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Transitioning to Lean with Oracle Flow Manufacturing [ID 433994.1] Modified 21-AUG-2010 In this Document Abstract Transitioning to Lean with Oracle Flow Manufacturing THE COMPETITIVE NECESSITY OF LEAN THE POWER OF LEAN TRANSITIONING TO LEAN 1) Implement a Kanban pull system 2) Implement a Flow line 3) Streamline the order to delivery process THE LEAN SUPPLY CHAIN AND BEYOND Type WHITE PAPER Status PUBLISHED

Applies to:
Oracle Flow Manufacturing - Version: 11.5.8 to 12.0.0 - Release: 11.5 to 12 Information in this document applies to any platform. Checked for relevance 21-AUG-2010

Abstract
This white paper focuses on lean execution strategies within the enterprise and across the supply chain, and highlights the advanced capabilities of Oracles Flow Manufacturing module in lean execution and enabling the transition from a discrete, push based manufacturing environment to a flow, pull-based one. These are discussed in the following topics: The Competitive necessity of Lean Covering the increasing pressures on Manufacturers today to cut costs and become more efficient with increasingly global competition and higher customer expectations. The Power of Lean How adopting Lean techniques can dramatically reduce cycle times, improve quality, reduce waste and improve the bottom line. Transitioning to Lean Covers the typical steps that companies go through when transitioning from a discrete to a Lean environment and how Oracles mixed mode manufacturing capabilities can ease the transition. The following functions from Oracle Flow Manufacturing suite are highlighted: Graphical Kanban Workbench combines kanban setup, kanban planning, pull sequence definition, and planning simulation all in one graphical interface. Line Design and Balancing - the Graphical Line designer and Mixed Model Map functions enable visual line design and line balancing by highlighting resource constraints and other bottlenecks in the production process. Scheduling & Sequencing Create Flow Schedules directly from Sales orders or Planned orders and sequence production using rules based on attributes (of the Sales order, Flow schedule) and constraints (including group by, order by, required/forbidden transitions). Feeder Line Synchronization / Outbound Broadcast sequencing Functions which takes the sequenced flow schedules and synchronize your feeder lines and components to the main assembly line. Flow Execution Workstation Intuitive and configurable user interface for managing production execution.

Transitioning to Lean with Oracle Flow Manufacturing THE COMPETITIVE NECESSITY OF LEAN
Manufacturers today face a variety of challengeslong lead times, too much or too little inventory, inconsistent product quality, and the inability to adapt to changing demand. As globalization has extended the supply chain, the need to identify waste and reduce costs, not only in the manufacturing process, but also in the whole supply chain, has become essential for Manufacturers to compete in the face of global competition. Additionally, the advance of the internet and the increased expectations of consumers to be able to customize their order, track it real time and have it delivered at web speed has forced manufactures to look at ways to be more demand driven, provide advanced customization capabilities and, at the same time, reduce cycle times, improve quality and lower costs. The outdated approach of push based, high volume manufacturing ensures that machine utilization is high but can lead to excess inventory, poor quality and an inability to respond to shifting demand patterns. One only has to look at Toyota as a prime example of a company that has been using lean initiatives for more than 50 years and managed to increase its global market share and adapt quicker to changing consumer demand (such as hybrid models) than its other competitors. These are some of the main factors that are driving Manufacturers to look at Lean techniques, which promises a triple win for consumers better quality at lower cost with more variety.

THE POWER OF LEAN

At the end of World War II, Sakichi Toyoda, founder of Toyoda Spinning and Weaving Company, dreamed of providing cars for the general public, much like Henry Fords dream thirty years earlier. He chartered Taiichi Ohno to put in place an efficient production system to produce high quality automobiles. Over the next three decades, Ohno developed the Toyota Production System, now known worldwide as Lean Manufacturing. The foundation of Ohnos system was the absolute elimination of waste and Ohno discovered that the combination of built in quality, rapid product flow, simple work instructions and the use of inventory supermarkets (or kanbans) for material replenishment led to the lowest cost, shortest lead time and highest quality products possible. Some of the main characteristics of Lean Manufacturing are: Elimination of waste Including overproduction (excess Inventory), waiting (including non-value added setup and move time), defects (requiring additional rework or scrap) and ignoring knowledge (not taking advantage of the employee knowledge base). Work with suppliers to improve quality and deliver smaller shipments more often with the ultimate goal to deliver directly to the line. Typically blanket purchase orders are negotiated with suppliers with kanbans as the actual material pull request. Just-in-time processing: a part moves to a production operation, is processed immediately, and moves immediately to the next operation minimizing WIP. Production based on actual demand rather than inaccurate forecasts. Quick changeovers of machines and equipment allow different products to be produced with one-piece flow in small batches. Defect prevention rather than inspection and rework by building quality in the process and implementing real time quality feedback procedures. Pull based material replenishment via kanban cards or electronic kanbans. As Lean has expanded to other industries where the demand can be less stable and the consumer may be offered a broad range of product options, additional techniques, such as those used by Demand Flow Technology (developed by John Constanza in the early 80s) can determine the best, most optimal mix of a family of products appropriate to a particular line or cell. Here, demand is typically aggregated by line, which allows for both the line design and the management of the flow line to be accommodated with a changing mix of products on a daily basis thus minimizing the impact of seasonal or cyclic fluctuations in customer demand. Additionally, operators are trained and certified for specific work and can flex up and down the line to allow maximum flexibility in meeting variable demand and production changes. Nowadays, virtually all major manufacturing companies have some form of lean initiative underway. The power of lean lies in its ability to reduce costs in all areas by challenging every step that does not add value to the customer. Business processes that may have been taken for granted for decades are

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candidates for elimination and are reviewed during Kaizen (continuous improvement) events, which are attended, by the owners and operators of a process to make incremental improvements to that process. Most companies (including lean leaders like Toyota and Pella Corporation, a major American window and door manufacturer), will tell you that these kind of continuous improvements never stop and that kaizen can be applied to virtually any part of the supply chain, including collaboration with suppliers and customers. Additionally most companies will combine Lean Manufacturing techniques with other initiatives such as Six Sigma (focuses on the statistical methods to put in place a parts-per-million performance metric), 5S (focuses on discipline, tracking, organization, housekeeping and consistency) and tracking of lean metrics (such as linearity, 1st pass yield etc) to help sustain the change. Benefits of implementing lean and Oracle Flow Manufacturing The benefits of successfully implementing lean and Oracle Flow Manufacturing can be dramatic: Pella Corporation (a leading door and windows manufacturer) - Reduced Purchase order costs by 50% and processing time by 27%. Thermo King (a world leader in transport temperature control equipment) increased plant production by 33% and reduced vendor and receiving activities by 33%. IMMI (a leading producer of commercial safety systems) cycle times down over 90%, reduced inventory by 25% and reduced customer returns by 52%.

TRANSITIONING TO LEAN
Although the benefits of Lean Manufacturing are dramatic, the transition to Lean can sometimes be a daunting task for any company. Oracles Discrete Manufacturing solution is designed to help enable the transition by supporting mixed mode Manufacturing and therefore allowing you to gradually move to a more flow based approach while maintaining your existing manufacturing processes. Oracles Work in Process product uses discrete jobs to drive production with built in quality plans, flexible shop floor control and resource and transaction tracking. Oracles Shop Floor Management product enables complex lot transactions, dynamic routing, end-to-end genealogy and the modeling and tracking of operation yield costs. In conjunction with Oracle Flow Manufacturing, Oracle supports the entire build-to-order manufacturing process, including make-to-stock, configure-to-order, discrete-repetitive, assemble-to-order, and engineer-to-order. Since Lean is a journey where, by definition, there is always room for improvement, the following steps are one approach to moving to a demand driven, pull-based environment while minimizing the inherent risks involved in any change:

1) Implement a Kanban pull system

A company will achieve the most dramatic results if they take the time and energy to redesign their production into dedicated lines or cells that can build a mix of products pulled from customer demand, as described in section two of this paper. However, many companies have been able to achieve tangible results simply by implementing a kanban pull system on products or components with relatively consistent demand patterns. Further improvements to the kanban system can be made as the manufacturing floor transitions to a line or cell approach. The kanban system is based on the simple principle of replenishment. When final assembly uses components and sub-assemblies, internal kanban signals are sent to replenish material from stores or to initiate feeder line production. External kanban signals are sent either to suppliers or to another business unit (in the form of an interunit transfer). Even customer orders, whether you supply directly to a consumer or another distributor, can be thought of as a form of kanban, pulling product from final assembly. Kanbans can take many forms, from physical kanbans cards to empty containers or visual indicators (such as light signals) to indicate that material is required or that production should begin. One of the main benefits of a kanban system is that it puts a limit on inventory build up i.e. when a kanban is full, no additional product should be made or material replenished. By limiting inventory, less cash is tied up, less space is used and WIP inventory is dramatically reduced thereby reducing your products lead times. Since Kanban sizing is usually calculated based on dependent demand for the material and replenishment lead time, it is important to have a good understanding of your product (or product families) demand patterns in order to accurately size your kanbans correctly.

Example of a Kanban Card Pick components that have reasonably stable demand to start with remember that even though the product family demand may vary, the dependent demand may be stable due to common components. Also, you will want to negotiate blanket purchase orders with your suppliers, have them deliver to you more frequently (preferably multiple times per day) and monitor supplier quality with the ultimate goal of delivering directly to the production line. The kanban signals themselves (whether physical cards or e-kanbans) will be the actual pull request to the supplier and the total pull amount should be allowed to flex up or down based on a pre-specified tolerance i.e. if the line goes down then the number of kanbans requested for the next delivery will be less than the normal pull amount. The Graphical Kanban Workbench is part of Oracles Flow Manufacturing suite and combines kanban setup, kanban planning, pull sequence definition, and planning simulation all in one interface. Kanban pull sequences define the replenishment chain the relationship between an item, its' point of use and its point of supply (another stores location, a supplier, a feeder plant or feeder line). For example, I may pull from RIP (line side location) to Stores and then from Stores to a Supplier. Each link in the chain could have a different kanban size (or number of containers), based upon the differences in replenishment times and other factors.

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Graphical Kanban Workbench Once the pull sequences have been defined, a kanban plan can be created to determine the kanban sizes or number of kanban cards. Typically kanban sizes are calculated when setting up a Flow line initially and are based on a forecast. The end assembly demand is exploded through the bill of material, the component demand at each location calculated and, using the pull sequence information, the kanban sizing calculated. As well as driving a kanban plan from forecast it is also possible to drive it from planning or from actual production and then compare the plans to see if there are any potential kanban shortages. The production kanban plan can optionally be updated with any changes and non-replenishable (one time use) kanbans can be created to satisfy any short-term demand spikes. Additionally, the workbench can be used to monitor demand patterns, track kanban statuses and replenish kanbans. In summary, kanbans are the way that customer demand, production and your suppliers and extended supply chain all stay in sync.

2) Implement a Flow line

The biggest impact in manufacturing cycle times and inventory levels will be seen when the production floor is redesigned into dedicated lines or cells that can build a mix of product. Ideally these lines or cells should be able to handle one-piece flow of product down the line. This is not always possible due to machine setups, but the goal should be to get as close to a one piece flow as possible by implementing setup reduction programs like SMED which can reduce setup and changeover times from hours to minutes. Start with the final assembly process (closest to the customer) and with parts that have a reasonably stable demand. Begin by mapping out the process for each product in its current state, while identifying what steps are value added and which are not, as well as which are critical to quality (value stream mapping). Eliminate as many of the non-value added steps as possible now, and mark the rest as targets for future Kaizan (continuous improvement) events. Next, group those products into product families that share a relatively common process flow. Then, determine if there is commonality of processes across product families such that multiple families could be built on the same line (the more products that can be built on one line, the more flexible your process will be). Once the products per line are determined, calculate the TAKT time, or operational cycle time, for your line based on the projected average daily demand for the products on that line. This time represents the frequency with which product needs move down the line in order to meet your demand at capacity. This information is used with your process map to determine how to group work into operations balanced to your TAKT time, or customer demand. Once this is done, you can physically re-arrange the shop floor to create the balanced operations in consolidated line. Often, after the line is started, there will be minor adjustments needed as actual parts flow through the line and operations where inventory is building up become apparent. Shift resources, move activities from one station to another or implement In process Kanbans (buffer stock located on either side of a constrained resource) to help balance the line. Oracle Flow Manufacturing uses the Graphical Line Designer and Mixed Model Map tools to define the process map and resource details, identify non-value added steps, calculate the TAKT time and balance the line based on available resources. If the line has already been created and balanced on paper or using spreadsheets, the Graphical Line designer provides a simple way, using drag-and-drop techniques, to select and associate line operations with events to build your balanced line. This tool enables you to link operations to each other as primary, feeder, and/or rework processes and to assign resources, attachments (work instructions etc) and components to events within the operations.

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Graphical Line Designer Once the line is balanced and production is under way, Oracles Mixed Model Map function can be run using actual production as the driver. In this way, any resource or other production bottlenecks created by todays schedule can be identified and worked around. For a more in depth discussion on Oracle Flow Manufacturings Line design and balancing capabilities, the white paper Line Design in Oracle Flow Manufacturing should be reviewed. Once you have a pilot line complete, you can decide to implement more lines at once. Start with other final assembly products, and then work progressively backwards in the production process till you have mapped out the whole process. Once your internal shop is lean, you can extend the same principles to your suppliers and distribution chain. In addition, implementing 5S principles, which focus on workplace safety, order and cleanliness will produce higher quality product sand more efficient working environment.

3) Streamline the order to delivery process

Companies aren't solely looking to reduce cycle times or waste at the plant, but additionally are looking to be more demand-driven, and to be able to redirect resources to profitable opportunities faster than their competitors can. In a Flow environment, products are made to customer demand. Sales orders (including configured orders) are used to drive the production schedule with level loading and heijunka techniques used to create an optimal mix for the day. The impact of varying demand or engineering changes is minimized because the cycle times are reduced and a smaller mix of products is made (rather than a large batch of one product). Oracles Line Scheduling Workbench uses Sales orders or Planned orders as demand and, based on the scheduling rules selected (including mixed model and level loading), will create flow schedules with an associated build sequence for the day and constrained to the line rate. This schedule represents a list of what you need to build in the order in which you need to build it, tied directly to the customer order. The system can also move any additional load on to an alternate line.

Line Scheduling Workbench The workbench gives a view of production on the line by item for the week and the linearity (scheduled vs. actual production) with the ability to drill down into the flow schedule details. If a more complex mix of products is required on the line, Oracle Flow Manufacturing has a powerful constraint based sequencing engine, which allows sequencing rules to be created based on attributes and constraints. The sequencing attributes include Sales Order dates, Sales Order properties (such as customer priority etc), Flow Schedule properties, Item properties (weight) and Component (color). The constraints include component availability, forbidden or required transitions (i.e. black must follow white), spacing and order by (ascending or descending). These user defined rules are

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then used to model the logical and physical constraints of the production lines as demand is scheduled to ensure the effective use of resources and provide the best, most optimal mix of products.

Constraint based Flow Sequencing Once the main assembly line production sequence has been established, feeder lines can be synchronized to the main line using the Feeder Line Synchronization function in Flow Manufacturing. This ensures that the feeder schedules arrive just in time to supply the main assembly line. Additionally, for sub-assemblies or components which cannot be ordered until exact configuration of the parent is known, there is a process called Outbound Broadcast Sequencing which creates one time kanbans which are communicated to a supplier with the build sequence specified so that the supplier can load their truck in reverse sequence and deliver the components / sub-assemblies to the main line exactly when required Operation method sheets (work instructions) are used to ensure that standard procedures are being followed and are typically broken into work content, verification steps and quality control steps (each indicated by a different color and shape in the instructions). Oracles Flow Execution Workstation can enable a paperless shop floor by providing your operators all the information they need to perform and record their work in an easy to use, HTML based interface. It is used on the shop floor by operators to view electronic work instructions, record assembly and component serial / lot numbers, record component qty changes or substitutes, view ECOs, capture quality information and complete the schedule or (optionally) complete at the operation level. The user interface and business flows are completely configurable so only the information and processes required by your business are displayed and transacted. Serial and shipping labels can be printed automatically and, for those components that are not kanban controlled because they are too large or because component kits are required, pick plans can also be automatically generated upon operation completion.

Electronic Work Instruction

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The Flow schedule number can be wanded directly into the workstation and serial and lot or component qty change information recorded at each line operation (so they can be captured as they occur on the line) or a simple express completion transaction can be done at the end of the line. The components are then backflushed from the RIP locations and, if there is a sales order associated to the flow schedule, the sales order will be automatically reserved and a notification sent via workflow allowing the order to be shipped directly from the production line. Shipping labels and ASNs can also be generated at this time.

Flow Execution Workstation Quality information can be captured directly within the workstation itself and quality plans defined as mandatory so that operators cannot move forward with the completion step unless the relevant quality data is entered. You can collect data either by direct data entry or in the background, as well as retain any quality data associated with lot and serial numbers. Once you associate a collection plan with the work orderless or flow operation completion transaction, it automatically transfers contextual data from the transactions into the quality collection plan. The use of collection plans and quality tasks reduces rework and scrap and produces a higher quality product. Pella Corporation, who use Oracle Flow Manufacturing extensively, make use of a technique called pulsing in which they focuses on specific cells to compare the scheduled operation cycle time to the actual cycle time. The operator scans to indicate that they have completed an operation and as the actual operation time begins to move outside of the scheduled TAKT time, different types of music are played to highlight this problem and three large LCD screens over the shop floor display the specific cells that are being tracked to show if the actual cycle time for those operations are moving into the red. Since part of the Flow mantra is to work as a team it is very useful to have these highly visible (or audible) indications when there are problems on the line so that the rest of the team are aware of the issues and can work together to solve them through Kaizen events. In summary, the order to delivery process should be as streamlined and low touch as possible creating a truly demand driven and agile environment.

THE LEAN SUPPLY CHAIN AND BEYOND

The same techniques used to identify waste and non-value added steps in the manufacturing production process could be extended out beyond the four walls of the plant to the rest of the supply chain. From working with customers and marketing to help smooth demand, working with suppliers to improve quality and deliver more frequently, and working with fulfillment, receiving and transportation to reduce non-value added steps, implement built in quality and introduce continuous improvement processes, Lean Manufacturing methodologies can be applied to the supply chain to achieve improved quality, reduced cycle times, improved customer satisfaction and supply chain agility. Coupled with other initiatives such as six sigma, 5S, value stream costing and the tracking of Lean metrics such as linearity, throughput, and on time delivery, the transformation to a demand driven Lean supply chain can be achieved. And, with Oracle's Lean enabling applications, you can take your initiatives to the next level, accelerate the transformation and sustain the gains.

Attachments card (9.21 KB) Graphical Kanban Workbench (51.69 KB) Graphical Line Designer (35.77 KB) Line Scheduling Workbench (61.75 KB) Constraint based Flow Sequencing (66.77 KB) Electronic Work Instruction (117.01 KB) Flow Execution Workstation (66.2 KB)

Related

Products Oracle E-Business Suite > Manufacturing > Discrete Manufacturing > Oracle Flow Manufacturing Keywords PULL SEQUENCE; FORECAST; FLOW SCHEDULES; KANBAN CARDS; CARDS; GLOBALIZATION; OUTBOUND

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