UNIVERSITY OF GRONINGEN
FACULTY OF ECONOMICS AND BUSINESS
Lean Dashboard Model:
a case study in
European plastic pipe and fitting industry
Author Junpeng Wu Student number: 2069407 E-mail: junpeng.wu1988@gmail.com Sumatrastraat 34 8022 PL Zwolle The Netherlands Wavin Netherlands
Supervisor: Egbert-Jan Van Der Veen Purchasing manager
E-mail: jan.van.der.veen@wavin.nl J.C Kellerlaan 3
7772 SG Hardenberg The Netherlands
University of Groningen – Faculty of Business Administration Master: Operations and Supply Chains
Supervisor: Dr. X. (Stuart, Xiang) Zhu E-mail: x.zhu@rug.nl
Co-assessor: Dr. ir. H. (Hen) van de Water E-mail: h.van.de.water@rug.nl
Netelbosje 2
Preface
After five months of work, I am able to present you this master thesis which I performed at Wavin in Hardenberg. Between April 2011 and August 2011, I was granted the opportunity to join Total Cost Investigation project and build up a lean dashboard model to visualize waste in supplier’s production line and supply chain.
When I was doing this research in Wavin, I received help from my supervisors and my colleagues. I could say that it could not be accomplished without the help from these people. Therefore, I would like to take some time to thank them.
First of all I would like to thank Wavin Netherlands and all the employees who supported me throughout this research. My supervisor at Wavin, Egbert-Jan Van Der Veen, not only offered me this chance to apply my knowledge and education into practice, but also introduced me how western company operates and its business culture. Moreover, Jos Hens, an experienced consultant, opened my eyes in identifying waste. Finally, I would like to say thank you for companies that agreed to share their knowledge with me.
Furthermore, I would like to thank both the supervisors and the co-assessor from the University of Groningen for their assistances and supports during this research. My supervisor, Dr. Xiang Zhu, provided me with useful feedback of literature and the direction of my research. Co-assessor Prof. Dr. van Water found the time to provide assistance and to monitor the progress of this research. It was a great opportunity and experience for me to perform this research. This was a challenging experience, but at the end of the process I can honestly say I have learned a lot.
Management Summary
In the last several years, lean production that concentrates on individual firm is very popular. There are a series of lean tools to help managers or value engineers to identify waste in production line. However, no one can escape from globalization and internationalization of business in the 21st century. Competition now is between supply chain and supply chain rather than company and company. Purchasing managers confront with a couple of challenges, how to make international purchasing strategy, how to sustain the highest quality standards, and how to reduce costs and best add value to products and services. In other words, companies not only improve themselves, but also they need to help their suppliers optimize their production lines. Wavin, a leading plastic company in Europe, has to face challenges in business which is adding pressure on their sale prices and profit margins. One of the biggest business challenges is the increasing price of raw material and energy cost which takes almost 70% of the total costs. In order to maximize profit margin and add value to Wavin’s supply chain, Wavin started to drive cost leadership through complexity reduction and a lean and sustainable manufacturing and supply chain footprint. Total Cost Investigation (TCI) is one of these projects, which focuses on identifying ‘waste’ in supplier’s production line and supply chain and then eliminate them. Based on the objective of the TCI, the objective of this research is defined as following:
“The design of a lean dashboard mode is used to show details of waste in supplier’s production process and supply chain and reflect opportunities for improvements.”
This lean dashboard model originates from a cost model that was developed by Breukelen (1996), but has since then been further elaborated. More specifically, based on the theory that "value" is defined as any action or process that a customer would be willing to pay for, this lean dashboard model shows details of waste in supplier’s production line and supply chain by comparing target costs and actual costs. Target costs are defined by customer and actual costs are defined by producer.
The main contributions of this lean dashboard model is that managers can analyze the root causes of waste by exploring relevant and timely information from multiple perspectives and at various levels of detail. Furthermore, it helps managers monitor improving processes and activities using metrics of business performance that trigger alerts when potential problems arise. Last but not least, it makes it easy to manage people and processes to improve decisions, optimize
Table of Contents
1 Introduction ... 1
2 Theoretical Framework ... 3
2.1 Cost Model ... 3
2.2 Value Engineering ... 4
2.3 Lean Supply Chain and Value Stream Map ... 5
2.4 Performance Dashboards ... 6
2.5 Summary ... 7
3 The Case Study: Wavin Netherlands ... 8
3.1 Introduction of Wavin ... 8
3.2 History of Wavin ... 9
3.3 Company Strategy of Wavin ... 9
3.4 Introduction of Total Cost Investigation ... 11
3.5 Summary ... 12
4 Research Methodology ... 13
4.1 Problem Statement ... 13
4.2 Research Framework ... 14
4.3 Summary ... 17
5 Lean Dashboard Designing ... 18
5.1 Specifications for the Lean Dashboard ... 18
5.2 Structure of the Lean Dashboard ... 19
5.3 Costs Elements of the Lean Dashboard ... 21
5.4 Operating Details ... 25
5.5 Value Stream Map ... 31
5.6 Summary ... 31
6 Implementation and Evaluation of the Lean Dashboard ... 32
6.1 Implementation of the Lean Dashboard ... 32
6.2 Evaluation of the lean dashboard ... 34
6.3 Summary ... 38
References ... 41
Appendix I: Information Check List ... 45
Appendix II: Guideline on VSM ... 50
List of Figures
Figure 1: Cost Model ... 3
Figure 2: Production sites of Wavin Group ... 8
Figure 3: Map of the production sites of Wavin Group ... 9
Figure 4: Benefits of TCI projects ... 12
Figure 5: Model Designing Procedures ... 14
Figure 6: the Structure of the lean dashboard ... 20
Figure 7: Layout of the summarized graphical view ... 21
Figure 8: Layout of the multidimensional view ... 21
Figure 9: Structure of Material Costs sheet ... 22
Figure 10: KPIs for the Lean Dashboard ... 22
Figure 11: Material Costs ... 23
Figure 12: Labor Costs ... 25
Figure 13: Operating Costs ... 26
Figure 14: Process KPIs ... 28
Figure 15: Inventory KPIs ... 29
Figure 16: Transport KPIs ... 30
Figure 17: Quality KPIs ... 30
Figure 18: Development and production engineering KPIs ... 31
Figure 19: Repair and maintenance KPIs ... 32
Figure 20: Preliminary version of the lean dashboard ... 33
Figure 21: Function Areas of the lean dashboard ... 33
Figure 22: A Multidimensional View ... 34
Figure 23: Material Costs Sheet ... 35
Figure 24: Labor Costs Sheet ... 36
Figure 25: Operating Costs Sheet ... 37
Figure 26: Operating Details ... 37
Figure 27: Value Stream Mapping ... 38
Figure 28: Implementation Plan ... 39
Figure 30: Details of Waste ... 43
Figure 31: Proportion of wastes ... 43
Figure 32: Improving Opportunity ... 44
Abbreviations
FAST: Functional Analysis Systems Technique NVA: Non-Value Added
JIT: Just-in-Time
TCI: Total Cost Investigation TPS: Toyota production system VA: Value Added
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1 Introduction
Nowadays, “lean” approach has been applied more frequently in manufacturing and supply chain management. The “Lean” concept was defined by Womack et al.(1990) on the basis of the observation of a fundamentally different supply and production system in the automobile sector which had been the catalyst for Toyota achieving sectorial competitive advantage. Then “Lean” was developed as a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for
elimination. Working from the perspective of the customer who consumes a product or service, "value" is defined as any action or process that a customer would be willing to pay for (Lean manufacturing, 2011).
In order to achieve lean production, it needs a multi-dimensional approach that encompasses a wide variety of management practices, including just-in-time, quality systems, work teams, cellular manufacturing, supplier management, etc. in an integrated system. The core thrust of lean production is that these practices can work synergistically to create a streamlined, high quality system that produces finished products at the pace of customer demand with little or no waste (Rachna Shah & Peter T. Ward, 2003).
A majority of articles on the topic of lean production system focus on the relationship between implementation of lean and performance. Most of these studies have focused on a single aspect of lean and its performance implications (e.g. Hackman and Wageman, 1995; Samson & Terziovski, 1999; McKone et al., 2001). Some studies also focus on how to use lean techniques and present a classification scheme to guide lean implementation (e.g. Ahmad et al. 2005, Melton 2005,
Radnor 2000, Cook and Rogowski 1996, and Billesbach 1994. Abdullah et al. 2002 and
Abdelmalek et al.2006). A few articles pay attention to how to visualize waste in production line and supply chain like value stream map (e.g. Rother and Shook, 1999). But only value stream map still cannot help managers monitor the production improving progress. Furthermore, how to visualize waste in supplier’s production line is still a problem. Thus, there is a need to build up a lean dashboard helps managers visualize waste in their supplier’s production line and supply chain.
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overall financial and operational control.The case study concerns a European plastic pipe and fitting industry, Wavin Netherlands. The company is considering a design of a lean dashboard model to do value engineering towards its strategic suppliers. Reasons for this are as followings: with the growing competition in plastic water pipe market and economic recession, Wavin has to face challenges in business which is adding pressure on their sale prices and profit margins. Though this model, Wavin visualizes supplier’s waste and help supplier eliminate it. By doing this, Wavin can obtain a lower purchase price. Suppliers, on the other hand, will benefit from increased productivity and lower
manufacturing costs. Moreover, the whole supply chain would be optimized, for waste can be eliminated. Wavin and its suppliers would gain more profit and market share from the increased competitiveness.
This paper is organized as follows. Chapter 2 is used to represent a theoretical reference
framework which provides information about different aspects relating to this research. Chapter 3 introduces the case company. Readers can acquire the organizational setting and business
processes of Wavin North-West Europe clearly in this chapter. Then the business environment and developments in the plastic water pipe industry is discussed in order to clarify on the initial motive relating to the lean dashboard model. Following that, a research framework and
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2 Theoretical Framework
The background information about the cost model, value engineering, lean supply chain and value stream map and performance dashboards are represented in this chapter. They play a key role in this research project. The goal of this chapter is to offer a theoretical reference framework of this research which provides readers more information about this topic.
2.1 Cost Model
Breukelen (1996) defined a cost model which is used to analyze cost structure of a product. This cost model consists of four parts, namely material costs, labor costs, operating costs and total costs, shown as follow Figure 1.
Figure 1: Cost Model
Input means material costs what suppliers have to purchase from market. It includes direct material, indirect material, energy, and service and so on. Labor costs mean all costs (wages, salaries, fringes benefits) of all employees involve in producing the products. They include direct labor and indirect labor. Direct labor is operating machine or working in the job floor, indirect labor who is working in the office like sales man, marketing, designer. Operating costs include all costs resulting from the investments such as buildings, equipment and stock. It consists of
investment’s interests, insurance and so on that what need to keep the factory running. Then total costs represent the value of supplier’s product. Based on this cost model, company and supplier can see the cost structure of a product. In general, most process factories have the same structure like what defined by Breukelen (1996). But for specifics like what kind of direct material would depend on factories.
In this paper, this cost model is used to analyze the cost structure of factories and help define KPIs for the lean dashboard. Through this model, managers or value engineers can identify waste and drill down to find out root causes of waste.
Input Operating Costs
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2.2 Value Engineering
Value engineering (VE) is synonymous, with the terms Value Analysis, and Value Management. VE is a management tool to achieve essential functions of a product, service or project with the lowest cost (Xueqing Zhang, 2009). The origin of value engineering (VE) can be traced back to the days of World War II when there was a material shortage problem in the manufacturing sector (Cheah, 2005). Although the main emphasis was not cost reduction, this came as a by-product. Initially named as value analysis by Miles himself, the program was designed to improve value without sacrificing intended functions on purpose (Younker, 2003). The value analysis technique was subsequently introduced into construction by the US Navy and the Army Corps of Engineers circa 1963 through the adoption of incentive provisions and sharing clauses in construction contracts (Zimmerman LW & Hart GD, 1982). Over time, the subject of VE embraced other tools such as the job plan, the Functional Analysis Systems Technique (FAST), and even methods to nurture creative thinking (e.g., the Delphi Method) (Cheah, 2005). Soon, the value methodology was used to improve the value of projects in government, the private sector, and the manufacturing the construction industries and value concepts spread worldwide (SAVE International Value Standard, 2007). In many ways, the inquiry of key functions furnished by a product or service system and the search for alternative solutions beyond mere cost cutting remain central to these different forms of implementation. The list of advantages often extends beyond functional improvements, cost reduction and creative solutions, since implementation of VE potentially leads to more effective teamwork and improved communication among
stakeholders.
The value methodology is a systematic process that follows the job plan. A value methodology is applied by a multidisciplinary team to improve the value of a project through the analysis of functions. The Job Plan consists of the following sequential phases.
1. Information Phase
The team reviews and defines the current conditions of the project and identifies the goals of the study.
2. Function Analysis Phase
The team defines the project functions using a two-word active verb/ measurable noun context. The team reviews and analyzes these functions to determine which need improvement,
elimination, or creation to meet the project’s goals. 3. Creative Phase
The team employs creative techniques to identify other ways to perform the project’s function(s). 4. Evaluation Phase
The team follows a structured evaluation process to select those ideas that offer the potential for value improvement while delivering the project’s function(s) and considering performance requirements and resource limits.
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The team develops the selected ideas into alternatives (or proposals) with a sufficient level of documentation to allow decision makers to determine if the alternative should be implemented. 6. Presentation PhaseThe team leader develops a report and/or presentation that documents and conveys the adequacy of the alternative(s) developed by the team and the associated value improvement opportunity. In this paper, the concept of value is used to define target costs. "Value" is defined as any action or process that a customer would be willing to pay for. Moreover, the job plan would be applied into the implementation plan for the lean dashboard.
2.3 Lean Supply Chain and Value Stream Map
The term “lean” means a series of activities or solutions to eliminate waste, reduce non-value added (NVA) operations, and improve the value added (VA) (H.M. Wee & Simon Wu, 2009). A value chain identifies activities, functions and business processes that have to be performed in the designing, producing, marketing, delivering and supporting a product or service (Quayle, 2006). The origins of Just-in-Time (JIT) management is closely associated with the Toyota Production System (TPS) and the work of Taiichi Ohno (Ohno, 1988) with a clear emphasis on eliminating excess, waste and unevenness in the supply chain. More recently lean manufacturing (Womack J. J., 1990) and lean thinking (Womack J. J., 1996) have demonstrated the broad potential of the elimination of waste in improving business performance. The “lean supply chain” identifies all types of waste in the value stream chain and seeks to eliminate them (Rother and Shook, 1999; Abdulmalek and Rajgopal, 2007), and this is a major strength of the lean production System (Womack et al., 1991).
“Waste” is defined as anything that interferes with the smooth flow of production (Macduffie and Helper, 1997). The eight wastes highlighted in TPS are overproduction, waiting, conveyance, over processing, excess inventory, movement, defects and unused employee creativity, and the biggest one being overproduction (Monden, 1998; Liker, 2004). The VSM is a lean supply chain tool used by TPS to identify between wasteful and necessary value-adding activities. The “lean supply chain” identifies all types of waste in the value stream chain and seeks to eliminate them (Rother and Shook, 1999; Abdulmalek and Rajgopal, 2007), and this is a major strength of the lean production System (Womack et al., 1991). The way Toyota uses VSM is different from the conventional thinking; they focus mainly on avoiding over production (Rother and Shook, 1999). VSM begins by listing all operations, and classifies them into VA and NVA. The VA activities are those that customers are willing to pay money for tangible goods or intangible functions. The NVA work includes the eight wastes of TPS.
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elimination, but also the status of their lead time in the supply chain from incoming parts to finished good delivery.2.4 Performance Dashboards
A performance dashboard is a dynamic management tool that is used by an organization to gauge performance and progress toward specific goals (Ventures, 2008). It provides timely data to the organization’s executives, managers, and employees, who use the performance dashboard to identify problems in real time and to manage people, decision making, and processes to optimize performance. Moreover, dashboards serve as a helpful tool in providing boards with consistent and up-to-date information on how the organization is progressing against its goals. While performance dashboards may resemble other data tracking mechanisms, dashboards tend to be more consistent, more frequently compiled, and more thoroughly integrated into the
organization’s work, providing information on a predictable schedule and in a consistent format. Also, it is important to note that while dashboards are used to track data, they are meant to be used primarily as management tools, rather than for accountability purposes. To this end, performance dashboards can streamline information collection and sharing, and, in turn,
streamline organizational planning. In other words, by tracking progress over time, the dashboard illuminates trends, cycles or outliers that can inform an organization of the key factors
influencing (or inhibiting) its success.
It is important to note that performance dashboards are only as effective as the structures that are in place to keep them populated and integrated into broader organizational strategy and activities. Overly complex or isolated dashboards will not inform – and may only confuse – the overall performance of any organization. However, organizations that create clear systems for
information collection and that promote a culture of using dashboards to drive decision making find that these tools have a significant positive impact on performance (Ventures, 2008). In short, what organizations really need is a performance dashboard that translates the
organization’s strategy into objectives, metrics, initiatives, and tasks customized to each group and individual in the organization (Eckerson, 2006).
As what Ventures (2008) defined, a performance dashboard provides three main sets of functionality. Briefly, a performance dashboard lets business people:
• Monitor critical business processes and activities using metrics of business performance that trigger alerts when potential problems arise.
• Analyze the root cause of problems by exploring relevant and timely information from multiple perspectives and at various levels of detail.
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In this paper, the concept of dashboard is used to combine all the information from supplier perspective and customer perspective and then provide managers or value engineers a clear view of waste.2.5 Summary
The concept of cost model is used as the structure of the lean dashboard model. Value
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3 The Case Study: Wavin Netherlands
This chapter is used to elaborate on the organizational context this case study. Through this way, readers are provided an overview of the organizational setting and business processes at Wavin. Following that, the motives, objectives and expected results of this case study can be found.
3.1 Introduction of Wavin
Wavin provides above and below ground solutions for hot & cold tap water, surface heating and cooling, soil and waste, rainwater management and last mile telecom. Its end-to-end solutions include consultation, design, implementation and after-sales service. Customers are building and civil wholesalers, plumbing merchants, civil contractors, housing developers, large installers, utility companies and municipalities. Wavin is a total solutions provider. By getting involved in a project early on, they help clients identify solutions that achieve the best long term result.
Working closely with municipalities, installers, real estate developers and architects Wavin has gained an extensive local knowledge throughout Europe. The company is committed to creating innovative products. Our goal is to achieve 20% of revenues from products less than five years old. In addition, profitability is increased through product rationalization and other operational improvements.
Wavin has offices in 26 European countries with manufacturing plants in 16 of those. Their company has a strong presence in the growth markets of Central and Eastern Europe. Via the Wavin Overseas network of agents and partners, Wavin products are also available in Asia, Africa, Latin America, the Middle East and North America. Wavin is present in most European countries and is organised in 4 geographic areas: see Figure 2 & 3.
North West Europe South West Europe Central & Eastern Europe South East Europe Netherlands Germany Belgium Denmark Norway Sweden Finland UK Ireland France Poland Czechia Russia Slovakia Ukraine Lithuania Estonia Latvia Belarus Italy Turkey Hungary Romania Croatia Bulgaria Serbia
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Figure 3: Map of the production sites of Wavin Group3.2 History of Wavin
In 1955, Wavin (a contraction of water and vinyl chloride) founded by Local Dutch water authority WMO. Late 1950’s, greenfield started ups in the Netherlands, Germany, Denmark and Ireland. In 1962, Royal Dutch Shell took 50% participation in Wavin. Geographical expansion into Western Europe (UK, France and beyond) happened in 1960s and started a period of diversification (packaging, films, bags, crates and profiles). In 1970’s, Wavin launched
Technology and Innovation project and worked as Group development organization. At the same time, Wavin Overseas was established as the central export organization. In 1980’s, Wavin paid more emphasis on systems and "above ground" applications and 25% of company sales outside pipe systems. Re-alignment of activities took place in 1990’s, focusing on core competence: plastic pipe systems and established operations in Eastern Europe. Nowadays, Wavin has achieved a number of successful bolt-on acquisitions in Northern and Eastern Europe and tool expansions in Water Management and Surface Heating &Cooling segments.
3.3 Company Strategy of Wavin
The ‘Wavin 2015’ strategy update was launched in October 2010. This strategy brings the
company back on the path to sustainable and profitable growth and will enable Wavin to reap the full benefits once the markets return to more normal levels.
Market Leadership
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countries and invest (both organically and through acquisitions) in other European countries where leadership can be achieved. The ultimate goal is to achieve number one or two market positions in all markets in which we operate.Portfolio and Segmentation
Wavin intends to offer a complete product portfolio to our customers and increase their presence in non-residential building markets, with a strong focus on sustainable systems and solutions. They also aim to increase revenue in key target segments. By 2015, 40% of Wavin’s total revenue should originate from the Water Management and Hot & Cold (including Surface Heating & Cooling) segments.
Operational Excellence
Wavin aims to drive service and cost leadership through complexity reduction and a lean and sustainable manufacturing and supply chain footprint. Their benchmark is to have 95% of orders realized in time and in full. Between 2008 and 2015 the company’s carbon footprint should be reduced by 20%.
Innovation
Wavin will focus on and accelerate the implementation of European innovation projects. The innovation rate target – the percentage of revenue from products that have been on the market for less than five years – has been raised; it should be 20% in 2015.
People
Wavin wants to stimulate continuous improvement and drive individual and team development. Through this strategy we want to achieve tow targets, namely revenue and margin. As for
revenue, Wavin aims to grow organically at least 2% ahead of the European construction industry. Revenue development will be driven our presence in emerging markets, ongoing substitution of traditional materials by plastics, and the increasing need for energy efficiency of buildings and water management solutions. Regarding margin, Wavin aims to return to pre-crisis margins despite lower revenue levels, reflecting the benefits of strong local market positions, innovation and structural cost savings. Financial leverage Wavin will reduce the leverage ratio to an average ratio of 2.0 over the year.
Products
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3.4 Introduction of Total Cost Investigation
With the purpose of providing readers a clear view about the motives, objectives and expected products of this case, this part is to explain the reasons why Wavin started the TCI project and its objective.
Motivation
With the growing competition in plastic water pipe market and economic recession, Wavin, a leading plastic company in Europe, has to face challenges in business which is adding pressure on their sale prices and profit margins. One of the biggest business challenges is the increasing price of raw material and energy cost which takes almost 70% of their total cost. In order to expand profit margin and add value to Wavin’s supply chain, Wavin starts to drive cost leadership through complexity reduction and a lean and sustainable manufacturing and supply chain footprint.
Total Cost Investigation (TCI) is one of these projects, which focuses on identifying ‘waste’ in supplier’s production line and supply chain and then eliminate it. Through this way, Wavin could obtain lower purchase price. Suppliers, on the other hand, will benefit from increased
productivity and lower manufacturing cost. Moreover, the whole supply chain would be optimized, for waste in supply chain would be eliminated. Wavin and its suppliers would gain more profit from the increasing competitiveness. The following paragraph is to explain the reasons why Wavin launched the TCI project from external and internal perspectives.
External perspective: Competitiveness of plastic pipe industry
The fierce competition and economy recession make Wavin profit margin decrease dramatically. In order to hold its market proportion and its leading position, Wavin has to improve production effectiveness and efficiency. However, that is not enough to reinforce Wavin’s position, for the competition today is rather competition between supply chains than just between companies. Therefore, Wavin needs to cooperate with its supplier to improve the whole value chain, to reduce the total costs and to satisfy end customers.
External perspective: Increasing price of raw material
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Internal perspective: Operational Excellence
Wavin’s strategy aims to drive service and cost leadership through complexity reduction and a lean and sustainable manufacturing and supply chain footprint. Moreover, the TCI model is a powerful tool to identify waste which can help improve suppliers’ production effectiveness and efficiency.
Internal perspective: Potential Benefits
The implementation of TCI models can illustrate supplier where they need to improve, how many wastes they need to eliminate, and what categories of the wastes are. In Wavin’s perspective, with the improvement of supplier’s production effectiveness and efficiency, Wavin can obtain lower purchase price and closer strategic partnership with its supplier. Figure 4 as following shows benefits of supplier and Wavin.
Supplier Wavin
▲Efficient production: ▼Production costs
▼Purchase Price
▲Profit other customers
▲Partnership Wavin
Figure 4: Benefits of TCI projects
3.5 Summary
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4 Research Methodology
In the first section, the problem statement for this research can be found. The details of research process and model designing process would be represented in following part.
4.1 Problem Statement
Total Cost Investigation (TCI) is an integral diagnosis instrument for the manufacturing unit, which is used to identify waste in strategic supplier’s production line. Through the TCI models, waste hiding in production line and supply chain will be identified by categories and then a plan used to improve production line and supply chain would be launched based on the analysis of the TCI models.
The first model is used to select strategic suppliers to join value engineering program. The criteria are as followings:
Company and suppliers must view each other as strategic partner;
Suppliers must be the supplier of one of most valuable products for company; Suppliers must be the supplier of one of the most promising products for company; Then Wavin developed a cost model which is used to analyze supplier’s cost structure. This cost model consists of four parts, namely material cost, labor cost, operation cost and total cost.
Material costs include direct material, indirect material, energy, service and so on. In other words, material is what suppliers have to purchase from market. Labor costs means direct labor that is operating machine or working in the job floor, indirect labor who is working in the office like sales man, marketing, designer. Operating costs consists of investment’s interests, insurance and so on that what need to keep the factory running. Then total costs represent the value of
supplier’s product. From the cost model, company can see what activity adds value and what activity is non-value-added. Based on this cost model, company and supplier can see where they need to improve and where they can eliminate waste.
The TCI models, until now, have set up two models. However, these two models still cannot answer managers or value engineers’ questions as followings:
Where is waste?
How many wastes are there?
What kinds of wastes does the supplier have? Are there any opportunities to eliminate waste?
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“The design of a lean dashboard mode is used to show details of waste in supplier’s production process and supply chain and reflect opportunities for improvements.”
4.2 Research Framework
Design process model is used as model design methodology. Design process model aims at reflecting the methodology and characteristics of the engineering design process and propose strategies for the designers about how to proceed in the design procedure (A. Erden, 2007). One of the most important models in the engineering design process in this category is the systematic approach (Pahl & Beitz, 1988) in which the flow of work during the design process is divided into four main steps as follows;
1. Clarification of the task
Collection of information about the requirements and about the constraints
2. Conceptual design
Establishment of functional structures, the search for suitable solution principles and their combinations into concept variants/design alternatives
3. Embodiment design
Development of layouts and forms for the concepts, evaluation of them, determination of a preliminary layout, optimization, definite layout, determination of production
procedures
4. Detail design
Finalization of design
Based on A. Erden (2007) theory and Coroxton et al. (2001), there are four phases to build up the lean dashboard model, namely specification, Designing, Adapt and Evaluate. See Figure 5 as following.
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Specification
The goal of this research is to slove a problem by adapting existing tools or by using existing tools in novel ways (Holmstrom and Ketokivi, 2009). In order to accomplish tasks of identifying waste effectively, this phase focuses on gathering information about the organization and goals. This phase has been divided into three parts. The first one is specification of the research objective. Specifing the lean dashboard model context is the second part. In the third part, the research scope of this research has been defined.
Specification of the research objective
In order to establish a good TCI mdoel, the choice is made to collect information organization wide. First of all, by discussing with purchasing manager, the information about the TCI objectives, its goals and challenges has been collected. Then a discussion with value engineers would help gather all the processes which are related to the TCI and measurements. Last but not least, an interview with suppliers can help understand their production line and supply chain. Above interviews are used to formalate a general insigt about the current condition of the TCI project and help understand production line and all processes related to the TCI project.
Specification of the research context
Research of the context plays an important role in facilitating the performance of the lean dashboard. For example, who is the end user of the lean dashboard model? The research context would be defined by interview key managers at Wavin and supplier.
Specification of the research scope
This lean dashboard is originally developed for Wavin to evaluate its strategic suppliers. The lean dashboard can be applied for other process factories as well, for most process factories have the same cost structure. The objective of the TCI project is to identify waste in Wavin’s supplier’s production line and supply chain in order to add value to the whole supply chain. Based on the objective of the TCI project, this research focuses on how to identify waste and how to reflect the details of waste.
Designing
Based on the book of Excel® Dashboards & Reports (Michael Alexander & John Walkenbach, 2010), there are three most important things need to be done before designing a dashboard, namely establish the audience, define the performance measures and determine the needs for drill down details.
Establish audience
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Define lean measuresIn order to reflect details of waste in supplier’s production line and supply chain, this lean
dashboard is designed around a set of measures called Key Performance Indicators (KPIs). A KPI is an indicator of the level of performance of a task deemed to be essential to daily operations or processes (Michael Alexander and John Walkenbach, 2010). The idea around a KPI is that it will reveal waste that need for attention. These KPIs should be able to answer questions mentioned in model criteria. This lean dashboard is based on the cost model developed by Breukelen (1996) so that KPIs are defined according to Breukelen’s book.
Determine the needs for drill down details
With the purpose of identifying waste, this lean dashboard provides drill-down features that allow users to click through to the details of a specific measure. To most users, a drill-down feature means the ability to get a raw data table supporting the measures shown on the dashboard (Michael Alexander and John Walkenbach, 2010). Therefore, a clear understanding of the types of drill downs users have in mind would help satisfy users.
Adaptation
The implementation of the solution design in an empirical context is the only method for evaluating the design because the refinement is in large part based on cooptation of unitended consequences (Denntt, 2003). This phase is used to adapt and improve the developed models. Feedbacks from users about expected and unexpected outcomes of this lean dashboard was collected in this stage. Based on the analysis of feedback and expected and unexpected results, this lean dashboard model would be improved. This adatation would be performed as followings:
Filling the lean dashboard with real data
The lean dashboard would be filled with real data gathered from pilot supplier. Disucssion & Feedback Collection
Purchase manager of Wavin, value engineers and managers from supplier side would get together to discuss the lean dashboard model.
Improvement
Based on feedbacks, the lean dashboard would be improved.
Evaluation
This section will be applied to review the lean dashboard with criteria which shows as followings. Through this way, designer can find out whether this model can satisfy user’s demands.
The model should display where waste is in supplier’s production process and supply
chain
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know where waste is in production line and supply chain. For example, the dashboard model of TCI can show managers or value engineers that there are some wastes in long waiting line so that experts can examine the root causes of long waiting line. Therefore, where wastes are in the production line can contribute to find out the root causes of waste and then take measures to eliminate wastes. To satisfy this criterion the following question should be answered: How can dashboard show where waste is?The model should show what categories of waste are
In order to find out the root causes of waste, managers or engineers have to know what kinds of wastes they are so that they can find a general orientation to identify the root causes of waste. For instance, if one waste is in the category of overproduction, experts can make a preliminary judgment that there is something wrong with the alignment of customer demand and production rate. Thus, it makes much easier for experts to eliminate waste. To satisfy these criteria following questions should be answered: What categories of wastes are going to be displayed in the model? How do wastes define under these categories?
The model should reflect opportunities to improve supplier’s production line and supply
chain
With the purpose of identifying waste in supplier’s production process, the dashboard model needs to show gaps between actual price and target price. Through this way, managers or value engineers can see how much they can improve the supply chain. To satisfy these criteria the
following question should be answered: How do possible opportunities of improvement calculate? The model should show order of what need to improve and visualize in what field supplier
has to pay more attention
The model is supposed to encompass a function which displays the order of what need to be improved and illustrates where supplier should pay more attention. In order to realize this function, following questions have to be solved: Which is the most important for customer? Which can exert the largest effect on reducing production cost?
4.3 Summary
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5 Lean Dashboard Designing
In this chapter, the requirements, functions and structure of the lean dashboard can be found. Following that an introduction of costs elements of lean dashboard and how the lean dashboard works are shown. In the final part, the layout of the lean dashboard will be illustrated.
5.1 Specifications for the Lean Dashboard
A lean dashboard illustrates an overview of costs and waste of a certain product can contribute to the effective management of organizations. The lean dashboard is built up in order to answer following questions:
1) What’s the cost structure of supplier’s product? 2) Where are the wastes?
3) How many wastes are there? 4) What kinds of wastes they are?
5) Are there any opportunities to eliminate waste?
Based on the requirements of the lean dashboard, it is designed as three applications in one, woven together in a seamless fashion:
1) A monitoring application 2) An analysis application 3) A management application
The monitoring application conveys critical information at a glance using timely and relevant data, usually with graphical elements; the analysis application lets users analyze and explore performance data across multiple dimensions and at different levels of detail to get at the root cause of problems and issues; the management application fosters communication among executives, managers, and staff and gives executives continuous feedback across a range of critical activities, enabling them to “steer” their organizations in the right direction.
Methodology for the lean dashboard
The methodology of the lean dashboard is to identify waste by comparing actual costs and target costs. Supplier-based view defines the actual costs. Customer-based view defines the target costs. The supplier-based view means to calculate the manufacturing costs and supply chain costs according to supplier’s actual production status. It means to gather data or relevant information by interviewing key person and observing in its production line. And then use these figures to fulfill the lean dashboard.
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Customer-based view means Wavin calculates that cost based on Wavin’s knowledge, Wavin’s needs and basic local market information such as the average labor cost, raw material price, and interest rate etc. The most important that Wavin defines what activity adds value or not.Finally, there would be two different costs of a product, one called actual costs means cost calculated from supplier’s perspective, the other one is target price representing the cost from Wavin’s perspective, a customer’s perspective. By comparing these two costs, managers can see where the waste is, how many there are and opportunities for improvements.
5.2 Structure of the Lean Dashboard
When looking at the data that lean dashboard displays, users can navigate through three layers or views of information: see Figure 6.
1) A summarized graphical view 2) A multidimensional view 3) A detailed or operational view
Figure 6: the Structure of the lean dashboard Lean
Dashboard
Analysis Layer
Material Costs Labor Costs Operating
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Users can access the lean dashboard at any of these layers, but most start at the summarized graphical view and drill down along fairly predefined pathways through the multidimensional and detailed views.In the summarized graphical view, those questions of the TCI are answered as following Figure 7.
Figure 7: Layout of the summarized graphical view
In the multidimensional view, details of calculation and data are illustrated here. See Figure 8.
Figure 8: Layout of the multidimensional view
There are five sheets that are used to illustrate details of material costs, labor costs, operating costs, operating details and value stream map respectively. In general, material costs sheet, labor costs sheet, operating costs sheet and operating details are in the same structure. See Figure 9 as
What’s the cost structure of
supplier’s product?
Are there any opportunities to eliminate waste?
What’s the status of gaps between target and actual? &
Where do wastes exist?
How many wastes are there?
What kinds of wastes they are?
Analysis of actual Vs. Target price
Actual Price Calculation
Target Price Calculation
Remarks, comment
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following.Figure 9: Structure of Material Costs sheet Value stream map is used to show where waste is in production line.
5.3 Costs Elements of the Lean Dashboard
Based on Costs Model (Breukelen, 1996) and literatures, there are three main metrics for Total Cost Investigation Dashboard which represents what comprises the total cost. See as Figure 10.
Figure 10: KPIs for the Lean Dashboard
Material Costs
Breukelen (1996) defined material costs as what a factory needs to purchase from outside. This can be divided into several “out of pocket”: see Figure 11.
Details of material costs Remarks
Notes Comments
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Direct material: all material directly associated ending up in final products. For example,ethylene and (poly) propylene.
Indirect material: all other material used, such as office supplies, suppliers for repair and maintenance.
Energy: all energy costs (water, electricity, gas) that necessary to keep the organization (factory as well as offices) running.
Other costs: all costs not include yet.
Figure 11: Material Costs
Labor Costs
Labor Costs in Breukelen (1996) means all costs (wages, salaries, fringes benefits) of all employees involved in producing the products. For details, labor costs include indirect labor, direct labor and hired-in. (See Figure 12)
Direct labor is who is working in the factory or beside the production line, such as machine operator.
Indirect labor is who is working in the office, such manager, sales, marketing, and so on. Hired-in means temporary workers.
Under each costs element, there are some items that are used to calculate or record relevant figures or facts. They are volume, cost (per hour) and activities.
Volume means how many hours does a direct labor need to use to produce one product. Cost (per hour) represents the labor cost.
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value” and “added costs” groups can be an important first step in finding the directions for improvement programs.Usually there are following activities in direct labor. This also depends on actual situation. Operating: Direct labor operates the machine to produce products.
Transporting: Direct labor operate transport machine to remove products or prepare materials.
Maintenance: Direct labor prepares the machine or does maintenance.
As for indirect labor, it is much more difficult than in the case of direct labor, since there are no quantitative standards regarding indirect functions and no clear job descriptions. However, it is possible to find out where indirect employees are working on, to find the “drivers” for their activities (Breukelen, 1996). All activities are depending on the actual situation. As usual, these activities can be found.
Product diversity: In assembly industry, half of the total number of indirect labor is apparently necessary to manage the diversity (Breukelen, 1996).
Process control: Unlike assembly industry, more than half of all indirect labor in process organization is related to process control (Breukelen, 1996).
Fixed “stuff” : activities like callings, send & receive orders
Process improvement: activities are focusing on how to improve production efficiency and effectiveness.
Mechanization: activities like marketing, sale.
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Figure 12: Labor CostsOperating Costs
Based on the definition of Breukelen’s book (1996), operating costs include all costs resulting from the investments such as buildings, equipment and stock. For details, buildings mean
production sites, warehousing, staff offices and production-related utilities. They are discounting to present value and calculating how much per product should burden. Equipment means
machines, transporting car and so on. As for stock, there are three categories of stock, one is WIP, one is finished products, and another one is material. The cost of stock also includes overhead. (See Figure 13)
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Figure 13: Operating Costs5.4 Operating Details
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and production engineering, and repair and maintenance.Process
The item process is used to reflect the status of production line. Based on Lean for the process
industries (King, 2009), following the KIPs can effectively represent the condition of production
line. See Figure 14.
1) Cycle Time This is the time between releases of arts of batches of material from a step in the process.
2) Takt The amount of time that a step in the process has to produce one unit of production so that customer demand can be fully satisfied.
3) Utilization This is a measure of how fully utilized a process step is and provides a key to how close to a bottleneck or capacity constraint it may be. Ti is
calculated as cycle time divided by takt time, or takt rate divided by effective capacity.
4) Lead time The time it takes for one part, one batch, one roll, one tote, or one lot to complete that process step, from the time the material enters the process step until it leaves.
5) Yield The percentage of the material entering the step that leaves with all properties in acceptable ranges for all downstream processing.
6) Reliability The percentage of time that the equipment is not down because of equipment failure.
7) Uptime A metric that encompasses all forms of time lost; reliability downtime, PMs, yield losses, setup or campaign changeover time, rate reductions, and so on. It similar to OEE (overall equipment effectiveness).
8) Batch size The amount of material produced as a single lot or batch.
9) EPEI A lean term for “every part, every interval”. It is the time span over which all, or almost all, product type are made.
10) C/O Time Changeover time, the time to change from one product type to another, including the time to get to full rate on the new product and get all properties within quality specifications.
11) C/O losses The amount of material lost in a product change. This is usually the amount of off-spec product made getting properties back within spec after the mechanical changeover is complete.
12) Available Time
The total time this process step is scheduled to run.
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Inventory
The inventory item is used to show the relevant information about all inventories, including raw material, WIP (work in process), and finished product inventory. See Figure 15.
Average Inventory
The average total amount of inventory of all SKUs stored at that position in the process flow. In the process industries, an inventory location may be shared by WIP from several points in the process, so what should be shown here is only tine inventory that that stage of production (King, 2009). Days of
supply
This is the inventory volume converted to a number of days. This can be calculated using a variation of Little’s law: Days of supply=WIP/Throughput (King, 2009).
Figure 15: Inventory KPIs
Transport
The transport item is used to represent all transportation steps, including deliveries from suppliers of the most significant raw materials, and deliveries to warehouses, distribution centers, and customers. See Figure16.
Delivery frequency
How often shipments are received; how often shipments to warehouses and customers are made.
Lot size The average quantity shipped or received. This should be listed in the same units used in order and production data, not as a number of truckloads or lascars.
Transport time The average time from shipment to receipt.
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Figure 16: Transport KPIsQuality
In this item, user can find information about quality such as first time pass rate and customer return rate. Therefore, user can know whether the quality is the root causes of waste. Figure17.
Figure 17: Quality KPIs
Development and production engineering
In this item, user can evaluate the developing capability of supplier’s production line and supply chain. One factor is development lead time means the how long the supplier needs to develop a new product. This is used to reflect its developing capability. The other factor in this item is that development activities. In this factor, user can know the details of supplier’s development research. For example, these activities are including factory support, new features for existing products, new products, quality assurance, cost reduction, engineering changes, and
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Figure 18: Development and production engineering KPIsRepair and maintenance
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Figure 19: Repair and maintenance KPIs5.5 Value Stream Map
As what was defined on the website (Value Stream Mapping How to Guide, 2011), the value stream mapping is a tool commonly used in lean continuous improvement programs to help understand and improve the material and information flow within organizations. Value Stream Mapping borne out of lean ideology captures and presents the whole process from end to end in a method that is easy to understand by those working the process - it captures the current issues and presents a realistic picture.With the help of value stream map, uses can easily formulate and define the graphic format and future state of its supply chain and production line. The method encourages a team approach and through the capture of performance measurement data provides a mechanism to constructively critique activity. Participants in the activity are encouraged to suggest improvements and contribute towards and implement an action plan.
As with any lean management toolset the principle aim of Value Stream Mapping is to improve processes. This is achieved by highlighting areas of waste within a process and therefore enables businesses to eliminate these activities. Value Stream Mapping also has the benefit of
categorizing process activity into three main areas - value add, Non value add (but necessary) and waste. Therefore, managers or value engineers can view the waste directly and know where the waste is and find a way to eliminate waste.While value stream mapping isn’t overly complicated it does benefit from some preplanning – it is important that for example a house style is
developed using common graphics for use in the diagrams so that everyone participating does so in a common language.
5.6 Summary
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6 Implementation and Evaluation of the Lean Dashboard
In this chapter, readers can find the implementation plan and evaluation of the lean dashboard model. This implementation plan and evaluation procedures can not only be implemented at Wavin, but also can be applied into other process industries, for they are based on value standard and further developed to adapt to the lean dashboard.
6.1 Implementation of the Lean Dashboard
Based on value standard (SAVE International Value Standard, 2007), the implementation plan can be divided into three parts, namely pre-workshop, workshop, and post workshop. See Figure 28.
Figure 28: Implementation Plan
Pre workshop
The purpose of the pre workshop is to plan and organize the value study. The fundamental question of this section is as following:
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The expected outcomes of phase:A clear understanding of what senior management needs to have addressed, What the strategic priorities are, and
How improvement will increase organizational value The activities of this phase:
Obtain senior management concurrence and support of the job plan, roles, and
responsibilities.
Develop the scope and objectives for the Value Study Obtain project data and information
Obtain key documents such as scope of work definition, drawings, specifications, reports,
and project estimate
Identify and prioritize strategic issues of concern Determine the scope and objectives of the study Develop the study schedule
Undertake competitive benchmarking analyses Identify Value Team members
Obtain commitment from the selected team members to achieve the project objectives Gather appropriate customer/user information about the project
If appropriate, invite suppliers, customers, or stakeholders to participate in the Value
Study
Distribute information to team members for review
Develop informational models and diagrams about the project Determine the study dates, times, location and other logical needs
Clearly define, with senior management, the requirements for a successful Value Study
results Workshop
The workshop phase consists of the following sequential phases.
1. Information Phase
The TCI team reviews and defines the current conditions of the project and identifies the goals of the study. The TCI team will ask the pilot supplier to prepare data or information according to the information list. Based on supplier’s data or relevant information, the TCI team defines the actual costs and fills the lean dashboard. See Appendix 1.
2. Function Analysis Phase
The TCI team defines the project functions using a two-word active verb/ measurable noun context. By talking to the key manage and view relevant information provided by the pilot
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guideline and check list (Appendix II), material costs sheet, labor costs sheet, operating costs sheet and then define the actual costs. In this phase, the TCI team defines the target costs according to whether the activity adds value for Wavin.3. Waste Identify Phase
By contrasting the actual costs and the target costs, the TCI team reviews and analyzes these functions to determine which need improvement, elimination, or creation to meet the project’s goals.
4. Evaluation Phase
The TCI team follows a structured evaluation process to select those ideas that offer the potential for value improvement while delivering the project’s function(s) and considering performance requirements and resource limits. Moreover, the TCI team has to find out the root causes of waste in this phase.
5. Development Phase
The TCI team drills down and find out the root causes of these wastes and then develop an appropriate development plan.
6. Presentation Phase
The TCI team leader develops a report and/or presentation that documents and conveys the development plan and the associated value improvement opportunity.
Post Workshop
The purpose of this part is to ensure accepted development plans are implemented and that the benefits projected by the value study have been realized. In order to achieve this part, following fundamental question have to be answered:
What are the program changes, and how will the project team manage them?
Following delivery of the value study preliminary report, management and the project team should consider and agree upon the value alternatives to be implemented and then how and by when the implementation will occur. For instances, additional study and information may be required. Implementation of alternatives is the responsibility of management with assistance from the project and value teams.
6.2 Evaluation of the lean dashboard
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validating and verifying that this dashboard meets the requirements that guided its design and development; works as expected; and can be implemented with the same characteristics.Criteria of the lean dashboard model
The model should display where waste is in supplier’s production process and supply chain
Users can find answer to this question in the summarized graphical view. See as following Figure 29.
Material Costs Status
1) Direct material 2) Indirect material 3) Energy 4) Service Labor Costs 1) Direct labor 2) Indirect labor 3) Hired-in Operating Costs 1) Buildings 2) Stock 3) Equipment
███ Target Price (Per unit) ███Actual Price (Per unit)
0 0.5 1 1.5 2 2.5 3 3.5 4 0 0.0005 0.001 0.0015 0.002 0.0025 0.003 0.0035 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0 0.1 0.2 0.3 0.4 0.5 0 0.1 0.2 0.3 0.4 0.5 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 0 0.0002 0.0004 0.0006 0.0008 0.001 0.0012 0 0.02 0.04 0.06 0.08 0.1 0.12 0 0.02 0.04 0.06 0.08 0.1 0.12 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6
Figure 29: the summarized graphical view
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wastes there are.The model should show what categories of waste are
Figure 30: Details of Waste
From this figure 30, user can tell what kinds of waste are there in supplier’s production line and supply chain easily. Moreover, the “red” bar represents the target waste which means the supplier has to improve its supply chain to achieve the target waste within a certain years.
Figure 31: Proportion of wastes
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The model should reflect opportunities to improve supplier’s production process
Figure 32: Improving Opportunity
From Figure 32, users can find answer with a glance from this graphic that how much the supplier need to improve their production line and supply chain. What is more, user can find out where the waste is.
The model should show the cost structure of the supplier’s product.
From following Figure 33, users can see that the structure of supplier’s product and the target costs and actual costs. From this graphic, users can get a general idea about the details of the waste.
Elements of Product Price (per unit)
Actual Target Material Costs € 3.6670 € 3.6663 Labour Costs € 1.5559 € 1.0425 Operating Costs € 2.0577 € 1.7037 Total € 7.2807 € 6.4124 Throughput Valume 130000 Saving (Per Unit) € 0.87
50.37% 21.37%
28.26%
Elements of Pruchase Price (per unit) Actual vision
Material Costs
Labour Costs
Operating Costs
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6.3 Summary
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7 Conclusions
The aim of the Total Cost Investigation project is to improve supplier’s production efficiency and effectiveness by using a lean dashboard to visualize waste in supplier’s production line and supply chain. However, two previous models cannot accomplish this mission. Selection model focuses on how to select potential and strategic suppliers to do TCI. Cost model contributes to analyze the cost elements of supplier’s product. The questions concerning where the waste is, what categories of waste are and how many wastes can be eliminated still cannot be answered. Therefore, there is a need to develop a lean dashboard model to complete the TCI model.
Based on discussions with the principal purchasing manager of Wavin NWE and the objective of the TCI, this research objective has been developed as following:
“The design of a dashboard model is to show details of waste in supplier’s production process and supply chain and reflect opportunities for improvements.”
In order to achieve this objective, this research question can be spilt to several sub-research questions:
Where is waste?
How many wastes are there?
What kinds of wastes does the supplier have? Are there any opportunities to eliminate waste?
On the basis of these sub-questions, the criteria of the lean dashboard have been developed, which is used to evaluate the lean dashboard. This study mainly uses software development method and in-depth interview to investigate and analyze supplier’s data. In order to facilitate data gathering and sharing, this lean dashboard is developed on Microsoft Office 2007 EXCEL. This lean dashboard model can be divided into three layers: a summarized graphical view; a multi-dimensional view; a detailed or operational view. User can find answers for above
questions in the summarized graphic view layer. If users want to drill down and find out the root causes of the waste, they can find out answers in a detailed or operational view layer.
Because most factories in process industry have the similar costs structure, this lean dashboard model can be applied into other factories. It can contribute to facilitate and guide lean
implementations by visualizing waste in production line and supply chain and show opportunities for improvements. It also can help the process industry eliminate waste, maintain better inventory control, improve product quality, and obtain better overall financial and operational control.
Recommendation
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It is common sense that nothing could be done perfectly at once. This lean dashboard model needs to be improved and updated based on specific needs. The lean dashboard could serve Wavin and its strategic suppliers better and better, if it can be improved continuously. In fact, this dashboard model also can be applied into other factories in process industry because mostfactories have the common cost structure. The implementation of the lean dashboard should base on the specific needs of actual situations.
Pay attention to cultivate the “lean” culture in supplier’s company
Lean culture is one of the four components of a successful lean implementation. The components are: Lean Planning, Lean Concepts, Lean Tools and Lean Culture. Policy Deployment, which connects an organization’s goals to the Lean Tools, is part of the Lean Planning activity. It is important to note that this order of component implementation may seem incorrect to current lean practitioners. This results from our tendency to jump to the lean tools first. However, the road map to using lean as a system and becoming world class starts with the end in mind – Lean Planning. Lean Planning ensures that we are not using lean as an add-on or appendage in our organization, but as the system to accomplish the organization’s goals.
All four of these components must be implemented to their fullest extent throughout the organization, in a timely manner, to be successful. Most organizations like to pick and choose what elements of lean they would like to implement. This is primarily because they do not understand that lean is a total system and represents a complete and comprehensive culture change in their organization. Lean represents a completely new way of managing the organization.
Limitation