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„Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive supplier “ Klaus Günther, Senior Manager Group Logistics

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Page 1: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

„Lean Manufacturing along the Supply Chain – efficient implementation at a global operating

automotive supplier “

Klaus Günther, Senior Manager Group Logistics

Page 2: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

GRAMMER‘s success started more than 100 years before when Willibald

Grammer founded a saddlery in Amberg. Since then GRAMMER developed itself

from a local manufacturer of seat cushions to a global automotive supplier for the

car and commercial vehicle industry.

GRAMMER – Milestones

1880 Willibald Grammer establishes a saddlery

1954 Georg Grammer produces seat cushions for tractors

1970 Serial production of suspended seats

1982 Production of seats for trucks and busses

1985 Division automotive interior

1990 Production of passenger seats for trains (ICE)

1996 IPO of GRAMMER AG

2004 Development and production of center consoles

2005 Opening of two new production sites in China

2008 Entering the Russian truck market

2011 Takeover of EiA Electronics N.V., Belgium

2012 Joint Venture for truck seats with Yuhua in China

2013 Takeover of Nectec s.r.o., Czech Republic

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As a global player in the passenger car and commercial vehicle industry we are

located on four continents with 26 companies and more than 30 production and

sales/distribution facilities focused on highest quality.

GRAMMER – Globally next door to the customer

Page 4: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

GRAMMER – products and markets

Driver seats for tractors, construction vehicles, forklifts and municipal vehicles

Page 5: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

GRAMMER – products and markets

Driver seats for trucks and buses; seating systems for passenger seats

Page 6: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

GRAMMER – products and markets

Headrests, armrests and center Consoles for passenger cars

Page 7: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Motivation and initial situation

Supply chain with lean principle

Process and application overview

Functional details

Lean-capable supply network

2

1

3

4

5

Page 8: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Motivation and initial situation

Supply chain with lean principle

Process and application overview

Functional details

Lean-capable supply network

2

1

3

4

5

Page 9: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Without levelling in production each single demand variation has

a direct impact on the production and supply network

Assembly line

JIS plant

OEM Production plant

Components 1

Components 2

Low-Runner

IC plant IC plant

Supplier A Supplier B Supplier A

Challenges today

Disturbances initiate a shock

wave in planning

Event-driven plan: distur-

bance, planning, disturbance

Continuous replannig leads to

instable production program

Changing sequences disable

optimisation

Missing transparency

Ongoing coordination of

involved persons is required

A stable planning and according processes are a prerequisite for levelling in production,

replenishment and procurement processes

Page 10: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

LEAN Production and SAP – a contradiction?

LEAN and SAP???

* Every Part Every Interval

Interface to SAP ERP?

IT application support vs. IT-free processes (Kanban, Heijunka)

If supported by IT: standard solution/software or individual development?

Central data access: transparency vs. local and IT-free processes?

General question before the LEAN implementation

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Quick response on demand variations / faster reaction on market development

Complexity of processes is reduced

Processes are standardised

Increase of quality in operations and logistics

Stock level reduction

Manufacturing processes are decoupled from exceptional events

Number of utilised resources is optimised

Motivation of employees is increased / absence times are reduced

Benefits of Lean Manufacturing in the supply chain

Page 12: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Motivation and initial situation

Supply chain with lean principle

Process and application overview

Functional details

Lean-capable supply network

2

1

3

4

5

Page 13: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Supply Chain with lean principles

super-

market

OEM

OEM

Components 1

IC plant External

supplier

pull

Goods receipt

Production plant

Components 2

Low –Runner

Demand-

driven

IC plant

push

Assembly line 2

Assembly line 1

JIS plant

JIS plant

JIS

JIS

push

push

Supplier park

Define /

simulate

schedule

Pull

Calculation of

safety stock

KANBAN

calculation Alignment Heijunka

Page 14: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Motivation and initial situation

Supply chain with lean principle

Process and application overview

Functional details

Lean-capable supply network

2

1

3

4

5

Page 15: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Segmentation:

Identification of material groups with

individual planning processes and

requirements (e.g. differentiation of high

runners and low runners)

EPEI calculation:

Determination of the minimal lot size

Define schedule:

Specification of time intervals for the pre-

definition of the production sequence

Simulate schedule:

Align schedule and actual production plan

Calculate safety stock:

Definition of the safety stock levels

based on number of Kanban boxes

Alignment:

constant production quantities within

planning interval as result of MRP

Levelling:

Creation of the production sequence

according to defined schedule

Pull:

Replenishment of components

according to the real consumption

Process steps of the „Heijunka levelled Kanban system“

Master data maintenance for alignment/levelling Material require-

ments planning

Short-term

planning

Production and re-

plenishment control

Segmen-

tation

EPEI

calculation

Define

schedule

Simulate

schedule

Calculate

safety stock Alignment Levelling Pull

Page 16: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Supported by SAP Enhancement Packages

Enhancement Package 6 is available

The functionality “Enhanced Lean

Manufacturing” in EhP5 replaces SAP LPO

SAP extended the lean manufacturing

capabilities of SAP ERP (EhP2, EhP4,

EhP5, EhP6) continuously

Supported by Consulting Solution

Available since Q3/2011 as consulting

solution “Lean Manufacturing Planning &

Control (Heijunka)” by SAP Consulting

Process steps and elements of the

„Heijunka levelled Kanban system“

Master data maintenance for alignment/levelling Material require-

ments planning

Short-term

planning

Production and re-

plenishment control

Segmen-

tation

EPEI

calculation

Define

schedule

Simulate

schedule

Calculate

safety stock Alignment Levelling Pull

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Lean & SAP – two different worlds?

SAP’s understanding of Heijunka and an adequate IT-solution:

system integrated leveling keeps demand fluctuations from shop floor to enable a more

efficient production process

there are high- and low runners, and production needs to be mixed

different kinds of leveling have to be supported: Push, Push-Pull and Pull-Leveling

Heijunka needs a good visualization

SAP and Lean is not a contradiction, it’s the combination of the benefits of PUSH & PULL:

SAP covers both approaches, PUSH and PULL

PUSH is the classic planning approach, which is performed mainly by MRP

PULL means consumption based replenishment of goods, and is covered by ERP

processes like JIT, JIS and Kanban

Both approaches can be combined in SAP, so that the long-term planning view can be

improved by short-term consumption information

SAP’s consulting solution “Lean Manufacturing – Planning & Control” supports a fully

integrated, IT supported Heijunka process.

Page 18: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

System-based leveling with SAP LMPC

Initial Situation:

…material‘s

requirements

fluctuate over

time…

… but efficient

manufacturing

needs steady

quantities

Solution: demand fluctuations are covered by a buffer; buffer size is calculated according to fluctuations’ size

and service level required

goods are produced in leveled, steady quantities, filling the buffer

all calculations are performed by the system; manual interaction needed only in case of exceptions

many other leveling variants possible (e.g. Pull / Push-Pull), depending on requirements

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Heijunka-Board – the electronic way:

graphical planning table with SAP LMPC add-on

Capacity

view

flexible &

adjustable

menus and

buttons

Alle relevant data

available (> 900

columns in ALV-

Grid)

Alerts, e.g. for

buffer level,

constraints not met,

etc.

Visualization

of order

sequence

Sequencing

according to

different

criteria (e.g.

setup matrix)

Stock level

view

production orders with e.g. leveled quantities can be displayed, sequenced etc.

rhythm wheel / production schedule functionality can be used

mixed sequence of high / low runners

direct access to relevant data

conflicts (e.g. missing components, tools, etc.) can be visualized

solution combines the features of a Heijunka-board, combined with the comfort of a planning cockpit

Page 20: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Motivation and initial situation

Supply chain with lean principle

Process and application overview

Functional details

Lean-capable supply network

2

1

3

4

5

Page 21: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Segmentation

Product related analysis

Variation of overall demand

Average volume

Product min/max demand

Value/benefit contribution

Analysis of available capacity

Asset utilisation

Disturbances

Cycle time

Operating times

Maintenance

Support during determination of

EPEI

Safety stock

Stock to cover increasing

demand

With consideration of

OEE-Influence, pre-setup

Reserve capacities

Setup changes

Stock areas, box sizes and

box availabilities

Operating times

EPEI classes

Functional system support –

segmentation is a prerequisite for optimised Heijunka planning

Master data maintenance for alignment/levelling Material require-

ments planning

Short-term

planning

Production and re-

plenishment control

Segmen-

tation

EPEI

calculation

Define

schedule

Simulate

schedule

Calculate

safety stock Alignment Levelling Pull

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Master data maintenance alignment/levelling:

Principe of the EPEI calculation

EPEI calculation

Master data maintenance for alignment/levelling Material require-

ments planning

Short-term

planning

Production and re-

plenishment control

Segmen-

tation

EPEI

calculation

Define

schedule

Simulate

schedule

Calculate

safety stock Alignment Levelling Pull

Production duration Stop time Shift decoupling Setup time

Determination of EPEI, lot size and target stock levels

Based on demand

forecast and output

rate for the whole

product portfolio per

shift (incl. Scrap)

Based on statistical

reports of shift

protocols (average

values)

Establishing of a

shift decoupling

covering 80% of

occurred stop times

Usage of the

residual available

time per shift for

setup

Overall shift duration

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EPEI calculation

EPEI is the shortest time

interval, where each product is

produced at least once

EPEI is the operational smallest

lot size – in contradiction to the

economic lot size

Target is the standardised

process for the determination of

the moving stock

Master data maintenance for alignment/levelling

EPEI calculation

Master data maintenance for alignment/levelling Material require-

ments planning

Short-term

planning

Production and re-

plenishment control

Segmen-

tation

EPEI

calculation

Define

schedule

Simulate

schedule

Calculate

safety stock Alignment Levelling Pull

Page 24: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Calculate safety stock

SAP enhancement package 5:

Improved support to calculate

safety stock

SAP ERP proposes the number

of Kanban boxes

Periodic process to update the

parameter settings

Customer demand or a specific

forecast can be used for

calculation

Less gap of material with

reduced stock level

Master data maintenance for alignment/levelling

Calculate safety stock

Master data maintenance for alignment/levelling Material require-

ments planning

Short-term

planning

Production and re-

plenishment control

Segmen-

tation

EPEI

calculation

Define

schedule

Simulate

schedule

Calculate

safety stock Alignment Levelling Pull

Average demand Replenishment, consumption

Stock variation

Disturbances, buffer Operating time

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Alignment

Alignment for each

production line after

MRP run for high

runner

Production capacity is

adapted to alignment

Customer specific

implementation is

possible

Daily production

quantities basis for

sequencing

Planning of low

runners by date

Requirements planning:

Alignment

Master data maintenance for alignment/levelling Material require-

ments planning

Short-term

planning

Production and re-

plenishment control

Segmen-

tation

EPEI

calculation

Define

schedule

Simulate

schedule

Calculate

safety stock Alignment Levelling Pull

Page 26: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Production and replenishment control:

Pull

Pull

Manufacturing:

Release 2 of the consulting solution

supports the Heijunka aligned Kanban

system with shop stock

Replenishment:

MRP generates the demand forecast

Kanban-/JIT-calls support pull-based

replenishment from production,

storage and the supplier

Kanban board with automatic update

Batch building box

Master data maintenance for alignment/levelling Material require-

ments planning

Short-term

planning

Production and re-

plenishment control

Segmen-

tation

EPEI

calculation

Define

schedule

Simulate

schedule

Calculate

safety stock Alignment Levelling Pull

Consumption plant

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Production and replenishment control: Pull

Supplier – KANBAN: control cycle calculation

SAP Enhancement Package 5:

Graphical display of demand

and the calculated stock level in

the supermarket

Calculation of the number of

Kanban boxes within the control

cycle

Master data maintenance for alignment/levelling Material require-

ments planning

Short-term

planning

Production and re-

plenishment control

Segmen-

tation

EPEI

calculation

Define

schedule

Simulate

schedule

Calculate

safety stock Alignment Levelling Pull

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Production and replenishment control: Pull

Supplier KANBAN board: consumer view

Features:

Empty KANBANs already

assigned to the supplying plant

are marked in red

Full KANBANs in the

supermarket of the consuming

plant are marked in green

KANBANs in transit with delive-

ry note are marked in yellow

JIT call via SAP standard

Display:

Schedule line ID (customer)

Box number of customer

Processing status in supplying

plant

Planned delivery time

Consumer

Source

Segmen-

tation

EPEI

calculation

Define

schedule

Simulate

schedule

Calculate

safety stock Alignment Levelling Pull

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Levelled production and material flow

Peaks on capacity requirements on people and machines are reduced

Bullwhip effect especially to intercompany suppliers is reduced

Continuous customer delivery is improved

Stable consumption of supplier parts (internally/externally) is ensured

Less impact of variances in sales quantities and disturbances to the production plan

Lead time and stock level are reduced

Integration of shop floor and SAP supported material requirements planning and procurement

processes

Simplification of the planning process with reduced planning effort

Transports and their capacity is easier to plan

Stock level planning is optimised: buffer stock is reduced Stock areas get smaller costs

of stock keeping are reduced

Benefits through a lean oriented supply chain…

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Operational lean processes supported by SAP ERP

Lean processes

In SAP ERP

Super-

market

OEM

OEM

Production 1

IC plant External

supplier

pull

Goods receipt Production plant

Production 2

Low -Runner

IC plant

push

Assembly line 2

Assembly line 1

JIS plant

JIS plant

JIS

JIS

push

push

Supplier park

Segmen-

tation

EPEI

calculation

Define/simulate

schedule Levelling

Alignment Calculate

safety stock

Calculate

safety stock

Pull

Pull

Segmen-

tation

EPEI

calculation

Define

schedule

Simulate

schedule

Calculate

safety stock Alignment Levelling Pull

The transfer of the processes to SAP ERP avoids

disruptions and increases the positive effect of levelling

in production with impact on the whole supply chain

Lean: Processes and IT are aligned to an efficient flow

Page 31: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Motivation and initial situation

Supply chain with lean principle

Process and application overview

Functional details

Lean-capable supply network

2

1

3

4

5

Page 32: „Lean Manufacturing along the Supply Chain – efficient ...sapidp/... · „Lean Manufacturing along the Supply Chain – efficient implementation at a global operating automotive

Process oriented

Demand is in principle continuously, a preview is available

Stable processes and a stable bottleneck (maybe challenges during ramp-up/phase-out)

Straight oriented material flow

Partners and involved departments are able to adapt to levelled requirements and delivery

Short term additional demands can – even though – be covered

Combined planning of high runners with levelling and low runners by requirement date

Relatively short setup times

IT oriented

SAP SCM is too complex (heuristic with characteristic based or model mix planning)

Standard capacity levelling in SAP ERP (graphical planning table) has gap of transparency

Infinite planning is „too less“ ( finite planning with Heijunka board is required)

Lean & Levelling, but when?