HOW CAN LEAN-ORIENTATED GOODS RECEIVING LEAD TO IMPROVED VALUE FLOW?

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Empirical Data

This chapter provides an overview of the activities performed at the case company. Furthermore, empirical data collected is presented to give answer to the study’s research questions.

Company Description

The case study has been conducted at one of the largest heavy truck manufacturing companies in the world with a history of manufacturing trucks for 90 years. Their vehicles are sold and serviced in more than 140 countries all over the world with 95 percent of their production capacity in Sweden, Belgium, Brazil and in the USA. Throughout the company, the focus is on their core values; Safety, Quality and Care of the environment. This results in the fact that the company are branch leader in manufacturing safe and innovative high-quality products with an environmental awareness for their customers.
The case study has been conducted at the plant located in Bangkok, Thailand. This plant manufacture two types of brands. One brand is manufactured by assembling knock down (KD) kits received from other plants. KD are kits that’s manufactured at another plant and then shipped to the facility to be assembled to finished products. For the other brand the company have complete manufacturing which means that they manufacture the trucks by themselves. They also manufacture KD parts of this brand to be assembled at another plant in southeast Asia. Due to the manufacturing of two brands the plant handles approximately 5300 different part numbers. The takt time at the plant is 12 trucks a day which means that the company in an average must receive 50 trucks and 8 containers a day with components to satisfy the production lines. Trucks are made to customer order which means that customers have a great opportunity to customize the truck to own preferences regarding look, performance, quality and features.
The case company is currently working with Lean philosophy, mainly in its manufacturing processes. From interview with logistics manager it surfaced that there are currently problems with supplying the assembly lines with correct components and materials. The manager said:
“Most of the time we have the materials we need to manufacture a truck in the plant. But sometimes there is a lack of products in our inventories before the assembly lines. This is often because the materials get stuck between activities in the goods receiving process. The assembly line is directly affected by this and it can sometimes lead to a total stop in manufacturing. In this case we need to go to goods receiving and search for the right materials to continue the manufacturing process.”
According to the manager the assembly line was functioning well as long as there are materials in stock but unfortunately the lack of materials happens quit frequently which results in manufacturing stops.

Current State Goods Receiving

The company’s goods receiving process handles incoming goods received by truck or container from both local and oversea suppliers. The goods receiving process is divided into eight different activities which handles goods from point of arriving to plant until component storage in either a super market or in high rack storage. Each of these activities are seen as either value-adding, non-value-adding or necessary non-value-adding activities that the company needs to perform to manufacture products or in this case to get the components to storage.
When a customer places an order at the case company the company translates the ordered truck in to components and electronically order the needed components from each supplier. The components are then sent as overseas freight with boat, local delivery by truck or by air freight if quick delivery is needed. The goods receiving process starts when the shipment arrives at one of the unloading locations at the plant and ends when the materials have been moved to storage. The received trucks and containers pushes the material in to the plant in a “push flow”. The activities in goods receiving aren’t functioning with a pull system due to the irregularity of shipments and trucks. The activities are therefore sometimes operating at full capacity with materials waiting on handling between activities and sometimes standing still due to no materials being received during that time.
Although the case company have a Lean philosophy adapted to their manufacturing processes, they haven’t implemented it at goods receiving. When interviewing an operator at goods receiving he states that they don’t work with Lean which was noticeable when observing the operators performing work tasks. Operators performing the same task completes it differently and uses different tools and equipment. From the interview with the logistics manager it surfaced that the goods receiving process isn’t prioritized to be improved:
“We mainly focus on the manufacturing procedures and improving them. As long as the Goods Receiving is functioning and being able to support JIT manufacturing we are happy”

Suppliers

The case company have suppliers located all over the world. Some are located in Europe and are a part of the focal firm as subsidiaries, like the case company, and provides the case company with organizational branded components like doors, huts, and chassis which is delivered by oversea containers. The organization also have other manufacturing plants in Asia which acts as KD suppliers provides the factory in Bangkok with finished modules, which are ready to be assembled in to finished trucks at the Bangkok plant. The local suppliers are not part of the organization and mostly provides raw materials, screws, nuts, door panels, roof panels and much more.
Shipment times overseas vary several months due to uncertain ocean condition and thereby force the case company to keep these items in stock. The Asian and Bangkok local suppliers on the other hand can deliver ordered component from a couple of weeks to under a week’s time depending on shipment distance.

READ Performance in different market environments

Packaging

The case company receives materials and components in many different packaging types with different kinds materials and dimensions. The organization have standard packaging which is used when shipping between different manufacturing plants within the organization, called V-emb. These have different dimensions and are labeled with letter K, L, F, G or H depending on which dimension the packaging has. V-emb is made of wood and metal pieces that protects the components during shipments. Upon completed shipment these packaging’s are reused within the organization to save costs and to reduce the environmental impact of shipping. V-emb is also used as storing packages due to their strengths and standardized size. This is something that the logistic engineer pointed out during the interview:
“The durance and quality of the V-emb packaging makes it great to use as storage packaging. It helps us save space and reduce the number damaged products at the same time as it improves the flow through the receiving process due to not needing to be unpacked and repacked.”
Suppliers outside the organization mostly ship components by carton packaging. These can vary in dimension and in material strength which makes them less efficient to work with compared to V-emb that are made of stronger material and has standardized sizes. To cope with handling different type of packaging materials the case company currently repack the components received by carton packaging to their own standard packaging V-emb to keep in storage. During the interview with the logistics engineer he said:
“The cartons received by truck from the local suppliers are often damaged or contains the wrong items. This forces us to unpack, inspect and repack the shipments which is frustrating”

Goods receiving

The case company receive goods from its six unloading docks located at the incoming goods section of the company. The different docks handle different kind of packaging and materials. For example, one of the docks is strictly used for unloading chassis due to their size. Received packages is unloaded at the unloading docks and are then checked and controlled by operators. Depending on what type of packaging that is unloaded, some will be repacked in V-emb to fit storage dimensions and some that already is packed in V-emb is moved directly to storage.

Analysis

The chapter answers the case study’s research questions by matching collected empirical data with the theoretical framework.

Which lean tools or methods could be applied on a manufacturing company’s goods receiving?

The first research question will be answered by identified lean tools and methods will be matched against the case company’s good receiving to evaluate which tools or methods are suitable to apply on a manufacturing company’s goods receiving. To get a clear structure of the analysis each paragraph will begin with the lean tool analyzed.

Application of Lean tools or methods in goods receiving

A Lean philosophy needs to permeate the entire organization to be successful (Liker J. K., 2004). Liker (2004) also states that the organization needs to have a comprehensive view of Lean to benefit from the implementation of different Lean tools and methods. The case company is working with Lean in its manufacturing processes and on manager level but not in goods receiving which indicates that the Lean philosophy does not permeate the entire organization. Rogers (2009) and Imai (1997) claims that improvements made without a holistic view could lead to sub-optimizations.

Table of content
1 Introduction
1.1 BACKGROUND
1.2 PROBLEM DESCRIPTION
1.3 PURPOSE & RESEARCH QUESTION
1.4 SCOPE & DELIMITATIONS
1.5DISPOSITION
2 Method & Implementation
2.1LINK BETWEEN RESEARCH QUESTION & METHOD
2.2 WORK PROCESS
2.3 APPROACH
2.4 STRATEGY
2.5 LITERATURE REVIEW
2.6 COLLECTION OF DATA
2.7 DATA ANALYSIS
2.8 QUALITY OF RESEARCH
3 Theoretical Framework
3.1 LINK BETWEEN RESEARCH QUESTION & THEORY
3.2 LEAN PHILOSOPH
3.3 LIKERS 14 PRINCIPLES OF LEAN AND 4P MODEL
3.4 KAIZEN
3.5 GEMBA
3.6 JUST-IN-TIME
3.7 VALUE STREAM MAPPING
4 Empirical Data
4.1 COMPANY DESCRIPTION
4.2 CURRENT STATE GOODS RECEIVING
5 Analysis
5.1 WHICH LEAN TOOLS OR METHODS COULD BE APPLIED ON A MANUFACTURING COMPANY’S GOODS RECEIVING?
5.2 HOW CAN LEAN-ORIENTATED GOODS RECEIVING LEAD TO IMPROVED VALUE FLOW?
6 Discussion & Conclusions
6.1 DISCUSSION OF RESULTS
6.2 DISCUSSION OF METHODS
6.3 CONCLUSION AND RECOMMENDATIONS
6.4 FURTHER RESEARCH
7 References