Literature Review On Application Of Lean In Manufacturing Accounting Essay

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This Literature review focuses about how good lean methodology can be implemented in manufacturing and service industries. Carrying out a detailed literature review gave an impact that these manufacturing systems have a large void in two respective fields such as implementing lean with the help of control theories and transition from their traditional manufacturing system to the advanced development in lean manufacturing.

Further down the report we will discuss about the implementations of lean methodologies and their tools that can be used in manufacturing industries and further improvise on major issues or benefits of implementing lean and their tools. Ultimately at the end of the day every manufacturing company wants to make profit this can be achieved with the help of reduced customer lead time and reduced cycle time. The void that arises in these manufacturing companies can be only filled with the help of implementing lean manufacturing and reducing the number of non value added days. By value streaming the manufacturing layout we can clearly identify the current state and future state of the process, what the problems are? , what is the solution? , What can be improved? and how good the obtained solution can be implemented, maintained for achieving the customer needs.

In mid of the report we will analyse the current state value stream mapping of the organisation and identify the seven waste occurring and thereby decreasing the lead time by implementing the lean techniques such as 5S,Poka Yoke,Andon,SMED,Yamazmi Board,Kanban systems. The literature review concludes by postulating lean manufacturing principles as the best solution for overcoming these difficulties in meeting the demands of the customers and reducing the inventory level which are commonly high in every industry.

KEY WORDS: Lean production, Productive maintenance, Bottle necks

INTRODUCTION:

"Lean manufacturing is a Business philosophy that continuously shortens the time between customer order and shipment by eliminating everything that increases the cost and time (Alessandro Laureani and jiju Antony, 2009)". Increasing competitiveness and intensity the manufacturing companies try to improve manufacturing operations by addressing specific needs. According to Author (Hayes and Pisano , 1994) manufacturing companies handle different strategies for reducing the gap between customer demand and current manufacturing capabilities. Due to heavy market demand with increased variation of products and extreme quality expectation all manufacturing companies require a new production philosophy and redefinition of inventory.

LITERATURE REVIEW:

This literature review is based on the reviews of present and past journals and books on lean manufacturing engineering. The purpose of this literature review is to enumerate how the key principles of lean manufacturing can drive the evils of inventory and reduce the lead time thereby leading the organisation to meet the demands of the customers. This literature review revolves on seven journal articles and three books that add value to the benefits of using lean manufacturing in organisations. The topics such as

Why implementing lean?

Benefits of lean manufacturing.

Their Tools used.

Issues encountered by company people.

The largest portion of literature review falls on identifying the need of lean manufacturing, identifying the non value added works with the help of value stream mapping, designing the future state map with the help of current state map. According to Matthias Holweg lean manufacturing systems successfully challenged the mass production practises and engraved a trade off between the productivity and quality (Matthias Holweg, 2006). He further quotes that lean manufacturing is a generic process management philosophy which is originated from Toyota production system in the early 1990s. This system focuses on identifying the seven wastes in the manufacturing line that improves the value added works. Akin O. Akinlawon confers a point to this that lean manufacturing system is comprehended when the 3M's of manufacturing systems are blended together i.e. Man (human resources), Materials (raw materials), Machines (Equipments). As the author points out that maximum utilisation of available resources should be made this will successively lead to smooth flow of materials, man and machines, reduce the investment and increase the return on investment. The author (Akin O. Akinlawon, n.d.) also suggest that there are 3 major steps in establishing lean philosophy by

Designing a simple manufacturing system

Recognize that there is always room for improvements

Constantly Improve the Lean Manufacturing System Design.

According to the author Liker in his most recent book about the Toyota production systems confers that the management principles of Toyota is the greatest management principles among the leading manufactures. The author confers that lean manufacturing is a way of thinking or a culture in which everyone in the organisation should think and recognize that there is always a room for improvement. He also mentions that lean is nothing but manufacturing without any waste. Another author Lee comes out with a lean assessment procedure in which a Questionnaire or survey is conducted to the members of the organisation the survey includes details about inventory level, process, maintenance, setups, quality etc. As the results are immediately available the obtained results are recorded in the scoring sheet and analysed thereby reducing the gap between current state and target can be achieved.

Author shahram Taj articulates that implementing lean production system will answer the following questions relating to the manufacturing line such as:

Which area of the plant is organized by functions or process type?

Quantity of WIP which flows from one machine to next machine without any buffer storage.

Quantity of raw material or purchased items delivered directly without any inventory.

Quantity of WIP in the Kanban Square.

Overall setup time of the major equipment.

Overall defect rate of component.

On time delivery performance.

Due to various competitive forces in the global market organisations are forced to manufacture products of higher quality at lower prices for this they need an improved manufacturing operation. This can be only achieved by implementing lean production system (Shahram Taj, 2007). John S.W. Fargher articulates that conversion of the customer demand into final product is based upon value stream mapping the current state and the future state. Reconfiguring value stream analysis at each manufacturing cell is the first step in implementation of lean. Author also expresses that value streaming the manufacturing cell will help us to identify the 7 waste that delays the total lead time of the product. Value stream mapping of the current state is done and then it is re-arranged to eliminate the non value added activities which reduces the total lead time of the process. From the views of various authors it can be clearly seen that the lead time increases due to the Work in progress inventory between each cell which is the bottle neck of lead time. As a result of value streaming the current state it becomes a base line for continuous improvement and to identify the 7 waste and eliminate them to give the future state map. The seven waste such as overproduction, inventory, defects, over processing, waiting, underutilized people, motion and finally transportation are identified using GAP analysis.

Fig 1.0 Gap analysis audit chart

(Source: Coventry University Lecture notes)

(Shahram Taj, 2007) confers that the gap analysis audit covers areas such as Just in time, people, and manufacturing excellence which in turn helps to identify the seven wastes in the current state map.

Fig 1.1 how to bridge gap between current state to future state vision

Source: (Dennis P. Hobbs , 2004)

Dennis P. Hobbs in one of his book on Lean manufacturing implementation articulates that project managers of the organisation are the ones who take the imitation in implementing lean into the organisation. Value stream mapping bridges the gap between current state and future state (Dennis P. Hobbs , 2004).

Fig 1.2 identification of Seven Wastes using value stream map

(Source: Coventry University Lecture notes)

Mohammad Taleghani in one of his famous journals he articulates that there are two basics of lean manufacturing i.e. "respect to the work force" and "elimination of waste". Mohammad Taleghani also states that lean manufacturing cannot be successfully implemented if one part of the organisation follows and other part does not follow it. Lean can be successfully implemented only when the total organisation dedicates to follow then lean can be successful and also highlights on the benefits of lean manufacturing such as (Mohammad Taleghani , 2010):

Productivity of the organisation improves

Total Manufacturing lead time is reduced.

Better usage of the resources (machine, men, materials)

Less scrap

Cost of the material reduced

Inventory levels reduces

Stock holding cost reduces

Quality of product and organisation improves.

Plant space gets reduced

Layout of plant is efficient

Utilization of the Best labour resources

Safety increases.

Stabilized market position

Good communication

Continuous improvement

Meeting customer demand on time

From the views of all the authors we can come to a strong determination that a organisation which neglects lean manufacturing will definitely face lot of difficulties and will not be able to withstand in the current competitive global market with increased. A study done by one of the author Puvanasvaran P.Megat and Hong T.S in his journal confers that most companies fail in implementing lean due to the lack of communication within the organisation and lack of training to the employees about lean manufacturing.

As the author Dennis P. Hobbs already stated about the Lean manufacturing implementation in his book he quotes that the main reason for implementing lean production is for having shorter response time, improvements on inventory, working capital reduction and for having a competitive pricing among the competitors (Dennis P. Hobbs , 2004). One of the famous authors of lean manufacturing Nakamura M. Sakakibara confers a strong point that people are considered as the assets of organisation, a poor quality management would result in loss and waste. People are considered as the key elements of lean manufacturing.

This literature review highlights the key reasons for implementing lean manufacturing system in organisation thereby reducing their organisation overall products lead time with a reduced inventory level and meeting the demands of their customers. In addition to this we have articulated various difficulties that companies face during implementation of lean in their organisation and this literature review highlights some of the key tools of lean manufacturing such as 5'S principles,7 waste analysis, Poke Yoke, Gap analysis, Andon, SMED, Yamazumi Board and finally the, Kanban systems. This literature review also covers some of the important issues of implementing lean culture within the whole organisation and also confers how managers of the organisation should remember the main basic of lean which is "Respect for people" thereby leading their organisation to continuous improvement

LITERATURE REVIEW TABLE:

Source

Why implement lean

Benefits of lean

Tools used

People issues encountered

Akin O. Akinlawon, Managing Director, Manufacturing Solutions/ Industrial Automation Group, Comdisco Inc.

Increasing competitiveness

Due to high customer demand

Minimizes the cost

Reduces the lead time.

Reduces the inventory level

Understanding the 3M's of manufacturing systems thoroughly.

None mentioned

Liker

14 Management Principles from the world's greatest manufactures

2004

To implement Good management principles

Way of thinking changes.

Way of thinking by members of the organisation

Culture changes occurs

Continuous improvement

Reduces 7 wastes.

None mentioned

Shahram Taj

Lean Manufacturing performances in china

2007

To understand the principles behind manufacturing systems

To increase Competitive forces

To reduce non value added works in each process

To Improve customer satisfaction

To Increase job satisfaction

To Increase profit for the company

To identify the area of the plant

Quantity of WIP.

Quantity of raw material

Quantity of WIP in the Kanban Square.

Overall setup time of the major equipment.

Overall defect rate

Delivery performance.

Lean production system Design template

Cellular type manufacturing system

Chinese people were new to this kind of practise

Lee

Lean manufacturing strategy from the site

http://www.strategosinc.com/

Lean assessment procedure

Assessment tool for identifying the drawbacks.

Targets can be achieved

Questionnaire or survey

Scoring sheet

None mentioned

John S.W. Fargher

Lean Manufacturing implementation tools

2009

To Reduce lead time

Identify the 7 wastes

Reduces the lead time of the process

Demolishes the 7 waste that increases the lead time

Value stream mapping of current state

Value stream mapping of future state

None mentioned

Nakamura M. Sakakibara

Adoption of just in time manufacturing methdods in US

1998

To motivate the employees of the organisation

To consider people as the asset to reduce waste

Provides a good management

Reduces the waste

Improves flexibility within the organisation

GAP analysis

5'S principles

None mentioned

Mohammad Taleghani

Key Factors for implementing lean manufacturing system

2010

To Eliminate waste

To respect the work force

Increases profit

Reduces the lead time

Reduces inventory

Effective leaders ship within the organisation.

Kaizan

Just in Time

5's principle

Poke Yoke

None mentioned

Puvanasvaran P.Megat and Hong T.S

The role of communication process for an effective lean manufacturing implementation

2009

To avoid the lack of communication.

To provide regular training to employees.

Quality of product and organisation improves

Utilization of the Best labour resources with good communication

Training to employees about lean manufacturing

None mentioned

Dennis P. Hobbs

Lean manufacturing implementation

2004

To have a shorter response time

To have a improved inventory control

Less lead time

Good control over inventory

Competitive price

Cellular manufacturing system

None mentioned

PART B -CURRENT STATE MAP

SUMMARY:

Increasing competitiveness and intensity every manufacturing company tries to improve their manufacturing operations. Manufacturing companies handle different strategies for reducing the gap between customer demand and current manufacturing capabilities.M Automotive Parts (MAP) is a first tier supplier to the automotive industries with their base in the Midlands process machines, presses, paints and assembles products in high volume let us critically appraise their current manufacturing process and suggest them with implementing lean for achieving their customer demands.

CUSTOMER REQUIREMENTS:

1400 car sets per month

Returnable carriers (universal for AZ123, AZ124 AZ223, AZ224),

10 assemblies per carrier

Carriers should be identified by part number.

Three shipments per day to the customer by lorry.

Customer site working three shift system.

CAR SET

AZ123 (1 off) AZ223 (1 off) AZ124 (1 off) AZ224(1 off)

AZ123A(1 off) BZ111(1 off) AZ124A(1 off) BZ111(1 off)

WORKING TIME:

20 working days in a month

Operating a 2 shift system in all production operations

6am - 2 pm, 2pm - 10pm,

30 mins lunch and two 15 min breaks

ASSESSING THE CURRENT MANUFACTURING FACILITY:

Takt Time Calculations for Shift A and Shift B

Working shifts / day

2

shifts

Hours / shift

8

hours

Available time / shift

480

minutes

Break time / shift

30

minutes

Lunch time / shift

30

minutes

Planned downtime / shift

0

minutes

Net working time / shift

420

minutes

Net working time / shift

25200

seconds

Net available time / day

50400

seconds

Customer Demand:

Customer demand / day

70

pieces

Net available time / day

50400

seconds / day

Customer demand / day

70

pieces / day

Takt time =

720

seconds / piece

Value streaming the current state map of Lanchester Steels a critical appraisal is done based on the following factors:

Lead-time High

Value Added very low

WIP levels Very High

Flow of the product Parallel flow

Balance of the line poor

Information flows complex

Ownership of the product (problems) nil

GAP AUDIT ANALYSIS:

A Gap Audit analysis is conducted on the current state of Lanchester steels which gives a judgemental data for the areas where implementation of lean can be done for Lanchester Steels to meet the customer demand of 70car sets per day.

MASS

GAP-AVERAGE SCORE SCORESSCORE

LEAN

1. Just in Time

Order levelling - High 5

Material movement - Slow 3

Flow Manufacture - Complex 4

2. People

Training - Less 2

Team involvement - Less 2

3. Manufacturing excellence

Visual Controls - None N/A

Quality - Good 5

TPM - Yes 5

SMED - Yes 5

5S - Yes 5

The next process of critical appraisal is identifying the seven wastes that occurs in the value stream mapping of the current state:

Waiting

Over production

Rework

Motion

Processing

Inventory

Transportation

SEVEN WASTE OF LEAN MANUFACTURING:

WASTE

OBSERVATION

Waiting

Long waiting time

Process 2 has long waiting time

Process

Overproduction

NOT APPLICABLE

Rework

NOT APPLICABLE

Motion

PARALLEL TYPE

Processing

Totally 11 Operations are being done

Inventory

1. Assembly 3 has more finished goods.

2.Process 1 has more WIP inventory

3.Finished product inventory after assembly 3 operation

Transportation

1.Raw Material Arrives Every Monday And Wednesday

2.Finished Products 3 times per day

CURRENT STATE OF APPRAISAL:

The seven wastes can be easily identified from the value stream mapping of the current sate. The picture below shows the value stream mapping current state of cell 1 with identified seven wastes. The critical appraisal of the current state mapping cell1s can be done with considering some of the major factors such as:

Lead-time

Value Added

WIP levels (set ups, batch size & queues)

Flow of the product

Balance of the line

Information flows

Ownership of the product (problems)

CELL 1

Fig 1.3 identified seven wastes of cell 1

Source: Own source

The seven wastes can be easily identified from the value stream mapping of the current sate. The picture below shows the value stream mapping current state of cell 1.When critically appraising the cell11 it can be clearly identified that the Lead time of the manufacturing cell 1 is approximately equal to 60.38 days which fairly on higher side. The lead time is high due to the large amount of work in progress inventory stored after each operation. Operation Press form should wait for 30.6 days to get a product from Press blank which forms the bottle neck in the cell1 which increases the total lead time of cell. Whereas the total value added time of cell 1 seems to be 383.5 seconds which is quite less. The flow of the process seems to be slowed down due to the bottle neck formed after process 1.

Valued-added tasks:

Press blank, Press form, Insert, Drill, Automatic paint

Non-value-added steps, necessary:

Work in progress inventory

Change over time

Transportation of WIP products between each assembly operation

Value-added time = 383.5 seconds

Percentage value-added time = 383.5sec/1480seconds = 25 %

CELL 2

Fig 1.4 identified seven wastes of cell 2

Source: Own source

When critically appraising the cell 2 it can be clearly identified that the Lead time of the manufacturing cell 2 is approximately equal to 11.29 days which fairly on lesser side. The lead time is less due to the less amount of work in progress inventory stored after each operation. Operation CNC TURN should wait for 4.29 days to get a product from SAW operation which forms the bottle neck in the manufacturing cell 2 which increases the total lead time of cell. In operation 2the cycle time is900seconds which is also a draw back because the total Takt time of the product is 720 seconds. Whereas the total value added time of cell 1 seems to be 1215 seconds which is fair. The flow of the process seems to be slowed down due to the bottle neck formed after process 1.

Valued-added tasks:

Saw, CNC Turn, Grind

Non-value-added steps, necessary:

Work in progress inventory

Change over time

Transportation of WIP products between each assembly operation

Value-added time = 1215 seconds

Percentage value-added time 1215sec/1480seconds = 82%

CELL 3

Fig 1.5 identified seven wastes of cell 3

Source: Own source

When critically appraising the cell 3 it can be clearly identified that the Lead time of the manufacturing cell 3 is approximately equal to 52.09 days which fairly on higher side. The lead time is high due to the large amount of work in progress inventory stored after each operation leading to forming of queue and WIP inventory. Assembly 3 operation should wait for 6.86 days to get a product from assembly2 operation which forms the bottle neck in the cell 3 which increases the total lead time of cell. Whereas the total value added time of cell 3 seems to be 265 seconds which is fair. The flow of the process seems to be slowed down due to the bottle neck formed after process 1.

Valued-added tasks:

Assembly operation 1,2,3

Non-value-added steps, necessary:

Work in progress inventory

Change over time

Transportation of WIP products between each assembly operation

Value-added time = 265 seconds

Percentage value-added time = 265sec/1480seconds = 17 %

5'S PRINCIPLES:

Seiri (Sort)-Separating the necessary tools from unnecessary items, including tools, parts, materials, and paperwork, and remove the unnecessary items.

Seiton (Straighten)-Arranging the necessary items neatly for next product, providing visual cues to where items should be placed.

Seiso (Sweep)-Clean the work area i.e. Waste from machines etc

Seiketsu (Standardize)-Standardizing the first three 5'Ss so that cleanliness is maintained throughout the shop floor.

Shitsuke (Sustain)-Ensuring that the first four 5'Ss continuously performed on a regular basis.

SPAGHETTI DIAGRAM OF THE SCHEMATIC LAYOUT OF THE FACTORY:

Goods IN Goods Out

Shipment Staging

Raw material Stores

Stores

Machine Shop

(Insert, Saw drill, CNC, grind, paint booth)

Tool Stores

GAUGE ROOM

ASSEMBLY

Tool Room

X-RAY

NDT

Inspection

Press shop

DISCUSSIONS:

From the schematic factory layout we can clearly see that there is large time is taken for the part family to travel from inspection to the NDT and X-RAY section which delays the product for shipment. Moreover there is a drawback in the layout of the factory the NDT and X-RAY sections can be clubbed together in the inspection section so that the transportation time can be reduced which reduces the unnecessary motion which is considered as one of the major waste of lean. From the value streaming the current state we could identify that cell2 has less lead time due to small amount of WIP inventory whereas cell1 and cell3 had large lead times due to high WIP inventory between each machining operation. Lanchester steels have less variety of product ranges and can implement cellular manufacturing layout as they have less product lines and less variety of products leading their organisation to have

Reduced setup time

Small batch sizes

Reduced material handling

Reduced material transportation

Increased job satisfaction

Improved communication between operators

Improved quality of the end product

Lanchester steels can implement the SMED which is single minute exchange of die which reduces the change over time or set up time between each operation. Installing the KANBAN system and Pull system the overall lead time of the process can be reduced thereby eliminating waste, overproduction and inventory. By Increasing the technology of the press blank operation the lead time can be totally reduced. Yamazumi boards can be installed in the shop floor which displays the Takt time of the whole process, easy to identify the work elements, highlighting the Value Added and Non Value Added work to the workers where they can visually know the work balance if they are lagging behind the schedule. By installing these lean techniques Lanchester steels can

Raise their working standards

Will have the capacity to recognise and eliminate 'waste'

Better utilisation of available resources can be achieved

Promotes team work within the organisation.

Controlled inventory level

Stabilized market position

Reduced Lead time

Increased Profit

Meeting customer demands on time.

CONCLUSION:

The benefits of implementing lean is significant for Lachester steels, with increased market range and product ranges for an organisation to withstand its market position lean has to be implemented at some point of time. Since global economy of the world is changing and increased customer demands a company have to be with the innovative strategies and lean is one of the easier way of achieving it.

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