Lean manufacturing concept: the main factor in improving manufacturing performance a case study

Transcription

1 Int. J. Manufacturing Technology and Management, Vol. 17, No. 4, Lean manufacturing concept: the main factor in improving manufacturing performance a case study N. Zakuan* Lecturer, UTHM, Parit Raja, Johor 86400, Malaysia hayatiz@uthm.edu.my *Corresponding author M.Z. Mat Saman Senior Lecturer, UTM, Skudai, Johor 81310, Malaysia zameri@fkm.utm.my Abstract: In this ever-competitive business environment, the company that can deliver a product that can thoroughly satisfy the manufacturing outputs will attain the most market share. Besides that, cost cutting is key in competing with lower labour cost region in the world. Inability to execute cost reduction programme effectively will result in loss of contract to competitors. In relation to that, lean manufacturing approach offers tools to pursue reduce operational cost through reduction of waste of resource in the manufacturing industry. This paper has attempted to analyse the current production system of the company. The results show that, the company have to redesign the production system in order to satisfy the current needs. They have to setup a new strategy in order to achieve these needs. Based on that, lean manufacturing concept was suggested to the company and several analyses have been done in order to improve the current performance. Keywords: lean manufacturing; manufacturing outputs; manufacturing performance; cost reduction; value stream analysis. Reference to this paper should be made as follows: Zakuan, N. and Mat Saman, M.Z. (2009) Lean manufacturing concept: the main factor in improving manufacturing performance a case study, Int. J. Manufacturing Technology and Management, Vol. 17, No. 4, pp Biographical notes: N. Zakuan is a Lecturer in Faculty of Mechanical and Manufacturing Engineering, UTHM. She received her MSc from Coventry University, UK and her BSc from UTM. Her current research is in quality engineering. M.Z. Mat Saman is a Senior Lecturer in Faculty of Mechanical Engineering, UTM. He received his PhD and MSc from Coventry University, UK and his BSc from UTM. His current research interests are manufacturing system, product life cycle and industrial engineering. Copyright 2009 Inderscience Enterprises Ltd.

2 354 N. Zakuan and M.Z. Mat Saman 1 Introduction The performance of a company can be defined as the sum of each strategy of its component functions such as manufacturing, finance, marketing, service, research and development, etc. In a successful firm, these strategies interlock to provide maximum competitive advantage of which the firm is capable (Chin and Mat Saman, 2004). In many manufacturing companies, employees both inside and outside the manufacturing function realise that manufacturing is struggling to provide what the company needs to be successful in this ever-competitive marketplace. The reality is the company that can deliver a high quality and low cost product at the right time to the marketplace will win the most market share. Hence, getting company to meet market expectations can be accomplished only by realigning manufacturing system, continuous improvement, increasing manufacturing capabilities and simultaneously seeking to reduce waste in the system. This paper begins with the analysis of the current situation of the company s production system and then followed by a proposed recommendation of the production system. Following this, several elements involved in the proposed recommendations are elaborated. Lastly, discussion and conclusions are briefly described. 2 Literature review Productions systems can be categorised into four main groups that is, craft, mass, agile and lean. Womack et al. (1991) published their output on the research of the world automotive industry in The Story of Lean production. It was a research under the International Motor Vehicle Program (IMVP), Massachusetts Institute of Technology (MIT), which spend five years and USD$5 millions to complete. The researchers of the programme comprised of a worldwide team with diverse professional background. The team visited 90 automotive assembly plants in 17 countries around Europe, Northern and South America, Japan, Korea and Australia (Womack and Jones, 1996). Generally, lean operations are characterised by five key principles (Robertson and Jones, 1999), 1 Value: Specify value by specific product based on customer requirements. 2 Value Stream: Identify the route of each product that is from raw material to the customer. 3 Flow: Develop a value flow of the process, which can provide a short lead time, high quality and low cost. 4 Pull: Develop a pull system (Just in Time (JIT) concept). The flows of the process are driven by the customers. 5 Perfection: Implementation of the continuous improvement concept at all time in order to produce good results. A success implementation of the lean operations system has been proven by Davidson Instrument Panels Company (Miltenburg, 1995). Davidson Instrument Panels in New Hampshire had changed its batch flow production system to a physical flow JIT production system. The layout and material flow was changed from a functional layout to a product focused lines. As a result, setup times are reduced from 8 hr to just 10 min. Production rate for each line can be synchronised with customer requirements and

3 Lean manufacturing concept 355 products can be produced and shipped JIT. The result is decrease in manufacturing cost, an improvement in quality and a drop in manufacturing Cycle Time (CT). Inventory turns increased from 7.5 to 28 turns per year over the four-year period. Result of study by Standard and Davis (1999) (Table 1) illustrated a significant improvement gained by companies that embraced the lean Concept. Table 1 The results of implementation of lean concept Selected competitive advantage Company realising advantage (%) Reduce customer lead time 63 Steady or reducing price 63 Increase market share 61 Reduce time to launch new product 39 Increase product diversity 24 Result from this study indicated that about 60% of lean companies improved their competitive advantages in the area of lead time, pricing and market share. In the area of time to launch new product and product diversity, respectively, 39% and 24% of lean companies claimed to experience improvement after switching to lean approach. All these improvements significantly increase their competitiveness. Another study done on companies in the UK also indicated a direct relation between the improvements in company performance and the adoption of lean approaches (London Business School, 1993). 3 Product summary and problem identification The case study of this project is an automotive component (a car seat) (Coventry University, 2005). Based on company production data, a product family containing two parts, that is AL123 (Left-Hand Side (LHS)) and ARE124 (Right-Hand Side (RHS)). A car seat consists of two LHS, AL123 and two RHS, ARE124. ARE124 has an additional electronic subassembly. The company manufacturing facility is a mass production principle. The process includes conventional machining and electronic assembly and final assembly. The production starts with sawing of bars to size in the raw material stores. The product is transferred in a batch size of 400 to a conventional lathe, followed by deburing. Next process is for CNC machining operations which define LHS and RHS features. Then, in batches 1000, heat treatment process is carried out. After that, grind process to be done for the finishing face. At this phase, the products are split to different operations. AR is transported to operation 8, where electronic subassembly to be added while AL being transported directly to operation 9. The electronic subassembly is produced in a manual assembly in an adjacent building, where 3 operations are carried out. The final electronic subassembly product is transported to manual assembly and combined with AL product to operations 9 and 10. Finally, the finished assemblies are then loaded to the LHS and RHS designated carriers and ready for shipment. This gives the overall picture of the company s operation in producing its high volume runner products. Based on initial observations, it shows that there are several waste areas that can be improved such as waiting, overproduction,

4 356 N. Zakuan and M.Z. Mat Saman rework, motion, processing, inventory and transportation. Then, the following analysis looks at the overall operations from lean manufacturing approach to cut waste throughout the operations and subsequently lowering operational cost and maximising company profit. 4 Current state mapping 4.1 Takt time From the data collected on customer demand (4200 units per month), Takt time which is the maximum CT of an operation in producing a product in order to meet customer demand can be determined. Takt time = Available production time / Total daily quantity required where Available production time = (7 3) = 75,600 sec and so 4200 Total daily quantity required = 4 = 840 parts required 20 75,600 Takt time = = 90 sec Analysis of current state mapping There are eight main steps to construct current state mapping; icons, data box, enter shipping and receiving data, manufacturing operations, enter process attributes, show information flow, show inventory icons and finally push locations. Once all information is gathered, current state mapping had been constructed as shown in Figure 1. Referring to documented current state mapping, lean metrics can be identified and analysed to achieve future state goals. Eliminating waste can make the company stronger and more competitive. Based on current state mapping, main assembly total production lead time is days and value added time is 859 sec + 4 hr. Lead time = = hr Value added time = 859 sec+ 4 hr = 6.38 hr Therefore, ratio of lead time to value added time for main production, /6.38 = The ratio of lead time to value added time is This ratio is a comparison between the total time for the whole process from raw materials to finished products and the total of operation time. A smaller ratio is the best value to illustrate the productivity

5 Lean manufacturing concept 357 of the company. Based on the lead time and the ratio calculated, the company has to take further action to improve this situation in order to satisfy customer demand and remain in competitive market. The company has to investigate. Figure 1 Current state mapping (see online version for colours)

6 358 N. Zakuan and M.Z. Mat Saman 1 Long lead time: the production lead time, consists of three components which are processing time for supply lots, waiting time and conveyance time between processes (Monden, 1997). Basically, the components of production lead time are queue time before processing, setup time, run time, waiting time after processing and moving time (Tapping et al., 2002). Lead time can be reduced by shortening processing time, for example introducing single-unit production and conveyance system especially at assembly and subassembly production. Even if a process does not involve single-unit production, the operation is still limited to a small production lot size. To achieve this, multiprocess holding by multifunction workers is efficient. The layout needs to change so that each worker could handle several different types of machines at the same time. With this method, only one item of stock is involved in the work in process in each machine. The inventory level is minimised and production lead time is reduced. 2 High batch/lot size and setup time: lead time can be reduced by shortening process time through small sized lot production. In this case study the CT per unit of operation 2 (lathe) is 1 min and the lot of size is 400, then the total processing amount to 6.6 hr. However, by reducing the lot size to 100, its CT is only 1.6 hr. For example, the processing of operation 2 (lathe) has decreased to 1.6 hr from 6.6 hr just by reducing the lot size. This simple logic is basic to shortening the lead time by reducing the lot size. However, from current state mapping, it is visualising that for heat treatment process, the CT is too long which took 4 hr complete. If the setup time in changeover of the lots is kept constant, the total setup time will increase in proportion to the increased number of changes of the lots. Therefore, the setup time must also be shortened when lot of size is reduced. Based on current state mapping, it can be seen that setup time in changeover of each process is too high. For example, the changeover time for the grinding process is 45 min. Further study needs to be carried out to reduce the changeover time. 3 High inventory and waiting time: high inventory will increase the production lead time and waiting time as well. As for waiting time, the first type of waiting time is often caused by a delay in a preceding process making the subsequent process. The second is often caused by a delay in a subsequent process making the preceding process wait. Therefore, both causes are the result of unbalance production time between processes and resulted high in inventory. Based on the current state mapping, unbalance line can be figured out as shown below. To construct operator balance chart, it is focused to the main assembly line which involve operation 1 until operation 10 except heat treatment process. However, electronic subassembly line in not consider in the main assembly line. So, the CT is, CT = 10 sec + 60 sec + 10 sec sec sec + 84 sec + 84 sec sec sec + 55 sec = 859 sec 4 Rearrange the layout: as discussed earlier, the lead time can be reduced by rearranging the layout. The purpose of rearranging the layout is to reduce the travel distance. The material flow for current situation is not smooth.

7 Lean manufacturing concept 359 For example, after the CNC process, the next process is heat treatment but location of heat treatment is quite far and it is affected to the lead time because after that the product needs to proceed to grinding process which makes material flow not consistent. Rearranging the layout will give a better flow of the material. 4.3 Summary As a summary, current state mapping can help to promote good visual management on the factory floor. Mapping material and information flow will allow to, 1 visualise the entire manufacturing material and information flow 2 visualise how operations currently communicate with production control and with each other 3 see problem areas and sources of waste from the analysis 4 provide a common language for all manufacturing personnel 5 gain insight into how the operation truly is running that day. Based on the analysis that have been carried out, the current manufacturing situation need to improve to ensure the company satisfy customer demand and remain in the competitive market. The subsequent section will discuss on the evaluation of future state mapping. 5 Future state mapping The next step is to design future state mapping. The process for mapping the future state mapping takes place in three stages which are customer demand stage, flow stage and levelling stage. Figure 2 shows the future states mapping which highlighted the involvement of lean operations such as cell design and supermarket kanban systems. 5.1 Analysis of future state mapping Referring to future state compared to the current state, the future state mapping shows a significant reducing in lead time, CT, changeover time and inventory as well comparing to current state mapping. The first stage, the company should focus on customer demand. The elements should be included are takt time, target and identifying which improvement method to be implemented. Next, the production flow should be established such as perform line balancing, plan for work cells and determine which control methods need to be used. The detail of this continuous flow will be discussed later. In the final stage of future mapping is considering the elements that will help the level of production. Levelling of production means designing a system in which information flow regarding customer demand is integrated with the flow of material. Lead time and CT are also included to the future state mapping to see the improvement.

8 360 N. Zakuan and M.Z. Mat Saman Figure 2 Future state mapping (see online version for colours) The result, six cells have been identified which are; Cell 1 combining 3 operations. The operations are saw, lathe and deburing. Cell 2 is combining 2 operations which are CNC1 and CNC2. In order to balance the work load, the company have to invest an additional machine each for CNC1 and CNC2. Cell 3 is only 1 operation which is heat treatment and Cell 4 is only 1 operation which is grinding. Cell 5 is combining assembly

9 Lean manufacturing concept 361 productions which are assembly 1, assembly 2 and assembly 3. Cell 6 is electronics subassemblies which contains electronic subassembly 1, electronic subassembly 2 and electronic subassembly 3. However, the CT and lead time for electronics subassembly is calculated separately. This is because electronic subassembly is considered independent of the main production line. An example on how CT has been calculated for Cell 5 is, Takt time = 90 sec Takt time for assembly = = 335 sec 335 Number of operator = = Its need 3.7 people, with continuous improvement and CT reduction, its can reduced to 3 people. Three people working at a 98% efficiency gives a CT, CT = 98% 90 = 88.2 sec and Total Work Content (TWC) = = 265 sec Furthermore, for the lead time, it is assumed that the lead time for each process is one day except raw material lead time, 1.5 days. So that Total lead time = 11.5 days Value added time = 671 sec + 4 hr Therefore, the ratio of lead time to value added time for main production, Lead time = = 236 hr So Value added time = 671 sec + 4 hr = 5.86 hr 236 Ratio = = As mentioned earlier, a smaller ratio means an increase in productivity. Finally, now is the time for the company to create detail plans that will guide to improve the value stream. 5.2 Line balancing In the current system, some operations take longer than others, leaving operators with nothing to do while waiting for next operation. On the other hand, some operators take more than takt time for 1 operation. So bottleneck will occur in the production line. Line balancing is the process which distributes the work element evenly within a value stream in order to meet takt time. Line balancing helps optimise the operator and balance workloads so that no one is doing too little or too much.

10 362 N. Zakuan and M.Z. Mat Saman 6 Discussion Generally, lean operations provide an extraordinary opportunity to improve quality, customer service and profitability. The benefits to the company by implementing lean operations are: 1 Reduce lead time: the reductions of lead time for the future production system are given in Table 2. 2 Lower manufacturing cost: by implementing lean operations, the number of operators can be reduced from 10 to 7 as shown in Figures 1 and 2 in previous section. 3 General: there are a lot of benefits of implementing lean operation such as increase in productivity, lower selling price, increase market share and also increase profit for the company. Table 2 Comparison between current state and future state System Raw material Machine shop CNC Heat transfer Grind Assembly Finish goods Total (days) Current Future The benefits of lean operations can be quite dramatic, and this explains why so many companies are undertaking the difficult transition. In an increasingly competitive environment, lean operations can provide advantages that are not easily duplicated by rival companies. Based on the analysis, compared to current state mapping, the main assembly line shows a 70.9% reduction of total lead time, a 21.8% reduction in value added time and for the electronic subassembly line, a 33.7% reduction in total lead time and a 51.3% reduction in value added time as shown in sample calculation below. Main Assembly Line: Current state: Total lead time = days and Value added time = 859 sec Future state: Total lead time = 11.5 days and Value added time = 671 sec ( ) Total lead time reduction = 100% = 70.9% Comparing to current state mapping, instead of making every part every two weeks, the company target is now changing to making every part every day. Even though, it has been in business for 40 years, the company will gain a significant benefit by implementing lean operations. 7 Conclusion From the presentation of this paper, the company have to redesign the manufacturing environment in order to satisfy the market demands and also to become a world class manufacturing. Without changing the manufacturing environment, the company will not

11 Lean manufacturing concept 363 be able to stay in competitive business in the next few years. Based on the analysis, this company has a potential to become a more competitive manufacturer through adaptation of lean operations concept. Successful implementation of this concept can help the company improve customer satisfaction, improve quality, reduce costs, reduce inventory, reduce delivery time and eliminate the wastes. Generally, the proposed future state developed using lean manufacturing approach offers significant operational benefits that will improve company s competitiveness. Besides that, to ensure the success of future state mapping, detail proposed implementation methodology need to be carried out. There are a few methods of lean operations that can be implemented. These are continuous flow, work cell, Single Minute Exchange of Die (SMED), in-process supermarkets, kanban system, first in first out rule and 5S. References Chin, H.G. and Mat Saman, M.Z. (2004) Proposed analysis of performance measure for a production system, Business Process Management Journal, Vol. 10, No. 5, pp Coventry University (2005) MSc Programme: Lean Operations Module (Case Study), UK. London Business School (1993) Made in Britain: The True State of Britain s Manufacturing Industry, London. Miltenburg, J. (1995) Manufacturing Strategy, Portland Oregon: Productivity Press. Monden, Y. (1997) Toyota Production System: An Integrated Approach to Just-in-Time, 3rd edition, USA: Engineering and Management Press. Robertson, M. and Jones, C. (1999) Application of lean production and agile manufacturing concepts in a telecommunications environment, International Journal of Agile Management System, Vol. 1, No. 1, pp Standard, C. and Davis, D. (1999) Running today factory: a proven strategy for lean manufacturing, Society of Manufacturing Engineers, USA. Tapping, D., Luyster, T. and Shuker, T. (2002) Value Stream Management: Eight Steps to Planning, Mapping and Sustaining Lean Improvements, New York, USA: Productivity Inc. Womack, J.P. and Jones, D.T. (1996) Lean Thinking, New York: Simon and Schuster. Womack, J.P., Roos, D. and Jones, D.T. (1991) The Machine that Changed the World, New York: Simon and Schuster.