Monday, April 30, 2018

April - Industrial Engineering Knowledge Revision Plan

April 1st Week (1 to 5 April)

Production/Manufacturing/Operations Management continued

Material Requirements Planning - Review Notes

Operations Scheduling - Review Notes

Financial Analysis - Review Notes

Operations Technology - Review Notes

Supply Chain Management

Understanding the Supply Chain
Supply Chain Performance: Achieving Strategic Fit

Supply Chain Drivers and Obstacles - Review Notes
Designing the Distribution Network in a Supply Chain

Facility Decisions: Network Design in the Supply Chain
Network Design in an Uncertain Environment

2nd Week

Demand Forecasting in a Supply Chain
Aggregate Planning in the Supply Chain - Review Notes

Planning Supply and Demand in the Supply Chain: Managing Predictable Variability

Managing Uncertainty in the Supply Chain: Safety Inventory
Determining Optimal Level of Product Availability

Sourcing Decisions in a Supply Chain
Transportation in the Supply Chain - Chopra and Meindl

Pricing and Revenue Management in the Supply Chain
Coordination in the Supply Chain - Review Notes

Supply Chain Industrial Engineering and Cost Reduction/Management Ideas

3rd Week

Information Technology and the Supply Chain
e-business and the Supply Chain

Financial Accounting

Accounting: The Language of Business
Measuring Income to Assess Performance - Review Notes

Recording Transactions - Review Notes
Accrual Accounting and Financial Statements - Revision

Statement of Cash Flows - Review Notes
Accounting for Sales - Review Notes

Inventories and Cost of Goods Sold - Review Notes
Long-Lived Assets and Depreciation - Review Notes

4th Week
Liabilities and Interest - Review Notes
Intercorporate Investments and Consolidations - Revision Notes

Financial Statement Analysis - Review Notes
Cost Measurement - Essential Activity of Industrial Engineering

Introduction to Cost Terms - Review Notes
Traditional Cost Objectives and Their Utility

Job Costing - Review Notes
Cost Allocation: Joint Products and By Products

Activity-Based Costing and Activity-Based Budgeting
Process Costing - Review Notes

One Year Industrial Engineering Knowledge Revision Plan

January - February - March - April - May - June

July - August - September - October - November - December

Updated  9 April 2018, 13 April 2017, 25 March 2016

Monday, April 23, 2018

Focus Areas of Industrial Engineering - Proposed in 2017

Focus Areas of Industrial Engineering - First Presented in the Commencement Lecture of PGDIE Program, NITIE, 2017




Productivity Science

Product Industrial Engineering

Process Industrial Engineering

Industrial Engineering Optimization

Industrial Engineering Statistics

Industrial Engineering Economics

Human Effort Industrial Engineering

Productivity Measurement

Productivity Management

Applied Industrial Engineering

The focus areas are based on the following explanation of Functions of Industrial Engineering



The functions of industrial engineering are derived from the Principles of Industrial Engineering presented at the 2017 Annual Conference of IISE, held at Pittsburgh, USA

Taylor - Narayana Rao Principles of Industrial Engineering



Applied Industrial Engineering

3D priniting or any new technology does not make IE obsolete.  It provides additional work to IEs. IEs have to focus on different areas. Therefore we have to appreciate your specialization in IT

New technologies do not make IE irrelevant. In Industrial Engineering Focus areas,  I added Applied Industrial Engineering as a new area. Focus Areas of Industrial Engineering -

Applied industrial engineering indicates the application of IE principles, methods and techniques in each new technology to make it more productive and reduce its cost in each application. It involves identifying specific technology and management dimensions that have an effect on productivity (productivity science)  and changing the processes and management procedures to maintain the variables in the required magnitudes and proportions (productivity engineering and management). So 3D printing requires industrial engineering and industrial engineers in the area of manufacturing 3D printing machines and also to utilize 3D printing process with increasing levels of productivity.

Each technological development, increases the work for industrial engineers by providing new technology on which IEs have to work. IE is industry expansion engineering and each new engineering product and service depends on IE for its growth.

It is a comment I wrote on the blog post in IISE blogs

Happy to see this book by John Heap

Improving Organizational Productivity: Defining Philosophy, Product, Process and People.  

Paperback – November 6, 2017

by John P. Heap (Author), Remi Dairo (Author)

Remi Dairo is the the President of the Institute of Productivity and Business Innovation Management (IPBIM) a globally focused African institution of productivity and innovation learning. Remi is based in Nigeria and, not surprisingly, he has a particular interest in using productivity and innovation to address some of Africa’s contemporary realities and future challenges Much of Remi’s work is focused on individual development and personal productivity and he is a keen advocate of organisational capacity building through the development of skills, competencies and mental abilities. Remi is a regular speaker on national media and at international conferences. John Heap is Managing Director of the Institute of Productivity based in the UK; President of the World Confederation of Productivity Science; President of the European Association of National Productivity Centres; visiting professor at Srinivas Institute of Management Studies in Mangalore, India; co-editor of the International Journal of Productivity & Performance Management; a Member of the Advisory Board of the Institute for Consultancy and Productivity Research (India); and a director of Juice e-Learning. John is the author of a number of books and journal articles and a regular keynote presenter at international conferences.

Product details
Paperback: 292 pages
Publisher: Institute of Productivity (November 6, 2017)
Language: English

Updated on 24 April 2018, 19 October 2017

Sunday, April 22, 2018

Organizational Trends Affecting Productivity - Paul Mali - Summary

For higher productivity, too many complex factors must be arranged, coordinated, and managed. Reliable productivity requires an awareness of its basic components, an understanding of its processes, and a well thought out strategy.  Management personnel must have the skills and competence for managing productivity.

Twelve Causes of the Productivity Crisis in Organizations (1978)

1. Shocking wastes of resources result form our inability to measure, evaluate, and manage the productivity of a growing white-collar work force.

2. Spiraling inflation results from giving rewards and benefits without requiring the equivalent in productivity and accountability.

3. Delays and time lags result from diffused authority and inefficiency in complex, superorganizations.

4. Costs sour from organizational expansion that reduces growth.

5. Low motivation prevails among a rising number of affluent workers and new attitudes.

6. Late deliveries are caused by schedules that have been disrupted by scarce materials.

7. Unresolved human conflicts and difficulties in cooperation result in organizational ineffectiveness.

8. Management options and prerogatives for productivity are constrained by increasing legislative intrusions and antiquates laws.

9. Dissatisfying and boring work has resulted from specialized and restrictive work processes.

10, New opportunities and innovations are declining from impact of rapid technological change and high costs.

11. Time commitments are disrupted from the increasing demands of leisure time.

12. Practitioners become obsolete because of their inability to keep pace with accelerating information and knowledge.

People Productivity Factors - Model by R.A. Sutermeister

1. Productivity

    2. Technological Development
         Raw Materials
         Job Layout

    3. Employees' Job Performance

        4. Ability

           5. Knowledge
           6. Skill

       7. Motivation
           8. Physical Conditions
               Rest Periods
            9. Individual Needs - Physiological, Social, Egoistic
                10. On the Job - Off Job Activities
                       Perception of the situation
                       Level of Aspiration
                       Reference Group
                       Male - Female
                       Cultural Background
                 11, Situation at a Point in Time
                       General Economic Conditions
                       Individual's Personal Situation
             12. Social Conditions
                   13. Formal Organization
                         14. Organization Structure
                         15. Leadership Climate
                         16. Organization Efficiency
                         17, Personnel Policies
                         18. Communication
                         19. Specific Environment of Company or Plant

                   20. Informal Organization (Groups)
                         21. Size
                         22. Cohesiveness
                         23. Groups

                   24. Leaders

                   33. Union

From R.A. Sutermeister,  People and Productivity, McGraw Hill, New York, 1969

These factors have to be taken into effect in Human Effort Industrial Engineering.


Friday, April 20, 2018

Productivity Management - Management Function-Wise Explanation

Productivity Management - Traditional Management Function-wise Explanation

Planning for Productivity 

The top management is to set productivity objectives and goals that are in line with and integrated into organisation’s long-term strategic plans. To ensure that these goals are met, key performance indicators and targets need to be identified and developed. The organisation’s productivity performance can be monitored against these targets.

Phase I – Diagnose

For any productivity intervention to be effective, management should have a thorough understanding of the organisation’s current situation. This can be done through a productivity diagnosis.

A productivity diagnosis covers a qualitative assessment of organisation’s performance in relation to the productivity levers and a quantitative assessment of organisation’s performance based on certain key indicators that are linked to the various productivity levers.

These assessments are undertaken specifically to:
Measure the gap between the current situation and the productivity goals set by the organisation in the past.
Identify organisation’s strengths and weaknesses in the area of productivity improvement.
Determine the underlying causes of the gaps (for the weak areas).
Determine areas for improvement.

Qualitative Assessment of Performance

The key levers that affect productivity can be identified.

Technology - Adoption on appropriate technology on a continuing basis

Machinery & Equipment - Selection of appropriate machinery and equipment and their replacement based on engineering economic analysis

Operators - Human effort engineering - Design manual activities incorporating motion studies, principles of motion economy and ergonomics

Productivity Levers

Reduction of Price and Reduction of External Failure of Products - Stimulate Demand providing market for increased productivity and economies of scale.

Productivity Innovations - Technology, Management - Processes, Policies, Programs, Rules, Human Effort

Productivity Standards Improvement

Productivity Control Effort

Productivity Knowledge Base Improvement

Increasing Skills of Operators and Managers - Productivity Training

Changing Attitudes of Operators and Managers

These  levers are areas or actions that an  organisation can focus on to improve productivity significantly.

Productivity levers do not operate in silos. Improvements made to one lever require complementary actions on some other levers, for it to be effective. For example, the adoption of new technology inevitably requires the complementary actions of training of employees and redesign of work processes. Similarly, weakness in one lever is likely to have an adverse effect on other levers.

Quantitative Assessment of Performance

There are 10 common indicators used to gauge an organisation’s productivity performance:

 Labour productivity
 Sales per employee
 Value added-to-sales ratio
 Capital productivity
 Sales per dollar of capital
 Capital intensity
 Labour cost competitiveness
 Labour cost per employee
 Profit-to-value added ratio
 Profit margin

Along with an analysis of organisation’s overall performance, the performance of the operational units and functions also needs to be measured.

To know how well an  organisation is faring in the area productivity,  a comparison the organisation’s performance against some standard has to be made. This can be done across time and space, with external entities (e.g. benchmarks and organisations within the same industry) and within the organisation (e.g. between departments for setting departmental goals) . Such comparisons provide valuable information on the organisation’s relative standing vis-à-vis competitors and the best-in-class performers.

Organisations who want to assess themselves against their competitors can use the Inter-firm Comparison (IFC) tool. Some industry organizations conduct IFC studies involve comparing productivity ratios of organisations in the same industry. Their identities are kept confidential and summary results are circulated or sold as reports to the members of the industry organization.

Phase II

Develop Road Map

After the diagnosis is completed, a productivity road map or action plan has to be developed. The road map indicates specific activities to achieve productivity goals in a coordinated and systematic manner.

Components of Productivity Road Map

A productivity road map addresses the following:

What affects productivity?
 Identify the specific actions that need to be taken in relation to the findings from the diagnosis.
 Spell out the key performance indicators, targets and deliverables for the actions to be taken.

Who affects productivity?
 Identify the units or individuals who will carry out the actions.
 Assign responsibilities and accountabilities to the parties identified.

When are the activities to be undertaken?
 Set milestones and timelines for the actions to be taken.
The actions should then be taken and monitored according to the road map.

Organizing for Productivity

Establish Productivity Management Function

Establish A Productivity Management Structure

Good management of productivity requires commitment and focus from top management. A dedicated organisational structure must be set up to facilitate the productivity improvement effort. Depending on organisation’s policy decision, needs, size and characteristics, this structure may take the form of:
 a productivity management unit, headed by a Productivity Manager who reports directly  to senior management; or
 a cross-functional team comprising productivity coordinators appointed from the various  operational units.

In engineering organizations, the best practice is to establish industrial engineering department to take care of productivity management because engineering products and processes have to be improved to improve productivity.

The typical scope of work of a Productivity Manager is given under a separate topic. The scope relevant to a particular organisation can defined depending on the structure and complexity of the productivity management function in an organisation.

Staffing Productivity Department

Productivity department requires productivity coaches and study experts. The norms for productivity department personnel may have to be established. Let us say each engineering and production manager requires one industrial engineer to support him in engineering organizations.

Other Resources for Productivity Department
Productivity department may need a laboratory of its own or  a work area where they can try out alternative ways of doing work.

Directing Productivity Effort

Garner Participation and Commitment

A harmonious and open corporate culture is essential to continuous productivity improvement. This can be achieved through the following:

Commitment from Top Management
Top management sets the direction of an organisation. For any productivity plan to succeed, senior leadership must be fully committed to the cause. This commitment can be expressed through direct communication with employees on your productivity goals and strategies, as well as allocation of resources for productivity improvement. A senior employee could also be put in charge of the organisation’s productivity efforts.

Communication and Creation of Awareness
Employees must have a clear understanding of productivity concepts, the organisation’s productivity goals and how these goals will benefit them as well as the organisation. They then need to be armed with the right tools to improve their productivity and know how they can play a part in the productivity journey.

It is, therefore, important to set up open communication channels between departments, staff and management to facilitate exchange of ideas and information, create trust and engage employees.

Mobilisation of Employees
Employees should be involved in each stage of the productivity effort — from the setting of targets and development of initiatives, to the measurement and management of productivity performance. Their involvement helps to foster commitment and provides them with a sense of ownership.

Control of Productivity Improvement 

Implement Measurement System

Importance of Productivity Measures
Productivity improvement initiatives must be complemented by a sound measurement system, which forms an integral part of an organisation’s management information system.

Productivity measures can be used to:
  • Evaluate the effectiveness of action plans
  • Monitor performance
  • Set targets and formulate strategies
  • Account to various stakeholders – customers, investors, employees, suppliers and funding agencies
  • Link effort and reward for employees

Productivity Measurement

Since productivity is the relationship between output and the input used to produce that output, there are various ratios you can use to measure the performance of different operational units within your organisation. By adopting an integrated approach to productivity measurement, you can learn how each of your departments affects your organisation’s overall performance.

Key management indicators at the top are broad indicators that provide management with information related to productivity and profitability. They are then broken down into activity indicators and operational indicators.

Activity indicators provide a snapshot of costs, activity levels and resource utilisation rates, which are particularly useful for middle and higher management.

Operational indicators are usually physical ratios that address the operational aspects that need to be monitored and controlled.

You should consider the following points in selecting productivity ratios:

  • Ratios should measure something significant.
  • Only elements that have an important impact on the business performance should be measured.
  • Ratios should be meaningful and action-oriented.
  • Ratios used must be relevant to the objectives and operations of your organisation.
  • They should explain the pattern of performance and preferably signal a course of action.
  • Component parts of the ratios should be reasonably related.
  • The numerator and the denominator should correspond with each other. For example, it would not be appropriate to relate sales with the number of employees in the human resources department as they are not directly responsible for sales.

Implement Performance Management System

Productivity measurement tells an organisation how it is performing and why, and what it should do in view of its performance. The next step is to use these measures to manage productivity performance.

Performance management covers two main areas: (a) activities to monitor performance; and (b) activities to reinforce performance and motivate employees.

Activities to Monitor Performance

Productivity Level and Growth

An organisation’s productivity performance can be monitored in terms of the productivity level measured by the various productivity ratios, or the change in productivity level over time. Productivity level represents the efficiency and effectiveness of resource utilization achieved at a given point in time. Comparison of productivity levels must be made between similar entities. For example, the management of a restaurant chain may compare the labor productivity of outlet A against that of outlet B.

The change in productivity level over time is expressed as a percentage. It indicates dynamism and the potential for achieving higher productivity levels. An organisation with a consistently high productivity growth rate may overtake another with a negative growth rate, even if its current productivity level is lower.

Comparison of Performance

Within the organisation, comparisons can be made against its productivity goals and targets to evaluate the effectiveness of the productivity efforts; and against its past performance for trend analysis. Comparisons can also be made across different operational units and different employees for performance appraisals.

Review and Feedback Mechanism
Information on any organisation’s productivity performance is rendered useless if it does not lead to further improvements. It is therefore important to put in place a review and feedback mechanism to gather valuable information for strategic planning and training purposes. The information should be made readily available to all employees to improve the performance of the organisation or the unit that they are in.

Activities to Reinforce Performance and Motivate Employees
To sustain the productivity drive, a clear link between rewards and achievements must be established. The wealth generated by the organisation should be distributed back to those who have contributed to the production process.

Productivity incentive schemes can take different forms:
1. Recognition Schemes
Awards can be given out to individuals or teams to encourage continuous productivity improvements.
2. Productivity Gain-Sharing Schemes
The value added created by the organisation is shared with employees, based on a formula agreed upon by both management and employees.
3. Staff Performance Appraisal Linked to Productivity Improvements
Employees’ contributions to productivity efforts are recognised in their performance appraisals. Good performers should be rewarded with higher bonuses or salary increments.

Scope of Work of a Productivity Manager

The duties of a productivity manager include planning, coordinating, controlling and monitoring of productivity programmes within an organisation. The productivity manager is also responsible for getting cooperation from all management levels to achieve the productivity goals and objectives that have been set.

Attributes of a Productivity Manager


• Well-versed in productivity concepts, frameworks and tools
• Prior knowledge or relevant experience in the organisation’s sector of work

Abilities & skills

• Good people management and negotiation skills
• Strategic view of the organisation’s productivity objectives

Key Responsibilities of a Productivity Manager

• Establish productivity management structure, responsibilities and accountabilities
• Mobilise employees to participate in the productivity drive
• Manage and facilitate actions taken to improve productivity
• Establish productivity measurement system and performance management system Establish structure, responsibilities and accountabilities
• Review current reporting structure and assess if it is suitable for productivity management accountability
• Assess need for a productivity management committee or unit within the organisation
• Establish productivity accountability at different management levels
• Decide process of setting overall productivity goals

Mobilise employees

• Educate employees on:
 i. Meaning and scope of productivity, its benefits and how it can be improved and measured
 ii. Role of every employee and how to adopt a positive mindset towards productivity initiatives

• Communicate to employees on:
 i. Organisational objectives in productivity
 ii. Organisation’s targets and overall direction and strategy to achieve its productivity objectives

• Involve employees at different levels in the productivity drive by:
 i. Engaging them throughout the whole productivity journey - planning, development of measures and implementation of initiatives
 ii. Showing them the impact of their efforts in improving productivity and the consequent benefits
Manage and facilitate productivity improvements

• Diagnose
 i. Assess performance in relation to the key productivity levers
 ii. Identify areas for improvement and productivity levers to address

• Develop road map
 i. Work out action plan to address findings from diagnosis
 ii. Set targets and assign responsibilities
 iii. Monitor progress of actions taken

Establish productivity measurement system and performance management system
• Identify and implement measures to track productivity performance against targets and benchmarks
• Identify and implement employee incentive schemes to motivate employees

Productivity Improvement - Principles - Sumanth - 1984

David J Sumanth in his book Productivity Engineering and Management, published by McGraw Hill in 1984 listed the following principles in the chapter Productivity Improvement Concepts.

1. Microprocessor Principle
Whenever and wherever possible, design products and processes with microprocessor control.

2. Global-Market Principle
Design and manufacture products for global markets.

3. Learning Curve Principle
Wherever possible, plan productivity levels and product costs on a learning curve.

4.Secrecy Principle
Productivity improvement strategies that are novel when compared to the competitors must be kept secret.

5. Product-Mix Principle
Develop a product mix that consistently shows the largest gains in total market productivity and market share.

6. Emulation Principle
Take the best of at least three competitors' technologies in product design, development and production

7. Productivity Gain-Sharing Principle
Always, share the gains in productivity improvements with everyone directly or indirectly responsible for it, particularly employees and customers.

8. Leading Competitor Principle
Be the leading competitor for as many products/services as possible.

9. Harmony Principle
Seek harmony in human relations at all levels of management from the topmost executive down to the production/operations level employee.

10. International Outlook Principle
Keep an international perspective in management activities related to planning, research and development, marketing, operations/production,and technology transfer.

11. Cooperative Research Principle
Work closely with universities and generic research establishments to bring in ideas for productivity improvement.

12. Productivity Process Principle
Productivity improvement must be an ongoing, day-to-day process and not a one-time program or project

David Sumanth

Updated  21 April 2018,  6 February 2017, 25 November 2016

Autonomous Robots - A Note for Industrial Engineers for Industrial Engineering 4.0 (IE 4.0)

Autonomous Robots and Productivity

Have you noticed these communications

Maximize productivity and accuracy

LocusBots deliver 3x to 5x more productivity. That translates to substantially more tasks with less labor in the same workspace. You see a significant reduction in your labor costs, including costs associated with “task interleaving” and overtime. It also minimizes the impact of wage and healthcare increases.

Less drudge work, more effective workers

LocusBots take away the drudgery that diminishes worker productivity to dramatically improve worker throughput and order accuracy. LocusBots work collaboratively with workers, helping them become more effective and efficient using their already established workflow and procedures.  (Accessed on 9 January 2018)

Service robots: The next big productivity platform
September 8, 2016 by Lamont Woo

Autonomous robots are already in service and more developments are occurring to increase their application in industrial and service sector activities.

Autonomous Robots - Introduction

Autonomous robots are intelligent machines capable of performing tasks in the world by themselves, without explicit human control. Examples range from autonomous helicopters to Roomba, the robot vacuum cleaner.

Roboticists created new programs and sensor systems to make robots smarter and more perceptive. Today, robots can effectively navigate a variety of environments.

Simpler mobile robots use infrared or ultrasound sensors to see obstacles.  The robot sends out a sound signal or a beam of infrared light and detects the signal's reflection. The robot locates the distance to obstacles based on how long it takes the signal to bounce back. More advanced robots use stereo vision to see the world around them. Two cameras are used to  give these robots depth perception, and image-recognition software is used to classify various objects. Some robots  use microphones and smell sensors to analyze the world around them. Some autonomous robots are capable of working only in a familiar, constrained environment. An office-cleaning robot may take a fixed route in a  building to do its task. More advanced robots can analyze and adapt to unfamiliar environments.  These robots use visual sensors and based on the image take certain actions or stop completely or give way to the other objects that are coming in the same path. If an obstruction is encountered,they can change direction travel in a different path.

In the year 2018, that is the current year,  you might notice a fresh face in many office rooms: a robot.

Robots are being used in factories for number of years.  And the dirt-sucking Roomba and its peers are popular in many homes. Now, there are  robots that monitor and stock shelves in grocery stores. There are robots that are  mowing the lawns. Of course driverless cars are already on the road on trial basis. There are food delivery robots in some restaurants. Decades of advances in the robotics science, engineering and commercialization have been aided by the information technology industry developments—such as the growing library of open source software,  increasingly powerful and energy-efficient processors, and cheap sensors. So “smart” autonomous robots are getting produced at lower costs and are available at affordable prices for companies to use in their production and business activities.

Autonomous robots are increasing productivity. Guy Michaels and  Georg Graetz in research reported in 2015 found that robots are increasing productivity. Industrial engineers have to do engineering economic analysis of various robot implementation ideas or proposals and recommend using robots to increase productivity. As already noted, autonomous robot technology is a significant component of Industry 4.0 technology set.


Guy Michaels and  Georg Graetz,

Chapter of the Blog Book - Industrial Engineering 4.0 - IE in the Era of Industry 4.0 - Blog Book

Previous Chapter

Industry 4.0 - A Note for Industrial Engineers for Industrial Engineering 4.0 (IE 4.0)

Bibliography - Autonomous Robots


Autonomous Robots Research Advances
Weihua Yang
Nova Publishers, 2008

Introduction to Autonomous Mobile Robots
second edition
Roland Siegwart, Illah R. Nourbakhsh, and Davide Scaramuzza


Autonomous Robots
From Biological Inspiration to Implementation and Control
By George A. Bekey, 2017

Papers and Articles

Robots Seem to Be Improving Productivity, Not Costing Jobs
Mark MuroScott Andes
H BR, JUNE 2015

Online articles


Collaborative Robots in Automotive Manufacturing PSA Group, Europe’s second-largest car manufacturer, is modernizing its European manufacturing sites with Universal Robots’ UR10 collaborative robots.
By David Greenfield , Director of Content/Editor-in-Chief, on April 12, 2018

Universal Robots Drives Cost Savings, Improved Quality and Worker Ergonomics at PSA Group, Europe’s Second-Largest Car Manufacturer
With significant results in just eight months, PSA Group will modernize all of its European manufacturing sites with its patented production system that integrates UR robots
March 21, 2018



The Impact of Robots on Productivity, Employment and Jobs
A positioning paper by the International Federation of Robotics
April 2017

Updated on 21 April 2018, 9 January 2018

Lean Supply Chain and Lean Warehousing

Tortorella, Guilherme & Miorando, Rogério & Marodin, Giuliano. (2017).
"Lean Supply Chain Management: Empirical research on practices, contexts and performance", International Journal of Production Economics. 193. 10.1016/j.ijpe.2017.07.006.

Lean Supply Chain Management Practices

LSCM1 – Kanban or pull system     
LSCM2 – Close relationship between customer, supplier and relevant parties   
LSCM3 – Leveled scheduling or heijunka   
LSCM4 – Efficient and continuous replenishment 
LSCM5 – Two-way feedback assessment 
LSCM6 – Value chain management team 
LSCM7 – Win-win problem solving methodology 
LSCM8 – Value chain analysis or Value stream mapping 
LSCM9 – Keiretsu (suppliers play a strategic role marshalling the efforts of their own suppliers) 
LSCM10 – Kyoryokukai (suppliers' association that enhance lateral communication among suppliers, and act as an extra bulwark against customer opportunism)
LSCM11 – Intervention strategy (customer is able to cooperatively intervene in the supplier's business operation and bring about change for better)
LSCM12 – Material handling systems 
LSCM13 – Standardized work procedures to assure quality achievement 
LSCM14 – Open-minded and in depth market research conducted jointly (joint understanding of end-user requirements so that all players can work towards providing customer value)
LSCM15 – Open-book negotiation 
LSCM16 – Inbound vehicle scheduling 
LSCM17 – Hoshin Kanri (policy deployment and development of a strategy for the supply chain) 
LSCM18 – Development of supply chain KPIs 
LSCM19 – Outbound transportation 
LSCM20 – Establishment of distribution centers
LSCM21 – Consignment stock
LSCM22 – Functional packaging design

References for Lean Supply Chain Management Practices

LSCM1 – Kanban or pull system

Lamming, 1996; (2) Levy, 1997; (3) Naylor et al., 1999; (4) Jones et al., 2000; (5) McCullen and Towill, 2001; (6) Stratton and Warburton, 2003; (7) Alves Filho et al., 2004;

LSCM2 – Close relationship between customer, supplier and relevant parties 
(1) Lamming, 1996; (2) Levy, 1997; (3) Naylor et al., 1999;

LSCM3 – Leveled scheduling or heijunka 
(1) Lamming, 1996; (2) Levy, 1997; (3) Naylor et al., 1999;
(4) Jones et al., 2000; (5) McCullen and Towill, 2001;
(6) Stratton and Warburton, 2003; (7) Alves Filho et al., 2004;

LSCM4 – Efficient and continuous replenishment 
 (1) Lamming, 1996; (4) Jones et al., 2000; (6) Stratton and Warburton, 2003; (7) Alves Filho et al., 2004;
LSCM5 – Two-way feedback assessment
(1) Lamming, 1996; (2) Levy, 1997;

LSCM6 – Value chain management team 
(2) Levy, 1997; (7) Alves Filho et al., 2004;

LSCM7 – Win-win problem solving methodology 
(1) Lamming, 1996; (2) Levy, 1997; (6) Stratton and Warburton, 2003; (7) Alves Filho et al., 2004;
LSCM8 – Value chain analysis or Value stream mapping 
LSCM9 – Keiretsu (suppliers play a strategic role marshalling the efforts of their own suppliers)
LSCM10 – Kyoryokukai (suppliers' association that enhance lateral communication among suppliers, and act as an extra bulwark against customer opportunism)
LSCM11 – Intervention strategy (customer is able to cooperatively intervene in the supplier's business operation and bring about change for better)
LSCM12 – Material handling systems
LSCM13 – Standardized work procedures to assure quality achievement
LSCM14 – Open-minded and in depth market research conducted jointly (joint understanding of end-user requirements so that all players can work towards providing customer value)
LSCM15 – Open-book negotiation
LSCM16 – Inbound vehicle scheduling
LSCM17 – Hoshin Kanri (policy deployment and development of a strategy for the supply chain)
LSCM18 – Development of supply chain KPIs
LSCM19 – Outbound transportation
LSCM20 – Establishment of distribution centers
LSCM21 – Consignment stock
LSCM22 – Functional packaging design

Lean Supply Chain

Content in chapter 3 (The Machine that changed the world)

Supply Chain to Support Lean Production

The production of a car involves engineering and fabricating more than 10,000 major components and assembling them into around 100 major sub-assemblies - engines, transmissions, steering gears, suspensions, and so on.

Toyota took a new approach to organize this supply 10,000 major components. It termed the suppliers of complete sub-assemblies  as first tier suppliers. These first-tier suppliers form an integral part of the new product development team. They are given responsibility for detail engineering the sub-assembly. They are given the performance specification of the sub-assembly, which is developed with them as a part of the team developing the new car. The supplier has to deliver the prototype for testing and once approved, the production order was given. Thus the detailed engineering of the sub-assembly was done by the tier 1 supplier.  The tier 1 suppliers were encouraged to talk among themselves about ways to improve the design process.  Each first- tier supplier formed a second tier of suppliers for components.

Toyota takes some equity in some supplier companies and these companies are encouraged to take equity in Toyota. Toyota also acts as banker for its supplier group providing loans to finance the machinery for new products.

Toyota share personnel also with suppliers. It provides work-force when load surges and also deputes its managers. Toyota encourages its suppliers to produce for other companies also.

Kanban system: Kanban system is used in Toyota production system to implement Just-in-time (JIT). As a container of parts was used up, it was sent back to the previous step or the supplier and this becomes the signal to make one more container of parts. Reduction of inventories in the JIT system means any error will disrupt the production. But the power of JIT idea is to involve everybody in quality and timely production by removing safety stocks or nets.

It took Eiji Toyoda and Ohno more than twenty years to fully implement JIT within the Toyota supply chain. They succeeded and created a highly productive, high quality, responsive supply chain.

Chapter 6

Problem of supplying 10,000 parts for making a car.

Henry Ford's solution: Do everything in your factory.
Alfred Sloan's solution for GM - Do it all in your own company but set up decentralized parts making divisions.

Toyota's Lean Solution to Parts Supply

At the very outset of product development, the lean producer selects all the tier I suppliers. Lean producers assign a whole subassembly as a component to a first-tier supplier.

The first-tier suppliers assign their engineers as resident design engineers to the lean development program of the final assembler. The development typically starts two to three years prior to production. As product planning is completed with the help of various resident design engineers of various suppliers, the basic design of the subassembly is handed over to the respective supplier for detailed engineering. The detailed engineering is done with support from design engineers of tier 2 suppliers.

The lean producer takes care to learn an enormous amount about the supplier's production cost and quality. Such interchange take place because a rational framework exists for deciding price that gives adequate profit to the supplier. The contract between the buyer and seller establishes ground rules for quality assurance, ordering and delivery, proprietary rights, material supply and pricing over a long-term. The contract lays the basis for a cooperative relationship between the company and suppliers.

Lean Supply Practices

The system of establishing prices: The lean producers work on target pricing and costing. The lean assembler sets a target price for the car and with the suppliers, figures how the car can be made for this price while allowing reasonable profit for both the assembler and the suppliers. The basis of the system is "market price minus" rather than "supplier cost plus" rule.

To achieve target cost, both the assembler and the supplier use value engineering. Value engineering is used during design and it is also used during the entire production phase. We need to emphasize that industrial engineering is used during design as well as during the production phase. Actually, lean systems incorporate industrial engineering objective of efficiency and profit improvement through elimination of waste in the project right from the inception of the new product development. In lean systems, managers take a much more active part in the efficiency improvement by involving all their people in efficiency improvement along with other objectives.

Womack et al. comment that cost reduction is more focused in lean systems as costs can be ascertained more quickly and accurately due to short set up times and batch quantities.

Declining Prices and Costs: A second feature of lean supply is continually decreasing prices over the life of a model in components as well as the assembly. Lean producers and supply chain managers believe that learning curve benefits overcome inflation and plan for reduction in prices and costs.

There are agreements to share the cost decrease achieved in collaboration and for keeping the cost reduction benefits achieved by the supplier alone during the life of the model. So there is incentive to participate in the cost reduction activities during the entire life cycle of the product.

Delivery Schedule: In lean supply chains, the universal practice is to deliver components directly to the assembly line many times in a day, with no inspection of incoming parts.

Production smoothing (Heijunka): Lean producers try to smooth production not through inventory buildups but through other means and share ups and downs with supply chain.

Supplier Associations:  A final feature of lean supply is the supplier associations where the first tier suppliers of the company meet to share new finding on better ways to make business. That how the supply chain improvement effort is carried out. These supplier meets have been extremely important for disseminating such new concepts as statistical process control (SPC) and total quality control (TQC) in the late 1950s and early 1960s, value analysis and value engineering (VE) later in the 1960s, and the computer aided design (CAD) in the 1980s.

Research Papers


Investigating “The Way” for Toyota suppliers: A quantitative outlook on Toyota's replicating efforts for supplier development
Type: Case study
Author(s): Phillip Marksberry
Source: Benchmarking: An International Journal Volume: 19 Issue: 2 2012

Development of lean supply chains: a case study of the Catalan pork sector
Type: Research paper
Author(s): Catalina Perez, Rodolfo de Castro, David Simons, Gerusa Gimenez
Source: Supply Chain Management: An International Journal Volume: 15 Issue: 1 2010

Improving construction supply chain collaboration and performance: a lean construction pilot project
Type: Research paper
Author(s): Per Erik Eriksson
Source: Supply Chain Management: An International Journal Volume: 15 Issue: 5 2010

Lean supply chain and its effect on product cost and quality: a case study on Ford Motor Company
Type: Case study
Author(s): H.M. Wee, Simon Wu
Source: Supply Chain Management: An International Journal Volume: 14 Issue: 5 2009

Strategic considerations in the development of lean agri-food supply chains: a case study of the UK pork sector
Type: Case study
Author(s): David H. Taylor
Source: Supply Chain Management: An International Journal Volume: 11 Issue: 3 2006

The making of a lean aerospace supply chain
Type: Case study
Author(s): L.M.J. Michaels
Source: Supply Chain Management: An International Journal Volume: 4 Issue: 3 1999


An Analysis on Application of Lean Supply Chain Concept for Construction Projects.
Full Text Available
By: Baladhandayutham, T.; Venkatesh, Shanthi. Synergy (0973-8819). Jan2012, Vol. 10 Issue 1, p25-36. 12p.

Modelling and analysis of workflow for lean supply chains.   Full Text Available
By: Ma, Jinping; Wang, Kanliang; Xu, Lida. Enterprise Information Systems. Nov2011, Vol. 5 Issue 4, p423-447.

A Lean Supply Chain Manifesto.   Full Text Available
By: Reese, Andrew K. Supply & Demand Chain Executive. Aug/Sep2006, Vol. 5 Issue 7, p23-27.

Build and Manage a Lean Supply Chain.   Full Text Available
By: Srinivasan, Mandyam M.; Srinivasan, Tanushree; Choi, Emily W. Industrial Management. Sep/Oct2005, Vol. 47 Issue 5, p20-25.


Reinventing Lean: Introducing Lean Management into the Supply Chain (Google eBook)
Gerhard Plenert
Butterworth-Heinemann, 26-Jul-2010 - Technology & Engineering - 328 pages

Lean Supply Chain: Collected Practices and Cases
Productivity Press
Productivity Press, 2006 - Business & Economics - 136 pages

Lean Supply Chain Management: A Handbook for Strategic Procurement
Jeffrey P. Wincel
Productivity Press, 2004 - Business & Economics - 239 pages







Lean SCM Consultants

Lean Warehousing



Lean concept has been used in supply chain and warehousing


Lean Supply Chain Management -  Principles and Practices - Prof Deborah Nightingale - 2005

Updated on 21 April 2018, 2 November 2013