Simulation of Kanban System in an Automobile Component Manufacturing Organization - A Case Study

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1 International Journal of Lean Thinking Volume 9, Issue 1 (June Simulation of Kanban System in an Automobile Component Manufacturing Organization - A Case Study Shobha. N.S a*, Dr.Subramanya K.N b a Assistant Professor, Department of Industrial Engineering and Management, Rashtreeya Vidyalaya College of Engineering, Bengaluru , Karnataka, India E mail:shobhans@rvce.edu.in, Phone: b Principal and Professor, Department of Industrial Engineering and Management, Rashtreeya Vidyalaya College of Engineering, Bengaluru , Karnataka, India E mail:subramanyakn@rvce.edu.in, Phone: A B S T R A C T Value Stream Mapping is one of the popular visual tools used in most of the industries. This makes it a powerful tool, which can be used to develop remedial methods to resolve problems in production and concurrently achieve optimum production results. This study is to suggest an improvement for a problem present in an existing production line which has a variety of Processes defined for a product. In this study, the work is only focused on the improvement of the same production line even better by implementing Kanban system at the preliminary stages of production. Firstly, a simulation is carried out for the production line with the help of VSM mentioned earlier. The simulation is performed by using a computer program called ARENA. It is performed for both the AS-IS and the TO-BE of the system in the VSM. Secondly, a Kanban system is proposed in the initial stages of the production to improve production output. Simulation of the Kanban-inclusive VSM is also performed. The simulation results for the TO-BE with the Kanban system show an improvement in production by 25 to 30%. The TO-BE VSM also has reduced the Process times by 28 to 35% for value added activities. Furthermore, the non-value added activity time has been effectively reduced from 31 to 25 days highlighting improvement activities around the Processes. * Corresponding author: Shobha N S, shobhans@rvce.edu.in,tel.: K E Y W O R D S Lean manufacturing, Value Stream Mapping, Kanban, Arena. A R T I C L E I N F O Received 4 February 2018 Accepted 8 May 2018 Available online 30 June 2018

2 1.0 Introduction Lean manufacturing has increasingly being implemented as a potential solution for many organizations. Anyway, the lean formula is applied directly only to the make-to-stock business, but the make-to-order (MTO) product environment has to adopt lean manufacturing principle. The three interrelated components: (1) re-engineering an organization by using the power of computer simulation combined with the business Process. (2) Value stream mapping (VSM) is used to create a map of both value and waste in a given Process. (3) Integrative supplier relationship is one of the most critical factors to maintain an advantage in the increasing levels of competition. Lean concepts strive to bring more and more improvement in areas of the production Process. Any business, in order to be successful, requires efficient and effective methods for its sustenance. The business should create value in addition to serving products or services. Lean manufacturing is one such method in the manufacturing sector that has proven its ways of improvement. Lean manufacturing addresses efficiency and effectiveness in these industries. The core idea is to eliminate waste and maximize workflow. Apart from this, it serves as a tool to achieve discipline in the workplace with respect to the work performed. This work investigates two methods which are selected from the Lean manufacturing philosophy. They are Value Stream Mapping (VSM) and Kanban systems. The shortcomings of VSM is the main reason for the introduction of simulation. Simulation is a method to assess how Processes in real-time work by imitating the real-time parameters in a controlled environment. The other method is Kanban systems, wherein the manufacturing system is regulated by the use of signaling cards in the system. In this context, the Kanban system is suggested at the end as part of improvement for the case considered. 2.0 Problem Statement and Objectives of Study The presence of inventory in a production line that works on several products using a series of Processes is investigated through Value Stream Mapping. The problem of surplus inventory is the focus of this study. In order to address the above issue, following objectives were set for study: 1. To study the existing Process in Lean environment using Value Stream Mapping and identifying Value added and Non-Value added activities. 2. To model the system using AREANA Simulation and designing the Kanban system 3. To compare the AS-IS and TO-BE Processes through measuring performance parameters. 2

3 3.0 Review of Earlier Works Peter Hines et al. discusses the application of Value Stream Mapping(VSM) on a distributor network company which distributes electrical, electronic and mechanical components. As a result, the average lead time was reduced by 3 weeks and the delivery on time of the end product was increased to 95% from 72%. The rejection rate and customer returns were also observed to be reduced to 1000 & 10,000 parts per million parts made, for a year. Thomas McDonald et al. discuss using simulation to improve value stream mapping. They use VSM to a dedicated production line in an engineer-to-order control production setting, which is enhanced by simulation. In that case study, the production was on a daily basis and the requirement was 80 parts per day. By VSM and a simulation run of 500,000 minutes, a reduction in inventory was observed by 32 parts & 58 parts respectively for 2 shifts in the production line. D.Seth & V.Gupta discusses the implementation of VSM and Lean concepts. Takt time calculations are performed.production lead-time is observed to be reduced from days to 0.54 days and Processing time for each Process is also reduced from to minutes. F.A.Abdulmalek & J. Rajgopal present the benefits of lean manufacturing and VSM through simulation. By incorporating total productive maintenance they could achieve a lead time reduction from the actual 48 days to less than 15 days. V.Ramesh et al. developed a lean model to carry out VSM in a manufacturing firm. Cycle time and setup time are the two main factors which are brought down to an appreciable extent. TO-BE VSM was drawn, as a result, the cycle time was reduced to an extent of 1080 minutes from the actual 1900 minutes. B.Singh et.al. conducted a detailed literature review on implications of VSM in Indian industries. A case study resulted in improvements such as lead-time reduction, a decrease in WIP etc. due to the presence of VSM. A. Mahfouz et al. use discrete event simulation as a medium between the AS-IS and TO-BE VSM. The simulation showed a decrease of cycle time from 28 days to 15 days in the TO-BE VSM. The labor utilization was found to be constant at a rate of 27% regardless of VSM simulation or the actual Process. R.Golchev et al. present a different view on Kanban systems. They supplement Kanban systems with discrete event simulations. A simulation model was developed so that it serves as the basis for any experiments related to Kanban systems involved with a simulation that leads to production Process optimization. Although, the container capacity discussed in the case study is 750 finished parts, the option of considering 50 parts per container due to the reason that it had more daily cycles. Mahdi Sabaghi et.al. conducted a VSM and Kanban analysis through simulation in a plastic fabrication industry. They focussed on three lean manufacturing methods namely: Kanban, setup time reduction and total productive maintenance (TPM). After conducting simulation and getting results from Analysis of Variance (ANOVA), Kanban and TPM are found to be more significant than setup time reduction. Therefore, Kanban TPM method is selected to reduce lead time and WIP. 3

4 4.0 Methodology: The following research methodology is adopted for designing and analysing an LMS. Step 1: Identification of plant for study and production schedule: The design of an automobile parts manufacturing organization is used for analysing the LMS. In the work, all the required information needed for this study is provided. The VSM chart was developed by gathering data and working with the production engineers who helped envision the production layout in the form of VSM. One of the important point seen in the Production Centre, the Master Planning schedule follows both the monthly schedule as well as daily schedule, which means that the routine meets the demand daily and in monthly terms. The production scheduling is depicted in Figure 1 below: Fig. 1 Production Scheduling Step 2 & 3: Process mapping of existing system: There are 3 key people involved in the creation of production schedule. They are (1) Inventory Planner (2) Demand Planner (3) Key account managers.this personnel takes their respective roles in inventory, customer demand & costs-profit incurred after production. Their input is the most crucial aspect of the production center failing which results in inappropriate output or inventory-demand mismatch. The series of Processes happen in a sequence. The arrival is assumed to be following Poisson distribution. The Poisson distribution expresses the probability of events for a fixed interval of time and is independent of the other events that occur. In this study, the arrival of material in the first Process is assumed to be constant i.e., average units per hour. The details of all the Processes are given in Table 1. The time taken is the Takt time for each Process. The Takt time is expressed in seconds, so the unit of measurement of time is considered in 4

5 seconds throughout the study. The unit of measurement for the incoming material is expressed as units per hour i.e., number of sheets per hour. Table 1: Processes in VSM chart Sl. No. Process name Inventory after Process ( in AS-IS VSM) 1 Sheet Cutting - 2 Printing Clear Coating Propack Conversion ASCENT Conversion Warehouse(store) 6200 Among the Processes mentioned above, some Processes are divided into subprocesses. It is shown in the table below. Table 2: Sub-Processes Process Name Printing Conversion 1 Conversion 2 Sub-Processes Sakurai, Four Post, Two Post Big & Two Post Small Kiss Cut, Welding, Pre-inspection & Lamination Thru Cut, Final inspection & Packaging To simulate any Process, a broader understanding of the activities, resources, and Processes are necessary. In the present study, the minimum requirements to conduct simulation are met such as Process time, inventory, cycle time etc. The focus here is to obtain an improvement over the existing developed VSM in terms of productivity while emphasizing on inventory. Feasibility allows assessing and organizing all of the necessary details to make a business work. A feasibility study helps identify production problems, and nearly every business-related problems, along with the solutions to eliminate or avoid them. Feasibility studies can also lead to the development of marketing strategies necessary for the survival of the company. In the present case, the TO-BE map is used to assess the improvement in operational productivity for a specific production layout mentioned earlier. The TO-BE map shows a reduction in cycle time after constantly working on identifying and eliminating kaizen bursts (bottleneck Processes highlighting improvements). Drawing Current Value Stream Map: The AS-IS map indicates the production scenario before the bottleneck Processes were identified and modified. The AS-IS map with kaizen burst is shown in Figure 2. The Process with sub Processes is indicated with yellow boxes. The initial and the final stage i.e., the supplier and customer stages are indicated in the polygon colored green. The inventory is indicated by an orange triangle. 5

6 In this map, the bottleneck Processes are identified and alleviated. These Processes when improved will lead to a reduction in all the Process times. It is shown in the following Figure 2. Figure 2: Value Stream Map with kaizen bursts Kaizen bursts are indicated with an orange explosion symbol, which depicts the bottleneck Processes. Step 4: Proposed system after improvement: In TO-BE state map, the Processes which are highlighted by Kaizen bursts are improved. The improvement is shown with a decrease in Takt time. Sometimes, a mere decrease in takt time does not mean an improvement in the productivity. Overall influencing factors are also to be considered. Figure 3: TO-BE Process Value Stream map Step 5: An AS-IS Process: The demand for the product as well as the average daily production requirement is provided by the organization in the case study. It is presented in Table 3. 6

7 Table 3: Demand & Process time data Description Quantity UOM Demand sheet cutting 368,706 Demand Printing/ Clear coat 300,876 Demand Conversion 1 254,898 Sheets/Month Demand Conversion 2 174, 198 Demand Conversion Propack 113,033 Demand Conversion Ascent 80,700 No. of days worked 25 Days/Month Average daily demand Printing 12,035 Sheets/Day Average daily demand Conversion 1 10,196 Average daily demand Conversion 2 6,968 Takt time Sheet cutting 3.2 Takt time Printing 5.8 Takt time Clearcoat 5.8 Sec/Sheet Takt time Conversion Takt time Conversion Takt time Propack 5.2 Takt time Ascent 7.2 The simulation is based on the values presented in the table above. These values help in determining the balance between demand and production. The simulation would suggest an increase in production compared to demand. After all the data are gathered and organized, a model is developed resembling the actual VSM maps presented above. The model is developed in ARENA. Simulation is conducted for both the AS-IS VSM and TO-BE VSM. The inventory is chosen to be 15% of the actual inventory. The reason being inventory incurring costs and increases the Process times of all the production activities. The simulation Process for the AS-IS Process and TO-BE Process are conducted. In this case, the inventory level is 15% of the actual inventory. The tabulation is shown in Table 4. Table 4: Inventory for AS-IS Process and TO-BE Process Sl. No. Process name AS-IS Process TO-BE Process Actual Actual Inventory Inventory Reduced Inventory ( 15% of actual) Reduced Inventory ( 15% of actual) 1 Sheet Cutting Printing Clear Coating Propack Conversion ASCENT Conversion Warehouse(store) Based on this inventory, the simulation Process is began. While the simulation is in progress, ARENA keeps tab of the inventory in the Process. It pauses the simulation if the inventory is brought down to 7

8 zero. However, the simulation would carry on regardless of the inventory as the study parameters are given prior to simulation. There are two decide modules in the simulation. They are situated between (1) Propack & Conversion 1 and (2) ASCENT & Conversion 2. The first decide module distributes 65% of the output to Conversion 1 Process while the rest to Propack. The second decide module distributes equal output to both ASCENT & Conversion2. The simulation Process is carried out for 45 minutes since it is assumed that for a production of one hour, 15 minutes is accounted as production recess or break time. It has been said that the production run is 20 hours per day, on a regular basis. In TO-BE Process, the Takt time or the Process time has been changed for individual Processes due to the identification of bottleneck Processes in the AS-IS and highlighting improvements in the form of Kaizen bursts. Consequently, the inventory of the Processes is also modified, which is given in the table 4. Based on the above inventory, the simulation Process begins. It is paused if the inventory is consumed fully. Again, the simulation is carried for 45 minutes with 15 minutes accounted for production break time for an hour. The production run is 20 hours per day. The simulation parameters remain the same for this scenario expect there is a Kanban post at each Process. The Kanban posts operate on two cards i.e. production order Kanban cards and withdrawal Kanban cards. Here, both cards are denoted in the same Kanban post so as to reduce the number of Kanban posts. However, they are separated from each other so that the worker gets to know which card to pick or drop according to the requirement. If the production order card is present, then the worker starts producing that part (subprocess). If a withdrawal Kanban is present, the card is passed on to the preceding stage to withdraw components (sheets) from that stage. Step 6: Results of Simulation and Inference The three main Processes which are considered for daily demand are (1) Printing (2) Conversion-1 & (3) Conversion-2. The simulated demand and the average demand are compared in Table 5. Sl. No. Process Name Table 5: Daily demand simulation results for AS-IS Process Average Daily demand (sheets/da y) AS-IS Process Takt Time Production achieved in simulation Average Daily demand (sheets/day) TO-BE Process Takt Time Production achieved in simulation 1 Printing Conversion Conversion For the rest of the Processes, monthly demand is given and the simulated was approximated accordingly to those demands. Table 6 gives a description of the results. The Processes considered for 8

9 monthly demand are done so because there is no specified restriction for daily output in these activities. Sl. No Table 6: Monthly demand simulation results for AS-IS Process and TO-BE Process Process Monthly Demand (No. of sheets) Takt Time in Secs AS-IS Process Production achieved in simulation Takt Time in Secs TO-BE Process Production achieved in simulation 1 Sheet Cutting Printing/Clearcoat Conversion Conversion Propack ASCENT In the TO-BE process VSM, the Takt time values are reduced due to an improvement achieved through Kaizen bursts. This procedure was done prior to the simulation by the company. The Processes considered for daily demand remain the same and is presented below for its simulation results. In the above table 7, the Takt time for Propack has seen an increase due to the fluctuating demand. It has been compensated for the ASCENT Process. Step 7: Determination of Kanbans The Kanban card requirement for every Kanban post is calculated by the formula given below. K [DL (1+α)] / C Where, K is the no. of Kanban cards required, D is the demand per unit time for each Process, L is the lead time, α is the safety and C is the capacity. Therefore, the calculations are tabulated in Table 7. The capacity C is assumed to be 1 million sheets and the lead time is 30 days. The factor of safety is 0.5. Table 7: Kanban card requirements Process Monthly demand (no. of sheets) Kanban size ( Kanban cards at each post) Sheet Cutting Printing/Clearcoat Conversion Conversion Propack ASCENT

10 After the Kanban posts are placed at each Process, the simulation is carried out for the Kanban- VSM setups. The output is more or less the same since the Kanban post does not improve the productivity but only regulates the flow of work smoothly. The results are tabulated below in table 8. Table 8: Simulation results with the Kanban setup Process Monthly demand Production at each stage after (no. of sheets) Kanban posts Conversion Conversion Propack ASCENT Step 8: Impact on productivity and inventory The results obtained show that the company could simulate the production environment for better productivity. The effect on productivity and inventory is as follows: The simulation was conducted at 15% level of inventory (WIP), which is a significant reduction in the existing inventory. Thus the results from simulation showed a drastic increase in the production exceeding demand. The production output was observed to show an increase of 25-30% at each stage from the actual demand. This shows the non-value added time at each Process could be reduced to a greater extent to achieve more output. The non-value added activity time has also been reduced from 31 days in the AS-IS Process to 25 days in the TO-BE Process as a result of highlighting the improvement in bottleneck activities. In the entire Process of simulation, the demand data is assumed to be exactly the number of parts produced at each stage. Therefore, the output is compared with the demand itself. This criterion is essential to overcome inventory-demand mismatch. The Kanban system is a scheduling system rather than a production output procedure. Therefore, the introduction of Kanban does not merely guarantee an increase in throughput rather it provides an efficient flow of work in the production environment. The Kanban only produces what is demanded from the downstream Processes i.e., successive Processes. It works its way up to the upstream Processes to initiate production 10

11 Step 9: Summary and discussion The results obtained from this study are applicable to a production-oriented environment. In industries which provide services rather than goods, the concept of inventory is not appropriate since there is no inventory of material. The idea of VSM is to be carefully charted. However, in this study, the production layout had significant inventory, which resulted in cumulatively longer Process durations as a consequence of non-value activities. The activities were identified through Kaizen bursts and thus the reduction in total cycle time. Later, the simulation was conducted for 15% of the actual inventory. This improved the results compared to the actual data. The incorporation of a simple Kanban system achieves smoother workflow and material flow without leading to delays. In a highly flexible production layout which caters to a range of products, a Kanban system is not sufficient. It should be developed with respect to the Process of each product. A complete view of the production regarding its working is essential to develop a Kanban. Value stream mapping as a tool provides the top management and production personnel with a simplified outlook towards production, facilitating a better understanding and ideas for improvement. By simulating the value stream map, the ideas can be assessed and quantified. The intrinsic problem is that as a tool, VSM is limited in the complexity of problems it can provide answers to. The simulation of VSM increases that capability fairly at a low cost with regard to time & investment. The major findings in the study were the differences between traditional VSM and Simulation analysis. However, when the simulation has the advantage when it comes to TO-BE analyses, the traditional VSM is still a suitable tool for mapping the value stream and searching bottlenecks along the value stream Processes. ARENA is a simulating tool aimed at users with little or no prior experience in simulation software. One of the objectives of the study was to evaluate the Simulation model. However, there are limitations in the working of the software module. Despite this, the data from the traditional VSM and Simulated VSM points at the same bottlenecks in the value stream. This emphasizes that the focus should be on the achieving better output through continuous improvement. The results from the simulation largely depend upon the type of machinery used, type of industry, machine utilization and the presence of inventory at different stages of the production line. In this study, only simple basic Processes were used. However, the Process can be complex. Therefore, care is to be taken while considering simulation parameters. 5.0 Conclusion In this work, the production layout had significant inventory, which resulted in cumulatively longer process durations as a consequence of non-value activities. The activities were identified through Kaizen bursts and thus, the reduction in total cycle time. As a next step, simulation was conducted for 15% of the actual inventory. This improved the results as compared to the actual data. The major findings in this study were the differences between traditional VSM and Simulation analysis. 11

12 However, when the simulation has the advantage when it comes to future state analyses, the traditional VSM is still a suitable tool for mapping the value stream and searching bottlenecks along the value stream processes. The results from the simulation largely depend on type of machinery used, type of industry, machine utilization and the presence of inventory at different stages of the production line. References Amr Mahfouz, John Crowe and Amr Arisha.(2011). Integrating AS-IS and TO-BE Value Stream Mapping with Discrete Event Simulation: A Lean Distribution Case Study, The Third International Conference on Advances in System Simulation (SIMUL), pp Bhim Singh, et al. (2010)."Value stream mapping: literature review and implications for Indian industry", International Journal of Advanced Manufacturing Technology, Vol.10 Issue 7, pp Dinesh Seth and Vaibhav Gupta. (2005). "Application of value stream mapping for lean operations and cycle time reduction: an Indian case study", Production Planning & Control: The Management of Operations, 16:1, pp Fawaz A. Abdulmalek, Jayant Rajgopal. (2007). Analyzing the benefits of lean manufacturing and value stream mapping via simulation: A Process sector case study, Int. J. Production Economics 107, pp Mahdi Sabaghi, Reza Rostamzadeh and Christian Mascle.(2015). Kanban and value stream mapping analysis in lean manufacturing philosophy via simulation: a plastic fabrication case study, Int. J. Services and Operations Management, Vol. 20, No. 1. Peter Hines, Nick Rich and Ann Esain. (1999) Value stream mapping, Benchmarking: An International Journal, Vol. 6, Issue 1, pp Riste Golchev, Bojan Jovanoski, Valentina Gechevska and Robert Minovski. (2015)."Kanban Simulation Model For Production Process Optimization ", Journal Of Engineering Management And Competitiveness (JEMC) Vol. 5, No. 2, pp Thomas McDonald, et al (2002). Utilising Simulation to Enhance Value Stream Mapping: A Manufacturing Case Application, International Journal of Logistics Research and Applications: A Leading Journal of Supply Chain Management, 5:2, pp V. Ramesh, K.V. et al (2008). Implementation of a Lean Model for Carrying out Value Stream Mapping in a Manufacturing Industry, Journal of Industrial and Systems Engineering Vol. 2, No. 3, pp