There is a sudden surge in volume for one of the product line from daily output of 18,000 to 24,000 per day.
Increase daily output by 33% without incurring additional capital cost within a period of 3 months.
Current Operating Strategy
This line is currently operating on a 24 work hours per day with 17 direct operators and 15 indirect support staff. It is a fully synchronous line with a total of 23 processes link together by conveyor systems. The initial capital outlay for this line is approximately US$3 Million.
As the line is currently already working on a 24 hr work day, 5 days week, there is no way to increase the output by working additional hours through daily overtime. Working week end overtime is also not a solution as this would only increases the operating costs, which eventually lead to increase in unit cost.
This facility has been in operation for 10 years, since then, we have increased our daily output from 15,000 to 18,000pcs. Hence, in order to achieve output by another 33%, we need to think “out of the box”. We started with the objective of “Achieving Flow through the entire value stream” – that is from the moment customer order is received until cash is received upon goods sold. To achieve this significant output improvement, we would need to identify and eliminate waste along the value stream, as wastes prohibit FLOW. The 2 Key approaches were to create flow and improve machine output by applying several lean concepts.
1) Create Material Flow from Suppliers to Internal Point of use
Prior to Kaizen, suppliers delivered raw parts based on our consumption. As our consumption was not regular, deliveries from suppliers were not consistent or predictable. Thus, we have a 4 days stock staged at our supermarket to ensure there is enough to raw materials supply to production. Pallets of parts were also issued and staged at the production area causing poor housekeeping.
After Kaizen , parts from key suppliers are delivered to the plant daily, at a fixed time (3x/day) and fixed quantity (based on level schedule). This provides a standard work to suppliers and does not cause any jerk to their processes – hence ensures quality product and upfront supply chain stability. Other part supplies were also improved from weekly to daily deliveries thus reduces inventory in our supermarket. Through these implementations, we are able to reduce inventory in our supermarket from 4 to 1.5 days. Parts delivered to the receiving dock are transferred to line site flow rack in a FIFO manner. Any quantities those are not able to be placed onto the allocated rack space will be staged at the ‘Overflow’ area which indicates an ‘Abnormal’ situation. Action will be taken to resolve this abnormality. (E.g. machine down, hence missed schedule). Overflow quantities also indicate a need to catch up missed production. To create rapid flow in m manufacturing, delivery router will move parts to point of use in small lot size – 15 minute delivery route. (see Figure 1)
Figure 1: Frequent delivery of parts to point of use