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“Sustainability is the possibility that human and other forms of life will flourish on the Earth forever” John Ehrenfeld, 2005

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  • A Day of Lean

    Embracing the Toyota Production System (TPS) and the Triple Bottom Line Philosophies of Sustainability

    Dennis M. Gawlik

    March 28, 2006

  • Agenda

    The Need for Sustainable Business PracticesTools for Supply Management (Lean, etc.) FedEx ShortToyota Production System (TPS)Triple Bottom LineSourcing Local
  • Human Population:
    Fundamentals of Growth

    2005

  • Digging Deeper

  • What the Future Might Bring?

  • The Living Company:
    Habits for Surviving in a Turbulent Business Environment

    Studied companies around the world:

    Older than Royal Dutch/Shell (200 years old)Had successfully weathered some fundamental change in the world around them - such that they still existed today with their corporate identity intact

    40 Corporations met this criteria (Dupont, Sumitomo, Uniliver)

    The Living Company, Arie de Geus, Harvard Business School Press, 2002

  • The Living Company:
    Habits for Surviving in a Turbulent Business Environment

    Long Lived Companies were (learning org):

    Sensitive to their Environment

    (i.e. surroundings, its environment, etc.)

    Cohesive Strong Sense of IdentityTolerant & DecentralizedConservative in Financing

    an organizations true nature is that of a community of humans, Arie de Geus

    The Living Company, Arie de Geus, Harvard Business School Press, 2002

  • The Top 3 Most Sustainable Corporations in the WorldToyotaAlcoaBP
  • A New (Long-Term) Vision

    In my mind I have a dream vehicle it is a vehicle that makes the air cleaner the more one drives it, a safe vehicle that does not harm people in any way, a vehicle that serves as a base for sending and receiving information, and a vehicle that actually improves ones health.

    Katsuake Watanabe, President, Toyota Motor Corporation

  • Rankings by Country32Great Britain20United States9Germany7Sweden6Canada5Japan21Other
  • ISM Principles of Social Responsibility

    CommunityDiversityEnvironmentEthicsFinancial ResponsibilityHuman RightsSafety

    ISM Principles - 2004

  • Supply Management Effects Many Areas:

    DesignR&DSourcing & Securing

    Materials/Sub-Assemblies/Services

    AssemblyPackagingLogistics/TransportationDisposal - Reuse/Recycle/Refuse
  • Revitalization the Supplier Diversity Value Proposition Through Supply Chain Effectiveness, SBC Knowledge Ventures, L.P., 2003., pg. 232.

    SM Input

    SM Input

    SM Input

    SM Input

    SM Input

    SM Input

    SM Input

  • Different Approaches/Tools for Sustainable Procurement

    Industrial EcologyLife Cycle Assessment (LCA)Waste TPS, Lean, Six Sigma,

    Natural Step, Local Supply,

    ISO14001 Certification, etc.

    Triple Bottom Line & Balanced Scorecard
  • Triple Bottom Line Approach

    296.bin
  • Supply Management Benefits

    1059.bin
  • Balanced Scorecard

    The Balanced Scorecard; Translating Strategy into Action,

    Robert Kaplan and David Norton , Harvard Business School Press, 1996.

  • A New Field: Industrial Ecology

    The means by which humanity can deliberately approach and maintain sustainability, given continued economic, cultural, and technological evolution.An industrial system needs to be viewed not in isolation from its surrounding systems, but in concert with them.This is a systems view. One seeks to optimize the total materials cycle from virgin material, to finished material, to component, to product, to obsolete product, and to ultimate disposal. Factors to be optimized include resources, energy, and capital.Principles: (1) Close material loops, (2) Dont discard waste that has energy content, (3) Eliminate materials (e.g., heavy metals) that upset system, and (4) Deliver function with fewer materials.*

    * Industrial Ecology; Graedel, Thomas, and Brad Allenby, Second Edition, 2003.

  • New Performance Measurement Concept:
    The Life Cycle Assessment (LCA)

    An objective process to evaluate the environmental burdens associated with a product, process, or activity by identifying and quantifying energy, material usage, and environmental releases, to assess the impact of those uses and releases on the environment, and to evaluate and implement opportunities to effect environmental improvements.The assessment includes the entire life cycle of the product, process or activity, encompassing extracting and processing raw materials; manufacturing, transportation, and distribution; use/reuse/maintenance; recycling; and final disposal.

    The Society of Environmental Toxicology and Chemistry

    LCA tools are another result of a heightened sense of our need to plan for the environment

    Move quickly to next two charts

  • Introduction to LCA for Purchasing Agents, City of Seattle, 10 May 2001, Rita Schenck, IERE.

    204.bin
  • Purchasing Power: Harnessing Institutional Procurement for People and the Planet Lisa Mastny, World Watch Paper 166, July 2003.

    3. Recycle

    2. Reuse

    1. Redesign

    4. Refuse

  • FedEx Short

  • Waste

    Any activity or action that adversely affects the value equation, i.e., reduces valueWaste is a symptom of problems with a process (continuous improvement addresses)Waste is Paradigm shift -Some Tools:

    TPS, Lean, Kaizen, JIT, TQM, Six Sigma, Natural Step, ISO14001 Certification, Local Supply

    lost profit!

  • Savings From:Materials and Energy SubstitutionsReducing the Materials, Energy, and Water Used Per ProductRedesignReducing, Reusing, and Recycling Scrap MaterialReusing and Recycling Returned ProductsPackaging, Transportation, and Approval Cycles

    The Sustainable Advantage; Bob Willard,

    New Society Publishers, 2005

    Reduction of Waste Creates Reduced

    Expenses in Manufacturing *

    A recent book making the business case for sustainability. These changes require operations management decisions.

  • History of Lean

    Henry Ford was one of the first CEO that target the elimination of waste and use of flow. He used the concepts and principles in his automotive, mining, hospital and farming industries that he controlled.Toyota, under the leadership of Taiichi Ohno used these same Lean ideas of eliminating waste, flow, pull systems, etc. recorded by Henry Ford Toyota has become the champion of Lean.Toyota became the largest automotive company in the world in 2006

    Brief History of Lean

    Henry Ford, who left school when he was 15, had a keen eye on identifying waste and improving efficiencies. When he started manufacturing his Model T in 1909, it took 14 hours to assemble. By 1916, he lower the assembly time to 1 hour 33 minutes. He also reduced the car price from $1000 down to $360.

    Ford eliminated waste everywhere he could:

    - Iron ore came in on a train car in the morning, and was cast into an engine block in the evening

    Employed new technology to improve his blast furnaces Patented Charcoal briquettes as a way to recycle scrap wood from his Kingsford facitlity Improve the efficiencies of his machining operations to reduce milling time, scrap metal waste and cutting oil waste.

    In the late 1940s,Taiichi Ohno was responsible for bringing the Toyota car manufacturing facilities up to par with the American companies in three year. At the time, Toyota was nearly bankrupt (lack resources to invest in large expensive machinery) and had a shrinking domestic market (due to the war and tight credit restrictions from the occupying American forces).

    He relied on ideas used by Henry Ford (eliminate waste) and Shigeo Shingo (tool changeover and poka-yoke).

    With these restriction, he quickly developed the Toyota Production System with four the overarching principles. These principles have been continually improved since then.

    Ironically, in December 03 Toyota became the Number 2 global car manufacturing corporation in the world. Toyota mission statement is, Become the number 1 global transportation corporation in the world.
  • LEAN

    1540.bin
  • LEAN vs. TRADITIONAL

    1633.bin
  • The Toyota Production
    System (TPS)

    Goal: The absolute elimination of wasteLowest costHighest qualityShortest time

    Be clear BPS is not Factory Physics, not lean thinking, not quick response mfg., not mistake proofing It is BPS and BPS alone.

    BPS maximized all three: cost, quality, and time by designing a system based on principles.

    Sheet:

    1st Qtr

    2nd Qtr

    3rd Qtr

    4th Qtr

    Us

    Them

    Others

    Sheet:

    Quality

    Us

    Them

    Others

    Sheet:

    Costs

    Us

    Them

    Others

  • Womack & Joness Five Steps

    Define Value

    Value Stream

    Flow

    Pull

    Perfection

    Lean Solutions; How Companies and Customers Can Create Value and Wealth Together; James P. Womack and Daniel T. Jones, Free Press, 2005

    Five Steps for Implementation of Lean Thinking

    1.Define Value from the perspective of the Customer

    Precisely define value in terms of specific products with specific capabilities offered, at specific prices through a dialogue with a specific customer/s, and at a specific time. In other words, lean enterprise understands and focuses precisely on what the customer/s want to buy.

    2.Identify the Value Streams

    The set of all the specific actions required to bring a specific product through the three critical management tasks of any business: problem solving, information management, physical transformation. Once the value stream has been identified, create a map of the Current State and the Future State of the value streams.

    3.Flow

    This step identifies and eliminates any was