Reducing set-up times at Van de Leur Bolsward

Reducing set-up times at Van de Leur

Bolsward

Reducing set-up times at Van de Leur Bolsward

Master Thesis

MSc Technology Management Author: Martine van der Pal Student number: 1647393 University of Groningen

Faculty of Economics and Business First Supervisor: Dr. M.P. Mobach Second Supervisor: Dr. G.C. Ruël Company: Van de Leur

Location: Bolsward

Executive summary

This graduating research is performed at the confectionary specialist Van de Leur in Bolsward that mainly produces vlarios. Due to changes in the sales environment, Van de Leur is forced to reduce the production costs to stay profitable in the new sales markets. Van de Leur wants to become a Lean Manufacturer. This research is focused on the reduction of set-up times, which is one of the contributors of the production costs. The set-up time is in the period of 2007-2009 increased with 73%, so this variable is eligible for reduction. The goal of this research is to introduce improvement proposals with respect to the reduction of the set-up times in order to decrease the production costs. The leading research question of this research is as follows:

How could the set-up times at Van de Leur be reduced to decrease the production costs?

In this report five variables are introduced that were supposed to influence the set-up time. The variables are: degree to which tools are arranged, product variety, degree of external activities, changeover item quality, and coordination. Based on the theoretical framework the supposed relations seem to be true.

The first variable is about the fixed location of the tools and components and the real position of these tools and components. The second variable is about the amount of different products that are offered. For the third variable a difference is defined between internal and external activities. Internal activities can only be performed during downtime of the production. The less internal activities the less downtime of the production so less revenue loss. The changeover item quality refers to the quality of the machines, components and tools used in the changeover process. The last variable, coordination, is about the coordination between the different departments of the high dependent functional production process of Van de Leur.

In the diagnosis phase the five variables are investigated at Van de Leur. Data is gathered by means of cost and revenue data analysis, observations, estimations of the planner and the production leader, the SMED method introduced by Shingo (1985), and the time interval study.

It became obvious that the location of the tools is in general good, but the position of the tools and components is rather often different than the place where they belong. The product variety at Van de Leur is very wide which asks for short batches and a lot of changeover processes per day. There are performed fewer activities external than internal, but not all activities that nowadays are performed internal needs to be performed during downtime of the production. The changeover item quality, so the quality of the used machines and tools, is not very good. There are occasionally recurring problems which are about the same or with the same machines. And there is concluded that the coordination between especially the dough department and the vlario generation department is not good enough to ensure an as short as possible changeover process and waste as less as possible material.

 Cleaning the dose machine with two employees instead of one can reduce the internal set-up time with 8.5 hours a year.

 Taking off some whole diameter product lines, like the 11 centimeter and the 28 centimeter, can reduce the set-up time respectively with 11 and 8 hours.

 Replacing a difficult product by a simpler product can in the given example of this research reduce the set-up time with 11 hours. The total calculated reduction of the set-up time in this research for the variable product variety is about 40 hours.

 The degree of internal activities can be reduced with about 64% after some adjustments. The degree of external activities will increase and some activities will completely disappear after making adjustments. With adjustments, a reduction of 56 hours downtime could be possible.  By elimination of fine adjustments of the filling machines, 7 hours set-up times can be

reduced.

An assumption of the reduced set-up costs is made based on the described improvement proposals. The hourly rate of the production line is about €505-. It can be said that the reduction of the production costs could be about €56,300 per year ((8.5+40+56+7) x €505). This number is based on the 8.5 hours reduction by performing the cleaning of the dose machine together, 40 hours reduction by rehabilitation of product lines or difficult products and replacing them with simpler products, 56 hours reduction by externalizing activities or performing them after adjustments not at all and 7 hours reduction by elimination of fine adjustments. But it has to be mentioned that this is a very raw estimation, based on the biggest improvements. The real reduction must be experienced in practice after making the improvements.

With this reduction of downtime of the production process by means of set-up time reduction Van de Leur is a step further on the way to become a ‘lean manufacturer’.

Preface

With this research report I finish the course program of the Master Technology Management at the University of Groningen. I started this Master in September 2009 and since April 2010 I did my graduate research at Van de Leur in Bolsward. Van de Leur is a confectionary specialist that mainly produces Vlarios.

Through this way I would like to thank several people for the help and advice which they gave me during the research period.

At Van de Leur, I want to thank my company supervisor Mr. Menno Breeuwsma for discussing some problems and making this graduating at Van de Leur possible. Besides him, I want to thank my neighbor at Van de Leur, Mr. Ad Vervoorn, who is always open for questions and can answer them almost always. Also the production employees, operators, production leader and the planner have helped me with data gathering and answering questions, thanks for that.

Further, I want to thank my supervisors at the University of Groningen. Mr. Mark Mobach, as my first supervisor, helped me to come to this result and guided me when I had questions. Mrs. Gwenny Ruël has supported me especially before starting my research at Van de Leur and I want to thank her for that.

Finally I want to thank my family and friends. During this graduating project they helped me with inspiration and motivation.

Table of content

1. Introduction ... 13

1.1 History of Van de Leur ... 13

1.2 Current state and mission ... 13

1.3 Production ... 14

1.4 The current general changeover process ... 17

1.5 Organisational structure ... 19 1.6 Changes ... 20 1.7 Structure ... 21 2. Research design ... 23 2.1 Problem analysis ... 23 2.2 Scope ... 23

2.3 Why set-up time reduction? ... 24

2.4 Variables that influence the set-up times ... 25

2.5 Problem statement ... 26

2.6 Conceptual model ... 27

2.7 Definitions variables and relations between variables ... 27

2.7.1 Production costs ... 27

2.7.2 Efficiency of the production process ... 28

2.7.3 Set-up time ... 28

2.7.4 Degree to which tools are arranged ... 28

2.7.5 Product variety ... 28

2.7.6 Degree of external activities... 28

2.7.7 Changeover item quality ... 28

2.7.8 Coordination ... 29

2.8 Research methodology ... 29

2.9 Conclusion ... 32

3. Theoretical framework ... 33

3.1 What is set-up time? ... 33

3.2 Already existing method to reduce set-up times ... 34

3.3 Independent variables ... 35

3.3.1 Degree to which tools are arranged ... 35

3.3.2 Product variety ... 36

3.3.3 External activities ... 37

3.3.4 Changeover item quality ... 38

3.3.5 Coordination ... 40

4. Diagnose ... 43

4.1 General observations ... 43

4.1.1 Attitude ... 43

4.1.2 Boundary conditions ... 43

4.1.3 Conclusion ... 44

4.2 Degree to which tools are arranged ... 44

4.2.1 Locations of the tools ... 44

4.2.2 Position of the tools ... 46

4.2.3 Preparation of the day ... 47

4.2.4 Results of the time interval study for the category ‘searching’ ... 49

4.2.5 Conclusion ... 50

4.3 Product variety ... 50

4.3.1 Wide variety ... 51

4.3.2 Difficult products ... 52

4.3.3 Conclusion ... 52

4.4 The degree of external activities ... 53

4.4.1 Not wasted internal time ... 53

4.4.2 External preparation ... 53

4.4.3 SMED step 1 ... 53

4.4.4 Conclusion ... 55

4.5 Changeover item quality ... 55

4.5.1 Observed changeover item quality problems ... 55

4.5.2 Design for changeover ... 56

4.5.3 Results of the time interval study for changeover item quality ... 58

4.5.4 Conclusion ... 59

4.6 Coordination ... 59

4.6.1 Interdependence of the dough, start and modeling departments ... 59

4.6.2 Communication ... 60

4.6.3 Results of the time interval study for the category ‘waiting’ ... 60

4.6.4 Conclusion ... 61

4.7 Conclusion ... 61

5. Redesign ... 63

5.1 General improvements ... 63

5.1.1 Cleaning of dose machine ... 63

5.1.2 Involvement of production employees in the change project ... 64

5.1.3 Conclusion ... 64

5.2 Degree to which tools are arranged ... 64

5.2.1 Tools on the right place ... 64

5.2.2 Preparation of the day ... 65

5.4 Degree of external activities ... 69 5.4.1 SMED step 2 ... 69 5.4.2 Explanation of table 5.2 ... 70 5.4.3 Adjustments ... 71 5.4.4 Priority ... 72 5.4.5 Conclusion ... 72

5.5 Changeover item quality ... 73

5.5.1 Elimination of fine adjustment ... 73

5.5.2 Elimination of unnecessary faults ... 74

1. Introduction

In this chapter the company of this research, Van de Leur, is introduced and the current production process at Van de Leur is described. Furthermore, the organization of Van de Leur is taken into account and the changes in the sales environment of Van de Leur are described.

1.1 History of Van de Leur

Van de Leur in Bolsward is a confectioner specialist with the core business “vlarios” (flans). The first Van de Leur confectionery was established in 1973 in Sliedrecht by Henk van de Leur. In addition to producing vlarios for the direct sale, Van de Leur started to deliver vlarios to pastry shops in the region. There was a constantly increasing demand for the products of Van de Leur, which resulted in growth of the company. But in Sliedrecht there was lack of space for expansion and the costs of storage elsewhere were increasing. So Van de Leur was looking for a new location in the vicinity, but this proved to be difficult. Motivated by tv-commercials of Hans Wiegel and the Frisian accountant of Van de Leur, Van de Leur came in contact with the district Friesland. In 1995 the whole company moved from Sliedrecht to Bolsward. In 1999 Henk van de Leur retired and passed the business to his son, Robert van de Leur. Van de Leur has expanded the sales internationally and distributes its products all over the world. Besides in the Netherlands Van de Leur is also very successful in the Belgium and German markets.

“Quality and Van de Leur are synonyms”. Quality is the first rule of the formulated company goals. The continuous attention for quality has gained great appreciation in the market.

1.2 Current state and mission

For more than 35 years Van de Leur offers a broad assortment of semi-finished and finished products and prepares the products for delivery. The main products are custard vlarios, which are semi-finished products which can be semi-finished by the baker itself, and fruit vlarios with lattice, both in all kinds of different shapes and sizes. Normally Van de Leur uses sugar dough for the vlarios, but they also produce vlarios with dough without added sugar. All products made by Van de Leur, which are about 250 different products (see appendix 1), are immediately frozen. Due to a lack of space in Bolsward, petit fours are produced in Heerenveen for a large customer (Albert Heijn).

The main sales market of Van de Leur is the pastry shops in the Netherlands. Than the largest customers are the Belgian pastry shops. Also the catering industry sells products of Van de Leur. Since not too long Van de Leur delivers indirectly to the retail market. Van de Leur sells products to a supplier who finishes the products and sells them to supermarkets, among others Jumbo, Albert Heijn, C1000 and Super de Boer.

Van de Leur distributes their products to wholesalers in their sales countries. For example, in the Netherlands there are 10 wholesalers for bakery products. In Belgium and Germany there are a lot more. Those wholesalers deliver (for instance) the vlarios, and other products ordered by the bakers, to the pastry shops. For the catering industry there is one extra step; Van de Leur delivers to Bakery Stars who delivers on his turn to the wholesalers who deliver to the catering companies. Then there is the retail market. Some supermarkets buy at the wholesalers and some supermarkets are served directly from Van de Leur with Visser as transporter.

and a part of Germany. Another transport company, Broersma, serves the other part of Germany. And transport company Jawimex serves Austria, Switzerland and France. Besides this, Van de Leur occasionally has orders in among others America, Canada and New Zealand, which are transported by sea containers.

The mission of Van de Leur is: “Van de Leur’s products across whole Europe.” Every consumer in Mid- and West Europe has to have the possibility to buy at anytime a Van de Leur vlario. This may be at the bakery, supermarket, restaurant or institution. As an entrepreneur, Van de Leur has a strong network of contacts in all relevant markets. For these markets, Van de Leur is the authority in quality vlarios and a professional partner in business. Van de Leur is known for their high quality, service and enthusiasm.

1.3 Production

To produce the high variety of products Van de Leur uses different machines, such as a kneading machine, piston pump, dose machine, lattice machine, and a water sprayer. These machines are placed in a functional structure, this means the end-product is produced in different departments of the production process, each department add some value to the product. The different departments are dependent on each other, which is called sequential task interdependence (Woodward, 1958, 1980) (see figure 1.1). The activities of an employee directly affect the activities of the next employee in the process. This asks for accurate coordination and communication. A failure at the beginning of the production process can cause significant problems later on in the process.

At Van de Leur it is important that during the production process there is as less inventory as possible. This has to do with the rise process of the dough. When the dough is too long in the open air without being processed, the dough rises too much, making it

unusable as shell anymore. It is then returned to the dough production department as so called “retour dough”. Before this retour dough can be used again at the dough production, the retour dough has to be cooled. This is because the rise process continues in the open air which is not wishful before it is processed again in the kneading machine with raw materials.

The production process can be divided into 9 different steps who indicate the functional structure of the production process at Van de Leur. In figure 1.3 the areas are indicated where the steps are performed.

a) Dough production (red in figure 1.3). Van de Leur has a ‘continue kneading machine’ to mix raw material with retour dough from the production line

b) Reducing dough (orange in figure 1.3). The dough out of the kneading machine has to be flattened. This is performed by rollers that flatten the dough that is transported on a conveyer belt. During 18 minutes the dough is modified and made into a thin dough slice. The parameters must be set to indicate the desired thickness and width

Figure 1.1: Task

c) Put the bakery moulds on the production conveyer belt (light blue in figure 1.3). The single ‘pannen’ or ‘koppels’ are manually placed on the conveyer belt. A ‘pan’ is a single bakery mould for one vlario, often round. A ‘koppel’ is a square bakery mould with small, often round, gaps for smaller vlarios. The number of vlarios per ‘koppels’ differs per diameter. The single ‘pannen’ have various diameters varying from 160 to 280 millimeter. The height varies from 18 to 27 millimeter. The ‘koppels’ have a standard size of 600x600 millimeter with the forms at a fixed position in the ‘koppel’. There are varieties of 4.5 centimeter (144 pieces), 90 millimeter (36 pieces), 100 millimeter and 2 variants of 110 millimeter. The Trompline is used for the ‘pannen’ and the Rademakerline (or mini line) is used for the ‘koppels’. So there are two production lines. In the beginning of the production line, the ‘pannen’ and ‘koppels’ are sprayed with margarine.

d) Production of unbaked products (light green in figure 1.3). The dough is placed in a bakery mould, filling is put into the mould, the filling is spread in the mould, and an option is to add a lattice or crumbles.

e) Loading cars (purple in figure 1.3). The cars are loaded with single ‘pannen’ on bakery trays or ‘koppels’. Often the cars are being placed in the proofer (not necessary for all vlarios). f) Loading furnace (dark blue in figure 1.3). The cars are unloaded and the bakery trays are put

into the (conveyer belt) furnace.

g) ‘Depannen’ (pink in figure 1.3). The vlarios are unloaded from their bakery mould, partly manual, partly automatically. The bakery trays and the single bakery moulds (‘pannen’ and ‘koppels’) are placed in cars and are cooled with the use of blowers until the desired temperature, so they can be used again in the production process.

h) Enter the freezer (dark green in figure 1.3). This is performed automatically. Just before the products enter the freezer, jelly and sugar is affixed.

i) Packaging process (yellow in figure 1.3). The vlarios are packaged in various packages and provided with a label. The boxes are manually placed on a pallet.

Figure 1.2: The production process flow of Van de Leur

As described above, the departments in the production process are sequential dependent on each other (see figure 1.2). Globally the vlario production process can be divided into 3 main departments: the dough production, the vlario generation and the furnace process (including the rise process and bakery mould unloading).

Normally, there is one employee who performs the tasks at the dough production department (location 1) (figure 1.3). This includes mainly replenishing the kneading machine with raw material and retour dough from the modeling line, preparing lattice dough, production of crumble dough, start and stop the kneading machine at wished times, and changeover from sugar dough to dough without added sugar and vice versa.

The vlario generation is performed on the Trompline or the Rademakerline. In each case there is the start, modeling and filling part on the line. The start is performed by one employee who places the bakery moulds on the line after that they are provided with some margarine by the margarine sprayer (location 2). The modeling part is also performed by one employee (location 3), the operator.

He is responsible for the dough conveyor belt and other coordinating activities around the dough production and the vlario generation department. The number of employees at the filling department (location 4) is very dependent on which product is in production. For the custard vlario there are two possible machines at the Trompline that could be used to fill the vlario with filling, custard or fruit filling. The dose machine, this machine fills automatically two ‘pannen’ side by side. The other machine is the Obrut; this is a machine that needs to be operated by hand by one person (used for three kinds of vlarios). For a custard vlario there is only one (or two) employee(s) needed at the production line who loads the ‘pannen’ at the car (location 5). But for a Fruit vlario with lattice or crumbles at the Trompline there are about four employees needed. And for mini vlarios produced at the Rademakerline there is also a varying number of employees needed at the filling department, depending on the shape, the ingredients and the finishing of a product.

The furnace process consists of several places where activities have to be performed. One employee is needed for placing the cars in the proofer and taking them out of the proofer (location 6). He also puts the baking trays in the furnace. At the other end of the furnace (location 7), there are often two employees active who unload the vlarios from their bakery mould and put the bakery trays and bakery moulds in the cars. In case of mini vlarios produced on the Rademakerline, the vlarios are unloaded from the ‘koppels’ with the help of the turner and then there is only one employee needed for this department who loads the cars with the bakery trays.

In figure 1.3 a map of the production department of Van de Leur is given with the location numbers as mentioned above. Also the areas are indicated as described above in the summation a) until i). In this map the machines are drawn around the Trompline, but in case of the mini vlarios the machines of the Rademakerline are used. The number of production employees in this map is in a general sense, because this depends on the product produced, as mentioned above.

In figure 1.4, the route of a ‘pan’ and a ‘koppel’ (and later on a vlario) through the production department is drawn to get an idea of the production process of a vlario. This is a standard route and almost always the same. One exception in the route is that the ‘pannen’ or ‘koppels’ do not always need to go through the proofer for half an hour, then they go directly from the filling belt into the furnace.

1.4 The current general changeover process

This paragraph is intended to get a general picture of the current changeover process at Van de Leur. In paragraph 2.2 comes up for discussion that the focus of this research is on the changeover processes at Van de Leur.

= route of a ‘pan’

= route of a ‘koppel’, rest the same as ‘pan’

The activities that need to be performed during a changeover process in the different parts of the production line are shortly described over here. A simple changeover process is described, but there need to be mentioned that there are more difficult changeover processes which asks more time. As mentioned in paragraph 1.3 the Trompline and the Rademakerline are divided into the start, modelling and filling part.

During changeover there are several activities that need to be performed at the start. The employee who places the ‘pannen’ at the Trompline or the ‘koppels’ at the Rademakerline during production, first hold them under the margarine sprayer. The ‘pannen’ needs to be positioned by putting them against the side of a guide, so the ‘pannen’ become in the right position with respect to each other. Half a metre further, there is a small rack that halt the ‘pannen’ for a moment to prevent the ‘pannen’ touch each other during filling. These two tools, the guide and the small rack, are of different size for the different ‘pannen’ diameters. So during changeover these have to be changed. Also the margarine sprayer has to be cleaned. Beside this, this employee at the start of the line has to set out the ‘pannen’ or ‘koppels’ for the next run when the diameter of the next vlario is different from the last run.

At the modelling and filling department there are also several activities, these overlap each other often. At the filling department, the dose machine is filled by means of a piston pump. Before changeover, the standard car with filling has to be emptied. Then the piston pump needs to be cleaned a bit (the hose of the piston pump remains filled with old filling after that the standard car is empty) and the hose has to be emptied by flushing the hose through with the new filling until the new filling reaches almost the dose machine. During changeover, generally, the dose machine has to be cleaned. Or the machine is flushed trough until all ‘old’ filling is out and then it is flushed trough with the ‘new’ filling until this is ‘clean’ without old filling, or the dose machine is fast flushed trough with a water sprayer and then filled with the new filling and flushed through until the water is out. In some cases, the dose machine is brought to the flush kitchen when it needs a more thorough cleaning. This is, for example, when the machine is used for custard after it was used for kirsch. After this cleaning, the filling has to be weighted to test if the settings are good.

As can be read above, the bottleneck during changeover is cleaning of the dose machine. Now, often one employee is busy with this cleaning task and filling the dose machine with new filling. Small tasks that need to be performed during changeover process are sweeping, bring dough trays to the dough department and put new empty boxes to collect dough, put away not needed machines, registration of the time, weighing of the dough and filling in a ‘pan’ or ‘koppel’, change stamps in the stamp machine and set out cars at the end of the filling line.

1.5 Organisational structure

At the head of Van de Leur there is the Managing Director, Robert van de Leur (see figure 1.5). The Managing Director, Manager Operations and the Controller together form the Management Team (MT). Van de Leur is divided into 11 departments and every department has its own manager. The departments are driven by the three MT managers. Today, Van de Leur has about 75 employees whereof about half working in the bakery and the other half are managers and representatives.

Robert van de Leur is the managing director and owner of Van de Leur, and one of the members of the Management Team. He is responsible for all activities of the company with the focus on sales activities. He coordinates the five departments that focus on buying and sales.

The export manager is responsible for maintaining and extending international customer relations. The procurement manager is the head of the buying department. He is responsible for the purchasing of products and domestic exports.

The quality and development manager is responsible for quality assurance and development. He develops among others new vlarios on request of customers.

The operations manager is responsible for production, logistics and maintenance. He coordinates the five departments which are related to the operations of Van de Leur.

The planner of Van de Leur together with the head of production creates the planning per week. They stay in strong contact with each other. Within the week the planner adjusts the planning with small updates when needed. The planner also plans the work times of the employees in the bakery. The head of production is responsible for everything in the production department (but he will do this as much as possible together with all the employees). There is always an operator present in the

Tech-nical staff Managing director Develop-ment and quality Adljé Caparis Manager operations Adminis-tration and personnel Plan-ning Controller Produc -tion Logis-tics Buying deprat -ment Export domes tic Export abroad Marketing Quality control, labour conditions, environment Bakery NL

production department who is responsible for following the planning, pauses of the employees, coordination if there is breakdown and the, coordination of the changeovers. Within the production department there is a distinction in the dough department, the modelling department, the furnace department and the packaging department. The operator is most active at the modelling department, which is the most complex department and ask for lot of coordination between the four departments.

The logistics manager stays in strong contact with the procurement manager to coordinate the outgoing product flow.

The technical staff consists of several technical specialists who are responsible for the maintenance of the production machines and repairs during breakdown.

The controller is responsible for finance, administration, personnel and automation. He coordinates the administration and personnel department.

1.6 Changes

Nowadays, about 80% of all Dutch pastry shops order their products at Van de Leur. But these days more and more small

bakeries disappear. Where in 1960 there were about 10,000 pastry shops, according to the CBS1 in 2003 the number of pastry shops was 2,675. This number is decreased to 2,260 in 2009 and nowadays this is about the same (a few less). An important reason for this decrease of

pastry shops is that consumers increasingly buy all their products in the supermarket. This results from the fact that the recession is tangible for a lot housekeeping wallets (Van Berlo, Murk, van Aalst and Sloot, 2009). Figure 1.6 shows that the specialty stores are hit harder by the recession than the supermarkets. The purple bar shows the percentage of customers (who feel the recession in their wallet) that cuts down. It is obvious that the supermarkets are relatively insensible for the recession in relation to the specialty stores.

Despite the fact that a lot of people have specialty stores (like pastry shops, butchers, druggists) in their vicinity, they only make limited use of these shops. It can be concluded that supermarkets, with the exception of fish, sell most of the fresh articles (see figure 1.7) (Van Berlo, Murk, van Aalst and Sloot, 2009).

1 _{http://www.cbs.nl/nl-NL/menu/themas/industrie- energie/publicaties/artikelen/archief/2004/2004-1551-wm.htm}

This trend results in that some small pastry shops are not viable anymore. Supermarkets have a growing assortment in bread and confectioner specialties and also provide quality products, just as the bakeries, but for lower prices. So the supermarkets are a serious threat for the pastry shops.

The disappearance of pastry shops in the Netherlands forced Van de Leur to look for other markets and to penetrate in these new markets. First, Van de Leur penetrated the catering industry and creates a big share in the catering market. Nowadays, Van de Leur is also penetrating the market of supermarkets, because supermarkets want to order the more luxury products at Van de Leur. Albert Heijn, for example, came with the Excellent brand for which they ask a premium price for these products.

But the penetration of this new market results in changes for Van de Leur. Supermarkets order larger orders than bakeries do, which give them the opportunity to require a discount because of scale advantages, and sell the products for lower prices. In order to stay profitable there need to be changed something at Van de Leur. The change in the sales environment asks for a more efficient production process to reduce the production costs. This research is there to investigate how the production process can be made more efficient. In chapter 2 the design of this research is given where the problem is described and discussed.

1.7 Structure

In the next chapter, chapter 2, the design of this research is given. Here, a problem description with corresponding variables and research question get a chance. In chapter 3 the theoretical framework is given, where all variables are elaborated on in more detail. These variables are diagnosed at Van de Leur and the description of this analysis is given in chapter 4. After this analysis, there are improvement proposals given in chapter 5. Thereafter, the conclusion of this research is given followed by a discussion.

2. Research design

In this chapter the problem description is given and the focus of this research is described. Also the need for set-up time reduction is described. Besides this, the research variables are introduced and explained.

2.1 Problem analysis

As described in paragraph 1.6, there are changes going on in the sales environment of Van de Leur. Due to the disappearance of pastry shops in the Netherlands, Van de Leur is forced to penetrate other sales markets alongside the pastry shops market. Van de Leur entered into the catering industry and recently Van de Leur penetrated the market of supermarkets. However, these new customers order in larger quantities at once which give them the opportunity to claim discounts. To deal with these desired discounts by the supermarkets, one of the tasks for Van de Leur is to reduce the production costs if Van de Leur wants to continue to be profitable.

Now Van de Leur knows that the supermarkets will be the main (or at least a very important) customer in the future, it is necessary for Van de Leur to invest in order to meet the future large orders. The current production process is not appropriate for these large orders. Van de Leur is busy with plans to build 1500 m2 extra plant space. This space is reserved for: a second spiral freezer to deal with large orders, to extend the package space, to stock package material that now is stocked externally and space is reserved because it is likely that Van der Leur in the nearby future will invest in a second oven and kneading machine in order to deal with the larger orders.

2.2 Scope

Every company is forced to keep the total costs as low as possible to remain viable and to retain a good competitive position. Therefore, this research is indirectly focused on the reduction of the total costs of Van de Leur. The total costs consist of several aspects and are made within several departments. This research focuses on the reduction of the production costs, made in the production department. Investment costs are not taken into account, because the Management Team of Van de Leur has already taken decisions about this for the near future. As described above, there are investment plans for extra plant space and a second spiral freezer. This will be executed later on this year and so this is outside the scope of this research. Also personal cost is not considered in this research. This research is performed in line with the Master Technology Management, and therefore an investigation in how the production costs can be reduced is very appropriate.

In this research the assumption is made that when a reduction in the production costs can be realised, this will have a positive influence on the reduction of the total costs. In this research, this relation will not be verified.

In the production department several aspects contribute to the production costs. Some major contributors that can be distinguished in the production department at Van de Leur are: number of breakdown, amount of scrap, downtime production and set-up time within the production process. This research is focused on the reduction of the internal set-up times within the modelling department, so the focus is on the downtime of the changeover processes performed on the Trompline and the Rademakerline, where the unbaked products are produced.

Figure 2.1: Benefits of a quick changeover process (Van Goubergen and van Landeghem, 2002:205)

increased over the last 3 years. The percentages over a certain period of the different variables that contribute to the production costs are shown in table 2.1.

Table 2.1: Contributors to production costs

Period Contributor Increase (%)

2007-2009 Set-up time 73%

2009 Scrap - 0.53%

2007-2009 Breakdown - 18.42%

2007-2009 Downtime production 27.7%

From this table 2.1 it can be concluded that the set-up time is significantly increased in comparison with the other contributors to the production costs, and therefore reduction of the set-up time needs some serious attention. In 2009 the total downtime of production due to set-up time was 200 hours.

2.3 Why set-up time reduction?

The need to reduce set-up times is not new and first realized by mister Shingo who started research in 1950. This arose from Toyota’s development of their Just-In-Time based production system (Gest, Culley, McIntosh, Mileham & Owen, 1995). The time between producing the last product of a batch and the first product of a new batch that meets all quality requirements has always been considered as waste or as ‘added cost’. Globalization of the market, customization of products and the continuous effort for a better efficiency of the existing production equipment are the main driving forces for the reduction of set-up times. Many companies around the world are implementing ‘lean’ concepts (see appendix 2) and customer-pull-based production systems. For these systems, short set-up times are a key requirement (van Goubergen and van Landeghem, 2002).

Van Goubergen and van Landeghem (2002) categorize several reasons for short set-up times:

 Flexibility: Due to an increasing number of products and product variants that have to be offered to the customer and a decrease in the corresponding order quantities, a company has to be able to react very quickly. If you need to produce small lot sizes, then you need to have short set-up times.

 Bottleneck-capacities: Especially on these machines, every minute that is lost is waste. Set-ups need to be minimized to

maximize the capacity available for production.  Cost minimization: Since direct production costs are related to the machine performance, an overall equipment effectiveness (OEE) calculation can easily show the impact of

set-up reduction on overall machine performance.

Van de Leur is also busy with the implementation of ‘lean manufacturing’ to improve the efficiency of the production process. See for a short description of ‘lean manufacturing’ and the relation of lean manufacturing and set-up time reduction appendix 2. Van de Leur has a very big variety of products, mainly caused by the high customization that Van de Leur wants to realize. Then, as Van Goubergen and van Landeghem (2002) stated, it is very important to have short set-up times. Also cost minimization is important at Van de Leur to stay profitable in the new sales market, the supermarkets.

2.4 Variables that influence the set-up times

In this research several variables are considered that can influence the set-up times. The variables are shortly introduced in this paragraph and described how these variables are obtained. The variables are reflected in the conceptual model in paragraph 2.6.

The first variable that may affect the set-up times is ‘the degree to which tools are arranged’. This variable is mainly based on intuition of the author and set-up time literature. In a general sense, structure and order in a workplace are necessary to guarantee an efficient production process. The second variable of this research is the ‘product variety’. This variable is mentioned by one of the Management Team members as a variable that possibly can have an influence on the set-up time reduction. These days, Van de Leur has such a large product assortment that every baker can order almost anything they can imagine. “But such a high product variety does not benefit the efficiency of the production process”, according to the Manager Operations. After reading some set-up time reduction literature it is clear that this is a common variable where a lot of companies have looked at in an attempt to reduce set-up times.

The ‘degree of external activities’ is the third variable of this research. This is a well known variable in the set-up time reduction literature, where this variable is based on. This variable has its origin from the SMED (single minute exchange of dies) method of Shigeo Shingo (Shingo, 1985). This is the first man who recognized the need to reduce set-up times. The SMED system is an often referenced method in set-up time reduction projects because of its easiness. So this is a very interesting variable for Van de Leur.

The fourth variable is the ‘changeover item quality’ which is based on reading the article of McIntosh, Culley, Mileham and Owen (2001) about a maintenance perspective on changeover improvement. Van de Leur has to deal with a lot of machines and components in the production process, so it is interesting to take this variable into account.

So there are five variables that are considered in this research. In paragraph 2.7 these variables are shortly described and in paragraph 3.3, these variables are more extensively discussed and related to set-up time reduction.

2.5 Problem statement

Following Van de Leur’s need to reduce the costs as a result of the changes in the sales market environment, as described in paragraph 1.5, a problem statement is formulated in this paragraph which includes the objective of this research and the research question with associated sub-questions (‘t Hart, van Dijk, de Goede, Jansen and Teunissen, 1998).

Objective

Map the current changeover process at Van de Leur and introduce improvement proposals with respect to the reduction of the set-up times in order to decrease the production costs. Research question

How could the set-up times at Van de Leur be reduced to decrease the production costs? Sub-questions

1. What part of the production costs are set-up costs?

2. What is the influence of set-up times on the efficiency of the production process?

3. What is the influence of the degree to which tools are arranged on set-up time reduction? 4. What is the influence of product variety on set-up time reduction?

5. What is the influence of the degree of external activities on set-up time reduction? 6. What is the influence of the changeover item quality on set-up time reduction? 7. What is the influence of coordination on set-up time reduction?

2.6 Conceptual model

The five variables outlined in red in figure 2.2 are supposed to have an influence on the set-up time, each with their own effect. These relations of the variables with the set-up time are supposed in this model, and it is further investigated if these relations are true with the help of literature in paragraph 3.3.

If the set-up time can be reduced, it is presumed that it have a positive influence on the efficiency of the production process because it results in a reduction of the downtime of the production machines (ceteris paribus). A more efficient production process will result in a reduction in the production costs which results in a reduction in the total costs.

In the next paragraph the variables of the conceptual model are shortly discussed. 2.7 Definitions variables and relations between variables

In this paragraph the variables are discussed shortly. In chapter 3 the four red outlined variables of the conceptual model (paragraph 2.6) are more extensively dealt with.

2.7.1 Production costs

The production department is one of the departments whose costs have a share in the total costs. Production costs are the costs associated with the manufacturing of a product. Incurring costs that are independent of the output are called fixed costs. For example, the costs of the factory and machinery. Then there are variable costs that do change as the output changes. Examples are raw material and energy2.

A reduction of the production costs will cause a reduction of the total costs and so a reduction of the total costs per product.

-

-

-

+

-

-

-

Efficiency of

the

production

process

Set-up

time

Production cost

Product

variety

Degree of

external

activities

Coordination

Degree to

which tools

are arranged

Changeover

item quality

2.7.2 Efficiency of the production process

Efficient production refers to the use of resources in such a way as to maximize the production of goods and services. A highly efficient production process will minimize the production costs as much as possible and so the costs per product. In general this is the case, but Van de Leur has to be conscious about the contradiction that may occur. A more efficient way of production (or reduction of costs at one place) can cause a reduction of effectiveness at another place (or raise the costs at another place). So there has to be searched for an optimum. For example, when an employee gets less time to change over a production line, it is possible he or she will do it less accurate and so there will be more scrap which could be more expensive than some more set-up time.

2.7.3 Set-up time

Set-up time is the time between when the final unit of one batch is finished and the first acceptable unit of the next batch is finished (Nicholas, 1998). The set-up operation is the preparation or after adjustment that is performed once before and once after each lot is processed (Cakmakci & Karasu, 2007). If the set-up time in the production process reduces, it is expected that it will have a positive influence on the efficiency of the production process.

2.7.4 Degree to which tools are arranged

“Set in order” is one of the 5S (Sort, Set in order, Shine, Standardize, Sustain, (additional one: Safety)). 5S is a concept used within lean manufacturing for work place organisation and standardization (Nicholas, 1998). ‘Degree to which tools are arranged’ corresponds to this second S. There is an assumption being made that a high ‘degree of tools arranged’ has a positive influence on the set-up time reduction.

2.7.5 Product variety

‘Product variety’ refers to the number of different products produced on the production lines. Intuitively seen, an increase in the product variety leads to a higher total set-up time because there will be more frequent changeovers.

2.7.6 Degree of external activities

The set-up operation can be divided into two parts: the internal set-up and the external set-up. Internal set-up includes the set-up operation that can be done only when the machine is shut down (attaching or removing the dies). External set-up is the set-up operation that can be done when the machine is still running. It can be assumed that an increase in the activities that can be performed externally will cause a reduction of downtime in the production machine, so a positive influence on the efficiency of the production process will be the result.

2.7.7 Changeover item quality

2.7.8 Coordination

‘Coordination’ describes the process of harmonic cooperation of different departments in performing a function3. In other words, coordination means integrating or linking together different parts of an organization to accomplish a collective set of tasks (Van de Ven, Delbecq and Koenig, 1976). It is assumed that good coordination between different departments, involved during a changeover process, will have a positive influence on the set-up time reduction.

2.8 Research methodology

This research can be characterised as a case study research. The case study is the method of choice when the phenomenon under study is not readily distinguishable from its context (Yin, 2003). This research is performed for Van de Leur, focused on the changeover process, and so it is applied to a specific context. Because of the specific context in which this research is performed, there is a limited ability to generalize the results of the research, but there are described general main concepts where other companies can learn from.

According to Ellram (1996) a case study research generally emphasizes qualitative, in-depth study of one or a few cases. But he mentions that a case study may also gather quantitative data. Stuart, McCutcheon, Handfield, McLachlin and Samson (2002) introduce a research process model with five critical stages (see figure 2.3).

Stage 1 is elaborated earlier in this chapter, where the research question is defined. Stage 2 is about the development of a research instrument and selection of the appropriate field site. The first part of this step is to bring focus on the research, and this is done in paragraph 2.2 and 2.5 where the scope and sub-questions are defined. The latter aspect, the selection of the field site, was fixed, this research is performed at Van de Leur.

Stage 3 is about data gathering. In this research both quantitative and qualitative data is used. Qualitative data is gathered by observations of the production employees and the production process and informal interviews with the production employees. Quantitative data is collected by document analysis, observations and estimations of the author and production leader. The measurement techniques per variable of this research are described below in more detail.

Not only specific company data of Van de Leur needs to be gathered. Reliance on theoretical concepts to guide the design and data collection for case studies remains one of the most important strategies for completing successful case studies, according to Yin (2003). The goal of theory is to develop preliminary concepts at the outset of a case study. A function of these concepts is to place the case study in an appropriate research literature, so the lessons from the case study will more likely advance knowledge and understanding of a given topic. Besides this, theory helps to define the components of analysis (what is the case?), and to suggest the relevant variables of interest (as is

3 _{www.encyclo.nl}

done in paragraph 2.6 and 2.7). This theory is found in books and articles, related to changeover processes.

Stage 4 is about analyzing data, where the chaos of the qualitative data should be interpreted and where is searched for patterns. This is done with the help of already existing methodologies for improving changeover processes and new ideas based on the gathered data.

The dissemination of the results, stage 5, will be done by means of this thesis and a presentation of the results at the University of Groningen.

Data gathering

To investigate how the variables influence the set-up times at Van de Leur, an extensive observation of the current production process at Van de Leur is done. For variable 1, degree to which tools are arranged, it is studied where all required tools and changeover components are placed and if these places are correct. The time needed for searching the required components is analysed. It is very difficult to see when a production employee is searching for tools and components, but by means of time interval studies this is tried to catch (explained below).

Variable 2, variety in products, is examined with the help of product databases of Van de Leur which show the costs and revenues of the different products. Besides this, the difficulty of producing products is taken into account.

The degree of external activities is observed. The first step of the SMED method (paragraph 3.2) is an appropriate method to get an overview of the internal and external activities and the time spent. The time needed for all internal and external activities is collected through specific time measurement of all activities during twelve changeover processes. Not every activity needs to be performed during changeover, so there are activities that are observed almost every changeover process and there are activities that are only observed a few times. By means of observing, and thinking it over together with the production employees, it is judged which internal activities may be performed external to reduce the downtime of the production line (step 2 of SMED).

Variable 4, changeover item quality, is also investigated with the help of time interval studies. By analysing the percentage of time needed to solve problems, it is become clear whether the changeover item quality is good or not.

The fifth variable, coordination, is observed and the relative time needed for waiting caused by poor coordination is measured by means of the time interval study.

Time interval study

The time interval study is a procedure where with random observations of several production employees the average time is gathered that is spend on different activities4

. There is a distinction made in the different activities that are performed by the employees. In appendix 3 an example is given of a sheet that is used to score the activities. There are distinguished 11 categories, whereof three are divided into some more specific activities. In table 2.2 the definitions of all categories are given.

Table 2.2: Category definitions

For this time interval study pocket-size devices are used who are called ‘Re-pipip’. These devices made a sound signal in a randomly produced time interval, about 5 to 6 times per hour. With the help of these devices per employee the activities of each observed employee is written down. There is a distinction in production employees and an operator. The production employees are mainly focused on performing one task at a moment and stay often fixed at the production line. The operator is there to make the work possible for the production employees. He ensures that for example the dose machine is filled with filling and there stay cars ready to be filled with ‘pannen’ or ‘koppels’. This operator is free and is not fixed on the production line. In the analysis of the time interval studies this distinction is kept, otherwise the averages are not representative for the activities. In the time interval study there are during 4 production days 5 production employees observed at the same time each day, and 2 operators each day.

In appendix 4 is the required number of observations for this time interval study calculated. This number is calculated at 1112 observations. In this calculation a standard deviation (2s) of 3% is taken as satisfactory. So the real output will be in a range of 3% lower or higher than the observed output with an accuracy of 95%.

Activity

Directly productive Activities that fall into this category are: place ‘pannen’ or ‘koppels’, stamping, place ‘pannen’ or ‘koppels’ in car, operate the lattice machine, spreading, place crumbles. Solve problem All activities performed to solve a problem

Searching All search activities during changeover or production

Waiting All time there is no activity performed related to the production process of Van de Leur Set out/collect Machine Box Car Tools Ingredients/dough

Set out a machine to use the next batch

Set out empty dough boxes to fill with retour dough Set out empty cars to put bakery plates in

Collect tools from the tools cabinet in the scullery or other place. Tools are small material, such as stamps, scratcher, dough knife, crumble box and spread plates, but also the bakery moulds fall into this category.

Set out filling, lattice dough or crumbles at the modelling department Move something/tidy up

Machine Box Car Tools

Move machine away from the production line, or to the flushing kitchen or next to the dough conveyor belt

Bring full dough boxes with retour dough to the dough department Move full car with bakery moulds to proofer or furnace

Tidy up small material Cleaning

Machine/car Floor

Flushing trough a machine or car with water. Flushing the machine trough with new filling. Scratch filling out of the car with a scratcher.

Sweeping the floor

Weighing All weighing activities; weighing of dough, weighing of filling, weighing complete bakery mould

Set up machine Insert settings in the production machines

Administration Register times or other administrative activities with respect to finished vlarios

2.9 Conclusion

3. Theoretical framework

In this chapter the theoretical framework is given wherein the different aspects of this research are elaborated. First a general description of set-up times is given. Thereafter, a well known existing method for reducing set-up times is considered and the five variables mentioned in the conceptual model are reflected. In paragraph 2.7 these variables are already shortly described and the supposed relation with set-up time reduction is given.

3.1 What is set-up time?

In this paragraph a description is given about what set-up time is and the second sub-question ‘what is the influence of set-up times on the efficiency of the production process?’ is answered.

There are a lot of authors who have written about set-up times, and especially about set-up time reduction. Van Goubergen and Van Landeghem (2002) describe set-up time as the time between producing the last product of a series and producing the first product of a series that meets all quality requirements. McIntosh et al. (2001) describe set-up time as the time needed to substitute components of a machine, so that alternative products may be manufactured. Mileham, Culley, Owen & McIntosh (1999) make a distinction in run-down, set-up and run-up during a changeover process. These authors describe the same process in a slightly different way, but the essence is the same.

Irani (1999) gives an extensive description of set-up time in his book and takes all of the above mentioned aspects into account. The following description of Irani (1999) about set-up time is used in this research. Irani (1999) defines set-up time as the time the production is stopped while the production employees are changing items and machines to make the production line capable for producing the next job. This includes removing and replacing items. It also includes any quality checks and first article approvals. He separates three stages in the changeover process: clean-up, set-up and start-set-up. Clean-set-up means removal of previous products, materials and components from the line. Set-up is the process of actually changing the equipment and finally start-up is the time used for fine tuning the equipment after it has been restarted (Irani, 1999) (see figure 3.1).

As mentioned in subparagraph 2.7.3, it is expected that a reduction in the set-up times have a positive influence on the efficiency of the production process. Capacity that is lost due to the machine(s) being down during set-up can never be regained; it is lost forever (Irani, 1999). During this changeover process nothing is produced, until the first products are approved and the production line is ready to produce the whole batch in good quality. Efficiency refers to the use of resources in such a way as to maximize the production of goods and services. One of the resources is time, and because downtime of the production line (among others due to changeovers) is wasted time when there is no production, set-up times cause inefficiency of the production line. So a reduction of the set-up times results in a more efficient production process because of more efficient use of time.

The sub-question of this paragraph is about the influence of set-up time reduction on the efficiency of the production process. It can be concluded that in case of set-up time reduction, the production process can be used more optimally because the production is faced with less downtime. This means a more efficient production process, because the same actions can be done within less time. This added time can be used as additional capacity to produce more products, or to produce a greater range of products without increasing the total set-up time (Sherali, van Goubergen & van Landeghem, 2008). But the time savings can also be seen as cost savings, because in less time the same amount of products can be produced and so the wage cost (among others) can go down. There are already several publications and case studies available on how set-up times can be reduced in existing situations. Basically, all these approaches are based on the same well known method, which is discussed in the next paragraph.

3.2 Already existing method to reduce set-up times

The goal of this research is to introduce improvement proposals with respect to reduction of the set-up times. Such set-set-up time reduction initiatives have been used in industry for more than a decade. Many researchers and consultants have worked in this area and the majority have recommended an implementation strategy based mainly on organizational improvement, widely known as Shingo’s SMED or single minute exchange of dies system (Mileham, Culley, Owen & McIntosh, 1999). Van Gouberg and Van Landeghem (2002) report the SMED system in their article. They mention that SMED is a straightforward approach to improve existing set-ups and that a lot of set-up time reducing approaches are derived from SMED. In their article, Patel, Shaw and Dale (2001) describe a study of an application of SMED in a small company. In this paragraph this improvement method is shortly described.

Shingo was the first to realize the need to reduce changeover times, based on the development of the Just-In-Time movement at Toyota. Dr. Shigeo Shingo introduced his methodology called Single Minute Exchange of Dies (SMED) (Cakmakci & Karasu, 2007). The main goal of SMED is to minimize what needs to be performed during downtime of the production process. This is done in three steps (van Goubergen and van Landeghem, 2002):

Step 2: Transferring on-line activities to off-line: This can be done by technical modifications, e.g., instead of exchanging 10 small parts on-line, a sub-assembly containing these parts is exchanged, and the preparation and after care (the actual removing and attaching of the 10 parts on the sub-assembly) is done off-line.

Step 3: Minimizing or streamlining on-line and off-line activities: Can the on-line and off-line activities be done in a different/smarter way, which takes less time? In this step, all the adjusting and readjusting issues are considered.

3.3 Independent variables

In this paragraph a more comprehensively description of the five variables listed in the conceptual model (paragraph 2.6) is given.

3.3.1 Degree to which tools are arranged

In this subparagraph the following sub-question is answered: what is the influence of the degree to which tools are arranged on set-up time reduction? First a description of the degree to which tools are arranged is given, where after the relation between set-up time and the degree to which tools are arranged is elaborated on.

During changeover it is important that the necessary tools are organized and arranged in the work area to prevent costly search time (Van Goubergen and van Landeghem, 2002). This refers to the ‘degree to which tools are arranged’. This variable can be identified with the second S, ‘Set in order’, of the 6S system, commonly used by the implantation of lean manufacturing (see appendix 2). In subparagraph 2.7.4 it is assumed that a good arrangement of tools has a positive influence on the set-up time reduction. This subparagraph shows the effect of the arrangement of tools on set-up time reduction.

McIntosh et al. (2001) mention that it is important that all tools and parts, that are to be used during the changeover process, might be clearly identified and stored closest to their point of use. Van Goubergen and van Landeghem (2002) agree with this need and introduce design rules for efficient work methods (see figure 3.2). These are some easy-to-use, basic Industrial Engineering tools that can serve as guidelines to help the design engineer. Rule 9.2 and 9.6 are especially important for this variable, ‘degree to which tools are arranged’. They are respectively about the routing during changeover and the place where to put changeover items before and during changeover.

9. Method and organization

9.1 Separate on-line and off-line set-up activities, by asking the question ‘Does the machine has to be stopped for this activity?’

9.2 Optimize the order in which the activities are performed to minimize movements and walking distance

9.3 In a line situation with more than one operator, divide the work on the different stations between the operators so that the machine on which the most activities need to be performed is not waiting

9.4 Balance the workload between the available operators and make separate instruction sheets per person 9.5 Use the Kipling questions on every activity of the set-up for critical review (What, where, when, who, how, why) 9.6 Provide set-up sets with all necessary tools and parts, determine the exact location where the tools and parts have to be placed before the actual set-up starts

9.7 Provide set-up instruction guides

Van Goubergen and van Landeghem (2002) notice that tools and parts need to be prepared before the changeover process begins and stored away after production is running. However, this is not sufficient. Besides this, the ideal place to put the changeover items (tools, components) during preparation has to be specified to minimize the motion of the production employees during downtime of the production line. The gathering and delivery of tools and equipment required for a changeover have a significant effect on the overall changeover time (Gest et al., 1995). They mention that housekeeping is the organization of the workplace and changeover personnel in such a way that tools can be quickly and easily located and efficiently changed over. This is important to ensure an efficient changeover process. Techniques observed are: coding dies and keeping them adjacent to their dedicated machine; ensuring all tools, gauges etcetera are available for a process; the use of two people rather than one; arranging the workplace so that everything can be found; and ensuring that all tools etcetera are where they are supposed to be and clean and ready for use.

It can be concluded, based on the statements of the above mentioned authors, that it is very important to structure the workplace and keep fixed positions for the tools and parts needed for changeovers. To answer the question of this subparagraph about the influence of the degree to which tools are arranged on set-up time reduction, it can be said that the arrangement of tools and parts is necessary in order to guarantee a fast changeover. This is because an ordered and structured workplace eliminates times required for searching the tools and parts during the downtime of the production line. An ordered and structured workplace can contribute to a more efficient changeover process during downtime which can result in a reduction of the set-up times.

3.3.2 Product variety

In this subparagraph the fourth sub-question is elaborated on. The question is about the influence of product variety on set-up time reduction. In subparagraph 2.7.5 it is already supposed that an increase in the product variety of a company leads to an increase in the set-up time. In recent decades, product variety has increased in most industries. For instance, the number of products available in large supermarkets has increased from about 1.000 in the 1950s to 30.000 different products in a supermarket nowadays (Thonemann & Bradley, 2002). In this subparagraph the effect of product variety on the set-up times of a production line will further be examined with the help of diverse literature.

Product variety refers to the number of different products offered by a company, also called the product portfolio (Thonemann & Bradley, 2002). An advantage of a large product portfolio is that it allows a closer match between the customer preferences and the offered products of a company, which has the potential to enlarge or maintain market share and/or yielding higher prices/profits (Benjaafar & Kim, 2004).