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Principles Of Lean Operating Systems Discussion
Lean thinking refers to approaches that focus on the elimination of waste in all forms, and smooth, efficient flow of materials and information throughout the value chain to obtain faster customer response, higher quality, and lower costs.
Manufacturing and service operations that apply these principles are often called lean operating systems, initially developed and implemented by the Toyota Motor Corporation.
Lean
Eliminate Waste: Eliminate any activities that do not add value in an organization. Includes overproduction, waiting time, transportation, processing, inventory.
Increase Speed and Response: Better process designs allow efficient responses to customers’ needs.
Improve Quality: Poor quality reduces yields, requiring extra inventory, processing time, and space for scrap and rework. Do it right the first time.
Reduce Cost: Simplifying processes and improving efficiency translates to reduced costs.
Principles of Lean Operating Systems
Avoiding Wastes in Lean Systems
Inventory is any asset held for future use or sale with objectives of maintaining sufficient amount and variety to meet demands while incurring the lowest possible cost.
Inventory Management involves planning, coordinating, and controlling the acquisition, storage, handling, movement, distribution, and possible sale of raw materials, component parts and subassemblies, supplies and tools, replacement parts, and other assets that are needed to meet customer wants and needs.
Inventory Management
Raw materials, component parts, subassemblies, and supplies: inputs to manufacturing and service- delivery processes.
Work-in-process (WIP): partially finished products in various stages of completion that are awaiting further processing.
Finished goods: completed products ready for distribution or sale to customers.
In-transit inventory: items in in-bound or out-bound logistics links.
Safety stock: additional amount of inventory that is kept over and above the average amount required to meet just-in-case demand.
Types of Inventory
Inventory turnover, or the ability to make more sales with less investment in inventory: the higher the better (a measure of inventory productivity)
Inventory carrying costs, the expenses associated with keeping inventory in hand (obsolescence, storage, moving, etc.)
Shortage costs or stockout costs, or the costs associated with an item being unavailable to meet demand: the lower the better (to an extent).
Inventory Decisions & Costs
When inventory level is high (service level or order fill rate is high): stockouts and resulted, lost sales are less likely to happen but inventory carrying costs and obsolescence risks are high.
When inventory level is low (low safety stock): costs of keeping inventory in hand are minimized and inventory turnover is high but there is an increased risk of running out of stock and the customers may not be happy.
The question is how much inventory do you keep?
Inventory Trade-Offs
What type of driver are you and implications of your conscientious decision: costs (stops for gas, time, mileage, higher price of gas…), benefits (peace of mind, ready anytime), risks (running out of gas, fuel pump damage…)?
Can you analyze this?
Driver A vs. B
Monthly Retail Sales and Inventories, United States, 1992-2019
Monthly Retail Sales and Inventories, United States, 1992-2019
Fact 1: Retail sales have been going up. Fact 2: Retail inventories have been going up as well. Fact 3: Inventories/Sales ratios have been going down.
Question 1: What does inventories/sales ratio mean? Question 2: Why are they going down?
Think…
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Excellent Quality 95-100%
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Introduction
45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Literature Support 91-84 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met. |
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Average Score 50-85% |
40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided. |
83-76 points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration. |
52-49 points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met. |
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Poor Quality 0-45% |
37-1 points The background and/or significance are missing. No search history information is provided. |
75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration. |
48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met |
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Principles Of Lean Operating Systems Discussion |
Principles Of Lean Operating Systems Discussion