To streamline supply chain of two Bin components at NHNT, K6, V28, KV Assembly line.

Name Vikrant Chiddarwar YMDP Intern 2009

Sponsor Sanjay Kamat Guide Anant Pethkar

PROJECT 4 BLOCKER
To streamline supply chain of 2 Bin components at NHNT, K6, V28 and KV Assembly line.
PROJECT TITLE : DEPARTMENT :Materials
Description of the project: Objective of project is to streamline supply chain of 2 Bin components Low value bulk items are procured through 2 Bin system. Synchronization of demand and consumption is important aspect of project. .Solution strategy suggested by this project will help us to: 1> Avoid shortage. 2> Generate data bank of Bulk parts with details like Bin size and location. 3> Refine Min-Max level

Objective/Target of the Project

Scope To streamline supply chain of 2 Bin ( Bulk ) Materials Identify locations for which analysis needed to be done. Identify data required for analysis. Preliminary Actions-To prepare Layout with Bin locations for Reference. Data Capture 1>Bin size of items at Lines/Usage area 2> .Package size of items from stores/Vendor Data Analysis - Thorough analysis of captured data in Excel. Findings Actions

Time Plan of the Project:

Sr. No 1 2 3 4 2 Activity Working Days

Benefits and Justification: A complete data consisting of Bin size, Pkg. size, Location of Bin obtained which will help in fast tracking of item. Alignment of Bin size and Pkg. Qty Reduction in excess issue . Avoid shortage/ Line stoppage Reduce Gap Between Consumption and Demand.

Data Collection Data consolidation Data analysis Actions/ Findings

18 11 19 13

Project understanding

Material flow
VENDOR

Min max planning group

STORES

Operation Pull

2 Bin materials via move order

ASSEMBLY LINE

2 Bin supply system

Two Bins of items are created. The first Bin is in front of second Bin. Material is drawn from first or most accessible
Bin only. When the first Bin is empty it is exchanged with the second Bin. Move order is generated at usage point to replenish empty first Bin. Material is then drawn from second Bin while waiting to receive Material on order.
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Advantages of Two Bin system

Eliminates down time due to shortage. Keeps reduced amount of supplies at point of use. Makes replenishment and re-ordering a simpler
process. Best suitable for supply of low cost items required in Bulk quantities. Creates a self-perpetuating inventory.

Streamlining supply chain

Need of co-ordination between purchase, stores,
Assembly line( usage point ), and supplier felt for streamlining supply chain. Data about Items and their Bin Qty located on various usage points was initially unavailable. This data was most relevant for carrying out analysis to streamline supply chain. Data collection to be carried out at all nine location to generate a comprehensive data base which will serve as a foundation for analysis.

Streamlining supply chain

Consumption and Demand are two prime aspects of
supply chain. A right synchronization between consumption and demand must for a streamlined supply chain. Two Bin materials have no tracking once they are out of store. Need to generate a database which will help in proper planning of Two Bin materials.

Project Road map (macro) Scope To streamline supply chain of 2 Bin ( Bulk ) Materials. Identify locations for which analysis needed to be done. Identify data required for analysis. Preliminary Actions To prepare Layout with Bin locations for future Reference. Data Capture Bin size of items at Lines/Usage area. Package size of items from stores/Vendor. Data Analysis Thorough analysis of captured data in Excel. Findings Actions
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DATA CAPTURED

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Snapshots of Data Collected

User Locations- 9 Total Data gathered- 3973 usage points. Location with Min Max items- 2902 No of unique Min Max items -1187 Items with single Bin Location only per minimum
one line- 924 Items with only one Bin location- 648 Package size collected for 1045 items. Actual consumption and demand for six months.
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Locations of Data

NHNT Assembly line NHNT Upfit NHNT KIT K6 Assembly line NHNT/K6 Sub assembly V28 Assembly line KV Assembly line KV Sub assembly KV Upfit
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Sr No 1 2 3 4 5 6 7 8 9

USER LOCATION NHNT Assembly Line NHNT Sub assembly K6 Assembly V28 Assembly Line NHNT Up Fit NHNT KIT KV Assembly KV Sub assembly KV Up Fit TOTAL

Total No. of Bin 990 176 504 375 390 473 637 346 88 3973

No. of Min Max Bin`s 725 97 358 283 325 413 387 241 73 2902

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Outcome of Data collection

Once data for item and Bin size on various location
was captured it was observed that items could be classified in groups. Groups were as follows :
1>Items having single Bin location. 2>Items having multiple Bin locations but single Bin on each location. 3>Items having multiple Bins but may have multiple Bin on single locations.

Once classification was done Analysis work was

simplified. Proper planning can be established using this data.
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DATA ANALYSIS

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Location and Bin Spread

Item Nos. BIN count 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 22 23 28 31 33 38 52 Grand Total
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Number of locations 1 648 63 11 1 2 166 49 10 2 3 4 5 6 7 8 9 Grand Total 648 229 137 46 30 21 19 12 10 6 5 1 2 1 2 1 3 2 2 2 1 1 1 1 1 1 1 1 1 1 1 5 1187

77 14 5 4 1

21 14 8 4 2 3

9 7 8 3 5 1 1

2 5 6 3 1 3 1

1 1 2 1 1 1 1 1 2 1 1

1 1

1 2 2 1

1 1

723

227

101

52

34

23

11

11

The Funneling Effect

Total Data points

3973 2070

Total 2 Bin Locations

Unique items Min Max items (Planner 41 or 42) Single Bin In multiples lines

Total 2 Bin items

1187
924 648

Min Max 2 Bin parts

Single Bin single line

Items having only 1 Bin

Items
17

Focus group for further analysis

Consumption/Demand Analysis
200 180 160 140 120 100 80 60 40 20 0 0 - 2020 - 50 50 - 100 100- 1000 Consumption > Demand (%) >1000

179 129 67 38

No. of items

115

This data is for 924 items with single Bin having one or multiple locations. Consumption demand data is for 26 weeks from 1st June 2009 to 1st Dec 2009. 18 Total items in oval = 349

Demand Pattern
140 120
No. of items

128

100 80 60 40 20 0 0 - 2020 - 50

73

79 64

50 - 100

100- 1000

Demand > consumption (%)

This data is for 924 items with single Bin having one or multiple locations Consumption demand data is for 26 weeks from 1st June 2009 to 1st Dec 2009. 19 Total items in oval = 216.

Line wise consumption Vs Demand for One Bin Item

80 70 60
No. of items

67

50 40 30 20 10 0
K6

46 39 23 19

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C < D( 167 ) C > D( 241 )

19 18 12 9 22 16
C- consumption D- Demand

`
19 23 16 14 1
KIT KVA KV SA KV UF NHNT

NHNT SA

NHNT UF

V28

For this analysis Items having only one Bin all over selected ( Total=648) Items having difference of more than 20% included in graph. Assumption- Consumption is negligible for lines apart from one in which Bin is located.

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Next analysis Phase

It was found that Non alignment of Package size
and Bin size could be a probable reason for consumption demand discrepancy. Package size for items was unavailable . Package size for all items was collected from MinMax stores. Analysis of package size and Bin size to be done to check their alignment. Also Analysis for move type to be done.

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Analysis of single Bin Items

Motive of this task is to standardize Bin size and
package size for single Bin items. Parts having Single Bin in all the locations selected for Analysis. Total number of parts = 648

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Spread of single Bin Items

K6 KIT 55 35 64 78 153 KV ASSEMBLY KV sub assembly KV UPFIT 133 3 53 74 NHNT NHNT Sub assembly NHNT UPFIT V28

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Bin size Vs Pkg. size for Single Bin items

119 228 Bin>Pkg Pkg > Bin Bin = Pkg 218

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Analysis for Single Bin Parts

140

120

119

100

No. of items

80

75 Not perfect multiples 62 Perfect multiples

60

112

40

80

20 22 0 0 0-0.1 0.1- 0.4 0.4- 0.8 0.8- 1 Bin size/ Pkg size 1- 1.2 0 0 6 8 0

43 30

1.2- 2

>2

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Target Diagram

OK Components = 256

Pkg. size not a perfect multiple=309

Parts with data not available= 83

Single Bin parts Total- 648

Remark Components in red patch are the ones with action needed (Target). Data available for total 565 items.
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Item types for Single Bin parts

54, 8% 65, 10%

141, 22%

388, 60%

fast medium slow non moving

Total Number of items = 648

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Consumption/ Demand Analysis with Item type

70 60 50
No. of items
6

40 30 20 10 0

Fst/medium
5 13

59

Slow/Non moving
2 1 9

34

29
5

15

16

9 1

13

K it

N T

SA

SA

U N T

K V

K V

K V

N H

N T

Single Bin item having only one Bin all over selected.

Items with difference between consumption and demand more than 20 % selected
Total= 648
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N H

N H

V 28

k6

Analysis for single Bin on multiple lines

Move type distribution for items with single bin on multiple lines

49, 29%

33, 20%

87, 51%

Slow Medium Fast

Items having multiple Bins but only one Bin per line selected.
Items with difference in consumption and demand more than 20% selected. Total Items = 169
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Package and Bin size Alignment

Items having multiple Bin's and only one Bin

per location selected for this activity. Total Number of items = 270 Recommendations made to align package size with Bin size on every locations for each part.

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Recommendations chart

140 120 100

No. of items

115

114

80 60 40 20 0
increase pkg qty Decrease pkg qty keep pkg qty ok

14

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Co-relation of Bin- Pkg. diff and consumption demand diff.

Consumption > Demand

120
Number of items

100 80 60 40 20 0

9 18 69 7 28 34 25 8 16 11 33

B>P Multiples P>B

54

0 - 20
32

20 -50 50 -100
% Diff

> 100

Percentage distribution
100% 90% 80% 70%

% of items

60% 50% 40% 30% 20% 10% 0% 0 - 20 20 -50 50 -100 > 100 % diff in consumption/demand

B>P Multiples P>B

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FINDINGS

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Key Findings
Bin sizes not aligned with packing size
50 % of items having only one Bin has package size not aligned with
Bin size. 53 % of items having single Bin on multiple lines need change in package size.

Discrepancy in consumption-demand data.

408 out of 648 one bin items i.e. 63% items have difference between
consumption and demand more than 20 %. 79 % of these items having discrepancy are SLOW MOVING.

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Key Findings
Single Bin items at KIT has maximum consumptionDemand discrepancy.
Kit has maximum single Bin items (153) Out of these 113 items have discrepancy in consumption demand
data.

Issues at multiple locations for items having single

Locations.
Out of 648 for 178 parts multiple issues have occurred.

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Key Findings
Multiple packing size for single item.
87 items have multiple package sizes.

Non moving items at some locations Excess Bin size at one station and inadequate Bin
size at another station.

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Actions

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Actions and Recommendations

Once Analysis phase was complete significant

number Findings were observed. Pertinent recommendations are made against these findings to streamline supply chain. Data obtained through the project was found useful for setting up Min Max level planning. Implementation of Min Max level planning will result into smooth supply chain without shortage.
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Actions against Findings

Findings Suggestions Implications

Bin size not aligned

with Pkg. size

Considering
implications make optimum changes in Pkg. size and Bin size.

Cost aspect. Requirement at

station. Consent of Vendor/sourcing.

Discrepancy in
consumption-demand data.

To reduce Bin size of

slow moving items as per consumption.

Maximum
discrepancy in consumption and demand for single Bin items .
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More focus on single

Bin items at Kit.

Actions against Findings

Findings Suggestions Implications

Multiple Pkg. sizes

Make unique Pkg.

size for all items as per Bin size.

Consent of vendor.

Multiple issues

To check
requirement of items in location other than Bin location and add a Bin if needed.

Excess Bin at one

To make station wise

location inadequate at Bin size as per other. consumption

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Actions against findings

Findings Suggestions Implications

Non moving items at Conduct periodic

some locations. review of Bin quantity, Packing size and consumption.

Need of reducing
excess issue due to manual error while issuing move order

To club the acquired

data into system through IT dept. to establish proper planning.

Support of IT
department.

Remark : Data collected will help in setting up Min Max level according to consumption on line.
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Min Max planning

In Min-Max planning Minimum and maximum are
thresholds for sending an order to supplier. When stock goes below minimum level, order is generated to replenish stock up to maximum level. This stock shortage and results in smooth supply from stores. Efficiency of supply chain is enhanced.

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Min-Max Level setting

Concept 1: Multiple of sum of Bin Qty taken as Buffer stock. Minimum Level to be set by considering safety stock for 4 weeks and Buffer stock. Maximum Level to be set by considering safety stock for six weeks and buffer stock. Items classified into three groups ; Different formulas suggested for Calculating Min level of each group. 1> Items with Bin data available 2>Fast/ Medium moving Items with no Bin 3>Slow moving items with no Bin
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Formulas for concept 1

Option 1 Max of Consmtn for 52 wks X 4 = Min Lvl

Max of Consmtn for 52 wks X 6 = Max Lvl

Option recommended for fast and medium moving items with no Bin.

Option 2 Buffer stock = Sum of Bin qty * 2 ((Avg. weekly cosmtn)*4)+Buffer stock=Min Lvl ((Avg. weekly cosmtn)*6)+Buffer stock=Max Lvl Option Recommended for items having Bin qty data
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Formula for concept 1

Option 6:

Avg weekly cosmtn * 4 = Min Lvl Avg weekly cosmtn * 6= Max Lvl

Option recommended for slow moving Items having No

bin.

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Concept 2 : Use of standard deviation

Fluctuation in demand over a period of 1 year

taken into consideration. Safety stock calculated in such a way that 99.7% of time the fluctuation can be catered. Standard deviation for a monthly data of 12 months considered in analysis.

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Concept 2 : Use of standard deviation

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Formula for Concept 2

Min Lvl = ( + 3*Sigma ) + (10* /30 )

Covers Avg. monthly consumption and fluctuation in demand

Covers a supplier lead time of 10 days

= Avg. of 12 months consumption Sigma = Standard deviation for 12 months consumption data
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Results of concept 2
Out of 1293 Items for which Min-Max level is to be set, 974
Items have new Min-Max level > 0.75 * Old Min-Max level obtained through concept 1. i.e. 75 % item's Min Level set by option 2 is complying with Min Level set by option 1. For 318 Items having New Min Lvl < 0.75* Old Min Level following criteria is established to Min Level. 1> For fast and medium moving items Min level calculated by standard deviation formula. 2> For slow moving items Min level taken as maximum of : a) Min level by standard deviation formula b) Sum of Bin qty. c) Weekly max of average consumption/demand * 2

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Summary

New Min level set by concept 2 caters to the

fluctuation in demand and monthly consumption. Since 75% of items have Min level almost equal to or more than Min Level set by concept 1, Concept 2 is on safer side and the Available Bin quantity data is taken care of By concept 2. There are no assumptions in concept 2 and scientific approach is followed.
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Aspects of supply chain worked on in project

VENDOR

Recommendations to change pkg. size.

Min max planning group

Alignment of Bin size and Pkg. size to avoid excess issue

Operation Pull

STORES

Implementation of min-max level

2 Bin materials via move order

ASSEMBLY LINE

Consumption-demand analysis
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Complete data of items and bin size on all locations obtained

Project Gantt Chart

Gantt Chart
[Streamlining Suppply chain of Bulk items ]
[Cummins India Ltd] Project Lead: Anant Pethkar Start Date: 12/4/2009
[42]

To dow nload an unlocked version of this template, visit 2008 Vertex42 LLC http://w w w .vertex42.com/ExcelTemplates/excel-gantt-chart.html

Today's Date:

12/3/2009
(vertical red line)

Friday

Days Remaining

Days Complete

First Day of Week (Mon=2): ## ## ## ## ## ## ## ## ## ## ## ## ## ## ##

Working Days

30 - Nov - 09

07 - Dec - 09

WBS 1 1.1

Tasks

Task Lead Vikrant

Start
4-Dec-09 4-Dec-09

End

DATA COLLECTION Draw detailed layout for NHNT assembly Capture all item data(as per format) on NHNT line at various substation Save the data captured in excel format (Daily Basis) Data collection at NHNT Up Fit section And NHNT Kit. Data collection at KV Assembly plant and Data entry into excel format. DATA CONSOLIDATION

8-Jan-10 36 4-Dec-09 1

100% 100%

% Complete

Duration (Days)

26 1

36 1

0 0

1.2

7-Dec-09 14-Dec-09

100%

1.3

7-Dec-09 14-Dec-09

100%

1.4

21-Dec-09 22-Dec-09

100%

1.5 2 2.1

6-Jan-10 Vikrant

8-Jan-10

100% 100% 100%

3 34 1

3 44 1

0 0 0

8-Dec-09 22-Jan-10 44 8-Dec-09 8-Dec-09 1

Selecting MinMax items Capturing packing size of selected items from 2.2 minmax store and vendor 2.3 Arrangement of Data in Excel format 53 Work on Excel 2.4

18-Jan-10 22-Jan-10

100% 100% 100%

5 5 5

3 10 6

0 0 0

23-Dec-09 29-Dec-09 10 11-Jan-10 16-Jan-10 6

14 - Dec - 09

My Contribution
Data Collection from 11 locations. Updating of Data into excel format. Identifying gap between Pkg. Qty and Bin. Qty. Alignment of Pkg. Qty. and Bin Qty. Identify items having gap between consumption
and demand. Line wise analysis. Identify type of items having maximum discrepancy in consumption demand data.
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Learning
Understanding of Material supply chain. Understanding flow of material from Vendor to
stores to assembly lines. Min-Max planning procedure for Bulk Parts. Probable causes for Material shortage and excess issue. Supply chain Jargon. Engine assembly procedure and Material required for Assembly.
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