Planning, Scheduling and Execution
Planning your value stream is an ongoing activity. Business volumes change, new products are introduced, older products are retired. Planning begins at a strategic, high level basis with Lean Sales and Operations Planning where the value stream is used to confirm capacity for the production plan. Planning also includes calculating the right levels of supermarket inventory at every level (finished goods, WIP and raw materials), kanban reorder points, and FIFO lane sizes.
Scheduling begins where planning leaves off moving beyond forecasted levels of demand to actual customer orders. All work is launched at one point, called the pacemaker, in a lean value stream. Visual factory then guides flow downstream from the pacemaker to the customer while pull signals control all upstream processes. The schedule must be confirmed for both material availability and capacity. A demand leveling strategy allows work to flow more smoothly by buffering mix and volume variation using finished goods inventory for make-to-stock (MTS) businesses or by using a flexible work force or work schedule for make-to-order (MTO) businesses. A hybrid MTS/MTO strategy can be very effective to gain the benefits of inventory buffering with as few products in inventory as possible.
Execution is the domain of the shop floor where the requirement is simple, visual controls. If the FIFO lane is empty, then downstream work must stop. If the FIFO lane is full, then the upstream process must stop. If there is a kanban to replenish an item, then work is authorized. With no kanban, work must stop. The heijunka schedule created in the scheduling process determines what products to launch, in what order and quantity. The remainder of the value stream execution responds dynamically and naturally.
Lean Sales and Operations Planning
Sales and Operations Planning is the established discipline to synchronize sales plans with production plans and finished goods inventory. Operating at the product family level, S&OP typically looks out over a long-term horizon normally 12 to 36 months. This provides visibility and the ability to smooth production considering seasonality and longer term trends. The value stream model is used to confirm the capacity for the production plan providing a much more detailed analysis than traditional Rough Cut Capacity Planning. The benefit of a longer term planning is to have enough lead time to address capacity shortfalls whether by expansion, contracting, or capital investment.
Supply Chain Management
Once a S&OP plan is in place, longer term supplier agreements can be established based on overall volumes. This supports a lean philosophy to negotiate agreements using the time-phased forecasted levels from S&OP for planning but controlling actual execution using pull signals or kanban.
FIFO and Supermarket sizing
Also based on the S&OP demand level, the optimum level of inventory in supermarkets for finished goods, WIP and raw materials can be calculated. Safety time allows you to buffer for both supply and demand variation and to include service levels. The supermarket size also determines the number of kanbans and their reorder points. This is dynamically recalculated based on the value stream demand and the process capabilities in the replenishment loop providing an integrated kanban solution.
Demand Leveling Workbench for Heijunka Scheduling
The actual mix and volume of customer orders will always be different than what was forecasted. The goal however is to release as even an amount of work as possible into the value stream. This is done using the buffering appropriate to the business model whether MTS, MTO, or hybrid. The demand leveling process includes analysis of the effects of batching and load balancing as well as confirmation of material availability and capacity not just at the pacemaker but for the entire value stream. Finally, the demand leveling process creates a heijunka schedule using a fixed interval basis for scheduling. This simplifies scheduling and execution over traditional MRP dispatch lists and also over Finite Capacity Scheduling push schedules.
Capacity Reservations with Available and Capable to Promise
As intervals are reduced from lean efforts freeing up substantial inventory, the process of committing to customer orders becomes more challenging. By opening up future schedules in advance, reservations of capacity can be made for specific customers, RFPs, or quotes. This ensures that committed dates can be achieved in analogous fashion to MPS orders in traditional MRP environments.
Pull management using Kanbans
Once you have calculated the number of kanban cards needed in supermarket sizing, you can either run your pull system entirely manually with a manual kanban board or you can use VSEM to electonically track every kanban and integrate with VSEM easily with bar code scanners from your existing data collection system. Electronic kanbans provide a complete execution solution including an electronic kanban board and electronic notifications.
Supplier kanban management
As you extend your lean initiative to your supply chain, your suppliers can be set up to receive and update their kanbans electronically using an internet connection and a web browser. e-Kanban with suppliers completes the planning begun with Supply Chain Management. As the supermarket restocked by your supplier goes below order point, email notification is automatically triggered notifying them of new kanbans to fill.