The Benefits of Lean Manufacturing - Arrod Widget Company - Case Study Example

Business Operations College: Name: Students ID: Date: Course Name: Unit Code: Instructor's Name Introduction Arrod Widget Company (AWC) assembles widgets of which there are 3 sizes; small, medium and large. The widgets are categorised according to their robustness and capacity, not size. The Company has been experiencing a number of quality as well as efficiency issues particularly on their large widget production line. As a result of these problems, AWC has been little by little losing sales to their competitors. Mr Arrod, the owner of the Company, is incredibly uneasy and wants this state to be turned round. Lean manufacturing and six-sigma are two key concepts that have won accolades in production and manufacturing. Today the concepts have as well been adopted in other areas such as project management. These two concepts have been seen to boost production efficiencies, hence, the quality of products (Kilpatrick, 2003; Park, 2003). Therefore, I believe that if AWC adopts these concepts, the Company will be able to overcome most of the quality and efficiency issues experienced in the production of large widgets. In this report, I put in plain words what is meant by “lean” manufacturing and “six sigma”, and name those concepts along with related tools and techniques which are most expected to be practical to the AWC. Also, I explain the quality as well as efficiency benefits to be expected implementing the preferred concepts and related tools as well as techniques. Lean Manufacturing The concept of lean manufacturing originated from Japan in the 1940s. Lean manufacturing came about from the Toyota Production System; a system that is closely associated with Taiichi Ohno. The Toyota Production System riveted around the need to manufacture in a continuous flow. The system evaded lengthy production runs so as to be efficient; it was founded on the realization that just a little bit of the total time as well as effort to manufacture an item added value to the end-user. The Toyota Production System was a plain reverse of the Materials Resource Planning and compound programmed systems adopted by the Western world in mass production (LERC, 2004). Basically, lean manufacturing refers to a “systematic elimination of waste” in the whole organisation’s process. Waste refers to whichever utilisation or loss of resources not directly linked to the manufacture of a product or creation of a service a customer needs as soon as they yearn for it. The lean methods, hence, often turn into less material, a smaller amount capital, a reduced amount of energy, and less waste per unit of production, in the quest of excellence (Kilpatrick, 2003). Tools and Techniques There are a lot of tools and techniques that can be used to achieve lean manufacturing. Below I discuss some of the tools that ASW could possibly adopt in the production of widgets; Cellular Manufacturing Cell manufacturing is where production actions are divided into cells. A cell comprises the apparatus plus workstations placed in an order that ensures a smooth flow of materials as well as works right through the process. Each cell is allocated competent and trained operators. This is a concept that can be applied by ASW where the production of each widget would constitute a single cell (Melton, 2004). Continuous Improvement (5S) 5S is one of the main valuable tools for continuous improvement. In lean manufacturing, continuous improvement can be in the form of reduced inventory, reduced defects, among others. 5S comes from Japanese language whose English translation is Sort, Straighten, Sweep, Systemize; and Standardize. The goal of 5S is reduction of waste which can be realised through searching for waste followed by getting rid of it. Waste could arise from defective products, material overuse, obsolete apparatus, or unnecessary items (Melton, 2004). Benefits Each tool and technique employed to achieve lean manufacturing has its own benefits. However, the overall goal of lean manufacturing is to eradicate wastage and ensure production efficiency that ends in quality production. Should ASW adopt cellular manufacturing, the Company will invite a lot of benefits linked to this concept. Dividing the production process into cells allows the implementation of one-piece flow process. In one piece-flow production, each one product progresses through the process, one unit at-a-time devoid of abrupt disruption, at a pace dictated by consumer needs. Another advantage is the extension of product mix. If clients require various products at quicker delivery rates, cellular manufacturing promises flexibility through grouping similar products into families that can be produced on the same equipment and in a matching order (Melton, 2005). The benefits of continuous improvement (5S) include; reductions of total lead time for clients; eradication of errors; shorter switch over times; better employee turnout; value addition; and more perfection of ideas (knowledge management) per employee. Other benefits of lean manufacturing are; condensed raw material usage and inventory for manufacturers; less space consumption and using fewer employees which lead to the ultimate goal of cost reduction (Melton, 2005). An evaluation of the impact of lean production was conducted by Manex Consulting in 2010 across all the aspects of CA Food Company in the United States. The table below indicates the results obtained; Element Previous New Total lead time 20 days 15 days Total processing time 6 days 5 days Sales level $240 million $290 million Pre-tax profit 2.7% 5.5% Company value $110 million $168 million Source: Manex Consulting (2010), p.41. Besides the figures in the table above, CA Company trimmed down the total energy, waste, scrap, movement and effort. In addition, the total time required to ship finished products reduced. The Company’s competitive edge went up, hence, boosting the sale of its products and cutting down the prices charged. Manufacturing costs plummeted and the defect rate declined. The impact on the environment was also reduced (Manex Consulting, 2010). From this illustration, it is clear that if ASW implements lean methods in the production of widgets, the Company is on the road to success. More importantly it will boost the wasting competitive edge, hence, boost its sales. Six-Sigma Six Sigma is a quality upgrading system that was initiated by Motorola in 1986. Six Sigma originated from the idea of Statistical Process Control (SPC). Six Sigma basically aims to step up the manufacturing processes and stamp out defects. Statistically, Six Sigma aims to ease process variation so that almost all products/services meet up or surpass customer expectations. Six Sigma refers to 3.4 defects in a million chances (Park, 2003). Tools and Techniques There are three fundamental approaches by which the concept of Six Sigma can be implemented. These include; (1) Process step up; (2) Process design/re-design; and (3) Process management Process improvement Process improvement is intended to close down the origin of performance insufficiency in processes already present in the organisation. The performance insufficiency could be causing trouble for the organisation, or hinder organisational working efficiency (Pande et al 2000). The following five-step move (DMAIC) is applied to get rid of the insufficiency. Define – Involves identifying a severe setback and forming a project team to resolve the problem. Measure – Involves collecting of actual data describing how the process is running at present and analysing it so as to generate some pilot ideas regarding the cause of the problem. Analyse –Theories are formed, based on the pilot ideas, regarding the cause of the problem. By examining the theories, root causes can be known. Improve – changes to wrong processes are designed and implemented to stump out the root causes. Control – Involves designing and implementation of fresh controls to put a stop to the initial setback from recurring and seize the gains generated by the progress. Process design/re-design Process improvement may at times be insufficient, hence, requiring fresh processes to be designed, or existing processes be re-designed. Process design/re-design is generally necessitated by; (1) the need to change, more willingly than fix, one or several key processes; (2) the realisation that merely improving an existing process will certainly not convey the level of quality demanded by clients; and (3) identification of a prospect to tender an completely new product/service (Pande et al 2000). Process design/re-design uses the five-step approach (DMADV) described below; Define – The aim for the new process is identified, considerate of the client needs. Match – Involves developing a set of performance requirements for the new course of action that equal the defined goals. Analyse – The performance requirements for the new process are analysed. The outcome of the analysis then guides development of a rough design for the new process. Design and Implement – The rough design developed is fully developed and then implemented. Verify – This involves ensuring that the new process performs as required. Controls are also set up to make sure it continues to perform as required. Process management This process requires the organisation to basically modify its structure and change the way it is run. For this reason, process management demands a lot and consumes a lot of time (Pande et al 2000). Generally, process management entails; Definition of procedures, main customer needs, and process ‘owners’. Weighing performance alongside customer needs as well as key performance markers. Data analysis to boost the process and purify the process management system. Screening process inputs, process operation and process outputs plus taking swift action to troubles as well as process divergence so as to manage process performance. Benefits Six Sigma is scientific and offers a statistical means for quality consideration for each and every one process by measuring the level of quality. The method allows for assessment amongst all processes. It too indicates the state (goodness) of a process. The top-level management can employ this information to identify the route to go after in realizing process improvement as well as customer satisfaction.Six Sigma also facilitates resourceful manpower development and deployment mainly through the ‘belt system’. Under this ‘belt system’, employee levels of expertise are categorised as green belt (lowest level), black belt, and master black belt then champion (topmost level). ASW can deploy this system to classify its employees then assign them the most fitting widget production lines, based on their level of mastery (LG Electronics, 2002). Moreover, Six Sigma presents a flexible way of managing the 3Cs of the new millennium of 3Cs. These are: (1) Change which involves the changing social order; (2) Customer which relates to shifting power to customers and their demand; and (3) Competition that entails competing in quality and efficiency. All the 3Cs are mandatory for ASW, particularly competition (Park, 2003). Starting with Motorola, distinguished world-class companies have told stories of how Six Sigma boosted their operations. IBM, Sony, Nokia, Kodak, as well as Philips Electronics among others have been pretty booming in Six Sigma. Samsung and LG Groups of Korea launched Six Sigma in their operations in the beginning of 1997. They reported amazing results. A case in point is where Samsung SDI (a subsidiary of the Samsung Group) reported a total of US$150 million in cost savings (Samsung SDI, 2000). Conclusion Lean manufacturing and Six Sigma are the latest quality and efficiency improvement concepts today. There are various tools that can be applied for each concept. The benefits of implementing either lean manufacturing or Six Sigma are immense. Companies that have employed these concepts have gained better competitiveness, improved product quality and customer satisfaction along with better production efficiency (Pande et al 2000). ASW has good reason to implement lean manufacturing or Six Sigma. References Kilpatrick, J. 2003, Lean Principles. LERC, 2004, Lean Enterprise Research Centre, Cardiff Business School, . LG Electronics, 2002, Six Sigma enables LG Electronics to improve business performance, an explanatory paper provided by LG Electronics/Digital Appliance Company. Manex Consulting, 2010, Benefits from a Lean Manufacturing Presentation, retrieved 11 January 2014, . Melton, P.M., 2004, To lean or not to lean? (that is the question), The Chemical Engineer, 759: 34–37. Melton, T. 2005, The Benefits of Lean Manufacturing: What Lean Thinking has to Offer the Process Industries, Trans Ichem Part A, Chemical Engineering Research and Design, 2005, 83(A6): 662–673. Pande, P.S., Neuman, R.P. and Cavanagh, R.R. 2000, The Six Sigma Way, McGraw-Hill, New York. Park, S.H. 2003, Six Sigma for Quality and Productivity Promotion, Asian Productivity Organisation: Productivity Series 32. Samsung SDI, 2000, Explanation Book of the Current Status of Six Sigma, Prepared for the National Quality Prize of Six Sigma for 2000 by Samsung SDI. Read More