Lean Supply Chain and Logistics Management, page 21
After analyzing the process, the following types of waste were identified:
Extra Processing Steps
Manually separating materials among NXT modules.
Re-ordering of part numbers that go into multiple NXT modules.
Redundant reel component testing which was separate from setup verification.
A “pass” sticker placed on the license plate when component has passed electrical test.
Splitting license plates if that is chosen as the solution for the ERP system not supplying enough quantity of license plates for split part numbers.
Difficulty locating components that are separated from license plates for electrical test since the company used black static-free mats for placing components.
Defects
License plates that fail electrical test were placed into “pass” bin and later used in assembly.
Motion
When scanning feeder, scanner label was on the opposite side of the feeder compared to the operator, forcing the operator to reach over and twist arm and hand to scan bar-coded feeder ID.
Waiting
If ERP system did not supply enough quantity of license plates for split part numbers they were ordered from the central stockroom.
Transportation
Material preparation and off line setup areas were separated and far from each other.
Inventory
Too many partial license plates returned to stock.
Too many setup carts with a single license plate on it in the kanban area.
Process Improvements
After a detailed analysis of the process, the following waste elimination goals were set:
Install a computer application to automate the entire process, perform it on one station with one operator (instead of three), and cut lead time by 50 percent.
Provide bins with more than three modules/separators to avoid marking materials for the 10th module.
Move NXT offline setup area to the same area material is received from stockroom.
Integrate LCR measurement into setup verification to prevent the license plate from being verified on the feeder if it does not pass electrical test. This eliminates problems with wrong component placements and redundant LCR checks.
Provide white background on the desk surface where operators place components for the LCR measurement.
Ensure that a unique license plate does not change for a particular piece of material to avoid repeated measurements of the same license plate and eliminate the need for placing a “pass” sticker on the license plate.
Place another feeder bar code label on the opposite side of the feeder for easy and faster off line setup verification.
To solve the issue with kitting enough license plates for part numbers of multiple feeders, identify 13 part numbers across 27 assemblies that are split. Based on historical work order run data, estimations of the number of license plates and quantity levels that need to be maintained in the small supermarket were made so that material could be placed alongside the line. Kitting is now a combination of central stockroom kitting plus kitting materials for these 13 parts at the supermarket.
The supermarket is caged with a single entry point. The line lead operator will have control over the supermarket, picking parts and putting away parts.
The application performs the following component verification activities:
Checks whether license plate is marked as defective due to recent customer feedback.
Checks whether the license plate is lead-free if the job is for a lead free assembly.
Determines which license plate is first to be set up on the machine.
Performs component test: electrical (LCR) test if data is available, or if it isn’t, a markings test if markings are available on the component, or manufacturing part number (MPN) verification if markings are not available either.
Verifies that component belongs to the setup.
Performs MPN data verification, i.e., checks whether feeder type matches required feeder type by MPN, whether feeder rotation matches MPN feeder rotation, and whether height matches MPN height. If MPN validation fails, which may affect machine program, black setup label is printed to warn process engineers that machine program change could be required.
DELIVER
Lean Case Study: Lean Supply Chain Reduces “Fat” by 13 Percent*
Customer’s Challenge
Fujitsu Services is a leading European information technology services company, with an annual turnover of £2.46 billion ($3.59 billion) and over 19,000 employees in 20 countries. Its Sourcing & Supply Services operation provides purchasing and supply services for its major customers. In addition, its Technical Integration Centre (TIC) offers IT engineering, configuration and repair services, recycle and disposal solutions. These are both supported by a warehousing and distribution facility that provides secure bonding and storage.
With customers in areas such as banking, government and defense, Fujitsu’s Supply Chain operation has to run without error or delay. However, in 2006 it faced some serious issues as Paul Fraser, Head of Logistics, Fujitsu, explains, “Quite simply we were failing. Delivery to customers on time was down to 95 from 99.9 percent, with significant costs being incurred for rearranged engineer visits and penalties for late installations.
“In addition, picking errors were running at over 4 percent, which meant having to rework many orders. Morale was low, with 14 percent absenteeism. Productivity was running at a minus figure, SLAs were being missed and we had to pay for off-site storage to handle 1,000 pallets of kit as our own 141,000 sq ft warehouse was full! In short, our reputation was badly damaged—customer expectations were low, complaints were increasing and new and key contracts were in serious risk of being lost. Something had to change significantly to improve the situation.”
Fujitsu Solution
Drawing on the experiences of world class companies who use Lean operational practices together with Fujitsu’s own unique Sense and Respond approach to continuous service improvement, Fujitsu’s Supply Chain embarked upon a program of change utilizing elements of Lean, kaizen, and Six Sigma.
“We had to remedy what was going wrong before we could enhance the service we offered,” says Paul Fraser. “So we analyzed the situation and found that we had a significant amount of customer-owned stock, much of it aging, and kit that needed to be recycled, but we had no instructions about what to do with it. In fact, it turned out that there were almost 90,000 units of redundant stock taking up space and just getting in the way physically and logistically, so it was inhibiting efficiency, morale was low and accidents were happening.” Fujitsu realized that it needed to change the way it did business with its customers, so that it was clear about their needs, what had to be done to meet them and what was wasteful. Paul Fraser adds, “The most important thing is to talk to your customers and understand what is really of value to them, so that you can decide what to do away with without affecting customer service.”
So, Fujitsu initiated a Lean program, called “The TIC Way,” through which it developed a vision of where it wanted to get to and how it would measure its progress and success. This was captured in a detailed Transformation Plan, covering everything from leadership and processes, through to inventory controls and management. Fujitsu also created core team of employees to drive the change process. The team was built around the people directly involved in either identifying or creating the issues that need to be addressed, because of their key role in the problem solving sessions.
The rigid, command and control style of management previously used in Logistics has also been replaced. Today a more empowered workforce is instrumental in developing strategy and external relationships and involved in the problem-solving techniques used to understand and address the root cause. In particular, Fujitsu is using Visual Management techniques to monitor performance against targets, ensure actions from problem solving sessions are put into place and to monitor ongoing results once solutions are applied. These measures are openly displayed in each department used as a “Communication Hub,” with teams being encouraged to contribute to the discussion and resolution and general updates. This information is then used across Sourcing & Supply Services to create awareness and initiate change across the wider capability.
“The introduction of Lean has had a positive effect on the way we work. Our workforce has become more involved with the processes and is taking more responsibility for the results we aim to achieve. Lean is also bringing the different departments together to work Leaner and more effectively,” comments Tony Huddart, Operational Shift Manager, Fujitsu.
Paul Fraser agrees, “The vision we have is simple: get it right first time and with minimal touch points. Thanks to the use of Lean techniques our people now share that vision and the long term view of Supply Chain and Fujitsu Services and are passionate about the success and indeed the journey we have taken. Our next steps are to understand and address a further 30 to 40 percent non-essential time wastage through double or even triple handling and poor work flow, so that our customers get even more value from our services.”
Benefits to Our Customer
Through the use of Lean operational controls Fujitsu has:
Enhanced customer service—the identification and resolution of key operational issues enables faster and higher quality service delivery, which has seen customer satisfaction increase by 10 percent from 6.8 to 7.8 out of 10.
Increased staff satisfaction—active involvement of staff in the change process has improved morale and absenteeism has fallen from 14 percent to just 3 percent, largely because there are fewer injuries.
Improved resource usage—productivity has increased by over 23 percent and has enabled headcount to be reduced by over 14 percent, with the development of staff skills allowing them to work in other parts of the business.
Reduced costs—has delivered 13.6 percent cost savings on a budget of £12.6 million, saving of £1.7 million in the first year. In particular, supplier deviations have been reduced by 18 percent, inventory is down by 19 percent, the need for off-site storage has been removed as redundant stock has dropped by over 90 percent to just 7,500 units, and costs of third-party handling and transport have been reduced.
Created new revenue opportunities—better use of resources has enabled Fujitsu to increase volume throughput by 10 percent and develop new service offerings, such as engineering and workshop repair facilities.
Enabled continuous improvement—involving and empowering people has created a sustainable internal capability, which is focused on continually identifying and permanently eradicating problems and waste.
“Through the use of Lean we have restructured our operation and processes to ensure the work flows and relationships with suppliers and customers are enhanced and we are more flexible within a highly controlled environment,” comments Paul Fraser. “As a result, we have a very capable back-end to a very efficient and proficient front-end capability in the procurement of equipment and the delivery of engineering services, such as our break-fix and recycling capabilities.
We are now a leader in our field, because we understand what our customers want – and can deliver it.”
Our Approach
First developed in the manufacturing industry, Lean is a systematic approach for identifying and eliminating waste or unnecessary activities through continuous improvement of the product or service in response to customer needs.
Paul Fraser says, “The involvement, inclusion and development of our people is key as it enables new processes to be put in place much more quickly than would otherwise be possible, because they have an understanding of the overall strategy. We’ve now got a team of people who question, recommend, advise, and are always looking for involvement in customers’ needs. In fact, because we can now tap into the experience of our people in many cases we know what our customers want before they’ve recognized it themselves. And that mean they have pride in what they do, which is enabling the cultural change necessary for sustainable success.”
Our Expertise
Fujitsu has been delivering consistently high levels of service to organizations across the United Kingdom for more than 30 years. Its business is helping its customers realize the value of information technology through the application of consulting, systems integration and managed service contracts. As such, its support infrastructure is constantly being developed and refined to stay ahead of the demands of new technologies and evolving business practice, so that services can be delivered effectively and economically.
DELIVER
Lean Case Study: Lean Logistics—Goodyear’s Automated Warehouse Puts Customers on Top*
In manufacturing, the only thing as vital as the flow of product is the flow of information. Supply chain management is a critical component of doing business, and at The Goodyear Tire & Rubber Company, it’s a priority. It’s also one of the factors that made the company a global success story and North America’s number one tire maker.
Paul Fledderjohann, Goodyear’s Manager, Process Engineering, North America Tire (NAT) Supply Chain, is keenly aware of the distribution challenges. He is also well informed as to what tire manufacturing facilities are doing, not just to survive, but also to compete in an ever-evolving marketplace. It’s a dilemma Goodyear faced in 2005 as it set its sights on improvements to the warehouse distribution system at the Goodyear facility in Fayetteville, North Carolina.
The Challenge
With a modernization project going on upstream from the warehouse, it was clear the Goodyear plant would require more than a retrofit for the current manual processes used for tire distribution. With the high number of SKUs, manual sorting capabilities had reached capacity, and Goodyear wanted to protect its workforce from the risk of injuries. It was also essential to have a Supply Chain Deployment strategy that offered real advantages to customers.
Since the expansion on the manufacturing side required half the existing warehouse space, Goodyear decided to build a new facility to handle tire storage and distribution. The challenge now was finding the right automation system, and the right provider to design and install it.
“It was a very strategic decision based on proposals received from the Bid Request and the supplier’s past performance,” said Fledderjohann. “We’d worked with RMT Robotics to build a fully-automated warehouse at the Goodyear plant in Lawton, Oklahoma, and we felt that solution would be a good system for Fayetteville.”
In the last decade, Canada’s RMT Robotics had established a solid track record with Goodyear, installing more than 30 robots at 6 of Goodyear’s tire manufacturing facilities in North America. As the creator of large, high-velocity gantry robots and integrated systems, RMT understood the performance demands that Goodyear would require in Fayetteville.
The Concept
The challenge for Goodyear’s NAT Supply Chain and RMT Robotics was to create a system for Fayetteville that could ship more tires directly to customers, and do it more accurately. As well, Goodyear wanted a system that could achieve payback very quickly.
The robotic distribution system that RMT proposed for the Goodyear plant featured 12 gantry robots working simultaneously to handle every aspect of warehouse distribution, from the time the product arrived from manufacturing, all the way through to sequential loading onto a trailer for customer delivery.
“The robotic gantry ‘direct ship’ solution is ideal in tire distribution,” says Bill Torrens, Director Sales and Marketing at RMT Robotics. “In today’s lean manufacturing and warehousing environment, it’s a competitive advantage to have automation that can sort, temporarily stage, then ship tires directly to customers on demand. It not only reduces labor costs, it also keeps inventory levels low and customer response high.”
RMT’s “direct ship” system was capable of managing the entire system inventory and had no difficulties coping with the demands of a high-SKU environment.
“There could be up to 1,000 different SKUs in one month,” said Fledderjohann. “As well, the Fayetteville facility can produce 55,000 replacement tires per day. To stock, stage and ship them from a deployment standpoint is very, very difficult and manually intensive. Our new system does it all automatically, first by identifying each tire, and then remembering that identification as it stacks, sorts and deploys to customer requirements.”
Torrens describes the “direct ship” concept as palletizing avoidance. “Fed by final finish, the system maintains a large, dynamic picking inventory on the floor under the gantry, then ships it out in trailer loading sequence.” He adds, “All of this without ever having seen a person, pallet or rack location. While the system is able to palletize to feed longer term storage, it’s the high percentage that flows from final finish direct to trailer that makes the solution such a success.”
In the fall of 2005, RMT Robotics was commissioned to begin the project. The work was completed in nine months, and after system optimization, Goodyear declared the installation phase completed in early May, 2006.
“It went even more smoothly than the Lawton installation,” confirms Fledderjohann. “As a test, we processed about 30,000 tires per day for about a month and a half. When we finally went inside the gantry to do a physical count of the tires after processing 1.3 million tires, the discrepancy in inventory was basically nonexistent. That’s very, very impressive.”
