What is Logistics?

I made short presentation about what is logistics and how does it affect on your business and it’s finances.

Production Control

As I wrote earlier the magic of pull is based on the WIP regulation. In order to have optimal production we should set the correct WIP level. If it’s too close to critical WIP, throughput will suffer. If it’s too big, cycle time increases.

Humans as an robots

Even though robotics has been developed a lot it’s not going to replace workers yet.

Activity Based Costing (ABC)

Activity Based Costing (ABC) or Cost Accounting is a way to divide organization’s fixed costs for products.

Push or Pull Production?

Earlier I wrote about MRP as an push production and JIT as an pull production. In reality they seldom are this black and white but it is some kind of mix of these push and pull production.

Reducing Cycle Time

Production time at workstation can be divided into following categories: Transfer time Queue time Setup time Process time Wait-to-bath time Wait-in-batch time Wait-to-match time

Flow laws

Regarding to variability and its control we will go through some “laws” that will affect production flow.

Variation in Practice – Part 2

Lean is based on the thought that excess work (muda) needs to be removed. So we can lead this into the variation removing. We must still remember that variation can also be good if it’s our strategic decision.

Variation in Practice – Part 1

Variability can be controlled with different kind of combinations. Example if machine receives its raw material from multiple sources the variability of this combined feed will be close to value CV = 1. Despite if sources are LV or HV machines, their summarized feed tend to be medium variable.

How does the variability affect on production

According to the Little’s law (TH = WIP/CT) same production can be achieved with long cycle time and large WIP or short cycle time and small WIP. I think that later option is better choice for everyone.

  • Is it crucial to control WIP?

    We can quite easily compute the optimal amount of WIP for each production. At the same time the WIP in use notifies the performance of our production when compared to the optimal, worst-case and practical worst-case.

  • What is LEAN?

    Term LEAN appeared for the first time in 1988 or 1990 depending on sources. But actually LEAN was only new term for JIT philosophy and afterthought it was just simplier and prettier form of JIT. Next book about Toyota and LEAN didn’t appear until 1996.

  • What is Kanban?

    Kanban is often heard in discussions when talking about Japanese JIT philosophy. Most common translation for kanban is card. In Toyota’s factory cards were big part of managing the material flow.

  • Is it worth to invest?

    Value of something after n-years is calculated with the formula below. This concerns about savings when the value of the capital increases each year.

  • What is JIT?

    JIT is acronym for Just in Time. It is created in Japan at 1900’s when Japanese tried to compete with Americans. Japanese labor productivity was only one-ninth of the Americans so they had to do something differently. Most of the JIT practices comes from Toyota.

  • Starting Point for Production Planning Systems – MRP

    MRP was developed in the 1960s at the IBM. Computers became common in production facilities and they were assigned for calculations. Because production planning was quite complex it was natural to try to assign it for computers.

  • What is good production strategy, how to stand out?

    In orderd to manage global competition, enterprise must succeed in at least one of these dimensions:

  • Ordering in practice 3, reorder point (ROP)

    Now that we have decided our order quantity and safety stock we can figure out when to reorder. Inventory can be supplemented in many ways. For example:

  • Ordering in practice 2, overage or shortage

    So far we have decided our optimal order quantity and safety stock. Safety stock is one way to satisfy variable demand but could we lead inventory from the value of the demand? Safety stock is based on service level but now we will calculate stock amount from products sale and ordering price.

  • Ordering in practice 1, Safety Stock

    We have now solved the optimal order quantity. When is this order supposed to do? Can we end up in the situation that we have to sell zero stock? In this post we will figure out what is safety stock and why you should have it.