© Lean & Mean Consulting. All rights reserved. 2015 © Lean & Mean Consulting. All rights reserved. 2016

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Production Control & Logistics

Automotive Standards & Best Practices

Material Flow Management & Organization / Production Planning Strategy (PC&L)

World-Class Standards & Best Practices of Operational Excellence

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Training Objectives

Understand the function and philosophy of the PC&L

Learn how to anticipate variability in demand and ensure high responsiveness to any changes in schedules

Learn why leveling production is needed to optimize utilization of the resources

Get familiar with key elements of the production control: S&OP and MPS

Learn the standards and best practices of the material flow organization

Learn the principles of leveling supplies and optimizing logistic organization

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1. Introduction to PC&L 2. Customer Relationships & Production Leveling Production Levelling

Sequencer & Withdrawal Plan

Master Production Schedule (MPS)

The Sales & Operation Plan (SOP

3. Internal Flow Management Reception Area

Flat Storages & Overflow Stock Management

Line Supply with Small Train

Flow Racks

Withdrawals, Shipment Preparation & Pool Stock

Handling Operation Standardization

4. Supply Leveling & Logistics Optimization Supply Leveling

Stabilize the suppliers

Increase the deliveries frequency

Use of small containers

Agenda

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1. Withdrawal organized by the customer

2. Stocks are located by the supplier site

3. Frequent delivery with mix of references

4. Standardize processes in the logistics

5. „Leveling” of customer needs at medium and long term

Understand the PC&L function 5 main PC&L principles

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Leveling of Production

Leveling of Supplies

Control the Lead-Time

The Leveling

Objective: Constant level of production, and NOT constant level of stocks!

Sto

ck

RM

& B

OP

Filte

r:

FG

sh

op

-sto

ck +

po

ol-

sto

ck

Our plant

Supplier Customer

Leveled production

Leveled orders High demand variability

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Major components of Lead Time that generate stocks:

1. Overproduction

2. Lack of flexibility

3. Lack of reliability

4. Poor organization of the Production and the PC&L

5. Quality Problems

6. Irregular Withdrawals and Deliveries

Exceptional risks

Which ones?

Understand PC&L function

Reduction of the Lead Time

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Reduction of the Lead Time (1) Overproduction

1 – Production over needed demand

Gap between production and customer needs

Unstable production rhythm

= NO respecting the rules of

TAKT-TIME

Pull System + Production Leveling

Material Flow Management & Organization / Production Planning Strategy (PC&L)

Module. 04

9

Simulation game

The Batch Size / Withdrawal Frequency Stage 1. • You produce three products: yellow triangles, green circles and blue squares • Production batch size for the first stage is 4 • You have three options for delivery / withdrawals frequency:

• 1 / day • 2 / day • 4 / day

Task: • Calculate the maximum stock before loading any truck (how many pieces in

total). • Fill in just the grey fields only. Note: • Truck load reflects customer order and must be respected. • Trucks come to pick up parts in due times (at 9.00, 12.00, 15.00 and 18.00) • Depending on batch size and withdrawal frequency, you may need to have some

stock available before production begins (safety stock)

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Simulation – S1 The batch size / Withdrawal frequency

Max stock before loading

Stock needed at the

beginning of the day

Stock before

loading

4 deliveries / day

Stock before

loading

2 deliveries / day

1 delivery / day

Stock before

loading

Batch size : 4

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Production Control & Logistic (PC&L) Customer Relationship & Production Leveling

GROSSDOCK

Customer Relationship &

Production Leveling

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Production leveling

The principles to stabilize the Production (1)

Sequencer

A

stabile TT

TT

Customer

TPA

Constraints! Variability departure time due to potential issues related to: - Customer - Forwarder

6h 8h 10h 12h 14h

C1 C2 C3

Truck Schedule

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Production leveling The principles to stabilize the Production (2)

A Customer

We need a

stabile Takt-

Time

Sequencer

The demand mix and

quantities fluctuate!

Constraints!

To absorb

Variations of

Qties/ref Pool stock

TPA

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Shares the workload over the day / shift

Generates frequent withdrawal from Shop-stock & brings the customer demand information to the production lines (Takt Time transmission)

Organizes truck preparation area ( TPA )

Manages the flows to and from Pool Stock

Initiates Indirect Labor Standardization (handling)

The Sequencer A mean to express a mixed and leveled Customer Demand

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The Master Production Schedule: MPS Customer Demand Treatment & Leveling

C C C C C

B B B B B

W1

A A A A A

W5 W4 W3 W2

M

c c c c c

B B B B B

A A A A A

T W T F

ZOOM

Decided Production

A A

A A

A

B

B B

B

B

C

C

C

C

C

W1 W2 W3 W5 W4

Customer demand

leveling

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Decide the Production (Part N° & Quantities) for the ongoing week.

Satisfy 4 Constraints (sorted according priority):

Achievable

Answer the Customer Order

Respect the SOP

Leveling the production activity

Maintain constant production level with FG stocks fluctuating between „min-max” levels.

The Master Production Schedule: MPS Objectives

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Which time horizon?

The horizon should be longer than longest lead-time of one of the critical resources. For instance:

Human Resources: recruitment time, necessary training, etc.

Space for production: time for construction or extension, adaptation, equipment, etc.

Machines: time for capital availability (CAPEX), delivery lead-time, assembly, run & rate, testing, validation

Raw materials: suppliers capacity, flexibility, delivery lead-time, etc.

Benchmark: 12/18 months (min. 6 months)

What is S&OP?

S&OP - Sales & Operations Plan is a cross-functional business plan that involves sales

and operations:

Sales represent Demand Operations represent Supply

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Sales & Operations Planning

What are the inputs and outputs of the S&OP process?

From Market: •Marketing Forecast •Customer Forecast

From Exterior: •Suppliers Capacity

From Operations: •New Product Launches •Plant Capacity •Human Resources Capacity •Previous S&OP •Initial Inventory Level

From Finance: •Financial Targets •Budget

To Customer

•Shipment plan To Exterior

•Procurement plan To Operations

•Operations plan •Load balance between sites •Inventories plan •Resources plan •Action plans

To Finance •Revenue plan •Budget (once a year)

STANDARD S&OP PROCESS • current month S&OP • compared to prior S&OP • compared to budget • goal : 95% for each section, every month • one set of figures

„input”

„output”

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To anticipate & to adapt: medium term vision & plant steering Vision of volumes over 6 months (or longer) by product family

To define the level of production (by family) Customers Consumption (volumes, start-up & end of production) Capacity Equipment

To define the plant’s organization at medium term Define the working calendar according to customer calendar ( working days in a

month) Plans for repairing, renovation and necessary technical downtime - maintenance

(TPM) Identify the necessary human resources (number of operators + staff (indirect)) The supply of critical resources (raw materials and materials, but also the demand

on the media) and to take into account the constraints and their Lead-Time

Sales & Operations Plan: SOP

Objectives

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Production Control & Logistic (PC&L) Material Flow Organization

CROSS-DOCK

Internal Flow

Management

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Agenda:

Internal Flows: General Organization of the Layout

Reception Area

Flat Storages & Overflow Stock Management

Line Supply with Small Train

Flow Racks

Withdrawals, Shipment Preparation & Pool Stock

Handling Operation Standardization

Production Control & Logistics

Internal Flow Management

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Material Flow Organization

Lay-out & Flow

Emp

ty p

acka

gin

g

Sequencer

TPA

zo

nes

Sho

p-s

tock

N°1

N°2

N°3

Heavy equipment

truck 1

truck 2

truck …

queue

Lin

e A

Lin

e B

Lin

e C

Lin

e D

Frontal feeding by small train

Oft

en

an

d r

egu

lar

pic

kin

g

Incoming zone

Supermarket

Shop-stock

Shop-stock

Pool-stock

Fin

ish

go

od

s fl

ow

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Reception area Flow & lay-out of the Flat Storage / Supermarket

Train for supply

Train 2

Emp

ty p

acka

gin

g

Dock 1 Dock 2 Empty packaging Empty packaging

Train of reception

Train 1

Incoming Inspection

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Supermarket Management (1) Supermarket Organization: dynamic racks supply

SUPERMARKET

SUPERMARKET

Pallets loaded on small train

Small train feeds the supermarket With small boxes

Overflow stock

Pallets that do not fit in the supermarket are stacked in the overflow stock

Reception area

Transport of Small boxes

Transport of pallets

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Line supply with small train (1) Small train Cycle

SUPERMARKET

SUPERMARKET

Small train feeding the line with

small boxes and evacuating

empty boxes

Freq.: 30 – 50’

The small train replenishes the

line thanks to withdrawal

Kanbans

The small train driver can decant

a few components from their

boxes if:

- There is time-gain

- No quality risks

The capacity of assembly

line flow racks is about

twice the small train cycle

time

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Optimize the standard work time:

Make the time measurements of the work elements (movements, handling).

Reduce movements. Eventually, line several loops together (ex: with removal of rubbish).

Use one train to supply several lines.

Loops organized by the logistics.

After a HOSHIN workshop the train activity must be reviewed and adjusted.

Line supply with small trains Characteristics

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Small train. Few examples

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Search for the best locations for components.

Reduce variability:

Reduce useless movements, blockages, catching, difficulties.

Optimize the supply of components (distance, sliding in the flow racks).

Optimize the “flow rack” capacity according the cycle of small train.

Progress step by step & optimize continuously

Flow Rack Application of Kaizen in line supply

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Flow racks - Benchmarking

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Withdrawals & Shipment Preparation (1) Withdrawal flow of FG & WIP

The withdrawal train takes the WK from the Sequencer to pick the containers out of the Shop Stock (Frequency to be decided on. In a Lean factory it takes between 15’ to 30’)

The forklift truck or small train brings the products into the TPA (Truck Preparation Area) or into the Pool Stock according to the WK. Decision is made by Logistics through placing the right WK in the Sequencer

Shop Stock Shop Stock Shop Stock

POOL STOCK

Sequencer

WK

WK WK

WK

TPA

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„A full for an empty”

No empty runs

No handling inside the production lines

Leveling of workload

Standardization allows the optimization (organization = cost)

Handling operation standardization Principles

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Training Modules of PC&L

GROSSDOCK

Supplies Leveling & Logistics Optimization

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The Transport Scheme (TSc) defines:

The route (main route et sub route) followed by each carrier from Supplier to the factory

The assignment of the docks to the routs

The Transport Program (TP) defines: The delivery times The number of trucks The workload of the trucks drivers Firm 1 month, horizon 6 month

Supply Leveling Establish the Transport Scheme and the Transport Program

A B C

1-6-X Main route

The factory

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Manifest (pick-up sheets, loading list):

It is the truck packing list expressed by part Number in packaging units (PU).

It is as well the document to check-up loading & shipment. It is used to keep tracks off any shortage.

It is expression of a firm order

It is the proof of loading

It is the transport documentation (Delivery Note)

It is reception document (physical or computerized)

The manifest allows to control the BOP physical flow

Stabilize the Suppliers Manifest

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Check deliveries against manifest

Report shortage

Appraise suppliers MPM

Repot MPM towards Suppliers

Follow up action plan

Stabilize the Suppliers Deliveries Follow Up

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Increase the deliveries frequency Current situation for RM & BOP transportation

The Factory

Customer

A

B

C

D

E

1-1-X

1-1-X

5-3-X

5-2-X

5-3-X

1-3-X

CURRENT SITUATION Separated Flows, few deliveries: loss of synergies and of savings

Suppliers

37

Project Management structure driven by PC&L with purchasing involvement

S&OP / MPS / SP / TP

Supply Leveling & Manifest Management

„E” (Ex-works)-group of incoterms transportation

Needs expressed in packaging units

12h access to supplier shipping area

Knowledge of the nationals laws

Increase the deliveries frequency Establishing a Milk Run: Requisite

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The aim is to supply the line work stations in small containers.

Purchasing negotiates, with support from the material planners, the transition to small containers.

Use reusable (returnable) containers.

HOWEVER, In some cases it is more reasonable to:

Repack. Only a small container may enter the supermarket.

Supply in disposable (one-time) containers. In this case, the supply to work stations without loss of time and waste removal must be guaranteed.

Use of small containers Principles

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Use of small containers (1) Recommendations

1. The box has at least one "standard" side measuring 200, 300 or 400mm (enable to standardize the width of supermarkets and flow racks)

2. The height and the other side (see 1st criteria) of the box, are designed to optimize the ratio "Number of Parts / Box Volume"

3. The surface of a standard pallet can be exactly filled with a set of boxes

4. One part number per box (left and right detached)

5. Full box weight does not exceed 12 kg (and meets Health & Safety criteria)

6. The box is stackable

7. The box is solid enough to do project life time rotations

8. The box has plain walls (recommended)

9. The box has a flat bottom

40 © Lean & Mean Consulting. All rights reserved. 2016