A BASIC RESEARCH ON LT SEVEN TOOLS FOR TOTAL LEAD-TIME REDUCTION

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1 The Journal of Japanese Operations Management and Strategy, Vol. 4, No. 1, pp , 213 A BASIC RESEARCH ON LT SEVEN TOOLS FOR TOTAL LEAD-TIME REDUCTION Kazuto Ohata Keio University Toshiyuki Matsumoto Aoyama Gakuin University Takashi Kanazawa Keio University ABSTRACT When considering improvements in manufacturing industries, reducing inventory and leadtime is regarded as critical issues. This paper is positioned as a starting research based on case study approach towards TLR (Total Lead-time Reduction), which is the lead-time improvement activity based on management cycle. The LT seven tools such as Whole Chain Viewpoint, Straight Flow, Parallel Flow, Stop Push, Seek Pull, Smaller Step, and Neglect Wait are proposed. Four cases are selected as typical case samples based on the procedure and the measure of fluctuation range. The LT seven tools are verified effective for reducing leadtime and inventory through the within-case analysis by applying the tools to four selected cases with the gathered data. The applicability of the LT seven tools is evaluated by the crosscase analysis in terms of similarities and differences. Finally, four propositions are proposed based on the results of analysis. Keywords: case study, lead-time, inventory, accumulative graph 1. INTRODUCTION The objectives of manufacturing companies are to contribute to the society through products and services, to accomplish social responsibility, to create or maintain employment and to give motivation to employees. In order to accomplish these objectives, increasing sales, decreasing cost, and increasing profit are considered as the target of management. Management thinks the target in terms of the financial indexes such as sales, working assets, profit and debt, while management instructs the production people to implement cost reduction, reduce lead-time, improve productivity and quality, and reduce inventory. There is a problem for the instruction that makes confusion among the production people. Management has instructed to reduce lead-time. But, lead-time is an operational level index. Since the condition of lead-time and the room for improvement are not considered, the instruction does not tell how much to reduce it. Therefore, we need a translation mechanism between the financial target and the operational index. SCOR (Supply Chain Operation Reference model) (Supply-Chain Council, 25) gives one insight for the translation. SCM (Supply Chain Management) is used as a tool to achieve 55

2 the financial target of reducing inventory as a result, and the operational index of reducing lead-time as a cause. The management cycle becomes a PDCA (Plan, Do, Check, Action) cycle of developing the operational index of lead-time reduction from the financial target of reducing inventory (Plan), improving lead-time (Do), evaluating the operational result by comparing with the operational target (Check), and setting the next financial target according to the difference between the result and the previous target (Action). From the above insight that the financial target and the operational index are translated each other, we take a way of thinking that inventory is a financial index and lead-time is an operational index. It can be said that the reduction of lead-time as a cause links to the reduction of inventory as a result. In this paper, we introduce the concept of Accumulative graph consisting of Flow and Stock to support an easier understanding of the relationship between lead-time and inventory. We shall go into detail about the translation mechanism or the relationship between leadtime and inventory. It is frequently asked by production people why they need to reduce inventory and why it is wrong to produce excessively. And we need to argue its rationality with a focus on the lead-time reduction, and to explain the translation or the relationship as an evidence. This has another advantage. To argue the lead-time as a main issue means that we place emphasis on a controllable cause rather than an uncontrollable result. We shall discuss how to promote an activity of improving lead-time. As mentioned above, such an activity needs to consider both management s financial index and production s operational index, and also the activity relates all members from a plant manager to people in production floor. We need to take into consideration PDCA cycle in the management structure and organize the activity as a plant-wide project. We call this improvement activity as TLR (Total Lead-time Reduction). The word Total comes from TQC (Total Quality Control) in which the word Total implies the involvement of all the related people. It is important and strongly requested to have a clear principle for promoting and spreading out the TLR as a plant-wide activity. The concept development of TLR including its principle is our research goal. But we cannot complete our goal of the TLR overnight, and thus we need to proceed step by step towards the goal. This paper is its first step and a case study of one targeted company, and can be a starting point for theory development as pointed out by Eisenhardt (1989). This paper is organized as follows; discussion of findings in the literature, description of research methodology, development of tools for the lead-time reduction, selection procedure of cases, application of the tools to analyze and improve lead-time, evaluation of tool s applicability, and generation of propositions. In the argument of this case study, we assess the rigor of this case study using the criteria such as internal validity, construct validity, external validity, and reliability. The objective of this paper is to propose the LT seven tools for the lead-time reduction by focusing on Flow (lead-time reduction) and Stock (inventory reduction), to evaluate the applicability of the LT seven tools by applying to the cases selected from a real company, and to analyze their effectiveness. 2. LITERATURE REVIEW 2.1. Case study approach 56

3 This paper is a case study. Stuart et al. (22) mentioned that the effective case study consists of five processes. They are defining the research question, conducting instrument development and site selection, gathering data, analyzing data, and disseminating the research findings. These processes are implemented in this paper. Gibbert et al. (28) discussed four criteria such as internal validity, construct validity, external validity, and reliability, which are commonly used to assess the rigor of case study research. Those four criteria were summarized in his paper as follows: * Internal validity is also called logical validity and refers to the causal relationships between variables and results. * Construct validity of a procedure refers to the quality of the conceptualization or operationalization of the relevant concept. * External validity or generalizability is grounded in the intuitive belief that theories must be shown to account for phenomena not only in the setting in which they are studied, but also in other settings. * Reliability refers to the absence of random errors, enabling subsequent researchers to arrive at the same insights if they conduct the study along the same steps again. For ensuring the rigor of this case study, we are trying to argue in the following sections by referring these criteria as much as we can. Mahapatra et al. (21) discussed the effectiveness of governance based on case studies. The section structure of the paper is clear and well organized, and thus we follow the same section structure in this paper Lead-time reduction Several studies on the lead-time reduction have been reported. Sakazume et al. (1997) pointed out that the factors which lengthen the total lead-time are interactivity and multi-staging between information and object flow in whole supply chain. The interactivity means the occurrence of waste operations such as process confirmation, adjustment operation, rework operation, and duplicate operation. They are caused by not achieving good quality in output level necessary for a downstream process. The multi-staging means the stagnation of information and object flow caused by the unnecessary division of labor in the production flow. To eliminate the interactivity, the proper maintenance of output from the upstream process and input to the downstream process was proposed. To eliminate the multi-staging, the specialization of items and the self-completion were proposed. Regarding the non-sharing of information among processes as the factors for lengthening the total lead-time, Niwa et al. (28) reported that the lead-time from design to production was reduced by introducing the system that shared specification and design data among processes and by eliminating supplemental operations such as inquiries. Mizuno (25) proposed a system to reduce the production cost by sharing information like demand and inventory among the companies in supply chain, and returning a share of the effect of cost reduction to the companies that shared the information. Enkawa (1994) reported that the hindering factors for Just-in-time were uncertainty in decision making, lead-time, and demand in the multi-stage logistics system. Also, it is necessary to maintain the system of sharing the demand information based on the cooperation among organizations and to synchronize the supplement activity of the whole system in short cycle. The findings of the study are useful references. It is said that the lead-time can be reduced by sharing information among the organization and process. However, since it does not explain how to develop the necessary activity of the workers, it is difficult to apply 57

4 continuous PDCA cycle activities for the introduction of information sharing and the reconstruction of production flow. Regarding a system to reduce the lead-time, the methods of optimization of inventory level using simulation and experimental design (Correll, 2; Ben-Daya et al., 23) and the research where the optimum lot size is derived using numeric calculation (Irohara et al., 212; Koo et al., 27) have been reported. Many examples of the reduction of lead-time during the improvement activity of Toyota way, which is used in many Japanese car and electronic industries, have been shown in books. However, the Toyota s way of the improvement activity as well as its analysis method and viewpoint of improvement are explained in few of them. Even though the findings from those examples of lead-time reduction are useful, there are some difficulties in implementing these findings because of the difference in industry or corporate culture as compared with Toyota An accumulative graph An accumulative graph as shown in Figure 1 is a tool for visualizing the flow. In Figure 1, X- axis is the time, and Y-axis is the accumulative quantity. The graph shows the inflow and outflow of materials, work-in-process, or products as plots of the accumulated flow. Inflow Lead Time Initial stock Stock Outflow Figure 1 - Accumulative graph Time The accumulative graph represents three measures. First, the difference between inflow and outflow in the Y-axis direction shows the stock at the time. Second, the difference between inflow and outflow in the X-axis direction shows the lead-time. Third, the slope of lines shows the speed of the inflow to the process or the outflow from the process. An important thing of the accumulative graph is that the lead-time is a cause, and the inventory is a result. Since the inventory is a result, the inventory cannot be increased or decreased directly, and the increase or decrease of inventory can be realized by the change of inflow and/or outflow which are the causes of the inventory. It is common to hear management directions like x% reduction of working inventory; however, this direction only indicates the target or the result, and does not imply the necessary means for improving the flow and the lead-time. In factories, the accumulative graph of production processes shows timings and speeds of each process, and inventories between processes. The accumulative graph can be used to realize smooth flows. Ichikizaki et al. (21) studied the topic of change points. In our research, the accumulative graph, focusing on flow and stock, is used as the analytical tool, and the reduction of lead-time is discussed. 58

5 3. METHOD 3.1. LT Seven Tools LT seven tools are introduced as tools to improve the lead-time. We use the word Tool to imply the instrument of improving the lead-time, but the seven tools also can be taken as the aspects or the viewpoints where we will be able to consider the improvement of lead-time. In the following analysis sections, these LT seven tools are treated as factors that affect the results of the reduction of lead-time and inventory Whole Chain Viewpoint (SCM) The first of the LT seven tools is the viewpoint of Whole Chain Viewpoint (SCM). This aims to achieve the lead-time improvement from the viewpoint of whole supply chain of Buy/Make/Deliver instead of limiting on a specific operation. While supply chain was defined as Plan/Buy/Make/Deliver in the SCOR model, Tompkins (212) pointed out that Buy/Make/Deliver follows Store, and Sell comes at the end in supply chain. The actual use by customers is the real Supply End, and Tompkins calls it Sell. The Whole Chain Viewpoint of the LT seven tools considers that, before Sell, the delivery to Store comes; before that, the shipment from the factory (Deliver) comes; and before that, the input for the production line (Make) and the purchase of materials (Buy) come. After drawing the accumulative graph, improvement will be done to reduce lead-time throughout the whole supply chain by changing the step lines to straight lines (the second of the LT seven tools), changing the different slope lines to parallel lines (the third of the LT seven tools) and reducing the gap between lines Straight Flow (Flow) The accumulative graph consists of the Flow and lead-time, which are the cause, and the Stock and inventory, which are the result. Two sets of data are shown in Table 1. The inventory graph for these two sets of data shown in the left side of Figure 2 is identical, but the accumulative graphs for these two sets shown in the right side of Figure 2 are different. The graph of Set 2 shows faster input and output speed, and has sharp slopes compared with those of Set 1. This means that the resulted Stock can be calculated from the cause Flow, but the cause Flow cannot be perceived from the resulted Stock. In addition, the slope of each accumulative line and its shape are important. The input and output of production are normally the combination of a straight line, which represents onepiece production, and a step line, which represents batch production. In order to reduce leadtime, the conversion of accumulative lines from step lines to straight lines is necessary. This improvement is the second tool, the viewpoint of Straight Flow (Flow) of the LT seven tools. Input Input () Table 1 - Two data Set 1 Set 2 Output Output () Inventory Input Input () Output Output () Inventory

6 Inventory Inventory graph Set 1 Set Input 8 4 Output Input 12 Output Accumulative graph Figure 2 - Inventory graph and accumulative graphs Parallel Flow (Lean) The third of the LT seven tools is the viewpoint of Parallel Flow (Lean) to obtain the lines with the same slopes. This is identical to the operation of Kanban in Lean Production System. Kanban aims to control the same speed of flows, and thus to make the lines of inflow and outflow become parallel. Because the capacity of each process is not equal, the line balancing is one of the problems in production. While the workers psychologically want to deal with the work-in-process in terms of work efficiency, the efficiency in terms of flow is more important than that. In a situation of capacity imbalance, it is a normal way to improve the balancing with reallocation of works or adjustment of machine capacity. These improvements aim to utilize the unused capacity. There is an opposite thinking that the surplus capacities are waste, and then the unused capacity should be thrown away from the viewpoint of smooth flow rather than its utilization. This capacity imbalance problem is discussed usually after purchasing machines, but it is desirable that a good machine balance should be considered in the stage of selecting machines. Not purchasing machines in excess is a primal factor for low-cost products in developing countries, and it is a major recent subject for Japanese manufacturing industries Stop Push (Non-Push) Under Kanban system, products are produced synchronously with the sales because Kanban gives the production start timing for each process that is the production lead-time before the due date. Because not the sales quantity but production quantity is used as a financial measurement in the factory accounting, many Japanese manufacturing companies utilize their capacity of production line and produce for the orders in advance. The capacity utilization creates excess inventory and lead-time. Since the products will not be sold, dead money occurs and cash flow becomes poor. Then, the fourth of the LT seven tools, Stop Push (Non-Push), is applied to postpone the production timings. Many companies face the problem that both delivery delay and preceding delivery occur simultaneously when the production capacity is almost full as shown in Figure 3. They think that the delivery delay is a cause and is a major problem rather than the preceding delivery. Almost all companies try to solve the delivery delay problem, but cannot solve it. If one delivery delay is solved by shifting the production earlier, it creates another delivery delay 6

7 because there is no extra capacity when the production capacity is full. It means that the real problem is the preceding delivery, and it became a cause of the delivery delay. Then an adequate way of solving it is to avoid the preceding delivery instead of the delivery delay by applying Stop Push to the preceding delivery. Then, the corresponding delivery delay can be resolved as a result. Figure 3 - Delivery delay and preceding delivery Seek Pull (Pull) The fifth of the LT seven tools is Seek Pull (Pull). It aims for the pull production which the production is triggered by that of downstream processes. In the processes as shown in the top of Figure 4, the last shipment [5] is decided at first. Then, store to warehouse [4] is drawn by [5]. Thereafter, remaining [3], [2], [1] are settled consecutively, and thus processes are chained with the backward manner from [5] to [1]. The chain of accumulative lines determined from upstream processes, as in Figure 4, is the push production, and inputting materials to the first process [1] has no relation to the last shipment accumulative line [5] and also has no relation to the middle accumulative lines. This results in the accumulative lines with different slopes and shapes, and then those accumulative lines increase lead-time and inventory. Figure 4 - Accumulative graph for the production factory When we consider the supply chain of Plan/Buy/Make/Deliver/Store/Sell, Sell must be the end of the chain, and Pull production from the Sell is the most desirable. But such a chain is difficult to realize, and thus Make should be shifted to the end to make it practical. After realizing Plan/Buy/Make with Make at the end, there is a way to expand the chain where Sell comes at the end. It is a course that expands to Deliver, Store and finally 61

8 Sell. Plan/Buy/Make may be a basic chain, and we are analyzing and arguing the basic chain in this paper Smaller Step (LOT) In most cases, the supplier and the manufacturer are divided with respect to the production facilities and/or technologies they possess, and are almost not divided with respect to the logistic issues such as the lot size. As a result, the lot sizes of supplier and manufacturer become different, the lead-time between them becomes longer, and the inventory increases. The same things happen in production line because lot sizes among processes are different. It is necessary to analyze and decrease production lot sizes for the lead-time reduction. This is the sixth tool, Smaller Step (LOT), of the LT seven tools. Regarding the lot size problem in the accumulative graph, the sixth tool corresponds to making small steps on an accumulative line. There are three approaches as follows. The first method is to shift the inflow line to the rightward until it contacts with the outflow line. The second method is to make the lot size smaller and shift the inflow line downward. The third method is to make the lot sizes equal, and this gives us the smallest inventory in production. When making the lot size small, not only the evaluation of lead-time or inventory, but also the minimum cost for setup or transportation should be considered. Moreover, the lot size problem for reducing lead-time or inventory needs to consider not only a partial optimization in some part of a supply chain, but also the total optimization in the whole supply chain Neglect Wait (Step-less) The seventh of the LT seven tools is decreasing steps, Neglect Wait (Step-less). The seventh tool is the activity for reducing non-productive times which obstruct the smooth production. The non-productive times include setup, moment stop, breakdown, startup, inspection, and clean-up. If these non-productive times become zero, an accumulative line basically becomes straight. Here, the important thing is not merely decreasing non-productive times, but also thinking why non-productive times occur and improving it. Thinking about the difference between QC (Quality Control) and QA (Quality Assurance) in quality improvement, the QC means preventing the shipment of defects from the factory by acknowledging the existence of defects. On the other hand, the QA means preventing to produce defects in production stages. Then only good products will be shipped by so-called made with quality." In other words, the QC means strengthening inspection, while the QA means eliminating inspection. Similarly, the post maintenance means maintaining machines after stoppage, and on the other hand, the preventive maintenance means maintaining machines before stoppage. The improvement activity aiming for QA or preventive maintenance is focusing on the causes that are the fluctuations or mechanisms of the non-productive time. This improvement activity is different from the activity based on the result like defects or machine stoppages. In other words, the former improvement activity is the Flow improvement as the cause, and the latter is the Stock improvement as the result. The seventh tool, Neglect Wait, is the former improvement Case selection procedure By following the definition of construct validity in Gibbert et al. (28), we describe three aspects such as the extent to which this study investigates, how and why we choose cases, and how we collect data from the cases. 62

9 About the reliability, Gibbert et al. (28) defined it as the feasibility of subsequent researchers arriving at the same insights if they conduct the study along the same steps again. They proposed two ways of assuring reliability. They are transparency by a case study protocol and replication by a case study database. It is difficult to present fully the protocol or the database of this study because of the company s security policy for disclosure. From discussions with researchers of other companies about the problems and solutions of this paper, they have similar situations and problems concerning about the lead-time reduction. Therefore, we think that subsequent researchers will be able to have an overall transparency from this Section 3.2 and the following Section Research context The products of the manufacturing company discussed in this paper are divided into three types as follows; Product A: This product is a packaging material and is manufactured by customer orders. After receiving an order, the product is made in three to four processes. The last process is conducted in smaller shipping lot sizes, but the former processes are conducted in larger lot sizes. The reason of the larger lot size in the former processes is the loss in remained materials and the complicated set-up operations. Product B: This product is similar with Product A and is manufactured in one process. Product C: This product is a sales promotion material and is assembled from the parts that come from a supplier. The production of Product C consists of two processes. Parts supply is done in the same mass volume, and the assembling and shipping are done in daily volume. There are about 1, different items and 4 customers for product A; 12 different items and 3 major customers for product B; and 5, different items and 1 customers for product C. Improvement activities in terms of productivity and quality were conducted before in this manufacturing company, but the company had a long lead-time from order to shipping, and the inventory, both of work-in-process and finished product, was enormous as the result of the long lead-time. In several meetings with other company researchers, we were told that the long lead-time problem and situation, and the related problems such as excess inventories, imbalance of capacity between processes, earlier and/or lump-sum production, and unsynchronized scheduling (they are shown later in analysis section), are common in many manufacturing companies. From the commonality, the selection of this company and the lead-time problem does not lose generality and is an accurate observation of reality Case selection The production lead-time is about two months for Product A, and about one and half months for Products B and C. The inventory levels of finished products are about one month volume for Products A and C, and about half a month volume for Product B. The lead-time problem is larger for Products A and C from their length of production lead-time and volume of finished product inventory, and the division management has strong consciousness and desire to solve their lead-time problem. Then two divisions of Products A and C are selected from the amplitude of problem and the possibility of promoting lead-time reduction activities with support of the division management. 63

10 The accumulative graph for one year over of all items of Product A is shown in Figure 5. The five accumulative lines are the receipt of orders, start of the first process, finish of the last process, start of shipping, and completion of shipping. Two lines of the start of the first process and the finish of the last process are parallel, and the interval of these two lines is about half a month. From the fact that the lines are parallel and have the same gap of half a month interval, it can be said that the production control is working to keep a constant level of work-in-process. The two lines of the start and the completion of shipping are also parallel, and shipping to customers is done daily in a constant pace as indicated by the smooth and straight completion line of shipping in Figure 5. The problem is the interval of about one month for those two lines. It means that the daily shipping to customers are allocated from finished product inventory. There is a large room for improvement to reduce both the leadtime and the inventory Order Start at the first process Finish at the final process Start of shipment Finish of shipment /7/1 1/8/1 1/9/1 1/1/1 1/11/1 1/12/1 11/1/1 11/2/1 11/3/1 11/4/1 11/5/1 11/6/1 11/7/1 Figure 5 - Accumulative graph of Product A An overall trend or situation can be read from the total accumulative graph in Figure 5, but more classified accumulative graphs are required to analyze and improve each item s leadtime reduction problem in a more concrete manner. A graph drawing tool is developed for drawing many of those classified graphs. We know that there are other classifications by process or customer, and need to analyze for those aspects. But this paper is the case study that is a starting point for theory development as mentioned in Section 1, and thus detailed analysis of those aspects remains as future research. Figure 6 shows the accumulative graph of an item of Product A. The four accumulative lines are the receipt of orders, start of the first process, finish of the last process, and start of shipping. In Figure 5, the accumulative lines are straight and parallel, whereas in Figure 6 the accumulative lines from order to the last process are step-wise. From the production lot sizes of Product A that were explained in Section 3.2.1, the lump-sum order reception and production happened and the step heights became larger. The Lead-time from the order reception to shipping is about two months long as a result of those lump-sum operations. The lump-sum order reception and production have an advantage in keeping enough order quantity on hand and the efficiency of production including set-up. But, the lump-sum becomes a disadvantage in the aspect of lead-time. The lead-time is more important than the efficiency in recent manufacturing environment. Here, the Fluctuation range regarding the average slope is introduced as a measure of amplitude of the lump-sum order reception and production, or the step height. The fluctuation range is calculated by the following procedure (refer to Figure 7); 1) Draw an average line by connecting the start and the last point of the accumulative line. 64

11 2) Move the average line up and down while keeping parallel to the average line until the moving lines touch with the upper and the lower point of the accumulative line. 3) Gauge a vertical length between the upper and the lower moving lines, and it gives the measure of the fluctuation range Order Start at the first process Finish at the final process Start of shipment /9/1 1/1/1 1/11/1 1/12/1 11/1/1 11/2/1 11/3/1 11/4/1 Figure 6 - Accumulative graph of an item of Product A Average line Upper moving line Fluctuation range Lower moving line Figure 7 - Conceptual diagram of fluctuation range Basically, two items having the widest fluctuation range are selected as case samples from Products A and C. We call A1 and A2 for two items of Product A, and C1 and C2 for Product C. The selected four cases are typical not only in the targeted company, but also in similar manufacturing companies from discussions with the researchers of those companies. The word basically implies that we selected case samples by the measure of fluctuation range. However, the discriminating ability of the measure is yet weak, and then a complementary judgment is needed by referring to the shape of the accumulative graph. Future research is planned to refine and evaluate the fluctuation range. There can be another way of viewing the graph, which is to measure the horizontal length instead of the vertical length. It means the measure of lead-time instead of inventory. We think that the inventory as a result is easy to understand compared with the lead-time as a cause, and thus we use the fluctuation range of inventory in this paper Data collection To analyze the causes of lead-time problems and consider improvement ideas for selected four samples in Section 4.1, data are collected by the following protocols; * To gather actual data concerning the efficiency of processes and the flows among processes, the process and work analysis of IE (Industrial Engineering) methods is conducted, and also interviews with peoples in production floor are conducted. 65

12 1st Process 2nd Process 3rd Process 1st Process 2nd Process 3rd Process Ohata, Matsumoto and Kanazawa: A Basic Research on LT Seven Tools for Total Lead-Time Reduction * To understand the way and situation of production planning and control, interviews with planning staff, and the data collection of actual production planning and control performance are conducted. * To know about actual contents of customer order, interviews with sales people and data collection of received order are conducted. By conducting the above data collection in many aspects, we try to do objective judgments and not get into subjective judgments. 4. ANALYSIS In this analysis section, the internal validity and the external validity must be assessed. According to Gibbert et al. (28), internal validity refers to the causal relationships between variables and results. And three measures have been proposed to enhance internal validity. The measure of A clear research framework out of its three proposal measures is selected to enhance internal validity in this paper. Figure 8 shows the framework of this case study research. The left-hand of the figure shows the problem situation where the long lead-time and the large inventory come from imbalances and un-synchronized timings of production processes. Then factors (LT seven tools) are listed in the middle of the figure, and results (lead-time and inventory reduction) are shown in the right-hand of the figure. Problems Long lead-time Large inventory Factors (LT seven tools) Tool 1:Whole Chain Viewpoint (SCM) Total LT reduction from order to shipping instead of local reduction Tool 2:Straight Flow (Flow) Aim for the on-piece production instead of sum-up prodction Tool 3:Parallel Flow (Lean) Syncronize the prodtion pave with other processes Results Lead-time reduction Inventory reduction Tool 4:Stop Push (Non-Push) Start production by syncronizing with shipping instead of sum-up Tool 5:Seek Pull (Pull) Syncronize with the next process instead of own process operation Tool 6:Smaller Step (LOT) Seek for production of smaller and same lot sizes Tool 7:Neglect wait (Step-less) Reduce the non-produsable time those harmed production Figure 8 - Research framework Because the causal relationships between factors and results in the framework may be generally tangible among researches in similar manufacturing industries, this framework may enhance this paper s internal validity. Within-case analysis (in Section 4.1) of four selected case samples is argued based on the causal relationships in the framework. About external validity, Eisenhardt (1989) suggested that a cross-case analysis involving four to ten case studies may provide a good basis for analytical generalization. According to this suggestion, the cross-case analysis (in Section 4.2) among four selected case samples is argued in terms of similarities and differences Within-case analyze Case A1 66

13 An accumulative graph of item A1 is shown in Figure 9, and six accumulative lines are the receipt of orders, start of the first process, start of the middle process, finish of the last process, start of shipping, and completion of shipping. About the middle process, the processes of Product A are divided into the preliminary processes where mass production is favorable from the efficiency, and the finishing possesses where production with smaller lot sizes can be available. The middle process is the first process of latter finishing process to indicate the separation of two processes; the preliminary processes and the finishing possesses. Figure 1 shows the enlargement of part X and Y in Figure 9. Accmulation 25 Z 2 Y X Order Start at the first process Start in the middle process Finish at the final process Start of shipment Finish of shipment 12/1 1/1 2/1 3/1 4/1 5/1 6/1 7/1 8/1 9/1 1/1 11/1 12/1 1/1 Figure 9 - Accumulative graph of item A1 Accmulation 1 Order Start at the first process Start in the middle process Finish at the final process Start of shipment Finish of shipment Accmulation 17 Production lead-time : two weeks Total lead-time : two months /1 3/1 Total lead-time : two months 4/1 (a) Part X in Figure 9 (b) Part Y in Figure 9 Figure 1 - Enlarged accumulative graph of item A1 As shown in Figure 1(a), steps of the order line are higher than that of the shipping, and it means that the order is received by lump-sum volume of smaller customer orders. By applying the second tool Straight Flow, a smaller lot size production, compared with the actual larger order lot size, is introduced between the first process and the last process of production. It is simultaneously planned to keep the efficiency even for smaller lot sizes by the IE improvement of set-up operations from the viewpoint of the seventh tool Neglect Wait. Also shown in Figure 1(a), the total lead-time of item A1 from the receipt of orders to the completion of shipping is almost two months. A half of the lead-time is a production leadtime from the start of the first process to the finish of the last process, and the large inventory 7 6/1 7/1 Order Start at the first process Start in the middle process Finish at the final process Start of shipment Finish of shipment 8/1 67

14 of work-in-process is in the production processes. From the interview with planning staff, it is known that the practical lead-time of item A1 is almost half a month, which is smaller than the actual lead-time of one month. This means that the earlier start of the first process is done by using earlier accepted orders. By applying the fourth tool Stop Push, the timing of the start of the first process is determined by synchronizing with the shipping, even though orders are received earlier than the timing. Inter-process lead-times are set from the interview with planning staff and the survey of operating condition of each process. The start timing of the first process shall be matched with a sum of the inter-process lead-times of each item s process routing. As a result shown in Figure 1(b), even the total lead-time of item A1 is still two months, the production lead-time is reduced to about two weeks, and the inventory of work in process is reduced about by 5%. The last process production of item A1 is divided by matching with the shipping lots. It happens that the shipping of partially finished products is done before the completion of the last process, and then two lines of the finish of the last process and the start of shipping are overlapping each other. Then applying the fifth tool Seek Pull, the production of the last process is planned to synchronize with the shipping. As shown in Figure 11 (enlargement of part Z in Figure 9), the line of start of shipping comes earlier and does not overlap with the line of completion of the last process. Accmulation 26 Order Start at the first process Start in the middle process Finish at the final process Start of shipment Finish of shipment Order accumulative line in Figure 1(a) /1 11/1 Figure 11 - Part Z in Figure 9 In Figure 11, as compared with Figure 1(a), the order quantity that is the slope of the order line is gradually decreasing. The third tool, Parallel Flow, and the sixth tool, Smaller Step, are applied to cope with that order decrease. Then the production is controlled to keep parallel with the order line, and the lead-time is maintained at two weeks, which is the same value as in Figure 1(b). And now, improvements for the total lead-time reduction until the shipping line are undergoing from the viewpoint of the first tool, Whole Chain Viewpoint Case A2 An accumulative graph of the second case of Item A2 is shown in Figure 12 and six accumulative lines are the same as in Figure 9. In this case, shipping quantities are classified into larger or smaller periods in three months cycle. Figure 13 shows the enlargement of part X and Y in Figure /1 68

15 3 Small Large Small Large 25 2 Y /1 1/1 2/1 3/1 X 4/1 5/1 6/1 Figure 12 - Accumulative graph of item A2 7/1 8/1 9/1 Order Start at the first process Start in the middle process Finish at the final process Start of shipment Finish of shipment 1/1 11/1 12/1 1/ Total lead-time : three months 3 Production lead-time : two weeks Total lead-time : two months /1 3/1 4/1 5/1 Order Start at the first process Start in the middle process Finish at the final process Start of shipment Finish of shipment 6/1 7/1 (a) Part X in Figure 12 (b) Part Y in Figure 12 Figure 13 - Enlarged accumulative graph of item A /1 9/1 1/1 11/1 Order Start at the first process Start in the middle process Finish at the final process Start of shipment Finish of shipment 12/1 1/1 In the first three months in Figure 13(a), the push production is done by using the earlier accepted orders from customers. As a result, the production becomes earlier compared with the shipping, and the amount of two months inventory is carried. Figure 14(a) shows the accumulative graph of two lines of the order and the completion of shipping, which are extracted from Figure 13(a). The average lines of order and shipping lines in Figure 14(a) are parallel. Then the first tool, Whole Chain Viewpoint, is applied, and the people of the sales department discuss with the customer and try to match the timing of shipping and reception of order. In the first three months of Figure 14(a), the quantity of order for each time varies and the step of the accumulative line is uneven. In this matter, the sales department, with the cooperation of customers, makes improvements to reduce the order quantity from the viewpoint of the sixth tool, Smaller Step. As a result, the accumulative line of reception of order becomes parallel, and the amounts of order and shipping become equal as shown in Figure 13(b). The lead-time from the receipt of order to the completion of shipping is three months long as can be seen in Figure 14(a). This long lead-time implies that the lump-sum production is done among the preliminary processes by placing emphasis on the efficiency of large and mass equipment, and wider fluctuations can be seen in the accumulative line of the first process in Figure 14(b). Improvement on the first process accumulative line is introduced to synchronize and have the same slope with the shipping line by applying the second tool, Straight Flow, and the fourth tool, Stop Push. The IE improvement for reduction of the 69

16 set-up operation time from the viewpoint of the seventh tool, Neglect Wait, is also conducted as in Case A Total lead-time : three months 2 Upper moving line 15 Average line /1 3/1 4/1 5/1 Order Finish of shipment 6/1 Average line 7/1 (a) Order and the completion of shipping (b) Start of first process Figure 14 - Extracted accumulative graph from Figure 13(a) As a result of improvement of controlling the production timing of each process with the application of the third tool, Parallel Flow, by the production control department, the accumulative lines of Figure 13(b) become parallel. As a consequence of those improvements, three months total lead-time and one month production lead-time are reduced to the total leadtime of two months and the production lead-time of two weeks. In this Case A2, the first tool, Whole Chain Viewpoint, is discussed from an earlier stage of the improvement instead of the delayed application and argument in Case A1. To realize the first tool improvement, the cooperation between the three departments are necessary; the sales department who coordinates the order timing and quantity with customers; the production control department who controls the start timing of the first process; the manufacturing department who coordinates the process timings to realize parallel lines. Looking at the accumulative graph of Figure 13(b), the problem among the departments can be shared and is solved effectively. And now, the improvements of quality problems by utilizing data of inspection equipment and maintenance operations to reduce equipment malfunctions are conducted from the viewpoint of the seventh tool, Neglect Wait Case C1 An accumulative graph of the third case of item C1 is shown in Figure 15. This is the case where the manufacturer uses materials provided by the supplier. The first accumulative line represents the supply to the manufacturer from the supplier, the second accumulative line represents the use of materials by the manufacturer, and the bar graph represents material inventory at the manufacturer. The scale of the inventory graph is located in the right-side vertical axis. In part X in Figure 15, materials of one month usage by the manufacturer are supplied monthly. This monthly material supply results in one and half month long lead-time, and the amount of about.9 month materials on hand (the average inventory of 1492 pieces and the average monthly usage of 171 pieces in the period of November to December). In part Y in Figure 15, by applying the second tool, Straight Flow, and the sixth tool, Smaller Step, the unit of supply quantity is reduced from one month volume to two weeks volume. And, by applying the fourth tool, Stop Push, the supply line is shifted to the right 5 2/1 3/1 4/1 Lower moving line 5/1 Fluctuation range Start at the first process 6/1 7/1 7

17 and close to the usage line. Moreover by applying the fifth tool, Seek Pull, the pull method from the manufacturer is introduced for parts supply, to keep the amount of materials constant. The two weeks supply amount is determined to balance the cost emerged from lot-size dividing at the supplier and the cost emerged from inventory holding at the manufacturer. By these improvements, the third tool, Parallel Flow, which is the steps in the supply line become constant and parallel with the usage line, is realized. Inflow,Outflow (pieces) 2, 15, 1, 5, Stock Supply from the supplier Use of materials by the manufacturer X Y 4, 3, 2, 1, Stock (pieces) 1/1 11/1 12/1 1/1 2/1 Figure 15 - Accumulative and inventory graph of item C1 For the above improvements, the coordination between the supplier and the manufacturer is needed, and also the coordination is required and taken place from the viewpoint of the first tool, Whole Chain Viewpoint. The production control department shares the material related information with the sales department by monitoring the inventory level of each material weekly compared with the pre-determined inventory target. And by referring to the list of materials with a high inventory level, the PDCA cycle of inventory reduction is carried out across the departments. As a result of the above mentioned improvements, the lead-time from supply to usage of materials is reduced to two weeks, and the average inventory level in the period of February to June become 182 pieces and decrease by 27% as compared with 1492 pieces in the period of November to December. 3/1 4/1 5/1 6/1 2, Stock 4, Supply from the supplier Inflow,Outflow (pieces) 15, Use of materials by the manufacturer 3, 2, 1, Stock (pieces) 1, 4/1 5/1 Figure 16 - Enlarged accumulative graph of part Y in Figure 17 Figure 16 is an enlarged accumulative graph of part Y in Figure 15. The reason of the line of material usage being horizontal in the part encircled in Figure 16 is that the machine which 6/1 71

18 uses materials is stopped by trouble, and it implies that the accumulative line can be straightened by eliminating the problem of machine stoppage. Now, from the viewpoint of the seventh tool, Neglect Wait, the visualization of the machine operating status and maintenance records is carried out, and the reduction of machine stoppage can be dealt with by planned preventive maintenance Case C2 An accumulative graph of the fourth case of item C2 is shown in Figure 17, and the accumulative graph and the inventory graph have the same contents as in Figure 15. This case is characterized as early stage production. Item C2 is a new product, and there are three stages of production; trial production in part X, first mass-production in part Y, and normal massproduction with additional orders in Part Z. It is rather common to treat the new product or the early stage production as irregular case separated from the normal mass production. We are trying to analyze and improve this case as one regular case instead of treating as irregular case, and apply LT seven tools to this case similarly as the previous three cases. 4, 3,5 Stock Supply from the supplier Z 4, 3,5 Inflow,Outflow (pieces) 3, 2,5 2, 1,5 1, 5 Use of materials by the manufacturer Y X 3, 2,5 2, 1,5 1, 5 Stock (pieces) 1/1 11/1 12/1 1/1 2/1 3/1 Figure 17 - Accumulative and inventory graph of item C2 At the stage of the trial production in part X, a little amount is shipped. At the end of part X or at the beginning of part Y, 18 pieces of materials for mass production come from the suppler. Mass production starts from the beginning of part Y. The material inventory of 13 pieces is remaining in the middle of January because the shipping quantity does not increase steadily. This manufacturer has a tendency of producing extra inventory by expecting the order from the customer similar to case C1 as shown in part X of Figure 15. Reflecting on the tendency, the supply of materials is stopped until the material inventory become less than 5 pieces by confirming the accumulative graph of the material inventory and materials usage in Figure 17. Shipping quantities become the constant pace, and the shipping line becomes straight in part Y after the middle of January. And then, in part Z of Figure 17, the material supply quantity is set to the amount of two weeks usage from the viewpoint of the second tool, Straight Flow. But the control of supply quantity has some problems, and the actual supply amount fluctuates. The corners of the supply line are moved closer to the material usage line by postponing the timing of materials supply until the timing when the material inventory almost finishes from the viewpoint of the sixth tool, Smaller Step. 72

19 The material supply rule is the same as that of the case C1. For avoiding the earlier material supply compared with the material use from the viewpoint of the fourth tool, Stop Push, the system of the material pull from the supplier is adopted. As a result of this improvement, the average inventory level of materials decreases to 385 pieces, and significant inventory reduction is achieved. As mentioned before and shown in part Z of Figure 17, material supply quantities have variations and are not according to the viewpoint of the sixth tool, Smaller Step. It is the next assignment to realize the material supply of equal lot and the Parallel Flow, which is the third tool. Now, from the viewpoint of the seventh tool, Neglect Wait, the introduction of the preventive maintenance activities is carried forward by the visualization of the machine operating status and the maintenance records. The above improvements show that LT seven tools can be applied to the early stage production of a new product like part Y in Figure 17 for reducing lead-time and inventory. But the material supply and production in the initial trial production like part X in Figure 17 is not yet solved. Analysis and consideration of the early stage production is remained as a future assignment Cross-case analysis In this subsection, cross-case analysis of four selected cases is argued in terms of similarities and differences among the four cases from the point of external validity. We define that the similarity in this paper is an affecting degree of each factor to the results in the causal relationship of framework of Figure 8. We think that it can be measured by an applicability level of each LT seven tool (factor) to the results of the lead-time reduction in the four cases. The applicability is evaluated in the next three levels by qualitative judgments of authors as follows; : Intensive improvement actions are taken to aim for the result and the improvement effect is large : Complementary improvement actions are taken along with the above intensive improvements and the improvement effect is rather small - : Not yet implicated or the assignment of future research The total applicability is also evaluated; indicates more than two case evaluation, and : indicates otherwise. Table 2 shows the summary of the applicability evaluation. Table 2 - Applicability Case A1 Case A2 Case C1 Case C2 Total Tool 1 : Whole Chain Viewpoint (SCM) - Tool 2 : Straight Flow (Flow) Tool 3 : Parallel Flow (Lean) - Tool 4 : Stop Push (Non-Push) Tool 5 : Seek Pull (Pull) - Tool 6 : Smaller Step (LOT) Tool 7 : Neglect Wait (Step-less) - The applicability is evaluated by qualitative judgments. We think that quantitative judgments are more preferable from the point of objective evaluation. We think that the development of quantitative evaluation is also the issue as future research. 73