Introduction To Lean Manufacturing SAP

Introduction to
Lean Manufacturing
Enhancements
Part 1: SAP as a Lean Manufacturing Enabler
Part 2: Lean Manufacturing Enhancements
Part 1:
SAP as Lean
Manufacturing Enabler
Key Drivers and Business Strategies
How does SAP Enable Lean?
Manufacturing Key Drivers and Pain Points
Long manufacturing lead times

Difficulty in achieving on-time delivery targets
Low inventory turns (unnecessary high inventory level)
High demand for storage space at a production line
Less labor productivity because of non-value-added activities
Limited flexibility to adapt to unplanned events
SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka
Customer Business Strategies
Manufacturing Strategies
Production to customer demand or based upon consumption
Shifting to single-piece-flow approach
Poka yoke (mistake-proofing)
Visual management
Kanban
Event and exception based processes
Organizational Strategies
Jidoka: operators empowered to stop line if there is an issue
Kaizen: continuous improvement
Top 10 Business Initiatives Influencing IT Investments
AMR Research recently surveyed

over 500 IT and business
executives in 7 manufacturing
vertical industries to determine the
key business initiatives driving IT
spending in 2005.
In all industries, Lean

manufacturing was identified as
the first or second most
important initiative.
Source:
AMR Research: East Meets West Lean
Manufacturing and ERP Are a Better Fit Than
You Think, October 2005
SAP as Enabler for Lean Manufacturing
Recent evidence [...] uncovered that automotive manufacturers that are backing
their Lean efforts with an SAP platform are not only outperforming automotive
companies that have chosen Oracle, they are even better equipped to beat the
best, with automotive SAP customers outranking even the Best in Class for
manufacturing cycle time.
Maura Buxton, Aberdeen Group,
Automotive Industry Leads the Lean Supply Chain Charge with SAP Solutions, August 2006
Lean Customers: Automotive
South Africa
PT ASTRA
SIEMENSVDO
GRUPO ANTOLIN-IRAUSA, S.A.
TVS MOTOR COMPANY

India
China Motor
Corporation
SOFEDIT
Part1:
SAP as Lean
Manufacturing Enabler
Key Drivers and Business Strategies
How does SAP Enable Lean?
How is Lean Manufacturing Enabled by SAP?

Supply Chain Management
Customer & Supplier Collaboration
Kanban
In-house movement, stock
transfers, and external procurement
Mixed-Mode Manufacturing:
Event-driven or one-time Kanban
- Make-to-Order Manufacturing
Kanban replenishment with or

without MRP
- Repetitive Manufacturing
Internet-based electronic Kanban

for external procurement
Order-less production
- Flow Manufacturing Techniques
Preventive/Predictive Maintenance
Line Design
Sequence of events
Operational method sheets
Capacity line balancing
Quality Management
Statistical Process Control
Business Intelligence & Integration
Takt calculations
xMII
Detailed planning and sequencing
KPIs, Analytics, Alerts
Backflush
Role-based configurable portals
Lean Manufacturing: Transactions in SAP ERP
Here you see standard transaction

codes in SAP ERP associated with
functionality.
Sequence of Events: Tasks
Detailed tasks are listed with

respective time for setup, labor,
machine, or move
Indicate if each task is Non-ValueAdded (NVA)
Sequence of Events: Materials
Indicate component
quantity used for each
task
Sequence of Events: Production Resources and Tools
May assign tools, equipment,

and drawings to each task
Graphical Display of Line
Graphical display of line can show

main path and all feeder paths
Critical path is designated by

red highlighting
Operational Method Sheet
Material and Tasks are

displayed for each workstation
Drawings or graphical
representations are displayed
for each workstation
Tools and equipment may be listed for

each workstation
Line Balancing: Volume Design and Takt
Total volume of units (products)

planned to run on line is 150. Total time
available is 600 minutes. Therefore,
Takt is 600/150 or 4 minutes.
Volume of each product to be produced

on the line
Line Balancing: Total Product Cycle Time
For each product, you can see total

execution time or Total Product Cycle Time
(TPc/t) and the amount of time that is nonvalue-added (NVA). NVA is muda, or waste,
and may be targeted for elimination to
reduce cycle time.
Note: Takt violation for this product at

this operation 4.1 is greater than 4
minute takt or available time
Graphical Line Balancing: Takt Violation
In a graphical display of each

product by workstation, you can
see the Takt violation for a
product highlighted in red
Graphical Line Balancing
When task 70 is selected, you can see that

it is system test and .90 minutes are
required at the workstation. If operators
are cross-trained at each workstation, this
is a candidate for work to be moved to
better balance the line.
Graphical Line Balancing: Drag & Drop Operation
Task 70 can be dragged and dropped to a

different workstation. This is a simulation until
saved once saved, it will update Sequence of
Events (SOE) and may be pulled into the
Operational Method Sheet.
Planning Board - Level Loading for Production
This section shows Primary and Alternate

Lines or work centers where orders may
be scheduled and sequenced.
Pool of orders that need to be scheduled and

sequenced on the line.
Planning Strategy
Scheduling Stategy Profile
Planning Board
Work is sequenced according to strategy profile.

Here, setup times are not optimized.
Planning Strategy Optimize setups
Designate to optimize based upon setup time.
Planning and Sequencing Setup Optimization
Work is now scheduled in a different order to

minimize setup times. Some of the setups are
now shorter. Throughput time is shorter.
Kanban Board: Demand Source View
Kanbans may be selected and click on To

Empty or To Full to change status and
respective transactions occur automatically.
The boxes above represent Kanban

containers which are color-coded to
indicate status.
Kanban Control Cycle
Control cycle details such as supplying

area and plant.
View the number of kanbans and kanban

quantity as well as designating maximum
amount of empty containers that may
generate an alert to take action.
The vendor and agreement designated will

be used to automatically generate releases
to the supplier.
Part 2:
Lean Manufacturing
Enhancements
Enhancements to existing Kanban Processes

Alert-based Kanban Process Monitoring
RFID-enabled Kanban
Reporting Point Kanban (Kanban for WIP Material)
Production Leveling based on Heijunka Processes
Kanban Analytics
Kanban Board Automatic Refresh

Benefits:
Kanban Boards can be used for monitoring the shop floor with user
interaction only for exceptions
Kanban Board Tabular view
Benefits:
Provides the same information as the graphical board in a tabular display
Easy to configure, easy to use
Extensible to display additional system and customer-specific fields
Sophisticated print function
Can be displayed in web-based user interfaces (Portal)
Kanban New Business Application Interfaces

New BAPIs for Kanban Data and Control Cycles:
BAPI_KANBANCC_EXISTCHECK
BAPI_KANBANCC_GETLIST_ALL
BAPI_KANBAN_GETLIST_ALL
BAPI_KANBANCC_CREATE
BAPI_KANBANCC_CHANGE
BAPI_KANBANCC_DELETE
BAPI_KANBAN_CHANGE
Benefits: Supports customer-specific process control and development
Part 2:
Lean Manufacturing
Enhancements

RFID-enabled Kanban
Kanban Analytics
Kanban Alerting
New alerts supported in the Kanban process:
1.
Alert when errors occur while changing Kanban status
2.
Alert when replenishments are deleted
3.
Alert when maximum limit of EMPTY Kanbans is exceeded
4.
Alert when deliveries are delayed
Benefits:
-
Manage by exception if there is no alert/message, no action is

required
Ease of exception handling
Can configure alerts so only appropriate parties are alerted with

their preferred communication method
Part 2:
Lean Manufacturing
Enhancements

RFID-enabled Kanban
Kanban Analytics
Kanban Process with RFID

Automatic Kanban status change,
goods receipt posting and
creation of the material document
Source
Material
l
Ful
Full
l
Ful
RF Gate
Empty
Automatic Kanban status change and

creation of a replenishment element,
e.g. a PO
Kanban
(with RFID Tag)
RFID in Kanban Business Benefits

Cost Reduction:
Time
No
savings through automatic status change
interaction with screens for end users
Reduced
labor costs
Reduced
cost of incorrect data
Better Process stability

Less
dependence on worker, thus less human error
Part 2:
Lean Manufacturing
Enhancements

RFID-enabled Kanban
Kanban Analytics
In-house Production in Repetitive Manufacturing
In-house Production
with Kanban (current):
mat
mat
mat
Operation 1
Operation 2
Operation 3
Supply Area
mat1
Storage
Location
0001
Storage
Location
0002
Storage
Location
0003
Component
mat1
Routing
Operation 1
Operation 2
RP 1
mat1
mat1
Operation 3
RP2
RP3
Final backflush
Control cycle mat1
In-house Production with Reporting Point Kanban (new)
In-house Production
with Reporting Point
Kanban (new):
mat
mat
mat
Operation 1
Operation 2
Operation 3
Storage
Location
0002
Storage
Location
0001
Storage
Location
0003
Component
mat1
Routing
Operation 1
CC 1
mat1
mat1
Operation 2
Operation 3
RP 1
RP2
RP3
SA 1
SA 2
SA 3
CC 2
CC 3 Final backflush
In-house Production with Reporting Point Kanban (new)

Background:
Kanbans are more effectively used for the shop-floor control
Pull principle in shop-floor control (work load for each operation/reporting point
is represented by an empty kanban); operation n controls the previous operation
n-1 (not vice-versa)
The allocation of material to the work center is assigned dynamically -- due to the
stock level, capacity, etc.
Reporting Points monitor the production progress between operations
Manufactured parts at each reporting point are backflushed to the reporting point
Benefits:
Visibility and reduction of WIP
Assemblies are only produced when needed and in the quantity needed
Avoiding rework
Elimination of waste
Simplified and flexible production process
In-house Production with Reporting Point Kanban
Part 2:
Lean Manufacturing
Enhancements

RFID-enabled Kanban
Kanban Analytics
Heijunka Definition & Business Benefits

Heijunka: Toyota Production System (TPS) term
The distribution of production volume and mix evenly over time
Business Benefits:
Convert uneven customer pulls into an even and predictable
manufacturing schedule
Stabilize the material and value flow
Decrease production lead times and inventories
Increases production flexibility and delivery reliability
Mission: Produce every product, every day, several times
Heijunka Process Requirements

Load Leveling Volume and Mix
Material A
Uneven production volume
and product mix
Material B
Material C
M
Material A
Leveling production volume
Material B
Material C
Material A
Leveling product mix
Material B
Material C
Heijunka Process Requirements

Load Leveling Volume and Mix
Material A
Material B
30 PC
20 PC
Material C
60 PC
Material A
10 PC
Material B
5 PC
Material C
20 PC
Material A
Material B
Material C
Material D
Material E
Material F
Requirement situation
of a shift or day
Lot calculation by MRP

or Kanban control
cycles
Heijunka: Sequencing
/Leveling of finished
goods
Heijunka: Sequencing
/Leveling of semifinished goods
Heijunka Leveling/Sequencing
Several tools and functions already in the SAP portfolio to support
Leveling/Sequencing:
Tools and functions for demand leveling:
SOP
(mySAP ERP)
Demand
Model
Management (mySAP ERP, mySAP SCM)
Mix Planning (mySAP SCM)
Tools and functions for production leveling:

SOP
(mySAP ERP)
Demand
MRP
Management (mySAP ERP, mySAP SCM)
(mySAP ERP, mySAP SCM)
Tabular
Planning Board (mySAP ERP, mySAP SCM)
Capacity
Planning (mySAP ERP, mySAP SCM)
Sequence
Planning (mySAP ERP, mySAP SCM)
Heijunka Leveling/Sequencing
Enhancements leverage key features and functions of mySAP ERP
to support Lean Manufacturing processes:
Pull
principle for the control of in-house production, external procurement and

transport processes using Kanbans
Order-less
or order-independent production planning and control using

Repetitive Manufacturing
Takt-based
planning and scheduling in the Sequence planning
Newly designed process uses the following application areas of

mySAP ERP:
Material
Requirements Planning (MRP)
Repetitive
Manufacturing (REM)
Kanban
Sequence
Planning
Enhanced Heijunka Process:

1) MRP calculates requirements
Lot size calculation within the leveling/sequencing horizon uses fixed lots
representing the relevant Kanban quantities
Fixed lots in short time horizon, daily or weekly lots in long time horizon
2) MRP creates planned orders and projects capacity requirements

Capacity leveling and sequencing is possible based on MRP planned orders
3) Kanban process control production based on actual demand (internal or

external)
Extension of the current process:
The Kanban module (change status to EMPTY) does not create a new planned
order which replaces existing MRP planned orders
Instead the system searches for a suitable scheduled MRP planned order and
links it to the Kanban
This enables keeping the scheduling/sequencing situation stable within the
planning horizon
Additional scheduling/sequencing algorithms
Heijunka Board - Execution

1. Sequence planning board supporting sub-day time segments
Heijunka Board - Execution

2.
Kanban board (graphical or tabular format)
Part 2:
Lean Manufacturing
Enhancements

RFID-enabled Kanban
Kanban Analytics
Kanban Analytics: KPIs available in BI content 7.1.2

Actual replenishment lead time / replenishment lead time from control
cycle
Actual quantity delivered / call-off quantity from control cycle
Wait time (time span between status empty and full), other
interoperation times like empty-transit, transit-full, etc.
Number of defects per time unit
Correction of defects per time unit (time span from defect status to
productive status)
Stock in production supply area (number of full boxes)
Actual empty boxes / maximum of empty boxes from control cycle
Summary - Key Takeaways
- Lean is a top priority in todays manufacturing

environment
- SAP enables Lean Manufacturing processes
through current functionality such as Kanban
- SAP will continue to provide value to our
Manufacturing customers by enhancing our
solutions to more effectively support Lean
Your Turn!
Q&A
Jutta Wesemann-Ruzicka
Solution Manager
Jutta.Wesemann-Ruzicka@sap.com
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Introduction to

Manufacturing Key Drivers and Pain Points

Long manufacturing lead times

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Customer Business Strategies

Top 10 Business Initiatives Influencing IT Investments

AMR Research recently surveyed

In all industries, Lean

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

SAP as Enabler for Lean Manufacturing

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Lean Customers: Automotive

GRUPO ANTOLIN-IRAUSA, S.A.

TVS MOTOR COMPANY

How is Lean Manufacturing Enabled by SAP?

Event-driven or one-time Kanban

Kanban replenishment with or

Internet-based electronic Kanban

Business Intelligence & Integration

Detailed planning and sequencing

KPIs, Analytics, Alerts

Role-based configurable portals

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Lean Manufacturing: Transactions in SAP ERP

Here you see standard transaction

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Sequence of Events: Tasks

Detailed tasks are listed with

Indicate if each task is Non-ValueAdded (NVA)

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Sequence of Events: Materials

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Sequence of Events: Production Resources and Tools

May assign tools, equipment,

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Graphical Display of Line

Graphical display of line can show

Critical path is designated by

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Operational Method Sheet

Material and Tasks are

Tools and equipment may be listed for

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Line Balancing: Volume Design and Takt

Total volume of units (products)

Volume of each product to be produced

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Line Balancing: Total Product Cycle Time

For each product, you can see total

Note: Takt violation for this product at

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Graphical Line Balancing: Takt Violation

In a graphical display of each

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Graphical Line Balancing

When task 70 is selected, you can see that

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Graphical Line Balancing: Drag & Drop Operation

Task 70 can be dragged and dropped to a

SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

Planning Board - Level Loading for Production

This section shows Primary and Alternate

Pool of orders that need to be scheduled and