review of existing supply chain methods in other · pdf file5.1.1 qfd – diagnostic ......

REPORT TITLE: Review of existing Supply Chain Methods in other Sectors

Subject/Deliverable: Innovate UK – REMI Project

The data contained in this document contains proprietary information and it may not be copied or communicated to a third party or used for any other purpose than that which it was supplied without the MTC’s prior written consent. © MTC

PMO-004-F6 (v5.0) REMI Report of 36

PMO-004-F6

Review of existing Supply Chain Methods in other Sectors

Innovate UK – REMI Project




PMO-004-F6 (v5.0) REMI Report of 36

Version Date Author Status Change Description

0.1 09/02/2016 Satwant Sahota Draft Document created

0.2 15/02/2016 Satwant Sahota Draft Document reviewed and updated

0.3 05/05/2016 Satwant Sahota Draft Document reviewed by customer and updated

1.0 26/05/2016 Satwant Sahota Issued




PMO-004-F6 (v5.0) REMI Report Page 4 of 36

Contents

1 Management Summary.................................................................................................. 5

2 Background.................................................................................................................... 6

3 Problem Statement ........................................................................................................ 7

4 Proposed Strategy Models............................................................................................. 8

4.1 Building Information Modelling – BIM...................................................................... 9

4.2 Agile Supply Chain Strategy ................................................................................. 10

4.3 Collaborative, Planning, Forecasting and Replenishment – CPFR Model ............. 14

5 Define, Measure, Analyse, Improve, Control (DMAIC) Tool box................................... 17

5.1 Define ................................................................................................................... 20

5.1.1 QFD – Diagnostic .......................................................................................... 20

5.2 Measure................................................................................................................ 22

5.2.1 Key Performance Indicators (KPI).................................................................. 22

5.3 Analyse................................................................................................................. 23

5.3.1 Value Stream Mapping .................................................................................. 23

5.3.2 Failure Mode Effect Analysis (FMEA) ............................................................ 25

5.3.3 Process Failure Mode Effects Analysis (PFMEA)........................................... 25

5.3.4 Design Failure Mode and Effect Analysis (DFMEA) ....................................... 26

5.4 Improve................................................................................................................. 27

5.4.1 Kano Model ................................................................................................... 27

5.4.2 Kaizen Blitz.................................................................................................... 28

5.4.3 Kanban Systems............................................................................................ 29

5.4.4 Poka Yoke ..................................................................................................... 30

5.4.5 Seven Wastes of Lean Manufacturing ........................................................... 31

5.5 Control .................................................................................................................. 33

5.5.1 Lessons Learnt .............................................................................................. 33

6 Conclusion ................................................................................................................... 34

7 Bibliography ................................................................................................................. 35





1 Management Summary

This report having been requested by the consortium members of the Construction/Refurbishment Manufacturing Industry (REMI) aims to identify and explore the main challenges that the construction industry’s Supply Chain (SC) is currently facing, challenges that include, but are not limited to;

Increased legislation Shortage of available locations Skills shortage Globalisation Adoption of technology Late/no/short delivery of goods to the point of demand Incorrect specification

o Unnecessary manufacture o Repeat/replacement manufacture

The REMI project, funded by Innovate UK, is a feasibility study which aims to establish through individual analysis of each, how established techniques and process methods, used in other industries (e.g. Automotive or Fast Moving Consumer Goods (FMCG)) to manage and improve their own unique supply chains and manufacturing processes could be adopted to form the basis for a new construction process for off-site bespoke domestic refurbishment.

For this to be achieved, the project partners have identified several deficiencies within current processes and procedures for the production of homes and wall panels. Consequently by examining the established methods and proven processes contained within the latter sections of this report, it is considered that a potential solution will demonstrate that these could be utilised within the construction/refurbishment sector in addition to recognised strategic models that describe the best possible future for the sector.





2 Background

The construction industry is under-performing in terms of its capacity to deliver value, which means duplication of tasks, excessive paper work and non-value added activities are being carried out across the supply chain network. As an example, duplicity and non-value add can be found in the surveying. The activity is conducted by estate agents, architects and surveyors. All parties involved require the same information to fore fill their tasks, so effectively, data capture is conducted three times per project, which concludes to the flow of information being more important than the flow and supply of physical goods. One reason why the construction industry is not addressing under performance issues is the lack of investment in construction efficiency and growth opportunities (Government Site, 2016). The consequences of non-value add tasks is detrimental, as this is time and money that is being wasted on activity that does not benefit the end user.

It is known that the construction sector operates at “arms-length1” approach and that “back and forth” communication between parties within the sector is prevalent, which makes it more difficult to manage and operate effectively within the supply chain (SC). There is no clear engagement model of how information or data is disseminated or shared amongst the parties. The challenges that are identified in the problem statement, see section 3, lead to another facet which is how different parties collaborate within the SC; this is where the “arms-length” or “close2” collaboration contrast comes into play. Close collaboration can help reduce some duplicated processes or activities as the lines of communication are more frequent within the supply chain and non-value added tasks removed. The strategy model helps to support this statement, as it demonstrates who needs to interact with who and how they should work together. This will help to restore the damaged reputation that the sector has been facing for many years and increase efficiency and deliver a reduction in costs across the sector.

1 Arms-length is an expression when individuals or suppliers do not work closely together. 2 Close collaboration is when individuals or suppliers work tightly together and information is passed between them on a regular basis.





3 Problem Statement

The current state of the construction sector clearly indicates that there is duplication in processes, as well as excessive movement of data. Within a typical construction project there are multiple stakeholders, for example clients, funding providers, contractors, sub-contractors, consultants, architects, surveyors, engineers, suppliers and users/residents. (C.Orr, 2005). This can cause an overlap of tasks, as well as delays to the project. These inefficiencies cost money and time, as the whole sector operates in a dysfunctional manner and the collaboration between the parties as a consequence is poor.

The key issues in construction are:-

The Construction Supply Chain (CSC) is project based.

o Collaboration between different parties is arranged around certain projects and in most cases ends when the project is completed. Conversely, in a process based collaboration, there is no determined duration and efforts are not only based on the current product, but also on looking for developing sustainable processes.

Bespoke nature of the product.

o This can be a potential strain on the supply chain as personalised solutions incur more time and cost as they are not shared across multiple instances of standardized products.

Insufficient collaboration within the supply chain.

o The supply chain operates in a non-collaborative, “arms-length” manner. One reason for this is that the parties involved in the supply chain operate reactively to a situation instead of pro-actively planning and collaborating with other members in the sector, which would mitigate the problem.

For these problems to be addressed, the construction sector should explore the adoption of methods that are applied in other sectors or industries. These methods will reduce cost and improve the response to supply and demand of construction/refurbishment of homes across the United Kingdom. For the construction sector to be more responsive and cost effective, and for there to be a reduction in inefficiencies, the supply chain must be properly structured, strategically planned, organised and executed. The adopting organisations, who are external to the traditional supply chain, may engage with existing or new participants in the network. This must be appropriately managed in order to effectively apply supply chain management principles, models and techniques to overcome the barriers in construction supply chains (S.Ponticelli 2012).





4 Proposed Strategy Models

Strategy models can serve to support managers that strategically plan new business activities and revise existing ones (C.Peters and I.Blohm and J 2015). This section reviews and explains two strategy models that are being utilised in the Fast Moving Consumer Goods (FMCG) industry. The models are explained and then described to show how they can be applied to the construction/refurbishment industry.

There are three approaches that can be used in the SC.

The first model is:

Building Information Modelling (BIM). o Which supports teams to be more collaborative, so that the working

standards are the same. BIM also helps to create value from the combined efforts of people, process and technology.

The second model is:

Agile supply chain3. o The Agile approach to supply chain management aims to create a

responsive structure and associated process to service customer demand in a changing marketplace (P.Baker 2006). An agile supply chain has key areas that support the operations to bring the whole process together and make it more effective in delivery of a product or service.

The final model is:

Collaborative Planning, Forecasting and Replenishment - CPFR4. o The CPFR model has similar attributes, but is broken down into four core

areas, and identifies who needs to be in collaboration in each area. Both Agile and CPFR are strategy methods to help a business develop/improve communication.

The Lean method is a process that aims to avoid and reduce waste in many forms, effort, money, time, transport and processing. The method is a wrapper that underpins tools to support the processes that the sector can adopt and implement to improve their operational activities by ensuring that activities don’t waste or overspend on materials, labour or time. Lean methods are usually executed in a production environment, but can be applied to any process. Lean methods will be covered in further detail in section 5, which explains how they can be applied to the construction/refurbishment sector.

3 Agile supply chain may be defined as the ability of the organisation to respond to changes in demand. 4 CPFR may be defined as an approach to combine trading partners in planning and fulfilling customer demands.





4.1 Building Information Modelling – BIM

Building Information Modelling (BIM) is a collaborative way of working, which underpins the digital technologies that open up more efficient methods of designing, creating and maintaining processes. BIM embeds key product and asset data for effective management of information throughout product lifecycle, from earliest concept through to operation (Government 2012).

Figure 1 shows how BIM can be applied within the current communication and interactions that occur between different parties (e.g. suppliers, scaffolding, installer, plumber). Not having fluent communication between the parties involved in the project can cause delays and loss of information, which in turn causes further delays in the project. The main contractor will hold all the information with regards to project progression and customer requirements/changes. In general, this information is not easily accessible to the other parties (sub-contractor and suppliers), who will only be able to exchange and receive information by variable communication methods, which can lead to misunderstandings and loss of data. Consequently, it is important to have a centrally based system to gather relevant information, capture the requirements for the projects and allow the relevant parties to share data and information, as and when required.

Figure 1: High level BIM drawing of the Construction/Refurbishment





4.2 Agile Supply Chain Strategy

The “Agile supply chain” strategy model is normally executed in a less predictable environment, where demand is unstable and the requirement for variety is high (M.Christopher n.d.). This strategy model is predominately used in the retail sector, such as FMCG and the fashion industry, where flexibility is a crucial factor required to meet customers’ demand throughout the manufacturing process. Additionally, the 7 characteristics of the agile supply chain (below) ensure it is responsive to a sensitive market position. The strategy model is capable of reading and responding to customers’ needs when there is real demand (M.Christopher n.d.). If the principles of the strategy model are taken and applied to the refurbishment sector, the method could be executed to support the business in the following way:

1) Inventory is held at as few levels/locations possible

Problem Statement 1: With inventory being moved from different locations, it can incur a long lead time as well as handling cost, which can lead to damage of product or worse, loss of material. (Excessive movement of materials cost time and money).

o Resolution 1.1: Have a centralised location for materials or a buffer of materials on site to reduce the travel and cost of suppliers (i.e. fewer and less deliveries). This can only be implemented if there is sufficient dry space for storage, security and also a method to organize the materials and a method to order in parts; this is linked to the application of Kanban systems, which is explained later in the report.

2) Finished products are delivered direct to factory or customer or construction site

Problem Statement 2: Products or materials being directly moved to site can be at high risk of damage if there is no internal warehouse or storage facility on site. (For example moving from more than one location, whether it be a distribution centre or an internal storage centre for part finished products).

o Resolution 2.1: Some manufacturers may have internal warehouse/storage facilities at their site for finished goods. Goods can then be moved direct to site as and when needed, according to supply & demand. This also reduces the chance of any damage occurring to the product.





3) Replenishment of stock is driven by sales data

Problem Statement 3: The data that is driven by sales could possibly be delayed in getting to the manufacturer as the systems could potentially drop out, which would then cause a back log of orders. The way that this could be managed is by having triggers in place to help manage the inventory, as well preempting what materials are required. (Holding stock that is required to meet the demand. Having excessive stock would mean storage cost and cost of transport).

o Resolution 3.1: Trigger method of replacement of stock will reduce cost in holding inventory on site and additional transport costs. This is also fundamental in the application of Kanban systems, which are be explained later in the report.

4) Production is planned across functional boundaries

Problem Statement 4: The “arms-length” collaborative communication technique can delay lead time for production and delivery of materials. This also means that there is opportunity for errors to occur within the supply chain if all the parties operate in a detached manner, with no coherent flow of information shared through the supply chain. (Closer collaboration methods can improve the process and response times for projects).

o Resolution 4.1: Having a close collaboration2, between suppliers allows the flow of materials to be delivered on time and keeps the build motion moving on the production line/assembly area. This gives control to manufacturing and enables effective management and on-time delivery of the project.

5) Supply chain systems are highly integrated, giving clear visibility of inventory of all levels

Problem Statement 5: With the suppliers working at “arms-length” and not keeping the inventory levels accurate it can cause discrepancies when ordering materials.

o Resolution 5.1: Working off similar systems to ensure information is accurate and succinct. For example, Enterprise Resource Planning (ERP5) systems will support the transfer of data between the parties. Additional features that ERP systems can have are supply chain management, customer relationship management and E-business6.

5 ERP system is a business-management software, that an organization can use to collect, store, manage and interpret data from many business activities. 6 E-business is focused upon the end process, which could be, specifically offering information which is the right amount of data for the customer, at the right time.





o Resolution 5.2: Keeping all the data and accurate on the system, does not mean having hundreds of systems to control the information, but possibly a centralised source point for the information to be held.

6) Minimum lead times are developed and used

Problem Statement 6: Lead times can potentially be excessive due to uncontrollable circumstances, for example, suppliers missing delivery dates due to transportation issues (vehicles breaking down, shipment dates delayed etc). Also, weather can have an impact, as it can delay the progress of the build. For example, effect of cold weather will influence progression of the build. (If the build was to take place off site then the task itself on site would be very minimal).

o Resolution 6.1: Close collaboration between all parties can reduce excessive transport cost. The movement of the required materials only occurs when needed, executed with the Just In Time7 method. This also embodies attributes of Kanban trigger methods, which will be explored further on in the report.

o Resolution 6.2: If all the suppliers and manufactures worked off similar tools provided by such as ERP or Material Requirements Planning (MRP8), methods of communication can be impaired and bring together a closer collaboration of the parties. This would mean that any delays can be communicated via the preferred methods and could improve delivery times, which will increase visibility and therefore can facilitate appropriate actions to be taken quickly.

7) The majority of stock is held as Work-In-Progress (WIP) awaiting final configuration, which will be based on actual customer requirements.

Problem Statement 7: Not having WIP in some of the processes could possibly have a bigger impact on the whole process. For example, if there was no WIP for the fast moving materials, and there was a peak in demand, then this would potentially be a concern, as it would delay the build or project.(Having parts pre-built can support operations, so that when an increase of demand occurs there will be a buffer of stock in place to support the demand and yet still have time to produce more if the demand increases further).

o Resolution 7.1: Inventory management systems can help managing WIP. Additionally, forecasting software can help in producing the stock that is only required if there is a demand for it.

7 Just In Time is a Toyota Manufacturing method and is used highly in the automotive sector. This so that the materials arrive when needed and inventory is not excessively stored when it is not required. 8 MRP is a production planning, scheduling and inventory control system used to manage manufacturing processes.





o Resolution 7.2: This relates to having fewer locations of stock across the network, which enables better management of inventory.

As explained, the adoption of an agile approach could underpin brining all the parties in the construction/refurbishment sector together and help empower the network with closer and tighter collaborative communication methods. This will help to reduce costs and provide an opportunity to improve responses to customisation builds. It would also support the reduction in WIP and lead times from manufacturers to client sites, where construction/refurbishment will be taking place. Additionally, it will increase management and control of what needs to be produced (i.e. supply and demand), and where there is no requirement.





4.3 Collaborative, Planning, Forecasting and Replenishment – CPFR Model

Another strategy model that could be considered is the Collaborative, Planning, Forecasting and Replenishment – CPFR model, to support creating a stronger collaboration across the sector.

The CPFR model combines multiple partners in planning and fulfilment of customer demand. The model is used mostly to help the retailer/buyer and manufacturer/seller to work more collaboratively to satisfy the demand of the customers (P.Baker 2006). The model also works to satisfy the demand of the customers by defining each area and the associated collaborative tasks, what the responsibilities are for each party, as well as stating the key stakeholders for each area.

The CPFR model has four key areas that then divide into further areas, which help to drive collaboration of members/suppliers for the critical areas. The areas cover from strategy and planning to analysis. The area of focus for the construction/refurbishment industry is the Manufacturer circle, which is shown in figure 2.

Figure 2: CPFR Model (P.Baker 2006)





The manufacturer circle reviews the whole operation and helps to bring the parties together so that a more fluent and efficient process can be carried out. The areas are covered below with examples of how the construction/refurbishment sector could incorporate this model into their business activities.

Area 1: Strategy and planning: Identifying and agreeing the overall rules for collaboration, including product mix and placement and event plans.

Manufacturing Sections are: Collaboration Arrangement and Joint Business Plan consisting of account planning and market planning.

Problem Statement 1: The business plan identifies the significant events that affect supply and demand in the planning period, such as promotions, inventory policy changes and product introductions.

o Resolution 1.1: If each involved member of the construction sector was to carry out the same task repetitively (e.g, measurements and checks around the property), this would inevitability increase cost, increase takt time and add a delay to the project. However, if agreements were to be put in place for who will carry out the activity, then this can decrease duplication of tasks and costs.

Area 2: Demand and supply management: Forecasting of consumer demand at the point of sale and replenishment requirements.

Manufacturing Sections are: Sales forecasting and Order Planning/Forecasting:- Market Data Analysis, Demand Planning.

Problem Statement 2: Sales forecasting, consumer demand at the point of sale is not linked to order planning/forecasting. This means there is an information fracture with future product ordering and delivery requirements based upon the sales forecast and inventory.

o Resolution 2.1: Having foresight of the demand, enables relevant parties to manage supply and demand to reduce the bull whip9 effect.

o Resolution 2.2: Having a system that allows an indication of a sale from the agent propagating along the supply chain (or disseminated directly to all participants in the supply chain) may be an initial trigger method, which would then allow the relevant parties to collaborate and deliver the required materials to site ready for assembly.

9 The Bull Whip effect refers to the increasing demands in inventory which responds to the shift in demand from the customer.





Area 3: Execution: order generation and order fulfilment, forecast for demand and process of producing, shipping and delivery.

Manufacturing Sections are: Order Generation and Order Fulfilment: Production and Supply Planning; Logistics/Distribution.

Problem Statement 3: Lack of order traceability and uncertainty to confirm demand.

o Resolution 3.1: Ensuring that the materials are on site ready for production, whether it be at the manufacturer’s site or customer’s home ready for refurbishment.

o Resolution 3.2: Outsourcing or suppliers’ location needs to be a short lead/travel time. Having the supplier situated close by can help to reduce chances of damaging the stock. Also, if there is an error on the behalf of the supplier, then it can be resolved efficiently.

o Resolution 3.3: Information will be cascaded between the parties once the order has been placed (e.g. trigger methods on the production line to indicate parts are minimum level and need ordering).

Area 4: Analysis: the active monitoring of planning and operations for out of bounds conditions.

Manufacturing Sections are: Exception Management and Performance Assessment:- Execution Monitoring; Customer Scorecard.

Problem Statement 4: A method of the agreed requirements is needed to be in place between the customer and the parties. Agreed requirements between the customer and the relevant parties, which is outside of the standard requirements (bespoke building).

o Resolution 4.1: Continuous improvement techniques can be carried out anywhere across the building construction sequence, whether it be in the production of building the wall panels or to help accelerate the process from when the customer placed the transaction to delivery of project.

o Resolution 4.2: Questionnaire to monitor customer feedback as to whether or not they are happy with the refurbishment or build.

o Resolution 4.3: Key Performance Indicators (KPIs) monitor whether the targets are achievable or not. This is done by a company representative and also is managed by the project manager who is accountable for keeping the project on task to the customer requirements.





5 Define, Measure, Analyse, Improve, Control (DMAIC) Tool box

The DMAIC model is a logical analytical methodology that can incorporate the application and deployment of Lean/Six Sigma tools and methods for problem solving and product/process improvement. The DMAIC tool box is an information-driven methodology used to clarify and improve processes. For example and in respect to REMI, the tools within DMAIC can be focused upon how the walls are assembled and the use of Kaizen Blitz methods to understand the potential issues and a solution finder. Figure 3 details the DMAIC tool box breaking it down into 5 sections, designing what is required in each stage of the analysis.

Figure 3: The DMAIC model

Define•A problem•Voice of the customer (outputs)

•Project targets or goal

•Project boundaries or scope.

Measure• Identify the gap between current and required performance

•Collect data to create a process performance

•Establish a high level process flow.

Analyse•List & prioritize casuses of the problem

•Prioritize the root causes for improvement steps

•Detailed process maps to help pin point where in the process the cause is.

Improve•Create focus on the simplest and easiest solutions

•Create a detailed implementation plan

•Deploy improvements.

Control•To sustain the gains identified & implemented

•Create a control plan.

Define Tools

•Assess Readiness for Change

•Project Risk Analysis

•QFD•Thought Mapping

Measure Tools

•Key Performance Indicators

•Control Charts•Benchmarking Study

Analyse Tools

•Value Stream Mapping

•Root Cause Analysis

•Causal Analysis•5 Whys•PFMEA•DFMEA

Improve Tools

•Process Mapping•Kanban Systems•Kaizen Blitz

Control Tools

•Training•Standard Operating Procedure

•Lessons Leartn•Process Management Chart

•Poka Yoke





An example of the how the DMAIC model could be applied to the construction/refurbishment sector.

Define: - What the problems are in the construction/refurbishment sector. The following tools can be used:

Assess Readiness for Change; Project Risk Analysis; Quality Function Deployment (QFD), Thought Mapping.

Statements:

How to reduce or eliminate repetitive tasks in the process of assembling wall panels; How can storing holding materials on site be managed and cost effective; Where can lead-time be reduced; How can lead times be improved between suppliers within the supply chain;

Measure: - How can the process be monitored? The following tools can be used:

Key Performance Indicators; Control charts, Benchmarking study.

Statements:

How do we know we are meeting or indeed exceeding the requirements for the suppliers and manufacturers (e.g. delivering materials on time);

If suppliers are not delivering on time, is there a method and associated cost analysis for monitoring this;

How do we know the requirements are being achieved, will this be on-time delivery of materials and or delivery of the project to time and cost.

Analyse: - Understand the root cause. The following tools can be used:

Value Stream Mapping; Root Cause Analysis; DFMEA/PFMEA; Causal Analysis, 5 Why.

Statements:-

If there is a problem between the supplier and manufacturer how can it be identified; Is there a production element that needs re-focusing (e.g. a technique that is carried out

on the production line); Can elements of an exercise from the production line be re-designed, so it is possible to

reduce cost and time.





Improve: - Process performance by eliminating the root cause. The following tools can be used:

Process Mapping; Poka Yoke; Kanban Systems; Kaizen Blitz.

Statements:

When assembling the wall panels on the production line, is there another way of improving the process;

Can the supplier duplicate some of the processes that already exist within the sector to help improve the arrival of materials to the manufacturing site;

Elimination of repetitive problems helps improve the processes and also improve quality from both a supplier and manufacturing elements.

Control: - The improved process and future process performance. The following tools can be used:

Training; Standard Operating Procedure; Lessons Learnt; Process Management Chart.

Statements:

How can the process be sustained (e.g. on the production line and to ensure that quality is continuously maintained);

In respect to the development of new processes. Do the staff need to be trained to meet the required standards demanded by the new process, does this need to be applied to impacted suppliers down the supply chain;

Should there be elements of control in place to monitor progress and can this be applied to the project as well as the production line;

If a process has failed, how are the outcomes captured, can some elements be improved and learnt from.

Some of the tools that are applied within DMAIC are described below:





5.1 Define

5.1.1 QFD – Diagnostic The Quality Function Deployment (QFD) was first developed in Japan in the late 1960s as a form of cause and effect analysis. The model is a methodology focused on carefully listening to the voice of the customer and effectively responding to it. Additionally, it is used as a business strategy diagnostic tool. The QFD model is an approach that is used in a number of industries and sectors. It applies quantitative techniques to align product design requirements to what is most essential to delivering the strategic objectives of the organisation. The technique relies on using expert judgment to apply scores and weightings against the business objectives and success factors for the product. For example, the construction/refurbishment sector could use QFD to relate their objectives to the customer feedback, such as cost, time, delivery of project, quality of finished products (for example wall assembly). The objectives are situated on the left hand side of the model (see figure 4) and can have their own sub-sections. The ‘How’s’ (i.e. success factors) are listed across the top of the matrix and relate to how each of the objectives might be achieved.

Figure 4: QFD Model





Further explanation of the QFD can be found in figure 5, which illustrates in a high level view of what the potential process is for a QFD workshop. The construction/refurbishment sector would identify the objectives which would be located in the “What’s” and the success factors would be placed in the “How’s”, for example:

Business objectives (The What’s)

Key focus on customer requirements; More robust supply chain; Grow market and develop market share; Building strong, profitable, long-term relationships with our suppliers.

Success Factors (The How’s)

An understanding of customers current and future needs; Understand sales volume and competitors; An appropriate selling strategy; Continuity of supply to meet varying demands levels.

Figure 5: QFD Flow Chart





5.2 Measure

5.2.1 Key Performance Indicators (KPI) A KPI shows how effectively a company is achieving key business objectives. Companies use KPIs to evaluate their success in terms of how to reach their targets. KPIs can be used almost anywhere within the company. For example, KPIs can be used for sales, marketing, finance and within the SC.

Supply Chain KPIs could consist of the following:

Cost of inventory o Measurement to how much it costs to store inventory on site and over a certain

duration. Inventory turnover

o How quickly it takes the company to sell or move inventory over a year. Units per transaction

o Measurement of average number of units purchased in each order to establish a baseline and capture the value.

Inventory accuracy o How accurate is the physical stock compared to the system.





5.3 Analyse

5.3.1 Value Stream Mapping Value Stream Map (VSM): This is a representation here of flow of materials from the supplier to customer through the organisation, as well as the flow of information (figure 6 shows an example of VSM). The purpose of a value stream map is to sum all the activities and list them according to how the product is manufactured, which includes the value-added and non-value added activities (L.Li 2015). This technique helps to identify what areas need to be improved and how they could be improved. This can be carried out either at the manufacturer or at suppliers. The VSM includes information such as lead times or work in progress, from the manufacturer to supplier. The objective of the VSM is to analyse and identify opportunities for improvement.

The steps to construct a VSM are as follows:

Step 1: Identify what needs to be mapped

o For example, a product (internal wall) or service (refurbishment of the exterior of a home)-steps of how a refurbishment takes place or building of a new home.

Step 2: Describe each process

o For example, materials that are required for the project, labour, IT systems, also where is the labour (i.e. employees) situated in the process and what materials are needed.

Step 3: Scope of the process

o For example, does it start from the supplier right through to the end user-where does the trigger occur and where does it finish? Are there any overlaps in the process, if so what are they are?

Step 4: Capture process steps in sequential order to verify each operation that are performed to the product/service. What needs to be built first?

o For example measurements to be taken for the house and then panels to be built for the house

Step 5: Collect data. This is the data that enables the process parameter to be measured or assessed.

o Inventory levels and quality of the stock (any damage or defective stock);

o Cycle times (i.e. time to produce a product);

o Number of required operators to build the panels;

o Shifts patterns;

o Batch sizes, if building panels together.





Step 6: Identification of inventory located elsewhere in the process

o For example, WIP in suppliers, warehouse or manufacturer’s site.

Step 7: Calculate the total process times and lead times for inventory through each process

o For example, how long does it take for the wood to arrive and to be cut to size and then treated and finally assembled?

Step 8: Are there multiple suppliers/customers? If so what is their involvement and lead times?

o For example, lead times. For each supplier, how long will it take to deliver materials to site, etc.

After step 8, the VSM exercise focuses on future opportunities:

Step 9: Analyse the VSM, with the data collected and future state of a VSM

o For example, the analysis might reveal long cycle times or poor quality.

o What would be the ideal VSM? Can improvements be identified such as having the suppliers situated closer to the manufacturer? Would sufficient monitoring of inventory prevent delays to the assembly line (prevention of component shortages?).

Step 9 will then repeat the whole process from step 1 to 8 to re-assess the modified process with improvements to meet the business needs.

As demonstrated above, the VSM will review the process, improving understanding of where the constraints are. This is a perfect exercise to be carried out for the construction/refurbishment sector as it will help identify areas of duplicity of tasks of process elements, and help identify, justify and implement improvements. This provides a focus for Kaizen Blitz change exercise to be conducted (refer to section 5.4.2).





Figure 6: Value Stream Map (Wikipedia 2016)

5.3.2 Failure Mode Effect Analysis (FMEA) FMEA can be used as a prioritization tool to understand and tune the focus of a project. It can also be used to determine what can go wrong with the product and its manufacturing and installation process. Similarly, it can help to identify what data should be collected as part of the process metrics. As the FMEA is situated in the “Analysis” area of the DMAIC model, it can be used to address where to look for a root causes. Although the tool is used to address root causes, it is not used for identifying root causes. This method can be used for reviewing the project plan and to ensure that there are as few or as little potential for elements to overrun and cause impact upon other areas.

5.3.3 Process Failure Mode Effects Analysis (PFMEA) PFMEA is a structured approach that assigns quality risk levels to each step in a process, which can be from a manufacturing or transactional elements. PFMEA is a powerful tool to help prevent defects occurring. It can also help to anticipate risks/defects and implement countermeasures ahead of time. For example, this can be applied to the assembly lines for the wall panels; does the design allow for an easy assemble or an element of pre-assembly?





5.3.4 Design Failure Mode and Effect Analysis (DFMEA) DFMEA is an application of the FMEA method specifically to product/service design. The DFMEA process consist of the following:

1) Design review-use the product/service design drawings or documents to identify each component and its relations with other components of product/service;

2) Highlight potential failure modes; 3) List potential failure modes; 4) List potential effects of failure modes; 5) Assign the severity ranking, which should be based on consequences of failure; 6) Assign the occurrence ranking; 7) Assign detection ranking based on the chance of detection prior to failure; 8) Calculate the Severity x Occurrence x Detection (SOD) number or Risk Priority

Number (RPN); 9) Develop action plan to reduce vital RPNs; 10) Implement the improvements identified; 11) Calculate RPN again based on improvements (i.e. mistake proofing).

DFMEA is an extremely valuable tool in identifying and eliminating costly or otherwise undesirable design decisions, which could benefit the design of innovative industrialized refurbishment products and systems.





5.4 Improve

5.4.1 Kano Model The Kano model provides an analytical approach to classify, understand and interpret customer wants. The model represents customer wants based on the classification of the product attributes, how they are perceived by customers and what is their effect on quality. These classifications are useful for guiding design decisions as they indicate when good is good enough and when more clarification is better. The Kano model has been widely and successfully applied in strategic thinking, business planning and even product development to provide guidance with respect to innovation, competitiveness and product compliance (A.Seder, 2014). This model will highlight areas of strengths and weaknesses with the product, which will support the direction of the future development. For example, the task could be capturing the customers’ requirements accurately, ensuring that the activities being carried out are addressing the customers’ needs, defining which are important and which are activities that are not needed.

Figure 7: Kano Model (B 2004)





5.4.2 Kaizen Blitz This is a rapid improvement workshop10 designed to produce sustainable solutions for distinct problems within the organisation. Kaizen Blitz is a focused and structured improvement project, using a dedicated cross-functional team to improve a targeted work area with specific goals, in an accelerated timeframe (W. Glover, 2014).

Three main steps of the Kaizen Blitz are explained below, using an example on the construction/refurbishment.

Step 1: Where should the focus be?

Problem statement: Consider, how the product being assembled, is there a need to change the way it is being produced?

o How to change the methodology of assembling a side panel for the house what does the process involve.

o What are the steps involved in this? What are the individual steps – for each action to complete the task?

Step 2: What is the focus and actions?

Problem Statement: Is the product taking too long to produce? Is it not being delivered to the consumer quick enough?

o Decrease the time in making the panels for the house ready to be taken to site.

Step 3: How will it be sustainable?

Problem Statement: What other practices or techniques will support with the change in producing the product?

o Outsourcing the painting or pre-painted wood from the suppliers will reduce the time to assemble a panel.

o Measured pre-cut wood to the house specifications.

The benefits of the workshop are that it is a quick way to identify and improve areas and put measures in place that can be monitored. Additionally, holding a short workshop keeps the momentum going and keeps the focus on the root causes of the issues, rapidly implementing ways to resolve or improve the problem/process.

10 The workshop is predominately run over 1 -3 weeks dependent upon complexity.





5.4.3 Kanban Systems These are Japanese manufacturing systems in which the supply of components is regulated through the use of an instruction card (i.e. Kanban) sent along the production line to trigger replenishment. There are three Kanban systems that are suitable for construction/refurbishment operations. When there is no visibility/indication from production to low inventory the use of a card, a flag, a light or empty space on the production platform is used to signal the lack of parts, (N.Anisor 2014). This helps with ordering parts at the right time and support the control of inventory. o 3 bin system: This concept relates to obtaining the materials in a “just in time” fashion for

the production/assembly line. The basic principle to this is that three bins are filled with inventory and used sequentially. As the first bin is emptied by production, that bin is removed, other bins move up. The empty bin is either refilled or queued behind the remaining bins, or a full bin is called to fill the empty space. An empty bin triggers components for re-ordering. This is an effective way of managing the inventory as the line only holds the stock that is required for the build and potentially keeping some inventory as a “buffer” in case demand increases. This can be applied to the manufacturer’s site when producing the panels for homes that require refurbishment.

o Pick by light: This method is an enhancement of the 3 bin system. The only difference

being with this is a precise method that a light to indicate to the operative which product needs picking. This helps reducing errors, increases cost savings, and speeds up replenishment of inventory.

o Card system: The card system is similar to the previous control systems. The only difference is that the card system is attached to the product. This indicates when the product needs to be replenished as it is being tracked from one location to another on the production/assembly line. For example, the card is marked with the product number and quantity. Once the location is empty then the card is turned around for the inventory controller to replenish the stock. This enforces the trigger methods to place an order for the material.

All three methods can be applied in the construction/refurbishment sector to ensure availability of materials for manufacture. The most effective method would be the 3 bin system, as this will enable the manufacturer to keep stock for the required demand. If there is low stock then it, would be a trigger from the operative to inform the relevant staff to order in more parts from the supplier. This is a cost effective method and another excellent way of managing inventory on manufacturer and at the supplier sites. The disadvantage of this method is that it can be difficult to implement in the production area due to the time to educate the staff on how the method is used. Additionally, if the method is not executed effectively then this can hinder the production process and cause issues such as increased manufacturing time and cost, as a result of delay in parts arriving to the line and systems not correctly set up between the supplier and manufacture to ensure the correct parts are delivered on time.





5.4.4 Poka Yoke This is a Japanese term that means “mistake proofing”. The aim of Poka Yoke is to develop processes, hardware or software solutions without missing parts, misassembling components or incorrect processing during manufacturing and production. This is to support manufacturing operations by error-proofing the process, ensuring that materials can only go in a certain way when produced/assembled (i.e. ‘correct way of building’). Poka Yoke is a device that prevents a process from making an error (i.e. ‘predication/prevention’) or a defect from being passed on to the user (i.e. ‘detection’) (S.Schmidt 2013). Poka Yoke is a solution approach for mitigation as part of the process failure modes and effects analysis, when looking at flat pack furniture Poka Yoka is applied to ease the assembling of the panels by ensuring that the nuts and bolts can only fit in a certain way into the specific panel. Figure 8 illustrates, at high level, of how Poka Yoke can be applied to the assembly line of wall panels.

Figure 8: Poka Yoke Model of Wall Panel Assembly





5.4.5 Seven Wastes of Lean Manufacturing This is a set of focus area tools that can help to reduce waste in-between the steps and processes, thereby helping to reduce costs. Regardless of the business nature/activity there will be elements of value add and non-value add tasks. The idea behind this method is to minimize waste while maximizing the value of the customer (J.Taylor, n.d.).

Below are some areas that tend to accumulate cost when it could be avoided. Examples have been provided from the production area for the construction sector.

Transport excessive movement of people which could be walking significant distances between each workstation; sending vehicles throughout the day with half empty with small objects to deliver to the manufacture, when one consolidated delivery twice a day would be sufficient.

o How many times is a product or material moved in the process?

o Do the materials for the panel get moved several times before being assembled or painted?

Inventory excessive storing of parts or pieces and storage of cost.

o How much WIP is there between each workstation or on site?

Motion how many times does the individual have to bend, turn, reach or lift the part before carrying out the manufacturing operation?

o Are the materials easily accessible for the individual to assemble a panel for the house? Or do they need to twist or turn to fetch or use special equipment to carry out the task?

Waiting for parts from the supplier or internal storage: waiting on information which could be crucial to the project.

o What is the waiting time between each build/work station for the part to be built?

o Is the supplier delivering the parts on time for production to carry on or is there a waiting time?

Over production making more than what is immediately required will have a knock on effect with regards to storage, time, cost and also labour.

o Are panels for a house being over produced? Is this not a waste of time and money?

Over processing over delivering the product with tighter tolerances or higher grade materials than are necessary. This is a cost that can be avoided.

o Ensuring that the end result is to the customer’s expectation and not exceeded or over worked. For example, the paint work on the panel is clean and smooth to how the customer would expect it to be and not rough with patches of paint missing. If an satisfactory finish can be obtained with one or two cost, then don’t apply three.





Defects the time used to rework a defective product or the cost of scrapped material will be an additional cost.

o Are there quality control measurements in place for identifying defects on a panel? Each work station could have a quality control check sheet to ensure the product is meeting the required standard before moving on to the next stage or to the reworked area or worst case the scrapped/damaged area.

Skills are the staff utilised or are the tasks be delegated with inadequate training?

o Do colleagues need to be trained in using a certain tool to help produce the panel for the house? Are the staff skilled to carry out the task or do they require training?





5.5 Control

5.5.1 Lessons Learnt A ‘Lessons Learnt’ provides useful project management information gained through experience that the organization should retain for future use, which can be relevant for other similar projects. A Lessons Learnt is a document which captures the relevant information such as “what went well” and what needs to be improved next time a project is carried out. Figure 9 shows how a “lessons learnt” can be populated, with areas of improvement and the successful factors of the project.

Figure 9: Lessons Learnt Template (Blog 2015)





6 Conclusion

After reviewing and summarising the different applications of the methods used in other manufacturing sectors, it is clear that the construction/refurbishment sector can apply the above methods to reduce cost, time and wasteful duplication of tasks. These methods will also support a closer collaboration between supply chain parties which will improve both process and project performance.





7 Bibliography

A, M,F.Seder and M,H,F.Alhazza. 2014. “Review on the Theory Of Attractive.” Journal of Advanced Science and Engineering Research 88-102.

B, Jack. 2004. Kano Model Tutorial. Accessed March Monday, 2016. www.asq.org.com.

Blog, Robert McQuaig. 2015. Lessons Learned Excel Template. 12 January. Accessed April 17, 2016. www.robertmcquaig.com.

C.Peters and I.Blohm and J, M.Leimeister. 2015. “Anatomy of Successful Business Models for complex services: Insights from the Telemedicine Field.” Journal of Management Information Systems 75-104.

Government, HM. 2012. Industrial Strategy: Government and Industry in Partnership. London: Government Office.

J.Taylor and J, Sinn and J,M.Ulmer and M,A.Badar. n.d. “Proposed Progression of Lean Six Sigma.” The Journal of Technology Studies.

L.Li, C.Guo and Z.Guan and Y.Chen and. 2015. “Optimization of Production System Based on Lean Thinking.” International Journal of u- and e- Service, Science and Technology 405-416.

L.Sparks, J.Ferine and. 2009. Logistics & Retail Management. London.

M.Christopher. n.d. “The Agile Supply Chain : Competing in Volatile Markets.”

N.Anisor, N.Raluca and. 2014. “Results of kanban method implementation on a flexible manufacturing system.” Engineering 145-150.

P.Baker, A.Rushton and P.Croucher and. 2006. The handbook of Logistics and Distribution Management. Glasgow: Bell & Bain.

S.Ponticelli, D.Aloini and R.Dulmin and V.Mininno and. 2012. “Supply chain management: a review of implementation risks in the construction industry.” Business Process Management Journal 737 - 761.

S.Schmidt. 2013. “Preventive methods in logistics poka - yoke and failure mode and effect analysis (FMEA).” ACTA TECHNICA CORVINIENSIS – Bulletin of Engineering 27-30.

W, J. Glover and J,A.Farris and E,M. Van Aken. 2014. “Kaizen Events: Assessing the Existing.” Engineering Management Journal 39-61.

Wikipedia. 2016. Value Stream Mapping. 7 May. Accessed May 10, 2016. www.wikipedia.org.



PMO-004-F6 (v5.0) Review of existing Supply Chain Methods in other Sectors

review of existing supply chain methods in other · pdf file5.1.1 qfd – diagnostic ......

Documents