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Reinventing Lean Introducing Lean Management Into the Supply Chain

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Reinventing Lean Introducing Lean Management Into the Supply Chain Reinventing Lean This page intentionally left blank Reinventing Lean Introducing Lean Management into the Supply Chain Gerhard Plenert President Institute of World Class Management Lean Consultant MainStream Management, GS, LLC Adjunct Professor University of San Diego Supply Chain Management Institute AMSTERDAM • BOSTON • HEIDELBERG • LONDON NEW YORK • OXFORD • PARIS • SAN DIEGO SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO Butterworth-Heinemann is an imprint of Elsevier Butterworth-Heinemann is an imprint of Elsevier 30 Corporate Drive, Suite 400, Burlington, MA 01803, USA Linacre House, Jordan Hill, Oxford OX2 8DP, UK Copyright © 2007, Elsevier Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone: (+44) 1865 843830, fax: (+44) 1865 853333, E-mail: [email protected]. You may also complete your request on-line via the Elsevier homepage (http://elsevier.com), by selecting “Support & Contact” then “Copyright and Permission” and then “Obtaining Permissions.” Recognizing the importance of preserving what has been written, Elsevier prints its books on acid-free paper whenever possible. Library of Congress Cataloging-in-Publication Data Application submitted British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. ISBN 13: 978-0-12-370517-4 ISBN 10: 0-12-370517-7 For information on all Butterworth-Heinemann publications visit our Web site at www.books.elsevier.com Printed in the United States of America 06070809101110987654321 Working together to grow libraries in developing countries www.elsevier.com | www.bookaid.org | www.sabre.org Dedication To The Love of My Life– Renee Sangray Plenert Who makes my life worthwhile!!! This page intentionally left blank Contents Acknowledgments xi Preface xiii Introduction xv Part I Integrating Supply Chain Management Chapter 1 What Is a Supply Chain? Introducing the First Article Lab 3 Defining the Supply Chain 5 A Little History 9 The Supplier 11 N, Inc. 12 What Is the Role of the Supplier? 14 Taking an In-Depth Look at NAFTA’S Effect on Maquiladora Plants 15 N, Inc. Revisited 20 Summary 20 Chapter 2 What Is Supply Chain Management (SCM)? What Is Management? 22 Types of Managers 23 What Type of Manager Are You? 29 The World-Class SCM Manager 29 A Discussion of Change 35 Models for Change 38 Innoveering 40 How Do We Manage Change? 43 Goals 58 vii viii Contents A Model 67 A Strategy 70 A Structure, the Managed, the Managing 72 Education 73 N, Inc. 75 Supply Chain Management Integration 76 Successful Change Management 84 Quality Functional Deployment (QFD) 89 Total Quality Management (TQM) 90 Process Re-Engineering 98 ISO 9000 101 NS, Inc.—A Global Supply Chain Nightmare 102 Supply Chain Technology Transfer to Third World Countries 103 T in Q, Mexico 107 N in B, Indonesia 110 Some Additional Thoughts 111 Summary 115 Chapter 3 What Are the Tools of Supply Chain Management (SCM)? Meeting PPI, Inc. 117 SCM Tools 119 Chapter 4 What Are the Measures of a Successful Supply Chain Management? The Role and Purpose of Measures 129 Some Examples of Measures 130 The Role and Purpose of Control Systems 133 An Industrial Example—Managing Your Supply Chain Using Event Management 134 What Is the Best Measure for Your Organization? 139 Summary 140 Chapter 5 What Does It Take to Create a World-Class Supply Chain Environment? World Class 141 Contents ix Part II Developing a Lean Environment Chapter 6 What Is Lean? Defining Lean 145 Change 148 The Facilitator 152 Lean Tools 153 How the Lean Process Works 155 Summary 161 Chapter 7 What Are the Acceptance Tools of Lean Management? What Is an Acceptance Tool? 163 Some Success Stories 174 Reviewing a Few Examples of Acceptance Tools 177 Wrap-up 207 Appendix 7-A: The JoHari Window Assessment Test 209 Appendix 7-B: The Values Systems Survey 215 Appendix 7-C: The PA-PT Survey 219 Appendix 7-D: The Situational Leadership Survey 221 Chapter 8 What Are the Technical Tools of Lean Management? What Is a Technical Tool? 233 Mapping the Process 234 Identifying Improvements 241 Sustainment 247 Some Success Stories 248 Reviewing a Few Additional Examples of the Technical Tools 248 Wrap-up 269 x Contents Chapter 9 What Are the Measures of Lean Success? Why Are the Lean Improvements So Dramatic? 271 Measures 273 Summary 277 Appendix 9-A: Glossary of Terms 279 Part III Creating a Lean Supply Chain Management Environment Chapter 10 How to Create an Integrated World-Class Lean SCM Environment How Do the Principles and Goals of Lean and SCM Align? 290 More Examples 293 Industry’s Mandate 294 Chapter 11 Summary and Conclusions Supply Chain Woes 295 About the Author 297 Index 299 Acknowledgments In order to give credit where credit is due, I would need to create a long list of individuals, companies, universities, and countries that I have worked with. In my most recent academic past I have had the pleasure of working with uni- versities including the University of San Diego in its Supply Chain Management Institute, Brigham Young University, California State University, Chico, and many international universities. Professionally, I have had the pleasure of work- ing with organizations such as MainStream Management as a Lean consultant, American Management Systems (AMS) as a senior principal in their Corporate Technology Group where I was the business practice leader on Supply Chain Management/ERP/EAM/DRP/Lean Principles in an eCommerce environment, and Precision Printers as executive director of Quality, Engineering, R&D, Cus- tomer Service, Production Scheduling and Planning, and Facilities Management. Other organizations that I have worked for include Hill Air Force Base, the Cali- fornia Department of Child Support Services (DCSS), Texas Attorney General’s Office, Child Support Division where I was director of Change Management and Communications, Kraft Foods, and many more. As you can imagine, it is challenging to “lean” out an office full of lawyers or accountants. But in some cases the results were a tripling of throughput using the same number of employees. I have lived and worked in factories in Latin America, Asia, and Europe, I have co-authored articles and books, and I have worked with academic and professionals from as far away as Europe, Japan, and Australia. My broad exposure to a variety of manufacturing and service facilities all over the world has given me the background I needed to write this book. I also need to recognize my family, my wife, Renee Sangray Plenert, and my children, Heidi Lynette Plenert, Dawn Janelle Plenert, Gregory Johannes Plenert, Gerick Johannes Plenert, Joshua Johannes Plenert, Natasha Ida Plenert, Zackary Johannes Plenert, and Chelsey Jean Plenert, who gave me the time I needed to make this book work. Gerhard Plenert xi This page intentionally left blank Preface There are two concepts in management that have become somewhat disasso- ciated but that need to be integrated closely together. The first concept is Supply Chain Management (SCM). Integrating the linkages of the supply chain is an extremely complex task, especially if you are trying to integrate these linkages internationally. Supply chains can be as simple as going to a farmer to buy strawberries or as complex as involving thousands of suppliers, manufacturers, shippers, and retailers. But the failure of any one of the steps in this chain results in the failure of the entire supply chain. Customers do not care about why a product was late or why it was wrong; they only care that it was wrong, and they expected it to be correct. Supply Chain Management (SCM) integrates networks of international com- panies into a structure that allows them to optimize performance as a collective unit. The integration starts with the vendor’s vendor and ends with the cus- tomer’s customer. Three key measures identify the successful performance of the international supply chain: • Cycle time performance • Operating cost minimization • On-time performance and customer satisfaction Information exchange within the supply chain is critical for its successful oper- ation. This requires an openness and trust among all the entities of the supply chain. It also requires a mechanism for the efficient transfer of this information. Traditional methods of information transfer, such as fax, phone, or even e-mail, are too slow. Internet, intranet, and extranet information accessibility allowing all entities in the supply chain to monitor the performance of every other entity is critical to international competitive success. The second concept that needs to be reassessed and that needs to be integrated in conjunction with SCM is Lean. Lean is a tool that facilitates the elimination of waste. And waste can be identified in a multitude of resource areas. Any, and probably all, of the resource areas identified as part of the supply chain contain waste. Lean is the methodology that identifies the waste and then utilizes a bag of tools to attempt to eliminate this waste. The more waste that is eliminated, the greater the value-added time, resulting in greater throughput, lower costs, xiii xiv Preface increased capacity, and reduced cycle times. In the end, utilizing Lean princi- ples provides a supply chain that is more efficient and more responsive to the customer, and therefore more competitive. If every organization in the world worked in exactly the same way, this book would have been very easy to write. Unfortunately, however, no two organizations work alike. Even when the organizations are producing the same output and are right next to each other, they often operate differently because of management style and methods, or corporate influences.
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