The Rapid Growth Of Industrial Competition

Published Date: 02 Nov 2017

1.0 INTRODUCTION

The rapid growth of industrial competition throughout the world has brought about the needs to stay focus on how best a company can be producing to the customer’s requirement at a minimum cost.

This has also generated the needs of numerous researches which can help achieve the necessary requirement to stay ahead of the competition. Lean manufacturing is one of these principles which have over the years been used by many companies to be able to stay more flexible in business which is the backbone of meeting customer’s needs.

Again, these days, companies do not compete internationally but also locally as there are always struggles over who captures the immediate markets simply by how well the company’s products are able to fulfill the customer’s expectations. This is because; customers are always ready to pay for only what they consider as satisfies their needs. This has brought about companies always investing on how to operate to take control of the immediate markets. One important principle which has been identified by many successful organizations all over the world is what is called lean production.

The history of lean manufacturing is traced back to an American automobile owner Henry Ford

who was able to turnover inventory but did not provide varieties in the system. After the

Second World War, leaders at Toyota Company in Japan considered the short comings with

Henry Ford’s type of manufacturing which was very good at flow and spent intense researches

to come up with a system which is capable of providing varieties in the production system while

also considering the flow techniques. They were successful and that gave birth to Toyota

Production System which is now known in production world as Lean manufacturing. (Womack

and Jones 1996)

2.0 LITERATURE REVIEW

Lean production is known to be originated from Toyota Production System (TPS). Toyota production system also known as Just-In-Time (JIT) system was introduced to produce only what and also when the customer needs their products. Taiichai Ohno and his right hand man Dr. Shiego Shingo are known to be the originators of Toyota Production system (TPS) or Just-In-Time (JIT) when they needed to compete with other giants like Ford in the automobile industries (Badurdeen,2009).

With lean production, the value of a product or service is defined by the customer’s point of view. Customers accept your products by looking at how well they are going to satisfy their sets of requirements. Customers are not ready to pay for any quality defects created by your facility and therefore need to be corrected and also any overheads brought about during production but they are only ready to pay for what meet their expectations as far as your product is concerned.

Lean manufacturing sets priorities to simple, small and continuous improvement rather than big innovations.

2.1 Manufacturing Wastes

In manufacturing, wastes are inevitable and therefore form part of the daily processes during production. Wastes in manufacturing are any process that does not add value to the final product and therefore costing the organization a lot of time and resources. Wastes are normally hidden among the production processes and need critical analysis of the system to unearth them and also find means to eliminate from the processes. Many organizations spent a lot of their resources without noticing any waste in the system but there are wastes too and this is because the wastes are usually hidden and cannot be seen easily as people thinks. It has also been established that elimination of wastes is central to lean approaches. Wastes in manufacturing are over production, waiting, work in progress (WIP), and transportation during the process, excess inventory, defects, non-value-added process, under utilization of human resources etc.

2.1.1 Over Production

Along the production lines, one stage producing more than what the immediately needed by the proceeding stage is over production. According to Toyota production system, this is the greatest known form of waste in production system. It is also known as producing something or a product before it actually needed. This is why lean techniques recommend pulled system of production than the pushed system which produces as far as it can produce without thinking

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about the next stage. Pull system means you only produce when the next stage after you is in need of the product but not just producing because you have the capacity to do it. This means the next station is termed your customer as far as production is considered and therefore it is only that station that can trigger you production. Pull system eliminates unnecessary inventory which is also a cost to the organization from the production lines. Many loses in a form of cost are caused by over production in the system. Over production creates low quality products which becomes difficult to detect because of the high number of products and brings about higher work-in-progress (WIP).

2.1.2 Waiting

Waiting along the production lines is also a major waste in production. Studies show that 90% of the time, goods is waiting to be worked on. A minute lost in waiting can never be retrieved from the process afterwards. More waiting translate into higher lead times and that is a negative effect on the organization so why keep your customers waiting? Removal of waiting time along the production lines means it takes a shorter time to deliver your products to your cherished customers. One thing wealthy to know is that, customers are never ready to pay extra cost just because of waiting along the production line and therefore waiting must be removed always along the processes.

To avoid waiting along the processes, all stations and also workers must be trained to understand the effects of it so that they will work as a team in eliminating it. If this is not done, it will be difficult to entirely eliminate waiting from the processes. Also elimination of waiting means your company is in the position to compete with other competitors within the market because you will have a system to produce at a lower cost which is important in production competition. Main factors identified as those that bring about waiting in production according to Badurdeen 2009, are high volume machinery, conventional thinking of the workers and unawareness of the people at the working environment.

2.1.3 Work-In-Progress (WIP)

Work-In-Progress (WIP) according to lean manufacturing is defined as a form of inventory which is usually found within steps or sub-processes of the production process, sometimes in one bin or two bin system. The present of unnecessary Work-In-Progress (WIP) is an indicator that an unreliable supply chain or process or production bottlenecks. Work-in-progress is also considered as a waste just as inventory is also a waste because it ties up the company’s capital for a certain amount of time which could have generated high returns elsewhere within the company. For some companies, work-in-progress is used as a buffer to take care of unnecessary peak demand or volatile demand patterns. But if this is not the case, then work-in-progress

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indicates that there is a bottleneck somewhere within the production causing it and needs to be thoroughly investigated to entirely remove it.

Work-in-progress reduces the flexibility of the entire production facility by increasing the change over time between different products. It makes quality defects difficult to notice and therefore increases the number of quality defects in the system which is only noticed after a considerable amount of defects have occurred. Another negative effect of work-in-progress is that, it takes a lot of working space and makes the working environment looks very bad.

2.1.4 Transportation

From Taylor and martichenko 2006, transportation is not always a waste and transportation can be used as a differentiator. However, transportation in excess of what is actually required is a waste and it should be eliminated. Materials should always be delivered to its point of use. It is a waste to move or transport raw material from supplier to a receiving bay processed and then takes it to warehouse followed by moving to an assembly line. In lean principles, materials should always be shipped straight from supply to an area close to the area needed for work to start. This is what is termed point-of-use-storage (POUS) (Kilpatrick, 2003).

A lot of transportation of goods or materials in production causes congestion, higher cost of production and higher work-in-progress. Lean implementation in manufacturing is rightly centered on the implementation of small batch manufacturing, one-piece flow and the reduction of inventories. This means smaller quantities will be moved by transportation more frequently for both inbound and outbound shipments which are opposite to the traditional style of moving large lot sizes based on cost efficiency assumptions. But using lean effectively will reduce inventories, shipment sizes and also reduce transportation costs in the process. Lean transportation minimizes the time it takes to get products to reach customers which means you create a good business image between yourself and your customers.

Taylor and Martichenko again argue that transportation strategy and execution should support inventory strategy designed to support customer’s expectations. Inventory and customer strategies should not be a result of transportation strategies based on silo optimization of the transportation function. The above shows how customer’s expectations are paramount in choosing transportation for the organization. Customer’s expectations should always be considered when planning transportation because when you transport more goods than what the customer needed at a time and then another time round you are not able to transport anything to the customer when he/she needs the product because full truck load is not ready, then it becomes a waste and you may lose your customer to a competitor. Customer experience is always important when planning your transportation system.

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2.1.5 Excess Inventory

Any inventory above what is exactly needed to meet customer’s demand will negatively affect the company in a form of cash flow and again takes up workshop floor space. When there is inventory at any stage of production, it means cash is being hold up in the system until it is sold or delivered to the customer. Holding up money in a form of inventory is very bad practices of doing business since the company’s turnover rate will be very low as far as you hold more inventory in the system. All what lean principle does mostly is to eliminate excess inventory throughout the whole organization. The use of value stream mapping also known as end-to-end system mapping is to highlight such processes which do not add value to the product such as excess inventory and eliminate them. It is because of excess inventory which lean seek to eliminate that is why it suggest pull system instead of push system which creates a lot of inventory always on the following workstation. With the pull system, production is always triggered when customers request for the products.

It is also important to note that inventory is also sometimes necessary to be able to meet unexpected demand coming from loyal customers and therefore becomes necessary to a required minimum inventory as far as unstable demand is concerned. Managing inventory requires thoroughly knowledge of the market by keeping regular contacts with your customers and also study the demand trends. You also need good skills in forecasting to meet future demand with less cost by taking into account minimum inventory.

2.1.6 Defects

Defects in products during production are a major waste which all organizations wish to eliminate from their systems. When error occurs during production, materials are wasted; labor is also wasted during production and also needs reworking to correct it. A lot of time is also lost in doing the work and rework and again handling customer complains. Defects which are a type of waste that cost a lot to the company and therefore needs to be handled accurately to prevent it re-occurring. When defects get to the customer, they send bad image from the company to the customer which can cost the company very much. Because of this, many or even all manufacturing companies are frequently trying to improve their system to eliminate defects from their systems. Cost of correcting defects is very high to the extent that allocation of resources to those effects is on the rise these days among companies. Quality department within an organization should always make sure that the system works perfectly to avoid and eliminate defects. Removing defects from the system is a long time task and therefore should be plan as such. A known best method in doing this is to educate workers, high quality raw material and a fool proof system.

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2.1.7 Non-Value-Added-Process

Non-value-added-process is a waste that is normally hidden and can only be seen by analyzing the entire production system. To identify this type of waste usually value-stream-mapping (VSM) is used which has been successful over sometimes now. It is also known as excess motion and it main causes are poor layout, poor workflow, bad housekeeping and bad work methods. During production of products, motion is a non-value-added process and it must be minimized if not completely removed from the processes. A detail study of the processes is necessary to overcome this problem of non-value-added processes. All the above wastes such as overproduction, waiting, excess inventory, unnecessary transportation and so on are all non-value-added processes. A simple change of workshop floor or the production lines can add a significant amount of value to the entire system.

2.1.8 Underutilization of Human Resources

This type of waste is normally not considered by many lean experts but it has been a great waste in the production organization and it value is known to be having substantial effects. This includes underutilization of the mental faculty of your employees, creative and physical skills and abilities. Non-lean environments only recognize the ability of workers to contribute their physical attributes but lean goes beyond that to consider the skills and mental abilities of their workers to improve the system. Causes of underutilization of people include poor workflow, organizational culture, inadequate hiring practices, poor or non-existent training and high employee turnover. (Kilpatrick, 2003)

Workers are usually ignored when planning works for the organization because top management thinks they know all what are to be done without the workshop floor people. When this happens, the outcome of the planning become very little and some workers will feel neglected and may not put up with their best doing the work for the expected growth of the company to be realized. Considering lean manufacturing, means everybody within the company from top managers to the last person below the organizational structure is important as far as the growth of the company comes to mind. This means, managers should source for ideals from all workers and used them for the betterment of the company. It is therefore a waste for not tapping the knowledge of all workers from top to lower level. Motivation and rewarding of workers for their talents is a major means of pushing workers to come out with their full potentials to help the entire organization to grow continuously. (Burdeeden, 2009)

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2.2 Lean Manufacturing Tools

Many tools are used in reducing or eliminating wastes in the production lines or organizations. It has been established that when any of the lean tools is used as stand alone, it doesn’t give the required effect and most of the time these tools are together to have the needed effects. The sequences of implementing lean affect the overall impact of the system. Also using some of these lean tools wrongly affects the system negatively and therefore needs to be studied very well before choosing the correct lean tools for your organization.

2.2.1 Kanban

Kanban is a very important lean tool which informs when to replenish or place an order to the next work station and even exactly where those materials or order must be sent to. It also indicates how much is actually needed at a time and therefore it is seen as a method for maintaining an orderly flow of material within and even outside the organization (Kilpatrick, 2002). Kanban also serve as a tool to eliminate overproduction as it indicates when to start producing or start moving in material between two work stations depending on information from the customer. It is used to reduce cost in production by smoothing and balancing material flows by controlling inventories. It main functions have been the following

Reduces cost by eliminating waste by smoothing and balancing material flows

Creates work environment that can react to changes in the system due to demand

Helps methods of achieving and assuring quality control

Helps workers to reach their maximum potentials

According to Aza Bedurdeen 2009, there are two types of Kanban, the withdrawal and the production Kanban. Withdrawal Kanban sends work order or authorization of movement of parts between stages. A withdrawal Kanban indicates the following information such as

Part name and number

Lot size

Rooting process

Name, and location of the next process

Name, and location of the preceding process

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Type and capacity of container

Number of containers released

The production Kanban has a function of releasing an order to the preceding stage to build the lot size indicated on the card. It contains the following information

Materials needed at the preceding stage

Parts required at the preceding stage

And also all the information on the withdrawal Kanban

Because of the importance of attached to Kanban at workplace, there is a preconditions which has been established to guide Kanban system implementation. These preconditions are

No withdrawal of parts without a Kanban

The subsequent process comes to withdraw only what is needed

Do not send any defective part to the subsequent process

The preceding process should produce only the exact quantity withdrawn by the subsequent process

Smoothing of production always

Fine tuning of production using Kanban

For special circumstances, there are also special Kanban currently in used and they are

· Express Kanban –which is used when there is shortage of parts and needs to be replenish to continue production

Emergency Kanban – applied when there is a machine failure or there is changes in production

Through Kanban – used when two stations are closed to each other and therefore can use one production and withdrawal Kanban instead of separate ones.

Kanban can be seen as a simple card normally placed at a well selected position so that all the information on it can be read by those who need them during production or it can also be on a computer screen where operator and staffs can log in to the necessary information for next production. (Schonberger, 1984)

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2.2.2 Just-In-Time (JIT)

Just-In-Time is a term referred to the production of goods to meet customer demand exactly, in time, quality and quantity, whether the customer is the final consumer of the product or another process further along the production line. Just-In-Time in its totality consist of continuous improvement, eliminating of wastes, good housekeeping, reduction of set-up times etc. Just-in-time principle which was developed in Japan by one Taiichai Ohno who worked for Toyota Company in the fifties is used to eliminate waste by only producing goods when needed by the customer. It is based on pull system of production because it is the customer who place order to trigger the production of goods. Just-in-time shows how and when to place order for materials needed for production by depending solely on the next customer’s needs. It allows eliminating unnecessary stocks of raw materials by ordering materials in small batches continuously which means smooth running of production. Burdeeden 2009 noted that doing so helps reduce cost of storage, and also minimize degrading of goods at storage. Just-in-time when implemented well will improve profits, lower turnover cost, reduce variability, and improve product quality and increase employee’s loyalty. (Schonberger, 1984)

2.2.3 Work Cells

Work cells sometimes known as cellular manufacturing is a technique where machines and workstations are arranged in an efficient sequence that allows a continuous and smooth movement of parts and materials to produce products from start to finish in a single process flow, while minimizing transportation, waiting time etc. (silicon, 2005)

From Kilpatrick’s lean principles, work cell is a technique of arranging operations and/or people in a cell rather than in the traditional straight assembly line. Among other things, the work cell enables better utilization of people and also improves communication between workers.

A single process flow set-up makes the transfer of products between equipment along the same production line a free-flowing manner, avoiding transportation and batching delays. This is what is termed as work cell. Work cell is 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. Normally many work cells are created within a company to take care of the single process flow desired. Work cell is faster and efficient in production than the traditional method of batch and queue type of production.

Cellular manufacturing helps to achieve just-in-time and again eliminates build up of inventory as it depends on pull system where products made by a workstation are immediately pulled by the preceding work station. The end customer can also create the pull where products are manufactured straight to the customer therefore removing a build up inventory. From silicon

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2005, advantages of cellular manufacturing includes removal of waste, elimination or reduced inventory, higher production efficiency, higher cycle times, optimized used of floor space, effective use of production capacity and improved customer response time.

2.2.4 Total Productive Maintenance (TPM)

Total productive maintenance (TPM) is a productive maintenance carried out by all employees through small group activities. It is equipment maintenance performed on a companywide basis. The ultimate goals of total productive maintenance are zero breakdowns and zero defects. When breakdowns and defects are removed, then improvement takes centre stage in equipment operations, cost of production reduces and basic inventory can also be minimized. Total productive maintenance (TPM) suggests that operators carry out routine maintenance of equipment while only vital maintenance is carried out by maintenance personals. Many companies fail to achieve the numerous benefits of total productive maintenance because the operators and maintenance personals that are meant to deliver TPM to the equipment are ignored during its implementation. It capitalizes on proactive and progressive maintenance methodologies and calls upon the knowledge and cooperation of operators, equipment vendors, engineers and support personnel to optimize machine performance. This leads to improved utilization, elimination of breakdowns, higher throughput, reduction of unscheduled and schedule downtime and better quality products. It lowers operating costs, longer equipment life and lower overall maintenance costs. (Kilpatrick, 2003)

Also according to Sondalini’s article on total productive maintenance define it as an equipment program that emphasis operator involvement and ownership of equipment performance. It is also sometimes called total production maintenance. The goals of total production maintenance program are to maximize equipment productivity, maximum equipment availability and make quality product by eliminating causes of equipment defects, loses and wastes through expanding and engaging the knowledge, skills and abilities of the front line people running the processes.

2.2.5 The 5S

The 5S terminology which originated from Japan stands for five terms which are good housekeeping in an organization. It is one of the simplest lean tools which create a discipline, clean and well-ordered work environment. Lack of a robust 5S system makes other lean tools ineffective. (Chapman, 2005)

The term 5S stands for sort, straighten, shine, standardize and sustain.

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Sort- is to eliminate what is not needed and keep what is needed. Anything or substance that is not needed in any way should not be allow to take space on the working area and therefore need to be discarded.

Straighten- is to position things in their rightful places so that they can be easily be located when needed and again prevent causing obstructions during movement within the workplace. Everything has it place including files, tools etc.

Shine- keeping things clean and tidy. Dirt must not be seen in the working area. Normally cleaning is specified to determine who should clean at a particular time and how it should be done. Cleaning includes all areas, machines, furniture and so on.

Standardize- means to maintain cleanliness and order. Perpetual neatness is what is required by standardize. This requires that the above three of the 5S should be standard and become clearly outlined for all employees to note them.

Sustain- is to develop a commitment and pride in keeping to standards. Sustain makes sure that all the 5S housekeeping practices becomes part of the organization. It also makes sure that all levels of employees are involve in this housekeeping norms within the company that is from shop floor personnel to the top managers are involved. (Slack, Chambers and Johnston, 2010)

According to Chapman 2005, to successfully implement other lean tools, organization needs to adopt the 5Ss terminology so that it can get the full benefits of the other lean tools. By implementing 5Ss, equipment set-up times can be reduced drastically, and it is a crucial part of total productive maintenance (TPM). This is because while operators are taking cleaning chores, they inspect equipment by listening to sounds and watching parts for any defects and take actions before a breakdown occurs.

2.2.6 Single Minute Exchange of Die (SMED)

Single minute exchange of die abbreviated as SMED is a technique use to reduce machine set-up time by the use of modern engineering technology, simplicity and standardization of the processes of production. Single minute exchange of die makes production lines flexible by easily changing over from one product to another. It can easily be achieved by carefully planning and coordination of the processes so that all complications that are normally associated with changeover are removed and therefore becomes easier to changeover. SMED differs from organization to organization depending on what the organization produce which can result that doing so can be easily done or with a bit of difficulties. One issue wealth mention is that single minute exchange of die demands strategic planning, choosing the right machinery, correct layouts, well trained people and the best mindset of people. Some useful techniques that may

be used in implementing SMED are process analysis and mapping, shadow board,

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standardization of tools and tasks, use of automation and feedbacks, efficient use of labor and skills. The main purpose of reducing changeover times is not necessary increasing production capacity, but to allow for more frequent changeovers in order to increase production flexibility and allow smaller batch sizes. (Kilpatrick, 2003)

2.2.7 Total Quality Management (TQM)

From Kilpatrick 2003, total quality management is a management system used to continuously improve all areas of a company’s operation. TQM is applicable to every operation in the company and recognizes the strength of employees’ involvement.

Also from Slack, Chambers and Johnston 2010, total quality management is an effective system for integrating the quality development, quality maintenance and quality improvement efforts of the various groups in an organization so as to enable production and service at the most economical levels which allows for full customer satisfaction.

It also defined as an integrated organizational effort designed to improve quality at every level. It is all about customer-defined quality which is what the customer defined as quality. Quality has been defined by many experts in many ways such as

Conformance to specification which is how well a product or service meets the targets and tolerances determined by its designers.

Fitness for use defined as quality that evaluates how well the product performs for its intended use.

Value for price paid which is the product or service usefulness for the price paid.

Support services also defined in terms of the support provided after the product or service is purchased.

From Slack, Chambers and Johnston 2010, total quality comprises of all the following

Meeting the needs and expectations of customers

Covering all parts of the organization

Including every person in the organization

Examining all cost which are related to quality, especially failure costs and getting things right the first time.

Developing the system and procedures which support quality and improvement

Developing a continuous process of improvement

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Total quality management seeks to identify the root cause of any quality problem that occurs and immediately rectifies them at the main source of the problem so as to reduce defects in finished goods. It is a philosophy that stresses that quality is customers driven and therefore strive to go ahead to meet customers’ expectations or even go beyond those expectations and this is the main reason why total quality management involves the entire organization and not only quality department.

2.2.8 Batch Size Reduction

Batch size reduction is one of the lean principle tools that need to practice in a continuous manner to achieve the best minimum batch size. Reducing batch size leads to reduced work-in-progress (WIP) which then leads to reduce inventory cost. Smaller batch sizes shorten the overall production cycle to achieve shorter time to take products to the market. Increase batch size on the other hand affects set-up times by putting pressure on employees not to cause error during set-ups or it will affects all the items that will go through production after the error has taken place. When this happen it cost the company severely because then they need to rework all the affected products or even sometimes need to discard all products because they don’t meet specification. (Schonberger, 1982)

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