Towards Lean Manufacturing in Ulusoy Electric
Current Manufacturing System
In the current system, the sheet metal processing unit comes into action with feeding of sheet metal bought from the suppliers. Steel sheet metals are cut by CNC machines in the sheet metal processing unit and with necessary bending operations, expected shapes are given to sheet metals. In addition, in the process of machining of sheet metal of cubicle’s right side door, assembly of grounding is done. Production of grounding system is pushed by bell metal and copper parts that come from the machining unit and some copper parts that come from copper unit. At the end of these processes, all the needed semi-finished goods that form the framework of the cubicle become ready. In the next step, framework assembly of cubicle is triggered.
After the assembly of framework, the process of positioning the boiler into framework is done. The process of positioning the boiler into framework is fed by the finished boilers which come from the boiler assembly unit. At the same time, the process of boiler assembly is possible with the produced switches, machined semi-finished goods from sheet metal processing unit and motor that is bought from foreign supplier.
At the next step, assembly of copper parts is done on to boiler positioned cells. Copper assembly unit is fed by coppers from copper unit. Then, the panel is attached to cubicle. The unit, which the attachment of panel is done, uses the panels that are produced by the electric unit. While the electric unit is producing panels, semi-finished goods from sheet metal processing unit and painting unit come into action.
At this point, semi-finished product is tested. Blue doors are attached at the next assembly station to the products that have already passed the test. Blue doors are prepared by the serigraphy unit which is fed by semi-finished sheet metal products from painting unit.
At the last step of assembly of the product, there are two more units which perform the assembly of the left side and the backpart closure. Products which completed the process in the last two station of assembly line, is tested for electric and 70Kv tests. All passed products are transferred to shipping area.
In the current system, there is a worker for handling. This worker walks through a determined route all day, and transmits the wanted raw materials and/or semi-finished products to relevant production units. When the worker does this job, he uses the information that is collected on the previous day. If any production unit faces with a run-out situation of any required item, an alarm that can be seen by handling worker from everywhere is activated. This alarm warns the handling worker to replace required components. Item transfers in sequential production units are done by unit workers. In addition to these, in order to ease the transfer processes, there are yellow lines in the manufacturing area which represents the handling path.
Production planning department gives plans to each production unit separately once a week. According to the data given by production planning department, they can averagely produce 35 cells on a single day.
First step of the project is correctly describing the problem of the current system with its causes. Thus, value stream map is chosen for modeling the current system in order to make its problems visible.
Value stream mapping is a lean manufacturing tool that gives the whole picture of all the processes that performed in a company from an order of a raw material to product delivery to customer. Thus, value added processes, non-value added processes, lead times, inventory levels, setup times of the machines, defective materials, covered distance by material etc. is given with this map. There are three kind of flow inside the production area: material flow, information flow and man/process flow. Value stream mapping makes it enable to demonstrate material and information flow across and throughout the all processes from raw material to finished product. It is the only method that gives information about relationship between information flow and material flow inside the system. This map also depicts all of the processes that include both value adding and non-value adding (waste) processes. (Rother and Shook, 1999) Value stream mapping tool gives chance to its user to identify wastes of the system as well as bottleneck(s) of the system with their causes. On the other hand, its structure makes it easier to determine the lean manufacturing methods for cleaning up the wastes from the current system, and by the help of this map, the picture of planned future system can be drawn easily with an action plan. (Brunt, 2000)
Value stream mapping is drawn based on a product family. Thus, first step in value stream mapping is selecting a product family to draw its map. A product family is defined according to the similarity between operations of their assembly processes. (Rother and Shook, 1999) In Ulusoy Electric, cubicles are chosen as a product family where similarities between production steps of models in this family is above 80%. In the second step of value stream mapping, all required data for the value stream map are collected. For the material flow, data collection is started from the finished goods inventory and continues to backward towards the raw materials inventory. The current value stream map includes the snapshot data that are number of workers, inventory levels between each process, changeover (CO) times and process cycle times (CT). Finally, by the help of collected data, the current state value stream map is drawn.
In the value stream map, process is represented at small boxes and the numbers inside the boxes are the number of workers at the processes. In addition to this, there are data boxes below the processes. Process cycle times, change over times and the number of shifts are written in that data boxes. The data is collected by walking in the floor and talking with the system engineer Sercan Teke. The processing and set-up times are depended on the historical data taken from the management. The arithmetic average of gathered data is written at the process cycle times and change over times. For example, the cell assemble has got 13 processes and each process has got several sub-processes. By the historical data, process times are calculated and written down on the value stream map. The triangles between the processes at the value stream map represent the inventory levels between the processes. The data for inventory levels is gathered by counting the inventories between the processes. Since there are many types of products at the inventory, the products with high cost and most used are chosen for counting to add value stream map. For example, while counting the inventories in the resin department, inventories pf the upper and lower bodies are chosen for counting because these products are basis of the switch department and has the highest cost. However other products manufactured at resin unit are rarely used or some small parts which have low cost. After determining all the information and the material flows which are represented at the boxes, data boxes and triangles, the arrows are used for showing the connection between departments and the lines represent how work stations receive its production schedule from production planning and how production planning receive orders. There are two types of lines at the value stream map, one like thunder means the information is received by electronically, other means the information is received by both electronically and manual. At the bottom of the value stream map, there is a timeline which has two components. One with higher level represents the production waiting times in days which is non-value added time. The other with lower level represents the processing time in minutes which is value added time. Non-value added time is calculated by summing the lead-time numbers from each triangle before each process. One inventory triangle’s time is calculated by dividing inventory level of that triangle into daily customer requirements.
Observed symptoms and complaints in the stage of problem description and implications from analysis of value stream map are as follows:
- Turnover rate of the investments to the raw materials is approximately 58 days. This means, the company waits 58 days as a door-to-door time in order to gain earnings from their investments to the raw materials.
- What does the end customer actually wants from the product or service creates value for product. In other words, the features that customer ready to pay for creates value. In the manufacturing system of Ulusoy Electric, total value added processes times are approximately 1.8% of the total door-to-door time. Waiting time as a stocks of raw materials, semi-finished products and finished products, machine idle times, handling times and setup times are the wastes that make up the remaining 98.2% of the non-value added time. These wastes not only increase the turnover rate of the investments but also increase the cost of the final products.
- Orders of raw materials are given to suppliers once for a consecutive two months where the production plan is done weekly. As seen in the value stream map, there are raw materials inside the company that can satisfy more than monthly demand of the production process of the company.
- Even if a production unit finishes its daily plan, it continues to produce WIP stock. Together with WIP stocks, inside the production area, raw material and finished-product stocks take a large area that narrows the operation area. In this case, stocks violate the field with yellow line, which is reserved for handling. This situation causes difficulties of finding materials and increases defect rate of stocks that 10% - 15% of the raw materials and semi-finished products become scrap because of defects they have. Moreover, if the company decides to make a change in the design of the products, some raw and WIP inventories become useless.
- Lack of synchronization among the production units stop the production because a flow in the production process cannot be achieved. This kind of production system (push system) can be called as non-continuous mass production. In this model of production, because of the production of units are triggered by the flow of materials from the previous units, when a unit cannot get the required components from the previous unit, it has to stop the production. For instance, production unit A requires WIP products X and Y. Suppose that, these products are provided by production unit B. The production unit A stops because there is not any WIP Y in the inventory, even if there is a huge amount of X in inventory and unit B continues to produce X instead of Y.
- In copper, sheet metal processing and machining units, the setup times are higher than accepted levels (according to takt time).
- In resin and painting units, the process times are higher than accepted levels (according to takt time).
- In copper unit, workforce level is higher than required level.
As a result of traditional push system, Ulusoy Electric holds huge amount of stocks, scrap considerable amount of source, pays for workforce level more than required, stops production when a synchronization problem occurs, and faces a huge lead time (58 days) with respect to relatively small value-added time (1.8% of 58 days). In short, traditional push production system of Ulusoy Electric enhances all kind of wastes inside the production system.
Objective of the Project
The goal of the project is drawing an action plan for the next three year of the company to reduce the lead-time at a rate of 70% so that lead time of the system will decrease from 58 days to approximately 17.5 days. The project uses principles and methods of lean manufacturing in order to improve the current system. Moreover, it puts some sub parts of the action plan into practice within the production system of Ulusoy Electric.
Future Value Stream Map and Proposed Action Plan
Future value stream map is drawn by using lean techniques and principles to solve problems of the current push system, and satisfy continues and synchronized flow of products and data inside the production system. In this scope, future value stream map of the project offers an action plan covering lean production philosophy to reduce lead-time at least 70%.
Lean manufacturing aims elimination of Muda (wastes) from the system. There are seven types of wastes:
- Transportation: unnecessary movements of materials inside production area cause waste.
- Inventory: unnecessary inventory cause cash, material and work force waste.
- Motion: non-value added motions of operators cause waste.
- Waiting: inside the production process, waiting times for components, instructions, tools, indeed anything which is needed to maintain continuous flow is waste.
- Overproduction: producing more or less than customer demand is waste.
- Over-processing: non-value added operations are waste
- Defects: all of the defectives are waste according to lean principles. (Hines and Rich, 1997)
Therefore, the project uses these seven types of wastes and other principles of the lean manufacturing as a guide and aims to
- satisfy continuous flow of materials in every possible point of the production system,
- design supermarkets (inventories with Kanban control systems so that the level of inventory cannot exceed allowed limits) if continuous flow is not possible at that point of the production system,
- share production plans only with a single point of the system which is called Takt point, (This point manage the production with harmony that other points of the system get the information of what to produce from the continuous flow of materials or Kanban.)
- use demand leveling to reduce finished goods inventory,
- adjust process times and setup times to finish production cycle of each product in a Takt time,
- produce with small batches to respond customer demand quickly.
In short, lean manufacturing aims to produce components which are required for the next process just in the required time, just in required quantity and with high quality. In order to the so, continuous flow of processes must be satisfied. (Rother and Shook, 1999) In the light of these principles of lean manufacturing, proposed value stream map is created.
Each yellow cycle in the map is an improvement subproject to achieve more leaner production system. In the lean philosophy, each improvement project is called Kaizen. Kaizen also can be defined as homework to achieve lean targets. The project offers eight Kaizen and two of them are put into practice by the project team.
Kaizen 1: One-to-one Flow in Copper Unit
In the current state value stream map, it is seen that there is averagely 3 days of stock between copper unit and assembly line, and the scrap rate of the copper unit is 2.6%. In the current situation, four employees are working in that unit. One of these four employees is handicapped, and the remaining three can perform all production steps of the copper unit separately.
Copper unit produces copper parts for the assembly line. After ABC analysis in this unit, it is observed that 92% of all production is made for model 01, 02, 04 and 08 cubicles. For these four models, there exist 31 different semi-finished products are demanded by the assembly line from the copper unit. Production of these products inside the copper unit includes four production steps.
For the selected four models, takt time is calculated according to their demand history. Then, for each of the production step of copper unit, time studies are performed to point out required time to produce each of 31 semi-products. By using these data, a simulation model is coded and it is demonstrated that more than 50% of workforce level is idle in this unit.
To transform the current push system into the pull system, project redesigns the copper unit to satisfy one-to-one flow between copper unit and assembly line. With the new design, copper unit produces required semi-finished products with a same speed with their consumption speed in assembly line. Therefore, WIP inventory level reduced to zero between these two units. Moreover, the workforce level is reduced from four employees to three employees in the new design and utilization of the copper unit is increased 100%. As a result of new design, the company saves approximately 81,000 TL annually.
Kaizen 2: Kanban Model for Raw Material Inventory of Sheet Metal
The company holds 34.4 days of sheet metal stock in the raw materials inventory. The project team investigates old sales orders and observes that there is a huge fluctuation between orders. Change in price of sheet metal is listed as the primary cause of this fluctuation. The project aims to smooth this fluctuation. To do so, the project sets a Kanban model to control stock levels between calculated limits and puts it into practice as an instance of the other Kanban models of the action plan of the project.
The company signs a contract with a supplier so that the lead time of sheet metal orders are reduced to three days. Together with contract, the Kanban model reduces sheet metal inventory level to 7 days (approximately 80% improvement). The company reduces scrap levels and saves 1,136,941 TL anually. Moreover, as a result of lower stock levels, the used area for sheet metal inventory reduces at a rate of 60%.
Kaizen 3: Kanban Model for WIP Stocks of Sheet Metal Processing Unit
Kanban model for WIP stocks of sheet metal processing unit can reduce stock level from 5 days to 2 days (approximately 67% improvement). Scrap levels can be reduced at a rate of 30%. It is projected that the company can save 380,000 TL anually by applying this Kaizen. Moreover, the stoppages of assembly line caused by this unit will be reduced to zero.
Kaizen 4: Kanban Model for Other Raw Materials
The project presents Kanban models for raw material inventories of machining unit, resin unit, copper unit like as the Kanban model of raw materials inventory of sheet metal processing unit. The project can reduce stock level from 24.6 days to 7 days in machining unit (approximately 72% improvement), 34.7 days to 7 days in resin unit (approximately 80% improvement), and 37.2 days to 7 days in copper unit (approximately 81% improvement). The total forecasted saving is 347,329 TL annually.
Kaizen 5: Kanban Model for WIP Stocks of Machining Unit
Kanban model for WIP stocks of machining unit can reduce stock level from 18.8 days to 7 days (approximately 63% improvement). It is projected that the company can save 161,000 TL anually by applying this Kaizen. Moreover, the stoppages of assembly line caused by this unit will be reduced to zero.
Kaizen 6: Pull Model in Switch Assembly Unit
In the current situation, 12.9% of all stoppages in the assembly line is caused by synchronization problem between switch assembly unit and assembly line. Kaizen 6 satisfies synchronization between these two departments with Kanban signals and stoppages of assembly line caused by this unit will be reduced to zero. The WIP stock level can be reduced from 4.2 days to 0.5 days (approximately 88% improvement). The company can save 290,000 TL annually by applying this Kaizen.
Kaizen 7: Kanban Model for WIP Stocks of Painting Unit
Kanban model for WIP stocks of painting department is triggered by Kanban signals of raw materials inventory of sheet metals and sheet metal processing unit. It is projected that the related stock level can be reduced from 12 days to 2 days (approximately 83% improvement) with 45,404 TL annual saving.
Kaizen 8: Supermarket for Assembly Line
The Kaizen offers to divide the assembly line into two parts. In the first part of the line, common parts are assembled to electric cubicles. Then these unfinished products are sent to supermarket. After receiving customer demand, the semi-finished electric cubicles are sent from supermarket to second part of the assembly line where final customizations are performed to produce exactly demanded product. As a result of this Kaizen, it can be possible to reduce finished goods stock level from 5.26 days to 0.5 days (approximately 90% improvement) with a total annual saving of 1,083,690 TL.
The project evolves the current push system into a pull system that is triggered from a single Takt point. The action plan can reduce door-to-door time from 58 days to 17.5 days (approximately 70% improvement). The total expected annual saving is more than 3.5 million TL (more than 1.2 million TL saving has already been realized). All kind of wastes are avoided so that scrap amounts and idle times are reduced, production and handling costs are decreased, production area is used more efficiently.