LEAN SUPPLY CHAIN MANAGEMENT TOPICS IN. Marc J. Schniederjans. Dara G. Schniederjans. Ashlyn M. Schniederjans. :.,.' If I.

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1 TOPICS IN LEAN SUPPLY CHAIN MANAGEMENT Marc J. Schniederjans University of Nebraska-Lincoln, USA Dara G. Schniederjans Texas Tech University, USA Ashlyn M. Schniederjans Harvard University, USA :.,.' If I World Scientific NEW JERSEY LONDON SINGAPORE BEIJING SHANGHAI HONG KONG TAIPEI CHENNAI

2 XI CONTENTS Preface List of Tables and Figures Vll xix PART I. Chapter 1. Introduction to Lean and Supply Chain Management Lean Introduction What Is Lean? Origins of Lean Principles Lean Principles Seek the Elimination of Waste Seek Improved Quality Seek Increased Product Flow Seek Reduced Cost Lean Approaches and Methodology Process Mapping and Value Stream Mapping The 5 Ss '. Single Minute Exchange of Dies (SMED) Stable Production Scheduling Quality at the Source Continuous Improvement Six Sigma Total Productive Maintenance Green Manufacturing and Service Automation Visual Management Supplier Relationship Management Final Comments on Lean Summary Review Terms Discussion Questions Problems

3 xii Supplement 1 for Chapter 1: Toyota Plan-Do-Check-Act Cycle Approach to Operational Problem Solving 34 Supplement 2 for Chapter 1: Process Mapping and Value Stream Mapping 37 References 40 Chapter 2. Supply Chains 43 Introduction 43 Supply Chain Facility Flow 46 Supply Chain Problems 47 Bullwhip Effect 47 Snowball Effect 49 Supply Chain Disruptions 51 What Is Supply Chain Management? 51 History and Trends 52 SCM Tasks 53 SCM Performance 53 Decision Making in Supply Chain Management 60 Supply Chain Decision Making Tools 63 Supply Chain Information System and Technology. 65 Global Supply Chains 67 Summary 72 Review Terms 72 Discussion Questions 73 Problems 74 Supplement 1 for Chapter 2: A Simple Scorecard Methodology for Assessing Supply Chain Partner Risk 77 References 79 Chapter 3. The Nexus of Lean and Supply Chain Management 81 Introduction 81 Lean Supply Chain Management Principles 82 Seek Leadership and Growth Strategy 82 Seek a Strategic Customer Value Focus 83 Seek Single Source and Reliable Suppliers 84 Seek to Build Trust Based Alliances with Ethical Supply Chain Partners 84 Seek a Demand Pull, Synchronized Supply Chain 85

4 Contents xiii PART II. Seek to Maximize Flow and Eliminate Supply Chain Flow Constraints 86 Seek Supply Chain Agility 89 Seek Continuous Improvement 89 Seek Waste Elimination 91 Lean and Supply Chain Nexus Conflicts 92 Summary 92 Review Terms 95 Discussion Questions 95 Problems 95 Supplement 1 for Chapter 3: Gap Analysis for Continuous Improvement 98 References 100 Chapter 4. Topics in Lean Supply Chain Leadership 105 Introduction 105 Leadership Defined 105 Traits of Successful Leaders 107 Leadership Styles and Skills 108 Coaching Leadership 111 Teams 111 Obstacles to Leadership 113 Lean Supply Chain Leadership Topics 115 Importance of Leadership 116 Strong Leadership 116 Leading with Lean Certification 117 Leadership Training 117 Leadership Advice from a Lean Consultant 118 Summary 118 Review Terms 119 Discussion Questions 119 References. 120 Chapter 5. Strategic Customer Value Focus in Lean Supply Chain Management 123 Introduction 123 Customer Value Defined 123 Customer Value Components 124 Customer Satisfaction 126

5 xiv Implementing a Customer Value Focus 129 Lean Supply Chain Strategic Customer Value Focus Topics 133 Question Strategic Plan 133 Customer and Culture Focus 134 From Forecasting to Customer Orientation 134 Operational Excellence 135 Customer Focus in a Service Supply Chain Environment 136 Modularization of Distribution Systems 137 Integrating Marketing and Supply Chain Management for Improved Customer Value 138 Creating Customer Value by Resource Alignment 139 Creating Customer Focused Value during Recessions 142 Summary 143 Review Terms 143 Discussion Questions 144 References 144 Chapter 6. Topics in Aligning Lean Supply Chain Strategy, Tactics, and Operational Plans 147 Introduction 147 Strategy, Tactics, and Operational Planning Basics 147 Strategic Planning Stage 148 Tactical Planning Stage 151 Operational Planning Stage 155 Aligning Supply Chain Strategic Goals for Strategic Fit 156 Lean Supply Chain Alignment of Strategies, Tactics, and Operational Plans Topics 157 Supply Chain Capabilities and Strategies 157 Combining Lean Supply Chain Strategies for Organizational Change 159 Complexity and Lean Strategies 160 Strategic Sourcing 161 Interest in Lean and Supply Chain Management as a Combined Strategy 162 Summary 163 Review Terms 164 Discussion Questions 164 References 165

6 Contents xv Chapter 7. Chapter 8. Ethics, Trust, and Collaboration Topics in Lean Supply Chains 167 Introduction 167 Trust in Lean Supply Chains 169 Trust Defined 169 Trust: The Toyota Way 169 Collaboration in Lean Supply Chains 175 Collaboration Denned 176 Competitive Collaboration 176 Benefits of Collaboration in Lean Supply Chains 178 Environmental Issues in Lean Supply Chains 179 Lean Supply Chain Ethics, Trust, and Collaboration Topics 180 The Impact of Culturally-Based Ethics and Trust in Global Supply Chains 180 Ethics Expectations in Supply Chains 182 Suggestions for Improving Supply Chain Corporate Social Responsibility 182 Environmental Benefits and Problems 183 Lean Environmental Benefits in ISO 9000 and Programs 184 Summary 185 Review Terms 185 Discussion Questions 186 References. 186 Topics in Globalization and Cultural Impacts on Lean Supply Chains 189 Introduction 189 Globalization and Global Operations 189 The Importance of Global Operations 192 Understanding Culture 195 Global Supply Chain Management 196 Critical Success Factors in Managing Global Supply Chains 197 Managing the Global Supply Chains 205 Lean Supply Chain Globalization and Cultural Impact Topics 207 Global Integration with Information System Software 207 Cultural Distance and Global Start-up Enterprises. 208

7 xvi Learning from Lean Project Failure 209 International Culture in Supply Chains and Ethics 210 Summary 211 Review Terms 211 Discussion Questions 212 References. 212 Chapter 9. Topics in Lean Supply Chain Information Systems 215 Introduction 215 An Enterprise Resourcing Planning Information System 216 ERP Modules 217 Additional ERP Modules 219 ERP Implementation ' 221 Global Information Systems 223 Lean Supply Chain Information Systems Topics 226 Information, Automation, and Lean 226 Integrating Global Information Systems 226 Lean and IT Integration 227 Information: A Key Supply Chain Practice 228 Summary 230 Review Terms 230 Discussion Questions 231 References 231 Chapter 10. Topics in Lean Supply Chain New Product Development 233 Introduction 233 New Product Development Process 233 Steps in the New Product Development Process 234 Metrics for the Evaluation of NPD 244 Integrating NPD with Supply Chain Management for Mutual Benefit 244 Lean Supply Chain New Product Development Topics 247 Lean Product Design 247 Six Sigma for Product Development, But Not New Product Development 248 Lean as an Aid in NPD 248 Combining NPD and Lean in Software 249 Maximizing Productivity with NPD and Lean 251 Toyota Product Development 252

8 Contents xvii Summary 253 Review Terms 254 Discussion Questions 254 References 255 Chapter 11. Topics in Lean Supply Chain E-Commerce 257 Introduction 257 E-Commerce 257 E-Commerce and Supply Chain Management 260 Critical Success Factors in Implementing an E-Commerce System 264 Supply Chain Benefits of Using E-Commerce 269 E-Commerce Interaction with Supply Chain Management 269 Internet-based EDI (IEDI) and Supply Chains 270 E-Trust and Supply Chains 272 Lean Supply Chain E-Commerce Topics 272 Using E-Commerce as a Means to Enhance Supply Chain Responsiveness 274 E-Business Software Supports Lean Supply Chain Principles 275 Integrating Supply Chain Management in E-Commerce Environments 275 Maximizing B2C Supply Chains 276 Summary. 277 Review Terms 278 Discussion Questions 279 References 279 Chapter 12. Topics in Lean Supply Chain Outsourcing 283 Introduction 283 Introduction to Outsourcing 283 Types of Outsourcing 285 Benefits of Outsourcing for Lean Supply Chain Management 287 Outsourcing Planning Process 289 Strategic Outsource Planning 290 Tactical Outsource Planning 292 Operational Outsource Planning 293 Outsourcing and Supply Chain Management 295

9 xviii Lean Supply Chain Outsourcing Topics 296 Moving Suppliers to be Lean with an Outsourcing Strategy 296 Balancing In-house and Outsourcing Production 297 Trends in Outsourcing Distribution Management (Downstream) 298 Trends in Outsourcing Sourcing and Procurement (Upstream) 299 Supply Chain Outsourcing Focus 300 Outsourcing, Supply Chain, and Lean Paradoxes 301 Summary 302 Review Terms 302 Discussion Questions 303 References 303 Epilog: What's the Wisest Thing You Know? 307 Opportunities in Changing Supply Chain Trends 307 Author Index 309 Subject Index 315

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