Low Waste And Higher Value Accounting Essay

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Cellular Manufacturing (CM) refers to a manufacturing system wherein the equipment and workstations are arranged in an efficient sequence that allows a continuous and smooth movement of inventories and materials to produce products from start to finish in a single process flow, while incurring minimal transport or waiting time, or any delay for that matter.  CM is an important ingredient of lean manufacturing. (1)

What is Lean?

Running an operation lean means:

Removal of waste of all kinds (e.g. time, motion, inventory, poor cost of quality, etc.)

An organization that stimulates productivity and quality

An organization using value-added processes

Low Quality = High Waste

High Quality = Low Waste and Higher Value

In order to set up a single process flow (or single product flow) line, it is necessary to locate all the different equipment needed to manufacture the product together in the same production area.  This is in contrast with the traditional 'batch and queue' set-up wherein only similar equipments are put in the same area.  Under a 'batch and queue' set-up, products that need to undergo processing under certain equipment need to be transported to the area where the equipment is located. Here they are queued for processing in batches. Such a system sometimes results in transport and batching delays.  In a single process flow set-up, the products simply transfer from one equipment to the next along the same production line in a free-flowing manner, avoiding transport and batching delays.

The single process flow set-up described above is an example of a 'work cell'.  A work cell is defined as a collection of equipment and workstations arranged in a single area that allows a product or group of similar products to be processed completely from start to finish.  It is, in essence, a self-contained mini-production line that caters to a group of products that undergo the same production process. Cellular manufacturing involves the use of work 'cells', which is how it got its name.                 

Since differently-processed products need different work cells, a large company with diversified products needs to build several, different work cells if single process flows are desired.  Given enough volume of products to work with, work cells have been proven by experience to be faster and more efficient in manufacturing than 'batch and queue' systems. 

Because of the free flow of materials in cellular manufacturing, it has the ability to produce products just in time. This means that every unit processed at one station will get processed in the next station. As such, no inventories that have already undergone processing at one station will be left unprocessed in another station.  This prevents the build-up of non-moving inventories, which are products that have already incurred some production costs but can't generate revenues because they are stuck somewhere along the process. Aside from preventing non-moving inventories, process issues are immediately detected by just-in-time production, since defective products are seen earlier than if products are manufactured in large batches and queued. 

One technique that cellular manufacturing can use to achieve 'just-in-time' production is the 'pull system', wherein required inventories and materials are requested or 'pulled in' by each station from the station preceding it.  This 'pull' can originate from the end customer itself, thereby ensuring that the products manufactured are only those needed to satisfy a customer order. This prevents wastes from products not being sold.           

It is not enough to simply arrange different equipment in sequence to make cellular manufacturing really work.  Bottlenecks along the single process flow must be eliminated, usually by balancing the equipment capacities with each other.  If bottlenecks exist, then the higher-capacity equipment within the line will be underutilized. Balancing equipment capacities may mean:

1) Choosing 'right-sized' equipment that match each other; and/or

2) Combining two or more, smaller capacity equipments to match one, large capacity equipment.       

ENTERPRISE ANALYSIS

STRATEGY

Implement cellsCellular manufacturing framework:

MANAGEMENT SYSTEM

Systems, measurement & compensation

ORGANISATIONAL STRUCTURE

The cell as a production unit

Teamwork

TECHNOLOGY

Equipment to process cell families

PROCESSES

Grouping of similar products in families

INFORMAL ORGANISATION

Culture of change & improvement

PEOPLE

Staffing of the cell with skilled employees

CAPABILITIES

Faster responsibilities,

On-time deliveries

OUTCOMES

History of Cellular manufacturing

In its basic form, cellular manufacturing has been around for quite some time. In the late 1960's, the Langston Company in Camden, New Jersey, a producer of semi-custom heavy machinery for the paper industry, manufactured a large variety of parts in fairly small quantities. The plant was set up in a traditional job shop mode, where machines and processes were grouped according to function (i.e. separate departments exist for milling operations, grinding etc.) and where each department was supervised by a foreman. Langston had experienced two major problems: (1) The planning and scheduling of the plant was complex, difficult and time -consuming and (2) the progression of parts through the plant was slow, mainly due to excessive waiting and transportation time. In addition, the company was concerned with increasing labour costs and foreign competition. (2)

To address these problems, Langston adopted a concept called 'family of parts line production'. The idea was to create groups of machine tools that allowed the complete manufacture of similar parts in a straight line. Although its vice president of manufacturing had experimented with the concept in another firm, Langston believes it was the first US Company to pursue "family of parts production" on a large scale. The concept itself however is quite old and may have been developed independently by German and American firms. Daimler is reported to have initiated cells in its aircraft manufacturing as early as 1917 and applied it to its automobile production in 1919.

Although cell manufacturing was practiced in Germany, France, Sweden and Russia in the 1930's through 1960's the modern 'wave' of group production was to an extent caused by the Canadian born consultant and educator John Burbidge. Burbidge who mostly worked in England wrote his first paper on cellular manufacturing in 1961 and continued tirelessly to promote and systematize this concept for more than 30 years.

Chronological order in detail leading to the development of cellular manufacturing is as follows

Note: Cellular manufacturing is a subset of lean manufacturing and there are certain events which led to development of lean manufacturing and indirectly to cellular manufacturing

(3)

Explanation and Implementation

Rather than processing multiple parts before sending them on to the next machine or process step (as is the case in batch-and-queue, or large-lot production), cellular manufacturing aims to move products through the manufacturing process one-piece at a time, at a rate determined by customers' needs. Cellular manufacturing can also provide companies with the flexibility to vary product type or features on the production line in response to specific customer demands.

This one-piece flow method includes specific analytical techniques for assessing current operations and designing a new cell-based manufacturing layout that will shorten cycle times and changeover times. To make the cellular design work, an organization must perform keep in mind the following

Replace large, high volume production machines with small, flexible, "right-sized" machines to fit well in the cell

Equipment often must be modified to stop and signal when a cycle is complete or when problems occur, using a technique called Autonomation (or jidoka).

Both of these will be discussed in detail under step 2, later in this report

This transformation often shifts worker responsibilities from watching a single machine, to managing multiple machines in a production cell. While plant-floor workers may need to feed or unload pieces at the beginning or end of the process sequence, they are generally freed to focus on implementing TPM and process improvements. Using this technique, production capacity can be incrementally increased or decreased by adding or removing production cells.

Cellular manufacturing requires a fundamental paradigm shift from "batch and queue" mass production to production systems based on a product aligned "one-piece flow, pull production" system. The points of parity include:

Batch and queue systems involve mass-production of large inventories in advance, where each functional department is designed to minimize marginal unit cost through large production runs of similar product with minimal tooling changes

Batch and queue entails the use of large machines, large production volumes, and long production runs

It also requires companies to produce products based on potential or predicted customer demands, rather than actual demand, due to the lag-time associated with producing goods by batch and queue functional department

In many instances this system can be highly inefficient and wasteful. Primarily, this is due to substantial "work-in-process", or WIP, being placed on hold while other functional departments complete their units, as well as the carrying costs and building space associated with built-up WIP on the factory floor.

Figure 1 illustrates the production flow in a batch-and-queue system, where the process begins with a large batch of units from the parts supplier. The parts make their way through the various functional departments in large "lots", until the assembled products eventually are shipped to the customer.

Cellular manufacturing_Process.gif

Fig 1

cellular.gif

Fig 2

The following steps and techniques are commonly used to implement the conversion to cellular manufacturing.

Step 1: Understanding the Current Conditions.

The first step in converting a work area into a manufacturing cell is to assess the current work area conditions, starting with product and process data. For example, PQ (product type/quantity) analysis is used to assess the current product mix. Organizations also typically document the layout and flow of the current processes using process route analysis and value stream mapping (or process mapping).

The next activity is often to measure time elements, including the cycle time for each operation and the lead time required to transport WIP between operations. Takt time, or the number of units each operation can produce in a given time, is another important time element to assess. Time elements are typically recorded on worksheets that graphically display the relationship between manual work time, machine work time, and operator movement time for each step in an operation. These worksheets provide a baseline for measuring performance under a cellular flow.

Step 2: Converting to a Process-based Layout.

The next step involves converting the production area to a cellular layout by rearranging the process elements so that processing steps of different types are conducted immediately adjacent to each other. For example, machines are usually placed in U or C shape to decrease the operator's movement, and they are placed close together with room for only a minimal quantity of WIP. The process flow is often counter-clockwise to maximize right hand manoeuvres of operators.

To enable a smooth conversion, it is typically necessary to evaluate the machines, equipment, and workstations for movability and adaptability, then develop a conversion plan. In many cases, it is helpful to mock-up a single manufacturing cell to assess its feasibility and performance. The figure 2 illustrates the flow in a cellular production environment, where parts are pulled into the system as signalled by customer demand.

Several techniques are important to facilitate effective cellular layout design and production.

SMED: Single-minute exchange of die (SMED) enables an organization to quickly convert a machine or process to produce a different product type. A single cell and set of tools can therefore produce a variety of products without the time consuming equipment changeover and set-up time associated with large batch-and-queue processes, enabling the organization to quickly respond to changes in customer demand.

Autonomation: Autonomation is the transfer of human intelligence to automated machinery so that machines are able to stop, start, load, and unload automatically. In many cases, machines can also be designed to detect the production of a defective part, stop themselves, and signal for help. This frees operators for other value-added work. This concept has also been known as "automation with a human touch" and jidoka, and it was pioneered by Sakichi Toyoda in the early 1900s when he invented automatic looms that stopped instantly when any thread broke. This enabled one operator to manage many machines without risk of producing vast amounts of defective cloth. This technique is closely linked to mistake-proofing, or poka-yoke (see TPM method profile).

Right-sized equipment: Conversion to a cellular layout frequently entails the replacement of large equipment (sometimes referred to as monuments) with smaller equipment. Right-sized equipment is often mobile, so that it can quickly be reconfigured into a different cellular layout in a different location. In some cases, equipment vendors offer right-sized equipment alternatives, and in other cases companies develop such equipment in-house. A rule of thumb is that machines need not be more than three times larger than the part they are intended to produce.

After moving the equipment and ensuring quick changeover capabilities, organizations typically document new procedures for the new layout and train workers on the new production process. In many cases, workers from the affected processes participate in the conversion process.

Step 3: Continuously Improving the Process.

This step involves fine tuning all aspects of cell operation to further improve production time, quality, and costs. Kaizen, TPM, and Six Sigma are commonly used as continuous improvement tools for reducing equipment-related losses such as downtime, speed reduction, and defects by stabilizing and improving equipment conditions (see Kaizen, TPM, and Six Sigma method profiles). In some cases, organizations seek to pursue a more systemic redesign of a production process to make a "quantum leap" with regard to production efficiencies and performance. Production Preparation Process (3P) is increasingly used as a method to achieve such improvement.

Advantages

Cellular production helps to eliminate overproduction. Overproduction can be detrimental in following ways

Increases the number of products that must be scrapped or discarded as waste;

Increases the amount of raw materials used in production;

Increases the amount of energy, emissions, and wastes (solid and hazardous) that are generated by the processing of the unneeded output.

Cellular manufacturing helps in reducing defects that result from processing and product changeovers. Since products or components move through a cell one piece at a time, operators can quickly identify and address defects. Autonomation (jidoka) in cellular systems helps prevent waste by signalling when defects occur. Under a conventional batch-and-queue process, it is difficult to identify and respond to defects until the entire batch is produced or numerous pieces are processed. Reducing defects has following benefits

Fewer defects decreases the number of products that must be scrapped;

Fewer defects also means that the raw materials, energy, and resulting waste associated with the scrap are eliminated;

Fewer defects decrease the amount of energy, raw material, and wastes that are used or generated to fix defective products that can be re-worked.

Shifting to right-sized equipment means that production equipment is sized to work best for the specific product mix being produced, as opposed to the equipment that would meet the largest possible projected production volume. Right-sized equipment typically lessens material and energy-intensive (per unit of production) than conventional, large-scale equipment.

Cellular production layouts typically require less floor space for equal levels of production ("this is a factory, not a warehouse"). Reductions in square footage can reduce energy use for heating, air conditioning, and lighting. Reduced square footage can also reduce the resource consumption and waste associated with maintaining the unneeded space (e.g., fluorescent bulbs, cleaning supplies). Even more significantly, reducing the spatial footprint of production can reduce the need to construct additional production facilities, as well as the associated environmental impacts resulting from construction material use, land use, and construction wastes.

Cellular manufacturing layouts and autonomation can free workers to focus more closely on equipment maintenance (TPM) and pollution prevention, reducing the likelihood of spills and accidents.

Better delegation and accountability: All parts and machines of the group are close together and under same supervision, which can be made responsible for cost, quality and due-date.

Limitations

Switching to cellular manufacturing systems can require investment in new equipment, and potentially, the need to scrap the older, large-scale equipment geared more to batch-and-queue operations. This can produce scrap for recycling and/or waste.

Right-sizing and dispersing environmentally-sensitive production processes throughout a plant can disrupt conventional pollution control systems. For example, a shift to cellular production is often accompanied by a shift to disperse, point-of-use chemical and waste management, which requires an adjustment in chemical and waste management practices. Similarly, shifts to multiple, right-sized painting and coating, parts washing, or chemical milling operations can alter air emissions control approaches, needs, and requirements. If environmental requirements are not addressed sufficiently during the conversion to cellular layouts and right-sized equipment, the organization can impact the environment adversely and/or fail to comply with applicable regulatory requirements.

Set up times or change over times may not always be significantly reduced just because the components in the 'family' bear apparent similarity. In reality, the major proportion of the features of a group of components must be virtually identical for the reduction in the setup times to take place

Similarly, the assumptions regarding raw material and work-in-process inventories need to be checked during the design of the cells. In a process layout, the machines share a common pool of inventories; whereas in an ill-designed cellular system, machines may require their own individual stocks of materials.

Improper cell formation, whether based on component shapes/features or on production flow analysis, would turn out to be inefficient in terms of time, investment and humanistic aspects. Load balancing, utilization of non-key machines and the placement of bottleneck machines are issues that need to be addressed during cell formation.

Implementing cellular manufacturing could lead to a decrease in manufacturing flexibility. It is felt that conversion to cells may cause some loss in routing flexibility, which could then impact the viability of cell use.

Obtaining balance among cells is also more difficult than for flow or job shops. Flow shops have relatively fixed capacity, and job shops can draw from a pool of skilled labour so balance isn't that much of a problem. By contrast, with cells, if demand diminishes greatly, it may be necessary to break up that cell and redistribute the equipment or reform the families.

Also, some researchers have warned that the benefits of cellular manufacturing could deteriorate over time due to ongoing changes in the production environment. Finally, it must be noted that conversion to cellular manufacturing can involve the costly realignment of equipment. The burden lies with the manager to determine if the costs of switching from a process layout to a cellular one outweigh the costs of the inefficiencies and inflexibility of conventional plant layouts.

Inadequacies in employee education, training and involvement could come in the way of proper implementation.

Cellular manufacturing has concerned only to the internal 'spatial arrangements'. That is, it has been focusing only on one dimension of the production system.

Highly unsystematic in nature.

Application has been limited in its scope and therefore the results may not be radical in their extent.

Toyota Production System

Toyota has over the years established itself as one of the leaders in quality and efficient production. The Toyota Production System (TPS) is said to be among the most preferred process improvement system in the modern manufacturing establishments. TPS focuses on reduced human effort, less manufacturing space, less tooling, reduction in engineering time to develop a new and better product. (5)

Cell based manufacturing forms the heart of TPS. The idea is to group dissimilar processes operated by multifunctional workers on a family of products together to form a Manufacturing Cell. These cells are then linked by a pull mechanism (demand of part downstream processes) called Kanban. This system allows for physical controls in process inventory between cells.

In Toyota a cell usually includes all the process required to produce a complete part or assembly. Within the cell different processes are setup to follow the flow of line manufacturing system. The batches are usually small in size and allow for better coordination among the other cells and within cell as well

Cell Design:

The cells are typically arranged in U-shape, which offers shortest distance from process to process, thus reducing time in loading-unloading and other manual operations. The cell workers are empowered to make decisions about process functions.

E.g. Authority to check quality and stop the line for process improvement within the cell. The workers are allowed to stand, move or be multifunctional as per the requirement of task and cell process.

Human Resources:

Cell Manufacturing recognizes the worker as the most important and valuable resource in the each worker is supposed to be able to setup and operate each of the cell's processes and carry out all manual tasks. To achieve this target, training of worker and manager is a high priority task.

Built in System Check:

The efficiency of the process is checked in terms of Takt, the system's cycle time. The cells are expected to produce parts as per the needs of the downstream process in accordance with the system's takt time

Cell Goal:

Each cell has twin objectives of

Achieve 100% good quality production during the production time

Maximize the non-depreciable assets of organization, People and Resources.

Transition to cell manufacturing: The case of Duriron Company Inc., Cookeville Valve Division

Duriron Company (DURCO) was a manufacturer of world class valves and pump equipments. Its products were being used in petrochemical and other corrosive activities. The firm DURCO had a good reputation among customers which included Dow Chemical, Du pont etc. The zeal to continuously improve encouraged DURCO to implement process improvements in Cookeville Valve Division (CVD). (6)

Planning:

This stage involved the task of identifying

Define objectives regarding

Design of cells around product lines, machines required and layout

Develop a dynamic and robust scheduling system

Timelines for process improvement and implementation

CVD sought Anderson consultants, to achieve these objectives and to guide the implementation. The consultants planned for a reduction in lead time from 6-8 weeks to 1-2 weeks, floor space occupied reduction by 37%, increased inventory turnover ratio from 2 to 12. The designed cells were expected to payoff investments in one year.

Designing Manufacturing Cells

The cells were supposed to operate as small full-fledged factories. Each cell was supposed to handle its own inventory, scheduling and performance evaluation and track its own profits, lead times, scrap rates, inventory turn, and backlog. In addition, the cell was supposed to radically reduce the distance that a product had to travel inside the plant.

Steering Committee were setup to coordinate in the setting up of cell based design and to achieve reduced lead time, inventory, achieve 100% on time delivery and quality while maintaining costs.

Trial Project

The steering committee decided to test these methods on a single product before making it as a plant wide process. They chose "0.5- to 1.0-inch G4 plug valves" to be produced under cell manufacturing. The reasons were

Valve had less variations than other valves, hence designing was easy.

Fewer setups were required

It was a large volume product, constituting 65% of total unit volume, while making 33% of revenues

The existing line was not profitable; hence it will be a good fit to test profitability of process.

New workflow

The new setup required the workers to know about each and every process within the cell. The workflow required greater cooperation and shared responsibility among workmen and with the managers. Training and development of skill set became one of the key focus areas. Management assumed the role of facilitator and resources provider and empowered cell employees with critical decisions.

Cost Management:

Each cell was made accountable for its expenditure and profits. The need to improve profits led to tracing costs through all the processes. Thus the cost started being allocated to the task which enabled better billing and step to reduce costs. The allocation to overhead accounts reduced from 50% to 28% and is expected to reduce to10%.

Human Resource

The adoption of cell manufacturing led to two important changes

The responsibility of the worker increased as cell members were responsible for all the facet of production. The workers were now supposed to interact among each other as well as with suppliers, perform evaluation and preventive maintenance in order to identify problem and boost productivity. Individual performance evaluations are done by the cell members' teammates.

Training of personnel in every facet of production process became prime importance. Advancement

Within a cell is achieved by progressing through a series of five skill blocks. A person who has achieved the final skill rating can operate every machine in the cell, use SPC tools, perform preventative maintenance, and work effectively as a team player.

Problems Faced

Training was a not a focused activity owing to the lack of resources

Economy slowed down; resulting in lower orders, lower productivity. The drop in profits led to restricted capital expenditure and cell manufacturing was not given the necessary resources for full and successful implementation

DURCO had to layoff personnel to remain afloat during recession; cell manufacturing was seen as a tool for this layoff, reducing employee morale.

The Union was sceptical about the benefits of new work methods. Their support was crucial for success of the measures, yet their presence slowed the implementation of measures Management was forced to wear two hats in managing a plant that operates partly

Project Extension

The cell manufacturing was extended to BTV valve division. The division faced problems like

High development time of more than 5 years

Un-manufacturable designs reaching manufacturing department

Division was quite separated from other divisions, hence no flow of information and exchange of ideas

Cell manufacturing was used to overcome these shortcomings. A new team was selected to work on BTV and apply cell manufacturing already running in G4 division.

Progress

G4 Division:

The project has spent 5.8 percent more than the goal of $295,000.

On-time delivery averaged at 95 percent.

Lead times have been reduced from 10 weeks to 1-2 weeks.

The projected ROl has not been achieved due to unreached inventory goals

BTV-2000 cell

Capital expenditures for the project have been exactly the goal amount of $3.2 million.

Sales results have been significantly higher than expected. In addition, cost of sales has been slightly lower than expected

On-time delivery is 96 percent.

T-Line (half-inch to two-inch)

Ac $447,000, actual capital expenditures for the project are 12 percent lower than the goal.

Inventory reduction goals have not been reached.

Production costs reduced by 7 percent, against a target of 6%

One-inch G4 valve (added to existing G4 cell)

This project sought to add the 1" G4 to the existing small G4 cell.

Capital expenditures have been 48 percent less than expected.

Inventory reduction goals have been reached.

Cost reduction audit results are inconclusive.

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