UNIVERSITY OF MISKOLC INSTITUTE OF LOGISTICS

Production Logistics
4. topic

Dr. György Kovács

associate professor
tel.: 20-26 ext.
e-mail: altkovac@uni-miskolc.hu
 Purchase logistics

Logistics subsystems
Production logistics

Distribution logistics
[----------------------------------------------------------------------------]
+ Recycling logistics
 Figure 6/a.
Purchase Logistics
 PURCHASE LOGISTICS

Production logistics

Supply to the technological Production scheduling

process / supermarket

Delivery of components to the Selection of the adequate

technological line or machine technological equipment

Feeding of the technological Scheduling of inter-

process or machine operational material flow

Storage of semi-finished Selection of equipment

products of material flow Figure 6/b.
Production Logistics
Feeding of the next or final tech- Determination of inter-operational
nological process or machine storage method and mode

Testing, quality, Product monitoring/

assurance, packing tracking

Order picking, unit load forma-

Scheduling of delivery
tion, delivery from the production
from the production
process

DISTRIBUTION LOGISTICS
Ordering information
PRODUCTION LOGISTICS

Distribution logistics

Product transport to the Assignment of storage

finish goods warehouse locations of finished products
in the warehouse

Inward handling Scheduling of

loading-in activities

Storage into the finish Selection of equipments applied in

goods warehouse loading-in activities

Inventory
Figure 6/c.
Order picking, packaging,
unit load formation
management Distribution Logistics

Scheduling of loading- out

and order picking
Loading of vehicles

Selection of equipments
Delivery applied in loading-out and
order picking activities

Scheduling of delivery from the

finish product store, determination
and scheduling of transport vehicle

CUSTOMER
 PURCHASE PRODUCTION DISTRIBUTION
LOGISTICS LOGISTICS LOGISTICS

Packaging Technological Packaging

materials wastes materials

Recycling logistics

Determination of recycling
modes and places

Collection Assignment of storage locations

of wastes and storage equipments

Transport Scheduling of collection and

of wastes transportation
Figure 6/d.
Recycling Logistics
Disassembly, selection and Selection of transport
classification of wastes equipments

Storage Inventory management

Delivery to
Scheduling of delivery
recycling place

Repare Reprocessing Disposal 6

Figure 4. Aims of logistics
"Push type" means Make to Stock in which the production is not based on
actual demand.

"Pull type" means Make To Order in which the production is based on actual
demand.

Most of supply chains are the combination of push and pull systems.
Push System

Push production is based on forecast demand and pull production is based

on actual or consumed demand.
• The push system of inventory control involves forecasting inventory needs
to meet customer demand. Companies must predict which products
customers will purchase along with determining what quantity of goods
will be purchased. The company will in turn produce enough product to
meet the forecast demand and sell, or push, the goods to the consumer.
Disadvantages of the push inventory control system are that forecasts are
often inaccurate as sales can be unpredictable and vary from one year to the
next. Another problem with push inventory control systems is that if too
much product is left in inventory. This increases the company's costs for
storing these goods. An advantage to the push system is that the company
is fairly assured it will have enough product on hand to complete customer
orders, preventing the inability to meet customer demand for the product.
An example of a push system is Materials Requirements Planning, or MRP.
MRP combines the calculations for financial, operations and logistics
planning. It is a computer-based information system which controls
scheduling and ordering. It's purpose is to make sure raw goods and
materials needed for production are available when they are needed.
Pull System

A pull system only produces what a customer needs and has asked for.
You want to have as much “pull”in your systems as you can.

• The pull inventory control system begins with a customer's order. With this
strategy, companies only make enough product to fulfill customer's orders.
One advantage to the system is that there will be no excess of inventory
that needs to be stored, thus reducing inventory levels and the cost of
carrying and storing goods. However, one major disadvantage to the pull
system is that it is highly possible to run into ordering dilemmas, such as a
supplier not being able to get a shipment out on time. This leaves the
company unable to fulfill the order and contributes to customer
dissatisfaction. An example of a pull inventory control system is the just-in-
time, or JIT system. The goal is to keep inventory levels to a minimum by
only having enough inventory, not more or less, to meet customer demand.
The JIT system eliminates waste by reducing the amount of storage space
needed for inventory and the costs of storing goods.
• Long lead times due to inventory buffers.
• Extra inventory costs.
• Extra floor space is needed.
• Extra handling is necessary (potential
damage).
• Imbalances in the timing of operations
hidden - bottlenecks are hidden.
• Feedback from later operations
(customers) to earlier operations is
delayed. When a defect is discovered it is
not clear when or why it was produced.
• Little motivation for improvement.
• When shifting to a new product (e.g., from
A to B) there is a large buffer of parts to
be moved and handled.
• Production lead times are short.
• Inventory holding costs are minimized.
• There is minimum part handling.
• Imbalances in operation timing
(bottlenecks) are apparent –improvement
can focus on bottlenecks.
• Defects are immediately apparent and the
underlying cause can be quickly
determined.
• Constant motivation for improvement –
problems have immediate production
impact.
• Operations can quickly shift to a new
product (e.g., A to B) without interrupting
the flow, each operation makes just what is
needed when it is needed.
 General production process

WIP WIP WIP WIP

Shaft

WIP: Work in process,semi finished (partially finished) goods waiting for completion
Hou gazdálkodás
Absent munkakerülés
• Long lead times due to inventory buffers.
• Extra inventory costs.
• Extra floor space is needed.
• Extra handling is necessary (potential
damage).
• Imbalances in the timing of operations
hidden - bottlenecks are hidden.
• Feedback from later operations
(customers) to earlier operations is
delayed. When a defect is discovered it is
not clear when or why it was produced.
• Little motivation for improvement.
• When shifting to a new product (e.g., from
A to B) there is a large buffer of parts to
be moved and handled.
• Production lead times are short.
• Inventory holding costs are minimized.
• There is minimum part handling.
• Imbalances in operation timing
(bottlenecks) are apparent –improvement
can focus on bottlenecks.
• Defects are immediately apparent and the
underlying cause can be quickly
determined.
• Constant motivation for improvement –
problems have immediate production
impact.
• Operations can quickly shift to a new
product (e.g., A to B) without interrupting
the flow, each operation makes just what is
needed when it is needed.
 Advantages of Pull Systems
• Low Unit Cost:
– low inventory
– reduces average WIP
– reduced space
– little rework
• Shorter lead times
• Good Customer Service:
– short cycle times
• Higher flexibility
• Excellent protection against
stock-outs

• High throughput

• High Quality:
– high internal quality
– pressure for good quality
 JIT philosophy
Just In Time (JIT) is a production and inventory strategy
implemented to improve the return on investment (ROI) of
a business by reducing in-process inventory and cycle time.

When implemented correctly, JIT can lead to dramatic

improvements in a manufacturing organization's return on
investment, quality and efficiency.

ROI:
return on investment (%) = (Net profit / Investment) × 100
or
return on investment = gain from investment/ cost of investment
19
Traditional JIT
supply supply
Final manufacturing
process at the supplier

Quality assurance

Packing

Warehousing

Transport

Receiving

Quality assurance

Warehouseing

truck trailer
First manufacturing
process at the
manufacturer
 Origin of JIT

• JIT originated in Japan at Toyota Motor Co.

• JIT gained worldwide prominence in the 1970s
• Often termed “Lean Production”or “Lean
Systems”
• Broad view that entire organization has the same
goal - to serve customers

21
 The Philosophy of JIT
•JIT means getting the right quantity of goods at
the right place and the right time
•Often termed “ Lean Systems”
•All waste must be eliminated - non value items
•Broad view that entire organization must focus on
serving customers
•JIT is built on simplicity- the simpler the better
•Focuses on improving every operation
•Install simple visible control systems
•Flexibility to produce different models/features

22
 Elements of JIT Manufacturing
• JIT Manufacturing is a philosophy of value-
added manufacturing
• Achieved by focusing on these elements:
– Inventory reduction - exposes problems
– Kanbans & pull production systems
– Small lots & quick setups
– Uniform plant loading
– Flexible resources
– Efficient facility layouts

23
 Benefits of JIT
•Reduction in inventories
•Improved quality
•Reduced space requirements
•Shorter lead times
•Lower production costs
•Increased productivity
•Increased machine utilization
•Greater flexibility
24
 ADVANTAGES

Increasing flexibility

Reliable production planning

Reduction of re-ordering times

MANUFACTURER
Reduction of inventories
SUPPLIER

Reduction of lead times

Improvement of resource utilization

Quality improvement

Free floor space for production

Increasing of competitivens
Suggested types of components
for JIT supply:
•High volume,
•High value,
•High amount of usage,
•Frequented components,
•Low purchasing risk,
•Short re-ordering time at suppliers.
JIT philosophy means: getting the right quantity of goods
at the right place
and the right time!
 1. One piece flow

Before After

Traditional manufacturing (Job Shop) One piece flow

(individual manufacturing objects/plants)
 Cutt. Weld Assem. Test Packag

Asse
Cutt. Weld Test Packag
m.

Parallel shape
Weld-
Cutting ing
Cutt-
ing Weld- Assembly Testing Packag
Cutting
ing
Weld

Cutt-
ing L shape

Testing
Asse
mbly
Assembly

Packaging Weld Testing

U shape
Packag
Cutting

Traditional manufacturing Lean

(Job shop) (One piece flow)
2. Takt time –customer orders define the rhythm of production

Takt time: 59 sec

Manufacturing
processes
What is the problem ?

Szűk
keresztm
etszet

Készlet
 Technological times [sec]

Cutting

Drilling

Grinding etszet
Szűk

Készlet
keresztm

Clean-
ing

Checking

Before
After

Technological times [sec]

Cutting

Grinding

Clean-
Drilling
ing

Checking
 Just In Time
Production philosophy

3. Pull philosophy One piece

flow
Takt time
Pull
philosophy
Zero waste

4. Zero waste in processes

 Just In Time
Termelési al
a pe lv

erős
- Félkés z termék
felhalmozódás - Elérendő da -
rabszám nincs
- Munkadarabok kijelezve - Húzó-elvet ke- - Sok utómunka
s okszori áthely e- vés beszállítóval ráfordí tás
z ése a gyártócel- - Anyagkis zolgá- lehet alkalmazni
lákban lás nem üteme- - Magas besz ál -
zet t - Magas alapa - lítói hibaarány
nyag készlet
közepes
- 100 %-os minő-
ségellenőrzés
A vevő által
Egy darab van a elvárt ütemben
folyam atban történik a A húzó elv
term ék érvényesül Nulla hiba
kibocsátása

gyenge

JIT a gyakorlatban
Kanban philosophy
 Kanban philosophy
• The process is driven by a series of signals, or
Kanbans, that tell production processes to make
the next part.
• Card indicates standard quantity of production.
• Maintain discipline of pull production.
• Authorize production and movement of goods.

demand demand demand demand

Kanban signal / card

demand demand demand demand

Milk-run
(WIP)
Kanban philosophy
Sample Kanban
 Types of Kanban

• Production kanban • Signal kanban

– authorizes production of – a triangular kanban
goods used to signal
• Withdrawal kanban production at the
previous workstation
– authorizes movement of
goods • Material kanban
• Kanban square – used to order material in
– a marked area designated advance of a process
to hold items • Supplier kanban
– rotates between the
factory and suppliers
 TRW Automotive

Establishing: 1990

Main products: Seat belts,

airbags

Main customers: VW, FIAT, GM,

FORD,
PSA,RENAULT,
BMW, FIAT
Stage 1: Address for every element
1 2 3 4 5 6
1. The whole surface of 7 8 9 10 11 12
A
the production hall was
B
divided into areas C
about the surface of 2 D
E
square meters
F
2. Every G
line/component/the H
I
machine has its
J
own address, K
e.g. A-K10 L
M
N
O
P
Q
R
S
Stage 2: Kanban card
1. SMART card is a principal information tool
used for component ordering from a warehouse

Printer
Stop number / code number
Line number and Remarks
bar code

Card number /
Card quantity

Component number
Component
Delivery number
route
Kanban card number in
Component
Deliverypacking
updescription
Pickbar
address
place
and
(colure) code
Packing
Stage 3: Colors for better efficiency
1. Both cards and routes of the transport are marked with colors in
order of efficient components delivery to production.

2. The color of the card is dependent on the color of the route of the
component transport.

Shop

Manufacturer
 Stage 4: Kanban mailboxes and kanban
board
1. There are Kanban mailboxes in every
workplace, in the marked area, (for
single or more production lines)

2. The Kanban board is used for collecting

Kanban cards. This board is located in the
magazine.
It consists of 3 columns for 3 shifts. Every
column is divided into thirty-minutes'
periods.
Stage 5: Kanban office
1. The Kanban office worker collects and process
Kanban cards and she/he gives information for
supplying for the production line.
How does it work?
 Stage 1: Components utilization
What will happen when components are out in the workplace?

1. The operator takes the Kanban card Single

WORKPLACE 6 A-K10 kanban
from the empty container and he puts it card
in the local mailbox. Is in every
component
box!
2. Then, the same operator takes the B2

empty container and puts it in the

place marked for empty containers.
Kanban
Card

3. The next container with B2

B2
B2

components is ready for use.

B2

B2

B2
Stage 2: Collecting cards from mailboxes

1. The chosen operator collects cards from all boxes on his line.

2. Then he transfers cards to the collective mailbox.

Stage 3: Receiving cards from collective
mailboxes
1. Worker of the Kanban office gathers
cards from all collective boxes every
half an hour.

2. He uses the sound signal before

starts collecting cards to inform
all lines. All leaders should
check out or they
transferred all cards
to boxes.
 Stage 4: In the Kanban office
1. The worker of the Kanban office sorts all cards KANBAN OFFICE
under consideration of the color (route of the
transport) and of the order of the stop.

2. All cards are scanned.

3. This process causes the command to move

materials in the MRP system from the warehouse to
the production line, automatically. The order is printed
in the same time on the printer

10.00 - 10.30 4. All cards are put to the Kanban board.

10.30 - 11.00
Stage 5: The warehouse
1. Components are prepared in warehouse to transfer in right time in
relation the transfer order
Kanban
Card
Kanban
Card

B2 Kanban
Card
B2 Kanban
Card

Kanban
B2
Kanban
Kanban
Card
Card Card B2 Kanban
Card

B2
B2 Kanban
Card
B2 Kanban
Card B2

B2
Kanban
Card
B2
Kanban
Card

B2 B2

2. Components are arranged in the inverse order for the given transport
route. Kanban Kanban
Kanban
Card

Kanban
Kanban
Card

Kanban Kanban Kanban

Card Card
B2 Card
B2 Card Card Card

Kanban B2 B2 Kanban B2
Kanban B2 B2 B2
Card Card Card

Kanban Kanban Kanban Kanban Kanban

B2 Card Card
B2 Card
B2 Card Card

B2 B2 B2 B2 B2
Stage 6: The warehouse
1. Components are prepared in the warehouse within 2 hours.

Kanban
Card
Kanban
Card

B2 Kanban
Card
B2Kanban
Card

Kanban
B2
Kanban
Kanban
Card
Card Card B2
Kanban
Card

B2
B2 Kanban
Card
B2 Kanban
Card B2

B2
Kanban
Card
B2
Kanban
Card

B2 B2

2. Then components are prepared for delivery for production lines.

3. Components are delivered using special lift.

WAREHOUSE Kanban
Kanban
Card
Kanban Card

B2 Card
Kanban
B2Card
Kanban
Kanban
Card
B2
Kanban
Card
Card
Kanban
B2
Card
Kanban
B2Card
B2
Kanban
B2
Card B2
Kanban Kanban
B2
Card B2
Card

B2 B2
 Stage 7: Preparing components
1. Possessing various Kanban cards for the
same color of the transport route, they are
arranged in dependence on the stop on the
transport route.

B E A C A B C E

2. Then it is possible to prepare sets of

components for supply. It allows to
avoid mistakes and lack of supplies.

Kanban
Card

B2 Kanban
Card
Kanban
Card
Kanban Kanban
Card Card

B2
Kanban
Card
B2
Kanban
Card
Kanban
Card

Kanban
B2 B2
Pallet is ready for
B2 B2 Kanban

B2
delivery!
Card Card

B2 B2
Stage 8: Delivery of components to production lines
1. Delivery of components is
carried along the route of
determined color.

2. The color of the card is

connected with
the color of the route.
K10
3. Stops are on every M12
route. They points the
best places A
to unload
components.
S10 S13

B
Benefits of KANBAN
Rule 7: Material flow is only driven by signals (cards).
Rule 8: Every box has own card.
Rule 9: Only authorized cards are in the processes.
Rule 10: Right number and quality of all of components
should be guaranteed in a box.
 Advantages of KANBAN system

1. Flexibility –better preparation for sudden changes in ordering,

avoiding component returning to warehouse.
2. Transparency –improve transparency of material flow and
inventories.
3. Lead times –reduces lead times.
4. Inventory –levels of inventory in processes are much lower.
5. Production line surface - delivered orders are placed directly to
production lines that caused the elimination of the place used up for
the material on the floor.
6. Paper work –minimises the paper based administration.
7. Orientation for the customer - produced products are according to
customers requirements.
 Thanks for your attention!

Location: University of Miskolc, A/5. buliding I. floor

Phone: +36 46 565-111/17-39
Fax: +36 46 563-399
E-mail: gkalt@uni-miskolc.hu
Web site: www.alt.uni-miskolc.hu