Managing Automation - February 2008 - (Page 20) [ COVER STORY ] agents change that could easily be put on full replenishment. cally integrated manufacturing model to one Then map it and get a sense of the key attribthat relies on a wide range of supply partners utes and metrics that are important to imand contract manufacturers. As LSI’s supply prove. After you make gains there, look for chain has grown more complex, waste has more parts and suppliers you can work on.” risen, particularly in order management and That’s the approach IBM has taken to leandemand visibility. ing out its supply chain. The IT equipment Until recently, says LSI Procurement Vice and services giant started small two years ago President Don Alvine, by the time demand with lean training, a handful of lean black belts, signals passed from the end customer, through and a few lean pilot projects focused mainly on a distributor, to LSI, and on to a contract manprocurement processes. Since then, IBM has ufacturer in Asia, so much time had elapsed expanded to 18 black belts driving lean prothat the customer’s needs had changed. curement, services delivery, and fulfillment processes. “Latency in the demand chain was The company has applied the first and largest reason we needlean to 153 non-production ed to lean out and automate the supprocesses, Smith says. As those lean supply chain ply chain.” — LSI’s Don Alvine efforts have begun to deliver results, Smith says, more supply chain man“Latency in the demand chain was the first agers have bought in, asking Smith’s group and largest reason we needed to lean out and for help with leaning out processes. As a result, automate the supply chain,” Alvine says. IBM will triple its lean supply chain program LSI created value stream maps of the existbudget next year and organize its black belts to ing and desired demand management prodevelop a standard lean supply chain engagecesses and set out to eliminate waste from ment model that can be deployed in business information handoffs, many of which were units across the company’s supply chain. IBM’s handled manually via spreadsheets and e-mail. overall goal is to use lean to drive a 10% to As part of the fix, LSI automated many of its 15% improvement in supply chain productivity. supply chain collaboration processes — order “2007 was the tipping point for us,” Smith acknowledgment, demand forecasting, and says. “The critical factor is to get buy-in from WIP tracking — to an on-demand supply chain upper and middle managers — to get them management network operated by service to believe that this is a sustainable way to get provider E2open Inc. Enabling supply chain savings and operational improvements. Now partners to see up-to-date information online we have more demand [for lean expertise] allowed LSI to streamline or eliminate many than resource.” manual, wasteful information handoffs and, Besides starting with ultimately, improve customer service. small bites, manufacturers Prior to its lean and automation efforts, are discovering that autoAlvine says, LSI shipped products by customermation is a critical enabler, requested delivery dates 35% of the time, on avparticularly in removing erage. Now the company can get product to PRESSURES DRIVING LEAN ACROSS THE SUPPLY CHAIN waste from large, global customers on time 93% of the time. And LSI supply chains. According has reduced the size of its supply chain manImprove operational performance to Aberdeen’s lean study, agement group from 150 to 35. 25% for example, 55% of manu“Our goal is to run the supply chain as lean facturers said they are as possible,” Alvine says. “The only way we Reduce operating costs moving to kanban and can do that is through total automation.” 18% electronic kanban to imCULTURE CLASH prove supplier on-time deCustomers demanding shorter order cycle times liveries and cut inventory. The supply chain isn’t the only non-shop-floor 14% One manufacturer that domain where manufacturers are applying is taking an automationlean principles. A few are focusing on reducing Competitive advantage in price and service centric approach to implewaste in the new product development (NPD) 11% menting a lean supply process. While many manufacturers worry chain is semiconductor that applying lean principles, such as standard Customers demanding reduced prices maker LSI Corp. Like work, to creative processes may stifle innova9% many high-tech manufaction, a few see big potential returns. turers, the company has “Not nearly as many are applying lean to Source: Aberdeen Group, August 2006 been moving from a vertithe new product development area as are to ma February 20 2008 Photo courtesy: LSI
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