Operations and Supply Chain Management The Core

400 OPERATIONS AND SUPPLY CHAIN MANAGEMENT
Single Minute Exchange of Die (SMED)—Efficiency Requires
Attention to Details
Setup or changeover time is the time that it takes to
switch from making one type of part to another type on
a machine. In an automobile plant, large stamping dies
are used to form shapes in metal such as fenders. These
dies are big and heavy, and the process used to change
from one set to another could take hours. A technique
to speed this up is often referred to as Single Minute
Exchange of Die (SMED), since it was first applied to
these stamping dies.
SMED divides the activities in the changeover process
into internal and external activities. Internal activities require
the machine to be shut off before the activity can be completed.
External activities can be done while the machine is
still producing parts. To speed things up, additional people
are brought in to do the external activities while the machine
is completing the current job. As soon as the current job is
done, the machine is shut down and the internal activities
are done to complete the changeover. The machine can
then quickly move on to the next job.
The concept can be applied to many settings such as the
operating room in a hospital or the preparation of food in a
restaurant. For example, salads can be prepared and meats
trimmed ahead of time, so the salad can be quickly delivered
and the meat grilled while the customer is eating the
salad. Detailed attention to what needs to be done makes
processes more efficient.
LO12–2 Illustrate
how lean concepts
can be applied
to supply chain
processes.
Value stream
These are the
value-adding and
non-value-adding
activities required to
design, order, and
provide a product
from concept
to launch, order
to delivery, and
raw materials to
customers.
Waste reduction
The optimization
of value-adding
activities and
elimination of
non-value-adding
activities that are
part of the value
stream.
maintain level payrolls even when business conditions deteriorate. Permanent workers
(about one-third of the total workforce of Japan) have job security and tend to be more
flexible, remain with a company, and do all they can to help a firm achieve its goals.
(Global recessions have caused many Japanese companies to move away from this ideal.)
Company unions at Toyota as well as elsewhere in Japan exist to foster a cooperative
relationship with management. All employees receive two bonuses a year in good times.
Employees know that if the company performs well, they will get a bonus. This encourages
workers to improve productivity. Management views workers as assets, not as human
machines. Automation and robotics are used extensively to perform dull or routine jobs so
employees are free to focus on important improvement tasks.
Toyota relies heavily on subcontractor networks. Indeed, more than 90 percent of all
Japanese companies are part of this supplier network of small firms. Some suppliers are
specialists in a narrow field, usually serving multiple customers. Firms have long-term
partnerships with their suppliers and customers. Suppliers consider themselves part of a
customer’s family.
LEAN SUPPLY CHAINS
The focus of the Toyota Production System is on elimination of waste and respect for people.
As the concepts have evolved and become applied to the supply chain, the goal of maximizing
customer value has been added. Customer value when considered from the entire
supply chain should center on the perspective of the end customer with the goal being to
maximize what the customer is willing to pay for a firm’s goods or services. The value
stream consists of the value-adding and non-value-adding activities required to design,
order, and provide a product or service from concept to launch, order to delivery, and raw
materials to customers. This all-inclusive view of the system is a significant expansion of
the scope of application of the lean concepts pioneered by Toyota. When applied to supply
chains, waste reduction relates to the optimization of the value-adding activities and