Typically 95% of Total Lead Time is Non-Value Added!!!

Logistics, Inventory, Material Flow Optimisation,

Monika Uhrová, Ján Košturiak

LOGISTIC SYSTEM OPTIMISATION

Abstract

In a typical factory, logistics accounts for 25% of all employees, 55% of all factory space, and 87% of production time. Logistics and material handling is estimated to resent between 15 and 70% of the total cost of a manufactured product. These figures show that there is a big potential for waste reduction in material flows and inventories. This paper describes such approach developed by IPA Slovakia.

1. WASTING IN THE MATERIAL FLOW

Typically 95% of Total Lead Time is

Non-Value Added!!!

RUN

TIME Order Processing, Transport, Storage, Waiting, Rework, _{Machine Setup, Inspection, Machine Breakdowns, etc...}

Total Lead Time

Fig. 1:Where are the biggest improvement possibilities in lead time – waste in material flow? The logistic system optimisation approach of IPA Slovakia:

1. Analyses and process simplification – logistic audit, material flow analysis, throughput time analysis, added value curve, process mapping, segmentation and manufacturing cells

2. Waste analysis – flow kaizen, value stream mapping – current state mapping, future state mapping

3. Bottleneck management – Drum buffer rope, buffer management, SMED, batch size reduction, one piece flow, kanban

4. Dynamic simulation and optimisation of the whole logistical chain

Figure 3 Levels of logistic optimisation

Figure 4 Levels of logistic optimisation – supplier park

Team 2 Te am 1

Li ef er ant / Die nstl eist erK unde /Be su cherKun de /Besuch erLi efe rant /D ienst lei st er Waren ei nga ng / L ager / Kommi ssio ni erun g Te am 4 Team 3 Li eferan t / Die nstle isterKund e /Be such erKu nd e /Besu cherLi eferant /Dien stlei ster Präsen ta tion /Sch ul ung Prä sentati on /Sch ulu ng

Ha uptverk ehrsweg

Dien stlei ster Kund eKu nd e Team 1 Proj ekti erun g / Konstruk tion (mec h./el .) Softwa re

Arc hi v Dienstl eiste rKu ndeKun deKo nstrukti on (mech ./el .)Proj ekti erung /Team 2Software Arb eitsvo rberei tung Einka uf Arbei tsvorbe re itun g

QS / No rmung

Ebe ne 0 Ebe ne 1

Ga le rie

Tor 1 Tor 2 To r 3 Tor 4 To r 5 Tor 6

45 ,0 0 m 1 20,00 m 30,00 m

Global

Level

Supra

Level

Macro

Level

Micro

Level

Sub-Micro

Level

Site Location and

Selection - Sites

World or

Country

Site Planning –

Buildings

Building Layout –

Departments

Cell Layout – Cells,

Workstations

Workstation Design

– Tool Location,

Work Place

Building

Cells

Workstation

Site

Figure 5 Material flow simplification – manufacturing cells

Figure 6 Process simplification using value stream mapping

start:

the whole work time is only 15% of the door-to-door time !!!

results:

optimization and value stream design shorted the door-to-door time 34% 9 10 11 4 ST 5 Dauer 4 Abdrücken sonder FIFO 6 U n te rb a u -L a g e r V A Wartungs-anleitung Glas-Strahlen W a re n e in g a n g Lade-stationen Lade-stationen 7 8 7 8 11 1 ₂ 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5 2₃ 4 5 FIFO 10 3 9 10 11 4 ST 5 Dauer 4 Abdrücken sonder FIFO 6 U n te rb a u -L a g e r V A Wartungs-anleitung Glas-Strahlen W a re n e in g a n g Lade-stationen Lade-stationen 7 8 7 8 11 1 ₂ 3 4 5 2 3 4 5 2 3 4 5 2 3 4 5 2₃ 4 5 FIFO 10 3 9 10 11 4 ST 5 Dauer 4 Abdrücken sonder FIFO 6 U n te rb a u -L a g e r V A Wartungs-anleitung Glas-Strahlen W a re n e in g a n g Lade-stationen Lade-stationen 7 8 7 8 11 1 ₂ 3 2₃ 4 5 2 323 4 5 2 323 4 5 2 323 4 5 2₃ 2₃ 4 5 FIFO 10 3 level 4 enlargement to other value streams level 4 reducing problems in detail “mini-projects” level 2 optimization & standardization of processes level 1

value stream & control of processes

I

Molding Constant buf fer 10 Machines Ty p 4 cav mold Winding 3 40,000 pcs C/ T = 12s ea C/ O = 3h Bat ch = 5000pc s Rel = 85% 4 Power Press 2 Subassembly 4 Wind Bobbin Solder & Term Assy I 8,000 pcs 1X / Week Current Demand = 200,000 /yr = 833/day Available Time = 1 shift = 430m = 25,800s Takt Time = A vail Time/# units /day

= 25,800s /833units = 31 sec C ustomer Production Control Supplier P/ O MRP Mast er Sc hedule Mat 'l Mgt Purch Weekly Plan Prod Mgr P /O 6m o Fo rec as t Sheet Metal L/T= 5d Plast ic L/T= 10d Wire L/T = 10d RF Q Quote Sales Quote & estimat e Order Review Hit Rat e = Unknown Q oute L/T = 3d O rder L/ T = 3 - 5d Cust Service Order Review P/ O & J ob Folder Revis ed Dates Dept Schedule Except ion Daily Prod Meet ing

Cons tant Buff er 4 Machines Yield = 90% C/ T = 0.5s ea C/ O = 1. 5h Bat ch=10,000pc s Rel = 95% Yield = 90% C/T = 22s C/O = 1h Bat ch = 500pcs Rel = 95% Yield = 95% C/T = 2m C/O = n/a Bat ch = 50pcs Rel = n/a Subassembly 6 Contact as sy Stat or assy Yield = 95% C/T = 45s C/O = 15m Batc h = 50pcs Rel = 100% Subassembly 6 Motor assy Rotor assy Brac ket assy

Yield = 95% C/T = 1m C/O = n/a Batc h = 50pc s Rel = n/ a Machine Shop 6 Subassy components Yield = 95% C/ T = 2m C/ O = 30m Bat ch = 500pcs Rel = 99% I 60 days I 20,000 pcs Final As sembly 12 Yield = 95% C/ T = 25s C/ O = n/ a Batch = 150pcs Rel = n/a Testing 8 Yield = 95% C/ T = 2.5m C/ O = n/ a Batch = 250pcs Rel = n/a Ship I I I I 3,300 pc s 1,700 pc s 400 pc s 2,250pcs Cust omer O rder Shipping Ticket Reject Report

2. INVENTORY REDUCTION PROGRAMME

The main steps of the inventory reduction programme are:

1. ABC/XYZ analysis – final products, work in process, material and components, spare parts

2. Analysis of the inventory turnover

3. Analysis of the warehouse and storage system (material position, material identification, material preparation, input/output control)

4. Material flow analysis – Sankey diagram, distances, number of transportation trips, value added and non-value added activities.

5. Throughput time analysis 6. Space utilisation analysis

7. Material flow matrix construction.

8. Inventory level analysis – final products, WIP, raw materials. 9. Value added curve construction and logistic cost analysis 10. Setup time reduction and lot size minimisation (when necessary)

11. Inventory control system proposals - inventory safety levels, removing of unnecessary material items from shop floor, FIFO control, visualisation, etc.

12. New inventory control model, forecasting model implementation (when possible) 13. Value stream mapping and dynamic simulation of the value flow

14. Total optimisation of the value chain

Fig 7 ABC Inventory analysis 0,0 5,0 1 0,0 1 5,0 2 0,0 2 5,0 3 0,0 3 5,0 4 0,0 4 5,0 5 0,0 5 5,0 6 0,0 6 5,0 7 0,0 7 5,0 8 0,0 8 5,0 9 0,0 9 5,0 10 0,0 1 1 0 1 2 0 1 3 0 1 4 0 1 5 0 1 6 0 1 7 0 1 8 0 1 9 0 1 1 0 0 1 1 1 0 1 1 2 0 1 1 3 0 1 1 4 0 1 1 5 0 1 1 6 0 1 1 7 0 1 1 8 0 1 1 9 0 1 Artike l % K u m u la ti v e r A n te il d e s A rt ik e ls z u d e r g e s a m te n B e s ta n d e n g ro s s e A B C 53 649 870,99 = 68 Artikel, 75% Ante il A

10 729 974,19 = 144 Artikel, 15% Ante ill B

7 153 316,13 = 1749 Artikel, 10% Ante il C

A – 68 Products / 75% Inventory value B – 144 Products / 15 % Inventory value C – 1749 Products / 1,1 % Inventory value

Fig 8 Inventory and space reduction programme Input data collection Input information analysis Calculation of the basic indicators Inventory turnover

calculation ABC analysis

Inventory analysis group "A" Selection of the ordering and optimisation models New inventory management system Analysis of

causes for high inventories Measures for continuous inventory reduction

500 m

1200 m

3120 m

140 m

180 m

Figure 9 Inventory reduction – a way towards one piece flow Idle Times Long Setup Times Wrong purchasing Unbalanced capacities Scrap Inventories Low Discipline Waiting for Materiall Insufficient Inspection Unstable Processes

Figure 10 Dynamic simulation

This article was originated with financial support of VEGA project No. 1-9222-02 and of KEGA project No. 3-0169-02.