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The Replies
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REPLY 1
Renee McCormick
BUSI 650
Liberty University
Discussion Board: Cross Docking
Cross-docking is an efficient use of coordination between incoming and outgoing shipments of products through distribution centers (Tootkaleh, Ghomi, & Sajadieh, 2016). Warehouses typically are used for receiving, storage, order picking, and shipping (Motaghedi-Larijani & Aminnayeri, 2017). The act of cross-docking removes storage and order picking as it is taking a shipment from the incoming truck and moving it directly to the outgoing truck almost immediately. This dance between trucks reduces the costs of holding inventory and increases product turnover. Using the cross-dock concept has shown to reduce production costs with the reduction of overhead and transportation costs consuming 30% of the price (Tootkaleh, Ghomi, & Sajadieh, 2016). The consolidation of shipments also allows full truckloads to be shipped out reducing the number of partially empty trucks on the roadways.
The selection of this key concept is of professional curiosity. After observing its effectiveness first hand during a tour of the Lowes distribution center, the cross-docking concept should have been considered as process improvement for my previous employer. Multiple shipments of special make-ups going directly to big box companies would sit waiting for their time to ship and potentially miss their shipment window due to poor coordination.
Comparison
There are several different cross-dock coordination models based upon the needs of a company and their supply chain. Tootkaleh, Ghomi & Sajadieh (2016) conducted a survey to compare several different versions and found the best structure is the product substitution allowance. Substituting products on the outbound truck allowed full shipments to the stores without delays. The original products would sit in holding and go in the next shipment.
Motaghedi-Larijani and Ainnayeri (2017) found a gap in research as many studies do not take into effect the waiting time of the outbound truck. This detail is important for their study using cross-docking methods to improve fruit and vegetable distribution in Tehran, Iran. If an outbound truck is waiting for multiple incoming shipments, the time and costs must be considered especially with perishable items. Bergham & Leus (2015) also found the use of a parking lot allows a buffer zone for coordinating trailers without truck drivers waiting to leave to minimize personnel costs.
Another gap in research specific to transportation reliability was addressed by Amini and Tavakkoli-Moghaddam (2016). Companies using cross-docking re dependent on the timing of shipments, yet trucks do tend to break down. The authors study the potential effect of truck breakdown on the cross-dock coordination as this is an inevitable reality that must be taken into account for planning shipments.
Article Summary
Cross-docking may not be an immediate move from one truck to another truck. Zaerpour, Yu, & de Koster (2015) review the benefits of using limited storage on a temporary basis to maximize truck loads. The goal is to minimize product retrieval time and quickly load outgoing trucks to maximize shipments. For fresh produce and perishables, the study recommends different working shifts to minimize the storage of products. This is accomplishment by bringing in the freshly harvested item in the afternoon or evening, coordinating the shipment and storing to ship out in the morning.
Storage can be a premium at many distribution centers. Zaerpour, Yu, & de Koster (2015) recommend using a compact automated storage system to reduce the necessary short-term storage area. One downside would be how deep the storage can be and require multiple reshuffles during the day as shipments are packed. To avoid this constant shuffle, shared storage of different products in the same lane would work with much product tracking. There is a point that with cross-docking, the outbound truck timing is known and will help avoid multiple reshuffles of product.
Biblical Integration
Cross-docking provides efficiency for a corporation with their supply chain management. The Bible speaks to being efficient with our work. Ephesians 5:15-16 gives a warning stating “look carefully then how you walk, not as unwise but as wise, making the best use of the time, because the days are evil” (ESV). The book of Proverbs continues with a warning that of “the plans of the diligent led surely to abundance, but everyone who is hasty comes only to poverty” (Proverbs 21:5, ESV). The coordination of cross-docking must be precise to maximize the benefits and cannot be thrown together.
Application
The concept of cross-docking is most applicable to companies shipping to various locations on a continuous basis. Many large corporations have mastered the cross-docking task, including Walmart, Lowes, and other big-box retailers. Smaller businesses with continuous shipments should consider applying cross-docking to their continuous orders in the effort to reduce overhead costs and move inventory quickly to profit. Cross-docking is the best fit when there are stable demand rates, large volume of items, and low stock-out costs (Amini & Tavakkoli-Moghaddam, 2016). Coordination is key to align the incoming trucks with outgoing trucks, but it is possible as corporations track their shipments continuously. As companies are trying to cut down on costs to maximize profits, this is an opportunity to consider if it fits with their business model and product deliveries.
Annotated Bibliography
Amini, A., & Tavakkoli-Moghaddam, R. (2016). A bi-objective truck scheduling problem in a cross-docking center with probability of breakdown for trucks. Computers & Industrial Engineering, 96, 180-191. doi:https://doi.org/10.1016/j.cie.2016.03.023
Many studies of cross-docking methods forget the transportation follies that can affect the supply chain coordination (Amini & Tavakkoli-Moghaddam, 2016). Vehicles do break down and need to be considered when reviewing truck timing and delivery schedules. The authors identify these service interruptions as accidents and/or engine or truck part failure and propose strategies to maintain the supply chain. These five strategies include repairing the truck to resume work, use another truck temporarily, rent a truck temporarily, desert the truck for an available truck, or leave the broken truck for a new one. Each of these would work depending on the situation.
Bergham, L., & Leus, R. (2015). Practical Solutions for a dock assignment problem with trailer transportation. European Journal of Operational Research, 246(3), 787-799. doi:https://doi.org/10.1016/j.ejor.2015.05.057
The coordination of multiple trailers using limited docking space is addressed by Bergha and Leus (2015). A parking lot was designated as a buffer zone between trailers, not at the loading dock and not ready for shipment. The article reviews the trailer movement to best address timing and costs. Temporary storage is also addressed with either a structured design versus random placement of the trailer storage. The authors conclude that a random placement is better for maximizing space than a structured placement.
Motaghedi-Larijani, A., & Aminnayeri, M. (2017). Optimizing the admission time of outbound trucks entering a cross-dock with uniform arrival time by considering a queuing model. Engineering Optimization, 49(3), 466-480. doi:10.1080/0305215X.2016.1206414
Using cross-docking coordination has reduced supply chain costs to the fruit and vegetable distribution in Tehran, Iran (Motaghedi-Larijani & Aminnayeri, 2017). The authors attempt to address the amount of waiting time for outbound trucks. Models and math equations are reviewed to compute the outbound trucks waiting time and costs associated with this time. This calculation will best maximize the cross-dock concept and reduce overhead rates with trucks sitting with no shipments.
Tootkaleh, R., Ghomi, F., & Sajadieh, S. (2016). Cross dock scheduling with fixed outbound trucks departure times under substitution condition. Computers & Industrial Engineering, 92, 50-56. doi:https://doi.org/10.1016/j.cie.2015.12.005
When a shipment is delayed, Tootkaleh, et. al (2016) found using substitution is best to maintain truck departure times. Scheduling is important for cross-dock use and delays can cause chaos to the supply chain. Using a substitute product for a delayed shipment will maintain scheduled truck departures and limit the delay impact. Delayed shipments would be stored for the next outbound truck. If a substitution is available, the authors found it the best arrangement to avoid missing shipment deadlines.
Zaerpour, N., Yu, Y., & de Koster, R. (2015). Storing fresh produce for fast retrieval in an automated compact cross-dock system. Production and Operations Management, 24(8), 1266-1284. doi:10.1111/poms.12321
Maximizing the cross-docking system with limited storage is important for fresh produce (Zaerpour, Yu, & de Koster, 2015). The authors propose multiple working shifts to minimize the time between the produce is harvested when it reaches the customer. Using a compact automated storage system is proposed to reduce the necessary short-term storage area.
REPLY 2
Adam D. Fledderman, C.P.M.
October 2, 2019
Respectfully Submitted to: Dr. Scott Dickenson
Author Note
This research was written to satisfy Key Topic Explanation for Module Seven of the course
BUSI 650 Operations Management
Key Topic Explanation
Kanban originated in post-World-War II Japan; as the Japanese economy began to grow in alignment with the rebuilding of the nation, it was evident to the practitioners of manufacturing that the countries limitations for real-estate and manufacturing footprints would be a disadvantage into the future (Tagaduan, 2009, 1). The use of systems to maximize the value brought by all aspects from the organization, from production lines, spare parts, and manufacturing associates is a critical component in Kanban and the Toyota Production System, although the Toyota production system brought these concepts to the forefront and provided validation for the use of the ideas to the western business world, the basis for Kaban is deeply rooted in Japanese culture. Due to its status as an island nation with limited space and limited natural resources, Japan historically faced an imbalance in international trade in the procurement of resourced to fuel production, as a result of this imbalance Japanese goods previously had been economically disadvantaged thus limited export potential, furthering imbalanced the playing field in international trade (Tagaduan, 2009, p. 554)
Introduction
How Kanban/JIT is Used
On the surface, the implementation of Kanban/JIT can increase productivity, limit inventory levels, eliminate waste, effectively use company financial resources, and positively impact cash flow, revenue, and profit margin.
When dissecting Kanban/JIT as segments of the Toyota Production System, it is crucial that organization leadership fully understands the conceptual scope. The workforce must understand it as a way to grow efficiency and effectiveness. It must be communicated is a culture that must be adopted and lived at all levels of the organization. Not just on the plant floor, and by individual contributors in the professional disciplines, this concept must be embraced from the top-down, from the CEO to the janitor. As a core concept of the Toyota Production Concept, Kanban helps to utilize the abilities of the workforce entirely. Kanban should create opportunities for associates on all levels to display their talents, with the ability to succeed and advance on their merits and the value they bring the organization (Tagaduan, 2009, p. 554). While leadership and stakeholders may see the elimination of waste from the manufacturing process as a gain in profit, they must also recognize an increase in worker productivity and satisfaction in their work. Workers seldom see the benefit in an effort that results in no gain for themselves or their organization; the elimination of waste makes the associate’s actions more productive, and their results more beneficial.
Interest in Topic
Having spent my career in supply chain and procurement, I have become fascinated with the concept of elimination of cost. Cost eliminations that I have pursued were not only from the price of the product but also the process used to manufacture it. One of the most powerful tools that I have witnessed is the use of the Toyota Production Systems, specifically Kabana ad JIT. Through the elimination of waste and improved utilization of associate abilities, manufacturers can expect to see an increase in the quality of goods produced and a decrease in the cost of goods sold. As a result, the price that the product enters to market with can be decreased, if found to be beneficial to grow sales through pushing the market, rather than reacting to the pricing dictated by competitors. The lower cost to produce can enable the sales force to be more aggressive with selling pricing, or to allow for a premium price, and while possibly not increasing sales at a higher rate may grow profit margin organically, and grow sales through a higher perception of quality.
Comparison
The optimization of inventory levels is a vital principle of Kaban and the Just-in-Time system. These systems rely on correct lead times from suppliers to appropriately fill stock rooms to support production. The use of JIT is often seen in conjunction with Kanban. The collaboration of systems provides the best user knowledge to feed the adjustments to inventory levels as production volumes ebb and flow with time (Liberty University, 2017, p. 225). The use of Kaban can optimize inventory levels in the JIT environment to prevent bottlenecks by identifying the stages in the process that have experienced previously hire scrap or fall out. Using Kaban to accurately calculate the needed stream of product, starving of production can be prevented (Liberty University, 2017, p. 66).
How Kaban and JIT can affect the make-to-stock, or make-to-order products can vary.
With the implementation of a Kaban System or higher Toyota system, the result will be the lessening of inventory and waste, the improvement or production, and the ability to better use financial resources. The calibration of the benefit of the implementation of these processes will fall upon the Finance Department. As there will be an anticipated benefit to the investment of time, resources, and employee morale, it will be critical that a clear understanding of inventory and financial allocation levels are accounted for before, during (at key milestones), and at the realized implementation of the process. The result, and hopefully benefit of these efforts will be captured and aggregated by finance, this allowing for recalculation of overhead and labor rates through the manufacturing process, and a realization of a lower cost of goods sold, and higher profit margins.
The internal customer of the supply chain and operations will see benefits from the implementation of Kanban and the Toyota System, the elimination of waste will allow for a higher level of quality to be produced, this should, in turn, decrease internal demand on the inspection and rework function, which may allow for re-direction of these assets to bring value to other areas of the business.
Article Summary
In his article, Tagaduan (2009), discusses the process in which Toyota developed the Toyota Production System and perfected their use of Kanban and JIT inventory. Previous attempts had been made by Toyota to mimic the successful production methods of Ford Motor Company. Although benefit was gained, full-scale matching of the efficiencies of Ford was not realized. The developer of Kaban had studied the work previously completed by their forbearers and found that these projects had failed to address inventory levels as a segment of efficient manufacturing. This allowed for a focus of their study on reducing inventory to bring value (Tagaduan, 2009, 1).
The general findings of Tagaduan are in line with the findings from Meredith and Shafer in the text. However, there is a difference in the approach to the topic. Tagaduan focuses on the use of the tool as a way to optimize inventory and impact the ability of production to contribute to the revenue and profit of the organization, while Meredith and Shafer focus more on the fundamentals of the concept with examples of how it may be used to bring benefit
Before the invention of the Kaban system, the restrained ability to carry inventory due to particular limitations had been acknowledged as a standard and accepted limiter to manufacturing. This often forced many Japanese organizations to produce in a job shop or batch processing model (Tagaduan, 2009, 1). This limited potential production volumes, and also set market prices much higher than could be afforded by the general populous, and served as a strict barrier to growth and innovation. Tauchi Ohno and Shiega Shingo, in efforts to improve production at their employer, The Toyota Motor Company, developed a system based on the exchanged of cards for goods from inventory and other cards which triggered insufficient inventory levels that would initiate production, thus manufacturing cells that produced components and subassemblies could only produce product if they were granted authority by the possession of a Kanban card (Tagaduan, 2009, 3-4). The core belief in this system is only to produce what is needed when it is required. The use of Kanban will prevent overproduction of inputs, which will then reduce the use of space on non-value adding inventory, allow for manufacturing personal to be redirected to other functions, and prevent the over the ordering of raw material and other inputs from outside third party suppliers.
Tagaduan does not contribute time in his paper to the Theory of Constraints, while Meredith and Shafer draw attention ot it, and its rule in the utilization of Kaban and JIT in the manufacturing process. By acknowledging constraints and building systems to improve organizations can make great strides.
Biblical Integration
The bible gives us many guidelines on wastefulness and its perils. In proverbs 21:20, we are told, “Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it.” And in Ephesians 5:15-17 we see that God wants us to be deliberate and impactful with our efforts “Look carefully then how you walk, not as unwise but as wise, making the best use of the time because the days are evil. Therefore do not be foolish, but understand what the will of the Lord is.”. The concepts involved in the Toyota Production System, Kaban, and JIT are holistically aligned with God’s desire for us to be diligent stewards of the resources that he trust us with. The principles of the Toyota Production System that lead to the invention and widespread adaption of the Kanban inventory management process have significantly impacted the ability of an organization to improve internal efficiency through the concise and deliberate management of inventory levels and production triggers. The system is based on the root of understanding the processes and ability of the organization and improving the gaps and growing the strength even further. The core of the Kanban and Toyota system have spurred a culture of continuous improvement in all types and functions of business, not only manufacturing. The culture of analysis and challenging why things are done in an attempt to eliminate waste has resulted in the ability of organizations to streamline production, minimize inventory, and maximize output and value.
Application
It is critical that when implementing a Kaban system, the implementing party shall be cognizant of supplier lead-times, inventory programs, and safety stock levels (Liberty University, 2017, p. 8). These are all inputs that define the availability of the product, any miscalculation to the Kanban function could result in inventory levels that could starve production, risking costly downtime. However, if these levels are miscalculated, they could provide much higher inventory levels than needed. Using Kaban as a method to regulate and predict inventory levels to optimally feed products can help prevent the starvation of the production lines with a buffer inventory that is large enough without wasting resources and space (Liberty University, 2017, p. 66). Tagaduan (2009), discusses the limitations that Japanese manufacturers face in regards to the area for storage of stock and the constrained availability of real estate for development as a leading motivator in the development of the Kanban system (p. 2)
The use of an Enterprise Resource Planning system can interact with the Kaban philosophy, often it is common that the ERP system will be interfaced throughout the organization, with demands of production sending signals to other departs to trigger their production, resulting in the ordering of raw material and components by the procurement function (Liberty University, 2017, p. 16).
Annotated Bibliography
Danese, P., Romano, P., & Bortolotti, T. (2012). JIT production, JIT supply and performance: investigating the moderating effects. Industrial Management & Data Systems, 112(3), 441–465. doi: 10.1108/02635571211210068
In this article the authors conduct a study to understand the interactions between JIT supply practices and the JIT production model. The authors found in the research that there was a link between the two subset of JIT principles, and that by linking together they can bring greater value to the organization. Their research also found that if having to select between the two the priority should be focused on JIT production, as the value of finished good inventory is greater than that of component and raw material inventory. The authors state that to truly maximize effectiveness within the organization the use of both is recommended. It was also found that if an organization is to focus only on JIT production principles that the supply chain should attempt to implement introductory supply JIT concepts if possible to create a ready supply base to support the new initiative.
Kumar, C. S., & Panneerselvam, R. (2006). Literature review of JIT-KANBAN system. The International Journal of Advanced Manufacturing Technology, 32(3-4), 393–408. doi: 10.1007/s00170-005-0340-2
The authors deliver a literature review focusing on the principles and benefits of the Kaban and JIT production tools in this article. The initial phases of the article focuses on the history and philosophy of the concepts, and how they have been used to bring benefits to manufacturing. In addition the authors also review the blocking mechanisms in the implementation and use of Kaban, as well as possible solutions. They further discuss the measurement of performance of Kanban/JIT and how to insure the integrity of the measurement.
Piplani, R., & Ang, A. W. H. (2017). Performance comparison of multiple product kanban control systems. International Journal of Production Research, 56(3), 1299–1312. doi: 10.1080/00207543.2017.1332436
In this article the author discusses the basis for the history of Kanban control system and their impact on manufacturing as a waste elimination and efficiency building tool. The author highlights that in recent history attempts have been made to further the Kanban concept as a manufacturing control system, it is highlighted that much of the efforts and research around these developments has been focused on the single stage manufacturing process. Thus these systems are not fully transferable to more complex environments. The author conducted research on how new developments would perform in regards to more complex product lines and manufacturing operations, noting that adjustments in the concept would allow for optimization and increase value in the process.
Sugimori, Y., Kusunoki, K., Cho, F., & Uchikawa, S. (1977). Toyota production system and Kanban system Materialization of just-in-time and respect-for-human system. International Journal of Production Research, 15(6), 553–564. doi: 10.1080/00207547708943149
This article highlights the history and core principles of the Kanban and JIT tools, and their place in the Toyota Production system. The author highlights the origins of the tools, based on the needs of the limited space at manufacturing firms during post World War II Japan. The lack of space led to the creation of tools and methods that would dedicate as much effort and floor space as possible to the creation of value and profit for the organization. As a result the use of Kaban and Jit to minimize inventory and control inputs and outputs was born. The authors further discuss that while the system aims to eliminate waste it always provides what is needed for production, not allowing the quest for savings to halt the need to produce. The authors further discuss that Kanban and JIT were designed with the original intention of respect for the human and as a tool to enrich the professional lives of the workforce.
Tagaduan, D. (2009). Kanban system used to optimize inventory levels. Lucrări Ştiinţifice :
Management Agricol, 6, 1st ser.
In this article Tagaduan proposed the value brought to contemporary manufacturing by the Kanban system. He discusses the origin of the system as a component of the Toyota Production System, and how it was a result of the quest to meet the Productivity and outputs of the Ford Motor Company. Tagaduan also discusses how the limited production space due to constrained real estate supply of post-World War II Japan made the need to increase productivity a matter of life or death for organization. This demand fostered the culture of continuous improvement that is synonymous with Japanese companies. Tagaduan further discusses the contemporary use of Kanban, allowing for optimizing inventory levels and feeding production with a stable supply while minimizing the square footage needed to inventory materials.
References
Danese, P., Romano, P., & Bortolotti, T. (2012). JIT production, JIT supply and performance: investigating the moderating effects. Industrial Management & Data Systems, 112(3), 441–465. doi: 10.1108/02635571211210068
Kumar, C. S., & Panneerselvam, R. (2006). Literature review of JIT-KANBAN system. The International Journal of Advanced Manufacturing Technology, 32(3-4), 393–408. doi: 10.1007/s00170-005-0340-2
Liberty University (2017). Supply Chain Management. New York, NY: McGraw Hill Create
Meredith, J. R., & Shafer, S. M. (2019). Operations and supply chain management for MBAs.
Hoboken: Wiley.
Piplani, R., & Ang, A. W. H. (2017). Performance comparison of multiple product kanban control systems. International Journal of Production Research, 56(3), 1299–1312. doi: 10.1080/00207543.2017.1332436
Sugimori, Y., Kusunoki, K., Cho, F., & Uchikawa, S. (1977). Toyota production system and Kanban system Materialization of just-in-time and respect-for-human system. International Journal of Production Research, 15(6), 553–564. doi: 10.1080/00207547708943149
Tagaduan, D. (2009). Kanban system used to optimize inventory levels. Lucrări Ştiinţifice :
Management Agricol, 6, 1st ser.
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