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Lean Manufacturing along the Supply Chain

efficient implementation at a global operating


automotive supplier

Klaus Gnther, Senior Manager Group Logistics

GRAMMER Milestones
GRAMMERs success started more than 100 years before when Willibald
Grammer founded a saddlery in Amberg. Since then GRAMMER developed itself
from a local manufacturer of seat cushions to a global automotive supplier for the
car and commercial vehicle industry.
1880

Willibald Grammer establishes a saddlery

1954

Georg Grammer produces seat cushions for tractors

1970

Serial production of suspended seats

1982

Production of seats for trucks and busses

1985

Division automotive interior

1990

Production of passenger seats for trains (ICE)

1996

IPO of GRAMMER AG

2004

Development and production of center consoles

2005

Opening of two new production sites in China

2008

Entering the Russian truck market

2011

Takeover of EiA Electronics N.V., Belgium

2012

Joint Venture for truck seats with Yuhua in China

2013

Takeover of Nectec s.r.o., Czech Republic

GRAMMER Globally next door to the customer


As a global player in the passenger car and commercial vehicle industry we are
located on four continents with 26 companies and more than 30 production and
sales/distribution facilities focused on highest quality.

GRAMMER products and markets


Driver seats for tractors, construction vehicles, forklifts and municipal vehicles

GRAMMER products and markets


Driver seats for trucks and buses; seating systems for passenger seats

GRAMMER products and markets


Headrests, armrests and center Consoles for passenger cars

Motivation and initial situation

Supply chain with lean principle

Process and application overview

Functional details

Lean-capable supply network

Motivation and initial situation

Supply chain with lean principle

Process and application overview

Functional details

Lean-capable supply network

Without levelling in production each single demand variation has


a direct impact on the production and supply network
Production plant

OEM

Components 1
Assembly line

Challenges today
JIS plant

Disturbances initiate a shock


wave in planning

Components 2
Low-Runner

Event-driven plan: disturbance, planning, disturbance

Continuous replannig leads to


instable production program
IC plant

Changing sequences disable


optimisation

IC plant

Missing transparency
Supplier A

Supplier B

Supplier A

Ongoing coordination of
involved persons is required

A stable planning and according processes are a prerequisite for levelling in production,
replenishment and procurement processes

LEAN Production and SAP a contradiction?


General question before the LEAN implementation

LEAN and SAP???


Interface to SAP ERP?
IT application support vs. IT-free processes (Kanban, Heijunka)

If supported by IT: standard solution/software or individual development?


Central data access: transparency vs. local and IT-free processes?

* Every Part Every Interval

Benefits of Lean Manufacturing in the supply chain


Quick response on demand variations / faster reaction on market development
Complexity of processes is reduced
Processes are standardised
Increase of quality in operations and logistics
Stock level reduction
Manufacturing processes are decoupled from exceptional events
Number of utilised resources is optimised
Motivation of employees is increased / absence times are reduced

Motivation and initial situation

Supply chain with lean principle

Process and application overview

Functional details

Lean-capable supply network

Supply Chain with lean principles


Define /
simulate
schedule

KANBAN
calculation

Alignment

Supplier park

Production plant
Components 1

Assembly line 1

push

pull
Components 2
Low Runner
Demanddriven

Heijunka

JIS plant

JIS

Assembly line 2

push

supermarket

push

JIS plant

JIS

Goods receipt

Pull
IC plant

IC plant

OEM

External
supplier

Calculation of
safety stock

OEM

Motivation and initial situation

Supply chain with lean principle

Process and application overview

Functional details

Lean-capable supply network

Process steps of the Heijunka levelled Kanban system


Master data maintenance for alignment/levelling

Segmentation

EPEI
calculation

Define
schedule

Simulate
schedule

Segmentation:
Identification of material groups with
individual planning processes and
requirements (e.g. differentiation of high
runners and low runners)

EPEI calculation:
Determination of the minimal lot size

Define schedule:
Specification of time intervals for the predefinition of the production sequence

Simulate schedule:
Align schedule and actual production plan

Material requirements planning

Calculate
safety stock

Alignment

Short-term
planning

Production and replenishment control

Levelling

Pull

Calculate safety stock:


Definition of the safety stock levels
based on number of Kanban boxes

Alignment:

constant production quantities within


planning interval as result of MRP

Levelling:

Creation of the production sequence


according to defined schedule

Pull:

Replenishment of components
according to the real consumption

Process steps and elements of the


Heijunka levelled Kanban system
Master data maintenance for alignment/levelling

Segmentation

EPEI
calculation

Define
schedule

Simulate
schedule

Supported by SAP Enhancement Packages

Enhancement Package 6 is available


The functionality Enhanced Lean

Manufacturing in EhP5 replaces SAP LPO

SAP extended the lean manufacturing


capabilities of SAP ERP (EhP2, EhP4,
EhP5, EhP6) continuously

Material requirements planning

Calculate
safety stock

Alignment

Short-term
planning

Production and replenishment control

Levelling

Pull

Supported by Consulting Solution

Available since Q3/2011 as consulting

solution Lean Manufacturing Planning &


Control (Heijunka) by SAP Consulting

Lean & SAP two different worlds?


SAPs understanding of Heijunka and an adequate IT-solution:

system integrated leveling keeps demand fluctuations from shop floor to enable a more
efficient production process
there are high- and low runners, and production needs to be mixed
different kinds of leveling have to be supported: Push, Push-Pull and Pull-Leveling
Heijunka needs a good visualization
SAP and Lean is not a contradiction, its the combination of the benefits of PUSH & PULL:
SAP covers both approaches, PUSH and PULL

PUSH is the classic planning approach, which is performed mainly by MRP


PULL means consumption based replenishment of goods, and is covered by ERP
processes like JIT, JIS and Kanban
Both approaches can be combined in SAP, so that the long-term planning view can be
improved by short-term consumption information
SAPs consulting solution Lean Manufacturing Planning & Control supports a fully
integrated, IT supported Heijunka process.

System-based leveling with SAP LMPC

Initial Situation:

materials
requirements
fluctuate over
time

but efficient
manufacturing
needs steady
quantities

Solution:

demand fluctuations are covered by a buffer; buffer size is calculated according to fluctuations size
and service level required
goods are produced in leveled, steady quantities, filling the buffer
all calculations are performed by the system; manual interaction needed only in case of exceptions
many other leveling variants possible (e.g. Pull / Push-Pull), depending on requirements

Heijunka-Board the electronic way:


graphical planning table with SAP LMPC add-on

production orders with e.g. leveled quantities can be displayed, sequenced etc.
rhythm wheel / production schedule functionality can be used
mixed sequence of high / low runners
direct access to relevant data
conflicts (e.g. missing components, tools, etc.) can be visualized
solution combines the features of a Heijunka-board, combined with the comfort of a planning cockpit
Capacity
view

Stock level
view
Visualization
of order
sequence

flexible &
adjustable
menus and
buttons

Alerts, e.g. for


buffer level,
constraints not met,
etc.

Sequencing
according to
different
criteria (e.g.
setup matrix)
Alle relevant data
available (> 900
columns in ALVGrid)

Motivation and initial situation

Supply chain with lean principle

Process and application overview

Functional details

Lean-capable supply network

Functional system support


segmentation is a prerequisite for optimised Heijunka planning
Material requirements planning

Master data maintenance for alignment/levelling

Segmentation

EPEI
calculation

Define
schedule

Simulate
schedule

Calculate
safety stock

Short-term
planning

Alignment

Levelling

Segmentation

Product related analysis

Variation of overall demand


Average volume
Product min/max demand

Support during determination of

Value/benefit contribution

Analysis of available capacity

Asset utilisation
Disturbances
Cycle time

Safety stock
Stock to cover increasing
demand

With consideration of

Operating times

Maintenance

EPEI

OEE-Influence, pre-setup
Reserve capacities
Setup changes
Stock areas, box sizes and
box availabilities

Operating times
EPEI classes

Production and replenishment control

Pull

Master data maintenance alignment/levelling:


Principe of the EPEI calculation
Material requirements planning

Master data maintenance for alignment/levelling

Segmentation

EPEI
calculation

Define
schedule

Simulate
schedule

Calculate
safety stock

Short-term
planning

Alignment

Levelling

EPEI calculation
Overall shift duration
Production duration

Stop time

Shift decoupling

Setup time

Based on demand
forecast and output
rate for the whole
product portfolio per
shift (incl. Scrap)

Based on statistical
reports of shift
protocols (average
values)

Establishing of a
shift decoupling
covering 80% of
occurred stop times

Usage of the
residual available
time per shift for
setup

Determination of EPEI, lot size and target stock levels

Production and replenishment control

Pull

Master data maintenance for alignment/levelling


EPEI calculation
Master data maintenance for alignment/levelling

Segmentation

EPEI
calculation

Define
schedule

EPEI calculation

EPEI is the shortest time


interval, where each product is
produced at least once

EPEI is the operational smallest


lot size in contradiction to the
economic lot size

Target is the standardised


process for the determination of
the moving stock

Simulate
schedule

Material requirements planning

Calculate
safety stock

Alignment

Short-term
planning

Levelling

Production and replenishment control

Pull

Master data maintenance for alignment/levelling


Calculate safety stock
Material requirements planning

Master data maintenance for alignment/levelling

Segmentation

EPEI
calculation

Define
schedule

Simulate
schedule

Calculate
safety stock

Alignment

Short-term
planning

Levelling

Production and replenishment control

Pull

Calculate safety stock


Average demand

Replenishment, consumption

SAP enhancement package 5:

Improved support to calculate


safety stock

SAP ERP proposes the number


of Kanban boxes

Periodic process to update the

Stock variation

parameter settings

Customer demand or a specific


forecast can be used for
calculation

Less gap of material with


reduced stock level

Disturbances, buffer

Operating time

Requirements planning:
Alignment
Master data maintenance for alignment/levelling

Segmentation

EPEI
calculation

Alignment

Alignment for each


production line after
MRP run for high
runner

Production capacity is
adapted to alignment

Customer specific
implementation is
possible

Daily production
quantities basis for
sequencing

Planning of low
runners by date

Define
schedule

Simulate
schedule

Material requirements planning

Calculate
safety stock

Alignment

Short-term
planning

Levelling

Production and replenishment control

Pull

Production and replenishment control:


Pull
Master data maintenance for alignment/levelling

Segmentation

EPEI
calculation

Define
schedule

Simulate
schedule

Material requirements planning

Calculate
safety stock

Alignment

Pull
Consumption plant

Manufacturing:

Release 2 of the consulting solution


supports the Heijunka aligned Kanban
system with shop stock

Replenishment:

MRP generates the demand forecast


Kanban-/JIT-calls support pull-based
replenishment from production,
storage and the supplier
Kanban board with automatic update
Batch building box

Short-term
planning

Levelling

Production and replenishment control

Pull

Production and replenishment control: Pull


Supplier KANBAN: control cycle calculation
Master data maintenance for alignment/levelling

Segmentation

EPEI
calculation

Define
schedule

SAP Enhancement Package 5:

Graphical display of demand


and the calculated stock level in
the supermarket

Calculation of the number of


Kanban boxes within the control
cycle

Simulate
schedule

Material requirements planning

Calculate
safety stock

Alignment

Short-term
planning

Levelling

Production and replenishment control

Pull

Production and replenishment control: Pull


Supplier KANBAN board: consumer view
Segmentation

EPEI
calculation

Define
schedule

Features:

Simulate
schedule

Calculate
safety stock

Consumer

Empty KANBANs already


assigned to the supplying plant
are marked in red

Full KANBANs in the


supermarket of the consuming
plant are marked in green

KANBANs in transit with delivery note are marked in yellow

JIT call via SAP standard


Display:
Schedule line ID (customer)
Box number of customer
Processing status in supplying

plant
Planned delivery time

Source

Alignment

Levelling

Pull

Benefits through a lean oriented supply chain


Levelled production and material flow
Peaks on capacity requirements on people and machines are reduced
Bullwhip effect especially to intercompany suppliers is reduced
Continuous customer delivery is improved
Stable consumption of supplier parts (internally/externally) is ensured
Less impact of variances in sales quantities and disturbances to the production plan
Lead time and stock level are reduced
Integration of shop floor and SAP supported material requirements planning and procurement
processes
Simplification of the planning process with reduced planning effort
Transports and their capacity is easier to plan

Stock level planning is optimised: buffer stock is reduced Stock areas get smaller costs
of stock keeping are reduced

Lean: Processes and IT are aligned to an efficient flow


Lean processes

Segmentation

In SAP ERP

EPEI
calculation

Define
schedule

Simulate
schedule

Calculate
safety stock

Alignment

Levelling

Pull

Operational lean processes supported by SAP ERP

Supplier park
Production 1

Pull

Assembly line 1
Define/simulate
schedule

pull

JIS plant

JIS

OEM

Assembly line 2

Production 2
Low -Runner

push

Supermarket

push

Goods receipt

Pull

External
supplier

JIS plant

JIS

OEM

Calculate
safety stock

Production plant
Segmentation

IC plant

push

Alignment

Calculate
safety stock

IC plant

Levelling

EPEI
calculation

The transfer of the processes to SAP ERP avoids


disruptions and increases the positive effect of levelling
in production with impact on the whole supply chain

Motivation and initial situation

Supply chain with lean principle

Process and application overview

Functional details

Lean-capable supply network

Lean & Levelling, but when?


Process oriented
Demand is in principle continuously, a preview is available

Stable processes and a stable bottleneck (maybe challenges during ramp-up/phase-out)


Straight oriented material flow
Partners and involved departments are able to adapt to levelled requirements and delivery
Short term additional demands can even though be covered
Combined planning of high runners with levelling and low runners by requirement date
Relatively short setup times

IT oriented
SAP SCM is too complex (heuristic with characteristic based or model mix planning)
Standard capacity levelling in SAP ERP (graphical planning table) has gap of transparency
Infinite planning is too less ( finite planning with Heijunka board is required)

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