Lean Supply Strategies: Applying the 5S Tools to Supply Management

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Lean Supply StrategiesApplying the 5S Tools to
Supply Management

• ISM International Conference
• May 18, 2003
• Modified November 15, 2004
• Kimball Bullington, Ph.D., P.E.
• MTSU

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Outline

• What is a Supply Strategy?
• What is Lean Supply?
• What is 5S?
• Developing a Supply Strategy Using 5S

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What is a Supply Strategy?

• Strategy A plan for achieving
• organizational goals.

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Supply Strategy Constraints

• The Supply Strategy should support the Corporate
  Strategy.
• The Supply Strategy should support the Operations
  Strategy.
• The Supply Strategy should give our customers
  confidence in the quality, reliability, and
  safety of our products.

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Outline

• What is a Supply Strategy?
• What is Lean Supply?
• What is 5S?
• Developing a Supply Strategy Using 5S

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Lean Supply

• Supply in a Lean Production environment
• Supply that supports Lean Production
• Supply for diet food manufacturing

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Lean Production

• The latest incarnation of JIT
• Based on Toyota Production System.
• Waste elimination
• Widely used in automotive manufacturing other
  repetitive mfg.

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Outline

• What is a Supply Strategy?
• What is Lean Supply?
• What is 5S?
• Developing a Supply Strategy Using 5S

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Five S

• Yet another acronym
• An organizational method for lean production .
• A pillar of the visual workplace.
• Housekeeping

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Five S

• Sort (seiri)
• Set in Order (seiton)
• Shine or purity (seiso)
• Standardize (seiketsu)
• Sustain (shitsuke)

5S
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Five S

• Sort
• Set in Order
• Shine
• Standardize
• Sustain

RED TAG
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Sort Supplier consolidation or rationalization

• Reduces waste of working with wrong suppliers
• Focuses efforts of selection, evaluation, and
  improvement on a few suppliers
• Reduces transaction waste
• Increases opportunity for partnering and leverage

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Barriers to Consolidation

• Fear of loss of competition
• Doubtful savings
• Dilbert
• Lack of commitment to the selection process
• Pets

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Five S

• Sort
• Set in Order
• Shine
• Standardize
• Sustain

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Set in Order

• A place for everything and everything in its
  place.
• Tool cutouts
• Taped outline on floor or bench

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Set in Order

• A place for everything and everything in its
  place.
• Tool cutouts
• Taped outline on floor or bench

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Set in OrderSegmentation

• Risk value
• Spend value
• Design value
• Time value
• Location value

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How Can I Be Successful? Evaluation of Current
Supply Base

• Number of Suppliers
• Breakdown by Commodity
• Skills / Process Evaluation
• Performance Evaluation
• Location of Suppliers

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Supplier Characterization Matrix
High
Critical 2 Special Situations
Critical 1 Long-term Relationship
Risk
Non-Critical 2 Transactional
Non-Critical 1 Contractual
Low
High
Annual Spend
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Supplier Characterization Matrix
High
Critical 2 Special Situations
Critical 1 Long-term Relationship
Risk
Non-Critical 2 Transactional
Non-Critical 1 Contractual
Consolidate
Low
High
Annual Spend
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Supplier Characterization Matrix
High
Critical 2 Special Situations
Critical 1 Long-term Relationship
Consolidate
Risk reduce Consolidate
Risk
Non-Critical 2 Transactional
Non-Critical 1 Contractual
Low
High
Annual Spend
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Supplier Characterization Matrix
High
Critical 2 Special Situations
Critical 1 Long-term Relationship
Consolidate
Risk reduce Consolidate
Risk
Non-Critical 2 Transactional
Non-Critical 1 Contractual
Consolidate
Low
High
Annual Spend
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Supply Base Segmentation
Design JIT
Design
JIT
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Five S

• Sort
• Set in Order
• Shine
• Standardize
• Sustain

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Shine

• Keep everything clean and swept
• System maintenance and inspection
• Problems (e.g., oil leaks) are more easily
  spotted when the workplace is in order

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ShineInspection - Surveys

• Site surveys
• Supplier self-assessment
• Remote surveys
• 3rd party certification surveys
• 3rd party quality awards

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SWOT AnalysesCommon Themes

• Strengths
• Current supplier provides product for process
  mkt.
• Weaknesses
• We are a small customer with little leverage
• Lack of management depth for small suppliers
• Opportunities
• Setup reduction
• Cost reduction
• Threats
• Loss of technology leadership

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Shine

• Sometimes you just have to show up and make
  something happen.
• Danner

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Five S

• Sort
• Set in Order
• Shine
• Standardize
• Sustain

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Standardize

• Standardize ensures that your progress in 3S
  implementation is not wasted.
• Procedures, schedules, practices

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Standardize

• Align supply chain partner incentives
• Include in personal plans
• Make the status visible (e.g., of suppliers)
• Assign audit responsibilities
• Ticklers

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Standardize Problems Avoided

• Growth of supplier base
• Size of supplier base unknown
• Segmentation deteriorates classification
  unknown
• Suppliers not visited regularly
• Surveys conducted informally or with renegade
  processes

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Five S

• Sort
• Set in Order
• Shine
• Standardize
• Sustain

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Sustain

• Demings point number 1 Constancy of purpose
• The leadership of supply is responsible for
  sustaining the process.
• MBWA
• Prepare contingency plans for crises

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Five S

• Sort supplier consolidate
• Set in Order - segment
• Shine - survey
• Standardize 3S scheduled
• Sustain sustaining leadership
• Five S is the foundation of lean manufacturing
  and it can be the foundation of lean supply.

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Five S References

1. James P. Womack and Daniel T. Jones, Lean
   Thinking , 1996.)
2. Hiroyuki Hirano, 5S for Operators 5 Pillars of
   the Visual Workplace (Productivity Press, 1996.)
3. Hiroyuki Hirano, 5 Pillars of the Visual
   Workplace (Productivity Press, 1990.)
4. Kimball Bullington, 5S Supply Base Maintenance,
   Quality Progress, Jan., 2003
5. Hau Lee, The Triple-A Supply Chain, Harvard
   Business Review, October, 2004.

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Lean Supply StrategiesApplying the 5S Tools to
Supply Managementn

• ISM International Conference
• May 18, 2003
• Kimball Bullington, Ph.D., P.E.
• MTSU