Improvement of Lean Operations in Manufacturing

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To what extent could or should Deane expect to apply the philosophies and techniques of JIT/Lean to the running of a staircase cell

Staircases Production Company (SPC) is a small, successful, privately owned timber and building materials company based in a small city in the UK. The company offers a wide variety of timber products, from regular doors, windows and staircases to special products such as non-standard sections or special profiles (i.e. old designs of skirting board). Its products stand out from its main competitors (small joinery businesses) with high levels of quality.

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Due to the quality of its products as well as the huge demand of special stairs in the region, sales has been increasing steady year by year particularly special stairs. However, the business is not as profitable as it was expected and some important customers have been complained recently due to late deliveries. Because of the loss of profitability, Dean Hammond, the new appointed General Manager of SPC, is thinking about carrying out some changes in the organisation in order to cope with the current problems.

Precisely, he thinks Lean and Just-in-Time principles and techniques might help SPC increase its profitability as well as improve the performance of the whole organisation. However, although this philosophy has been applied successfully to manufacturing and operations environment (Chowdary and George 2012), Mr. Hammond unknowns if the application of Lean principles in a company that produces a high variety and low volume of products would make sense. The Lean management approach, developed by Taiichi Ohno (1912-1990) at Toyota Motor Corporation in Japan, forms the basis for the Toyota Production System.

The term Lean was first introduced in 1990 in the book entitled The Machine that Changed the World by Womack, Jones and Roos. In "Lean thinking", 5 principles were put forward an implementation framework to be used by an organisation (Womack et al. 1990):

Specify value from the customer’s perspective,
Identify and understand the value stream,
Improve work flow (minimize interruptions during processing),
Let value flow only through the customer's pull (all work is initiated by customer demand), and
Pursue perfection continuously (the goal is zero waste)

The core idea of Lean philosophy is to maximize customer value while minimizing waste. From a production perspective, Lean manufacturing uses Just-in-Time (JIT) approach as its production strategy for minimizing waste and improving quality (MindTool 2013). JIT provides for the cost-effective production and delivery of only the necessary quality parts, in the right quantity at the right time and place, while using a minimum of facilities, equipment, materials and human resources. JIT is accomplished through the application of specific techniques which require total employee involvement and teamwork (Lee and Ebrahimpour 1984). The application of these principles in the manufacturing and assembling processes characterized by a high variety and high volume (HVHV) of activity has been widely proven a great success. However, the difficulties associated with applying Lean principles within HVLV organization have been identified and analysed by Jina et. al (1997). The analysis of the applicability of Lean principles in SPC has been carried out taking into consideration some aspects analysed by Jina et al. (1997)

Product and product demand

The manufacturing and assembling process of SPC begins with a customer's order (simple dimensioned sketches of the required product) what is called “pull system”. Customer's pull demand is one of the principles of Lean and it enables a company to produce only what is required, in the correct quantity and at the correct time. However, the nature of the orders (called "make to order") makes the application of the Lean principles a huge challenge for SPC due to small changes of the inputs (changes in the schedule, differences of product mix between one period and the next one, volume changes between periods and the frequency of product changes within time-frame of customer lead time expectations) generates a large impact on the performance of the manufacturing system (Jina et. al 1997).

Nevertheless, the result can be levelled within a set of well-defined flexibility parameters (Jina et. al 1997), to give some examples: commonizing raw material and finished parts and organizing for high and low level demand.

Process

It can be said that processes currently do not follows any flow structure: production is planned without any solid criteria and there is no single flow route for either materials or machinery. This unstructured work floor causes: joinery department job shops are untidy and congested (joiners are working on several part-finished items at once, single pieces of equipment are shared by 10 or more joiners, joiners try to fit in with each other over the use of machinery, etc.) and big allowance of waste and timbers defects are found around the workshop. Despite of this chaos, it has been identified that the specific case of the manufacturing and assembling staircases follows a repeatable process steps (although staircases are different): cutting timber, sanding, machining and tenoning, which makes this process potentially standardised. Therefore, it can be said that Lean principles can be applied to this process. However, in order to identify the applicability of Lean principles to the rest of the processes, more information should be provided.

Workers

The processes disorder is supported by the fact that, on one hand, SPC's joiners are capable of making any product and, on the other hand, because they enjoy the wide variety of challenging work. Despite of this, workers' flexibility to carry out a wide range of tasks is considered as a factor that would help the implementation of Lean. To sum up, it can be said that the application of Lean principles is possible but it will be a great challenge for SPC.

What are likely to be the main categories of costs and benefits in establishing the cell? Are there any non-financial benefits which should be taken into account

Listed below, there is an analysis of the benefits (financial and non-financial benefits) and the costs (financial costs) expected to be achieved with the implementation of Lean principles in SPC:

Benefits

The company will gain financial and non-financial benefits which will affect the revenue stream of SPC and the level of satisfaction of both customers and employees.

The financial benefit of Lean for the company expected is an increase in its revenues as a consequence of increasing the productivity by finding and eliminating the waste within the process. This is achieved through reorganising and tidying the manufacturing floor (using 5S/CANDO or visual management), improving work flow to eliminate motion and transportation between stages of production (workshop layout) (Page 2004), and increasing employee efficiency by specialising and standardising the work and cutting out wasteful work;
Non-financial benefits are shown by the level of customer and employee satisfaction. On one hand, customer satisfaction increases by meeting requirements and on-time delivery; improving customer retention and attracting new customers by, for example, word of mouth (Cudney, Furterer and Dietrich 2013). And on the other hand, employee satisfaction increases by empowering them and taking into consideration their opinion. -Costs. There are two aspects that would affect the cost stream: cost reduction within the process and cost of lean implementation.
Cost reduction can be located from different attributes of the manufacturing process: inventory, defects, maintenance, labour cost, compensation, etc. (Ross 2002; Stegall 2012). Each task in the process gets specialised and standardised, the employee can stop the production line if they detect defects, thereby reducing the number of defects and work-in-process; production line productivity is improved to deliver products on time, helping the company to avoid compensation and discount, and reducing over-time working. Specialised jobs require particular machines or tools, to be handled with care and regularly maintained by the employees using it, reducing risk of break-downs and repair/replacement costs. And also, a reduction of raw materials inventory (waste) is expected.
Cost of Lean implementation can be located from: training for employees for redefinition and re-assignment, production line stoppage, workshop layout re-organising, information technology systems and management cost for implementing new system. These costs might be quite high when the company implement the whole system, therefore in the short-term it could overcome the profit of the company.

However, because Lean is a long-term commitment, it will help transform the company and enhance the profit for the long term.

At what stage, and how, should Deane sell his idea to the Joinery Manager and the workers

To sell the idea of Lean implementation and cellular manufacturing to the Joinery Department, Dean should have a strategy to approach first the Joinery Manager (JM) and a its employees (once the manager is already convinced). Frist, Dean needs to sell the idea to the JM because he is the one who will decide whether this plan will be done or not because his commitment and leadership are essential to achieve a successful implementation (Wrye 2013). To convince and engage the Manager with the idea, Dean needs to conduct and present a business report of the company: an analysis of the current status of SPC (covering both quantitative and qualitative aspects), with the pros and cons of Lean implementation in a HVLV organisation. A strategy and implementation plan which shows the roadmap, methodology, goals, and objectives to be introduced. Dean can then work with the JM to customise the implementation of the plan to suit with SPC current situation. After gaining the approval of the JM, Dean needs to prepare actions to sell the idea to employees, to create an organisational understanding of the philosophy, methodology, implementation process, in order to take full advantage of the significant changes. The JM and Dean need to explain to the workers the current situation of the company, an overview of Lean and its benefits for the whole company and for each employee’s job.

The workers also need to be acknowledged for the value of their work, their power over the production line and their responsibility of product’s quality. Some training and information about the new system might also need to be provided before actual implementation. Some details should be taken into account when the department start implementing Lean:

Because SPC is a HVLV manufacturer should adapt Lean principles to the reality of the organiation: product design geared to logistics and manufacture; organising manufacturing along Lean principles; and integrative supplier relationships (Jina et al. 1997);
The manager should have a clear goal for implementing Lean for the worker to follow (Womack and Jones 2003);
Lean is a new concept so it should be explained without technical terms or phrases to avoid confusion or resistance (Wrye 2013).

The strategy of implementation should contain small steps to give the workers time, and help them gain their confidence and build momentum to continue with Lean.

How different would the cell work be from that in the main Joinery Department

Traditionally, each worker has their own zone and working on different product or order. Each worker goes through the same process, uses the same tools so they have to wait for the tools and their turn to use the machine. Lean cell manufacturing is a common workplace that has become an integral part of Lean manufacturing because it seeks to take full advantage of the similarity between parts, through standardisation and common processing. Its implementation in the work floor implies the specialisation of each step so that one person is in charge for one activity, using one particular tool or machine to eliminate delay time (Lean Enterprise Institute 2009).

The worker will have space to move for their job but the movement and motion will be minimised by eliminating the gap between their tools and each other so that they can pass the finished part to the next stage immediately. Julian Page (2004) suggested the outward facing U-shape cells which taking up the same amount of space and give the worker more options to communicate with each other with the least movement required. For the staircases, the workshop new layout will have 5 major cells: cutting timber, sanding, machining, tenoning and assembling:

Each cell have its own tools and machine that only that cell uses. The machine which will be used for different purpose will be placed at machining cell;
Machining cell will be placed near the middle of the whole workshop so that if any other cell needed to use the machines, they can access them with the least movement;
Cutting timber cell: after the order was placed, timber will be delivered by vendor on to the first station. Here timber will be cut to required shape. Off-cuts will be at the same place and the workers at this cell know how many and what shape there are, so they can be used for future occasions;
Assembling cell can be spilt into 3 smaller cells: glue, wedges and treated. After this cell, the product will be finished and transported straight to packing or delivery;
Workers can rotate within or between the cells if they want flexible jobs, since they can all do every stage of the manufacturing line.
Kanban card can be used between part manufacturing cells and assembly cells to limit the level of work-in-process (Jina, Bhattacharya and Walton 1997).

Further information should be needed in order to assure if this layout can also be apply to the rest of the products of SPC. Another technique to be taken in is CANDO (clean-up, arranging, neatness, discipline and on-going improvement) to help maintain the Lean workshop, control obsolescence and inventory, preserve working tools (Page 2004).

What risks are associated with Deane's proposal

The main risks associated with Mr. Hammond's proposal are listed below:

People. Behaviours exhibited by people in the workplace such as the lack of trust and commitment is the main risk identify in Mr. Hammond's proposal. It is also one of the main reasons for unsuccessful implementation of Lean. oJoiners' procedures to manufacture and assemble products might experience changes with the implementation of Lean and, therefore, it may cause stress and rejection to them. Lean manufacturing requires constant employee input on quality control, which some employees may feel disinclined or unqualified to do (Čiarnienė and Vienažindienė 2012). oDifficulties in finding managers with sufficient leadership and persuasion skills to overcome this can be also another risk to bear in mind (Čiarnienė and Vienažindienė 2012).
Investment. Inability to make invest properly in the change. oDue to the unstructured work flow, SPC will need to make significant upfront investment in achieving a level of standardized processing. oImplementing Lean manufacturing often means completely dismantling previous physical plant setups and systems. The re-location of the machinery as well as training employees can increase considerably companies' expenses.
Duration. The implementation of Lean philosophy and principles is a long journey process and not easy implemented.

Bibliography and references

CHOWDARY, B. and GEORGE, D. (2012). Improvement of manufacturing operations at a pharmaceutical company: A Lean manufacturing approach. Journal of Manufacturing Technology Management, 23 (1), 56-75.
ČIARNIENĖ, R. and VIENAŽINDIENĖ, M. (2012). Lean Manufacturing: Theory and Practice. Economics and management, 17, 732-738.
CUDNEY, E.A., FURTERER, S.L. and DIETRICH, D. (2013). Lean Systems: Applications and Case Studies in Manufacturing, Service, and Healthcare. 1st ed., CRC Press, Taylor & Francis Group.
JINA, J., BHATTACHARYA, A. and WALTON, A. (1997). Applying Lean Principles for High Product Variety and Low Volumes: Some Issues and Propositions. Logistics Information Management, 10 (1), 5-13.
LEAN ENTERPRISE RESEARCH CENTRE (2013). What is Lean thinking?. [online]. Last accessed 28 November 2013 at: http://www.Leanenterprise.org.uk/what-is-Lean-thinking/what-is-Lean-thinking-and-key-Lean-thinking-principles.html
LEAN ENTERPRISE INSTITUTE (2009). What is Lean?. [online]. Last accessed 28 November 2013 at: http://www.Lean.org/whatsLean/
LEE, S.M. and EEBRAHIMPOUR, M. (1984). Just-In-Time Production System: Some Requirements for Implementation. International Journal of Operations & Production Management, 4 (4), 3 - 15.
MELTON, T. (2005). The Benefits of Lean Manufacturing: What Lean Thinking