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

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

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

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

Lean Customers: Automotive

South Africa
PT ASTRA

SIEMENSVDO

GRUPO ANTOLIN-IRAUSA, S.A.

TVS MOTOR COMPANY


India
China Motor
Corporation
SOFEDIT
SAP AG 2006, Lean Manufacturing Developments ERP 2005, Jutta Wesemann-Ruzicka

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

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

Lean Manufacturing: Transactions in SAP ERP

Here you see standard transaction


codes in SAP ERP associated with
functionality.

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

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)

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

Sequence of Events: Materials

Indicate component
quantity used for each
task

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

Sequence of Events: Production Resources and Tools

May assign tools, equipment,


and drawings to each task

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

Graphical Display of Line

Graphical display of line can show


main path and all feeder paths

Critical path is designated by


red highlighting

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

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

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

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

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

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

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

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

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

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.

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


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.

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

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.

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

Planning Strategy

Scheduling Stategy Profile

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

Planning Board

Work is sequenced according to strategy profile.


Here, setup times are not optimized.

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

Planning Strategy Optimize setups

Designate to optimize based upon setup time.

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

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.

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

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.

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

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.

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

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

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

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)

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

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

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

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 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

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

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

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

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

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

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

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

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

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

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

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

In-house Production with Reporting Point Kanban

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

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

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

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

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

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

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

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

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)

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

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

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

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

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

Heijunka Board - Execution


1. Sequence planning board supporting sub-day time segments

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

Heijunka Board - Execution


2.

Kanban board (graphical or tabular format)

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

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 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

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

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

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

Your Turn!

Q&A
Jutta Wesemann-Ruzicka
Solution Manager

Jutta.Wesemann-Ruzicka@sap.com

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

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