Perspectivas del diagnóstico organizacional

This section sums up the conclusions we are able to draw from this research. The objective of this research was to optimize the business processes by eliminating the wastes in order to increase the Return On Investment (ROI). We focus mainly on the sales-engineering process. To achieve this objective, we established a research question: “How can Lean Management be best applied to the optimization of the sales-engineering process at Universal Corrugated B.V.?”. The road we take to answering this question was by answering a few other investigative research question.

The first three research questions are about Lean Management. Lean Management is a methodology to run, plan and control operations with the purpose of meeting customer demand with perfect quality and minimum to no waste. Waste are activities that do not add any value to the company. There are seven types of waste, ranging from the waste of over-production to quality waste. To eliminate these types of waste, a company can apply several Lean tools, such as 5S, Automation or Total Productive Management.

Research questions 4 and 5 are about the current situation at Universal Corrugated. Universal Corrugated B.V., a company of about 40 employees, is a small- and medium-sized enterprise (SME). It is an unstructured company and there are no working patterns or documents that contain the working standards. The core problem of this research is the informal structure, which leads to several other problems. The communication and collaboration between the employees and between the departments are very weak. Also, the employees do not always have the discipline they should have. Looking specifically at the shop floor, the employees complain about materials and information not being received on time or not having the right quality. These are materials and information received by both their colleagues and the third-party deliverers. Also other departments complain about receiving low quality information. When linking problems to the triple constraint (quality – time – budget), we conclude that the quality of the end-product is too low (quality), the lead time is longer than necessary (time) and the ROI is at or beneath breakeven (budget). The low ROI is caused by high production, quality and stock costs. Sometimes, due to engineering mistakes or changes, the shop floor mechanics need to adjust the machine after the customer already paid the machine. These changes cannot be charged to the customer, which increases quality costs. The high stock costs are a result of materials being ordered when they are still in stock, wrong materials being ordered, or unnecessary sub-assemblies being produced. Some problems can be linked to one (or more) of the seven types of waste. The two types of waste the company mostly has are motion and defectives. Motion is the waste of looking busy, but not adding value at all. Defectives are quality wastes.

We answered research question 6 “What Lean tools would be best to optimize the sales-

engineering process at Universal Corrugated B.V.?” by establishing criteria, giving weights to these criteria and eventually giving scores to the different tools, we conclude that the top-3 of best Lean tools are: Standardized work, 5S, and Kanban. These tools focus on – respectively – integrating working standards, improving quality, and limiting the Work in Progress to eliminate overproduction and inventory.

The last research question answered how to apply the top-3 Lean tools to Universal

38

tools, one of the first steps is to analyze the processes and to check whether the implementation is needed and in which area of the company it is needed. It is also common in the tools to create teams to perform the implementation. One of the last steps in almost all tools is make the new way of working the standard and to continuously improve this standard.

The investigative research questions helped to create an answer to the main research question. Lean Management can be best applied to the optimization of the business processes at Universal Corrugated B.V. by implementing the Lean tools 5S, Kanban, and Standardized work. Furthermore, the employees must analyze the business processes step by step and create teams to perform the implementation. Also, the management must teach the employees about the different Lean tools and discuss the benefits the implementation can have for the company and the

employees. By applying the four tools, the quality can improve, the lead time can decrease and the costs can decrease.

6.2 Recommendations

This section contains the recommendations we have for Universal Corrugated regarding the

optimization of their business processes. Even though we focused on the sales-engineering process in this research, we also give recommendations to most of the other processes within the company. At last, we give some general recommendations for the management team of the company.

6.2.1 The sales process

Motion and defectives are the two wastes we mostly recognize in the sales process. The defectives are caused by the low quality of the delivered documents, for example drawings in which required information is missing. To retrieve this missing information, the sales employee needs to ask for corrections and has to wait for the engineering employees to fix this. This is the waste type “motion”. It is very hard for the sales employee to eliminate these wastes, as it is something that is caused by another department.

A recommendation for the sales department is to find out what the customer’s quality

requirements are for the end-product. At the moment, the quality requirements are not clear and the production employees do quality checks based on their own requirements. However, in the end it is the customer who decides whether something meets the requirements or not. The quality requirements must be clear before the machine is built.

6.2.2 The service / spare-parts process

The service / spare-parts department has three different types of waste: over-production, inventory and defectives. Over-production is caused by ordering products that are not needed. These products are still in stock, but the system shows a different stock. A new ERP system will be installed soon, which hopefully eliminates this problem, so that the stock in the system is always correct.

Inventory is a result of ordering wrong materials, which leads to the product being stocked in the inventory. The service / spare-parts employees must pay close attention to which products they have to purchase. Defectives are caused by ordering low quality products and receiving low quality information.

The engineering and sales departments both receive unclear and informal information from the service / spare-parts department. Information is transmitted by e-mail instead of orally and this sometimes results in information not being received the way it should be. It is useful to organize meetings when important information needs to be transferred. Also, when information is transferred by e-mail, the information needs to be very clear and detailed, so that it is understandable for everyone.

39

6.2.3 The engineering process

Over-production is a waste type that is present in the engineering process. The sales employee receives 2D drawings of the factory of the customer. The engineering employees make a 3D drawing of the machine to be built and sends it to the sales employee. The sales employee must then put the two drawings together, but this is very hard when the two drawings do not both have the same format. The engineering employees over-produce, because they make drawings that are not needed for the next step in the process. A recommendation for the engineers is to make the drawings in 2D (only 3D when the customer delivers 3D factory drawings). The drawings of the machine must be in the same format as the drawings of the factory delivered by the customer.

Sometimes drawings are not complete (such as missing measurements) or very vague. In order to avoid discussions or unsatisfied production employees, the engineering employees need to

check each other’s drawings before they are handed over to the next department. This way, they can eliminate mistakes and save time. They also have to avoid making changes after the contract is signed by the customer. It is ideally that every lay-out is right at the first time.

6.2.4 The production process

At the shop floor, and especially in the warehouse, it is not always clear what items are in stock or not. Also, the system does not give the correct stock. A recommendation to avoid this is to use ABC inventory. ABC inventory classifies inventory items into three categories:

• Category A: most valuable items • Category B: moderately valuable items • Category C: least valuable items

This method aims to manage the A-items and wants to avoid the waste of precious resources by managing the C-items. Managing the inventory items will result in keeping inventory costs under

control and improve the company’s competitiveness (Kaabi, Jabeur & Ladhari, 2018). Also, by implementing the ABC system, items are better organized and thus, it is more visible what is and what is not in stock.

For the process of building the machine, the Lean tool Single Minute Exchange of Die (SMED) can be useful. This method reduces setup changeover times. This means that the time between changing from the current order to a new order will be minimized. The method increases

productivity and minimizes production costs. In this method, we make a distinction between external and internal changeover times:

• Internal: the work elements that can be done only when equipment is not running • External: the work elements that can be done when equipment is running.

According to Díaz-Reza et al. (2017) the implementation of SMED can be divided into several stages: 1. Identification stage

➢ Examine the process by doing a continuous production analysis.

➢ Video record the whole setup and changeover process.

➢ There is no distinction made between an internal and external process. 2. Separation stage

➢ Distinguish the internal and external setup activities and separate them.

➢ This stage results in a setup time reduction from 30% to 50%. 3. Transformation stage

➢ Implementation stage.

➢ Convert as much internal work to external work as possible: work on the greatest number of tasks while machines are running.

40

➢ Examine whether some work has been wrongly assumed to be internal while it was external work.

4. Improvement stage

➢ Streamline and standardize the aspects of the setup process.

➢ Review all elements in order to continuously improve them.

6.2.5 The purchasing process

The purchasing employees sometimes order the wrong materials. This is due to the incorrect system or because other departments accidentally want to order materials they do not need. It is useful for the purchasing process to double check whether the materials are needed. The incorrect stock will hopefully be eliminated by means of the new ERP system.

6.2.6 The management team

We consider the management team to be the plant manager and the managers of sales, production, service/spare-parts, purchasing, and engineering at Universal Corrugated.

It is useful for the managers to set their priorities straight. This means that they must make a daily priority list and encourage their employees to work from the top priority to the bottom priority. It is important that the management team also checks whether the employees worked on the priorities in the right sequence. If this is not the case, they should organize a meeting to remind them of the benefits of working priority-wise. Benefits are for example getting work done in time,

providing a better quality, less stress and an improved efficiency (ProofHub, 2018).

The managers must really look into their third party deliverers. Products are not of the best quality, but are still used for the machine. This causes lots of care after the end-product is installed in the factory of the customer. Investing in higher quality products eliminates this after-care and can save a lot of money. Some products do not meet the accuracy, so that the production employees need to adjust the products. Sometimes this is not even possible, resulting in the employees

throwing away the unusable products. Also, some deliverers do not deliver the complete order, they deliver the wrong materials or they deliver too late. This is a waste of time and the departments need to wait for the deliverers to deliver the right products before continuing with the whole process of building a machine.

Some machines for producing sub-assemblies and the resources for testing the incoming products are outdated and lack some quality. Investing in these resources can save time and money. This also counts for the software system that goes into the machine.

Overall we can say that every department needs to implement 5S into their process, so that everything is organized and the quality can improve. This eventually results in better collaboration between departments, because higher quality information is transferred between the employees. There must be a first time right prospective. Furthermore, the management need to write down the standard and standardize every process within the company. Job procedures must be clear for the employees and must be present in documents. When the company implements 5S and maybe other Lean tools), the lead time can reduce and the quality can increase. Also the production, stock and quality costs can decrease. This eventually leads to a higher ROI.

41

References

25 essential Lean tools (n.d.). Retrieved October 29, 2018 from

https://www.leanproduction.com/top-25-lean-tools.html.

A beginner’s guide to understanding the Agile method (n.d.). Retrieved January 8, 2019 from

https://linchpinseo.com/the-agile-method/.

Aernoudts, R. (2015). A guide to applying standard work in a lean transformation. Retrieved January 29, 2019 from https://planet-lean.com/standard-work-lean-management/ .

Alexiadou, N. (2014). Researching policy implementation: interview data analysis in institutional contexts. International Journal of Social Research Methodology, 4(1), p. 51 – 69.

Al-Qahtani, N.D., Alshehri, S.S. & Abd.Aziz, A. (2015). The impact of total quality management on organizational performance. European Journal of Business and Management, 7(36), p. 119 –

126.

Bamber, C.J. (2000). Developing management systems towards integrated manufacturing: a case study perspective. Integrated Manufacturing Systems, 11(7), p. 454 – 461.

Berisha, G. & Pula, J.S. (2015). Defining Small and Medium Enterprises: a critical review. Academic Journal of Business, Administration, Law and Social Sciences, 1(1), p. 17 – 28.

Cooper, D.R. and Schindler, P.S. (2014). Business Research Methods. New York: McGraw-Hill Education.

Díaz-Reza, J.R., García-Alcaraz, J.L., Mendoza-Fong, J.R., Martínez-Loya, V., Macías, E.J. & Blanco Fernández, J. (2017). Interrelations among SMED stages: a causal model. Complexity, 2017, p. 1 – 10.

European Commission (2016). User guide to the SME Definition. Luxembourg: Publications Office of the European Union. Retrieved on November 11, 2018 from

https://ec.europa.eu/regional_policy/sources/conferences/state-

aid/sme/smedefinitionguide_en.pdf

Harrin, E. (2018, August 15). A complete guide to RACI/RASCI charts. Retrieved November 2, 2018 from https://www.girlsguidetopm.com/a-complete-guide-to-raci-rasci-charts/ .

Haughey, D. (2011). Understanding the project management triple constraint. Retrieved October 17, 2018 from https://www.projectsmart.co.uk/understanding-the-project-management-triple-

constraint.php.

Heerkens, H. & Van Winden, A. (2012). Geen probleem. Een aanpak voor alle bedrijfskundige vragen en mysteries. Nieuwegein: Van Winden Communicatie.

42

Multicriteria ABC Analysis. International Journal of Information Technology & Decision Making, 17(6), p. 1805 – 1837.

Kniberg, H. & Skarin, M. (2009). Kanban and Scrum: making the most of both. InfoQ. Kogawa, A.C. & Salgado, H.R.N. (2017). Quality tools for a successful strategic management.

International Journal of Business Process Integration and Management, 8(3), p. 153 – 159. Lee, C.Y. (2004). TQM in small manufacturers: an exploratory study in China. International Journal of

Quality & Reliability Management, 21(2), p. 175 – 197.

Majava, J. & Ojanperä, T. (2017). Lean production development in SMEs: a case study. Management and Production Engineering Review, 8(2), p. 41 – 48.

Maralcan, A. & Ilhan, I. (2017). Operations management tools to be applied for textile. IOP conference Series: Materials Science and Engineering, 254(2017), p. 1 – 6.

Ministry of Health and Social Welfare, Tanzania (2009). Implementation Guideline for 5S-CQI-TQM Approaches in Tanzania: Foundation of All Quality Improvement Programme. The United Republic of Tanzania, Tanzania. Retrieved January 23, 2019 from

http://webcache.googleusercontent.com/search?q=cache:http://www.nacp.go.tz/site/downl

oad/guide_5s_tz_2009.pdf .

Narusawa, T. & Shook, J. (2009). Kaizen Express. Boston: Lean Enterprise Institute.

Nave, D. (2002). How to compare Six Sigma, Lean and the Theory of Constraints: A framework for choosing what’s best for your organization. Retrieved February 14, 2019 from

http://www.toc-cga.org/upload/reference/3.pdf .

Onderneming. (n.d.). Retrieved September 12, 2018 from

http://www.universal- corrugated.com/p/nl/33 .

Planview Leankit (n.d.). How to implement a Kanban system. Retrieved January 25, 2019 from

https://leankit.com/learn/kanban/how-to-implement-a-kanban-system/ .

Pietrzak, M. & Paliszkiewicz, J. (2015). Framework of Strategic Learning: The PDCA Cycle. Management, 10(2), p. 149 – 161.

ProofHub (2018). Importance of Time Management in the Workplace. Retrieved February 2, 2019 from https://www.proofhub.com/articles/importance-of-time-management-in-the-

workplace.

Rabiee, F. (2004). Focus-group interview and data-analysis. Proceeding of the Nutrition Society, 63(2004), p. 655 – 660.

Randhawa, J.S. & Ahuja, I.S. (2017). 5S implementation methodologies: literature review and directions. International Journal of Productivity and Quality Management, 20(1), p. 48 – 74.

43

Remenyi, D., Williams, B., Money, A. & Swartz, E. (1998). Doing research in business and management: An introduction to process and method. London: Sage.

Robertson, B. (2003). Project Plan Development for 5S implementation. Unpublished Master’s degree

Directed Project, Purdue University. West Lafayette, IN.

Rose, A.M.N., Deros, B., Rahman, M.N. & Nordin, N. (2011). Lean Manufacturing best practices in SMEs. Proceedings of the 2011 International Conference on Industrial Engineering and Operations Management Kuala Lumpur, Malaysia, January 22 – 24, p. 872 – 877. Saunders, M., Lewis, P. & Thornhill, A. (2009). Research methods for business students. London:

Pearson Education Limited.

Slack, N., Brandon-Jones, A. & Johnston, R. (2013). Operations management. London: Pearson. Sugiyama, H. & Schmidt, R. (2013). Business model of continuous improvement in pharmaceutical

production processes. Proceedings of the 23rd _{European Symposium on Computer Aid Process}

Engineering.

Van de Poel & Royakkers (2011). Ethics, Technology and Engineering. Hoboken, New Jersey: Wiley Blackwell.

Wat is Agile? (n.d.). Retrieved January 8, 2019 from https://www.sixsigma.nl/wat-is-agile. With vision into the future. (n.d.). Retrieved October 25, 2018 from

http://www.minda.de/minda_group_company_philosophy.html .

Yon, R. & Evans, D. (2011). The role of small and medium enterprises in Frontier Capital Markets. Network Science Center at West Point.

44

Appendix

A. Organogram

Stock holder MINDA group

Sales manager Service / Spare-parts employees Service mechanics Engineering manager Mechanical engineers Electrical engineers Software engineers

In document Procedimiento general para la toma de decisiones en la Estación Territorial de Investigaciones de la Caña de Azúcar (ETICA) del municipio Ranchuelo (página 45-49)