfil a customer request.
Combining these approaches leads to more comprehensive approach: Systematic coordination between all required parties.
- to balance supply and demand
- to supply the market with products and services
- Operational goal: lowest possible costs and highest possible speed
- Ultimate goal: Satisfying customer needs
Define supply chain from the demand-side approach
Category management
Usually heavy on inventory
Demand chain focused on the marked demand towards suppliers, the supply chain is steered by demand pull from the customer. Translates a customer goal into instructions for the suppliers.
Decision-making process in four steps.
1. definition of the purpose of the demand chain
- Planning, e.g. in the form of a category plan
- Control of consumption and requirements (e.g. inventory management)
- Purchasing transactions, e.g. a call-off from a frame agreement
What is a frame agreement
You make a frame contract and put everything in it.
e.g. (Rahmenvertrag)
you order a machine and then call off or change something. You make a deal for packages instead so you pay not for the service or parts but for the packages send.
Define supply chain from the organization-related consideration.
Syloorganisations
Organization-related consideration of the supply chain: Supply chain as a series of organizational units both within a company as well as in other companies (intra- and interorganizational) that produce and deliver goods for and provide services to customers.
Define supply chain from the single-side and the multi-stage approach
How far into depth can I go?
how far into depth do I actually need to go?
Single-stage supply chain: Reflects only direct relationships between suppliers and customers.
Multi-stage supply chain: In extreme cases, it maps all stages, from raw materials through to the disposal or recycling of end-of-life products:
– complexity increases disproportionately with an increasing number of stages
– companies have neither the means nor the resources to monitor all stages.
– companies usually limit themselves to one or two levels
Define supply chain from the market-driven approach
Market decisions determine the nature of the supply chain. Within a supply chain with many supply chain partners, a large number of decisions are made:
– Decisions on investments, strategies for coordination and cooperation with partners, customer service, profit maximization strategies, etc.
– Many market decisions increase complexity and dynamics.
– Market dynamics increase uncertainty about the impact of decisions (numerous variables have to be taken into account).
Define supply chain from the functional approach
Functional Supply Chain: Analysis according to the main activity of the operational functional areas
- Purchasing activities: raw materials, components, resources and services
- Manufacturing activities: creation of products and services, repair and maintenance
- Movement activities: transport of material and persons
- Warehousing activities: raw materials, intermediates ("Work in Process", WIP), finished products
- Sales activities: market-oriented activities such as marketing and distribution
Alternative now upcomming is process oriented approach. Cause if you loose a function this function is gone, if you loose a process you can fix it..
What are different supply chain approaches?
- Supplier-centric
- Customer-centric
- Demand-side
- Organization-related
- Single-stage
- Multi-stage
- Market-driven
- Functional-side
Centric supply chain
You have the product and the disposal in one
What are drivers of change for supply chain strategies in the digital age
Material, payment and information flows along the supply chain used to be considered linear and coupled. The use of networked digital technologies such as the Internet has sustainably changed this:
- acceleration of information flows,
- decoupling of information flows from material and payment flows,
- development of traditional supply chains into networked, dynamic supply chains,
- dynamic integration (or exclusion) of partners according to e.g. customer preferences, technological advantages or product life cycle
What are the interactions between supply chain strategy, supply chain processes and information technology?
Information technology enables integrated supply chain processes and new supply chain strategies.
It is always the question as a leader how much freedom you will give your team in the process. The golden line lies in the middle of Top-down and Bottom-up.
Top-down:
1. Required processes are derived from the strategy and implemented.
2. Information systems are designed according to the requirements of the processes.
Bottom-up:
3. Networked information systems enable innovative integrated processes.
4. New integrated processes lead to innovative networked business models
What are dynamic supply chains
Dynamic supply chains are a network of organizations that:
–are linked together in both forward and backward directions
–create value within different processes and activities Dynamic supply chains or a network of organizations must place value creation in the center.
–Value creation must be seen both in internal and cross-company terms.
–Values are ultimately reflected in the products and services delivered to customers.
What is value co-creation?
You have all the different stages and when one part falls out all of the other suffer. So they exchange services.
Compare the traditional value creation (goods-dominant) vs. Value Co-Creation (Service-Dominant)
Goods-Dominant Logic (GDL):
- Value is generated in manufacturing.
- Value is provided to customers in transactions (Value-in-Exchange).
- Value is consumed by customers (Consumption).
- Goal: Standardize Products, Services and Processes in order to reduce cost.
Service-Dominant Logic (SDL)
- Providers generate value offers with products.
- Value is provided to customers in use (Value-in-Use).
- Value is continuously generated by customers (Service).
- Goal: Establish processes to integrate the resources from providers and customers to create value.
Draw a GDL
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- 1 / 461
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Flashcards
What information systems can be distinguished with regard to order planning and control?
- MRP (Material Requirements Planning)
- MRP II (Manufacturing Resource Planning)
- PPS (Production planning and control)
- ERP (Enterprise Resource Planning)
- MES (Manufacturing Execution System)
What types of demand are there (requirements)?
For functional production planning, materials are divided into demand (requirements) types.
- Primary demand: finished (and saleable) products
- Sales planning and forecasts for customer orders
- Forecasts for spare parts
- Secondary demand: assemblies, components and raw materials
- Bill of materials (BOM) derived from the primary demand, see the following slides
- Tertiary demand: lower value materials (indirect goods: consumables and supplies, cf. Block 2)
- Planning on the basis of experience or estimates
- No logical or direct dependence upon the finished product necessary
- Planning on the basis of experience or estimates
The chair is sold by IKEA in a cardboard box as a "kit". Is the chair, as sold by IKEA as a kit, to be seen as a "primary requirement" or "secondary requirement"? What type of requirement does the cardboard packaging have? Is this part of the product from IKEA's point of view?
Primary requirement
Packaging is part of the Tertiary demand
Describe the different methods of demand planning
To determine the requirements (demand), a distinction is made between gross and net demand: Gross requirements + additional requirements + reservations) -(stock on hand + open quantities) = net requirements
- Gross demand: Period-related total requirements for raw materials and parts
- for the production of all finished products in one period –
- Quantity determination using Bill of Materials (BOM, components and raw materials)
- Net demand: Quantity of components to be procured (purchasing and in-house production of parts)
- Consideration of additional requirements, reservations and stock on hand
- Add: Additional requirements based upon experience regarding possible rejections and scrap
- Add: Reservations (pre-bookings): secure availability for expected future orders
- Subtract: Existing stocks and safety stocks
- Subtract: Quantities from open purchase orders
- Consideration of additional requirements, reservations and stock on hand
- Stochastic methods (consumption driven)
- Primary requirements based upon forecasts using statistical methods (see Block 3)
- Based upon historical consumption values
- Deterministic methods (demand control)
- Secondary (dependent) requirements are planned on the basis of quantities, throughput-times and delivery dates
- The BOM (Bill of Materials, containing primary requirements) provides concrete requirements for assemblies, parts and raw materials
- Heuristic methods (estimation and approximation
- Necessary for new products or new markets, as no historical values are available
- Low-value goods, the effort for demand-driven or consumption-driven determination is too high
What are determination factors of the appropriate planning method?
Two determining factors in the selection of the appropriate planning method:
- Product value
- Expensive ->Calculate demand deterministically –
- Components such as motors, computer chips, and precious raw materials such as lithium (for batteries)
- Cheap -> Set generous stock levels (and safety stocks)
- Small parts e.g. screws, fastenings
- Effort for deterministic planning is not worthwhile, inventory costs insignificant
- Expensive ->Calculate demand deterministically –
- Constant (or uniform) consumption
- Push (Make-to-Stock, Assemble-to-Order): uniform demand and thus low planning effort → automatic order triggering (ERP, PPS)
- Pull (Make-to-Order, Engineer-to-Order): irregular demand pattern from customers → situational ordering (estimation methods)
You have now learned two methods for performing ABC-XYZ analyses. What are the differences between the two methods shown, and what do they have in common?
Differences between the two methods: 1. we are comparing different factors and 2. the tailored procurement section is split in two in the first graph (slide 16)
the first graph (slide 16) is much more financially driven, the other is a bit more about procurement (because it takes into account the quantity factor)
Define Advanced Planning and Scheduling
«Under the name Advanced Planning and Scheduling (requ), the aspects of the supply chain, i.e. the interdependencies with suppliers and customers, are, from the outset, included in production planning and control. In this way, it is possible to optimize scheduling while also taking transport and warehousing into account.». (Leimeister, 2015)
Information systems that support the APS approach are referred to as APS systems.
- In addition to the functionality of PPS systems, APS systems contain functions for integrating business partners.
- APS systems are often offered as function modules for ERP systems. In some cases, APS systems also consist of several individual ERP modules, which can be put together as required.
Sketch the APS-System-Matrix
APS systems seem to offer the solution to all SCM problems. Is that so? No, of course not! What do you see as advantages? What do you see as disadvantages? Please consider at least two advantages and two disadvantages.
Advantages
- Extends across the entire supply chain
- Be able to quickly react to market changes (almost in real time)
- Transition from step-by-step planning (available for PPs, MRP I, MRP II and ERP) to simultaneous planning
- Inventories across the supply chain sink. Throughput times shortened = shorter delivery lead-times
- Early detection (warning) system for production problems
- Works according to the pull principle by taking the wishes of the customer sustainably into account
Drawbacks
- Systems for puchasing, inventory management or invoicing are not replaced, but merely supplemented
- Dependencies in the supply chain increase due to the strong permanent networking with suppliers
- Transparency withing the cost calculation increases: Pressure on suppliers' profit margins
- Supply chain processes do not automatically get better. Data quality must be correct! -> training of employees
How should "quality" be understood in a business context?
«A quality-oriented organization promotes a culture that leads to behaviors, attitudes, actions and processes that create value by meeting the needs and expectations of customers and other relevant interested parties.
The quality of products and services is determined by the ability to satisfy customers and by the intended unintended impact on relevant interested parties.
The quality of products and services includes not only the intended functions and services, but also their perceived values and benefits to the customer.». (Grabner, 2017. p. 290)
What are different views on quality?
- Transcendent view: Quality is absolute and universally recognizable
- colloquial view, subjective experiences, e.g. "Made in Switzerland".
- Product-related view: Quality is precise and measurable
- Fulfilment of certain defined requirements, e.g. performance and service life of a battery
- User view: Quality is in the eye of the beholder and less in the product
- Customer requirements are all met, e.g. luxury goods (a question in marketing research)
- Process view: Quality is adherence to specifications
- Compliance with defined process requirements, e.g. batch traceability
- Price/benefit view: Quality is expressed by costs and prices
- Accepted price-performance ratio, somewhat subjective, e.g. reflected by ratings and reviews (question in marketing research)
What is there to know to understand the quality of goods and services?
Goods
- Quality can be measured objectively and directly, in advance:
- Features, durability, compliance with standards, reliability
- Subjective evaluations possible, in advance, on the basis of:
- Individual utility, aesthetics
- Subjective reviews, in retrospect
- Customer service in case of problems with the product
Services
- Customers do not know in advance whether the quality meets their requirements
- Quality is often only indirectly measurable, in three possible dimensions
- Potential dimension: Result of the precombination and the preparedness to perform
- Process dimension: Implementation of the individual activities
- Results dimension: totality of possible material and immaterial effects
On TripAdvisor tourists can assess the quality of places and hotels. Take a look at two examples.
What views of quality are reflected here? What is the underlying understanding of quality?
Is it about a product, a service or both?
Basel Minster
- User view
- Process view
- Understanding of quality
- Service
Hotel Les Trois Rois
- Transcendent view
- Price/benefit view
- User view
- Process view
- Understanding of quality
- Product & service
Define Total Quality Management
«Total Quality Management focuses on the customer in order to increase process effectiveness. Quality is achieved when the company’s processes are suitable for excellently fulfilling specific customer requirements (application-oriented quality concept). This does not only mean external customers. Internal customers, the employees of other functional areas, must also be satisfied with the service provided. Quality thus manifests itself as a "permanent corporate philosophy".” (Werner, 2017, p. 108)
For the implementation of TQM, a company must implement the following activities:
- Manifestation of clear principles and evaluation criteria to increase quality
- Introduction of a continuous improvement process
- Implementation of a quality management system
- Determination of organizational responsibilities
What is the development from Quality Control to Quality management?
What are the three levels of TQM?
Level 1: Meta Management level
- Total Quality Management (process effectiveness)
- Comprehensive quality philosophy in the company
- Internally and externally oriented customer loyalty
- Avoidance of over-the-wall syndrome
- From quality control to quality management
Level 2: Strategy level
- Lean management (process efficiency)
- Simple processes
- Lean hierarchies
- Productivity improvement
- Value creation orientation
- Kaizen management (prozess-know-how)
- Continuous improvements
- Employee suggestion scheme
- Deming cycle
- Error avoidance strategy
Level 3: Instrument level
- FMEA
- Quality circle
- Six Sigma
- Statistical process control
- QFD
- Quality benchmarking
- Bottleneck Engineering
Describe Kaizen's Continuous improvement process (CIP)
"Kaizen" is Japanese and means "change for the better" (Kai = change, zen = good). Philosophy of Kaizen
- Instead of just maintaining (process) innovations, we continuously develop them further until the next innovation leap.
- Improvement of processes through continuous problem identification.
- Management and employees have a common interest in the success of the company.
- Management and employees look for and solve problems together.
- Management and employees decide together on mostly smaller preventative measures.
Kaizen requires a consistent methodical approach PDCA cycle (also Deming cycle):
- P-Plan: Identify problem (error), analyze and seek improvements.
- D-Do: Implement and test improvement suggestions.
- C-Check: Check and compare the performance of improvement suggestions.
- A-Act: Implement best proposal and document as standard.
Standard becomes binding specification for all employees involved in the process. Deviations from a standard are only permitted if all employees have agreed on a new standard.
Define Lean Management
Lean = process of removing waste
«Lean management is not a method for improving processes. Rather, it is a holistic management system with a mindset at its center. [...] The focus of the mindset is the view of waste (Japanese: Muda). For activities that do not contribute to customer benefit, the customer is not prepared to pay money. Waste must therefore be eliminated.» (Grabner, 2017, p. 151f) Lean Management –and Kaizen are connected, Lean Management is inconceivable without Kaizen! –often leads to a reduction of hierarchy levels, because a trust-based cooperation between management and employees is necessary. –depending upon the point of view, has seven resp. eight aspects of "waste" in focus.
What elements in Lean management are waste to be eliminated to make a process more effective?
Waste are activities that require time, effort or space, but do not increase the value of the product.
- Overproduction - producing more than is currently required
- Waiting - due to malfunctions, underutilized employees or machines
- Transportation - unnecessary transports and multiple handling of products
- Extra-Processing - poorly planned processes that lead to additional effort
- Inventory - additional effort due to capital commitment and material handling
- Motion - activities that occupy employees but do not contribute to the value of the product
- Defects - Rework, rejects and repairs
- Non-Utilized Talent - waste through poorly used creativity of employees
What are the 4 Ps of Lean management? What are the including steps to each of the Ps?
Philosophy: long-term philosophy
- Management decisions are based on a long-term philosophy, also at the expense of short-term profit targets
Processes: the right processes lead to the right results.
- Continuously flowing processes to bring problems to light
- Pull system to avoid overproduction
- Balanced utilization of production capacity
- Culture of "first time right" instead of a culture of eternal repairs and remedies
- Standardized work steps as a basis for continuous improvement and the transfer of responsibility to employees
- Visual checks so that no problems remain hidden
- Using thoroughly tested (proven) technologies that serve people and processes
People/Partners: Generate added value by developing employees and business partners.
- Develop leaders who know and understand all work processes, who exemplify the corporate philosophy and communicate it to others.
- Developing outstanding employees and teams that follow the company philosophy
- Respect, challenge and encourage business partners and suppliers to improve themselves
Problem solving: Continuous problem solving as a motor for learning processes in the company
- Get a clear view of the situation for yourself, in order to understand it comprehensively
- Make decisions wisely and on the basis of consensus. Weighing decisions carefully, but implementing decisions quickly
- Through untiring reflection and continuous improvement to a learning organization
What are the seven management tools in quality management?
Tools forn handling detected problems -> start problem solving process
- Identify importatn problems and their dependencies
- Assign solutions or tasks in order to develop a systematic process.
- Affinity diagram
- Relations diagram
- Tree diagram
- Matrix diagram
- Portfolio diagram
- Problem-decision-plan
- Network diagram
Approach
1. Read through the initial situation on the next slide (time: 2 minutes).
2. Work through the tasks regarding the relations diagram on the slide after next together with your fellow students (time: 10 minutes).
Initial situation:
In the production of coffee machines, there are repeated delays in the manufacturing process because the machines must be reworked. This is because during quality control, two faults always come to light. These are on the one hand scratched housing parts (paint must be repaired and polished) and on the other hand too low temperature values of the water heater (sensors must be recalibrated). In the opinion of the employees in production and product development, the causes are multiple. The housing parts are prefabricated in large quantities and need be temporarily stored; however, the warehouse is about one kilometer away from the assembly hall. There are no suitable containers for transport and storage, so the housing parts are simply stacked in boxes. The problem with the temperature sensors also has several causes. On the one hand there are very many suppliers who supply the sensors, on the other hand not all sensors are tested for quality and compliance with the specifications upon delivery. It also appears that not all suppliers are aware of the exact specifications or simply do not pay attention to them.
What are the seven quality tools in quality management?
Tools for detecting problems -> use in the problem solving process
- Register, analyse, and evaluate problems
- Mostly quantitative data are processed (not for cause-effect diagrams and brainstorming)
- Error list
- Histogram
- Quality control chart
- Pareto-Diagram
- Correlations
- Cause-Effect-Diagram
- Brainstorming
Exercise:
Situation and tasks (time: 10 minutes) You notice time and time again that you must dispose of a great deal of packaging waste at home. Much of this waste is plastic. Only a portion can be recycled. In fact, only PET bottles can be returned to the point of sale and disposed of. You ask yourself the question: Does it have to be? You want to get to the bottom of possible causes.
Create a cause-effect diagram for the problems described.
a) On the right is the problem (effect).
b) The causes are drawn on the left and sorted by categories: Material, machine, environment, man, method.
c) Enter at least two causes per category.
What is meant by demand planning and what types of demand can be distinguished?
Gross demands + additional demands + (reservations) - (stock on hand + open quantities) = net demand
There is Gross demand
And Net demand.
Methods to plan are
- stochastic (consumption driven)
- Deterministic (demand control)
- Heuristic (estimation and approximation)
What is gross and net demand?
- Gross demand: Period-related total requirements for raw materials and parts
- for the production of all finished products in one period –
- Quantity determination using Bill of Materials (BOM, components and raw materials)
- Net demand: Quantity of components to be procured (purchasing and in-house production of parts)
- Consideration of additional requirements, reservations and stock on hand
- Add: Additional requirements based upon experience regarding possible rejections and scrap
- Add: Reservations (pre-bookings): secure availability for expected future orders
- Subtract: Existing stocks and safety stocks
- Subtract: Quantities from open purchase orders
- Consideration of additional requirements, reservations and stock on hand
What is Advanced Planning and Scheduling? What is an APS system?
Advanced planning and scheduling refers to a manufacturing management process by which raw materials and production capacity are optimally allocated to meet demand. APS is especially well-suited to environments where simpler planning methods cannot adequately address complex trade-offs between competing priorities
Information systems that support the APS approach are referred to as APS systems.
- In addition to the functionality of PPS systems, APS systems contain functions for integrating business partners.
- APS systems are often offered as function modules for ERP systems. In some cases, APS systems also consist of several individual ERP modules, which can be put together as required
What is quality and how can it be seen? What are the differences in the way quality is viewed and assessed?
Quality includes functions, sevices, perceived values and benefits to the customer.
Quality can be assessed with 5 different views.
- Transcedent view: quality is abosute and universally recognizable: "Made in Switzerland"
- Product-related view: percise and measurable: life of a battery
- User view: eye of the beholder: customer requirements are met
- Process view: is adherence to specifications: compliance with defined process requirements: batch traceability
- Price/benefit view: expressed by costs and prices: accepted price-performance ratio: reflected by ratings and reviews.
What is "Total Quality Management" and what is the idea behind it?
Total quality management consist of organization-wide efforts to install and make permanent climate where employees continuously improve their ability to provide on demand products and services that customers will find of particular value.
For the implementation of TQM, a company must implement the following activities:
- Manifestation of clear principles and evaluation criteria to increase quality
- Introduction of a continuous improvement process
- Implementation of a quality management system
- Determination of organizational responsibilities
What is Kaizen and Lean Management? Why are the terms related?
Kaizen is often considered to be the "building block" of all lean production methods. Kaizen focuses on eliminating waste, improving productivity, and achieving sustained continual improvement in targeted activities and processes of an organization.
Kaizen means the good change and is a continuous improvement approch. Good processes bring good results, speak with data, manage by facts, take action to contain and correct root causes of problems.
Lean is focused on eliminating waste. Without kaizen there is no lean transformation.
What are the seven management tools in quality management?
- Affinity diagram
- Relations diagram
- Tree diagram
- Matrix diagram
- Portfolio diagram
- Problem-decision-plan
- Network diagram
What are the seven quality tools in quality management?
- Error list
- Histogram
- Quality control chart
- Pareto-Diagram
- Correlations
- Cause-Effect-Diagram
- Brainstorming
Which types of Material requirements can be differentiated from one another?
For functional production planning, materials are divided into demand (requirements) types.
- Primary demand: finished (and saleable) products
- Sales planning and forecasts for customer orders
- Forecasts for spare parts
- Secondary demand: assemblies, components and raw materials
- Bill of materials (BOM) derived from the primary demand, see the following slides
- Tertiary demand: lower value materials (indirect goods: consumables and supplies, cf. Block 2)
- Planning on the basis of experience or estimates
- No logical or direct dependence upon the finished product necessary
- Planning on the basis of experience or estimates
How can the material requirements be planned? Which methods come into consideration?
- Gross demand: Period-related total requirements for raw materials and parts
- Quantity determination using Bill of Materials (BOM, components and raw materials)
- Deterministic methods (demand control)
- Secondary (dependent) requirements are planned on the basis of quantities, throughput-times and delivery dates
- The BOM (Bill of Materials, containing primary requirements) provides concrete requirements for assemblies, parts and raw materials
What is Lean Management, and what does one understand under Lean Management?
Lean methodology:
- Deliver value from your customer's perspective
- Eliminate waste ( whatever isn't bringing value to the end product)
- Continuous improvement.
Lean management means that you need to have respect for people and continuous improvements.
Principles of lean management: all around customer needs
- Identify value
- Map the value stream: map workflow of company
- Create flow: ensure that team's workflow remains smooth.
- Establish pull: work is only pulled if there is a demand for it.
- Continuous improvement
Benefits of lean management:
- Focus on activities that bring value
- Improving productivity & efficiency, when focused then employee will be more productive and effecting cause there are less distractions
- Smarter process (pull system). Be able to deliver work only if there is an actual demand
- Better use of resources
What is the «Continuing Improvement Process» (CIP)?
- Instead of just maintaining (process) innovations, we continuously develop them further until the next innovation leap.
- Improvement of processes through continuous problem identification.
- Management and employees have a common interest in the success of the company.
- Management and employees look for and solve problems together.
- Management and employees decide together on mostly smaller preventative measures.
Kaizen requires a consistent methodical approach PDCA cycle (also Deming cycle):
- P-Plan: Identify problem (error), analyse and seek improvements.
- D-Do: Implement and test improvement suggestions.
- C-Check: Check and compare the performance of improvement suggestions.
- A-Act: Implement best proposal and document as standard.
Standard becomes binding specification for all employees involved in the process. Deviations from a standard are only permitted if all employees have agreed on a new standard
What is a cause and effect diagram and how do you go about creating such a diagram?
A cause-and-effect diagram is a tool that helps identify, sort, and display possible causes of a specific problem or quality characteristic. It graphically illustrates the relationship between a given outcome and all the factors that influence the outcome.
To create one:
write down the main issues and describe how they are created.
What targets and measures must be defined for each customer segment in the supply chain?
Strategic orientation towards the benefits generated for customers and business partners on the sales side by the products and services provided by the company.
In the supply chain strategy, appropriate targets and measures must be defined for each customer segment.
- The way in which benefits are provided for a particular customer segment.
- The expected benefits of a customer segment in terms of quantity, cost, location, time and quality of products and services.
What is the ultimate goal of user, usage and benefit orientation?
The ultimate goal of user, usage and benefit orientation is for all those involved to achieve their individual goals. The user should meet one's needs with acceptable effort,
The company should be able to place its offers (information systems, products and services) on the market in an economically meaningful way, and also contribute to the achievement of social goals.
How can customer benefit expectations (B2B or B2C) be addressed promptly in the supply chain?
Customer benefit expectations of a product or a service. Additional questions:
- What products and services do customers generally want?
- What amount are customers willing to pay for a product or service?
Possibilities for addressing in B2B:
- Collaborative planning (APS systems)
- Purchase agreements
Possibilities for addressing in B2C:
- Classic marketing instrument such as market research ( see also the following topic on "Efficient Consumer Response").
- Depending also upon the level of need (Masslow pyramid), user expectations at a lower level area easier to estimate e.g. by means of forecasts, make-to-stock) than at a higher level (here trends must be identified)
- Customer decoupling point (Assemble-to-Order, Make-to-Order): offer configurators for individualization of products and services (topic at the end of this block)
