Title: Research Adviser: Jim Keyes, Ph. D. Submission Term/Year: Spring, Number of Pages: 65

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1 1 Author: Title: Mezentseva, Olga, I Implementation of the 5S Concept in Company XYZ The accompanying research report is submitted to the University of Wisconsin-Stout, Graduate School in partial completion of the requirements for the Graduate Degree/ Major: Research Adviser: Jim Keyes, Ph. D. Submission Term/Year: Spring, 2013 Number of Pages: 65 MS Operations and Supply Management Style Manual Used: American Psychological Association, 6 th edition I understand that this research report must be officially approved by the Graduate School and that an electronic copy of the approved version will be made available through the University Library website I attest that the research report is my original work (that any copyrightable materials have been used with the permission of the original authors), and as such, it is automatically protected by the laws, rules, and regulations of the U. S. Copyright Office. My research adviser has approved the content and quality of this paper. STUDENT: Olga I. Mezentseva STUDENT S SIGNATURE: DATE: May 1, 2013 ADVISER: Jim Keyes ADVISER S SIGNATURE: DATE: May 1, This section to be completed by the Graduate School This final research report has been approved by the Graduate School. Director, Office of Graduate Studies: DATE:

2 2 Mezentseva, Olga I. Implementation of the 5S concept in Company XYZ Abstract The objective of the project was to use lean tools to manage and improve the working conditions and efficiency of the Creform area in Company XYZ. The area was used to build different racks and carts from the several pipes and the fastener systems for the production side. To accomplish the goal the researcher focused on the 5S implementation as one of the lean tools. In order to develop a better organization of the work-space and its utilization, the research focused on the waste reduction within the Creform area, improvement of the original layout, and rearrangement of the tools and materials. Implementation of the 5S concept improved the existing situation of the area which resulted in increased profitability. The project also incorporated the usage of an A3 report as an additional lean tool. It was developed to observe the existing situation, execute the implementation plan, and evaluate results. With the use of the 5S tools, the Creform area became more organized, cleaner, and more visible which increased efficiency in the area. The improved working environment led to higher productivity during the manufacturing process.

3 3 Acknowledgments I would sincerely thank my family and my boyfriend, Ashish Mehta for their every day support and constant motivation. They gave me a chance to get a Master`s Degree abroad. I would like to thank Dr. Jim Keyes, my program director and advisor for the given opportunity to study at the University of Wisconsin Stout and for his support and guidance during my academic career and my project. I would like to thank my host family, Cindy and Dale Quilling who introduced me to American culture and always supported me in my life in the USA. Finally, I would like to thank all my friends for their support.

4 4 Table of Contents... Page Abstract...2 List of Tables...6 List of Figures...7 Chapter I: Introduction...8 Statement of the Problem...10 Purpose of the Study...10 Assumptions of the Study...11 Definition of Terms...11 Limitation of the Study...13 Chapter II: Literature Review...16 Lean Manufacturing...16 The Toyota Production System...18 Lean Principles and Tools to Increase Productivity and Eliminate Waste...23 Identifying the different types of waste S Beginning of Lean Implementation...26 Benefits of 5S Implementation...30 Chapter III: Methodology...33 Project Definition...33 Data Collection S Implementation...38 Data Analysis...40

5 5 Chapter IV: Results...42 A3 Report...42 Data Collection Results...45 Results of the 5S Implementation...47 Results from a New Layout Development...53 Chapter V: Discussion...56 Limitations...57 Conclusions...57 Recommendations...58 References...62 Appendix A: 5S Audit...65

6 6 List of Tables Table 1: Data Recording Sheet Template...37 Table 2 The Inventory Tracking Sheet Template...38 Table 3: The Inventory Tracking Sheet...45 Table 4: Data Recording Sheet...54

7 7 List of Figures Figure 1: The Toyota Production System House Diagram...19 Figure 2: An Example of a Kanban card...21 Figure 3: A Kanban system...21 Figure 4: A3 Report...34 Figure 5: Original Layout of the Creform area...35 Figure 6: Example of a Spaghetti Diagram...36 Figure 7: A3 Report Analysis...44 Figure 8: Spaghetti Diagram of distance traveled by employees within an original layout...47 Figure 9: Red tagged items...48 Figure 10: Supplies rearranged by a part number or type...49 Figure 11: Taped off location for the equipment...49 Figure 12: Labeled bins and their locations...50 Figure 13: Labeled surface of tool box and top shelf of casters racking...51 Figure 14: Creaform Board...52 Figure 15: Previous Creaform book location...52 Figure 16: Identified Creform book location...52 Figure 17: Spaghetti Diagram of distance traveled by employees in new layout...53

8 8 Chapter I: Introduction In light of the current economic situation and the high competition within the manufacturing industry, companies spend more time focusing on increasing their profitability and spend less time thinking about their employees and work conditions. However, management has realized that employees are key assets, who work towards achieving the company`s objectives. It has been revealed that one of the most vital issues to maximize a company`s profits was to improve the working environment for its employees and make their work space more comfortable. This will increase productivity within the manufacturing process. Lean transformation is an approach that helps companies achieve these improvements. Lean manufacturing is a continuous improvement process with the goal of delivering products in the quickest, most efficient and cost effective manner (Sanders, 2010, p. 1). Lean manufacturing is an approach that uses tools to manage the business quicker, cheaper, and more efficiently. To keep a lean production, companies need to apply effective lean rules and techniques to reduce any type of waste in processes and make manufacturing practice more resourceful. Waste can be anything that does not add value to a finished product. Therefore, an improvement made in the process, impacts increased productivity, reduced lead time and cost structure. In lean manufacturing, each step is aimed at improving a company`s processes, such as visual management, reduction in material handling, and better housekeeping. This can be implemented with the help of 5S as one of the lean techniques. The 5S system is a methodology applied for organizing, cleaning, standardizing and improving the work area (Alvord, 2010). The list of 5S activities includes five Japanese words: seri, seiton, seiso, seiketsu, and shitsukee; translated in English as sort, set in order, systematic cleaning, standardize, and sustain. The 5S is a system that is a central point of efficiency,

9 9 discipline and attention to details (Carreira, 2005). The 5S techniques focus highly on improving efficiency, increasing productivity, and eliminating waste. Company XYZ is one of the largest window and door manufacturers in North America. The company has been implementing lean manufacturing tools within production for the past 20 years, mainly focusing on the Kaizen method. However, Company XYZ needed to integrate changes in its processes in order to provide better working conditions for its employees, and therefore increase productivity. The management had to figure out how to improve the company`s business environment, and how to eliminate waste of time, supplies, excessive employee motion, overproduction, and waiting time. Implementation of this process would result in increased profitability. The company considered these factors to be crucial to improve efficiencies and reduce wasteful activity of its manufacturing process in order to become a more proficient manufacturer once the working environment changed. Company XYZ has experienced difficulties in the physical organization of the workplace within the Creform area. This area was used by the company to build different racks, carts, and boards from special pipes and the fastener systems. The area also was used to fix the items if they were broken or non-functional, and to develop any other projects as needed. Within the defined area, there were many tools and consumables that lacked order and structure, which resulted in chaos. During the production cycle the tools and supplies were hard to find as they did not have a fixed location and were being replaced or even lost. The employees were working in an uncomfortable, messy environment, which was full of many unnecessary items and excessive inventory. These items were not used and just stayed on the shelves covered with dust. This negatively impacted the process flow and visibility. These problems were non-value-added activities that consumed time, people, space and increased cost. These activities were inefficient

10 10 actions that led to wastes such as extra motion to avoid obstacles, time spent searching for misplaced things, delays due to defects or accidents, and ultimately did not add the value to the product. As a result, it was difficult to work efficiently within the Creform area. Company XYZ needed to re-evaluate its business model to more deeply incorporate the lean manufacturing method. Consequently, management of the company decided to apply the 5S concept, one of the lean manufacturing tools, to help solve the problems and achieve improvements. Statement of the Problem The Creform area of Company XYZ was able to be used by all employees to build or fix different items for the manufacturing processes. Company XYZ experienced lost productivity within the Creform area because of lack of order and control, resulting in increased costs. Purpose of the Study The purpose of the study was to use lean tools to identify the disadvantages of the Creform area layout, and to manage and improve the efficiency of this area. The main goal of the project was to implement 5S methodology in the Creform area and focus on continuous improvements of the unorganized area. Furthermore, another goal was to obtain a level 3 Organization Understanding of 5S method. This meant that everyone in the area should understand all documents, tools, and materials within the Creform area. Anyone could determine what is being worked on and what will be used next. Employees need to sustain and maintain the performance of the Creform area. This study was projected to create a more efficient layout of the area as well as sort, organize, and label all tools, materials and equipments used within the Creform process. The development of standardized work methods to ensure cleanliness of the area in order to streamline the flow of work was also planned. One of the company`s objectives was to eliminate the following kinds of waste as the first step of lean implementation: motion

11 11 waste, searching waste, and waste of excess inventory. Within these objectives, the company focused on creating better working conditions leading to higher efficiency in the workplace. Assumptions of the Study Company XYZ utilized lean principles and had already applied different lean methods for the past 20 years. However, the company had not standardized and sustained achieved efficiency within the Creform area. The company supported the 5S implementation project and assumed that the project would be effective and the manufacturer would be able to maintain implemented improvements over time. Definition of Terms A3 report. A report is called A3 because of the international-sized piece of paper 11 x 17 (A3 piece of paper size is in accordance with the European standards). Toyota started using the A3 report to present important information on one sheet more effectively during a meeting. It is a full report documenting the process. A problem-solving A3 would state the problem, document the current situation, determine the root cause, suggest alternative solutions, suggest the recommended solution, and have a cost-benefit analysis (Liker, 2004, p. 157). 5S. A Japanese concept that includes five principles: sort, set in order, shine, standardize and sustain. 5S is the foundation for continuous improvement, zero defects, cost reduction, and a safe work area and a systematic way to improve the workplace, processes, and products through production line employee involvement (George, Rowlands, Price & Maxey, 2005, p. 206). Creform area. Inside the area employees use pipes, a joint system, and casters to build different racks, carts, and rail required for all the production lines. Creform area is also utilized by any employee to fix one of these items and to work on several other projects when it is

12 12 needed. Within the Creform area certain storage cabinets with particular tools and equipments, totes with joint elements and casters, and wood racks can be found and used to custom define and construct units to their own unique application needs. Just-In-Time (JIT). A system for producing and delivering the right items at the right time in the right amounts. Just-in-Time approaches just-on-time when upstream activities occur minutes or seconds before downstream activities, so single piece flow is possible (Womack & Jones, 2003, p. 349). Kaizen. Continuous improvements of everything with elimination of wasteful activities (Womack & Jones, 2003). Lean manufacturing. Continuous improvement process with the goal of delivering products in the quickest, most efficient and cost effective manner (Sanders, 2010, p. 1). Lean manufacturing is a tool that many companies focus on for continuous improvement of processes to eliminate waste and boost performance (Green, Lee, & Kozman, 2010, p. 2976). Level 3 of 5S Organization Understanding. At this level the whole company clearly understands the 5S process. This means the company already went through the prior two levels of initial efforts and general awareness of needs. The company already did some initial work towards continuous improvements and is fully responsive to changes in order to organize the workplace more efficiently. Non-value-added work. Regarded as waste in the conventional sense. For example, walking to pick up parts, opening the package of goods ordered from outside, operating the push buttons, and so forth are things that have to be done under present conditions (Ohno, 1988, p. 57).

13 13 Red tagging. This strategy is used to identify unneeded items, excess inventory, broken tools, and helpful within the sorting process. Employees apply this strategy to manage the flow of items within the production area or by individual departments (Alvord, 2010, p. 4). Spaghetti Diagram. A visual depiction of a workflow, using visual representations of process equipment and arrows to show the different human interaction and flow. An area map is a sequence of operations or processes as defined by the work of a person, a machine, organization or staff (Alvord, 2010, p. 98). Waste (Muda). Any activity that does not add value to the good or service in the eyes of the consumer (APICS Dictionary, n. d.). Work flow. It means that value is added to the product in each process while the product flows along (Ohno, 1988, p. 130). Limitations of the Study This research was conducted only within the Creform department of Company XYZ and did not take the entire organization into consideration. The manufacturing layout was limited to a defined area; therefore new changes and recommendations were limited to this space. Methodology During the project, the researcher focused on the 5S implementation as one of the lean tools to accomplish the research objective. This tool was applied to eliminate waste through a more efficient organization of the work area and better layout. The major point of the project was to identify the problems in the current Creform area, and with the application of lean tools the workplace was improved. Within this project, the seven wastes concept was applied to clearly distinguish what wasteful activities existed and needed to be eliminated in the area. The following types of

14 14 wastes were examined within the research: motion waste, searching waste, and waste of excess inventory. The Spaghetti Diagram tool was applied to measure the distance between certain equipment used within the manufacturing process. During this step it was important to reveal how the area layout might be improved to make the process more effective. The 5S implementation was expected to improve the current situation within the Creform area and propose ideas to sustain the improvements over time. The 5S process started from the sort stage. During the sorting step, all unnecessary items were recognized and red tagged for future removal or recycling. After the red tagging process the set in order step was put into action. This required finding the proper location for each item used in the Creform area. Within the shine stage, each piece of inventory, machine, and storage totes with materials needed to be deep cleaned. Standardization was done by the Lead employees of the Creform area in order to monitor and manage the usage of the tools and equipment. Labeling the shelves and totes with materials and taping off the floor for the equipment location, were part of the fourth stage as well. Sustainability within the last stage was achieved only if each employee of the Creform area knew the main rules applied in the area and maintains the continuous improvements. Another lean tool applied was an A3 report. The A3 process combines two important concepts, strategic management and problem-solving. This report has a clear structure of the outcomes that are supposed to be achieved and the plan of how it might be completed. This lean tool is an instrument used to manage projects efficiency. It is easily understood by each employee who is involved in the solution. This was used to illustrate the original area layout to identify the problem zones and develop an implementation plan with measurements. The A3 was developed to document the current situation, and propose a working plan to achieve the stated objectives. The current situation was recorded with pictures to fully understand the

15 15 problem and the solution. These lean tools were applied in the research to help eliminate waste, develop a more efficient layout, and improve organization of the work-space. Summary Company XYZ, a window manufacturer, has experienced difficulties in the physical organization of the workplace within the Creform area. Tools and materials had no designated place which led to disorganized work areas and inefficient productivity. The working environment was messy, distracting, and uncomfortable. Company XYZ would have to deal with many issues including: excess inventory, increased inventory carrying costs, unnecessary supplies, lost items, and inefficiency. This research was developed to improve the workplace, create a better work environment, and increase efficiency within the assigned area, as well as generate a more beneficial layout for the area to fully utilize the work space available. The literature review in Chapter II discusses lean manufacturing tools used to achieve process improvement by eliminating wastes and sustaining continuous improvements.

16 16 Chapter II: Literature Review Company XYZ is a leader within the window manufacturing industry. It has faced the situation of decreased productivity and increased costs in the manufacturing side of the Creform area where carts and racks are built. This happened because of a lack of order and control within the area. This study focused on the 5S implementation in order to increase the productivity and improve the physical organization of the work place. The window manufacturer aimed at eliminating wasteful activities within this specific area to create better working conditions in order to achieve a higher level of efficiency. This chapter reviewed the literature about lean manufacturing and 5S practices. Lean Manufacturing In the current economic situation, many organizations focus on creating value for customers by improving their performance and increasing the customer service level, therefore keeping a competitive position in an increasingly global market. Lean manufacturing tools help an organization keep or improve its competitive position. Lean production is the philosophy of eliminating all waste in all system processes continuously. The system is the complete set of processes required to produce the product (Carroll, 2002, p. 8). Liker (2004) underlines the five-steps of lean manufacturing: Defining customer value Defining the value stream Creating flow Responding to the customer pull Striving for excellence (p. 7)

17 17 Lean production has been implemented by many enterprises that clearly recognize the importance of quality management. Furthermore, the management understands the need for developing a deliberate and systematic process as a big step towards achieving significant improvements of the enterprise performance. However, the spread of the lean concept is limited by an incomplete awareness of the importance of the lean system. In order to start a lean manufacturing process, companies need to identify the manufacturing areas that need to be improved and develop a plan of the entire implementation process (Hobbs, 2011). Organizations that are lean manufacturers eliminate waste in areas such as supplies, inventory, cycle time, operator time, and waiting time. Oliver, Schab, and Holweg. (2007) state: Lean systems minimize waste (where waste is anything that adds cost, but not value to a product): materials flow continuously through the system on a just-in-time basis; and there is an emphasis on error prevention, rather than detection and post-hoc rectification (p. 3726). Green, Lee, and Kozman (2010) indicate the major objectives of lean manufacturing include: minimization of underutilized labor reduced terms during the creation of new products guarantee of supplying products to the customer maximization of quality at minimum cost Application of lean tools is a crucial step to achieve a significant increase in productivity, improve product quality and become a more competitive organization without additional capital investment. Thus, for more successful lean concept implementation, companies have to be more

18 18 innovative and set goals towards continuous improvements and try to sustain them. Only in this case the use of the lean manufacturing principles gives significant results. The lean concept, implemented by the Toyota Motor Corporation, is the outcome of effectively using the lean tools. Japanese lean pioneer Taiichi Ohno, founder of the Toyota Production System, began his first experiments to optimize production in the 1950's. At that time, the Toyota Group faced the problem that demand was not high enough to build a strong production line like Ford had. The Japanese had effectively learned the way to create a variety of different models in conditions of low demand. This problem was solved by focusing on customer satisfaction and quality rather than mass production (Liker, 2004). As noted by Liker and Morgan (2006) since the 1980 s, many manufacturing companies take the Toyota production model as an example for applying lean techniques on the production side. This model is wellknown as the Toyota Production System (TPS). The Toyota Production System The Toyota Production System, the base of lean manufacturing, was developed and used by Toyota Motor Corporation for many years. Liker and Morgan (2006) state Toyota`s Production System (TPS) is based on lean principles including a focus on the customer, continual improvement and quality through waste reduction, and tightly integrated upstream and downstream processes as part of a lean value chain (p. 5). It is crucial for enterprises to concentrate on understanding the main principles of TPS to improve productivity and sustain continuous improvements within the production system. The use of the lean principles, in general, can produce a significant effect. One of the main advantages is that it needs 80% of management effort and only 20% of technology investment (Womack & Jones, 2003). Creation

19 19 of a true lean culture in the company is an important factor that makes people, process and technology engage and work as a whole system. The Toyota Production System can be represented as a house (Figure 1). This house is built in a way that if the lower layer is not stable the whole system would not be able to exist. There are two pillars of this house: Just-In-Time and Jidoka (Liker, 2004). Figure 1. The Toyota Production System House Diagram. Adapted from Toyota and preventive maintenance by McBride, D., May, Retrieved from The first step needed to support lean manufacturing process is the implementation of Just- In-Time (JIT). JIT is a set of principles, tools, and techniques that allows a company to produce and deliver products in small quantities, with short lead times, to meet specific customer needs (Liker, 2004, p. 23). This process is about making material flow as quick as possible with delivery of the right parts to the right place at the right time.

20 20 industry: Ohno (1988) underlines the main advantages of a JIT system within the manufacturing the low level of material resources and finished goods reduced production space improved product quality, less number of scrap and rework reduced production time more flexibility in changing the product mix smooth flow of production with less number of mistakes, less set-up time high performance and efficiency of the equipment employees` involvement in business problems good relations with suppliers less non-value activities (storage, material handling). Jidoka prevents the chance of defects passing into the next production stage. It includes the following elements of quality management system: process control, visible results of quality assessment, product control within the entire production cycle, and continuous improvement of quality (Liker & Morgan, 2006). Quality control is a crucial part of each work station. To ensure there is a clear understanding of production quality measurement, special notifications are used. In this case, employees know what part of the product has a quality issue, its current results and how it has to be improved. Quality is an important part of the lean process. The Kanban information system was developed by a group of Japanese managers in the Toyota Motor Corporation. Kanban is the Japanese word that consists of two parts: "Kan" means visible, visual, and "ban" means card or board (Figure 2). This system operates on the basis of "just in time" and is used for operations management (Ohno, 1988).

21 21 Figure 2. An example of a Kanban card. Adapted From Withdrawal Kanban strategies by Gooding, M., September, Retrieved March 20, 2013, Retrieved from The main idea of the Kanban system (Figure 3) is that all production lines, including the final assembly line, are provided with the right amount of raw materials. They are needed for a smooth production of a certain amount of products. Then they are delivered in accordance with the production schedule. A supply order for specific products is made with the use of a signal label. Each stage of the production cycle is dependent on each other. It leads to a reduction in the internal inventory level. This system is supported by a Total Quality Control (TQC) system that prevents the chance of defects (Weinstock-Herman, 2009). Figure 3. A Kanban system. Adapted from Applying Kanban to IT process (Part 1, para. 2) by Weinstock Herman, December, [Web log comment]. Retrieved from Copyright 2010 by Weinstock Herman, E. Kaizen is a Japanese word that consists of two parts: Kai (change) and Zen (goodness). Masaaki Imai, the author of this concept, believes that Kaizen is the continuous

22 22 improvement of everything that people do, embodied in business methods and techniques (Liker, 2004). As referred by Liker and Morgan (2006) Kaizen is a process based on a gradual, imperceptible improvement. The Kaizen concept focuses on the human factor, as people should always look for opportunities to improve their performance. Thus, according to Liker and Morgan (2006) companies are interested in the Kaizen concept because it focuses on process, not results and it uses statistics in the analysis and decision-making. Kaizen advantages are clearly visible by its application in Toyota Motor Corporation. Toyota, as a lean manufacturer, recognized several benefits of Kaizen (Liker, 2004). They are: waste reduction, defects elimination, effective source use, teamwork, and improved quality. The first and foremost advantage of kaizen process is that it significantly reduces the loss in each manufacturing process. Kaizen involves everyone within the organization. Thus, this system provides improvements at all levels of the company helping to minimize the loss of resources. It also reduces the run time of production cycles and makes the production more efficient. Due to the rapid changes within the organization, releasing extra resources can be used for other production purposes and improvements. It is important to highlight that a team is a great resource for the manufacturer. When problems are solved successfully within the work team, it strengthens the team spirit of the company. Colleagues, co-workers, supervisors, and subordinates learn to trust each other. All of these factors improve the working environment, as well as ensure the smooth flow of quality work. When the production team works more efficiently without any problems, it improves the quality of the product. In this way it improves production and impacts the company`s success within the industry. The main principles of Kaizen system are: quality improvement, involvement of all employees, willingness to change,

23 23 and communication (Wang, 2011). This does not require any big solutions. However, the principles are worth implementing in any manufacturing company. Lean Principles and Tools to Increase Productivity and Eliminate Waste The main point of the lean manufacturing concept is to understand what value the company creates for the consumer. According to the customer, the finished product becomes valuable only at the moment when it goes through manufacturing process and acquires parts that are needed for consumers. Ohno (1988) states that the main element of lean manufacturing is the process of eliminating waste or muda. Muda is a Japanese word that means losses or waste. Staats and Upton (2011) emphasize, Waste may be obvious once it has been pointed out but finding it in the first place is not always easy, because it has generally been part of the landscape for a long time (p. 103). It is any activity that consumes resources but does not create value. For example, consumers do not need the finished products and other parts to be in stock within the manufacturer. Identifying the different types of waste In accordance with the lean manufacturing concept, all activities of the company can be classified as processes that add value to the customer and operations that do not add value to the customer. Samolejova, Lenort, Lampa and Sikorova (2011) believe the major principle of lean is to identify and eliminate waste and increase efficiency of production. These wastes increase the cost of production without adding value, which is needed for the customer. They also increase the payback period and lead to a decrease in the employees` motivation. For companies that want to streamline their processes in the industry, these eight hidden wastes are their worst enemies.

24 24 Taiich Ohno, a former Toyota manager and Toyota Production System pioneer, has identified the different types of wastes within manufacturing process (Womack & Jones, 2003). They are: overproduction, waiting time, transportation waste, over processing waste, excess inventory, excess of motion, reject and rework, and underutilized work force. These wasteful activities do not add or reduce any value to the customer. Overproduction is the type of waste that occurs when companies produce and stock more than is necessary. Companies produce more surplus items instead of following the demand. There are activities that lead to longer production cycles such as bad planning, large stocks, long setup times, and not enough direct contact with customers which prevent clear understanding of any change in requirements (Carreira, 2005). Therefore, companies think their clients may need more, and as a result suffer from the high cost of production of goods and services that cannot be sold. As a result, it increases handling cost, storage space, other costs and time. Waiting time is time wasted when things are not ready when they are required. This occurs when people, operations, or partially finished products have to wait for further action, information or materials (Alvord, 2010). Poor planning, communication problems and inadequate inventory management lead to delays, which cost companies` time and money. Eliminating waiting time within the production process is crucial as it decreases lead-time, increases employee and equipment utilization, and creates excess inventory. Transportation waste occurs when personnel, equipment, products or information move more often or for longer distances than is really needed (Alvord, 2010). Rather than place the processes next to each other, they are often located far from each other, which requires the use of forklifts, conveyors, or other transportation equipment to move materials to the next operation. All of these moves do not add customer value to the products.

25 25 Over processing waste, according to Carreira (2005) happens in the production of highvalued consumer goods or services. Adding extra function to the product holds no value in the eyes of the consumer and does not improve the product or process. The lack of information about how consumers use the products or services often makes it unnecessary to add functionality, which, according to the manufacturer, customers need. Excess inventory waste takes place when surplus stock losses are fraught with many unpleasant quality problems such as modifications, defects, increased process time, problems with suppliers, and problems in planning the workforce and production (Alvord, 2010). Excess inventory ties up cash and reduces the return on investment in labor and raw materials. Excess of motion exists within unnecessary movement of personnel, products, materials and equipment that do not add value to the process (Ohno, 1988). Employees often make unnecessary movements from the site to the warehouse and back to the shop. They also walk around unneeded equipment. These movements can be eliminated which will speed up the process. This is one of the most crucial wastes for companies because it wastes time making the production processes inefficient and employees` work harder. This is one of the largest sources of loss, despite the fact that most of the production process was designed to minimize unnecessary movements. It occurs unnoticed and leads to malfunction. Rejects and rework are losses due to product defects or necessary rework. This occurs when there is no reliable preventive system and built-in error protection (Carreira, 2005). Companies take rework as an integral part of the process as every time a mistake is made within the production cycle the product is transferred to the next process stage. As a matter of fact, in this situation the company is losing money because something needs to be re-manufactured, re-

26 26 assembled, or repaired. These activities increase the final cost of the product and do not add any customer value. The eighth waste was created later by the Toyota Motor Corporation and it was defined as an underutilization of employees or unsuccessful use of human talent (Liker, 2004). The implementation of lean manufacturing is the move of a company to a new, more qualitative level, suggesting all employees should be involved in the entire company business process. In this case, active participation is ensured through financial and intangible incentives such as the opportunity to participate in the management of the enterprise, and the implementation of ideas and career. This should be a separate element of incentive and staff motivation by the company. By minimizing waste in general, companies can achieve higher efficiency and better quality within the production process (Dennis, 2002). 5S Beginning of Lean Implementation 5S system is a method of organizing the workplace to increase the efficiency and manageability of the operating area, to improve the corporate culture, and to save time (Dossenbach, 2006). The 5S system is generally used as the first stage of lean implementation. It helps to get rid of excess tools and materials in the production area and eliminate its occurrence in the future (Markovitz, 2012). This lean manufacturing method encourages workers to improve their working conditions and helps them learn to reduce waste, unplanned downtime and in-process inventory. 5S implementation organizes the workplace without significant changes in its existing design (Hough, 2008, p. 44). The result of the process is the space reduction needed for existing operations, storage and motion. The philosophy of 5S consists of five steps: sort, set in order, shine, standardize, and sustain (Hirano, 1995).

27 27 Sort (Seiri) means that the operating area needs to be checked and all unnecessary items should be removed (Hough, 2008). Employees often do not want to get rid of items that are no longer needed for work, keeping them for just in case. This usually results in confusion or creates obstacles to move within the working area. Removing unnecessary items and restoring order in the workplace improves the working conditions and safety. Within the sorting stage to clearly illustrate how many unnecessary items are in the workplace, a red tagging concept is applied to eliminate excess inventory. During this process, each item is labeled with red tag or flagged for removal from the work area. As mentioned by Hirano (1993) all employees are involved in sorting and identification of objects that should be immediately discarded, disposed of, moved to a more suitable place for storage, or moved to specially created place. When sorting, it is important to go through all items carefully and throw items that are not needed anymore in the area. In this case, in order to get rid of these things, owners` or special order management`s approval is necessary. During this step, found items are usually dusty and located behind, under or on equipment, as well as on the shelves and in the cupboards. These may be unneeded supplies, outdated documents, damaged or not used instruments, computers, accessories, old drawings, and drawers with junk items (Hirano, 1995). The sorting stage is a crucial step to help make a clear distinction between what is needed and what is unnecessary. Within this stage the company gets ability to free up space, remove obstacles, improve safety within the specific area, and feed into the next stage. Set in Order (Seiton) means to define and identify an appropriate place for each item that is needed in the work area. Without a structure and control, in the case where production is organized in shifts, employees of different shifts place tools, documentation, and material in

28 28 different places. This leads to chaos which impacts productivity level. In order to streamline processes and reduce production cycle it is extremely important to keep items in the same order (Markovitz, 2012). This is a key factor to minimize time spent on unproductive search. This is an essential step to run in order to make it obvious when something is out of place or missing, make things easier to find, and ensure tools are available when required. It is beneficial for companies to go through the set in order stage as it helps to eliminate frustration of searching for different items, creates a better working environment, reduces number of accidents, and prepares employees for the implementation of the next shine stage. Shine (Seiso) is checking on equipment and workplace cleanliness, providing sufficient follow-up, and maintaining it. The best way to detect leaking hoses, loose connections, damaged surface and defective equipment is to keep them clean. Cleaning at the beginning or the end of each shift provides immediate identification of potential problems that can interrupt the operation process. The erased marks on the places of storage of equipment and materials should be regularly updated. Marking of danger areas, quality signs and other manufacturing indicators should be clear and legible (Mehok, 2011). It is crucial to make a special check-list describing all the areas that need to be monitored and cleaned. This helps to get everyone involved in the process to better understand the new requirements and sustain them. It is a way to make problems easier to find by keeping areas clean, creating a healthier, safer work environment, and increases customer confidence with an orderly workplace. The inspection portion of the shine stage reduces contaminants and prevents downtime by identifying abnormalities before they cause injuries, productive losses, and quality issues. Standardize (Seiketsu) means to develop a checklist that is clear and easy to use for everyone. The required standards of cleanliness for equipment and work places should be

29 29 considered. It is important to let everyone within the organization know how essential the process is for the overall success. Standardization requires management participation in order to start a 5S implementation. Everyone must understand the necessity and validity of the new requirements and standards (Hirano, 1995). For this purpose it is useful to provide trainings. Implementation of the 5S method should be a part of the professional certification of employees and become a common cultural norm within the entire organization. According to Dossenbach (2006), this stage is an essential part of the 5S process as it helps make first 3S`s a habit and a regular task for employees. Thus, they try to sustain cleanliness with the help of daily housekeeping, keeping tools and materials in order, and develop an efficient replenishment plan to have everything that is needed in the right place at the right time. The standardization process is resourceful because it provides documented standards of 5S activities, presents a basis for problem solving and improvement activities, and guides consistency of 5S activities across all shifts and throughout the company. Sustain (Shitsuke) is the most challenging step within a 5S implementation. To improve and maintain the 5S system, managers and employees should communicate more often with each other, not forgetting to reward those who sustain the improvements. Everyone should understand what benefits the company receives from the 5S implementation. The most crucial factor for employees is that it improves safety conditions (Kobayashi, Fisher & Gapp, 2008). The management team is responsible for sustaining constant order within the work area, in addition to supporting and monitoring the implementation of new projects. They also have to determine in what work areas 5S tools need to be implemented to sustain continuous improvements. Within this step, it is imperative to perform a 5S audit in order to maintain gains or re-establish standards and improve them. Mehok (2011) states The key to success is to take

30 30 small steps in several of the other processes, and add to them once they have become part of the daily routine for the company (p. 61). A clean, well-organized work environment will increase quality of work and productivity, and as a result increase the overall company performance. Benefits of 5S Implementation The implementation of the 5S process contains specific improvement activities implemented in different business environments. 5S implementation has three core advantages including cleanliness, orderliness, and discipline (Kobayashi, Fisher & Gapp, 2008). Cleanliness helps to organize and allocate tools and materials in a way where employees can easily find them, such as a shadow board or taped off shelves and floor areas. It also helps to improve housekeeping of the assigned area, reduce the number of crime, and decrease the number of work related injuries. Orderliness increases efficiency in the area and improves productivity of the employees due to better organized work space and well-placed supplies. Discipline is the most crucial process as it increases the level of morality and improves organizational culture because of provided training and educational programs. This increases the quality of work and employees` involvement and motivation. The 5S process has a dominant influence on productivity, floor space, product and people travel distance, inventory replenishment and control, and quality. First of all, with the help of 5S tools the company will be able to eliminate some of the eight wastes within the manufacturing process, due to the removal of all unnecessary items in the work area and due to an ergonomic and appropriate created position for all the tools and materials used in the area (Hobbs, 2011). This tool helps in improving or building a better working environment through a clean work space and obvious signs that prevent wasteful occurrences such as delays, defects, injuries, and others.

31 31 The implementation of 5S is becoming more initiative and a part of the daily workday schedule. Companies that have already applied 5S achieved some of the following benefits: more available plant and office space, better communication and information sharing, increased level of product quality, reduced machine downtime, improved productivity, and improved safety. This, being one of the most efficient tools, has to be applied within the manufacturing side to achieve reduced number of callbacks, reduced call time per customer, and reduced training cycles for new employees (Shahin & Janatyan, 2010). 5S process is a crucial process that creates overall cleanliness by eliminating wastes in the work place and improves internal organization, visual management and communication. It helps to make the area cleaner for better performance. However, the success of the 5S implementation depends on each employee`s input and participation. The 5S process is one of the most fundamental and widely applied lean tools. Its application is not a complicated process and has visual advantages in most cases (Williams, n. d.). Increase in productivity. By reducing lead times and improving product delivery times, equipment downtime is reduced. Maintenance and cycle time improves daily and shift startup times and reduces changeover time. With the help of the 5S tool, the amount of time wasted searching for tools and equipment is reduced. Increase in quality. 5S application help improve quality by reducing the amount of errors and defects and implements standardization, thereby achieving output consistency. The standards that simplify the work environment increase employee self-confidence. Reduction in cost. 5S implementation helps achieve cost-savings by reducing inventory, storage costs and space requirements. It improves safety thus reducing the cost of worker

32 32 injuries and reduces the amount of scrap. This reduces production cost and improves productivity. Overall, the 5S system is a practical solution used to minimize wasteful activities by increasing productivity within the certain area and reducing costs with the help of rearranging the work environment. Summary This chapter discussed the Toyota Production System lean principles and under it several lean methods and tools that help make the manufacturing process more efficient and productive. It has revealed that lean manufacturing tools get applied by the companies in order to achieve high production levels and increase customer satisfaction by eliminating waste and sustaining continuous improvements. Chapter II provided details on how different types of waste arise within the production site and it has demonstrated the importance of lean methodology for minimizing and eliminating wastes. Furthermore, this chapter described the implementation process and five stages it contains. According to the information presented in the chapter, the 5S process assists companies in improving the physical organization of the work space, increases productivity, and should be used to develop more efficient work flow. Chapter III will analyze the data collection process used in the research and explain the methodology of each stage of the 5S implementation.

33 33 Chapter III: Methodology This study focused on implementing the 5S philosophy in order to improve efficiency in the Creform area of Company XYZ. The company was dealing with some problems of decreased productivity associated with unorganized work areas that were filled with excess tools, materials, and other unnecessary inventory. This limited the work-space resulting in chaos. The company could not sustain efficiency within this work-space. Improvements were planned to be achieved by cleaning up and arranging the work area, setting up the order process, and training employees on how to sustain continuous improvements. The literature review discussed the 5S implementation process consisting of five stages: sort, set in order, shine, standardize and sustain which were applied by Company XYZ in the Creform area. The 5S implementation process was expected to improve the current situation within the Creform area and proposed ideas to sustain the improvements over time. The 5S process was taken into account to help the company re-organize its work-space, rearrange its tools and materials, and achieve standardization within the Creform area. This chapter examines the data collection process carried out in the project and provides the methodology of what has to be done within each stage of the 5S implementation. Additionally, this chapter presents other lean methods that might be used along with 5S concept. Project Definition The project started with development of the A3 report (Figure 4). A report is called A3 because of the international-sized piece of paper measuring 11 x 17. Toyota started using an A3 report to capture important information on one sheet more effectively during a meeting. It typically contains the following sections: problem statement, scope, objectives, current condition, future condition, implementation plan, functional approvals, and team members and

34 34 their role. These sections follow one another in a logical order to clearly identify the problem and propose a way to achieve the goal. An A3 report is a visual instrument used to obtain the right decision at the right time. The report as an improvement tool connects the owner of the problem and other members of the organization and encourages them to go together through the problem-solving process. 1. A3 Project: Creform Area 3. Problem Statement (What is unacceptable with the current situation?) 2. Owner: 10. Future Condition What would we like things to look like in the future? 4. Scope (What is included and/or not included in the project) 11. Implementation Plan List of major steps required 1 Dates Responsible 5. Objectives 3 (Objectives should coincide with problems. Include quantitative goals. Ie.%) 4 9. Current Condition 10 (What is the current situation? Display your thinking in this box) Verify / update Actual Results 15 Start new A3 Project Implementation Plan Key: Gray Box indicates original project plared X indicates milestone is late Green O indicates completed milestone (on the date it was completed) Measures should coincide with Objectives and be measurable. Measures should correspond to your tracking measures 6a. Measures 6b. Current Results 6c. Target Results 12. Actual Results 7. Functional Approvals: 8. Team Members & Role: Figure 4. A3 Report An A3 report was developed as the first step of this project. The A3 was needed to put all the key data and information on a single sheet for a better understanding of the current situation and the achieved results. The A3 report was used for identification of an existing problem and for development of an effective action plan to find the right solution. The A3 report was also used to document the current condition of the Creform area in Company XYZ. This report was designed to observe present facts, propose working solutions, as well as to start a

35 35 checking or correction process and to achieve the stated goal. The data for the A3 report was collected while visiting the plant and meeting with the supervisor and employees. The current state of the area was identified and recorded with the help of observation. Data Collection The initial step of the project was to gather data to identify disadvantages of the layout and to find out what parts of the area needed to be improved. Improvements were needed for the following parts: casters` shelve stand, bins with screws, pins and other materials, working cart and table, and tool drawers and equipment. Before beginning the 5S process, a layout of the area was acquired to evaluate visually, the problems of the area. The measurement of the area was taken by using the measuring tape and presented with the help of Computer Aid Design (CAD) software (Figure 5). Figure 5. Original Layout of the Creform area

36 36 A Spaghetti Diagram (Figure 6) was utilized to identify movements of personnel within the Creform area. The Spaghetti Diagram is a lean tool that helps to improve the area layout and speed up the process flow. It is presented as point-to-point flow chart that shows the movements of the product or employees through the process and helps indicate how many steps employees take traveling from one section to another. Figure 6. Example of a Spaghetti Diagram In order to create a Spaghetti Diagram, it was necessary to draft a current work area in detail, drawing lines to describe every trip of each person or unit makes from one point to another. The use of a Spaghetti Diagram helped analyze the flow of movement of employees, material, and motion waste on the basis of different manufacturing layouts of the Creform area. With the help of a Spaghetti Diagram tool the distance between the working table and other destination points within the manufacturing process were measured. It was important to represent the current state of the area to evaluate how it might be improved and then compare it with the final results. On the basis of the current and future layout, the researcher observed employees movements and measured and collected data of how much motion time employees

37 37 wasted in the area. The data was documented in a spreadsheet which helped evaluate initial wasted time and reduced time after developing the new layout (Table 1). Table 1. Data Recording Sheet Template Time spent per day (minutes) State before 5S Implementation Tools Parts/Supplies Motion State after 5S Implementation Tools Parts/Supplies Time spent per day (minutes) Wasted & Saved time (before & after 5S implementation) Before Wasted time per week (minutes) Wasted time per year(minutes) After Motion Time saved per year (minutes) Time saved per year (hours) Dollars saved per year The project began by taking inventory of all Creform parts and equipment in the area and creating the inventory list. All the items located in the area, were examined and the data obtained within the examination process was recorded on the Inventory Tracking sheet (Table 2). Actions that needed to be taken for each item also were presented in the table. The inventory list needed to be discussed with the technical expert and the employees from the Creform area. This helped the researcher propose the future steps that were necessary to make improvements within the area. The company s essential goal was to identify unnecessary items and rearrange or remove them from the Creform area. This inventory list was helpful to identify and classify the tools and materials that were utilized in the area as well as discover supplies that were not required.

38 38 Table 2 The Inventory Tracking sheet Template Items Action 5S Implementation The first step in the process was sort. This is the step taken to identify the items in the area to be kept and those that are to be removed. It also helps to get rid of any unnecessary items that take space and create waste within the area. A required first step of the sorting process started with clearing up the area. This must be done before the process could continue. All items were moved out of bins and sorted by functionality: broken vs. working. The items stored in the wrong place had to be removed from the area and red tagged for disposal. Materials, tools, and casters that were considered as properly working ones were retained in the Creform area. The second stage of the 5S implementation was to re-arrange all items, material, and equipment within the area in order. Set in order is the step during which the company defines the proper spot and location for each item that is used in the area. During the application of the set in order process in the Creform area, casters, colored bins and other items had to be placed into the bins differentiated by the appropriate type. Then, these items were required to be sorted, organized, and located in the correct bin by an original equipment manufacturer (OEM) and part number, and stored on the shelve stand. These bins were then labeled or marked with the proper

39 39 labels to identify what items were inside the bin. The bins had to be located in a way everyone could have easy access to them. The third stage of the 5S process was to clean and shine the whole area including tools, equipment, machines, the floor, tables, shelves and bins. This was a step taken to make sure items and machines were clean allowing them to function efficiently and safely. During the standardize stage, every machine and piece of inventory was relocated and reassigned to the area that was taped to mark the proper location. These taped spots helped to clearly differentiate the area. The equipment location had to be labeled with the following signs: working table, recycling and scrap bins, work-in-progress, cutting machine, and cutting table. The surface of the tool box had to be labeled with the sign not a storage area to prevent employees from leaving other items on this table. In order to make employees put bins back after they take them from the shelves, the shelves location had to be labeled and contained the same information. This would help to standardize the cleanliness in the area. The information contained on each shelf label consists of the part number. Extra boxes of the same inventory were to be located on the same shelf behind the first bin. The final stage of the 5S implementation was sustain. The main purpose of this step was to maintain improvements achieved during the project. During this stage, the Creform board, entitled Creform Work Cell - Cleaning and Rules, was to be relocated to a more visible place. The Creform board was an efficient instrument that helps keep all the Creform creations in order. The board display was made up of various sections. The section titles were: WIP rules, 5S Cleaning, Disassembly rules. Employees were required to use a Creform build / WIP tag to signify that the creation is in progress. Every Creform creation is expected to have a build tag on it. Using the board, employees could also request the tools and materials needed for the future

40 40 projects. The 5S Cleaning sheet was created to monitor that the 5S system was being maintained. The board was created to ensure that all employees who work in the area are aware of the main rules. Replacing the Creform board was a needed step towards continuous improvements of the 5S implementation process. To sustain achieved progress within the area, it was crucial to identify a proper location for the Creform book. This book is a standardization tool that contains all the information needed to use certain materials and tools in order to build required items for the production lines. This information is a detailed description of the procedures and processes required for newly designed production tools and the repair of the existing items. Data Analysis The data collected within the project was presented as a table which helped develop its analysis. In order to identify opportunities for improvements the information gathered about the current and future state was compared. A Spaghetti Diagram was used to identify inefficiencies in the work area layout, resource allocation opportunities, and perspectives for better employee communication, safety improvements, and reduced material handling. It was an essential step for the researcher to evaluate how much saving the company could achieve as a result of the project implementation within the Creform area. Summary This chapter covered the methods that were used to accomplish the goal of improving the Creform Area. Within the project several lean tools were utilized including: 5S, Spaghetti Diagram, A3 report, and the seven wastes concept. The A3 report was needed during the project to clearly state the problem, identify the implementation plan, and define the results. 5S tools were applied to increase efficiency of the work space organization. A Spaghetti Diagram helped

41 41 to examine the disadvantages of the current layout and optimize the movement of the employees. The examination of the current and future state was a major step towards results. In Chapter IV results of the process will be discussed.

42 42 Chapter IV: Results The lack of organization of the work space and disordered structure in the Creform area of Company XYZ made it hard to efficiently work within the production environment. It also resulted in unproductive movements by employees and in increased number of unnecessary tools and materials within the work space. These activities limited the work area and led to wasted time, decreased productivity, and inefficiency. In order to improve the current situation in the Creform area, the company chose to apply 5S lean manufacturing tools. The 5S implementation was able to help with reorganization of the work space which reduced the number of wastes and improved productivity within the area. This study focused on implementing the 5S philosophy in order to improve efficiency in the Creform area of Company XYZ. The 5S tools were applied to restructure the work space, rearrange tools and materials, and achieve standardization within the Creform area. In this chapter the researcher analyzed the results of the 5S implementation. An evaluation of the state of the area before and after the 5S concept was applied indicated that the waste was caused by an inefficiently organized work-space. A3 Report The A3 report was used as a visual tool to obtain the right decision at the right time. The report served as a connection point between the researcher and the management of Company XYZ. The A3 report was developed to present important information on a single sheet of paper for a better understanding of the situation. The first step of the A3 report was an identification of the problem. The researcher scheduled a meeting with the supervisor and employees in order to discuss and identify problems that existed in the Creform area. Furthermore, observation of the area was prepared at the

43 43 beginning of the project as a part of the problem statement process. The problem statement of the project was concentrated on the improvements of the current condition of the area and on the development of the current layout. Company XYZ experienced lost productivity within the Creform area because of lack of order and control, resulting in increased costs. Additionally, inefficiency in the area was caused by poor organization and decreased employees` responsibility. After the problem statement was defined, the research focused on the clarification of the scope of the project. Since the organization of the work space was poor and the structure of the Creform area was chaotic, the scope of the research was to develop a more beneficial layout for the area in order to create more work-space and to achieve the 5S implementation of the level 3. A level 3 Organization Understanding of the 5S method assumes that employees are knowledgeable of the 5S process as the company has already went through the prior two levels of initial efforts and general awareness of needs. Therefore, the main purpose of the project was an improvement of the efficiency and creation of better working conditions in the Creform area. Elimination of the waste that existed in the area was necessary to accomplish the project goal. In order to record the before condition of the area, the researcher visited the plant and took pictures. The lack of organization of the work space and chaotic structure of tools and consumables was observed and noted as the before condition of the area. The machines, tools, materials, and other supplies were found to be in a disorganized state within the area. The following equipments and tools were used in the Creform area: chop saw, pipe cutter, table saw, dust collector, working table, casters rack, panel saw, pipe racking, recycling and scrap bins. On the basis of the observation and evaluation of the existing problems, the researcher developed an effective implementation plan to enhance the situation. The project began with

44 44 developing a Spaghetti Diagram of the employees movements within the old area layout to identify the next steps. It was continued by organizing tools and materials in the area in order to reduce time employees spent to find the right items. The usage of visual elements was considered a critical part of the process. This included labeling and taping off the equipment location. Within the project it was necessary to advance the labeling system, update, and standardize label information for every component in the area. A new floor layout was applied to create more available work-space. The A3 report was a tool used to develop an effective action plan to find the right solution. The A3 report that was developed by the researcher during the project is shown in Figure A3 Project: Creform Area 2. Owner: 3. Problem Statement The creform area can be used by all employees to build or fix different items for any of the cost centers. Company XYZ experienced lost productivity within the creform area because of lack of order and control, resulting in increased costs. It resulted in an area that is hard to work efficiently in. 4. Scope In scope: Layout and 5S of the creaform area 10. Future Condition Organize the tools and materials used for the various projects. Reduce the amount of motion performed by employee. (Floor layout) Develop a more efficient floor layout. 11. Implementation Plan List of major steps required Dates Responsible 1 Interview employees in area 2 Formulate a plan 5. Objectives 3 Draw current layout Obtain a 5S level 3 4 Sort tools and materials Establish control of consumable items 5 Red tag Reduce motion time, excess inventory, and searching time Improve efficiency 7 Organize materials Create better working conditions 8 Shine / clean area 6 Recycle unneeded materials 9 Labeled bins with proper part number 9. Current Condition 10 Visual work place (taping area) 11 Move equipment into proper area 12 Accessibility of board 13 Draw spaghetti diagram/adminestrative work 14 Verify / update Actual Results 15 Start new A3 Project Implementation Plan Key: Gray Box indicates original project plared X indicates milestone is late Green O indicates completed milestone (on the date it was completed) 1 5S Level Measures should coincide with Objectives and be measurable. Measures should correspond to your tracking measures 6a. Measures 6b. Current Results 0 6c. Target Results 12. Actual Results Functional Approvals: 8. Team Members & Role: Figure 7. A3 Report Analysis

45 45 Data Collection Results The project began by taking the entire Creform inventory and creating the Inventory Tracking sheet shown in Table 3. Table 3 The Inventory Tracking sheet Items Action Casters Should be sorted with broken ones recycled, then sorted and organized by part number. Toolbox Determine what tools are required in the area to perform typical work. The remaining tools should be taken away. Mats These get relocated to another area. Carts of miscellaneous Hardware Wood scrap Review with employees what is needed. Sort and identify pieces that are smaller than 25-50% of new. They should be recycled. Pipe colored bins Those are totes the factory uses to store small items on the production floor. These items are not used in the area, however just stored. Work in progress (WIP) Every creation that is in progress is required to have a WIP tag. Those are not needed anymore should be recycled.

46 46 The meeting with the supervisor was scheduled to discuss which items were required to be kept in the area and which were not needed to any further extent. The researcher proposed ideas about the next steps taken within the area to make it more efficient. The action plan regarding the listed items was approved by the supervisor of the Creform area. The data collected during the project was analyzed and applied to evaluate the old layout of the area, and furthermore, to create a new more beneficial layout. This data was collected by work observation and meetings with employees. It was observed that if there were more than one employee working the same shift in the area, the work space was not sufficient. In this case the second person needed to find any other available work station. Within the area there were many tools and consumables that lacked order and structure, and limited the work space. The employees of the Creform area needed to walk around equipment, materials, and WIP inventory to get the right part or tool during the working process. The major goal of the creation of a new floor layout and 5S implementation was to make the usage of the existing work space more efficient. This allowed several employees to use the area at the same time and work more productively. A Spaghetti Diagram was created to illustrate the movements the employees made to create Creform products during the project. A Spaghetti Diagram was utilized to draw and describe every trip employees made from one point to another, within an old floor layout shown in Figure 8. As it is reflected in the diagram, employees wasted time to walk through obstacles that existed in the area. They also walked too often between the parts racking and the working bench as it was the main working point in the area where employees were creating their racks.

47 47 Figure 8. Spaghetti Diagram of distance traveled by employees within an original layout Results of the 5S Implementation 5S tools were applied to improve the before situation within the Creform area by rearranging all the tools and materials used during the working day, reorganizing the work space and therefore making its usage more efficient. The sort stage began with clearing up the area. In the Creform inventory, bins were removed and tools were sorted by properly working ones and broken ones.

48 48 All items that were not needed in the area any longer were red tagged and removed for further recycling (Figure 9). Materials, tools, and equipment that were noticed to be necessary in the area were considered for the next stage. The main goal of this step was to leave only tools and materials within the area being used by employees and remove all the unneeded and surplus items. Figure 9. Red tagged items During the second stage of the 5S implementation all materials, tools, and equipment were set in order and rearranged. Each item was placed where it was required to be stored. Casters were sorted by a part number, and then located into appropriate bins differentiated by type. All the parts needed for the Creform creation were rearranged by part number and placed in the right order on the shelves. This step was taken to make it easy for employees to know where the supplies were kept in order to find the right part faster. According to the rearrangement process above, employees would be able to clearly realize if there were enough supplies to start and finish the project or if they needed to make an order. Figure 10 shows the set in order stage where the entire inventory was sorted properly.

49 49 Figure 10. Supplies rearranged by a part number or type The third stage, shine followed the set in order. During this step tools, machines, and equipment were cleaned and wiped down, floors swept, tables, shelves, and bins cleaned and prepared for supplies. This step was to ensure that the employees might easily tell what equipment is in need to be maintained or fixed, what supplies are enough to finish the project and what items are required to be ordered. Each employee who works in the Creform area needs to clean after the shift is over. During the standardization stage, each piece of equipment was relocated to the appropriate area that was taped off to reassign the area under the specific equipment. The equipment location was labeled with the following signs: working table, work-in-progress, chop saw, pipe cutter, table saw, dust collector, casters, and panel saw. This improvement was made to identify a proper placement for each machine (Figure 11). Figure 11. Taped off location for the equipment

50 50 Equipment location labeling was a part of the project to standardize the area. This step was to ensure that equipment was ready for the next person to use. Before, the equipment was kept everywhere in the area and did not have any specific location. This created a problem when equipment was not returned back to the location after usage. The change to standardize the equipment location by taping off the floor under the certain piece of equipment made it easy for employees to return it to the proper location. This also was a part of the clearing area up process in order to create more available work-space. In order to standardize the location for all supply bins and ensure employees return bins after using them to its correct location, each bin and shelves spot that it belonged to was properly labeled with the part identification part number and description.. It also told employees what bin might be missing and what parts should be reordered. Figure 12 illustrates the labeling procedure for the location of each bin as well as each bin s label. The labeling system helped to identify the right parts by all the employees working in the area. Bins contained excess supplies were located on the same shelf right behind the first bin. Figure 12. Labeled bins and their locations

51 51 In order to keep the surfaces of the tool box and top shelf of the casters racking clean, it was labeled with the specially designed sign that stated not a storage area. This prevented employees from leaving different items on the surface of the tool box and top shelf of the casters racking (Figure 13). Labels contained standard information that was clear for any employees entering the Creform area. Figure 13. Labeled surface of tool box and top shelf of casters racking The final stage of the 5S implementation was sustain. It was to make sure that improvements achieved during the project were kept and maintained over time. Due to the fact that a new desired layout was applied, the Creform board was replaced to a more beneficial location (Figure 14). In this case each employee within the area had an idea of how to use specific tags required for each project, how to inform other members about their unfinished creations, and how to follow 5S cleaning rule. It was required within the project to make the board more visible and helpful for employees to use. This step was to clear the area up in order to create more available work space.

52 52 Figure 14. Creform Board Within the sort stage the Creform book was discovered in one of the tool box drawers. It was noticed that it was hardly used during the creation process (Figure 15). The researcher identified a more favorable location for the book to make it used by the employees (Figure 16). The usage of the book made the Creform creation practice faster and easier as it contained detailed information about the whole process. Figure 15. Previous Creform book location Figure 16. Identified Creform book location

53 53 Results from a New Layout Development After the 5S tools were applied in the area, a new layout was developed. The working table was moved closer to the materials and supply racks. The piping stand was relocated closer to the wood storage to make the work space open. An analysis of the developed Spaghetti Diagram after the new layout was applied signified that the total amount of steps made within the area was reduced due to relocation of the work bench and pipe racking, and due to removing all the extra unnecessary tools and materials in the Creform area (Figure 17). Figure 17. Spaghetti Diagram of distance traveled by employees in new layout After reviewing the Spaghetti Diagram, the collected data was transferred into the spreadsheet that indicated how much time employees spent on searching for tools, parts and

54 54 other supplies, and on motion. Wasted time that employees spent per day in the old area layout and saved time after project improvements were put into practice is shown in Table 4. In the old area layout employees wasted 17,420 minutes per year on searching and motion. After the project was implemented, the employees waste on motion and searching became 8,190 minutes. The increase in productivity and layout improvements was 52.9%. With the new layout of the Creform area the company reduced their work content by 154 hours, that equated to $3,080. annually if the employee s hourly wage is $ Table 4 Data Recording Sheet State before 5S Implementation Tools Parts/Supplies Motion Time spent per day (minutes) State after 5S Implementation Tools Parts/Supplies Motion Time spent per day (minutes) Wasted & Saved time (before & after 5S implementation) Before After Wasted time per week (minutes) Wasted time per year(minutes) , ,190 Summary Time saved per year (minutes) 9,230 Time saved per year (hours) 154 Dollars saved per year $3,080 hourly salary is $20.00 Application of the 5S lean manufacturing tools helped to improve the Creform area conditions. The area became more organized, cleaner, and more visible. This resulted in products being produced in a more efficient manner within the Creform area and in less time. The labeling system that was applied in the area allowed employees finding supplies quicker and

55 55 keeping all the equipment and inventory in order. It was observed that employees were wasting time moving within the area from one point to another. A Spaghetti Diagram, created by the researcher on the basis of an old and a new floor layout, helped to identify how much time was wasted and how much savings the company could achieve after improving the area. As a result, Company XYZ could achieve $3,080 in savings per year because of implemented improvements. Additionally, in order to sustain the achieved results within the area the Creform board was relocated to a more visible place as well as the Creform book was put on the top shelf of the material racking in order to be used by the employees. The project helped to eliminate motion waste and remove surplus items from the area making the production more efficient. In Chapter V the limitation of the project and proposed recommendations will be presented and examined.

56 56 Chapter V: Discussion The implementation of the 5S lean manufacturing tools was required to improve the Creform area conditions and increase efficiency of the manufacturing processes at Company XYZ. The employees were working within an uncomfortable, messy environment, which was full of unnecessary items and excessive inventory. The existing problems led to the spread of non-value-added activities that consumed time, people, space and did not add value to the finished product. Due to these factors, the employees wasted time to avoid obstacles that existed in the area and to search for the right item between unneeded inventories. The main purpose of the project was to apply the 5S tools containing the following steps; sort, set in order, shine, standardize, and sustain, to manage and improve the physical organization of the area. Application of 5S was focused on sustaining the cleanliness of the area to streamline the flow of work. In order to accomplish the goals and create improved working conditions for employees within the Creform area, the researcher needed to create a more beneficial layout of the area and considered the elimination of the existed waste such as motion waste, searching waste, and waste of excess inventory. Chapter I examined the problems existing in the Creform area and addressed why it was necessary to improve conditions of the area. Chapter II researched the literature about lean manufacturing and 5S practices. It also reviewed the major benefits of 5S implementation and how it improves the efficiency of the production area and facilitates in the elimination of the waste within the manufacturing processes. Chapter III discussed the data collection process carried out in the research and provided the methodology of each stage within the 5S implementation. It also identified other lean tools that might be used along with the 5S concept. Chapter IV described the results achieved after the 5S implementation and the major benefits the

57 57 company received from the process, such as reduced waste of searching time for the right tool, motion time, and waste of excess inventory. This chapter reviews limitations of the study and the recommendations the researcher made on the basis of the project results for future improvements. Limitations This research was conducted only within the Creform area and did not take the entire manufacturing area of Company XYZ into consideration. The results of the project were limited to the certain area condition and the current area layout that existed in the Creform area within the time the project was carried out. Improvements and recommendations were limited to the space of the assigned area. These results could not be applied from outside of the scope of this research. Lean tools that were used during the project such as a Spaghetti Diagram and 5S were used to identify development of the Creform area. The researcher applied only these lean tools as they were found to be the most applicable to accomplish the goal. Application of other lean tools was not considered because of the specified time frame. It included no additional equipment and materials in the particular area. Conclusions The project was successful on the basis of the applied lean manufacturing tools and 5S concept. The reduction of the waste such as motion, excess inventory, and time on searching for tools as well as the identification of the new desired area floor layout were the major goals accomplished within the project. Company XYZ reduced their work content by 154 hours, that equated to $3,080 annually, after the improvements were achieved during the project. With the help of the Spaghetti Diagram that was created by the researcher to describe each trip the

58 58 employees made from one point to another, time wasted on travelling within the area was reduced by 50%. The labeling system applied in the area was a crucial part to achieve standardization within the area. This allowed identification of a proper location for equipment being used in the area as well as it helped employees find the right parts on the shelves and assisted in easier re-ordering process. With the use of the 5S tools, the Creform area became more organized, cleaner, and more visible which increased efficiency in the area. The improved working environment led to higher productivity during the manufacturing process. Recommendations The main goal of the project was the identification of a new floor layout and the 5S implementation in order to streamline the flow of work and reduced waste that existed in the area. Results were achieved by developing a Spaghetti Diagram for an old and a new area layout as well as by applying the 5S tools in the Creform area of Company XYZ. Usage of these lean tools led to increased efficiency in the workplace. The application of the 5S concept and lean tools within other departments in the company would provide additional cost savings and a better organization throughout the manufacturing processes. Further analysis of the Spaghetti Diagram and floor layout conducted for the specific areas will help to identify what improvements can be made to increase efficiency and develop a better working environment. The 5S implementation was able to help with reorganization of the work space that resulted in reduced waste and increased productivity within the area. Significant time saving might be achieved in other company s sections with the help of the 5S tools. It allows for elimination of obstacles and employees may move freely within the area. The created condition of the area should be sustained by the employees with the help of daily housekeeping and constant monitoring. The employees need to conduct cleanup at the end of the working day and

59 59 make sure that every tool and material bin is returned back to the same location. These improvements should be maintained by the team rather than individual employee. Other departments of Company XYZ need to consider 5S implementation to improve the work areas. By applying 5S tools within other sections, the company will create a better working condition, develop more efficient floor utilization, and increase productivity. The lean culture will allow the employees to work as a team towards continuous improvement. It will also continuously improve the operations as employees will often achieve additional small improvements. In order to maintain a lean culture, it is necessary to apply small ideas every day rather than a big change that happens at once. The success of the 5S process will also require the development of the weekly audit list to sustain the created condition in the area (In Appendix A). It might contain the central tasks of each stage of the 5S to ensure that employees are aware of the improvements needed in the area. This visual tool will keep all the employees engaged to accomplish the tasks and keep the area in better condition. The achieved results proved the necessity of the 5S implementation in the area. Company XYZ needs to provide future training on 5S within the whole organization to educate other employees about 5S benefits. This will help implement continuous improvements throughout the company. Within the second and fourth stages of the 5S process, all the tools and materials were sorted in order and the labeling system was developed to help employees clearly see what items are in use and what items were not returned back after their handling. In order to keep all the inventory in order, the company needs to assign the right person to be in charge of the section. This person will be able to supervise the employees during the working day within the area that

60 60 will allow sustaining continuous improvements in the section. This idea might be applied in any other department as well in order to increase control over the inventory and processes. It will also improve internal organization of any area that helps to establish convenient work atmosphere. During the project it was observed that power tools belonging to the Creform area were sometimes being used by different departments. The researcher proposed to develop the retractable tool system within the area to make sure that all the expensive power tools returned back after being used. Development of this system will require the employees to put the working badge on the place of the tool to guarantee it will be returned back at the end of the day. Along with this system a shadow board for tools might be created to establish control through visibility and sustain the organization of the work area. In order to improve the entire process of the company the shadow board concept should be applied to the whole operation, not just to one section. It will help to keep control over inventory, improve floor space utilization, and organize a better flow of tools and parts. In order to improve the working conditions throughout the facility the company needs to apply visual management tools for any other section that experience difficulties in finding tools and materials. Visual concept makes it easier for employees to find needed tools, parts, and material at a glance. This will also help to develop a control through visibility as well as decrease searching time and increase productivity within the specific area. Every department can take benefits out of visual management tools implementation as it was achieved in the Creform area. The implementation of the project helped the company eliminate motion waste within the area. It was examined that employees spent a lot of time during the working day near the

61 61 workbench and wasted time on getting tools and supplies. It was proposed to drop down extra power cords above the workbench to save wasted time. The same idea might be applied in any area of the company where it is possible and needed. In order to improve the processes throughout the whole organization, the management team has to find new solutions for future improvements. This might be done by communicating with the employees of the working stations to determine where changes are needed in order to identify the possible methods for improvements. Summary Implementation of the 5S concept improved the Creform area work condition at Company XYZ. The company needs to apply 5S tools within other departments in order to eliminate wasteful activities, maintain better performance of the areas, and increase efficiency. The company should share material about 5S practices throughout the operation. It would be helpful for other departments to get information about the benefits that 5S tools can bring to their areas. Furthermore, Company XYZ should provide training to the management and other employees to ensure that employees will maintain a lean culture and work as a team towards continuous improvements. Improvements cannot be achieved during one day, they happen through small steps over time that lead to the final results.

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65 65 Appendix A: 5S Audit AREA: Area 5S AUDIT CHECKLIST DATE: Total Score 18) 19) 20) 21) 22) 24) 25) 33) 34) 35) 36) 37) 38) 39) 40) SORT SET IN ORDER SHINE STANDARDIZE SUSTAIN SORT ACTIVITY DESCRIPTIONS SCORE (0-5) Only the required spare parts, materials, WIP, etc. are present at the workstation. Items not required to 0 Only the required tools are present at the workstation. Items not required to make the current product are removed from the workplace. Only the required paperwork is present at the workstation. Out-dated or otherwise unnecessary posters, Only the required equipment is present at the workstation. All obsolete, broken or unnecessary equipment, SET IN ORDER ACTIVITY DESCRIPTIONS Locations for containers, boxes, bins, WIP, materials, etc. is clearly defined by painted lines and properly labeled (part number, quantity, etc.). Tools have a designated storage location that is within reach of the operator. The location is properly labeled and tools can easily be identified if absent. Paperwork is properly labeled and has a clearly defined and labeled location that is visible to the operators and away from work surfaces. Equipment is clearly identified (numbered, named, color coded, etc.) and placed in a properly identified location. Critical maintenance points are clearly marked. The workplace layout accomodates easy exit in case of emergency. STANDARDIZE ACTIVITY DESCRIPTIONS SCORE (0-5) 28) Tools, equipment, paperwork, furniture, etc. are stored neatly in designated areas and are returned 0 immediately after each use. 29) Documents are labeled clearly as to contents and responsibility for control and revision. The date and revision 0 number are clearly visible. 30) Equipment maintenance records are visible and clearly state when maintenance last occurred and when next 0 maintenance is scheduled. 31) Product waste (e.g. shavings, containers, liquids, wrappers, etc.) is consistently and often cleaned up and 0 removed from the workplace. 32) Preventive measures have been implemented to ensure the workplace meets 5S guidelines (e.g. systems that 0 do not allow waste to accumulate such as containers to collect product debris from machines). The results of the previous audit are posted and clearly visible to the entire team. 0 Areas for improvement identified during the previous audit have been completed. 0 The work environment satisfies the requirements of the work being performed. Lighting (brightness and color), air quality, temperature, etc. SUSTAIN ACTIVITY DESCRIPTIONS A member of Management has participated in a 5S activity such as an audit or other activity within the past 3 audit periods. Recognition is given to teams who get involved in 5S activities. Time and resources are allocated to 5S activities (e.g. designated daily/weekly clean-up time, 5S team leader, etc.) All operators, team leaders, supervisors, etc. are assigned 5S activities to be completed at least once/week. The team took the initiative to make improvements to the workplace that were not identified during the last 5S audit. TOTAL SCORE (0-5) SHINE ACTIVITY DESCRIPTIONS SCORE (0-5) Containers, boxes, bins, etc. are clean and not cracked, torn, or otherwise damaged. They are neatly stacked. 0 Tools are kept clean and in good working order. Where possible, tools are stored in a manner to keep them clean and free from risk of damage. 0 Paperwork is not torn, kept clean and protected from dirt. 0 Work surfaces (machines, workbenches, dies, and other equipment including electrical boxes) are clean and painted. 0 Floors are free from dirt, debris, oil, parts, hardware, empty boxes, packaging material, etc. Drains (if required) are properly located and unclogged. 0 There is a schedule showing times, frequency and responsibilities to clean areas of the workplace such as windows, corners, walls, doors, top of cabinets, etc. 0 All cleaning equipment is neatly stored and is readily available when needed. 0 I I SCORE (0-5)