Synchronizing material flow with demand: a lean application case at a metalworking company

Supply flows are often handled by the operators themselves and benefit from the proximity between handling areas. However, this rarely happens in an organized way, with the various operators of the various flows fetching components throughout the entire plant. Without a critical eye, this seems to have little impact on productivity and organization, but the truth is that it results in a higher lead time and worse performance in meeting customer deliveries.

These problems become complex when we examine the details. The lack of aisles to facilitate handling and of organized and standardized ways and models for transporting materials usually are the first problems to be seen; in addition, other problems such as lost parts, difficulty finding and meeting the plan with all components, delays in starting production, various problems with documentation and controls, significant problems of quality and product scrap due to the handling of materials, impact on the operation's productivity and lack of clarity in roles, for example, slowly begin to draw the attention of leadership and, with the variation in production, can impact the company's results.

In this situation, it is crucial to understand and analyze the process in order to solve the problems. In this sense, there is great value in having a safe and proven method such as the lean approach, which at first helps create a structured plan to solve and eliminate all the losses; this plan will make more evident what most significantly impacts the processes and needs to be solved quickly.

Such is the case we recently saw at a mid-sized company in the hydraulic pump sector that was on the verge of tripling its production volume, from approximately 30.0000 to 90.0000 products per year; from the outset, it was already facing serious problems in material storage and handling.

The  immediate problem that needed to be solved was the organization of materials, which was causing significant quality problems and difficulty in controlling inventory; they found the excellent solution of using KLT-type boxes, which come in various sizes and heights, making it possible, depending on the dimensions, type and demand (deployed to the plant through the lean concept of takt time), to define the best packaging with the respective quantities for each of the internal flows and products. To size the number of these boxes, all of the company's products had to be analyzed to consider purchase volumes and the need for KLT boxes with their respective dimensional variations.

It is also important to establish ways of identifying and handling materials; for products that may have quality problems due to collisions during handling and transport, for example, trays can be created to separate the materials and mitigate these quality risks. The gain from this change alone has enormous potential by standardizing the quantity per package and making inventory control easier; with this, the volume for each box is defined, discrepancies are significantly reduced and inventory control in production processes is improved, in addition to helping mitigate quality losses.

Once the most serious problems are solved, the new challenge becomes expanding the planning of material handling and control in a structured way to the entire plant. But how can this be done considering the company's different product families, which have volumes and sizes with significant variations? The first step is to define a plan and stages with the goal of making a structured change oriented toward continuous improvement, using the lean approach to synchronize the flows and connecting the production and logistics processes. In this sense, the main stages are:

 

 

1) Definition of the site's macro layout

At this stage, the company's entire leadership should analyze the layout options, considering the pros and cons of each one with the respective materials and according to the variation in the site's production volume. In these models, the following must be considered: the best position of the site's receiving and shipping process, the sizes and flows of the material inbound and outbound processes in receiving and shipping, the process of picking and sending received materials to the production processes with all its handling, the outflow of processed products from the production areas, the site's handling aisles and the strategic expansion areas for new business.

One point that affects this analysis is how to create a layout that supports variations in demand over time (for example, if the company is dealing with an increase in volume or with a reduction in demand). What matters is being able to synchronize the workflow with demand. To this end, model and modular cells (each one designed to achieve maximum productivity with fewer resources and lower costs) can be replicated, which helps in this initial work. Also as an example, we can highlight, in the macro layout shown below, the definition of an area for potential growth of the production processes in the central area of the layout, allowing potential expansions beyond those initially planned.

 

Figure 1: Top-down macro view of the company's layout

 

2) Study of handling routes, takt time and standard handling times for the operator and tugger

This stage seeks to analyze in detail the tugger's flow, its speed, the number of operators and equipment needed, and to understand the best use of this resource, the handling capacity, handling times and the frequency of supply. It is important to highlight that the book “Making Materials Flow”, by Harris et al (2004), provides information on how this analysis can be carried out in a simpler way, with details of the calculations in this process, such as how to time and analyze the process with takt time and understanding the resources needed in this process of change and volume increase.

In this phase, the tugger's speed, the movement of the operators and their respective routes, and the supply frequency for the different processes are also calculated in order to reduce the material storage area in the production processes, which are transferred from the receiving area; the aim is thus maximum productivity per square meter in the production areas. This stage of the work provides a series of information to detail the layouts of each area.

In processes with higher demand, flows should be supplied at shorter time intervals, while in those with lower demand, they can be supplied at longer intervals, which affects the area occupied by materials in the production areas. Increasing supply frequency with rationalization of internal routes is a first lean approach to cope with volume variation, before thinking about investments in equipment.

In the figure below, you can see a sheet with the operator's standard work time, in which an example of application for material picking in logistics can be seen. On each line, this form covers the work performed by the operator: the timing of all of the operator's supply handling times, the delivery and the collection of packaging at each delivery point in production. The times on this form cover the complete time from the tugger's departure from the receiving process, through all the supply points in production, and back to its point of origin.

 

Picking Standardized Work

Figure 2: Example of standardized work for picking

 

3) Material delivery points, implementation of the standardized box and the identification card

After the previous work, the refinement begins of the material entry and exit points, the identification of components per box and the standardization of an identification card across all processes, making the different stages involved easier. At first, this material picking process can even be carried out manually, but over time, small automations and process controls can be implemented to save time and avoid typing errors, allowing greater control of this process and traceability of each product.

Below, we can see a revised list of materials, with the definition of the supply point, place of origin and destination, the type (whether it is material inbound or outbound), description of the type of material, means of transport, form of command to trigger this release and number of supply locations. The aim of this activity is the smallest possible use of area and the smallest possible volume of material in the production processes – in addition to delivering materials as close as possible to the point of use, maximizing the productivity of the operation.

 

List of materials

Table 1: List of materials by supply point

 

4) Schedule control system and deviation resolution

This stage focuses on observing whether there are line stoppages due to missing components, encouraging an investigation process to analyze deviations. To this end, some strategies are very useful, such as standardizing times and controls in the processes and defining the exact stopping point of the tuggers in the production processes; this makes it easier to reduce the variation in the time the operator spends walking through the operation.

It is also worth reviewing the tugger's speed and defining a maximum, safe speed to avoid variation in travel between supply points and reduce safety risks for operators and quality risks for the materials handled. With this, it is possible to define the exact moment for collecting and delivering materials at each point. In the event of deviations or delays (which can be seen on the disc in the Route 1 example in the figure below), that is, if the supply time at the line falls outside this window, a person is designated to resolve this problem of delivery outside the tolerated time, along with a means of contacting that person to analyze and make adjustments or address deviations so that the route operates within the permitted tolerance. 

Figure 3 shows an example of this control in practice. All times and deviations were estimated in a real case, based on the historical time of passage at each point; with this, in the case that inspired this example, there was a good reference for understanding the variation in historical times and having a quick decision-making process in case of delay or variation, enabling a reduction of the inventory level in production.

With control, a good reference is created for understanding the variation in historical times and having a quick decision-making process

 

5) Help chain methodology for problem solving, reinforcement of standardization processes and weekly tracking chart

The above information should always be refined in pursuit of continuous improvement of the processes, carrying out a standardization process, since the existence of a standard is considered the basis for any improvement process.

As shown in Chart 1, if the process does not have a standard over time, we will have the degree of improvement shown by the black line. With standardization, we will have the red line, showing a significant difference between the two models and a substantial impact on the degree of improvement due to the existence of the standard.

Information should always be refined in pursuit of continuous improvement of processes

Below is an example of a table of standard definitions for tracking and improving the processes for supplying materials to production processes, which was consolidated to include the delivery window times per day, in each shift; with this, it is possible to track this process on a single sheet each week. At the bottom, it is possible to consolidate this information into a single weekly indicator.

 

Table 3: Material supply tracking

 

And, based on the previous table, this information is consolidated through indicators and tracking, shown visually in Chart 2 with regard to adherence to the route schedule.

As shown in Chart 1, if the process does not have a standard over time, we will have the degree of improvement shown by the black line. As shown in Chart 1, if the process does not have a standard over time, we will have the degree of improvement shown by the black line.

As a result, the management process is greatly improved and it becomes possible to detect new opportunities, as well as to connect this entire system to the supplier's supply process and to the internal time for quality approvals.

 

6) Connecting the internal supply process with the planning process and internal support activities

The last stage seeks to introduce boards into the process and material picking when the request is in the approval or picking process (or if the material had not yet arrived at the company); the card for the pending material can be placed on a deviation management board. This triggers the escalation plan or help chain, which calls on people to work on analyzing and replenishing the material, changing the production sequence, if necessary, to avoid stopping the operators on the production lines.

It is also recommended to hold daily meetings with leadership to evaluate deviations and make decisions to improve supply; in addition, if necessary, it is recommended to review processes and procedures to improve the company's overall performance and results. This also helps begin working on the stability of material supply. Also based on this information and these deviations, it is possible to start addressing small deviations to avoid shortages or excess materials in the respective areas. For each pending product, an action plan must be defined to replenish the component, with tracking of the people responsible and the action completion dates.

With the evolution of technology, some companies have adopted AGVs, automated guided vehicles, to move materials between processes, and this may be a next improvement to be made if there is a need and economic feasibility for implementation, and from the moment basic stability has been achieved.

With the changes presented here, several companies have already seen significant productivity improvements in the manufacturing and logistics areas, because the production operator is no longer involved in fetching materials and always has all the components needed to produce, resulting in better inventory control throughout the plant and in the reduction of the respective deviations. With these improvements made and their level of connection, standardization and robustness, this process became a reference in Brazil and globally. These improvements were part of a larger project, which can be found comprehensively, with all the details and activities carried out, in the thesis “Systematization of a Lean Production implementation model”, written by Fumagali (2012).

In conclusion, the lean approach to business enables synchronization between supply, operations and demand, increasing productivity through the triggering of more frequent and standardized supply runs, and helps make this change gradually, obtaining the best productivity from the processes involved throughout this process of synchronization and volume increase. This work has presented in a practical way all these steps for carrying out this change in a structured way and obtaining the best result for the company. And at your company, have you also had an environment with the opportunity to synchronize the logistics process with customer demand? And how did you address this gap and improve your internal processes?

References:

“Making Materials Flow”, Rick Harris, Chris Harris and Earl Wilson, Lean Enterprise Institute, 2004.

“Systematization of a lean production implementation model based on DMAIC”, Adionil Jose Fumagali Junior, 2012, Doctoral Thesis, Unicamp.