Resize The Supply Chain For Optimum Flow

Resize The Supply Chain For Optimum Flow

The rapid and global spread of COVID -19 is having a huge impact and has come as a shock to our lives, livelihoods, and industries because of multiple lockdowns in various countries around the world. While COVID-19 is above all a humanitarian crisis, businesses have also suffered as economies slipped to a near halt. But already, there are signs of creative business building, as companies respond to the crisis with innovative solutions born of necessity.

They are throwing out the old assumptions that govern how they do business, as they rethink how to interact with customers and employees, are required to build more resilient supply chains, and reexamine attitudes toward privacy and data sharing. 

COVID -19 disrupted the whole supply chain because of demand and supply imbalances and raised the question of whether industries could ever match the pre-COVID-19 performance.   


In the Supply chain, flow is very important. Creating flow is creating a movement, both material and information and most important flow is the flow of value in the supply chain, which ultimately leads to cash flow. Lack of Flow is a persistent problem in any supply chain whether during a pandemic or not. In the current scenario, it is pinching industries much more than ever before. Another major problem which is affecting the whole supply chain is we are manufacturing a product on some forecasting techniques and not on actual customer order (Pull system) with some real-time data.  


Some big FMCG companies have overcome this obstacle, but this remains a big challenge for most of the companies irrespective of sector. This gives rise to Bullwhip effect which in turn leads to accumulation of waste (Muda) in our whole supply chain process and we are wasting precious resources on things which are not required at all.  


Total Flow Management (TFM)
is a management model for integrated logistics that is applied to the entire supply chain of a given company and that is why it is called “Total”. It is a KAIZEN™ strategy to design an entire Supply Chain based on concepts of the creation of Pull flow. TFM aims to establish one-piece flow, Eliminate Waste, Reduce the throughput time and finally to increase the Value-added portion of work in any given operation.  


When we establish flow, we eliminate waste, variations and stress or burden on machines and people across the supply chain. We only need to concentrate on making the flow of information and materials and try to minimize it. The information of flow should come from customer order, and not from the sales forecast. We say the flow is established when there is no material or information stopped or waiting. The Total Flow Management Model is composed of the following pillars:  

Basic reliability,  

Production flow,  

Internal logistics flow  

External logistics flow 


Basic stability is the foundation of this model. The purpose of it is to create minimum stable conditions in processes in terms of Man, Material, Machine, and Method.  It is recommended to reduce the variation in the above-mentioned inputs from day-to-day to hour-to-hour basis. We can achieve this basic stability by starting to involve shop floor operators in the daily problem-solving process, implementing 5S and Visual management.  


The flow of information and materials identified through the analysis of the logistics loop can be grouped into three macro flows - essentially the pillars of TFM: 

Production flow 

Internal logistics flow 

External logistics flow 


1. Production Flow 
 

The first stage is to improve the production flow, which is the major objective in the implementation of the one-piece flow and results in increased flexibility by adjusting the setup and an increase in operational efficiency and supply. To eliminate waste from the entire supply chain, we must start from Production, as Muda expulsion from the pacemaker process is the starting point of TFM. We must throw Muda/waste outwards from the main process to external logistics. To this, there are some improvement actions which are as follows: 


a. Redesign of the layout and line -
This phase generally starts with PQ analysis to determine the appropriate layout for the products to achieve one-piece flow.   

b. Redesign of the perimeter of the line – We need to design the periphery of the line in a better way for the better efficient supply of raw materials. 

c. Defining the Standard work – Standard work is agreed upon set of work procedures that establish the best and most reliable methods and sequences for each process and each worker. If standards are practised throughout the company by everyone then we get consistent quality and reduced variability. We can distinguish abnormal work from normal. Training efficiency is also improved. 

d. SMED (Single Minute Exchange of Die) – As the name suggests, we need to perform the changeover within Single-digit of time (under 10 minutes). So that the frequency at which we can changeover can increase. This technique enables us to remain flexible and work according to customer demand. The main purpose is to keep the batches as low as possible, possibly 1. 

e. Low-cost automation - Jidoka is the concept of stopping the process automatically if there are any irregularities. Stopping the process in case of trouble is essential for a good production system. The whole “stop the process if there are problems” should happen automatically. Having a human watch over the machine constantly is both demanding and error-prone. 


2. Internal Logistics Flow
 

The second pillar addresses the optimization of the internal logistics flow. As stated earlier that production flow consists of removing the wastes from processes, most of these are transferred to internal logistics. The main aim of internal logistics is to supply the material that production needs, exactly when they need it and in the quantity, they need it to enable flow in production. The objectives of internal flow are to create one small container flow, create information flow starting with a customer order and most important is to Synchronize Production with Logistics to Implement a Pull flow system. These objectives can be achieved with the help of following  


In Internal logistics, we transport material in small containers at a time which means that we avoid transporting them in lots and due to this less space is required at the production line to store this material and it can also be accessed easily by production people. 


a. Supermarkets -
They are standardized places where we have material of easy picking so that internal logistics can easily supply the production. They are a storage area working under the following rules 

i. Easy picking access 

ii. Visual Management 

iii. Replenishment triggered by consumption. 

iv. The component is available for immediate customer delivery.  


b. Mizusumashi –
The word Mizusumashi means Tailor or “he who moves easily”, typically called a Water Strider. Mizusumashi is an operator who executes all the internal logistics operations. He/she supplies the components and picks up the finished products, transports all the necessary information and production orders. He/she follows a standard work cycle to do all his work. Their main equipment or tool is the logistics train.  


c. Synchronization –
It is co-ordination between what customer demands and what we produce. KANBAN and Junjo help us to achieve synchronization. 

i. KANBAN - It is a signalling device that gives authorization and instruction for the production or withdrawal of items/goods.  KANBAN is a specific tool for controlling information and regulating material conveyance. It prevents the overproduction of material between the processes. It serves as a visual control tool for a production supervisor to determine schedule adherence status 

ii. Junjo – The word ‘Junjo’ means sequence. It is a card with a number that represents material order from a customer to a supplier. It is like KANBAN except that it does not replenish the same item. it is called Sequential scheduling 


d. Levelling
– It is what ensures that all the value streams are given an equal workload. Production levelling means to repeat a product in a constant time cycle. It is done to minimize the bullwhip effect. 


e. Pull Planning –
After levelling, we must start working on Pull planning. We need to decide the strategy of product replenishment, whether we must make our product as ‘Make to Stock’ (MTS) or ‘Make to Order’ (MTO). Depending on this, if products are MTS then there is substantial demand for these products, what we need to do is just build supermarkets and go on replenishing them until they are full. For MTO, we need to keep some spare capacity.  


3. External Logistics Flow 

Finally, the third pillar is the optimization of the external logistics flow that is the handling of materials and products, generally parceled out in pallet from the factory to the customers and suppliers to the plant. Here we not only face the challenge of eliminating Muda but also to link suppliers outbound to customer’s inbound logistics. The objectives of external logistics are to Minimize inventory, achieve more than 98% on-time delivery and minimize total logistics cost. We need to work on following parameters to fulfil these objectives 

i. Redesign Stores and Warehouses - The supply chain design and planning is essential for any company, since its competitiveness is closely related with the efficient integration of logistic activities and the fulfilment of the required service levels, at the lowest possible cost. Warehouses are known as an area where significant performance improvements can be achieved. Points to be taken under consideration while designing warehouses are 

a. Defined locations for products of each value streams

b. Flow oriented layout with minimum backtracking

c. Segregating based on whether the product is of type A, B or C (classified based on the pace of consumption) 

d. Storage bin, Storage area and packaging quantity optimization 


ii. Milk run –
Milk run is the coordination that drives the entire external logistics movements between supermarkets. Milk run routes are the major tool to improve External logistics flow and achieve a reduction in inventory, reliable replenishment Lead Times, better inventory visibility and improved supplier communication. Milk run has many advantages, instead of each supplier sending trucks to customer plant, customer can send 1 truck to all suppliers filling only small amount of inventory and this can be done 3 times a day, provided suppliers are located at a sizable distance. There are different types of milk run depending on locations of suppliers and customer however the concept remains the same. Milk runs enable frequent deliveries of small quantities rather than infrequent deliveries of large batches.  


iii. Inbound Flow –
This activity consists of all the actions done to unload the material and stock it in racks. The material should be unloaded laterally. Sometimes what happens is that we get many shipments and we unload it and store it at one place as we do not have resources to store that in racks. So, after some time when we get resources, we use forklifts and then transfer the material. This does not create a flow. What we intend to do is receiving levelling so that all these operations can go on continuously in a flow. After receiving is done, there can be quality checks and post that there is sorting.  Sorting consists of the preparation of goods for their next destination after their reception cross-docking or storage. 


iv. Outbound Flow –
it consists of 3 stages. Picking, Quality control and repackaging and loading. While loading, lateral loading, levelling of the expedition, use of double-deck trucks and direct transfer to loading area are taken into consideration. The picking operation is mostly manual and can represent 50% of direct labour cost within the warehouse. Movement during picking constitutes a large portion of waste and its reduction can bring considerable productivity gains. 


v. Total Pull Planning -
When we are talking about pull planning, we are not only talking about customers but also suppliers. The customer should pull all the products through the supply chain. So, whenever a customer gives us an order that will trigger our warehouse of finished goods and that will in turn trigger production processes and that to our supplier. The supplier will replenish the stocks. This is the concept of total pull planning. The customer is pulling all the supply chains. 


Total Flow Management is a model that can trigger a breakthrough in the performance of any supply chain process and embodies the power of a complete Lean transformation for any organization. 


Flow creates flexibility across your supply chain – and flexibility (ability to react quickly to changes) is more important now than ever before.  


Authors 

Ajit Bhist, Support Consultant at Kaizen Institute

Paresh Chaudhary, R & KD Member and Support Consultant at Kaizen Institute 


About Kaizen Institute
 

Kaizen Institute is the original and premier provider of KAIZEN™ services of Change Management, Business Excellence, Operational Excellence and Lean. 

We support companies of all sizes in all market segments, providing them with a sustainable, competitive advantage. Our Vision is Improving the world with Everyone, Everywhere, Every Day – The KAIZEN™ Way. “KAIZEN™ means Change for the better.” 

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