When a Kanban system is running internally, the transfer of classical kanbans into different areas can be established fairly easily. But, what if you have parts that are made by suppliers and need to be transferred externally? In this case a supplier kanban is used in place of a withdrawal or a move kanban. A supplier Kanban process is usually described as a connection between your external vendors and the internal kanban system. This can also work with different locations of the same company. The companies can be linked together into a supply-chain process via Kanban and replenish effectively.
The Economic order quantity or EOQ is the ideal, or most “economic” quantity of units that should be purchased or ordered, to meet demand while simultaneously attempting to minimize the costs of carrying inventory, ordering inventory and stocking out of inventory.
Engineer to Order, also known as design to order refers to products or services whose customer specifications/requirements contain significant customization, unique designs or innovative and new purchased materials.
Electronic Data Interchange (EDI) is a paperless method of communication used between businesses to transfer or exchange documents such as invoices, shipping notices and purchase orders.
Imagine for a second if everything you sent was hand delivered or mailed. The cost of these activities alone might be enough to send a company into early retirement. Among the costs of postage and rather wasteful transportation, EDI reduces costs that are associated with paper, ink, storage and document retrieval. While these costs seem rather trivial think of it this way, the average piece of paper costs $0.08 per sheet. That adds up if you were to calculate all the paper used within a year. Then add in the cost of labor (about $39.00 manualy transmitted) compared to EDI (about $1.32) and you have quite a savings. Other benefits associated with electronic data interchange are improvment of information flow. The most obvious benefit is that EDI can speed up the flow of information in a value stream by more than 60% while also reducing the amount of defects or transactional errors by more than 30%.
External setup time is the amount of time associated with the elements or activities of a setup procedure that are performed while the machine is running. The terminology comes from the fact that these activities are done outside of or away from the machine, or external to the process.
Engineering change orders (ECO) are used for changes in components, assemblies, or documents such as processes and work instructions. They may also be used for changes in specifications.
Enterprise resource planning (ERP) is a software that gives organizations to define, standardize and manage business processes. ERP is used to support planning and control of information throughout an organization so that they can use internal knowledge to achieve external advantage. ERP systems track resources such as: Cash, materials, capacity, orders, purchase orders and payroll.
Examples of ERP Systems:
For more information on ERP systems check out the book ERP, by: MHE. Apics is another organization that provides extensive knowledge in materials management and supply chain management. You can visit their website here: Apics
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An estimate is defined as an approximate judgement, calculation or opinion regarding time, size, weight, worth etc. A good source to read about project estimating is the book titled project estimating and cost management.
External Failure Costs are one of four types of failures measured within COPQ. They are any costs that are incurred to fix, remedy or mitigate defects that pass through the organization and are discovered by those external of the organization such as a customer. To learn more about External Failure Costs enroll in our Lean Six Sigma Yellow Belt Course by clicking on the link below.
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