Jit for Healthcare

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Why Just-in-time Won’t Work for Public Health Overview of Supply Chain Basics James Elam, Manager, 3M Supply Chain Network Analysis Rob Wehrman, Manager, 3M Supply Chain Optimization & Modeling Expertise Center

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Our Values and Goals

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Six Market - Leading Businesses
Health Care Business Consumer and Office Business Industrial and Transportation Business

Electro and Communications Business Display and Graphics Business Safety, Security and Protection Services Business

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International Focus
3M companies in more than 60 countries Sales in nearly 200 countries Consulting with Ministries of Health outside the US on Pandemic Influenza Preparedness

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Speakers
James Elam, Manager, 3M Supply Chain Network Analysis Rob Wehrman, Manager, 3M Supply Chain Optimization & Modeling Expertise Center

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Agenda
Introduction Basics Concepts in Supply Chain and Manufacturing Just-in-Time Manufacturing Concepts Warehouse and Transportation Considerations Conclusions Questions

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General Supply Chain Processes
Demand Information

Material Flow

Material Flow

Material Flow

Typical Supply Chain Network Model
Supplier Manufacturing Distribution Customer

Delay

Delay

Delay

Planning

Planning

Planning

Planning

Forecasted Demand and/or Orders Information

Planning

Types of Manufacturing Processes: Batch
Most prevalent Planned quantity of one product Many different products made on same equipment Economic situation determines an optimal batch size Products are run in a logical sequence to optimize process Lead time includes waiting in queue and processing time

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Types of Manufacturing Processes: Flow
Not as prevalent Single product production Very low variability Equipment usually runs at a steady pace Lead time is short as product is available all the time Capacity is expensive and hard to increase

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Manufacturing Capacity
Usually fixed at a rate determined by equipment Economics drive minimum capacity to meet demand Some excess capacity accommodates variability Demand can exceed capacity Adding capacity is generally a long lead time Hypothetical Demand of an Item

250

Demand Quantity

200 150 100 50 0 1 4

Capacity

Demand can exceed capacity

7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Time Periods
Capacity
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Demand

Avg. Demand

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Manufacturing Planning Processes: Make-to-Stock
Demand lead time is shorter than supply lead time Orders are filled from inventory Use forecast to produce inventory before demand occurs It is important to forecast accurately Replenishment quantities are based on an economical size

Inventory

Consumption Reorder

Replenishment

Cycle Stock

Cycle Stock Safety Stock

Cycle Stock

Time
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Manufacturing Planning Processes: Make-to-Order
Wait for actual orders before production Demand lead time is longer than supply lead time Usually used for low demand items that are hard to forecast Hypothetical Demand of an Item
250

Demand Quantity

200 150 100 50 0 1 4

Lead time allows making product when capacity is available

7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Time Periods
Capacity
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Demand

Avg. Demand

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Importance of Demand Forecast
Forecast is an estimate of anticipated demand All forecasts have error Forecast error is the difference in the forecast and actual The goal is to have minimum forecast error such that the planning is acceptable Low forecast Error: System is stable High forecast Error: System is chaotic Error Demand

Actual Demand Forecast Time
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History of Just-in-Time Manufacturing
1799 – Eli Whitney, interchangeable parts 1910 – Henry Ford, first to implement Just in Time manufacturing “We have found in...
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