Customer lead-times: Case polyethylene coated board
Examiner: Professor Janne Huiskonen
Instructors: Anton Kullh Marika Taitokari
Lappeenranta 04.12.2016 Jesse Meuronen
Subject of the Master’s Thesis: Customer lead-times: case polyethylene coated board
Year: 2016 Place: Lappeenranta
Master’s thesis. Lappeenranta University of Technology, Industrial Engineering and Management
69 pages, 6 figures, 8 tables and 19 appendices Examiner: Professor Janne Huiskonen
Keywords: Lead-time, value-stream, value-stream map, value-stream mapping, lean, lean manufacturing, board, polyethylene coated board
In this research we look into the conducting company’s customer order lead- times. The company is facing challenges with increased number and volume of orders and is therefore forced to utilize outsourced coating places in the production of polyethylene coated board.
The aim for the research is to find out how the lead-times of these customer orders has developed from 2014 to 2015 and identify the most challenging areas, bottlenecks and possible solutions for them. The research is conducted by utilizing value-stream map as a tool to analyse the current processes and material and information flows.
The research showed that the company is able to meet the promised lead-times but the total lead-time has increased and is much more varying during the research period. Most development has been in the part of the lead-time that the sample orders spend in the warehouses.
The company is able to overcome the found challenges by improving their order handling and developing their current product rotation. A thorough customer demand mapping and product mix re-planning can be a key to success. With this it is possible to develop the production from utilizing push to pull principle.
Työn nimi: Toimitusaika asiakkaalle: polyeteenipäällystetyn kartongin tuotanto
Vuosi: 2016 Paikka: Lappeenranta
Diplomityö. Lappeenrannan teknillinen yliopisto, tuotantotalous.
69 sivua, 6 kuvaa, 8 taulukkoa ja 19 liitettä Tarkastaja: professori Janne Huiskonen
Hakusanat: Läpimenoaika, toimitusaika, arvovirta, arvovirtakartta, arvovirtakartoitus, lean, lean-tuotanto, kartonki, polyeteenipäälystetty kartonki Tutkimuksessa selvitetään sen teettävän yrityksen asiakastilausten toimitusaikoja. Yrityksen haasteina on ollut tilausten lisääntyvä määrä ja kokonaisvolyymi. Näin ollen se on joutunut hyödyntämään useita ulkoisia päällystystoimittajia polyeteenipäällystetyn kartongin tuotannossaan.
Tutkimuksen tavoitteena on selvittää asiakastilausten tilausaika, miten se on kehittynyt tarkasteluvälillä vuodesta 2014 vuoteen 2015 ja tunnistaa ongelmalliset alueet, pullonkaulat ja mahdolliset toimenpiteet näiden ratkaisemiseksi. Tutkimus on toteutettu hyödyntämällä arvovirtakartoitusta työkaluna prosessien sekä materiaali- ja informaatiovirtojen analysoinnissa.
Tutkimus osoitti että yritys pystyy toteuttamaan lupaamansa toimitusajat mutta kokonaistoimitusaika tutkimusvälillä on kasvanut ja tilausten toimitusaikojen välillä on enemmän vaihtelua. Eniten muutosta oli tapahtunut kokonaistoimitusajassa oli havaittavissa varastointiajoissa.
Yrityksellä on mahdollisuus voittaa tutkimuksessa esiin tulleet ongelmat kehittämällä nykyistä tuotannonsuunnittelua ja tuotantosyklien kiertoa.
Perusteellinen asiakastarvekartoitus ja sitä kautta oman tuote valikoiman uudelleen suunnittelut voivat toimia avaimina ongelmien ratkaisemiselle.
Näiden avulla tuotantoa voidaan suunnata push-tyyppisestä pull-malliseksi.
journey from the first year of my studies to finalizing this thesis. It is unfortunately not possible to name all of these great individuals along the way but I would like to express my thanks to the following people who helped me through this final obstacle.
Marika, thank you for giving me the opportunity to conduct this research.
Anton and Björn, thank you for guiding me through the work. I could not have done this without you two.
Saana, thank you for pushing me forward. I would not be where I am now without you.
1.1 Background ... 1
1.2 Objectives and research problem ... 2
1.3 Execution ... 3
1.4 Structure ... 3
2 LEAN MANAGEMENT AND VALUE-STREAM ... 6
2.1 Overproduction ... 6
2.2 Lean manufacturing ... 7
2.3 Implementing lean concepts ... 8
3 VALUE-STREAM MAPPING ... 10
3.1 Material and information flows ... 13
3.2 Product family ... 13
3.3 Using the tool ... 14
3.4 Current state map ... 17
3.5 Building the map ... 17
3.6 Identifying waste ... 20
3.7 Future state map ... 23
4 RESEARCH CASE ... 26
4.1 Company ... 26
4.2 Product ... 27
4.3 Order handling and production process ... 28
5 METHODOLOGY AND DATA COLLECTION OF THE RESEARCH ... 30
5.1 Data collection ... 30
5.2 Data analysis ... 31
6.1.2 Coating Places ... 34
6.1.3 Identifying product families from the sample ... 34
6.2 Optimal ... 35
6.3 Current ... 37
6.3.1 Year 2014 ... 38
6.3.2 Year 2015 ... 39
6.4 Future ... 43
7 OBSERVATIONS ... 44
7.1 2014 vs. 2015 ... 44
7.2 Development in lead-time ... 46
7.3 Repetitive characteristics ... 47
7.4 Dependence within the value-stream ... 48
8 CONCLUSIONS AND TOPICS FOR FURTHER RESEARCH ... 52
8.1 Order handling process improvements ... 55
8.2 Production rotation development ... 56
8.3 Customer demand mapping and product mix ... 58
8.4 Demand driven material resource planning (DDMRP) ... 59
8.5 Value-stream mapping ... 61
9 SUMMARY ... 62
10 REFERENCES ... 67
Appendix 4: Current value-stream map 2PE mill 2014 ... 73
Appendix 5: Current value-stream map 1PE OP1 2014 ... 74
Appendix 6: Current value-stream map 1PE OP2 2014 ... 75
Appendix 7: Current value-stream map 1PE mill 2015 ... 76
Appendix 8: Data collection of 1PE mill 2015 ... 77
Appendix 9: Current value-stream map 2PE mill 2015 ... 78
Appendix 10: Data collection of 2PE mill 2015 ... 79
Appendix 11: Current value-stream map 1PE OP1 2015 ... 80
Appendix 12: Data collection of 1PE OP1 2015 ... 81
Appendix 13: Current value-stream map 1PE OP2 2015 ... 82
Appendix 14: Data collection of 1PE OP2 2015 ... 83
Appendix 15: Current value-stream map 1PE OP3 2015 ... 84
Appendix 16: Data collection of 1PE OP3 2015 ... 85
Appendix 17 Current value-stream map 1PE OP4 2015 ... 86
Appendix 18: Data collection of 1PE OP4 2015 ... 87
Appendix 19: Summary of value-stream maps ... 88
Figure 3: Optimal value-stream map ... 35
Figure 4: Current value-stream map 1PE mill 2015 ... 41
Figure 5: Example of sample order lead-time ... 42
Figure 6: Data collection of 1PE mill 2015 ... 47
List of Tables Table 1: Input/output table of the research ... 5
Table 2: Example of identifying product families (Rother & Shook, 2009, p. 4) . 14 Table 3: Product families based on coating type and place ... 34
Table 4: Key figures of lead-time of 2014 ... 39
Table 5: Key figures of lead-time of 2015 ... 41
Table 6: Key figures of year 2014 and 2015 ... 45
Table 7: 1 PE coating cycles at the mill site ... 50
Table 8: 2 PE coating cycles at the mill site ... 51
AOS Average order size
ERP Enterprise resource planning C/F Cycle frequency
C/O Changeover time
C/T Cycle time
DDMRP Demand driven material resource planning
L/T Lead time
LPB Liquid packaging board OEE Overall equipment efficiency
S Speed
SBS Solid bleached sulphate board
Takt-time Time between the start of production of a unit and the next unit VAT Value-adding time
VSM Value-stream map
1 INTRODUCTION
This research was carried out in co-operation with the conducting company. The topic was chosen to inspect their current challenges in the business and especially in the production section. The research was also carried out as part of the employer co-operation with one of their biggest customers to improve the processes between them.
1.1 Background
The conducting company operates in the paper and board industry and provides both so called raw board and polyethylene coated board as their primary products.
The coated board requires more production phases and different machines than the raw board before it can be sent out to customer.
The conducting company had faced difficulties in meeting their promised lead times. This was due to increased volumes in incoming orders. Both the quantity of single orders and the number of total orders were increased. Especially the number of orders requiring the polyethylene coating was going up. The company has only limited capacity to coat the board at the mill site and therefore is required to utilize outsourced coating places to get all the orders done.
Due to this utilization of outsourced places and increase in orders the company is interested in finding out how this is affecting to the whole lead time of the orders going out to their customers. This kind of research or monitoring is not done at the moment in the company and that is also another factor that they have interest in carrying out this work.
1.2 Objectives and research problem
To begin the research the main research objective was to be formed. The objective was formed after several discussions with the conducting company to meet their needs and to aid their processes the most. The main research question formed as so:
How the lead-times have developed during the last year and where are the most challenging areas, bottlenecks and possible areas of improvement?
In order to answer this main research question three different research questions were formed to act as guidelines for the whole research:
1. What has been the lead-time in 2014 and in 2015 so far?
2. Where has the most development happened and what is the reason for it?
3. How can the lead-time be improved or how can the challenges be overcome?
The company has quite wide product portfolio and therefore in order to inspect the problem at hand the sample size was to be reduced from all orders to a more manageable size. As mentioned this research was also in the interests of one of the biggest customers of the employing company so therefore it was just natural to select only this customers orders in inspection. However to meet the main goal and objective the sample size was to be reduced even more. It was decided in the end that we would only be inspecting those orders that were delivered as reels to the customer. Naturally as the difficulties were in the coated board section we also excluded the raw board orders from the research. Furthermore the orders were divided into different categories: those that were coated at the mill and those that were coated at the outsourced locations and also by the coating type.
1.3 Execution
First we need to familiarize ourselves with the theoretical framework that can support the research and chose the method or methods how to carry out the work.
Improving the lead-time is really closely related to lean manufacturing that is widely utilized in the modern day companies and that is also the framework that this research is based upon on. One of the ways to execute lean manufacturing is to utilize value-stream mapping that was chosen as the main method to inspect the chosen range of customer orders.
On the actual work the first thing was to introduce the lean manufacturing and value-stream mapping as concepts and that is what the theoretical part of this research is concentrated on. Later on when the research was conducted the data was collected from the company’s order handling software and the various reports that it provided. These reports were then piled up together and analysed firstly in quantitative and later on qualitative perspective to get the most out of the data at hand. From the observations gained from the reports the main issue was identified and further suggestions for improvement were formed.
1.4 Structure
The research is divided into two different sections containing the theoretical framework and later on the empirical research and analysis. The sections are further divided into chapters. The contents of these chapters are described in the following input/output Table 1.
Firstly the introduction in chapter one describes the background of the research and familiarizes the reader with the objectives, research problems and the scope.
Therefore defining the limits of this work. Chapters two and three concentrate on the theoretical framework of the thesis describing the basic idea behind lean manufacturing and the value-stream mapping that is the tool used in the research.
Chapters four and five can be seen as a kind of transitional chapters that lead the thesis report from the theoretical part to the empirical part. These chapters describe and visualize the actual case at hand and introduce the companies involved. Here we also have a look at the analytical methods used when working with the data gained from the research.
Moving on to the empirical part of the research. The chapters six and seven describe what is the current situation formed from the reports utilizing the value- stream mapping tool. After forming the value-stream map and the data structured into analytical from the observations are gathered and analysed further. The last chapter before summarizing the whole work then concentrates on the results gained from the observations and conclude my own suggestions and proposals for improvement. From the observations and results I also form some topics for further inspection that were risen up during this research that were not part of the main objective.
Table 1: Input/output table of the research
INPUT CHAPTER OUTPUT
- Introduction of the topic and reasons for conducting the research
1.
Introduction
- Background of the research, objectives and research problem - What is lean
management?
- What is value- stream?
2.
Lean management and value-stream
- Explanation of lean management, and its’
usage
- How is value-stream connected to lean management - What is value-stream
mapping and how is it utilized?
3.
Value-stream mapping
- Usages of value- stream mapping - The mapping process - What kind of
company is Company A
4.
Research Case
- Introduction of Company
- Products reviewed in this research done by Company
- The order handling and production process of the company - How was data
collected and utilized?
5.
Methodology and data collection of the
research
- The methods of data gathering
- Analysing process - What is the current
situation at the Company?
6.
Value-stream map
- What kind of current state is at the
Company
- Forming the map - What was discovered
in the research? 7.
Observations
- Observations, notes, and areas of interests found from the research process - What do the
observations mean?
- What to do next?
8.
Conclusions and topics for further research
- Conclusions about the observations - Possible solutions - Further areas to be
inspected - The most important
things in the research
9.
Summary
- Summary of the research
2 LEAN MANAGEMENT AND VALUE-STREAM
Lean as a term can mean many different things to different actors. (Martin &
Osterling, 2014, p. 5) However, originally the meaning and purpose of lean was to eliminate muda also known as waste. (Lian & Van Landeghem, 2002, p. 1) Lean can also be considered as speed that can be translated into quickness of problem solving. And out of it comes solutions without any strict processes that could take even months to implement into action. So the attention would be focused on the process flow instead of just plainly trying to improve the lead-time. (Chiarini, 2013, p. 9)
The origin of the lean concept comes from the Toyota production system usually abbreviated as TPS. The main goal for the TPS is to develop production environments where termination of activities that produce no value optimizes the operations to more cost-effective solutions. The aim for TPS is to reduce inventories and limit the production to the lowest level and the same time optimizing the production cycle times to match the customer demands.
(Schmidtke, et al., 2014, p. 6146)
The processes and productions are seen as flow in the lean environment and the reductions in production and processes can be translated into optimizing the flow.
Before the optimization however one must understand the process as a whole and see the bigger picture. Only after this can the lean tools be utilized in the most efficient way. (Chiarini, 2013, pp. 7, 9)
2.1 Overproduction
As earlier mentioned the processes should be seen as a whole. Unfortunately many processes operate as isolated systems and therefore the previous one might not be aware of what the next one will need. The production is push based where the processes produce material according to the received schedules from the operational control and not according to the actual needs. This in further leads to
inventories forming between processes where the material is stacking up making the actual lead-time through the whole production very long when the value- adding time is only marginal. (Rother & Shook, 2009, p. 36)
Overproduction generated from such miscommunication between two separated processes can be one of the most harmful types of “wastes” within a company.
Due to continuous production planning changes that are linked to ever more unpredictable market demand the two different processes can easily lost track from one another. This can lead to a risk of just-in-case principle of production rather than just-in-time. (Chiarini, 2013, p.88)
In order to reduce the total lead-time from raw material to finished product the aim is to reduce all the waste generated in the production. Here the waste can be considered as both material and non-material for example time or money loss. To eliminate the waste the root-causes must be identified. The most significant waste is from overproduction. This essentially is when material is produced more, sooner and faster than the next process step requires it. Overproduction can also result in shortages when processes are concentrating in processing the wrong material at the time. (Rother & Shook, 2009, pp. 36-37)
2.2 Lean manufacturing
Lean manufacturing is one of the principles that many major businesses are trying the implement in their own operations. The lean manufacturing is seen as a necessary tool to still compete in the increasingly global markets. As mentioned earlier the lean is meant to focus on the more cost-effective approaches in business processes by elimination activities that produce no or close to none value to their owners. (Abdulmalek & Rajgopal, 2007, p. 223)
Abdulmalek & Rajgopal (2007, p.224) identify the lean manufacturing as “the system focused on pinpointing the major sources of waste”. Waste can be found all over the production and its’ processes. The success is then dependent on ones
abilities to identify such wastes. In order to get rid of the wastes generated there are plenty of tools available for the companies adopting their lean manufacturing strategies such as just-in-time (JIT), production smoothing, setup reduction and many more. The tools can easily be used in conjunction with others or separately depending on the nature of the business.
In essence the lean manufacturing is trying to get one process to provide only the material that the next one needs when it needs it. Therefore translating this into value-stream the goal is to link the processes together from the final product to the raw material. This should be achieved in a way with the least detours and a smooth constant flow that will generate the shortest lead-time with highest quality and lowest costs. (Rother & Shook, 2009, p. 37)
2.3 Implementing lean concepts
Methodologies that are part of the lean manufacturing or management are the tools for the companies the take lean as part of their core processes. On of the commonly used tools has been the pull technique that by its name focuses on producing only what is required and when it is required. The material should then be used immediately in the following phases of production. This should then lead in less rework and waste, less work in one process, reduced lead-time and increased rate of material going through the whole process. Overall it should be visible as increased service level of a company. (Lian & Van Landeghem, 2002, p.1)
In addition to the pull technique have been standard work, quick changeover, 5S and so forth. These have been shown as quite effective techniques to improve the total quality of processes. However even though there exists plenty of well-refined lean manufacturing tools to choose from but the methods of implementing those said tools into the every day business have been quite few. One of the most widely preferred methods of implementing the tools has only come up in the recent years.
The method is called the value-stream mapping (VSM). (Lian & Van Landeghem, 2002, p. 1)
Value-stream mapping is as said one of the most preferred method of applying lean manufacturing to production of companies. This is despite the fact that Rother and Shook introduced this method only on 1999. Value-stream mapping is a systematic approach to viewing the production phases or processes as a whole.
The mapping enables the companies to rearrange their production shop floors, sites or even their whole supply chain systems by eliminating the non-value- adding activities. (Schmidtke et al., 2014, pp.6146-47)
Even though value-stream mapping has been widely preferred it is still under- utilized tool today that can be seen as one of the most powerful that can visualize and improve the lean thinking and manufacturing in a company. The power behind mapping is that it can be utilized much more as just a basic tool (Martin &
Osterling, 2014, pp. 6-7). It can be described as a graphical mean to map out the current situation in the organization and the production shop floor to identify the opportunities and places to eliminate waste. It can also provide basis for decision making for possible waste termination implementations. (Schmidtke, et al., 2014, pp. 6146-6147)
3 VALUE-STREAM MAPPING
The end customer or customers determine the definition of “value” in lean management. By this the value means identifying what the customers are willing to pay for a certain offering and what creates value for them. Therefore the whole supply chain and parts of production should be viewed from the customers’
perspective. After the “value” has been determined by this way the value stream can be explored. Basically value-stream are all those activities that produce or don’t produce value to customer combined required to deliver the product from raw material to the end customer. (Lian & Van Landeghem, 2002, p.1)
Value-stream can be described to be all the actions necessary to bring a product through the essential flows from the raw material to the finished offering to the customer. Value-stream perspective on the other hand concentrates on the big pictures and not just the individual processes but tries to improve the system as a whole. Following this trail of thought the value-stream mapping is a tool for understanding the necessary flows and operations involved in delivering the product through the production all the way and finally reaching the customer.
(Rother & Shook, 2009, pp. 1-2)
As mentioned the value-stream composes of different actions that add or don’t add value to the whole process of using the resources and bringing the end product to customer. These actions are considered both material and immaterial or information flows within the whole supply chain process. The end goal for the value-stream mapping is to find and identify the waste generated in such supply chain processes. Afterwards then eliminating the unnecessary actions. Therefore value-stream mapping can create a common basis for the processes involved and enhance the decision-making. (Abdulmalek & Rajgopal, 2007, pp.224-25)
Value-stream mapping is a very distinctive tool to help visualizing more than just the single process levels of one production. It enables the mapper to see the whole flow. Other than this the tool also has the following key aspects:
- It helps to see more than the waste – you will be able to identify the sources of the waste
- The tool provides a common language for manufacturing processes - The decisions of the flow are apparent after the map has been made - It ties together lean concepts and techniques
- The map forms a basis or a blueprint for implementing a plan - No other tool show the link between material and information flow
- It is a qualitative tool by which is described how to facility should operate (Rother & Shook, 2009, p. 2)
The value-stream mapping tool has been created from the lean production principle to help out redesigning the productive systems of companies and help them out to develop and compete better. (Lasa et al., 2008, p.39) The straightforwardness of value-stream mapping is one of the biggest factors in its’
success. Value-stream mapping is not just a handful of lean improvement tools but it is a roadmap for reaching the desired future state of lean production processes. (Schmidtke et al., 2014, p.6147)
Another factor driving the popularity of value-stream mapping is its flexibility as it can be utilized in both manufacturing and in service industries. In addition to this it can be applied in the production or even administration. This flexibility is based on the easy to change small details on the mapping processes. Value-stream mapping can therefore be considered as the first and most important managing method to be used to identify what is necessary for change in order to apply lean in the company. (Chiarini, 2013, p.33)
Even thought straightforwardness is one of the biggest success factors of value- stream mapping it is also one of the biggest issues as its applications can be restricted by the nature of the method. The method can be found to be static and low-detailed in nature. Value-stream mapping can only insufficiently address the levels of process details and dynamics as the map is concentrating more on the
bigger picture. Planning out the potential future states is key aspect of the process but proving them feasible is not something value-stream mapping is strong in. In addition it doesn’t compare the trade-offs with conflicting cost factors or quantify the benefits when looking into the future state maps. (Schmidtke, et al., 2014, p.
6147)
Many of the activities in the value-stream occur one after another but sometimes these activities can happen at the same time, partially or wholly, as parallel activities. Also the activities that outside parties that add something to the offering can be easily included into the value-stream. Value-streams often refer to the flows involved in producing the offering or the service to the customer but the value-streams can also come in other forms such as supporting value-streams for example a hiring process. A company can easily have multiple and even hundreds of value-streams and supporting value-streams. As long as there is a deliverable and a request a value-stream can be formed. (Martin & Osterling, 2014, pp. 2-4)
There are many benefits that can be achieved by using the VSM in the planning for improvement. The map will act as a visual unification tool where all the people of the organization, no matter on which part, can see the processes involved the same way and understand the needs and possibilities for improvement. If shared with the customer they can also easily understand what is needed to bring the offering from the raw material to them. (Martin & Osterling, 2014, pp. 11-14)
Value-stream mapping is a method to connect different parts of one organization into a one and from there can give input into organizational changes also as well as to only processes and strategic thinking. Different parts can after the mapping process understand their own value to the whole picture. In addition to this when processes and the whole organization is brought up to understandable level to all the processes and process flows can be simplified and unnecessary actions can be cut. (Martin & Osterling, 2014, pp. 14-16)
In addition to all that has been earlier mentioned value-stream mapping can easily be used as a practical means to drive continuous improvement within the organization, its processes and the certain value-stream. The map is also very adaptable which further emphasis the possibility of future development. Future development can be also applied to human resources side of the organization. And as mentioned value-stream mapping can be utilized as supporting tool for other core actions. Therefore the value-stream map can enable more efficient hiring processes within the company. (Martin & Osterling, 2014, pp. 16-18)
3.1 Material and information flows
In lean manufacturing you can consider both the material and information flows through the production as important as the other. The material flow indicates what material and how much of it is travelling forward while the information flow tells the manufacturing processes what to make or do next. The main focus is to identify the possibility of flow so that one process knows what the next one will need and when. (Rother & Shook, 2009, p. 3)
3.2 Product family
Before the mapping process it is important to understand what needs to be mapped. As the customers are only interested in the specific products that are delivered to them that can only be part of the product portfolio that the supplier can offer. These products can be divided into so called product families that pass through similar process steps in common equipment. Table 2 can be used as an example when identifying product families. It can be seen that products A, B and C pass through the same steps and can therefore be labelled to be in the same product family. (Rother & Shook, 2009, p. 4)
Table 2: Example of identifying product families (Rother & Shook, 2009, p. 4) Process steps and equipment
Products
1 2 3 4 5
A X X X
B X X X
C X X X
D X X X X
E X X X
3.3 Using the tool
Value-stream mapping is a mean to map out all the productive processes involved in the chosen product family. Once done the map should visualize not only the material flows involved but also the information flows. The information flows indicate the interactions between processes and also the interactions between parties involved in certain value-stream. The information flows demonstrate also the production control. (Braglia et al., 2006, p.3931)
Regarding the implementation process of this mapping tool there are four different phases how to do it. Special teams appointed for the purpose carry out these phases (Rother and Shook, 1998). The phases are as following:
1. Selection of a product family 2. Current state mapping
3. Future state mapping
4. Defining a working plan (Lasa et al., 2008, p.41)
The above phases provide a basis of a typical value-stream mapping process.
Firstly the selection of a product family is important for the success of the project as it gives guidelines for the whole mapping. The product family is formed up from products that have a common or similar production stages. This will ensure
that the project won’t turn into over-complicated and maintains the desired impact. (Schmidtke et al., 2014, p.6147)
Value-stream mapping can be understood as communication, business planning or a tool to manage the change process separately or together. The initial steps of the value-stream mapping process are presented in Figure 1. After gathering information and identifying the desired product family the first step is to map out the current state of the processes and flows. After this the goal, which is also highlighted in the figure, is to map out the future state. Mapping out the current state and future state are often simultaneous and the development are overlapping.
Current state will give the mapper many ideas of what the future state might look like while the future state can bring out some parts that have been overlooked in the current state mapping process. (Rother & Shook, 2009, p. 7)
Figure 1: Initial value-stream mapping steps (Rother & Shook, 2009, p. 7)
After the product family has been selected a current state map will be formed for analysing and afterwards one or more potential future states can be developed and visualized. Lastly the project team needs to define the work necessary to achieve a
Product family
Current state
Future state
Work plan &
implementation
selected future state. For implementation the future state can be divided into smaller development areas that are the executed consecutively. (Schmidtke et al., 2014, p.6147)
The final step after the future state has been planned out is to realize it. This can be achieved by actively planning out and implementing the necessary actions needed to transform the process as whole and the flows from current to future state. To continuously improve the operations there will always need to be a future state map. Once the previous future state has come true the implementing of the next one should start. (Rother & Shook, 2009, p. 7)
Even though value-stream mapping is successful tool on what it is meant to do it has some drawbacks also. Firstly as value-stream mapping is “just a paper and pencil” based technique used mostly on documenting value streams. When doing the mapping process one should physically walk on the production floor to record on what is happening in which action. This method limits both the level of detail and different versions that could be handled. (Lian & Van Landeghem, 2002, p.2)
In many real world situations many companies are have many different product families with high variety in volume. Therefore the value-streams are composed of many tens, hundreds or even thousands of components and products. This in turn adds complexity and variability to the whole stream that cannot be addressed by normal methods. (Lian & Van Landeghem, 2002, p.2)
Producing out the map on the process can be also complicated and many people can fail to understand how the processes and flows translate into reality. This can lead to a risk that the map will turn out of no real use (Lian & Van Landeghem, 2002, p.2). Other than the issue of understanding of what has been made on the paper, the method by drawing the map out with pencil is very static approach. The tool itself cannot describe dynamic behaviour, complexity or uncertainty in the flow. Furthermore the changes that have been made to the process need a long
time to be observed before any visible effects can be noticed. (Lian & Van Landeghem, 2007, p.3041)
3.4 Current state map
To achieve the goal of future state map it all starts from analysing the current state. The first thing to do is to set up the boundaries of the map and requirements of the customer. Identifying the customer requirements is really the key aspect when doing the mapping as otherwise the optimization of the value-stream can provide something other than what is desired by the customer. (Rother & Shook, 2009, pp. 7, 12)
To understand the current state value-stream is in a key role to start improving processes and other areas. Current state map allows all the people involved to see the actual performance of said stream and therefore increase the understanding in all necessary areas. The current state should visualize, as per its name, the state that the activities are performing in todays’ operations and not as they should be done. (Martin & Osterling, 2014, pp. 51-52)
The analysis for the current state should be based and started from gathering numerical data that can then be structured further. From the numerical data a graphical interface should be formed that will enable all associated parties to see and understand the relationships between material and information flows within the whole value-stream. (Lasa et al., 2008, p.42)
3.5 Building the map
Building or drawing the current state map can be done in multiple different ways but most of them can include the following mapping steps:
1. Customer plant and requirements
2. Basic production processes and inventories
3. Draw out finished product flow and material flow from supplier 4. Add in material flow between processes
5. Add in information flows
6. Draw a timeline (Rother & Shook, 2009, pp. 12-29)
The relative icons used in each step can be found in Appendix 1.
As mentioned previously the most important thing in value-stream mapping is to understand the customer requirements and therefore the first step of building the map is to start from the customer side and their requirements. This is usually placed in the upper-right corner of the map with factory icon and data box that will contain the said requirements. (Rother & Shook, 2009, p. 12)
After the requirements have been marked down it is possible to start mapping out the relevant processes down with process boxes. One process box should not contain too much detail but the ensemble of processes where the material is flowing without stopping. Where the material then stops an inventory should be marked. Beside the process boxes and inventories data boxes can be added that can contain information of C/T, C/O, the volume of the material and number of people involved. (Rother & Shook, 2009, pp. 14-19)
Now that the map contains the core process elements it’s time to indicate the flows from the supplier, which can be added to the upper-left part of the map, and to the customer. The ready material flows can be drawn with broad single coloured arrows. Meanwhile the material moving between the processes will be then marked with striped arrows. These arrows are called PUSH arrows as the material is “pushed” from one process to another. However as the production in the processes is mainly done in their own process cycles they are unfortunately operating almost isolated. Therefore the inventories are formed between the
different processes and implementing efficient lean management solution is close to impossible. (Rother & Shook, 2009, pp. 20-23)
However the material flow cannot operate without information flowing from one place to another. Without the necessary information the different processes don’t know what to make and when. Information flow can be marked in the map with narrow single line arrows. The arrow can be modified to have a lightning like wiggle if it is transferred electronically. A small text box can be made to accompany the arrows to describe the passing information. Usually you need to also add one process box between the customer and all the other processes for the operational planning. (Rother & Shook, 2009, pp. 22-23)
Once all the variables have been input into the map the next step is to visualize the time taken in each step with a timeline. The timeline should include the time the material takes when going through each step. The time consumed in the processes can be considered as value-adding time. After the timeline has been added we should have the current state map done and from that the process to develop the future state can begin. An example of the current state map can be seen in the Figure 2. (Rother & Shook, 2009, pp. 26-29)
Figure 2: Example of a current state value-stream map
The data required for each data box is highly dependent on the nature of the value-stream, the drivers for the research and improvements and targets. Also before beginning to map out it is recommended to first have a rough idea what is necessary to include in the map rather than just trying to map out every single step along the stream. (Martin & Osterling, 2014, pp. 49-50)
3.6 Identifying waste
Before organizations can start to identify their waste they need the definitions of operations and actions need to be clear. A process can be said to be “a sequence of actions used to manage one or more functions of the organization”. Where an action is a single operation within said process. Value is added to the action when it provides higher value output than input. But as mentioned in the lean management the value is always measured from the customers’ perspective.
Therefore those actions that provide maximum value recognized by the customer with the lowest minimum cost can be labelled as value-added actions. Finally a waste can be then identified to be opposite to value-added actions. Those actions that generate costs but no value-added to customers are waste. (Chiarini, 2013, pp.16-17)
Waste can then be divided into different categories. The Toyota production system, which is one of the biggest lean manufacturing production systems, divides the waste into seven categories:
- Overproduction or asynchrony: producing too much, too early or too late to meet the customer’s demand
- Waiting: having to wait before commencing the next activity.
- Transportation: unnecessary movement of products between processes - Inventory: raw material, work in process and finished products stored - Over or inappropriate processing: processing beyond what the customer
requires
- Motion: unnecessary movement of the workers or machines
- Defectiveness: non-conforming products and services in general (Chiarini, 2013, p. 20)
Overproduction can be considered as the worst waste within the value-stream. It disrupts the smooth flow of material and is likely to have impact on the quality and productivity. High overproduction usually leads to excessive lead and storage times. The longer the material sits in inventories the more pressure on work rate may be generated. Also possible defects can be unseen in time. In addition excessive work-in-progress or semi finished material stocks are formed generating issues in other areas of operations as well. Overproduction is usually the result from push style of production and can be countered by evolving the operations into pull system where the next operation determines the production of the previous one. (Hines & Rich, 1997, pp.47-48)
The waste of waiting occurs when time is not being used appropriately. In the production line this usually means those situations when the material is not moving is being worked on. Depending on the situation the waste can effectively affect both the material and also the workers, when both are waiting together or separately. The ideal state would be where no waiting times would exist and the material flow would be continuous from the beginning to the end. This would also lead into a faster pace of the flow of the material. If however the waiting time is necessary it can be utilized by training the workers, maintenance or other activities that would not result in overproduction. (Hines & Rich, 1997, p.48)
Transportation waste involves the movement of the goods. However if examined strictly then all movement of the goods in the factory or warehouse could be seen as a waste. Therefore the minimization of transportation is usually the aim rather than complete removal of it. Double time in handling could also expose the material to defects or damage. Also the reaction time between the processes comes longer and corrective actions when necessary are not so easy to make.
(Hines & Rich, 1997, p.48)
When complex solutions are utilized in simple procedures the over processing waste is formed. These kind of situations are usually linked in large inflexible machines when several smaller and more flexible ones could be used. This over- complexity tends to lead into overproduction to recover the large investments done into the complex machines. Overproduction in turn can then lead into excessive transportation and poor communication between processes that will affect negatively on the lead times. Ideally then multiple smaller machines should be used in conjunction with capabilities of producing the required quality.
Inappropriate processing is also happening when machinery is used without sufficient safeguards so that poor quality products can be appear from the production. (Hines & Rich, 1997, p.48)
Unnecessary inventory usually ends up increasing the lead times, preventing quick identification of problems and also takes up a lot of space. In a way we can think that the problems are hidden in the inventory and they have to be found before they can be identified or corrected. As the material flow becomes slower and the material can stay in the inventory for a long time period also the information flow is discouraged. In addition the inventories generate more storage costs and therefore lower the competitiveness of the company. Only way to achieve improvement is to reduce the necessity of inventories. (Hines & Rich, 1997, p.48)
Motion that is not producing value to the product is also a type of waste. This kind of motion includes the movement or ergonomics of the operators or workers when they have to stretch, bend or pick up something when these kinds of actions could be avoided. This kind of waste is not just harmful for the material but also to the employees as they get more tired which is likely to lead into decrease of productivity and sometimes even to quality issues. (Hines & Rich, 1997, p.48)
Defects can be translated into direct costs. In the Toyota production system (TPS) philosophy the defects should be seen as opportunities to improve rather than something that could be terminated. The continuous improvement is a way to
tackle these issues caused from defects by analysing the root causes and learning from them. (Hines & Rich, 1997, pp.48-49)
3.7 Future state map
Purposes of the future state map are to emphasis the sources of waste in the flow and eliminate them as efficiently as possible. The value-stream should be achievable within a short period of time. On the other hand the aim can be understood so that the separate processes should be linked together with a continuous flow or pull where they only produce what the customer needs and when it needs. (Rother & Shook, 2009, p. 49)
Defining and describing the future state map should be already started while still in development of the current state map. When issues, problems and especially the waste can be identified these things can already be marked as areas of improvement that can be utilized in the future state map. (Abdulmalek &
Rajgopal, 2007, p.227)
Even though the future state mapping process should be started while still in the current state the finalizing can only be done once the current state has been fully mapped out and all the most important sources of waste have been identified. In the manufacturing section the waste can often be linked in the sales rhythm or also known as takt-time. Meaning that processes are made to follow this kind of rhythm and within those restrictions to flow as continuously as possible.
Therefore when making the future state map a company should evaluate if semi finished product inventories could be introduced, the just-in-time ideology could be utilized more effectively or would a pacemaker to the production and order planning work. (Chiarini, 2013, pp.44-45)
Once enough understanding has been gained from the current state map a new future state map can be formed. There is not just one right answer for all the challenges faced in the current operations so no incorrect future state maps exist.
Therefore a multiple can be formed that will achieve the same desired developments. Even though there is just not one clear answer some key aspects need to be taken account for. From the lean perspective it is important to determine the correct work that needs to be done, making the overall flow consistent and working and also managing the processes so that they can be continuously improved. (Martin & Osterling, 2014, pp. 99-100)
When creating the future state map it is essential to keep the current state map close and in mind for easy comparing of where the project is coming from and where it is heading. Sometimes when building the map it is beneficial to start working from the end backwards to the beginning. This is of course dependent on the data gathered in earlier phases and how easy it is to adapt for further development. Sometimes even starting from the middle can be the easiest way of working. (Martin & Osterling, 2014, pp. 115-116)
However even with the most detailed and well made future state map has been made the decisions of implementing the improvements suggested often comes down to “beliefs” of their success or success stories reported from other sections of the possible payback. Unfortunately often they are not enough to justify the actions necessary to move from current state to future state. Usually more quantifiable evidence is needed in order to take actions. (Abdulmalek & Rajgopal, 2007, p.225)
The unquantifiable nature of the value-stream mapping leads to a question how can it be more viable. Sometimes the future state map can be evaluated without much effort but usually it is not the case. For example predicting inventory levels throughout the production in the future state scenario can prove to be impossible.
This is because the mapping model is static and cannot observe how the levels would interact in different scenarios. (Abdulmalek & Rajgopal, 2007, p.225)
This leads to a conclusion that a complementary tool to value-stream map is needed that can quantify the data in different stages. Obvious solution to this is simulation that would be capable of generating resource requirements and
performance statistics while remaining flexible to certain organizational details.
This kind of simulation can then be used as a basis of making the decisions of future improvements. (Abdulmalek & Rajgopal, 2007, p.225)
4 RESEARCH CASE
As mentioned in the introduction the company assigning this research doesn’t want to release all the details regarding their operations and subjects handled in this thesis. Therefore the company will be referred as Company A.
4.1 Company
The company has operations in over 35 countries employing some 27 000 people worldwide. Currently the company has divided its business areas into four different divisions of wood products, packaging, paper as well as biomaterials.
The sales were EUR 10,04 billion with operational EBIT of EUR 915 million in year 2015. (Company A, 2016; Company A, 2014a; Company A, 2014d)
The customer basis forms out of publishers, printing houses, paper merchants and also packaging, joinery and construction industries. Company A uses wood based products to meet the needs of the customers and is able to take on the global packaging challenges with its renewable packaging material expertise. (Company A, 2016; Company A, 2014a; Company A, 2014d)
The research inspects a mill site that is part of the packaging business division of Company A and therefore our study will also be focusing on the packaging products and raw materials. Packaging products are made from fibre-based materials that are then transformed into innovative packaging solutions for the customers. The business area is still divided into three smaller segments to cover different packaging categories. (Company A, 2016; Company A, 2014a; Company A, 2014d)
The mill site consists of two different units located in southern Finland. Between these two units there are four independent board machines, one paper machine, three plastic coating lines and in addition a pulp mill. The production capacity tops at 1,3 million tons a year of pulp and 1,1 million tons of paper and board a
year. The plastic coating capacity is about 0,3 million tons per year. This makes the mill site one of the Company A’s biggest production plants employing over one thousand people. (Company A, 2016, pp.132-33; Company A, 2014a, p.66;
Company A, 2014b) The product portfolio for mill site is wide ranging from tailor made board for cups and trays to SBS, LPB and speciality papers. Over 90% of the produced products are being exported globally. Each product segment is being delivered all over the world but main markets for this mill sites products remains in Europe covering over 70% of exported material deliveries. (Company A, 2014b)
4.2 Product
One of the main reasons to conduct this research was also to figure out the lead times of a certain customer’s products. Therefore the same products were chosen as the aim of inspection in this research. The most of the customers’ orders are produced in a single board machine at the mill site. This board machine only produces two separate products but these products have different variables. First and the most impactful of them is the thickness that is measured in grams per cubic meter. The board is formed from multiple layers of raw material, usually from different pulps.
The product can then be sold directly from the board machine as ready-made reels or it can be treated further. Most of the board is plastic coated after the initial board production on the plastic coating line either within the mill site or the Company utilizes outsourced places for extra coating capacity. The plastic can be applied to either one side of the board or to both. Same as the board has different thicknesses the plastic coating can have several different thicknesses. Also the plastic material itself can vary. The thickness, coating sides and plastic material is dependent on the customers’ requirements and the end use of the board. The product group inspected in this thesis has polyethylene coating and both one and two sided coated products are being looked at. There are still further processing possibilities for the plastic coated reels such as cut them in sheets before shipping
them out to customers Other possibility is to rewind them into smaller reels in diameter, width or both.
4.3 Order handling and production process
Currently the value-chain includes the Company A, their customer of whose orders we are looking at and possible outsourced coating production places.
Everything starts when the customer places their order electronically via e-mail.
After this the order handling is done manually in the order handling system that is also used worldwide on other mills as well. The sales coordinator works together with supply chain coordinators or directly with production planners as in this research case so find out the best possible production plans for the orders placed by the customer. After this is done the order is booked into production and order confirmation with the expected delivery date is sent out to the customer electronically.
Usually if no bigger changes in plans happen the board, that we can call raw board reels, are produced in the originally planned time in the board machine at the mill site. The board machines have a cyclic principle of producing board where certain thickness of certain product is produced. The rough production planning is usually done quite early and the production cycles have a certain pattern. However the fine production planning where the orders are placed into these cycles is done only closer to the actual production dates. This kind of cyclic method of doing production planning gives the production planners some freedom in choosing on which orders to produce when but at the same time it creates restrictions also.
Depending on where and when the plastic coating takes place the raw board reels are then transported into a warehouse to wait the second production phase.
Usually to this kind of production a day or two is usually necessary to “sit out” the raw board in warehouse before the coating to ensure the quality. Warehouses can be located within the mill site or outside or the material can be sent directly to the outsourced coating place to wait their coating. The coating is also done in cycles
depending on the type of the plastic used and the capacity is always reserved in the initial production planning phase before the order confirmation is sent out.
After the coating is done the board reels are now either ready to be delivered to customer or for further converting. Now if everything has gone as planned this far the board reels are shipped out to the customer with the originally planned transportation method or multiple methods. The customer whose orders we are inspecting has its’ production plants in multiple locations worldwide. Therefore different transportation methods need to be utilized as efficiently as possible. The most common transportation methods are with ships or trucks.
Due to the nature and the aim of the research the transportation methods and their differences are not looked into further. The transportation to customer is always necessary and even though the transportation in most cases is organized and on the Company A’s responsibility but they are handled by transportation companies and therefore cannot really be affected to. Meaning that depending on the location of the customer the transportation times should be rather constant.
5 METHODOLOGY AND DATA COLLECTION OF THE RESEARCH
This thesis is conducted using both qualitative and quantitative research method.
In the simplest the qualitative research method can be seen as description of the data material. The description is usually not numeral but numeral methods can also be applied depending on the data collected. (Eskola & Suoranta, 2003, pp.
13-14)
The main difference between qualitative and quantitative research method is the procedure of which the research is carried out. Qualitative research does not make findings based on some statistical methods but will approach the issue and solutions from different perspectives. The research can then handle topics such as behaviour, interactions and relationships. However the qualitative data can sometimes be qualified and therefore the two research methods are not mutually exclusive and can be combined in on research. (Ghauri & Gronhaug, 2010, pp.
104-105)
In qualitative research the data can be simplified to a plain text that can be generated because of or in spite of the researcher. The data is collected during the research and the research problem can evolve during the work. Partly this can be translated to the fact that the data collected in with qualitative methods will display the process nature of the issue at hand. (Eskola & Suoranta, 2003, pp. 15- 16)
5.1 Data collection
Due to the complex nature of the research problem and the questions it is not possible to get the most effective results from just either qualitative or quantitative research. Therefore the research methods had to be tailored to meet the necessary requirements. The most of the research is done utilizing quantitative data collected
from the company’s ERP –system utilizing various reports that could be extracted.
However in order to fully understand the quantitative data and the results that can be seen after the analysis some interviews with the company’s personnel was conducted. These interviews were very informal but the input for the research was meaningful.
The reports taken out from the ERP –system included various delivery follow-up, production schedule and transportation reports. Out of these reports most important numbers were the dates when something happened regarding the customer orders for example the duration of the production cycles or the loading date of an order. The quantity of an order was also included into the research data even though the more interesting thing was the time. However the quantity then indicated the impact of the order to the whole picture.
5.2 Data analysis
As the scope was set to find out the development of the lead times from year 2014 to 2015 the reports were taken starting from the orders dating back all the way to January 2014. The data included in the 2014 reports were analysed only based on the numbers visible on these reports. For 2015 orders the same reports were formed and out of these a smaller sample size was taken in order to manually check each number that it was correct and add some more measurement points.
The samples were formed mostly randomly but at the same time making sure there was a representation from different months and product groups. All the data was handled and analysed in Excel workbooks.
The data was divided by the principles of VSM into different product families.
Each of these families could have then been separated still into smaller groups but the inspection between these even smaller “sub–groups” but it was not necessary.
The analysis between “sub-groups” can be done from the whole sample size. As mentioned the most important measurement points were the dates involved in the information and material stream of the VSM. These dates included such as order
confirmation date, first process starting date and loading date. We’ll get into these measurement points in more detail later in this research.
From the date information gathered from the reports it was possible to form up the value-stream maps of the past year 2014 and of the year 2015 so far. From these maps it was easy to identify at which stage of the stream the most development had happened. Later in the data analysis phase of the research other reports were generated to support the findings and enhance the gathered information. These reports were about the production schedules that had taken place in year 2015 for each process involved in the chosen samples and product families.
6 VALUE-STREAM MAP
Now after all the data has been gathered from the various reports and made into more comparable form to one another it’s time to start forming the value-stream map. Before the project it was discussed with the conducting company that the best way to do the most comprehensive picture of the current situation and the changes there has been from the previous year is to divide the sample size in to smaller ones. The two things that were considered when dividing the sample orders into different categories were the type of order it was and where it was coated. Meaning if it was coated at the mill site or then at the outsourced location.
6.1 Product families
As the steps of the mapping goes first it is important to know what needs to be mapped and how. First thing to do was to sort out the sample orders into different product families. The families include orders with same kind of characteristics and in our research case those characteristics include the type of the order and the place that the order was coated in.
6.1.1 Product type
The products included orders that had coating on just one side or on both, so called two-sided-coating. From here onwards we can call these product families as 1PE and 2PE orders depending on how many sides the coating was on. In practice there is not that much difference in the techniques and processes involved in the coating as the same machines can in certain cases make both of the products. The 2PE orders don’t require the board to go multiple times through the same machine but both sides can be coated simultaneously.
6.1.2 Coating Places
In addition to sorting the sample orders by the product type we differentiated them by the coating place. In the research we included orders from multiple different coating places that were either located at the same country as the mill site producing the raw board or in a different country that usually required shipment overseas. In the inspection we included total of five separate locations including the mill site itself also. Four of these five were so called outsourced coating plants and two of them were located in the same country as the mill. We only included those 2PE orders that were coated at the mill as the volumes that were going through outsourced plants were rather small. We can refer the outsourced coating plants from now on the same way as the product types OP1, OP2, OP3 and OP4.
6.1.3 Identifying product families from the sample
Considering the factors discussed in the post two sub-chapters and taking into account that even though the coating places might be different the production steps are basically the same in ever product family. Therefore we were able to identify our sample orders into six different families based on the Table 3 below.
Table 3: Product families based on coating type and place Coating type
1PE 2PE
Coating place Mill
Mill Outsourced coating plant 1
Outsourced coating plant 2 Outsourced coating plant 3 Outsourced coating plant 4
6.2 Optimal
Even though the value-stream mapping process usually starts with mapping out the current state we decided to create one more map even before the actual research process. This map would represent the optimal state or what the company was basing on the promises of delivery times for the customer. This map was created not by using any gathered data but from the interviews of the company’s personnel. Basically if everything was running, as they should be the current state value-stream map should be identical to the optimal state. Otherwise the optimal state could be seen as the future state map or the goal where to aim the development.
The optimal value-stream map can be seen from the Figure 3 below and found from Appendix 2. The map shows us the different flows of material and information related to the products under the research. The information flow starts from the customer placing their orders to the operational control including the production planners and customer servicers that together book the order into the system. The operational control then let’s the factory know that the order has been placed and it can prepare for the production. In this case though the operational control is located within the mill and they act hand in hand.
Figure 3: Optimal value-stream map
