Dear Students, please watch following You Tube videos before you come to Class.

1. https://www.youtube.com/watch?v=nFu4FFgbMY4 (Day 1 TPS)

2. https://www.youtube.com/watch?v=9OL7BMBa4ys&t=12s (Day 1=TPS)
3. https://www.youtube.com/watch?v=fpNMGZCQEss (5 S) (Day 1)
4. https://www.youtube.com/watch?v=WULe9bg31ps (Day 2=Kanban)
5. https://www.youtube.com/watch?v=yjSwwPF5BUU (Day 2=Kanban)
6. https://www.youtube.com/watch?v=44uz4RGyeCM (Day 2= Automating
Kanban )
7. https://www.youtube.com/watch?v=ZOXoWOjsTp4 (Day 3 Mac Donalds SCM)
8. https://www.youtube.com/watch?v=2qanMpnYsjk (AMAZON) (Day 4
Logistics)
9. https://www.youtube.com/watch?v=AnYrQt2uh_E
Case Study: Lean Manufacturing in XYZ Automotive
Components
 Students should understand the 7 types of waste and apply them to real-world manufacturing
scenarios.
 They should use Value Stream Mapping as a key tool to analyze and improve processes.

 Students should also recognize that Lean is an ongoing process of continuous improvement,
and it requires collaboration and involvement from all team members.

Background:

XYZ Automotive Components is a company that manufactures parts for vehicles, such as brake
pads, exhaust systems, and engine components. The company has been facing significant
challenges related to inefficiency in its manufacturing operations. The production facility
operates at full capacity but has been experiencing delays, high production costs, and an increase
in defective products. Management has recognized the need for change and has decided to adopt
Lean Manufacturing principles to improve efficiency, reduce waste, and increase overall quality.

Current State:

The manufacturing process is broken down into the following key stages:

1. Raw Material Handling: Delivery of materials from suppliers and storage in the
warehouse.
2. Cutting: Parts are cut from raw materials according to specific dimensions.
3. Assembly: Components are assembled into sub-assemblies.
4. Finishing: Sub-assemblies are finished, painted, and quality-tested.
5. Packaging and Shipping: Finished products are packaged and shipped to customers.

The company has noted the following problems:

 Excessive Inventory: There is a large amount of inventory sitting in the warehouse. Parts
often sit idle in the production process, leading to higher holding costs and delays in the
production flow.
 Long Lead Time: The production process takes longer than expected, leading to missed
deadlines and late deliveries.
 High Defect Rate: A significant number of parts produced have defects, leading to costly
rework and scrap.
  Inefficient Material Flow: Materials are often moved around the shop floor inefficiently,
causing delays and increasing motion waste.
 Uneven Workload: Some stages in the production process are overloaded, while others
are underutilized, causing bottlenecks.

Task for Students:

Your task is to apply Lean Manufacturing principles to identify and solve the inefficiencies in
XYZ Automotive Components' manufacturing process. Specifically, you should:

1. Identify the types of waste present in the system, based on the 7 wastes of Lean
(Overproduction, Waiting, Transport, Extra Processing, Inventory, Motion, Defects).
2. Propose improvements based on Lean principles such as Value Stream Mapping,
Kaizen, 5S, Just-in-Time (JIT), and Total Productive Maintenance (TPM).
3. Design a Value Stream Map (VSM) for the current and future state of the production
process. Highlight areas of waste and propose solutions to eliminate these wastes.

Solution to the Case Study:

Step 1: Identify the Types of Waste

The current state of XYZ Automotive Components shows several examples of waste, based on
the 7 Lean wastes:

1. Overproduction:
o The company produces more parts than necessary, leading to excess inventory.
Parts are often made in large batches, even if not needed immediately, which
results in higher holding costs.
2. Waiting:
o Workers in some stages of the process are waiting for parts to arrive from
previous stages. For example, assembly workers might wait for finished
components from cutting or finishing stages.
3. Transport:
o Materials are moved inefficiently around the production floor, causing
unnecessary delays and increased motion. The warehouse is located far from the
production area, leading to long transport times.
4. Extra Processing:
o Some parts undergo additional processing steps (e.g., extra polishing or rework)
because of quality issues. This is both a time and cost burden.
5. Inventory:
o The company has excess inventory at multiple stages of the process. This includes
raw materials, in-progress parts, and finished goods. Holding inventory incurs
high costs and increases the likelihood of defects.
6. Motion:
 o Workers spend time walking long distances to fetch tools, materials, or
components. This increases motion waste, contributing to longer cycle times.
7. Defects:
o A high percentage of parts are defective, leading to rework and scrap. This results
in unnecessary resource usage and delays in meeting delivery deadlines.

Step 2: Propose Improvements

Based on Lean principles, the following improvements are proposed:

1. Value Stream Mapping (VSM):

o Create a current state VSM to visualize the flow of materials and information.
Identify non-value-added steps and bottlenecks in the process.
o Develop a future state VSM that eliminates waste and optimizes the workflow.
2. Kaizen (Continuous Improvement):
o Encourage small, incremental improvements. Implement regular Kaizen events to
address specific areas, such as reducing setup times in the cutting stage or
improving material transport.
3. 5S (Workplace Organization):
o Implement 5S (Sort, Set in order, Shine, Standardize, Sustain) to improve the
organization of the work area, reduce unnecessary motion, and ensure that tools
and materials are easily accessible.
4. Just-in-Time (JIT):
o Adopt a JIT system to reduce inventory levels. Ensure that raw materials arrive
just in time for production, and parts are produced only when needed, reducing
overproduction and excess inventory.
5. Total Productive Maintenance (TPM):
o Implement TPM to maintain equipment in good working order. Schedule regular
maintenance to avoid breakdowns and reduce defects caused by machine issues.
6. Workload Balancing:
o Balance workloads across different stages of production to avoid bottlenecks. For
example, if the assembly stage is overloaded, adjust the number of operators or
shift resources to the cutting stage.

Step 3: Value Stream Map (VSM)

Current State VSM:

 Raw Material → Cutting → Assembly → Finishing → Packaging → Shipping

The Current State VSM shows long lead times due to excessive inventory, waiting time
between processes, and inefficient material transport.

Future State VSM:

 Raw Material → Cutting → Assembly → Finishing → Packaging → Shipping

The Future State VSM reduces inventory, improves flow, and eliminates waste through JIT
delivery of materials, reduced waiting time, and better balance across workstations.

Diagram of the Future State Value Stream Map (VSM):

|--------------| |--------------|
|-------------|
Raw | Cutting | ----> | Assembly | ----> | Finishing
|
Material |--------------| |--------------|
|-------------|
| | |
v v v
|-----------------------------------|-------------------------------|
Packaging & Shipping

In this Future State VSM, the aim is to streamline processes, minimize waiting time, and reduce
inventory between steps, ensuring that each stage operates with only the necessary materials and
work in progress.

ase Study: Implementing Just-In-Time (JIT) at ABC

Electronics
Background:

ABC Electronics is a manufacturer of consumer electronics, specifically smartphones and

tablets. The company has been facing issues related to high inventory costs, frequent stockouts of
raw materials, and inefficiencies in the production process. While the company has been
profitable, management has noticed increasing overhead costs due to excess raw material
inventory, long lead times, and occasional production stoppages when critical parts run out. They
have decided to implement a Just-In-Time (JIT) inventory system to improve their
manufacturing process.

Current State:

The production process consists of the following stages:

1. Material Procurement: Suppliers deliver components and raw materials, including

screens, chips, and housings.
 2. Assembly Line: Components are assembled into smartphones and tablets.
3. Quality Control: The finished products undergo quality checks for defects.
4. Packaging and Shipping: Finished products are packaged and shipped to retailers or
customers.

The company has been experiencing several challenges:

 Excessive Inventory: The company holds large amounts of raw material inventory,
which ties up capital and leads to unnecessary storage costs.
 Stockouts and Delays: Despite holding excess inventory, certain critical components
(like microchips) often face stockouts due to inconsistent deliveries from suppliers.
 High Lead Times: The production process is delayed because materials often arrive too
early or too late, creating idle time or causing delays in assembly.
 Quality Issues: Defects in products lead to costly rework and delays in shipment.
 Overproduction: The company produces more units than needed, leading to excess
finished goods in inventory, which also increases storage costs.

The management has decided to implement Just-In-Time (JIT) to address these issues and
create a more efficient manufacturing system.

Task for Students:

Your task is to apply JIT principles to identify and solve the inefficiencies in ABC Electronics’
manufacturing process. Specifically, you should:

1. Identify the types of waste in the current process (based on the 7 Lean wastes:
Overproduction, Waiting, Transport, Extra Processing, Inventory, Motion, Defects).
2. Propose JIT improvements to reduce waste and improve the flow of production.
Consider the role of supplier relationships, inventory management, production
scheduling, and quality control in implementing JIT.
3. Design a JIT implementation plan, outlining steps for the company to transition to a
JIT system. Address challenges and risks, such as supplier reliability and demand
variability.

Solution to the Case Study:

Step 1: Identify the Types of Waste

In the current state, ABC Electronics is facing multiple types of waste in its production process:

1. Overproduction:
o The company produces more units than necessary, which leads to excess finished
goods inventory. Overproduction ties up valuable resources (like labor and
machine time) and increases storage costs.
 2. Waiting:
o Waiting time is created when materials are delivered too early or too late.
Workers wait for parts, and production is halted until the materials are available,
leading to downtime and wasted labor.
3. Transport:
o The movement of materials between various stages of production is inefficient.
Components might be transported in large batches, leading to long waiting
periods and unnecessary handling.
4. Extra Processing:
o Some products undergo additional processes due to poor quality control or
misalignment between production scheduling and material availability. For
example, excessive testing and rework may occur due to defects.
5. Inventory:
o The company holds excessive inventory at various stages (raw materials, in-
progress goods, and finished products). This ties up capital and increases storage
costs. For instance, microchips are ordered in bulk, resulting in overstock and
tying up resources in warehousing.
6. Motion:
o Employees and machines move materials and products unnecessarily due to
inefficient layout or poor organization. Workers spend extra time walking across
the production floor to fetch materials.
7. Defects:
o Quality issues in products result in defective units that need rework. This
increases costs and delays delivery to customers.

Step 2: Propose JIT Improvements

To address these inefficiencies, the following Just-In-Time (JIT) improvements are proposed:

1. Eliminate Overproduction:
o Adopt a demand-pull system, where production is based on actual customer
demand rather than forecasted demand. Implement Kanban cards or signals to
trigger the production of parts only when they are needed.
2. Reduce Waiting Time:
o Ensure that materials arrive just in time for production, eliminating the need for
large inventory buffers. Work closely with suppliers to develop a reliable delivery
schedule that matches the production requirements.
o Use supplier partnerships to ensure a steady flow of materials with shorter lead
times.
3. Minimize Transport Waste:
o Optimize the layout of the manufacturing plant to minimize unnecessary
movement of materials. Implement a U-shaped assembly line to allow smooth
flow of materials with minimal handling.
o Consider multi-modal transport for faster and more reliable delivery.
4. Avoid Extra Processing:
 oImplement root cause analysis and Poka-Yoke (error-proofing) techniques to
prevent defects from occurring in the first place. Focus on quality during
production rather than post-production inspections.
o Streamline quality control processes so that defects are identified and corrected
earlier in the production cycle.
5. Reduce Inventory Levels:
o Implement JIT inventory management, where raw materials are ordered based
on real-time demand and production schedules. Use Kanban systems to trigger
inventory replenishment automatically when stock runs low.
o Develop strong relationships with suppliers to ensure they can provide reliable
and frequent deliveries in small quantities.
6. Minimize Motion Waste:
o Apply 5S principles (Sort, Set in order, Shine, Standardize, Sustain) to organize
the workplace, reducing unnecessary movements. Ensure tools, parts, and
materials are organized and easily accessible.
7. Improve Quality and Reduce Defects:
o Implement Total Quality Management (TQM) and train employees on quality
standards. Utilize statistical process control (SPC) to monitor and improve
production quality.
o Set up continuous quality feedback loops to ensure any defects are identified
early and eliminated from the process.

Step 3: JIT Implementation Plan

Here is a step-by-step plan for transitioning to JIT:

1. Conduct a Value Stream Mapping (VSM):

o Analyze the current production flow and identify areas with the most significant
waste (e.g., excessive inventory, waiting times, and overproduction). This will
provide a clear picture of the bottlenecks and inefficiencies in the current system.
2. Collaborate with Suppliers:
o Establish long-term relationships with key suppliers to ensure consistent and
timely deliveries of raw materials. This might involve negotiating shorter lead
times, reliable deliveries, and smaller order quantities. The goal is to ensure
materials arrive just when needed.
3. Implement Kanban System:
o Introduce Kanban cards in the production line to signal the need for materials
and components. This system will ensure that materials are ordered and produced
only when required, eliminating excess inventory.
4. Optimize the Plant Layout:
o Redesign the layout of the factory floor to reduce unnecessary movement of
materials. Use a U-shaped layout to allow materials to flow smoothly between
workstations, reducing transportation and motion waste.
5. Train Employees on JIT and TQM:
 oProvide training for employees on JIT principles, quality control, and waste
elimination. Encourage a culture of continuous improvement (Kaizen) where
employees suggest ideas for reducing waste.
6. Monitor and Adjust:
o Set up Key Performance Indicators (KPIs) to monitor the effectiveness of JIT.
Track metrics such as cycle time, inventory turnover, lead time, and defect rates.
Use this data to make continuous improvements and adjust the JIT system as
needed.

Diagram: JIT Implementation in the Manufacturing Process

Below is a simplified flow diagram to illustrate the JIT system implemented in ABC Electronics.

|-------------------| Kanban |-------------------| Supplier

|
| Assembly Line | Pull System | Production | Deliveries
|
|-------------------| (Signal Req.) |-------------------| (Just in Time)
|
| | | |
v v v v
|------------------| |------------------| |------------------|
| Raw Materials |---->| Inventory |---->| Finished Goods |
| (Replenishment) | | Buffer | | (Ready for Ship)|
|------------------| |------------------| |------------------|

This JIT flow illustrates the use of a Kanban system to trigger production based on actual
demand, the reduction of raw material inventory, and the delivery of goods just in time for
assembly.

Conclusion:
By adopting Just-In-Time (JIT) principles, ABC Electronics can achieve significant
improvements in production efficiency. JIT will help the company reduce inventory levels,
eliminate waste, improve material flow, and reduce costs. The implementation of a demand-pull
system, effective supplier relationships, and continuous quality improvements will lead to more
reliable, faster, and cost-effective production.
Case Study: Implementing Kanban at BrightTech
Electronics
Background:

BrightTech Electronics is a company that manufactures small electronics such as smartwatches,

fitness trackers, and wireless earbuds. The company has experienced difficulties in managing
production flow across its various departments, which includes components manufacturing,
assembly, testing, and packaging.

Currently, the production process is inefficient due to poor visibility, inconsistent work priorities,
and frequent bottlenecks. As a result, the company faces delays in order fulfillment, long lead
times, and higher operational costs.

To address these issues, BrightTech Electronics has decided to implement a Kanban system to
better visualize and control its workflow, reduce bottlenecks, and improve overall production
efficiency. The goal is to enhance communication, ensure the smooth flow of work, and limit
work in progress (WIP) in each stage of production.

Current State:

BrightTech’s current production process can be broken down into the following stages:

1. Raw Materials: Procurement and storage of components (e.g., circuits, screens,

batteries).
2. Assembly: Components are assembled into products.
3. Testing: Finished units undergo testing for functionality and quality.
4. Packaging: Tested products are packaged and prepared for shipping.

While the process is straightforward, it has several inefficiencies:

 Excessive WIP: Many products sit idle at each stage waiting for attention, causing
unnecessary delays and increasing production lead times.
 Bottlenecks: The testing phase often creates a bottleneck because it has limited capacity,
causing finished products to back up in the assembly phase.
 Lack of Visibility: There is no clear understanding of which tasks are being worked on
and which are waiting, leading to confusion and miscommunication.

Task for Students:

Your task is to:

1. Identify the main inefficiencies in the current process and classify them as waste (based
on the 7 Lean wastes).
 2. Propose a Kanban-based solution to improve the flow of work. Use Kanban boards,
WIP limits, and visual cues to streamline the process.
3. Create a Value Stream Map (VSM) to illustrate the current state and future state of
the process with Kanban in place.

Solution to the Case Study:

Step 1: Identify the Main Inefficiencies and Waste

In the current process at BrightTech Electronics, we observe the following types of waste (based
on the 7 Lean Wastes):

1. Overproduction: Products are made before they are needed, creating excess work in
progress and long queues in the assembly and testing stages.
2. Waiting: Workers wait for parts or for previous stages to be completed. For example, the
testing phase is often delayed, leading to idle assembly workers.
3. Transport: Unnecessary movement of products between stages or to storage areas. For
example, when the assembly stage has completed units but is waiting for testing to clear
the backlog.
4. Extra Processing: Some products undergo unnecessary or repeated testing and rework
due to defects, increasing costs and cycle time.
5. Inventory: Excess inventory of parts at various stages, especially at the assembly phase,
leading to clutter and inefficient use of space.
6. Motion: Workers are often walking between stages to check on the status of tasks or
gather materials, leading to wasted time and effort.
7. Defects: If a product fails in testing, it needs to go back to the assembly stage for rework,
adding unnecessary processing time and waste.

Step 2: Implementing the Kanban System

To address these inefficiencies, BrightTech Electronics can implement the Kanban system,
focusing on visualizing workflow, limiting WIP, and ensuring smoother task transitions across
stages.

Kanban Board Setup:

A Kanban board will be set up to track tasks across the production process. Each stage of
production (Raw Materials, Assembly, Testing, Packaging) will have a column on the board,
with cards representing individual work items (e.g., products to be assembled, tested, packaged).

Basic Kanban Board:

markdown
Copy code
| Raw Materials | Assembly | Testing | Packaging | Done |
-----------------------------------------------------------
| Card 1 | Card 2 | Card 5 | Card 7 | |
| Card 3 | Card 3 | Card 6 | Card 8 | |
| Card 4 | Card 4 | Card 9 | Card 10 | |
-----------------------------------------------------------

In this Kanban board:

 Cards represent work items (e.g., products at various stages).

 Each stage of production has a column.
 Tasks flow from left to right from one stage to the next as work is completed.

WIP Limits: To prevent bottlenecks and overproduction, WIP limits are set for each stage. For
example:

 Raw Materials: No WIP limit (inventory is controlled by suppliers).

 Assembly: 4 units maximum in progress at any time.
 Testing: 2 units maximum in progress at any time.
 Packaging: 3 units maximum in progress at any time.

WIP limits ensure that the work is evenly distributed across stages and that no stage becomes
overloaded, which helps balance the workload and avoid bottlenecks.

Kanban Card:

Each Kanban card will contain relevant information for each work item. For example:

 Product ID: Identification number of the product.

 Task: A brief description of what needs to be done (e.g., assembly, testing).
 Priority: If certain tasks are time-sensitive or have specific deadlines.
 Due Date: The expected completion date for the task.

Signal System (Kanban Trigger):

When a stage reaches its WIP limit, the team will stop adding new work until the current tasks
are completed. When a task is completed, the Kanban card is moved to the next stage, and the
team can pull in a new task.

Step 3: Value Stream Map (VSM)

A Value Stream Map (VSM) visually represents the flow of materials and information from the
start of the process (Raw Materials) to the end (Packaging and Shipping). The VSM helps
identify where value is added and where waste exists.
Current State VSM:

Here is a simplified Current State VSM showing the flow of work in the existing process.

Raw Materials -> Assembly -> Testing -> Packaging -> Shipping
| | | | |
v v v v v
Large Inventory Bottleneck Long Wait Rework Delays

 Raw Materials: No inventory control; materials arrive in bulk and are stored, often
creating waste.
 Assembly: Overproduction leads to excessive work in progress (WIP) in this stage,
causing delays.
 Testing: Bottlenecks due to limited testing capacity, leading to waiting in the assembly
phase.
 Packaging: Idle time caused by waiting for products to pass through testing, leading to
backlogs.
 Shipping: Delays caused by accumulated products in packaging.

Future State VSM with Kanban:

In the Future State, after implementing the Kanban system, the flow of materials and tasks is
smoother, with WIP limits and improved visibility.

Raw Materials -> Assembly -> Testing -> Packaging -> Shipping
| | | | |
v v v v v
Controlled Pull Balanced Reduced Streamlined On Time
System Flow Waiting Flow Delivery

 Raw Materials: Materials are pulled into production only when needed, reducing excess
inventory.
 Assembly: WIP limits ensure that assembly workers are not overwhelmed, and work
flows smoothly.
 Testing: Testing capacity is balanced with the flow of products, and WIP limits ensure
that bottlenecks are avoided.
 Packaging: As soon as testing is complete, products move into packaging, reducing
delays.
 Shipping: Products are shipped on time, as there are fewer delays in earlier stages.

Diagrams:
1. Kanban Board Layout:

Here’s a visual representation of a Kanban board used in BrightTech Electronics:

2. Current State Value Stream Map (VSM):

This diagram illustrates the flow of tasks and materials in the current state of the production
process:

3. Future State Value Stream Map (VSM):

This diagram illustrates the future state after implementing the Kanban system:

Conclusion:
By implementing the Kanban system, BrightTech Electronics can effectively manage its
production flow, reduce bottlenecks, and minimize waste. The key benefits include:

 Improved visibility across the workflow, ensuring tasks are clearly tracked and
communicated

Case Study: Optimizing Logistics Operations at Stellar

Electronics
Background:

Stellar Electronics is a company that manufactures consumer electronics, such as smartphones,

laptops, and home appliances. The company operates globally and has a complex supply chain
that includes raw materials procurement, production in multiple factories, warehousing, and
shipping to retailers and consumers. The logistics division at Stellar Electronics plays a key role
in ensuring that products are delivered on time and at the lowest cost.

However, the company has faced several challenges in recent years:

1. Inefficient Warehousing: The company operates multiple warehouses across different

regions, but inventory management is poor. Stockouts and excess inventory have led to
delays in order fulfillment and increased operational costs.
2. Transportation Bottlenecks: Due to inefficiencies in route planning and carrier
selection, transportation costs have been rising. Delays in shipping have also resulted in
customer dissatisfaction.
3. Supply Chain Visibility Issues: The lack of real-time data has made it difficult to track
shipments and inventory levels across the supply chain, leading to poor decision-making.
 4. Demand Forecasting Problems: The company struggles with demand forecasting,
which leads to either overstocking or stockouts at different warehouses.
5. Environmental Concerns: Increasingly, customers and regulatory bodies are pressuring
Stellar Electronics to reduce its carbon footprint and implement greener logistics
practices.

Current Logistics System:

Stellar Electronics' logistics network includes:

 Multiple Regional Warehouses: Warehouses are located in key regions (North America,
Europe, and Asia).
 Transportation Providers: The company uses a mix of third-party logistics providers
(3PLs) and in-house fleets for transportation.
 Inventory Management: Each warehouse independently manages its inventory, without
a centralized system to track stock levels in real-time.
 Order Fulfillment: Orders are processed in batches, and inventory levels are replenished
based on monthly demand forecasts.
 Customer Orders: Orders are shipped from the closest warehouse, but transportation is
not optimized for speed or cost.

Challenges in the Logistics System:

1. High Warehousing Costs: Excess inventory is often stored at various warehouses,

leading to high storage costs.
2. Shipping Delays: Inefficient transportation routes and poor carrier selection lead to late
deliveries and higher transportation costs.
3. Poor Inventory Visibility: Without real-time data, there is a lack of coordination
between warehouses, causing delays in fulfilling customer orders.
4. Excessive Carbon Footprint: The company uses multiple transport modes that are not
optimized for sustainability, resulting in a higher carbon footprint.

Task for Students:

Your task is to analyze the logistics issues at Stellar Electronics and propose improvements.
Specifically, you should:

1. Identify the inefficiencies in the current logistics operations.

2. Propose solutions to optimize warehouse operations, improve transportation efficiency,
and enhance supply chain visibility.
3. Develop a strategy to reduce the carbon footprint of the logistics system, including
recommendations for green logistics practices.
4. Design a logistics network that optimizes the flow of goods from suppliers to customers.
Solution to the Case Study:
Step 1: Identify the Inefficiencies

1. High Warehousing Costs:

o Excessive Inventory: Warehouses are overstocked due to poor demand
forecasting and a lack of centralized inventory tracking. This results in increased
storage and handling costs.
o Lack of Coordination: The warehouses operate independently, without real-time
data sharing, leading to stockouts in some regions while other warehouses hold
excess inventory.
2. Shipping Delays:
o Inefficient Routing: Transportation routes are not optimized, leading to longer
delivery times and higher transportation costs. The company also does not
consider the best carriers or transport modes based on delivery times or cost.
o Use of Multiple Providers: The reliance on multiple third-party logistics
providers (3PLs) creates complexity in managing transportation schedules and
costs.
3. Poor Inventory Visibility:
o No Real-Time Tracking: The lack of centralized tracking and real-time data on
stock levels across warehouses means that products are not replenished on time,
causing delays in order fulfillment.
4. Environmental Concerns:
o Carbon Footprint: The company uses transportation methods that are not
optimized for sustainability. For example, long-haul trucks are used without
considering the potential benefits of using rail or sea transport.

Step 2: Propose Solutions

1. Warehouse Optimization:

 Centralized Inventory Management System (IMS): Implement a centralized

inventory management system (IMS) across all warehouses to track stock levels in
real-time. This will help ensure that products are replenished on time and prevent both
stockouts and overstocking. The system should also provide visibility into demand across
different regions.
 Just-in-Time (JIT) Inventory: Adopt JIT inventory management to reduce excess
stock at each warehouse and minimize storage costs. This will involve working closely
with suppliers to ensure quick deliveries of parts and finished goods when needed.
 Cross-Docking: To improve efficiency, introduce cross-docking at regional warehouses.
This method eliminates the need for storing goods for long periods and instead involves
directly transferring goods from inbound trucks to outbound trucks, reducing handling
time and storage costs.

2. Transportation Optimization:
  Route Optimization: Implement a Transportation Management System (TMS) to
optimize transportation routes, select the best carriers, and calculate the most cost-
effective and time-efficient transportation modes. This system will consider factors like
delivery deadlines, shipping costs, and carbon footprint when planning routes.
 Carrier Negotiations: Standardize agreements with fewer, more reliable carriers to
reduce complexity and achieve better rates through volume-based contracts. For example,
negotiate with a few carriers that provide competitive pricing for bulk transportation
while ensuring reliability.
 Mode Optimization: Consider intermodal transportation, where appropriate, to
balance cost and time. For example, for long-haul deliveries, rail transport can be used to
reduce costs and carbon emissions, while short-distance deliveries can rely on trucks.

3. Improving Supply Chain Visibility:

 Real-Time Tracking Systems: Implement Internet of Things (IoT) sensors and RFID
technology in warehouses and on transportation vehicles to provide real-time data on
inventory levels, shipments, and the status of orders. This data can be accessed through a
centralized platform, allowing supply chain managers to monitor the flow of goods.
 Collaboration with Suppliers: Foster closer collaboration with suppliers to get real-time
updates on material shipments and align production schedules with inventory needs. This
will help avoid stockouts and delays.

4. Green Logistics Strategy:

 Sustainable Packaging: Move towards using recyclable or biodegradable packaging

materials for shipments to reduce waste.
 Carbon-Offset Programs: Invest in carbon offset programs to balance out emissions
generated from logistics activities, especially in transportation.
 Eco-Friendly Transport Modes: Transition to using electric vehicles (EVs) or hybrid
trucks for short-distance deliveries and encourage the use of rail or sea transport for
longer distances to reduce fuel consumption and carbon emissions.

Step 3: Design a Logistics Network

Below is a high-level design for the optimized logistics network:

Optimized Logistics Network Design:

1. Supplier Coordination:
o Suppliers are integrated into the system for real-time data sharing regarding
material availability and shipment schedules.
2. Centralized Inventory Management:
o A centralized inventory management system allows for real-time stock
visibility across all regional warehouses.
 3. Regional Warehouses:
o Cross-docking is implemented at key regional warehouses to facilitate faster
deliveries with minimal storage time.
4. Transportation Optimization:
o A TMS optimizes transportation routes, carrier selection, and modes of transport,
ensuring that the best options are chosen for each shipment.
5. Sustainability:
o The company prioritizes green logistics practices such as using rail transport for
long-haul shipments, using electric vehicles for local deliveries, and adopting eco-
friendly packaging.

Logistics Flow Diagram:

+-------------------+ +-------------------+
+-------------------+
| Supplier A | | Supplier B | |
Supplier C |
| (Material Delivery)| ----> | (Material Delivery)| -----> |
(Material Delivery)|
+-------------------+ +-------------------+
+-------------------+
| | |
v v v
+---------------------------------------------+
+-------------------------+
| Centralized Inventory System | <---->| Real-Time Data
Sharing |
+---------------------------------------------+
+-------------------------+
| |
+----------v-----------+ +-----------v------------+
| Regional Warehouse 1 | | Regional Warehouse 2 |
+-----------------------+ +------------------------+
| |
+----------v-----------+ +-----------v------------+
| Cross-Docking Facility| | Cross-Docking Facility |
+-----------------------+ +------------------------+
| |
v v
+-------------------+ +---------------------+
| Transportation | | Transportation |
| Management | | Management |
+-------------------+ +---------------------+
| |
v v
+-------------------+ +-------------------+
| Customer Orders | | Customer Orders |
+-------------------+ +-------------------+
|
v
+------------------------+
| Delivery to |
| Customer (Final |
| Destination) |
 +------------------------+

In this design, the entire logistics network from suppliers to customers is optimized for inventory
visibility, transportation efficiency, and sustainability.

Conclusion:

By implementing these logistics improvements, Stellar Electronics can achieve significant

benefits, including:

 Reduced Costs: Optimized warehousing and transportation reduce both storage and
shipping costs.
 Faster Deliveries: Transportation route and mode optimization improve delivery speed,
leading to faster order fulfillment.
 Improved Supply Chain Visibility: Real-time tracking systems ensure better
coordination and decision-making.
 Sustainability: Green logistics practices contribute to reduced environmental impact and
improved brand image.

This integrated approach to logistics optimization will help Stellar Electronics improve customer
satisfaction, reduce operational costs, and enhance overall supply chain efficiency.