IMPROVEMENT OF SUGAR PRODUCTION PROCESS USING LEAN MANUFACTURING METHOD AT MERITJAN SUGAR COMPANY, KEDIRI

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1 IMPROVEMENT OF SUGAR PRODUCTION PROCESS USING LEAN MANUFACTURING METHOD AT MERITJAN SUGAR COMPANY, KEDIRI Yuniar Triarditya P.S and Moses L. Singgih Master s Program in Management of Technology, Institut Teknologi Sepuluh Nopember Jl. Cokroaminoto 12A, Surabaya, 60264, Indonesia yuniar.triarditya05@gmail.com; moseslsinggih@ie.its.ac.id Business competition forces manufacturing industry to continuously improve their production efficiency There are many factors which affect the production efficiency of a company, one of them is non value added actvities or waste. Meritjan Sugar Factory is one of sugar factories under the company PT. Perkebunan Nusantara X (Persero) which is engaged in the manufactur serving its primary product manufacturing sugar. Lean Manufacturing is an approach to streamline the system by reducing waste. Therefore strongly support the Lean Manufacturing approach to assist in reducing waste by improving PT. Perkebunan Nusantara X (Persero) - Meritjan Factory Sugar. VALSAT is a approaching method to determine weight of waste, afterwards from determine weight can choose appropiate tool using matrix. According to the research result, it is discovered that 3 waste which usual happen on production sector are Unnecessary Inventories with the weight of 5,66, Defect with the weight of 5,44, Not Utilizing Employees with the weight of 5,02. In order to reduce the waste, it is suggested or recommended to order raw material according to EOQ rate which is Kg, for Inventory cost reduction to Rp ,-, also to hire labor or workforce with the right abilities and skills, and also the precise and appropriate work placement. The increase of helping tools in order to move the goods to the warehouse to reduce time. Keyword: Waste, Lean Manufacturing, EOQ INTRODUCTION Meritjan Sugar Factory is one of the sugar company under the PTPN X (Persero) which actively moves on manufacturing sector. The main products of this factory is sugar and tobacco. Meritjan Sugar Factory always tries to make productions in time but in the process of the product making, some types of waste happen. Problems exist like the excess stock in phosphate acid, CaO, Sulphur or even the existence of deficient work from the employees. Besides that, other problem which happens commonly is the too much distance from the processing site to the finished (sugar) product warehouse. Based on the problem that Meritjan Sugar Factory faces, the company needs a solution which can must done with the Lean Manufacturing approach with the hope that this way it can minimize the waste that happens on production level. METHODOLOGY Lean manufacturing is a kind of systematic approach to identify and eliminate waste by continual improvement or repair and development, trying to make a smooth industrial flow inside a company in order to attract consumer in an attempt to reach perfection (Singgih,2015). Lean manufacturing is a philosophy based on TPS (Toyota Production System) which aims to reduce waste by doing continuous improvement. A-1-1

2 The steps of Lean Manufacturing are as follows: 1. Big Picture Mapping Big Picture Mapping is a tool used to picture a whole system along with its Value Stream located inside the company. (Singgih, 2012) 2. Value Stream Analysis Tools (VALSAT) VALSAT is a developed tool which is used to ease the understanding of value stream mapping and to ease the improvements making related to the waste that is located in value stream.(singgih,2011) The steps that need to be done: 1. the construction and dispersion of 7 waste weighting questionnaire 2. Validity test and questionnaire reliability. 3. Calculation of waste questionnaire. 4. Choosing tools with VALSAT (Value Stream Analysis Tools). 5. Process Activity Mapping (PAM) calculation 6. Big Picture Mapping. 7. Value stream Analysis Tools (VALSAT) analysis 8. Repairing recommendation using EOQ and cause effect diagram. RESULTS AND DISCUSSION Validity Test and Reliability Test. Validity Test. Based on output result of Corrected Item Total Correlation - For item Over production count the r > if the r of the table is > 0,316, then the item is - For item Waiting count the r < if the r of the table is > 0,316, then the item is - For item Transportation count the r < if the r of the table is > 0,316, then the item is - For item Inventories count the r > if the r of the table is > 0,316, then the item is - For item Motions count the r > if the r of the table is > 0,316, then the item is - For item Defect count the r > if the r of the table is > 0,316, then the item is - For item Not utilizing employee s knowledge, skill, and abilities (NUEKSA) count the r > if the r of the table is > 0,316, then the item is Based on all the waste items we can see that the r counted of all the item are bigger than the table r and because of that, all the items are A-1-2

3 Reliability Test. Tabel 1. Realibility Statistic Cronbach's Alpha N of Items r alpha = 0,840 because the r of the alpha > r of the table, 0,840 > then the items are considered reliable. Recap of the waste results from the questionnaire accordant to the ranking Table 2. Recap of the waste results from the questionnaire accordant to the ranking NO WASTE RESPONDENTS WEIGHT 1 Overproduction , Unnecessary Inventories , Defects ,44 3 Not utilizing 4 employee s knowledge, skill, ,02 4 and abilities 5 Unnecessary Motions , Excessive Transportation , Waiting ,95 7 RANKING Based on the average yield of waste types above, it can be seen that the highest average yield is located at Overproduction but because Overproduction is not considered as something problematic, then the highest average yield is replaced with Unnecessary Inventories with the average score of 5,66 while the smallest average score is located on Waiting with the average score of 3,95. Overproduction is considered not problematic because the sugar manufactory is producing sugar seasonally (sugarcane harvest season), so regardless of existing sugarcane, every count of sugarcane is turned into sugar products. VALSAT Tools Ranking. Table 3. VALSAT Tools Ranking VALSAT WEIGHT RANKING Process Acivity Mapping (PAM) 153,39 1 A-1-3

4 VALSAT WEIGHT RANKING Demand Amplification Mapping (DAM) 127,39 2 Supply Chain Respone Matrix (SCRM) 118,95 3 Physical Structure (PS) 50,88 4 Decision Point Analysis (DPA) 63,29 5 Production Variety Funnel (PVF) 36,00 6 Quality Filter Mapping (QFM) 51,73 7 The ranking of every VALSAT matrix is obtained based on the calculation result using the VALSAT table. Matrix or mapping with the highest weight is Process Activity Mapping with a total weight of 201, 73. Because of that, the tools which selected to be analyzed more is PAM (process activity mapping) tools. 1. Process Activity Mapping Table 4. Time Requirement Percentage Actual and Future Activity Time Amount Current State Percentage (%) Time Amount Future State Operation , ,01 Transportation , ,20 Inspection 5 0,4 5 0,39 Storage 20 1,4 10 0,78 Delay , ,62 Total Percentage (%) The repairing proposal can be seen on table 4 th, the researcher only gives repairing proposal to the company for reducing the appearance of NVA and NNVA activity. 2. Repairing for inventory waste of CaO material using EOQ (Economic Order Quantity) a. Demand of CaO a day (D) = 1000 kg/day Holding Cost CaO (Ch) = Rp 10,- / kg / day Supply Cost (Cr) = Rp / Supply EOQ = = = Kg A-1-4

5 From calculation of EOQ, average value of inventory can be calculate: Average inventory = EOQ / 2 = /2 = kg The controlling and repairing proposal can be seen on table 5 the researcher only gives controlling and repairing proposal to the company for reducing the appearance of waste risk. Table 5. Repairing Plan Waste Types Factors Improvement and Repairing plan. - Positioning of human resources are not match with their skill - Positioning of the workforce should be - Many of the education level of suited with the work field. employees are still low. - Lack of training - Procurement of training to the Not utilizing employee s knowledge, skill, and abilities - Human error employees. - Supervision uplift to the employees Defects Unnecessary Inventories - Defective material - Old-aged engines/machines. - The process is too long because of the big amount of content equalization process by using chemical ingredients because of the leaves and dirt which got minced. - The lack of operator understanding and unoptimal performance. - Less observant in predicting on the re-order of the raw materials. - Lack of coordination in every sector. - There is no raw material ordering schedule. -.The raw material is piling up because of too many orders. - Controlling uplift to the raw material. - Choosing workforce with the right skill for every sector. - Good continual training and instruction procurement to the employees. - Increasing the coordination between employees. - More observant in controlling the raw materials. - Strengthening the machine control. - Performs scheduling on ordering. Analysis of activities: 1. Operation According to the process activity mapping, operation has a total amound of percentage highest than other activities, as many as 68%. The amount of the time requirement is increasing to 67,01%. Operation is an activity which gives added value, higher amount of activity time amount is better for the company, because it can show how the company itself is so productive. 2. Transportation For the activity amount, transportation occupies the second place after operation (16%) and the time amount is 23,2%. Transportation activity is categorized as necessary non value A-1-5

6 adding activity, it does not give any added value but it needs to be conducted. Because of that, this activity is not needed to be erased as whole but it can be reduced. 3. Inspection This activity is conducted to keep the product suitable for customers. Inspection is an activity which not gives any value but needs to be done (necessary non value adding activity). In sugar production process, inspection is categorized as low. It has a 0,39% of activity time percentage and activity amount percentage of 4%. This could enable defect to happen. 4. Storage Storage is an activity which not gives any value but needs to be done (necessary non value adding activity). in storage activity along the value stream, the percentage of the time is reducing to 0,78% and the percentage of the activity amount is 4%. Storage activity time can be reduce with replacing tools with new and modern ones, it can make production time faster. 5. Delay From process activity mapping picture it can be seen that delay activity has the time percentage of 8,62% and activity amount percentage of 8%. Delay is actually an activity which not gives any added value on production process but this time delay is a precipitation and categorized as waiting activity so in this case even though the activity is categorized as non added value activity but the process can be made faster. CONCLUSION & RECOMENDATION 1. Waste rankings based on the biggest weight to the smallest is: Overproduction with the weight of 5,88, Unnecessary Inventories with the weight of 5,66, Defect with the weight of 5,44, Not Utilizing Employee s with the weight of 5,02, Unnecessary Motions with the weight of 4,54, Excessive Transportation with the weight of 4,27 and lastly Waiting with the weight of 3, Improvement recommendation for waste that is happening in the production level on PG Meritjan: Not Utilizing Employee K.S.A: - The recruitment of the employees must be fitted with the employees field. - Training for the employees. - Supervision improvement for the employees. Defect : - Controlling improvement for the raw materials. - Picking employees that are suited to each of their workfield. - Holding the best training and instruction giving for the employees, gradually and continually. Unnecessary Inventories: - From calculation of EOQ, average value of inventory can be calculate: Average inventory = EOQ / 2 = /2 = kg, where the value can reducing holding cost. - Controls machines strictly. - Scheduling the order. A-1-6

7 REFERENCES Askin, R.G & Goldberg, J. B, Design and Analysis of Lean Production Systems, John Wiley & Sons, Inc, United States Gaspersz, Vincent, 2007, Lean Six Sigma for Manufacturing and Service Industries, edisi 1, Gramedia Pustaka Utama, Jakarta. George, M. L, (2002), Lean Six Sigma : Combining Six Sigma Quality with Lean Speed, New York, McGraw-Hill Goldsby, Thomas J, Lean Six Sigma Logistics: Strategic Development to Operational Success Hines, Peter and Rich, Nick (2005). The Seven Value Stream Mapping Tools. International Journal of Operation & Production Management, Vol. 17, No.1, pp Cardiff, UK: Lean Enterprise Research Centre, Cardiff Business School. Hines, P. & Taylor, D Going Lean. Lean Enterprise Research Center Cardiff Bussiness School, UK King, Peter L. (2009) Lean for the Process Industries: Dealing with Complexity. CRC Press. Taylor & Francis Group. New York Likert, Jefrey K, (2006). The Toyota Way, Penerbit Erlangga, Jakarta. Ohno, Taiichi, 1988, TOYOTA PRODUCTION SYSTEM : Beyond Large- Scale Production, Portland Russel, R.S and Taylor B.W (1999), Orientation Management, 2nd ed, Prentice-Hall, Upper Saddle River, NJ Womack, J. and Jones, D.T. (2003). Lean Thinking, banish wastes and create wealth in your corporation, revised and updated, Free Press. Silver, Edward A., David F. Pyke, & Rein Peterson. (1997). Inventory Management and Production Planning and Scheduling (third Edition). London: Chapman & Hall Elean.A.Y.W. and Singgih, Moses.L, 2015, PERBAIKAN PROSES PRODUKSI GULA AREN DENGAN PENDEKATAN LEAN MANUFACTURING DI PABRIK GULA AREN MASARANG TOMOHON, Prosiding Seminar Nasional Manajemen Teknologi XXIII, Surabaya 1 Agustus 2015 Saputra, R. A., Singgih, Moses.L, 2012, Perbaikan Proses Produksi Blender Menggunakan Pendekatan Lean Manufacturing, Prosiding Seminar Nasional Manajemen Teknologi XV, Surabaya 4 Pebruari Fanani, Z. dan Singgih, Moses.L, 2011, Implementasi Lean Manufacturing Untuk Peningkatan Produktivitas (Studi kasus pada PT. Ekamas Fortuna Malang), Prosiding Seminar Nasional Manajemen Teknologi XIII Program Studi MMT-ITS, Surabaya 5 Pebruari 2011 A-1-7