BUEN GUIDO, BSME, ASQ-CQEQA MANAGER

CASE STUDY – ZERO STOCK OUT

NewGen Construction

Case Study• Shortage of Hardware Category C at the Construction Site• Installers having to source or buy parts at local hardware

store to fill shortage• Having to pay premium from buying at local hardware

store – Increased Labor cost• Having to take special trips to hardware store - Causes

delay• COPQ high

CASE #1 – ZERO STOCK OUT

What?

Problem Statement

CASE #1 – ZERO STOCK OUT

Shortage: Category C

Hardware at Construction

Site

DELAYS & INCREASED

LABOR COST=

COPQ

Installers having to buy

from local hardware store to fill shortage!

Possible Causes

CASE #1 – ZERO STOCK OUT

BOM Error:Wrong

Quantity, Wrong P/N

Callout

Kitting Error:

Wrong Quantity

Wrong P/N, etc.

Misplaced Hardware at Construction

Site

Why?

Proposed Solutions

CASE #1 – ZERO STOCK OUT

1Assembly BOM & Final

Design Signoff at NewGen

2Implement

In-Process & Final Audit at

Supplier

3Use KANBAN

at Construction

Site Store

How?

Assembly BOM & Final Design Signoff at NewGen Construction

CASE #1 – ZERO STOCK OUT

1

Asse

mbl

y BO

M &

Fin

al D

esig

n Si

gnoff

at

New

Gen

Cons

truc

tion

Assembly BOM Production Release Review

Signoff Engineering – Design Complete Supply Chain – Purchase Quantity QA – Package Complete & Accuracy

2 ImplementIn-Process & Final Auditat Supplier

CASE #1 – ZERO STOCK OUT

Impl

emen

t In-

Proc

ess &

Fin

al

Audi

t at S

uppl

ier

Develop In-process Audit of Category-C Hardware Kits per Part Number Incoming material inspection Quantities checked per hardware part

number

Incoming Material

QC Ok!

Check MFR. P/NCheck Material

Check QTY

2nd Tier Hardware Supplier

Move parts to Inventory

Location

Yes

No

Impl

emen

t In-

Proc

ess &

Fin

al

Audi

t at S

uppl

ier

Develop Final Inspection of Category-C Hardware Job Site Kits Final Audit of Job Site BOM hardware

Quantities

Pull needed parts for Job

Site Store

QC Ok!

Check P/NCheck QTY

Move parts to shipping

Yes

No

Planner

3 Use KANBAN (Zero Stock Out) at Construction SiteStore

CASE #1 – ZERO STOCK OUT

Use

KAN

BAN

at C

onst

ructi

on

Site

Sto

reKANBAN is Japanese word that means card you can see, posters, signs, etc. and is a visual signal used to trigger an action.

KANBAN was one of several tools Toyota developed to ensure that inventory was based on actual customer orders rather than managerial forecasts.

What is KANBAN

Use

KAN

BAN

at C

onst

ructi

on

Site

Sto

reHardware Store at the Job Site using KANBAN Method for “Zero Stock Out”.

Hardware Store at Job Site

Installers pull parts from store

Replenishment-Supplier to Job Site

Low stock triggers Replenishment

Usage being monitored

Use

KAN

BAN

at C

onst

ructi

on

Site

Sto

reHow does KANBAN work?

Use

KAN

BAN

at C

onst

ructi

on

Site

Sto

reHow are parts replenished or pulled from Supplier?

When container is empty, Signal to source to replenish Kanban

Wait until minimum order Quantity is reached

When order minimum is reached, a Job, PO or Move Order is created

When received, KANBAN status is updated and container is moved to usage area

Planner determines when to add/remove cards

NewGen Construction to work with LSS Black Belt in monitoring Hardware Stores performance (KPI) – Min. weekly report at start of program and less frequent when program achieves it’s “Zero stock out” objective.

Develop a learning organization (NewGen – Supplier) that will find ways to reduce the number of KANBAN and thereby reduce and ultimately eliminate the inventory buffer.

Continuous Improvement