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Analysis of Current State

Below an analysis of the current state will be presented. The focus of the analysis will be on the parts relevant to answer the thesis questions and fulfil the purpose with regards to the delimitations. The observations at the plant have shown that there are two major problem areas; the semi-finished goods inventory and the way work is conducted in the sheeting process.

Semi-finished goods inventory

The semi-finished goods inventory is presently rather disorganised; some rolls are outdated and identical rolls are stored apart from each other, making it difficult for conversion operators to locate them. Since the lead time to customer is five days and everything is produced against a customer order there should be no rolls older than five days at this inventory point. Due to the disorganisation in this inventory there is a great risk that rolls become outdated. Another risk connected to the disorganised state and the customer orientation is that the customer can order specific dimensions of sheets which creates a demand for specific dimension of rolls and if these rolls are not used for the order they are intended for they may become obsolete due to that they may be difficult to use in another customer order which is in accordance with what Jonsson & Mattsson (2005, p. 132) have stated. When rolls are not used for the intended customer order they are a result of overproduction in the extrusion; a wasteful activity (Liker, 2004, p. 28). The elimination of obsolete products, and the risk that products that will not be sold are produced, can lead to a lower inventory carrying cost. One of the problems with the products not sold is that they are consuming tied up capital. The main problem is that they are occupying parts of the rather small storing space and are contributing to increase the overall company inventory carrying cost when the aim is to keep inventory levels down. Rolls of the same kind are not always placed at the same location in the inventory; this creates problems when the conversion operators need to get material from the inventory. The inventory list (see 4.5.2) is meant to be an aid for operators in their search for rolls but is instead counterproductive since it does not show in which order to pick the rolls, this may lead to old rolls being left in the inventory. Also, the inventory list is not always up to date and can therefore not be trusted to give correct information. Further, the operators do not always use it since they pass the inventory of rolls, and may spot the rolls needed, on their way to the inventory list. The search for rolls leads to a lot of movement of the operators which is a wasteful activity that can be eliminated (Ohno, 1988, p. 129) if the inventory was structured in a more consistent way. Since the inventory list is not currently working ideally and the plant is not storing goods according to FIFO-principles (Lumsden, 2006, p. 455) the rolls are at risk of getting outdated and difficult to use due to wrong dimensions. This problem needs be solved in order to get an organized inventory that serves the company’s ambition to keep lead times short and only produce what the customer has ordered (and therefore only store what the customer has ordered). In order to accomplish the above, there has to be a structured way to withdraw material from the semi-finished goods inventory. The operators need a structured way to fetch rolls so they do not run the risk of fetching the most recent stored rolls, and thereby apply LIFO-principles (Lumsden, 2006, p. 455). Preferably there should be a simple way to get hold of rolls stored the longest in the inventory and thereby eliminate the risk of rolls getting too old. To create an improved structure in the semi-finished goods inventory one approach could have been to store rolls in fixed locations. This is not possible at the plant since there is little room for fixed positions in the inventory. Because of this limitation the plant needs to use floating storage locations which fortunately support the FIFO-principles (Oskarsson et al., 2006, p. 132) of storing because of its flexibility and because it does not require a large inventory. The flexibility is also needed at the plant since they have many different variants that are not always stored at the same time. However, a floating storage location requires that there is a simple way for the operators to know where to fetch rolls, since the location will vary. The area designated for partly consumed rolls is at the moment not very structured and is in close connection to the rest of the semi-finished goods inventory. The rolls are labelled in an inconsistent way and it is therefore difficult to determine the dimensions of the rolls. This area is large compared to the rest of the semi-finished goods inventory. Also, the area is not totally separated from the other rolls which means that this area can vary in size and it is difficult to make an ocular inspection and quickly determine how many partly consumed rolls there are. Since some rolls have specific dimensions, the same problems can occur in this area as the rest of the semi-finished goods area with regards to outdated rolls and difficulties to use. Therefore the aim should be to keep the number of partly consumed rolls down to a minimum. If the area can be separated from the semi-finished goods inventory it can become more visible for both the operators and management where the rolls are situated and how many there are. Also, a clearer labelling of the partly consumed rolls can contribute to an easier form of identification.

Sheeting machines

Currently there are no consistent instructions on how to conduct work in the sheeting area; however there are instructions on how to change the machine settings when moving from one order to another. On some orders there are customer specific requirements that are communicated to the conversion operators through the printed manufacturing order placed by the sheeting machines. The lack of instructions for how to conduct work has lead to that the conversion operators have developed their own methods as described by Liker & Meier (2006, p. 248). This in turn causes variation in cycle time. A variable cycle time implies that it is difficult to predict the time requirement for a customer order. When the machine has produced one package it is set to automatically stop to ensure that the package contains the right amount of sheets. Depending on the operator and his/her method of work the machine is started again before the package is packed or started after the package is packed. This creates the variation in the cycle time. Further, the machine also stops when the conveyor belt is full. This occurs when the operator is not immediately by the machine and can empty the conveyor belt. When the machine stops there is no signal to alert the operator’s attention. This also affects the cycle time but mainly creates a wasteful activity; wait (Ohno, 1988, p. 129). If there were a work instruction telling the operator how to act in these situations to avoid standstills the waste can be eliminated or significantly decreased. To have a work instruction can create a sense of security for the operators since they know how to conduct their work every time. Suitable work instructions can be accompanied by an andon (Liker & Meier, 2006, p. 10) to further bring the operator’s attention to the standstill of the machine. Today, the changeover takes 1 679 seconds. This time includes change of rolls, settings, printing labels and reporting back to the company ERP-system. The only activities in the changeover that requires the machine to stand still are the changing of rolls and the settings. The observed average time for these activities has been 516 seconds. Fetching new rolls, printing labels and reporting back to the system are activities that can be performed while the machine is running. This implies that there are 1 163 seconds of unnecessary machine standstill, which creates wasteful waiting (Ohno, 1988, p. 129). If there were a work instruction informing the operator how to perform the changeover this unnecessary standstill can be avoided. Working with lowering the time required for changeovers is in accordance with SMED (Liker & Meier, 2006, p. 71). Work instructions can also be an aid when using temporary staff. The temporary staff usually does not spend very much time at the company compared to the permanent staff and therefore has less time to learn how to conduct the work that needs to be done. If there is an accurate work instruction to follow, the work is made easier for the temporary staff. A work instruction is also a helpful tool when it comes to making sure that the temporary staff does what is required from them. Another issue related to variation in methods is the quality issue. To know when there is a quality defect there has to be a common standard for what is considered good quality. According to Liker (2004, p. 6) the production should be stopped when there is a quality problem. If there are no standards for how to conduct work it is difficult to identify and solve quality issues. With few existing work instructions there is a risk that quality problems will occur in the sheeting process (Liker, 2004, p. 134). If the operators are not performing their work according to instructions there is a risk that they are performing wasteful activities such as overprocessing, moving, waiting or making defective parts (Ohno, 1988, p. 129). Some operators are packing the sheets without starting the machine and some start the machine. The same thing occurs with replenishment of rolls; some operators fetch rolls while the machine is producing and others do not. If the machine is not running while the operators are performing tasks such as storing, fetching rolls or packing there will be a waiting activity in the machine since the material is waiting to be processed. This activity is wasteful and the waste needs to be eliminated. A work instruction can tell the operator how to perform their work to avoid wasteful activities.

Other areas of improvement

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During the mapping of the production flow other areas of improvement have been found. These contribute to a wasteful environment at the plant and will therefore be mentioned in this section. There are many different dimensions of both rolls and sheets found in the semi-finished goods and the finished goods inventory. Many variants in small batches lead to an increased need for changed settings and changeovers in the machines. Having many different variants also leads to increased handling, administrative and physical, since there is no efficient way to aggregate products. The observations have shown that there are many variants that are similar with only minor differences in size. The company needs to investigate if it is beneficial to offer that many variants to their customers. It might be necessary to classify the different variants based on the cost for producing them and the value of the products. A classification like this could be a helpful tool for the recipients of orders in their work to accept an order or not. The inventory at the plant is not gathered to one specific location. Firstly, as mentioned earlier there are three different types of inventory; raw material, semi-finished goods and finished goods. These are located at different places. Further, the semi-finished goods inventory for all of the conversion is spread and situated at each conversion area (see Figure 12). This creates a wasteful activity; movement (Ohno, 1988, p. 129), because the extrusion operators store rolls in different areas of the plant instead of in only one area. The company should investigate the possibility to store the semi-finished goods in the same area and in a more structured way. However, in Lean Thinking a pull system (Liker, 2004, p. is preferred and in this type of system inventories are kept at an absolute minimum. Therefore the true aim should be to eliminate as much of the inventories as possible instead of putting time and money on changing the organization of the inventory

Action Plan

The analysis of the Current State has resulted in points of action presented in this section. These points of action lead to the elimination of found wastes. Also, a future state map will be presented.

Semi-finished goods inventory

To solve the problems found in the semi-finished goods inventory an action plan has been created. Below, points of action will be presented and a further description of the suggestions is given.

Conduct a thorough clean-out in the semi-finished goods inventory.

To obtain a semi-finished goods inventory that suits the company purpose of producing only what the customer orders there should be an extensive clean-out in the current inventory. All that is older than two weeks should be milled down and used as raw material again.

Sort rolls of the same kind and place them at the same location in the semi-finished goods inventory.

Rolls of the same kind should be sorted and placed together in the inventory. This should be done to prevent rolls being forgotten and outdated in the semi-finished goods inventory. This point of improvement is closely linked to the implementation of FIFO-lanes.

Re-label partly consumed rolls in the semi-finished goods inventory.

The partly consumed rolls should be re-labelled in a more consistent way, preferably using an A4-paper with the colour appointed to that particular thickness of roll. The partly consumed rolls should be separated from the regular rolls to enable an easier way to identify them. The area for the partly consumed rolls can therefore be placed within the blue dotted lines which in Figure 18 contains six rolls and is indicated using blue arrows.

Implement FIFO-lanes in the semi-finished goods inventory.

The implementation of FIFO-lanes would eliminate the problem with rolls being outdated and placed at different locations in the inventory. Figure 18 below shows a suggestion on how the inventory could be organized in the semi-finished goods to enable inventory FIFO-principles at the plant. According to Figure 18 the rolls should be placed in straight lines with the oldest roll closest to the machine and the most recently manufactured roll at the other end of the line. The rolls should be placed on a roller conveyor to easily enable movement of the rolls in the inventory. The flow through the FIFO-lanes is indicated using red arrows for incoming products and green arrows for outgoing products in Figure 18. The placement of the rolls on a roller conveyor also enables storing of rolls on top of each other. The FIFO-lane can be divided into two lanes as seen in Figure 18. This enables storing of more variants which is more applicable at the plant since variants in small amounts occur often. Also, the shorter lanes on the left side in the inventory in Figure 18 can be used to store rolls for the saw depending on the need at that particular time. To keep the flexibility in the semi-finished goods inventory with the FIFO-lanes, floating location storage needs to be applied. This can be made possible through using a flexible labelling system. When a variant is stored in a lane the lane can be labelled with a removable tag telling what variant is stored there. When the lane is empty and another variant needs to be stored there, the tag is exchanged with another tag for the new variant.

1 Introduction 
2 Method 
3 Theoretical framework
4 Current state 
5 Analysis of Current State
6 Action Plan
7 Discussion and conclusions


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