Delivering excellent service to all customers is the key imperative for many sustainable businesses. So why do so many supply chains struggle to fulfill customer requirements at competitive costs? The answer is simple: traditional supply chain planning, which was tailored to a predominantly stable and predictable business environment, cannot handle the new challenges in the world of variability, uncertainty, complexity, and ambiguity-the VUCA world.
Companies can either accept the drawbacks that often result in high inventories, poor asset utilization, and unsatisfactory customer service or, they can change their view of the fundamental approach to supply chain management. LEAN Supply Chain Planning: The New Supply Chain Management Paradigm for Process Industries to Master Today's VUCA World introduces a new paradigm and a new approach to managing variability, uncertainty, and complexity in today's planning processes and systems.
Introducing a cutting-edge supply chain management concept that addresses current problems in the process industry's supply chains, the book presents powerful methods developed by leading research institutes, process industry champions, and supply chain experts. It explains how readers can change their approach to the fundamental planning paradigms in a manner that will help their organizations achieve higher levels of responsiveness, improved levels of customer service, and substantial increases in cost-efficiencies.
This holistic practitioner's guide describes how to establish the right accountabilities for performance management and also provides a set of meaningful metrics to help measure your progress. Supplying detailed guidelines for transforming your supply chain, it includes first-hand reports of leading organizations that have already adopted some of the facets of this paradigm and used the relevant instruments to achieve unprecedented improvements to customer service, supply chain agility, and overall equipment effectiveness.
WHY LEAN SCM TODAY? Supply Chain Management in Process Industries Supply Chain Management Must Master the VUCA World Supply Chain Management Orchestrates Global Functions and Networks Key Pain Points in Supply Chain Organizations Today Why Leadership is Concerned about the Impact of Volatility Supply Chain Planning in the VUCA World Today Planning and Control as the Backbone of Supply Chain Management Forecasting and Demand Planning Supply Planning and Production Scheduling Supply and Demand Synchronization The VUCA World Poses NEW Challenges to Supply Chain Planning Variability and Volatility Are on the Rise Uncertainty Keeps You Guessing Complexity Becomes Overwhelming and Synchronization Challenging Ambiguity Leads to Confusion and Inefficiency Today's Supply Chain Planning Approaches and Their Limitations From MRP to ERP Advanced Planning Systems and Supply Chain Management Drawbacks of Dependency on Forecasts and Ineffective Use of Inventories Why We Need a Paradigm Shift in Supply Chain Planning Now Traditional Planning Approaches Fail to Deal with the VUCA World The Planning Loop Trap: The Spiral to Inefficiency The Bullwhip Effect: Amplifying Variability along the Value Chain One-Sided Variability Management: Increasing Inventories and Supply Chain Nervousness Common Lean Approaches are Insufficient for Global Supply Chain Synchronization The Promise of Lean Principles in Supply Chains Cyclic Scheduling: Lean Scheduling for Process Manufacturers Limitations of the "Product Wheel" Approach for Managing End-to-End Supply Chains How to Back Out of the Dead End of Today's Planning Both Common Lean Approaches and Traditional Planning Fail Resolving the Traditional Planning versus Lean Conflict Prepare for the VUCA World by Opting for LEAN SCM Chapter Summary Guiding Principles of LEAN SCM Planning: Facing VUCA Challenges LEAN Demand: How to Cope with Rising Demand Variability Accept Uncertainty and Eliminate the Need for Certainty in Execution A View of Aggregated Demand: Be Prepared for Consumption-Driven Supply Stop Using Forecasts to Trigger Manufacturing: Respond to Real Consumption Summary of LEAN Demand Principles LEAN Supply: How to Get a Grip on Supply Uncertainty and Reliability Manage Demand Spikes with Planned and Right-Sized Safety Stock Buffers Level Production Plans to Create Flow and Stabilize Utilization Use Cyclic Production Patterns to Achieve a Common Takt and Regularity Summary of LEAN Supply Principles LEAN Synchronization: How to Master Complexity and Ambiguity Separate Planning to Slice Complexity for End-to-End Synchronization "Parameter-Driven" End-to-End Supply Chain Planning Establish Visibility and a Collaborative Environment for Synchronization Summary of LEAN Synchronization Principles Chapter Summary Fundamentals of LEAN SCM Planning: A Paradigm Shift in Planning What is the Most Suitable Supply Chain Planning Approach to Follow? The Lean Supply Chain is More About Waste Elimination and Cost Efficiency The Agile Supply Chain is More About Responsiveness and Customer Service The Resilient Supply Chain Is More About Risk- Avoidance and Robustness Trade-Offs among the Common Paradigms in Supply Chain Management How LEAN SCM Combines and Builds upon a New Planning Paradigm The Building Blocks for LEAN SCM Planning: Concepts and Highlights Flexible Rhythm Wheels Enable Cyclic Planning while Responding to Variability Dynamic Safety Buffers in Planning for Two-Sided Variability Management Cycle Times and Inventory Targets Aligned to Global Takt for Synchronization Separation of Tactical Pre- Parameterization and Planning to Reduce Complexity Enabling IT to Create Global Visibility and Staying Power for Sustainability How LEAN SCM Planning Drives Corporate Success in the VUCA World Creating a Step Change in Supply Chain Performance World-Class Operational Supply Chain Performance Means Financial Success Chapter Summary HOW TO DESIGN AND BUILD LEAN SCM Prepare Your Supply Chain for LEAN SCM Segment and Strategize Your Supply Chain How Many Supply Chain Strategies Are Needed? Structure Customers and Products to Build Supply Chain Segments Segmentation of the Product Portfolio Segmentation of the Customer Portfolio Assigning Strategies to Defined Supply Chains Aligning the Supply Chain from a Top- Down Perspective Create End-to-End Transparency in Supply Chains Selecting a Representative Time Period for Observation Selecting a Common Unit of Measure Mapping the Customers Mapping Stock-Keeping Points and Suppliers Mapping Production Sites Identify and Assess Gaps to Improve Supply Chain Synchronization Inventories Capacities Global Takt Global Lead Time Adopt Three Measures for Preparing the Supply Chain Network Design: Strengthen the Foundation for Agility Demand Variability: Shape it Proactively Portfolio Complexity: Get Rid of Unprofitability Aligning the Supply Chain from a Bottom-Up Perspective Gain Transparency into Local Value Streams Product Family Analysis Flow Path Mapping Analyze Value Streams to Prepare the Shop Floor for LEAN SCM Current State Map Key Shop-Floor Performance Metrics That Matter for LEAN SCM Lead Time Value-Added Time Changeover Time Takt Inventory Utilization Overall Equipment Effectiveness Transportation Data Information Flows Planning Mode Aim for Leveled Flow Design Ensuring Stable and Efficient Processes Allocating Products to Manufacturing Lines Product Portfolio Analysis Resource Portfolio Analysis Allocation of Products to Resources Focused Leveling of Product Flows Chapter Summary Strategic LEAN Supply Chain Planning Configuration What to Produce: Replenishment Modes Sell What You Make: Forecast-Based Push Replenishment Make What You Sell: Consumptionbased Pull Replenishment Make-to-Order Inventory Replenishment Level (IRL) Buffer Management How to Produce: Production Modes Kanban and Its Advancements for Process Industries Product Wheels and Rhythm Wheels for Cyclic Production Planning General Idea of Rhythm Wheel Planning and Scheduling: What You Need to Know Key Benefits: Why Your Company Should Put the Rhythm Wheel on Its Agenda How to Manage Variability with Different Rhythm Wheel Types The Classic Rhythm Wheel Breathing Rhythm Wheel High-Mix Rhythm Wheel Supply Chain Mode Selection: Combining Production and Replenishment Modes Define the Configuration Scope of the Supply Chain Segment Analyze Key Impact Dimensions of Mode Selection Replenishment Mode Evaluation Production Mode Evaluation Select the Appropriate Supply Chain Modes Interaction between Replenishment and Production Modes Supply Chain Interdependencies Evaluate Your Decision Quantitatively The Strategic Renewal Process to Configure Agile Supply Chains What Information Base Is Needed on a Strategic Level? Strategic Input Demand Input Supply Input Performance Feedback Establish Sustainable Renewal of Supply Chain Modes Ensure Supply Chain Agility Through Regular Mode Renewal Who Is Involved to Enable Governance for Supply Chain Agility? Supply Chain Excellence Center Supply Chain and Market Planners Supply Chain Board Chapter Summary Tactical LEAN Supply Chain Planning Parameterization Setting Up the Parameters for LEAN Production Modes Classic Rhythm Wheel Design to Enable Flow in Stable Environments Production Sequence Cycle Time Breathing Rhythm Wheel Design to Manage Higher Demand Variability Minimum and Maximum Cycle Time Boundaries Factoring Types High-Mix Rhythm Wheel Design to Manage Diverse Product Portfolios Determination of Production Rhythms Implementation of Production Rhythms Balancing Production Rhythms Setting Up the Parameters for LEAN Replenishment Modes How Stocks Are Structured for Variability and Uncertainty Cycle Stock Pipeline Stock Demand Safety Stock Supply Safety Stock Right-Size the Parameters to Enable Consumption-Based LEAN Replenishment Inventory Replenishment Level Buffer Management Synchronize Parameters to Achieve an End-to-End LEAN Supply Chain Synchronize Supply Chain Cycle Times to a Global Takt Determination of Global Takt Bottlenecks as Pacemakers of a Supply Chain Takt Synchronization of Takt Parameters to a Global Takt Build on Dynamic Inventory Target Setting to Smooth Cycle Time Oscillation Where to Hold Stock in the Supply Chain How to Right-Size Inventory Positions How to Balance the Four Effects Impacting Efficient Safety Stock Allocation The Tactical Renewal Process to Parameterize LEAN Supply Chains What Information Base You Need Establish Regular Renewal of Planning Parameters Alignment of Planning Parameters for the LEAN Supply Chain Communication of Renewed Parameters Release of Renewed Parameters in the IT Systems Who Is Involved in Keeping the Supply Chain LEAN Through Synchronized Parameters? Supply Chain Planner Local Planner Market Planner Chapter Summary Operational LEAN Supply Chain Planning Execution How to Execute Planning and Sequencing with Rhythm Wheels The Replenishment Trigger Report as a Link between Production and Replenishment Handling of Demand Signals with Rhythm Wheels How to Level Production with Factoring Use Cycle Time Boundaries to Stabilize the Asset Takt Use Upper Factoring When the Cycle Becomes Too Long Use Lower Factoring When the Cycle Becomes Too Short Effective Monitoring of Planning Execution in LEAN SCM What Should Be Monitored? Operational LEAN Production KPIs to Monitor Asset Performance Cycle Time Attainment Run to Target Cycle Time Variation Operational LEAN Replenishment KPIs to Evaluate Inventory Parameterization Service Level Target Inventory Attainment Dead Stock Ratio Chapter Summary WHAT TO IMPLEMENT AND TRANSFORM FOR LEAN SCM Build an Organization for LEAN SCM Below the Ground: The Prerequisites for LEAN SCM Management Buy-In and Mobilization for LEAN SCM Top-Management Buy-In Mobilization of the Organization Ensuring Leadership and Commitment across Functional Borders Cross-Functional Leadership Commitment of the Organization Shift in Mindsets and Accountabilities in the SCM Community Shifting the Mindsets of the SCM Community Above the Ground: The Visible Enablers for LEAN SCM What Is the Right SCM Organization Model for LEAN SCM? Typical Supply Chain Organizational Models in Process Industries Transition of the Supply Chain Organization Model Requires Harmonization Integration of LEAN SCM Processes with the Existing Planning Processes Framework Strategic Renewal Process Tactical Renewal Process Ensuring Process Governance Roles within the Tactical Renewal Process Roles within the Strategic Renewal Process Mapping Roles and Responsibilities to Renewal Processes Mapping of Responsibilities within the Tactical Renewal Process Mapping Responsibilities within the Strategic Renewal Process Consideration of Capabilities and Resources Managing Change and Transition for LEAN SCM Focus Areas of Change Management Key Activities of Change Management Change Planning and Benefits Tracking Communication and Stakeholder Management Leadership and Change Network Management Shift in Accountabilities Organizational Alignment Capability Development Valuable Tools for Change Management in LEAN SCM Chapter Summary Performance Management for LEAN SCM Role of Performance Management in LEAN SCM Key Objectives of Performance Management for LEAN SCM Performance Measurement Performance Analysis Planning and Directing Renewal of Planning Strategic Decision Making Orchestrating Supply Chain Planning Processes Successfully Integration of Performance Management into LEAN SCM Planning Processes Enabling Effective Configuration and Renewal of LEAN SCM Parameters How the LEAN SCM Paradigm Changes Your Performance Management How to Measure LEAN SCM Performance Metrics to Link Tactical and Operational LEAN Supply Chain Planning Metrics for Linking Strategic and Tactical LEAN Supply Chain Planning Metrics for Assessing the Maturity of a Supply Chain for LEAN SCM Five Points to Consider for Successful Performance Management Develop a Balanced and Comprehensive System of Metrics Effective Target Definition for Performance Tracking Systematic and Regular Performance Analysis for Sustainability Create Clear Responsibility for Metrics Use Data Management and IT Systems for Support Chapter Summary The Planning System Landscape for LEAN SCM The Evolution of IT Planning Systems MRP II: Consideration of Capacity but Captured in the Automation Trap Consideration of Capacity Requirements Automation Trap ERP: Functional Integration but Lost in the Details Functional Integration The Lost-in-Details Trap APS: Supply Chain Integration but Caught in the Optimization Trap Supply Chain Integration The Optimization Trap The Forecast Myth: An Overarching Obstacle IT for LEAN Planning: How to Escape the Optimization Trap and the Forecast Myth Enabling LEAN Planning: How to Leverage Past IT Investments Enterprise Resource Planning Master Data Management Market Demand Planning (APS Module) Supply Network Planning (APS Module) Detailed Planning and Scheduling (APS Module) LEAN Planning Add-Ons to Complete the IT System Configuring and Renewing Tactical LEAN SCM Parameters Stock Parameter Configurator Rhythm Wheel Designer Planning and Adjusting Production Based on Actual Consumption Rhythm Wheel Heuristic Factoring Tool Performance Monitoring for the Renewal Process Rhythm Wheel Monitor Stock Monitor Chapter Summary The LEAN SCM Journey Building Strong Commitment and Leadership for LEAN SCM Creating a Holistic LEAN SCM Architecture Establishing LEAN SCM Program Management Chapter Summary HOW YOUR INDUSTRY PEERS GAINED BENEFITS BY LEAN SCM Read How Top-Industry Players Share Their Experiences with LEAN SCM Motivation and Approaches to LEAN SCM AstraZeneca's Lean SCM Journey Company Profile Executive Summary Company's General Situation Lean Challenge Approach Results/Benefits Eli Lilly's Synchronized Lean Production Company Profile and Case Summary Executive Summary Company's General Situation Lean Challenge Approach Results/Benefits Buffer Management at Novartis Company Profile Executive Summary Company's General Situation Lean Challenge Approach Evolving from "Push" to "Pull" Selection of Products Being Suited for Pull Replenishment Alignment of the Push/Pull Boundary Operationalization of Buffer Management Buffer Size Determination Assignment of Replenishment Intervals Assignment of Minimum Order Quantities IT Support as Key Enabler for Buffer Management Results/Benefits Leveled Flow Design to Enable LEAN Planning Company Profile Key Facts Executive Summary Company's General Situation Lean Challenge Approach Results/Benefits AstraZeneca Excellence with Rhythm Wheel Takted Site Company Profile and Case Summary Executive Summary Company's General Situation Lean Challenge Approach Results/Benefits The Lean Production Initiative at PCI: A Company of BASF Company Profile and Case Summary Executive Summary Company's General Situation Lean Challenge Approach Results/Benefits Why LEAN SCM: Summary of Key Benefits Bibliography Index