Continuous improvement and facility redesign through the lean DMAIC Six Sigma approach: a final assembly work unit case study from Ohio, USA

Transcription

1 Int. J. Six Sigma and Competitive Advantage, Vol. 8, No. 2, Continuous improvement and facility redesign through the lean DMAIC Six Sigma approach: a final assembly work unit case study from Ohio, USA Matthew Franchetti Mechanical, Industrial and Manufacturing Engineering Department, The University of Toledo, 2801 W. Bancroft St., Toledo, Ohio 43606, USA matthew.franchetti@utoledo.edu Abstract: This study proposes the use of the define, measure, analyse, improve, and control (DMAIC) Six Sigma approach with an emphasis on facility redesign to reduce costs and increase capacity for a local manufacturing company in Northwest Ohio, USA. The DMAIC approach used for the case study demonstrated a broad implementation methodology to achieve cost reductions, in this case, by nearly $243,000 per year. The paper identifies each stage of the DMAIC cycle and the Six Sigma tools that were applied, including process mapping and time studies. This paper develops a framework that can be used as a template for cost reduction and capacity enhancement training. Keywords: DMAIC; define, measure, analyse, improve, and control; Six Sigma; facility design; lean; manufacturing; continuous improvement; case study. Reference to this paper should be made as follows: Franchetti, M. (2014) Continuous improvement and facility redesign through the lean DMAIC Six Sigma approach: a final assembly work unit case study from Ohio, USA, Int. J. Six Sigma and Competitive Advantage, Vol. 8, No. 2, pp Biographical notes: Matthew Franchetti is an Assistant Professor of Mechanical, Industrial and Manufacturing Engineering and the Director of Undergraduate Studies of the Mechanical Engineering Program at The University of Toledo. He also is the Director of the Environmentally Conscious Design and Manufacturing Laboratory and has served as the Principal Investigator with the Health Science Campus at The University of Toledo to improve the business processes for renal implant patients by applying Six-Sigma concepts. He is Certified Six-Sigma Black Belt from the American Society of Quality (ASQ) and has consulting and research experience with over 25 companies across the country. 1 Introduction This study applied the define, measure, analyse, improve, and control (DMAIC) Six Sigma methodology and lean principles (George, 2002) to redesign a final assembly work unit to increase capacity and reduce costs in a light manufacturing company located in the USA. The final assembly work unit that was redesigned for this study was Copyright 2014 Inderscience Enterprises Ltd.

2 84 M. Franchetti responsible for 38% of the company s revenue stream and experienced various cost and process efficiency issues. These issues included an assembly line imbalance, floating bottleneck operations, safety concerns, high percentages of non-value added time for employees, housekeeping issues, and storage issues. In addition, the company was seeking to increase production in this work unit to attain a larger market share. To accomplish these goals, the organisation applied the lean Six Sigma approach to create a meaningful and practical roadmap. This study illustrates such an application including a case study and results. This paper focuses on the creation of value stream maps, line balancing, and facility redesign to identify and track key processes within the facility. The manufacturing organisation in this study initiated lean Six Sigma to improve the financial outlook and attain a sustainable quality system with the following objectives: retain and attract customers reduce manufacturing costs increase process flexibility and output based on market demand increase capacity increase workflow and information flow improve process documentation enhance safety and housekeeping. The paper is organised into six sections to address these objectives. In Section 2, an overview of Six Sigma analysis is provided, in Section 3, a background description of the case study is provided, Section 4 discusses the application of the lean DMAIC approach, Section 5 discusses the improvement results, and Section 6 draws conclusions on the lean DMAIC cost reduction initiatives. 2 Facility redesign, value stream analysis and continuous improvement through Six Sigma quality focus DMAIC Six Sigma quality is an effective quality methodology that links the definitions of the Six Sigma terms, measuring, analysis, and the improvement process and controls the implementation sequence (Goding and Hammer, 2001). Value stream analysis is a powerful tool that may be applied to identify non-value added waste in business processes (Raulerson, 2006). The seven forms of waste in a process are defined as (Womack and Jones, 2003): transportation moving products that is not actually required to perform the processing inventory all components, work-in-progress and finished product not being processed motion people walking or equipment moving in excess of minimum requirements waiting waiting for the next production step overproduction production ahead of demand

3 Continuous improvement and facility redesign 85 over processing due to poor tool or product design creating activity defects the effort involved in inspecting for and fixing defects. The seven methods to identify and analyse these wastes; they are the seven value stream mapping tools listed below: process activity mapping supply chain responsiveness matrix product variety funnel quality filter mapping Forrester effect mapping decision point analysis overall structure maps. Previous research has been conducted in this field that compares and contrasts lean and Six Sigma (Naslund, 2008). From this study, Naslund concluded that lean Six Sigma is the best practice for business process improvement and the preferred methodology. Another study was conducted that linked total quality management (TQM) to Six Sigma (Chen, 2008) that concluded similar results. An additional study linked management methodologies to the success of Six Sigma projects (Choi, 2007). Although the literature field related to Six Sigma is extensive, very few research studies were found that focused specifically on facility redesign. Several studies applied facility redesign as a concept (Rantamäki et al., 2013; Angelis and Fernandes, 2012), but did not utilise it as the central focus. The study presented in this paper addresses this deficiency in the field by focusing primarily on facility redesign issues by applying Lean Six Sigma. The reviewed literature demonstrated several links between Six Sigma and other process improvement methodologies, but indicates a need for additional studies related to facility layout. This research will contribute to the field knowledge by demonstrating the application of facility redesign and lean Six Sigma via a case study. 3 About the case study 3.1 The background of the company The organisation studied is a leading manufacturer of industrial cleaning equipment headquartered in Northwest Ohio, USA. The company began operations in 1911 and conducts business in more than 60 countries with over $3.1 million in annual sales and employs 155 individuals. Their operations are based on one shift, and its hourly workers are unionised. The company has explored options to relocate its operations to less expensive regions, such as Mexico or the southern US, where they could save money by reducing labour costs and overhead due to increased costs and economic downturns. Before moving forward with these plans, the company investigated reducing costs and its location.

4 86 M. Franchetti 3.2 Targeted areas for improvement The process that was examined for improvement was the final assembly line for an automatic commercial floor scrubber that is available in three models and contains 416 different parts. The primary goal was to create a value stream map by applying lean Six Sigma concepts to reduce waste develop a more suitable facility layout. The process studied has many forms of waste that a revised layout would reduce. As with many other lean projects, the waste involved excess movements, redundancies, rework, errors, poor training techniques, and poor process flow were all within the direct focus. Based on conversations with management and observations within the facility, the following areas of improvement were identified to reduce costs, improve workflow, and increase productivity: 40% improvement in space utilisation 50% less work in process (WIP) 30% improvement in quality 20% improvement in worker productivity 20% increase in capacity 10% reduction in operating costs per unit 10% less scrap, with improvements in scrap control. 4 Application of the DMAIC process 4.1 DMAIC methodology This section discusses the model that was applied for this case using the lean DMAIC philosophy. The true value of the DMAIC Six Sigma approach can be realised only when it is used to identify the root causes for problems and derive solutions to overcome the root causes (Hamza, 2008). Value stream analysis and facility redesign were utilised as the core tools to analyse and identify the root causes from a cost reduction and efficiency improvement standpoint. The remainder of this section provides the details regarding this application. 4.2 Define This first step of the DMAIC cycle identifies the goal, objectives, and scope of the project. In addition, the project team is formed and the timeline was established. Tools used during this stage included brainstorming, critical to quality (CTQ) analysis, and scope definition. The primary objectives of this project were to increase capacity by 20% and reduce costs per unit by 10%. The primary metrics for this project were the annual capacity in terms of value of units sold per year and the weekly operating costs for the facility. As discussed later in the analysis phase, the process was base-lined at an average annual capacity of 8,000 units for the preceding two year period. Operating costs were also calculated for the same two year period normalised based on production rates.

5 Continuous improvement and facility redesign 87 The project team consisted of the Facility Manager as the sponsor, the Engineering Manager as the project leader, the Manufacturing Engineer as the Six Sigma Black Belt, and several shop floor and maintenance personnel. The project timeline was established at the first meeting of the team and is displayed below: identify project objectives: 2 weeks form Six Sigma team: 1 week develop the project timeline: 1 week define and clarify the project goal: 1 week measure the current state of the operation: 8 weeks analyse performance of the operation utilising various Six Sigma tools: 10 weeks improve the operation based on data provided in previous steps: 6 weeks control the operation and develop quality/cost control mechanisms: 6 weeks conclude the project, document results, and disband the Six Sigma team: 3 weeks total time: 38 weeks. The project time line was 38 weeks, the project was concluded within the 38 week timeframe. 4.3 Measure In this phase of the project the key metrics were identified, the data collection process was developed and executed, and the performance and variation of the current system were base-lined. Included in this phase was the development of a SIPOC diagram and vital X analysis. Table 1 displays the SIPOC diagram. Table 1 SIPOC diagram Suppliers Inputs Processes Outputs Customers >Metal fabricators >Stamped parts >Component suppliers >Parts and subassemblies See process flow diagram below >Finished floor cleaning equipment >Dealers >Institutions >Businesses The output variables analysed for this process were the manufacturing capacity and operating costs. The Six Sigma team conducted a brainstorming session to identify causes of variation in the system and potential vital X s that caused the variation in the system. The input variables (potential vital X s) included: lack of real time product and order data inefficient facility layout

6 88 M. Franchetti lack of communication training and associated documentation lack of standardised/efficient processes lack of work standards lack of control mechanisms. Data was collected for this project for the previous two years utilising a combination record review, database review, and real-time data collection from current processes. The data was collected by the Six Sigma team using standardised forms. Meaningful six-sigma metrics were established based on the data and goal of the project. These metrics included the process cycle time, weekly operating costs, value added activity analysis and material handling flows/costs. The tools utilised for this phase were very effective and allowed for a strong quantified baseline of the current process in terms of operation process time and costs as discussed in Section Analyse The third step of the DMAIC cycle involved studying the data and trends observed in the measurement phase to provide a data-driven basis for improvements. Several Six Sigma tools were applied to understand process capability and to identify the vital X s, which are the root causes of delivery failures and cost overruns. The tools and data analysis methods applied included: value stream analysis Pareto analysis root cause analysis failure modes effects analysis (FMEA). Before identifying and analysing root causes, a baseline for the current process performance was established and a process capability analysis was performed. On-site data were collected over an 8 week period and analysed by the project team concurrently over a 14 week period. The value stream mapping process included the flow of information and a diagram of the various processes of the product s path from customer to supplier. The value stream map was created by dividing the process in three phases: create the current-state map (process flow chart) conduct time studies to baseline current process metrics identify opportunities for continuous improvement and methods to reduce non value-added activities The remaining subsections provide more detail on each of these three steps.

7 Continuous improvement and facility redesign Current-state map (process flow chart) This step involved conducting interviews with employees in the work unit and several days of observation. Data was collected to document and understand the steps of the process. From the information was gathered, the following items were determined: customers, suppliers, steps of operations, flow, stock, transport, cycle times, number of operations by stations, uptime, changeover time, downtime per process, inventory stations, inputs, outputs, and delays. Once the collection of data was complete, an analysis of the data was completed in order to understand the value stream. Figure 1 is a diagram of the current-state value stream map. A process flow chart is a tool used to map out the steps of a process. In this particular application, there are five elements (and symbols) that are used: operation ( ), transportation ( ), inspection ( ), delay ( ), and storage ( ). Within the project process flow charts were created for all assemblies. A process flow chart is a good tool to use in order to easily represent a process. It can also provide opportunities to easily identify value-added activity, non-value-added activity, and non-value-added waste. Figure 1 Current process flow diagram In terms of the value stream mapping, a Spaghetti Flow Diagram was created by taking the existing layout of the facility and generating flow lines of product through the work unit. The flow diagram displays the path of an employee working on the main assembly. As displayed in Figure 2, the main assembly area is heavily circled as shown by the multiple of red lines, which indicate employee movement within the work area. There are also several lengthy trips that add up to a large amount of waste within the process. The information that was received from the spaghetti diagram helped to determine which areas were critical, which areas are needed to be closer and which areas did not need to be moved.

8 90 M. Franchetti Figure 2 Spaghetti diagram (see online version for colours) Baseline time studies of the current process A time study was performed on the work unit to baseline the current process metrics in terms of mean process times and the related standard deviations. This information was required to balance the assembly line process for the layout redesign. A time study is conducted by following an operator through a process or assembly and documenting the durations of the basic elements of the process. Several key concerns are crucial to an effective and accurate time study, such as pace rating, several observations of the process with the same operator and same procedure, and some degree of consistency. The information provided from time studies and the process flow sheets will be an integral part of creating a new, more efficient layout and procedure. For the time studies six observations of each assembly were recorded. Soon after the start of taking time studies it was evident that the various operators assembled the parts differently and their procedure changed between cycles (they did not follow a standard process). To remedy this issue, the team consulted with one trained operator to complete six rotations following the same process. The results from the time study are displayed in Table Opportunity identification for continuous improvement and the identification of methods to reduce non value-added activities The team identified opportunities for continuous improvement by highlighting some of the areas of waste within the processes and recommended methods to eliminate these activities; these are discussed in the next section related to improvements. From these five previous mentioned steps, a Pareto Analysis was performed to determine the largest contributors to cost overruns. The analysis indicated that over 50% could be contributed to a lack of standard procedures and related monitoring mechanisms while an additional 40% could be contributed to an inefficient layout. The Improve section will target these two areas.

9 Continuous improvement and facility redesign 91 A failure mode effects analysis (FMEA) was conducted. The six-sigma team analysed the data and system to determine the failure modes, potential effects, severity, occurrences and detection. The key findings from the study are listed below and the actions taken are listed in the Improve section of this paper. Table 2 Time study results Observations St. Element Mean Dev. Get face plate Get decal and ( ) Place decal Place ( ) Tighten Get ( ) ( ) ( 2) Place ( ) and tighten Get screws Get bolts and the red cable Prepare ( ) ( 2) Place ( ) ( 2) Tighten Add the red cable Checking directions Mistakes Store Total Improve The fourth step of the DMAIC cycle focused on identifying and implementing system improvements based on the findings of the Analyse step. After identifying and analysing the potential vital Xs, the team created a list of improvement initiatives to address each issue. Meetings and focus groups were held with the customers, managers, line workers, suppliers and engineers and other staff to review the results and develop the following list of improvements. The following improvements were identified: redesign the facility layout for optimal efficiency by reducing employee and material movement within the work area improve and monitor labour utilisation vs. the established engineering standards to ensure that savings are being realised standardise and document all the new processes train all employees and supervisors in the new processes.

10 92 M. Franchetti New facility layout After analysing the current state facility layout and the amount of traffic that overlaps, the team recognised that there was significant waste throughout. Through the analysis and application of facility planning tools, an improved facility layout greatly reduced movement in the facility. With the information gathered a future state layout was created. This was completed to minimise the amount of travel in the facility, decrease the cost of transportation for parts and products, cater to the proposed supermarket, and improve the overall tidiness of the facility layout. Figure 3 displays the improved future state layout. Figure 3 Improved future state layout (see online version for colours) By reducing the amount of space that the work unit occupies the material and information can flow more efficiently Labour utilisation Labour utilisation based on engineering time standards was very low for the entire facility. Most operations were less than 60% efficient based on these standards. A key reason for this was lack of manager attention to these standards and outdated specifications. Several newer product lines also did not have labour standards in effect. Many work cells also had very low utilisation rates and performed similar operations as other cells. 4.6 Control The fifth and final step of the DMAIC cycle involves developing a system to monitor and sustain the improvement initiatives. This was primary accomplished through the development of standard operating procedures, enhanced training, and daily progress tracking for all categories of employees within the work unit. The main purpose is to ensure the implemented improvements will hold and not revert to baseline figures.

11 Continuous improvement and facility redesign 93 Log books were maintained within work centres to record key metrics. Graphical charts displaying the planned vs. actual cost for each operation were also displayed daily as well. In addition, weekly meetings with the key staff are held to discuss performance and to generate new improvement solutions. These meetings involve a review of process times, customer surveys, and adherence to standard operating procedures. 5 Improvement results Table 3 displays the combined improvement results from the implementation of Lean DMAIC. In the table, there is an emphasis on layout redesign and value stream analysis. Table 3 displays the percentage and nominal savings were achieved by rearranging the layout of the work unit to establish a more streamlined operation. The savings were accomplished by modifying the layout and work processes based on the spaghetti diagram, travel distances, and standard operation times. The savings were calculated by comparing the distances and travel times in the original layout and process to the revisions identified during the improvement phase. Table 3 Savings achieved Current state Improved state Savings/reduction Cycle time mean min min 43.6 min Cycle time standard deviation 27.0 min 13.3 min 13.7 min Floor space requirements 1120 sq. ft. 810 sq. ft. 310 sq. ft. Labour cost per unit $ $ $30.40 Annual labour costs at 8000 units $1,280,000 $1,036,800 $243,200 By modifying the work unit layout the company can expect savings of over $243,000 per year based on cycle time/labour cost reduction at 8000 units per year. This also equates to nearly a 20% increase in capacity. 6 Conclusions Strong efforts are needed for organisations to remain viable it today s volatile financial climate. Lean Six Sigma with an emphasis on value stream analysis is such a tool to achieve this goal. This paper proposed a work unit layout redesign process based on the DMAIC cycle and provided a case study demonstrating its application. It is suggested that organisations needing to trim costs and boost productivity could achieve similar results improvements for stakeholders and customers. Furthermore, the implications of this paper promote other organisations to implement similar projects. The lean Six Sigma process and value stream analysis may be used as a guide or roadmap for Six Sigma development training and improvement. The case study demonstrated that through focused efforts, organisations can achieve great successes with relatively short project launch periods. A direction for future research would be to apply the value stream analysis methodology for different industries and gauge the positive and negative impacts.

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