The Lean tools impact of performance

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Lean production first came along in 1950. It all began in Japan when Toyota, the auto manufacturer, was having some problems. It started in the 1930s when the military government had prevented their effort to build passenger cars, instead they had to make trucks. In 1949 Toyota had sales collapse which forced the company to lay off great part of the work force. This also led to the resign of Kiichiro, the company's president, because of management failure. Toyota was also producing very little volume. It was then, in 1950, when the engineer Eiji Toyoda and his friend Taiichi Ohno, a production genius, realised that mass production could never work in Japan. They introduced the Toyota Production System also called lean production system. [1]

Lean thinking involves few principles, they are: [2]

Keeping processes customer focused. All activities should be driven by the customer needs and expectation.

Knowledge driven process. Keep everyone in the organisation involved and exploit their ideas and skills to implement systematic changes.

Dynamic process regarding change and capability building to ensure the sustained competitive advantage.

Elimination of waste throughout the value chain with the goal of creating value.

These principles need to be understood and applied correctly in order for the lean production system to be a success.

To implement lean manufacturing the following elements need to be worked upon: [2]

Manufacturing flow.

Organisation.

Process control.

Metrics.

Logistics.

Lean manufacturing involves tools. One or more tools are chosen for a certain production, it depends on what organisations choose to do and what kind of production they have. Lean tools are for example One Piece Flow, Poka-Yoke (Error Proofing), Visual Management, The 5S Method, Kaizen, Kanban, Value Stream Mapping, Demand Management, Heijunka, Continuous Flow and Cell Design and Changeover Reduction. [2]

The rest of the paper focuses on lean tools. Case studies from two companies, that use different lean tools, will be examined. The focus will be on what lean tools they implemented and the impact they had on the companies.

KAIZEN - NICHOLS FOODS

KAIZEN

Kaizen, or 5S, is one of the lean tools. 5S stands for five Japanese words, they are: [3]

Seiri:

Separates necessary things from unnecessary and abandons the latter.

Seiton:

Arranges and identifies things for ease of use.

Seison:

Maintain cleanliness.

Seiketsu:

Maintain the 3S mentioned above.

Shitsuke:

Make sure workers always conform to rules.

These 5S words can be translated to a cleanup activity at the work place.

Kaizen's principles are to implement smaller improvement activities to the production. It diminishes slack hidden in plants. Various kinds of undesirable things can accumulate in plants such as unnecessary work-in-process (WIP) inventories, unnecessary measures and tools, defective inventories and unneeded carts, equipment, tables, etc. 5S can be implemented to get rid of or reduce these things which should lead to improvements in quality, lead time and cost. These three are the main goals of production management. [3]

To achieve these goals, slack must be diminished. Slack involves: [3]

Excessive setup time:

By arranging necessary materials for a specific setup operation can reduce or even eliminate setup time.

Defective materials/products:

Workers are motivated to keep the plant clean to reduce defects. Defects become apparent in a clean plant.

Disorder on work areas:

Cleanliness at the workplace increases the operation's efficiency. It also raises worker morale which leads to increase in attendance rate.

Missed delivery times:

To deliver products on time the input for making them must flow smoothly. Keeping the plant clean will give better overview of necessary units and consequently the orders to suppliers will become more efficient which leads to less time wasted in waiting for materials.

Unsafe conditions:

Keep the workplace safe to prevent injuries of workers or damage on inventories.

It is very important to focus on these things to reduce slack among others such as good human relationships and morale. [3]

One of Kaizen's advantages is how little time it takes to train people. When a company decides to apply the Kaizen tool it usually develops a corporate plan which involves dividing all the employees into self managing teams and assigning every person a role. The team works as good as it can to reach its targets based on Kaizen activities. It can be said that Kaizen is vital to the achievements of group targets and the improvement and involvement of the personnel seen from an operations point of view. Kaizen is a spirit of improvement founded on a spirit of co-operation. [4]

NICHOLS FOODS

Nichols Foods manufactures products for vending, food service and retail markets. It was founded in 1981 and has three factories in Haydock. [5]

Nichols Foods started applying the Kaizen tool on its production in 1998. After applying Kaizen the company has achieved its success because of great customer service. To be able to deliver great customer service, the employees need to be really great motivated people. That is where the company's value comes in. The company does not only think about the results, it also thinks about the values who give the results. [5]

The company has outlined some values that make the business tick, they are: [5]

People:

All the employees have responsibility, accountability and commercial awareness. The organisation values its employees.

Passion:

The organisation has passionate commitment to quality and customer service excellence. It seeks to continually improve in all that it does.

Energy:

The organisation has a culture of team spirit. Its employees are also motivated to be free thinking, creative and innovative.

Partnership:

The organisation aims to build long term relationships with customers, suppliers and the community it operates in.

Integrity:

The organisation acts with integrity.

Before, managers were the ones improving things and driving changes. This has changed a lot with the implementation of Kaizen. Now, the employees are treated with respect. They should be the experts in their own jobs and therefore be able to drive positive changes in their jobs. Employees are challenged to participate enthusiastically in work by having to take responsibility and accountability for what they do. [5]

In addition, Nichols Foods also recognises employee's achievements. It has its own performance recognition scheme, known as GEMs (Going the extra mile). Each staff member can nominate a colleague for doing something beyond the normal scope of their job. Every month the overall prise winners are announced. Each year the first price winner is announced at the company's conference and the price is always the same, a two week long holiday on Florida. By doing this, more interest and involvement is created among the employees as well as education and entertainment. At the conference every member of the factory participates in a video clip, outlining their own Kaizen achievements, which is shown to everybody.

Another thing Nichols Foods also did was to introduce a sick pay scheme for all employees. Everybody who has 100% attendance record can win a price. Each year the winner is drawn from a pot at the company's conference. The price is always the same every year, a brand new car.

To maintain the employee's motivation the managing director of the company meets quarterly with the staff to discuss how things are going. This is a great opportunity to sort out problems if they occur.

When first implementing Kaizen, every member of the operations team took a two day course to understand and learn how to be involved in improving quality, cost and delivery in their jobs.

Because of interest, a success was recognised right away. However, the focus on improving the right things was missing in many cases. At this time the commitment to success was born, which was all that mattered to start with. Some things were not done right at the beginning. There was no steering group in control over each activity, both focus and structure were needed regarding what to do and how to apply the Kaizen tool, visibility through activity boards was also needed and both audit and review were lacking. From this point and on it was worked on improvements with the focus set on quality, cost and delivery. Another two day course was held, focusing on 5S. After this course significant improvements started to take off.

The factory was divided into areas of responsibility, colour coded and assigned to Kaizen teams. Photos of people were put on the equipment they were using and performance measures were displayed next to the machines and they were updated daily. After these changes, daily production meeting was held at the shop floor in front of the performance graphs. By using this approach, problems can be addressed first hand and the operator can explain issues and work with the management team to put corrective actions in place. Clarity in understanding the problem becomes much greater than before when meetings were held in offices.

Equipment levels improved rapidly resulting in old equipment being returned to better condition. Clean machines are better running and can therefore deliver better and the performance is also more reliable.

Ownership, performance measurements and workplace organisation is not all that takes. If improvements are to be maintained it is necessary to have standard operating procedures. Operators need to come up with the best way of doing things and be able to do it again the same way each time, every time. Only when the team decides there is a better way of doing things, the operation is changed.

Once started on continual improvements it is important to maintain and build on the momentum. To celebrate a success every time it occurs is the key to this.

JUST IN TIME, VALUE STREAM MAPPING & POKA YOKE -

PLASTIC INJECTION MOLDED AUTO-PARTS MANUFACTURER IN INDIA

JUST IN TIME

Just in Time (JIT) refers to inventory management. Its focus lies on making inventory on hand reach zero. To be able to do that, products are only produced or components procured as needed with only the necessary materials, equipment, and employee time that will add value to the product. [6]

The benefits involved in implementing Just in Time are considered to be: [6]

Reducing inventory levels to only the parts or supplies that are needed each time which results in lowering the holding or carrying cost of inventory.

Improvements in both productivity and quality by reducing labour and equipment time.

Decrease the time required to make and deliver the product and hence increase customer satisfaction.

VALUE STREAM MAPPING

Value Stream Mapping is one of the lean tools. Value Stream Mapping is used to identify every action needed to design, order, and make a specific product. These actions are sorted into three categories: those who the customers sees as value adding, those who create no value but are required in either the product or the process and those that do not add value according to the customer. [7]

This tool is used to find waste in the system, from the supplier's raw material delivery until delivering to end customer. It is also used to find out where to take actions in the supply chain to make the production more efficient. [8]

POKA YOKE

This is a way of process and/or product design that makes things go the right way the first time by preventing defects from happening. In other words it makes defect operations physically impossible in the first place. [9]

PLASTIC INJECTION MOLDED AUTO-PARTS MANUFACTURER IN INDIA

This company supplies both plastic injection moulded components and assemblies to leading auto manufacturers and consumer goods manufacturers of India, like TVS motors, Ashok Leyland, Whirlpool, IFB etc. It is medium sized and it is growing fast, with 200 employees and turnover over $8 million. [2]

This company is customer and quality focused and it decided to try lean manufacturing in hope to stay ahead of the increasing competition. In 2006 it was decided within the company to initiate a lean manufacturing pilot program. The program included more than one lean tool, it was composed of Just in Time, Value Stream Mapping, Poka Yoke and Kaizen. The product chosen for the pilot was Air cleaner assembly of TVS-victor motor bike. The reason why this product was chosen was because it was emerging as the major bread winner for the company with great future potential. [2]

The first step taken towards lean was to make employees aware of the program and educate them. [2]

JIT is the pre-requisite of lean so separate projects were initiated for that. This helped the company organise itself for the implementation of lean manufacturing. [2]

Value Stream Mapping was done on the value stream of victor air cleanser assembly and current state map was drawn. [2]

The findings and plans made from JIT and the value stream mapping were: [2]

TVS motors, the customer, should give monthly forecast and weekly requirements to production planning department. Then it is possible to plan and produce the amount needed of the product each time.

Case of air cleaner moulded in-house according to weekly schedule.

Cover of air cleaner moulded by subcontractor. Other parts bought from nearby suppliers.

Moulding of the cases and the assemblies of the air cleaner is done at separate places.

Production supervisor controls the production as per weekly requirement.

Takt time was 57 seconds.

Total value added time was 197 seconds.

Lead time including lead time for raw material, cover and beginning of period should was 8.5 days.

Finished goods inventory took 2 days.

Work in process inventory between case and assembly took 0.5 days.

Beginning of period inventory took 2 days.

The lean team also identified wastes and problems as follows: [2]

Inventory between case molding and assembly took 0.5 days.

Assembly between cover moulding and assembly took 2 days.

Finished goods inventory took 1 day.

Long distance between assembly and moulding caused material movement to be approximately 75 meters.

15 seconds spent in material handling.

Multiple visits to store for parts

Out of 97 seconds of the assembly cycle time, 9 seconds were spent in packaging which may not add any valueto the air cleaner. Batch production for moulded case and cover parts lead to significant amount of scrap due quality problem coming into picture at the assembly process only.

Current fixture used in assembly process of air cleaner is not useful for screwing tube outlet subassembly with the main body leading to difficult and tiring operation for workers.

Spring clamp entangling leading to wastage of 3-4 seconds.

The focus was put on all these factors to check if they could be improved by applying lean tools. By implementing lean manufacturing system, a single-piece pull based flow system was implemented. The reason was to remove the waste of work in process inventory. A single-piece flow was achieved within the required takt time of 57 seconds but before lean the whole assembly was done on 97 seconds. [2]

Figure II: Victor Air Cleaner, lean cell [2]

Figure I: Manufacturing system before lean [2]

The principle of single minute exchange of die (SMED) was used to achieve faster change of dies for other air cleaner, which decreased the set up time from 74 minutes to 15 minutes.

Before lean, the moulding machines availability was 86%. To make it 100%, total productive maintenance was initiated. [2]

Poka Yoke was applied in one of the assembly operation because the employees had the tenancy to forget the assembly of a piece of small foam. [2]

Kaizen was already successfully running in the factory, to continuously improve the processes. [2]

The following steps were taken to eliminate the remaining waste in the system: [2]

It was suggested to TVS people to receive air cleaners in covered bins, without individual cover. This suggestion was standardized, after successful pilot run, resulting in time saving of 9 seconds as well as in poly bag savings.

A spring clamp dispenser was designed to solve the problem regarding the spring etangling.

A new fixture was designed which made the assembly of tube outlet possible.

Two trolleys were design to hold a shift's parts required. One was kept in store and the other one was in use in the cell. This eliminated multiple visits to store for parts.

The company delivered air cleanser once a day to TVS motors. The deliveries were increased to two a day which resulted in space saving of 10 m2 as well as reduction in finished goods inventory. [2]

RESULTS

NICHOLS FOODS

Changes which have occurred:

Quality complaints are down 50% year on year for the third consecutive year.

Graph I: Manufacturing Quality Complaints [5]

Change over time has been reduced by 50%.

Graph II: Manufacturing Labour Cost [5]

Manufacturing efficiencies are up.

Pence per case are 28% lower today than in 1995.

Service levels are at record highs.

Graph III: Service Levels [5]

Graph V: Customer Satisfaction [5]

Graph IV: Customer Satisfaction [5]

Profit has doubled in the last 3 years.

Graph VI: Profit Performance [5]

The company has won:

The Duke of Westminster Business Excellence Awards in 1998.

The Management Today Business to Business service Excellence award in 1998.

The Management Today Best Household in 1999.

General Best Factory Award in 1999.

Best supplier award for a major customers, which have been very important to the company because award from customers mean business.

PLASTIC INJECTION MOLDED AUTO-PARTS MANUFACTURER IN INDIA

Implementing lean manufacturing to the company resulted in:

25% increase in production because of elimination of various waste activities.

Before, the production was 200 assemblies/operator/shift but by implementing lean tools this number increased to 250.

Finished goods inventory was managed to be reduced by half.

Bought out parts inventory was reduced by half.

Work-in-process inventory became negligible.

Approximately 20m2 of space was able to be saved due to inventory reduction and cell formation.

The production became defect free because of implementation of Poka-Yoke and single piece flow.

CONCLUSION AND LEARNING

Case studies from two companies who apply lean tools were surveyed. It is not enough to make some conclusions regarding weather lean tools are more preferable than other methods or tools. Conclusions about these two companies can only be made.

NICHOLS FOODS

Applying Kaizen to Nichols foods has made some obvious changes to the better for the company. Employees are made more aware of what they are doing. They are also made feel like they are important and encouraged to do their best. Everybody wants to do the best they can to have a chance to win the prise handed out at the company's conference. This has created more ambition among the employees and it is good as long as it is kept within some limitation. It has to be made sure that cooperation is dominant. It cannot turn to core competition between teams or individuals which might lead to them ruining things for each other. As long as everybody work together to reach mutual goal this should work fine.

Having performance measures updated daily at the machines is also very clever. It gives the employees a chance to see for themselves how things are going and if they need to improve anything. Having meetings daily at the shop floor to discuss these performance measures is also very good. It gives each and every employee a chance to improve what he is doing right away.

Simple thing like cleaning the machines resulted in them being more reliable and delivering better. That has definitely been worth it and made good things for the company.

If the graphs shown in the results are examined than it can be seen that the company has started thinking about improvements before it implemented Kaizen. The starting year of all the graphs is 1995, ever since that year the company has been improving.

The manufacturing quality complaints seem to reduce in the same ratio before and after implementing Kaizen, as seen on graph I above. The company has obviously been making some changes to reduce these complaints before Kaizen. There are some improvements in this area but it is hard to say whether it can be related to the implementation of Kaizen or not since it was already reducing before.

It can be seen from graph II that labour cost decreased a lot between the years 1995 and 1996, from 1996 to 1998 there was no great difference. It can be assumed that the company had started some arrangement about reducing manufacturing labour cost in 1995. After implementing Kaizen in 1998 it decreased significantly again so it can be assumed that Kaizen had something to do with it.

The company has obviously been working on improving service level since 1995, as seen on graph III. There is no significant difference in the service level between the years 1998 and 1999 so it cannot be assumed that Kaizen has had some impact on that factor. But it should also be noted that the service level is very high, almost 98%, which is very good. Maybe there would have been more difference after implementing Kaizen if it had been a lot less.

As seen on graphs IV and V, all customer satisfaction factors are better at Nichols Foods compared to its competitors. Numbers from 1998 are only known so it is hard to say whether Kaizen had something to do with it or not since no information is available regarding how things were before. It is likely that Kaizen has had something to do with it, but how much cannot be said.

The company's profit has been increasing every year since 1995, as seen on graph VI. It increased the most between 1995 and 1996 so the company has probably been focusing on this factor since then. But another big increase was between 1998 and 1999, which can be attributed to Kaizen.

After implementing Kaizen the company has won several awards. That should give some sign of better success both on the inside and the outside of the company.

Using this tool has not done the company any harm, things have only been improving. In terms of tangible measures of quality, cost and delivery it has without a doubt been worth implementing Kaizen in this company.

PLASTIC INJECTION MOLDED AUTO-PARTS MANUFACTURER IN INDIA

In the Indian manufacturing company many tools were applied at the same time. That makes it a little bit hard to see what changes occurred by implementing each tool if there were any changes.

By implementing these tools a lot of things were changed and improved at the same time, such as production planning, equipment setup in the plant, waste was reduced, management , assembly operation, delivery system, etc.

Nothing went from the better to the worse when all these changes were implemented. Factors like production, finished goods inventories, bought out parts, free space were all increased, work-in-process inventory became negligible and the production became defect free. These changes are all good and the company is more successful than it was before implementing the lean tools. Without a doubt, lean tools have done the company good. But whether it was necessary to implement all these tools and if they all have some purpose in making things better is hard to say because they were all implemented at the same time. It might have been better to try each tool individually first and combine them afterwards when it was known whether it had purpose or not.

The learning from writing this paper is mainly that according to the resources used, lean tools do nothing to harm the manufacturing in companies. Things always seem to improve. Therefore there is no reason not to recommend lean tools when trying to improve things in organisations.

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