CSS Lean Operations Report

1. Executive Summary

This report has been designed to help Crockwood Seat Suppliers (CSS), a manufacturing company based in the Midlands, to achieve its goal of eliminating waste in its production operations through leaning. The company which produces low volume seats using its current manufacturing processes which include pressing, forming, welding, sewing and assembly has been going through a difficult period. CSS has lost some of its contracts to overseas competitors and as such has laid off many employees. In order for the company to improve its operations by eliminating waste of resources in its operational strategy, it is important for management to consider some of the points raised in this report. Management has to eliminate non value adding processes so as to make the firm’s operations tight and leaner (Liker, 2008). In order to achieve this, it is important for CSS to adopt operations methods that will promote a smooth flow of the manufacturing processes and prevent unnecessary loss of time and resources. Through lean operations, CSS can identify those areas where it has been wasting its resources. Besides, it will also be able to simplify the production processes and adjust its layout in a way that allows work to flow without interruptions (Balle, M. & Balle, 2009). If it reduces wastes, the company will successfully reduce its cost of production which will help to improve its productivity. The goal of this report is to provide recommendations that will enable CSS to lean its operations by being on the alert for factors that can lead to waste such as waiting, flow, over production, inventory management and transportation. This report will identify the various ways through which these factors are affecting the operational efficiency at CSS and the various ways through which it can impact the company’s productivity and profits. However, before proceeding to carry out this evaluation, it is important to understand what leaning is all about and how CSS can take advantage of this operational strategy to improve its operational processes.

2. Introduction and Literature Review

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Lean principles were first adopted by the Japanese auto industry. The term lean operation was first used by John Krafcik in one of the pioneer studies that sort to know more about the concept (Radnor & Bucci, 2010).In 1988 Krafcik studied how firms could make their operations more effective in an attempt to minimise waste of resources.The study found that the industry’s operational strategy had an impact on profitability given that effective operational processes appeared to help cut down production costs and enable the industry to meet production lead times better than other car manufacturing companies around the world (Radnor & Bucci, 2010). The study found that Japanese car makers employed individuals whose only responsibility at the time was to identify areas that contributed to operational wastes and other non value adding operations. These employees helped the industry to reduce waste of resources, save millions of dollars and operate more efficiently.

Lean is commonly considered as the set of tool that help in the identification and elimination of waste within in systematic operations (Liker, 2008). The elimination of waste leads to improvement in the quality of operations. This improvement includes a reduction of production lead times and costs without compromising quality. Lean tools involve Value Stream Mapping, Poka-yoke (error-proofing), elimination of time batching, Total Productive Maintenance, Rank Order Clustering, mixed model processing, single point scheduling and multi-process handling to name just these few(Balle, M. & Balle, 2009). The underlying principle behind all these strategies is to improve the efficiency at every stage of the production operations. This principle is not true all the times, given that some operations contributions to the effective operation of a firm cannot be measured empirically. For instance, it is difficult to tell whether offering employees a coffee break actually affects their output.

Another approach to Lean Manufacturing that is used by Toyota Motor Corp is designed to improve the flow or smoothness of the production process (Radnor & Bucci, 2010). This helps to eliminate or minimise unevenness throughout the system. These include techniquesthat ensure that that the operations process is not stalled from time to time as it will reduce productivity (Pettersen, 2009). This is quite different approach which has been criticized by many operations professional for its inability to improved operations.Many factors contribute to the smooth flow of production processes within any factory. Some of these factors are visible and can be addressed by management. Employees’ personal state of mind can determine how smoothly operations will flow on a particular shift. This is something that is difficult for employers to address. For instance, the productivity of an employee who just picked a fight with his or her partner at home will likely be different from that of another employee just returning from a honey moon. As such, Toyota’s lean operations strategy cannot guarantee the smooth flow of operational processes.

The two approaches have a similar goal although they use different means to achieve these goals. The implementation of an uninterrupted flow makes it relatively easier to identify quality problems that can remain hidden in the system (Bicheno & Holweg, 2009). When this happenedit leads to waste reduction making it a worthwhile strategy to consider. One of the strengths associated with this approach is that it provides a general system-wide perspective and has the ability to resolve even unidentified issues within an operations system. However, it is good to make use of the proactive approach that identifies areas that can lead to potential waste of resources. This approach makes it possible to look ahead and make necessary changes before waste of resources begins. This is better than waiting until the company has begun losing valuable resources before making the necessary changes.Lean and TPS are a loosely linked set of competing principles that share a common goal of cost reduction through elimination or minimization of waste of resources (Chase, 2008). These include Waste minimisation, Perfect first-time quality, Pull processing, Continuous improvement, Flexibility and the establishment of long term relationships with suppliers (Montgomery, 2012). When all these techniques are used, they help to keep operations chains flowing without unnecessary interruptions and of course this helps businesses to meet the demands of their clients. The unrelated nature of some of these techniques can be explained by the fact that the TPS continued to improve since 1948 (Chase et al, 2007). This happened because it responded to the problems it set out to resolve within its own production facilities. This pragmatic nature of the TPS has made it possible for operations strategies to continue to improve dramatically because they are built on first hand experiences and not theoretical models that are sometimes difficult to see in real life situations (Bicheno & Holweg, 2009).

Toyota believes that the main technique used to achieve leaning lies in the reduction of three types of wastes common in many operations systems (Pettersen, 2009). These include the muda (“non-value-adding work”), muri (“overburden”) and mura (“unevenness”) (Pettersen, 2009). When these methods are used, they help to expose systematic problems. In this respect, the tools are flexible and can be adapted to different situations. One of the objectives of lean is to get the right things to the right place on time and in the right quantity. When this is done, it helps to achieve perfect work flow which is necessary for optimum productivity. Although much of the literature analysed above suggests that

3. Operational Evaluation of CSS

The design of the facility is not ideal to promote work flow. In the literature review above, the importance of work flow to the achievement of tasks has been clearly outlined. Work has to flow smoothly in order to identify mistakes and weaknesses in the system. The factory layout has to be designed in a way that one operation leads to the next one (Liker, 2008). When work is done in this manner, it makes it easier to notice mistakes and easily correct them on time. This is because when a mistake occurs, the item can be moved back to the previous stage where it can be easily sorted out without having to move from one end of the factory to the other. When workers have to move from one end of the factory to another, it creates loops in the flow of work and they end up spending some of their time wondering about in the factory giving room for items to start piling at their posts (Balle, M. & Balle, 2009). In an ideal design, raw materials should get into the factory from one side meanwhile the finished goods are moved out of the factory from a different exit point designed purposefully for the exit (Radnor & Bucci, 2010). However, CSS factory lay out is not designed in line with the flow of the manufacturing processes. This can be costly for the company in terms of time and even financial costs. Based on the above information and a review of the CSS’s current information, a number of weaknesses have been identified that need to be addressed.

3.1 Transportation

There are some inefficiencies in the current transportation system which leads to waste in time and money which. After weld and manual assembly is complete, the frames are sent to goods outwards, where they are loaded to special jigs ( 15 per jig) to be sent to a plating sub-contractor. The normal quantity despatched is 600 (parts are not required to be common) and the despatch timing is sporadic, depending on when the stock is available to go out. The turnaround time is quoted as 2 days however, the process time is 30 minutes per batch. In this scenario, it better to deliver the frames in good quantity in order to cut down transportation costs. Considering that CSS has 20 working days in a month and the client only wants one shipment per day by lorry. At this rate, CSS needs to find a double carrier in order to be able to transport enough seats in one lorry shipment. It is ideal to deliver the shipments at night since the customer’s premises also operate night shifts.

3.2 Overproduction

Again, given that 2520 seats are ordered monthly and a carrier can move 65 seats at a time, CSS has to put in place a strategy that will ensure that these chairs are delivered on time. CSS’s manufacturing facility is currently producing to mass production principles. The machines have a functional layout and produce components in large batches. The company needs to suit its production to meet the demands. For instance, given that demand has dropped there is no need operating at full capacity. This results in waste of energy and keeps machines working to meet a small order given that the company has lost some of its businesses to overseas competitors. Now, it is important for the company to cut back on costs and even consider hiring part time labour that is required to meet the demands of its existing customers (Montgomery, 2012). The company has to adapt its machines to meet its current market situation. For instance, instead of operating its machines at full capacity, CSS has to consider adapting its machines to meet current market demand. The pressing machine can be used at full capacity to produce forming in order to have material that it will use for a reasonable period of time. In that case, employees at the forming operation have to be mainly part timers with just a few full time employees. This is because once they do forming and pressing of material that can be used for a considerable time, they can go on to their second jobs and only come back when there is need for forming and pressing.

3.3 Waiting

CSS’s manufacturing process for the frame assemblies starts with pressing and forming. Because of the short cycle time and high set up times the batch size is high, 5000. The product is placed in stillages and transferred in a batch size of 1000. The output from the press shop should be of equal proportions of all products. However, currently this is not achieved as the output ratio depends on the set up of the presses. The press is a shared resource. Given that the press is a shared resource, it could lead to waiting that will stall the smooth movement of the operations. It is ideal to allocate different times for different. This is because shared resources help to cut costs and as such, it is important to allocate different times for employees to use shared resources in an effort to minimize instances when waiting has to occur. Waiting can have serious effects on the flow of operations and productivity.

Lanchester Steels Ltd supplies sheet metal stock to CSS on Mondays. Meanwhile Coventry Covers supply rolls of cover on Wednesdays. This can affect the pace of work in the case where they fail to deliver their suppliers. CSS needs to review its supply arrangement with its suppliers. It will be ideal if its suppliers deliver these materials on Saturdays, so that even if there is some delay of any sort, it will not alter the flow of work and the company will still be able to deliver seats to its clients on time. Failure to supply on time can lead to a termination of contract if it is recurrent in the industry. This is because these seats are needed at the car assembly line and if they do not show up, the assembly line could stall at some point in time thereby affecting their client’s schedule. For this reason, raw materials have to be sourced on time in order to ensure that CSS does not keep the customer waiting in the case where suppliers fail to meet up with raw material supplies. Waiting has to be eliminated whenever it is possible.

3.4 Human Resources

Keeping 200 employees to produce 2520 seats monthly could be too much for the company. This is a decision that most be clearly reconsidered in order to ensure that the company does not pay people who are doing nothing. The company needs to adopt a policy of using part time labour until it is able to pick up once more by winning new contracts in the sector. There is no point hiring too many workers when the company does not have many contracts. However, the company has to be looking for ways to grow. Growing can be done by gaining new markets. Since it has few markets, the company must keep just enough workers who are able to meet its customers’ demands. Secondly, it has to make sure that hires the right number of people at the right time to satisfy its customers’ needs. On the other hand, it must have a good bank of part timers whom it can call in at any time as soon as the market starts growing.

4. Discussion

Leaning is very important in manufacturing businesses such as CSS. This is because it helps these businesses to keep work flowing from one process to the order by making the right arrangements with suppliers and hiring the right people to complete the different manufacturing processes (Chase et al, 2007). In the long term, CSS has to remain conscious of the needs to ensure that it is not wasting time or resources. Wastes can always hurt CSS’s profits. The company could be making profits, but because the operational system is characterised by wastes, the company will not make as much profits as it would have otherwise done.

To begin with, lean operations have proven to reduce costs and improve productivity in the automobile industry in Japan (Pettersen, 2009) (Chase, 2008). This strategy was later on copied by many businesses in the manufacturing sectors that experienced similar positive results. In addition to eliminating wastes in many factories, lean operations have helped many companies to become more competitive after implementing lean strategies (Bicheno & Holweg, 2009). CSS is a company that is currently struggling and needs to improve its performance. One of the ways it can do so is by adopting any strategies that will make it more competitive. Leaning is just one of many strategies available for the company. In order not to take any chances, the company needs to implement the leaning strategy that has been outlined in this report.

Secondly, the key to success for CSS is to source the right quantity of raw materials on time in order to avoid shortage or waiting (Liker, 2008). Without raw materials, the company will be unable to meet the needs of its clients. Even with these raw materials, work schedules must be organised in a way that makes it possible to meet customers’ demands (Balle, M. & Balle, 2009). For instance, machines must be in good conditions and regularly checked given that failure to do so can result in untimely break downs.

Finally, appropriate transportation measures must be put in place to ensure that raw materials get to the factory on time (Radnor & Bucci, 2010). The same is true for finished products that are needed by the client. If for instance, the chairs do not get to the client on time, it will affect the client’s flow of work (Chase et al, 2007; Montgomery, 2012). CSS has to put in place and effective transportation at every given moment that is able to get raw materials to the factories and finished seats to the customer at the lowest cost and on time to guarantee efficiency and profit making, which is the underlying mission of CSS.

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