CONNECTIONS BETWEEN THEORY AND RESEARCH QUESTIONS

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Empirical study

The following chapter presents the case company in regards to its process and relevant empirics.

Case description

The site has recently been rebuilt due to a change in production from producing cars to trucks and buses. It is a part of a cooperation that uses Volvo production system (VPS). This system is closely related to lean production with a different approach to the formality of the organization structure (Sandberg, 1995). The site manufactures trucks and buses the studied flow is restricted to trucks. The site manufactures an average of twelve trucks a day. The trucks are manufactured with the basis in two different models, which is adapted to the customer’s specific requirements.

The current process

The current process begins with 90% of the pallets being unloaded to the goods receiving area (GR) while the remaining pallets are moved to a separate area for quality control. After the quality control the pallets re-join the main flow at GR. The pallets are later moved to storage where they are divided in two zones. This is where the case area begins. In the storage the pallets are sorted after their height and width after which they are assigned a random location in their respective zone. Next station for the pallets is the kitting rackets. Pallets are moved there whenever the quantity at a kitting rackets runs low. When the quantity runs low, an assignment is given to the replenishment operator. There are two assignment types. First and most frequent type is a normal assignment which signifies a future need of replenishment. Second assignment type is urgent assignment. This type signifies an immediate need for an article. The kitting rackets contains designated spots for every part number which is specific for every article type. In the kitting rackets each part is picked individually and moved to the assembly line. The study process end when the parts reaches the assembly line, thereby limiting the case study to two operations, store pallets and move them to kitting rack. This is where the focal of the bachelor paper ends. However the picking process is also studied in an attempt to avoid sub optimizations and increase efficiency through a higher output. Figure 1 show the flow as described in the previously paragraph.

Current performance

Average travel distance for kitting operators was collected to study how customer value from replenishment can be increased by placing pallets at optimal positions to reduce travel distance for operators further down in the material flow. The travel distance can be found in Appendix 2 where one choice random order from each usage point have been studied and added together. Average travel distance for replenishment operators was collected through a mathematical analysis of the case. The analysis is available in appendix 4. Even though most transportation can be seen as waste some is still be necessary in the current system. Average travel distance is a KPI that helps with waste reduction regarding traveling. The mathematical analysis is based on equal demand of pallets. In the case there are work zones two zones. Both of these Zones can be approximated as square. The zones contain eight parallel rackets each which was used in the analysis to calculate theoretical travel distance. The work zones split the storage area in two. The replenishment assignments that are generated in the storage are split into the work zones according to the location of the position in need of replenishment. To illustrate case also revealed how much time a replenishment operator spends on average to complete the assignments. The average time of traveling between storage location and kitting location is about four minutes out of the total eleven minutes which is the standard time for each assignment. A quick glance of Table 2 – Replenishment process time for operators.Table 2 and appendix 3 might reveal the problems of the current situation to an attentive reader. The problem is that the demand is higher than the capacity of the two operators. This is met by helping the replenishment operators with “clean to kitting location” by assigning additional resources. For clarification, this study focuses on average travel time “Fill part to kitting location” which gives the operator more time to complete a bigger portion of the task without help of additional resources. Table 2 illustrates the time spent on performing one assignment for an operator. The time is first divided into two categories. Part to kitting location is the process of receiving an assignment and getting the pallet to its kitting location. Kitting location to clean is removing the empty pallet from the kitting location to an area where pallets and other used handling material are placed. The standard time for these processes is STD time, which can be seen in the table. The process which the intended improvements effect is travel time of “part to kitting location”. For that reason the standard time for this category is split into average travel time and average non travel time.

Analysis

In the following chapter the empirics is combined with the theoretical framework in an analysis in respect to the research questions.

Research question 1

In chapter Error! Reference source not found.Error! Reference source not found. it is described how a KPI should be chosen. It is stated that the KPI should be designed to measure the intended result and overall goals. In this case: improved efficiency. Since efficiency depends on both input and output (Bernolack, 1997) both of these was measured. Chosen KPIs for input is theoretical capacity for replenishment operators. The number of operators remains the same during the case which means that improved capacity leads to less input for each assignment and thereby higher efficiency. A number of different aspects are studied. These are theoretical number of urgent orders, theoretical workload imbalance and a route study for kitting operators. Analysis of workload imbalances and measures the stability of the process which leads to higher customer value and output. Route study for kitting operators shows the effects replenishment has on the downstream efficiency. Increased downstream efficiency means a higher output and thereby higher efficiency in the focal area. For time being there are five operators in Zone 1 and six operators in Zone 2. In the same zones there are two replenishment operators. The effects are measured through the following KPI: Average travel distance for kitting operators. Average travel distance for replenishment operators. Frequency of workload imbalances. The outcome of these KPIs is documented in chapter 184.3 and was therefore not be further evaluated in this chapter.

Research question 2

Efficiency can be increased by either increase of output or a decrease of input.

Increase output

Customer value can be increase through adapting the focal process to the next process in the production chain. By providing savings in the downstream process customer value is increased by the same amount. The bulk of the work is put into picking operation (de Koster, Le-Duc, & Roodbergen, 2007), which in this case is made up by kitting the bachelor paper focuses on how the studied area can benefit the kitting operations. By increasing the customer value generated to kitting operations, the warehouse efficiency can increase. This means that the efficiency in the study is improved by increasing the output. The efficiency of the kitting operations was increased by improving the picking routes which reduces the travel distance and thereby the waste. It was done by dividing the articles in different families and locate the them in proximity to each other. Every part has one or multiple usage point in the production line, although most articles only have one. Every assignment was generated from usage points which make the product families relative clear cut. This limit the problems discusses by Castillo & Peters (2010). In the cases where some articles have multiple usage points, and therefore belong to two different families, these product families get linked together in the final layout. Another way of solving multiple usage point is to assign two kitting locations to the article. Even though the products have slightly different destinations they will for the sake of this project have a theoretical common destination. Due to the process relative small difference in physical destination this approximation was considered to be insignificant to the overall result. Since the usage points have a different number of articles and therefore occupy different amount of space it was beneficial for the kitting operator´s overall travel distance to locate the smaller product families closer to the common destination, thus allowing a bigger number of orders to be carried out with lesser travel distance. This rests on the same basic as ABC classification namely providing favorable locations for frequently picked articles. However because of different pallet frames and the preexisting warehouse layout the possibilities of doing this were limited. Therefore the smaller product families are only be placed close to the destination whenever it was possible. The complete layout is available in Appendix 1-Kitting layout where family groups are allocated in the kitting rackets. The new kitting layout was compared with the old kitting layout. This was done by comparing the travel distances in the kitting layouts. This comparison can be seen in Appendix 2 and shows that the average travel distance was reduced by 21% in Zone 1 and 41% in Zone 2 making the average benefit of 31%. Kitting locations can be organized through family grouping (Lundsen, 2012) according to Appendix 1-Kitting layout. In the current case it was found that the travel distance for the kitting operator could be cut by approximately 31% which correlates with the findings of Castillo & Peters (2010) who states that family grouping can increase the efficiency of the flow. Bernolack (1997) argues for efficiency as a ratio between input and output. In this case the input is labor. Labor input is measured by combined time spent for the operators. Since generally half the time spent can be attributed to traveling (de Koster, Le-Duc, & Roodbergen, 2007) . By limiting traveling the amount of waste can be reduced so that the operator can spend a higher portion of the time with value adding activities. This means that the produced work can be affected by the family grouping. Since travel distance and travel time is proportionate (de Koster, Le-Duc, & Roodbergen, 2007) reducing travel distance by a set proportion is likely to reduce the travel time to by the same proportion. Combining this logic with “Appendix 2” kitting operators can spend 21% less time traveling in Zone 1 and 41% less time in Zone 2. This gives an average of time saving of 31% in traveling. Half the total time is traveling which means that the time savings is 15.5% of the total time. There are five kitting operators in Zone 1 and six in Zone 2. In the same zones there are two replenishment operators, one in each zone which were the same findings as de Koster, Le-Duc & Roodbergen (2007), that picking is the most labor intense process in warehousing. This means that adapting the replenishment process to the kitting process has big effects on the efficiency of the replenishment process. There were eleven operators in kitting and two in replenishment. This meant that customer value generated by the less labor intense process is amplified by its impact on every operator in the next process. Saving a fixed number of work hours is more prominent in a process with fewer wok hours than in one with more work hours. Since then input is the same in both process, namely work hours, the waste reduction can be compared directly by calculate the overall impact on the organization. This meant that the customer value from replenishment can be increased by 85% by adapting the process to kitting operations and thereby increasing the efficiency by the same amount.

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Decreased input

The distance between kitting locations and warehouse location can also be reduced. This was done by changing the current system of random warehouse location in the zones to a system where pallets are placed at the closest possible position possible to their intended kitting location. If the right area was unavailable for the pallets from GR, the pallets can be transported to another area in proximity the one that was initially intended. From the document analysis it was found that the standard time for a replenishment operator was eleven minute per pallet. Out of these four minutes was reserved for kitting operator to travel between storage kitting location and kitting location. The complete distribution of time is described in Table 2 – Replenishment process time for operators. Appendix 4 show that organizing the pallets in storage according to their future kitting location, significantly reduce the travel distance. The current or old system leads to an expected travel distance between pallets of 0,63L compared to the 0,33L of the new system. This leads to a decreased travel distance of The travel distance that was reduced can be seen as waste in the current system Ohno´s (1988) deffenition. This however begs the question why the waste cannot be reduced more. Even the storage is 100% waste according to Ohno (1988). The necessity of storage is intuitive in the case as described in chapter Error! Reference source not found. due to deviations in the process such as demand and delivery deviations. There is however a case to be made that only kitting locations should be enough. This would however demand a big storage area which is not only expensive but also leads to impractical kitting layout and long travel distances for kitting operators. This reasoning justifies the use of storage to counteract the deviations in the process. Travel distance in the new system could be shortened further by split the alleys in the smaller sections and limit the storage to each of these regions in respect to the pallets in kitting. Even though this could lead to decreased travel distance it would also lead to lower capacity of storage. The storage would decrease in capacity since the zones would make the storage less versatile. This creates a trade-off situation.

Introduction
1. BACKGROUND
1.1 PROBLEM DESCRIPTION
1.2 PURPOSE & RESEARCH QUESTIONS
1.3 DELIMITATIONS
1.4 DISPOSITION
2 Method
2.1 STUDY DESIGN
2.2 CASE STUDY
2.3 APPROACH
2.4 DATA COLLECTION
2.5 QUALITY OF RESEARCH
2.6 WORK PROCESS
3 Theoretical framework
3.1 CONNECTIONS BETWEEN THEORY AND RESEARCH QUESTIONS
3.2 KPI
3.3 EFFICIENCY
3.4 WAREHOUSE LAYOUT
3.5 ARTICLE PLACEMENT
3.6 WAREHOUSE OPERATIONS
3.7 WORKLOAD DISTRIBUTION
3.8 TRADE-OFF
4 Empirical study
4.1 CASE DESCRIPTION
4.2 THE CURRENT PROCESS
4.3 CURRENT PERFORMANCE
5 Analysis
5.1 RESEARCH QUESTION 1
5.2 RESEARCH QUESTION 2
5.3 RESEARCH QUESTION 3
6 Conclusion and Discussion
6.1 RESULT
6.2 IMPLICATIONS
6.3 LIMITATIONS
6.4 CONCLUSIONS AND RECOMMENDATIONS
6.5 FUTURE RESEARCH