This report review how continuous improvements through lean manufacturing approach while using examples from Carrier International Sdn Bhd, Malaysia. The objective of this report is to have a deeper understanding about lean manufacturing approach as a way of continuous improvement. Research methodology and real world applications also will discuss clearer in industrial application section.
In today’s competitive manufacturing world, it’s important for a manufacturing company to improve their productivity in order to have a better efficiency to minimize the operating cost. Stansfield and Longenecker (2006), do stressed that manufacturing company faced lots of pressures of cost reduction, improving cycle-time and quality improvement in order to improve productivity and the opportunities for continuous improvement are critical to organizational survival. While, Chapman and Hyland (2000), supported by stating that one of the most important drive for continuous improvement is cost reduction. As for Rao (2006), he supported by stating that the primary objective of any business is to gain profits and this can be done by reducing the cost of production below the product selling price. In addition to it, due to the ever demanding of customer requirement on fast delivery, on time delivery for a manufacturing company is very important. Chase, Aquilano and Jacobs (1998), classified it under the delivery reliability, which relates to the ability of firm supply product on or before a promised delivery date. At such, once the manufacturing company committed to the delivery date, the delivery date must not be change and has to be adhering strictly. In any component manufacturing company, if there’s any delay or line stoppage, it will result the assembly unit manufacturing company to have the whole assembly line stoppage. In order to maintain 100% on time delivery, a manufacturing company must not have any line down situation due to machine failure, short supply of materials, insufficient manpower and imbalance assembly line capacity issues.
Literature Review on Lean Production
There are number of ways to continuous improving the process and delivery system of a company but on this research paper, we are going to focus on lean manufacturing. Lean manufacturing provides a way to specify value, line up value-creating actions in the best sequence, conduct activities without interruption whenever someone requests for it and perform the task in a much effectively manner (Womack and Jones, 2003). In short, Stevenson (2002) defined lean manufacturing as a system that uses less space, less inventory and fewer workers to produce comparable amount of output. Russell and Taylor (2000) believe that lean systems do incorporate of both the mass production and craft production, which are high volume, low cost and variety and flexibility and the quality produces is much higher than in mass production. Soni and Nicholas (2006), describes it as a portal of waste elimination and continuous improvement.
Lean manufacturing, a concept that brought to us by Toyota do provides an approach to make job more rewarding by providing instant reaction on efforts to convert waste in value (Womack and Jones, 2003). Lean methodology can be summarized into five principles, which are identifying the value by specific product, analyzing the value stream for each product, make value flow without disruptions, let the customer pull value from the manufacturer and go for perfections. By clearly understanding these principles and then binding them all as one, managers can make full use of lean methods and maintain a steady path (Kollberg, Dahlgaard and Brehmer, 2007).
In lean manufacturing, it involved skilled workers and these workers are more involved in maintaining and improving the systems rather than just run the production line without any idea of improvement, just like in mass production. Workers are educated to stop the production and immediately highlight to its superior if they discover a defect. They will also work with other employees to find and correct the root cause of the defects so that it will not happen again. Workers will be trained to conduct 10 times (or also know as 10x report) root cause analysis to find out the problem (Herrmann, 2006). It will result to an increase level of quality over time and reduces the need to inspect and rework at the end of the line, which is a waste of time and resources (Stevenson, 2002). In addition, the workers are also being taught with several tools to apply such as the total preventive maintenance in order to keep the machinery running and reduce any unplanned shutdown due to faulty machinery, kaizen techniques for cost analysis, JIT for inventory reduction and Kanban scorecard for inventory pulling system (Andersson, Erilsson and Torstensson, 2006). With the much equipped tools, the company management often has high expectation on the lean manufacturing workers. They do perceive them with the capability to function in teams and ability to improve the systems.
As lean manufacturing systems operate with lower amounts of inventory, efforts is placed on foreseeing problems that might occurs before they occur, and stay away from those problems through cautious planning. Even though problems still arise at times, speedy resolution is essential, where production workers involvement in both the planning and correcting the situations. Technical experts are still in used, but more as advisors rather than substitutes for workers (Stevenson, 2002). With this approach, it will divert the attention of technical experts to focus on designing a process or product so that the production workers will be able to achieve high levels of quality and quantity rather than wasting the technical experts knowledge firefighting down the assembly production line, while the production workers will pass on the responsibilities to the technical experts. In return this will reflect badly on the manufacturing productivity.
As such, NIST (2003 cited in Andersson, Erilsson and Torstensson, 2006) conducted a survey of 40 companies which had adopted lean manufacturing and improvements are significantly seen in 3 different areas which the first area of improvement is operational where lead time are reduce, productivity increase and work-in-progress inventory reduces. The second area is where the administrative shows improvement in order processing errors reductions and streamlining of customer service functions and lastly the third area is strategic improvements where cost are significantly reduced. However, the adaptation of lean principles such as kanban, standard operations, setup reduction, quality initiatives and maintenance do require management support and operator involvement, empowerment, training, changes in the production control system and incentive system (Soni and Nicholas, 2006). This will in return evolve the whole organization culture towards lead culture.
The objective of this paper is to understand the concept of continuous improvement through lean manufacturing approach and the chosen company that practices this concept is Carrier International Sdn. Bhd. (CISB) in Malaysia. CISB is one of the largest air-conditioner manufacturers in South-East Asia with over 40 years history. CISB is part of the United Technologies Corporation and has the proud distinction of cooling the largest architectural wonders in Malaysia such as the Kuala Lumpur International Airport (KLIA), KL Tower, Petronas Philharmonic Hall, and the Prime Minister’s Office in Putrajaya.
Our goal was to move beyond the point of just understanding the theoretical principles of lean manufacturing and to relate it with the “real world” of a manufacturing company. The theoretical principles were based on journals and books that related to lean manufacturing environment. We have tried as much as possible not to use any of the reading materials that are more than 10 years from now as it might not be valid at present. While the example quoted from this research is gathered by sharing the experience of working at CISB.
There are number of limitations in this study as the industrial application that we have chosen, CISB is an air conditioning industry, which depends very much on the world commodity and will be affected by the vagaries of the world event. This being the case, such studies can be overtaken by events. This study, which was completed in July 2007, reflects as much as possible the situation existing during that time.
Industrial Applications: Carrier International Sdn. Bhd. (CISB)
Kaizen, which is one of the important elements under the lean manufacturing, was at CISB in August 2005 with main objective to implement lean manufacturing concept in light commercial coil line. A team combined of thirty persons from top management, middle management and workshop operators was selected to join the Kaizen event and contribute to make the workshop continuous improvement (Kaizen report, 1995). In addition to it, the coil material suppliers, Carrier Corporation consultant and external consultant from Shingijutsu Co. Limited were invited to join the Kaizen activity. With their present, not only the communication between CISB and supplier was improved, the ways of material supplying also was suited to follow CISB material Kanban implementation. As Fraser (1995) said that continuous improvement activity can be joined by external supports such as consultant and suppliers.
Material supply is an important activity in a manufacturing factory. The company will fail delivery and causes customer to have line down situation if there’s failure on the material supply. Kanban, a Japanese word means signal and it is useful tool in lean manufacturing activity. The objective of the Kanban system is to provide instruction, provides visual control and increase awareness of self-control to prevent overproduction (Reid and Sanders, 2002). At CISB, a team has done a study on coil usage and quantities to use for the Kanban process selection. Since the coil components are made from various size and types of components. The small size components normally will put under supermarket system and it categorized under group C components, while the bigger size will categorized either in group A or B components. The components were supply to the assembly line by Kanban pull system. Kanban system will not only enhance the material control but also improved the components quality (Refer figure 1). This supported by Chase et al. (1998) and Reid et al. (2002) where low inventory will expose the quality problems.
Figure 1: Kanban selection process for light commercial coil.
(Source: Carrier International Sdn. Bhd. Kaizen Report, 2005)
Total Quality Management (TQM), which is another critical element under the lean approach, was introduced at CISB to focus on the whole coil manufacturing process, in which has significantly improve the quality level. According to Waller (2003), the manufacturing quality should start from product design to production, packaging, transportation to retail outlet, purchase, and use by customers. All the operators were trained and equipped with proper quality awareness to minimize the defect rate through strengthening the incoming production quality checking (IQC). The suppliers indirectly pressurized to maintain the components quality in new delivery system (Just-in-time concept) to avoid any coil shop line down. New racking system was developed for supplier to delivery components which able to provide space saving, better ergonomic and most important for quality inspection. Throughout the Kaizen event, the coil leak defect was reducing significant from 303ppm to 159ppm (47% improved)(refer table 1). Analysis was done and proved that dented coil components are the leaking root cause and operators empowered to voice quality improvement suggestions (Kaizen report, 2005).
Material handling is a tool that required knowledge and experience to improve. Shorter material flow distance will benefit the company with lower material inventory and easy for operators to control the quality. Waller (2003) agreed that material flow trough the whole processes should in linear flow to avoid zigzagging and backtracking. The coil traveling distance was reduced 75 meters after re-layout activities being carrier out at coil shop. This encourages the material to travel in one-piece flow concept which able to reduce work-in-progress inventory (refer table 2). CISB Management has invested in proper handling equipments such as hand-jack, manipulator and conveyor to improved material flow (Kaizen report, 2005). Ergonomic designed material handling tools will able to allow operators to maintain the high quality production (Hill, 2005).
As a conclusion, the challenge is definitely there for a manufacturing company to have continuous improvement to increase productivity, lower down operating cost while maintaining the product quality and to meet the delivery dates that customer demand. In order to meet all that, lean manufacturing is the way to move forward as it covers a wide range of scope from the engineering offices, purchasing teams, sales department and factories. Even though lean manufacturing do have some setbacks such as greater pressure exert towards the workers due to higher responsibilities and a flatter organizations structure slowed the chances of workers moving up the company hierarchy (Stevenson, 1998) but there are also many reason to incorporate lean manufacturing as it may contribute to cost reduction, reduces work-in-progress, increased inventory turns, create space for opportunity, cycle-time reduction and most importantly improved customer satisfaction by having 100% in-time-delivery. In order to have a success story towards the end, lean principles do need a strong commitment and implementations from the management team and not just leave it to the workers and supervisor at the assembly line. From the example given, CISB has proven that it makes whole lot of a different!