February 27, 2009
Under pressure
Reducing the lead time of Thomassen Compression Systems
February 27, 2009 2
Under pressure
Reducing the lead time of Thomassen Compression Systems
Author: C.A. den Hertog (student number 1271970)
Supervisors: Dr. J.A.C. Bokhorst (University of Groningen)
Prof. dr. ir. J. Slomp (University of Groningen) A. Blankestijn (Thomassen Compression Systems)
February 27, 2009 3
Preface
This report has been written for the master’s thesis project of the study Technology Management of the University of Groningen. This project has been executed within Thomassen Compression Systems (TCS), a company producing industrial
compressors.
Without the help of a lot of people this report wouldn’t have been existed. That’s why I’d like to thank everyone who gave a contribution to this research. There are a number of people I’d like to thank in particular. First, I’d like to thank Mr. Bokhorst and Mr. Slomp from the University of Groningen for their input to the research. Their knowledge and provided information has been a great contribution to get to this result. Second I’d like to thank everyone from TCS for their help during this research.
Special thanks are for the members of the project team ‘Under pressure’, Jeroen Tang, Geert Segers, Chris van Ravenswaay and Theo Geurts, and my supervisor of TCS, Andre Blankestijn who have provided me a lot of information and new insights. Finally I’d like to thank my parents for their support during my study and my girlfriend Esther for her support during the period I stayed in Velp.
February 27, 2009 4
Table of contents
Management summary ... 61. Introduction ... 8
2. The company Thomassen Compression Systems... 9
2.1 History ... 9
2.2 Products ... 9
2.3 Strategy ...11
2.4 Organization ...11
2.5 Results ...12
3. The second phase of TCS ...14
3.1 Assembly...14
3.2 Testing ...14
3.3 Disassembly and packing ...15
4. Problem introduction ...17
4.1 Trigger of the research ...17
4.2 Problems within TCS ...17
5. Research design...19
5.1 Objective of the research ...19
5.2 Problem statement ...19 5.3 Conceptual model ...19 5.4 Research outline ...21 5.5 Preconditions ...22 5.6 Research model ...22 6. Diagnosis phase 1 ...24 6.1 Lead time of TCS ...24 6.2 Floor space of TCS ...32 7. Diagnosis phase 2 ...36
7.1 Improving available resource capacity ...36
7.2 Decreasing work in process ...48
7.3 Implications for design ...50
8. Design ...51
8.1 Design of a layout for TCS ...51
8.2 Design of a system of order releases ...55
February 27, 2009 5
9. Implementation ...59
9.1 Projects...59
9.2 Prioritization ...59
10. Conclusions and recommendations ...61
10.1 The lead time of TCS ...61
10.2 Required floor space of TCS...61
10.3 Layout to use by TCS ...62
11. Further research ...63
References ...64
February 27, 2009 6
Management summary
TCS needs to decrease its lead time while, at the same time, layout changes are required because of a decrease of available floor space. A Value Stream Map showed the lead time of the test facilities to be the bottleneck, while there is a lot of work in process (WIP) increasing the required floor space. This leads to the following problem statement:
‘Which layout and system of order releases should be used by TCS in order to decrease the lead time of the test facilities while using less floor space?’
The impact of available resource capacity has been analyzed, in order to determine its impact on the lead time of the test facilities and required floor space. Besides this, the impact of work in process on the required floor space has been analyzed.
Diagnosis
A lack of workers, resulting from hired capacity of workers not matching required capacity of workers, stretches the lead time of the test facilities. Besides this, a high degree of disturbances on the test facilities are causing a stretched lead time. As a result TCS has a lack of test facilities in order to produce 42 compressors a year. There is no surplus of resource capacity resulting in a waste of floor space. The availability of resources can be improved by:
- Hiring workers based on a actual planning
- The use of pre-assembly stations in front of the test facilities
- Using a cell layout instead of the currently used product layout (product lines) High WIP is increasing the required floor space of TCS for assembly activities. The high WIP is caused by early order releases, as a result of a surplus of workers that need to be provided with work, in order to minimize indirect hours. The work in process can be decreased by:
- Using a pull system instead of a push system for order releases
- Better matching hired worker capacity with required capacity by changes in the system of hiring workers
These conclusions have been the input for the chapter ‘Design’.
Design
In order to improve available resource capacity and decrease work in process, the chapter ‘Design’ consists of:
- A design of a layout; 3 layout alternatives have been designed, using the cellular manufacturing principle. A layout alternative has been chosen with a medium required investment giving maximum results.
- A design of a system for releasing orders; A system has been designed in order to decrease the risk of waiting for cylinders on a test facility.
February 27, 2009 7
Implementation
From the chapter ‘Design’ 7 projects arise, for which it has been shown which projects should be prioritized. These are projects resulting in a high value to the company while being (relatively) easy to implement.
Changing the system of hiring workers should be prioritized because this will result in a decrease of work in process as well as a decrease of the lead time. Besides this the following packet of ‘projects’ will have high value for TCS:
A. Making use of pre-assembly stations combined with the test facilities B. Releasing orders to the test facilities only if all parts and required
subassemblies (cylinders) are available
C. Making the ‘cylinder process part 1’ a internal supplier and treating painted cylinders as parts being delivered to the assembly process
Conclusions and recommendations
For the problem statement, with respect to the layout the following conclusions are drawn:
- TCS should, based on the results of this research, use layout alternative 2, making use of the cellular manufacturing principle for the current test
facilities, including pre-assembly stations and clustering cylinder activities in a separated department.
- With respect to the choice for this layout, a note should be made this layout should be seen as an indication for a new layout because the influence of this product mix on the required test facilities will first further have to be
researched.
For the problem statement, with respect to the system of order releases the following conclusion is drawn:
- Orders should be released to the test facilities only if all parts, including cylinders, are available for final assembly.
Besides this, major changes can be obtained by changes in the system of hiring workers for which the following conclusion is drawn:
- Workers should be hired according to a continuously actualized planning in order to prevent from early order releases
February 27, 2009 8
1.
Introduction
Thomassen Compression Systems engineers, produces and services compressors used in the oil- and gas refinery and chemical industries. These compressors are sold and maintained globally, using offices all over the world. All compressors are engineered and produced in the Netherlands in Rheden.
The lead time of engineering and producing a compressor, has increased from 10-12 months to 22-24 months in three years. In order to remain competitive in the market of industrial compressors and to prevent penalties as a result of delayed deliveries, the lead time of TCS in Rheden needs to be decreased. Besides this, available floor space decreases, because a currently by TCS used production hall will partly no longer be available. As a result, the objective of this research is ‘decreasing the lead time of the second phase while using less floor space’. Using less floor space implies the need of layout changes. As a result the following problem statement will be researched: ‘Which layout and system of order releases should be used by TCS in order to decrease the lead time of the test facilities while using less floor space?’
The report starts with a general description of the company TCS. Next, the problem area that will be researched, the second phase, will be viewed in more detail. A number of problems are occurring in the second phase, that are presented in the ‘problem introduction’ by using a Value Stream Map. From this problem introduction a number of problems are selected, resulting in the problem statement and a
conceptual model showing factors possibly influencing the problem situation of TCS. A number of factors have been chosen to be analyzed in the chapter ‘Diagnosis’ being separated in a part (1) describing the current situation of TCS and a part (2)
February 27, 2009 9
2.
The company Thomassen Compression Systems
This chapter will give an introduction to the company Thomassen Compression
Systems (TCS). It starts with describing the history of the company. Next, information about the organization of TCS, the products the company sells and the process of a project will be provided. Finally there will be a paragraph showing the results of TCS.
2.1
History
Thomassen was founded over a 100 years ago. Since then, it has established a first-class reputation for providing quality, tailor-made compression solutions to the oil, gas and chemical industries (www.thomassen.com). The services the company provides are:
- The installation, maintenance and monitoring of compression systems - The supply of spare parts
- Field and factory repairs - Complete system overhauls
- Revamping of existing compression equipment
The founder of Thomassen, Mr. Thomassen, started in 1893 by selling ‘National’ gas engines. In 1896, Mr. Thomassen built his first own designed gas engine. In 1906, the ‘Motor and machine factory Thomassen & Co’ in Rheden was founded. In 1921, for the first time a reciprocating (industrial) compressor was developed by Thomassen. From 1924 till 1956, Shell acquired shares majority in Thomassen. In 1996,
Thomassen was split in Thomassen Compression Systems, Thomassen Machining and Thomassen Turbine Systems. On the 24th of September 1999, Thomassen
Compression Systems B.V. was started.
2.2
Products
TCS produces industrial compressors. These compressors are used for getting corrosive and dangerous gasses on a high pressure so it can be transported through a pipeline to for example a next processing station. Because the gas is different in every specific situation, a compressor has to be engineered to meet the requirements of the particular customer, making TCS an engineer-to-order company (Nicholas, 1998). Despite of the uniqueness of the compressors of TCS, for every project a base (choice of frame type) is used. The frame is chosen in such a way that a minimum number of cylinders is required with the smallest possible frame, in order to keep expenses as low as possible. A table with the offered frame types is shown table 1 while more detailed information is shown in appendix 1.
Table 1: Compressor models of TCS
Model Number of cylinders Max. power (kW)
February 27, 2009 10
CHS 1 – 6 3000
A compressor consists of a number of main subassemblies being necessary in every compressor. These subassemblies are:
1. Frame 2. Crosshead guides 3. Cylinders 4. Oil skid 5. Cooling skid 6. Engine
The following figure shows a compressor consisting of the main parts ‘frame’ (number 1), ‘crosshead guides’ (number 2) and ‘cylinders’ (number 3). The oil skid, cooling skid and engine are equipment belonging to a compressor and are not shown in figure 1.
Figure 1: Example of a compressor (model C25.4)
The frame is the base of the compressor. Inside this frame, the crankcase and its bearings will vary, but to a large extent the frame is standardized. Between the frame and the cylinders, the crosshead guides are positioned. These are necessary to
minimize the horizontal move of a piston in its cylinder liner. Every crosshead guide fits one frame. The crosshead guides are, like the frame, standardized to a high extent. TCS has 10 cylinder types, applicable in specific situations. Most of these cylinders can be used in combination with every frame and crosshead guide type. The cylinder will be fully engineered for the particular customer, using a lot of variables,
February 27, 2009 11 The oil- and cooling skid are lubing and cooling the compressor. These skids aren’t installed on the compressor itself, but are standalone installations being placed closely to the compressor. TCS standardizes these skids as much as possible.
The engine for driving a compressor is procured by TCS. Because of its size and weight, this engine is directly transported to the location the compressor has to be installed. This engine is one of the most expensive parts of a compressor. Advantage of the compressors of TCS is their relatively smooth working, so a relatively small engine is required, decreasing the costs. Three types of engines can be used depending on the wishes of the customer:
1. Electric engine 2. Gas engine 3. Steam turbine
Examples of compressors of TCS are shown in figure 2. A Bill of Materials showing the main parts of a compressor is shown in appendix 2. The total number of parts in a compressor is about 1400.
2.3
Strategy
According to the business plan of TCS, the strategy of the division projects (new compressors) is getting a maximum turnover to increase the installed base, while doing this with a minimum grow of fixed costs. From this strategy can be concluded, TCS sells compressors to ensure itself a future of providing service to these
compressors.
TCS has planned the coming years to be innovative in wearing parts and in this way being different from competitors. Besides this, TCS wants to broaden its product market combinations by selling a substantial part of compressors in, for TCS, new markets.
2.4
Organization
The organization of Thomassen Compression Systems (TCS) consists of seven departments (Appendix 3):
1. Sales & Service 2. Project management
February 27, 2009 12 3. Operations
4. Finance and Administration 5. Technology
6. Human Resource Management (HRM) 7. Quality Health Safety Environment (QHSE)
273 people are working for TCS in Rheden. 162 of them are workers of TCS itself while the remaining 111 workers are hired on a temporary basis.
TCS is an engineer-to-order company, meaning every compressor is fully customized for a specific situation. The process of selling, developing, producing and installing is performed by a project-based organization. A project of TCS consists of three phases as presented in figure 3. The total lead time of a project has increased from 10-12 months to 22-24 months in three years.
Sales Detail engineering Purchasing Receipt of parts Assembly Basic engineering Testing Quality check Packing
Transportation Installation Servicing
Phase 1
Phase 3 Phase 2
Shop planning
Figure 3: Phases projects TCS
2.5
Results
TCS does about ten to twelve projects a year. These projects vary in the number of compressors being delivered. The number of compressors TCS produces, decreased the last three years as shown in table 2.
Table 2: Sales of TCS
Frame 2006 2007 2008 Average
CHS 0 1 0 0
C7 4 1 4 3
February 27, 2009 13 C25 14 2 0 5 C35 9 7 10 9 C45 1 11 2 5 C85 13 4 11 9 Total 41 30 28 33
TCS has planned the coming years to do twelve projects per year, with an average number of compressors for a project of 3,5. This means the total planned number of compressors for a year will be 42. TCS thinks the average number of cylinders for a compressor will be 3 so the total number of cylinders will be 126.
The financial results of TCS are summarized in table 3. 2007 was a really good year for the company. In 2008, profit isn’t as high as in 2007 which is caused by higher personnel costs.
Table 3: Summarized financial results (values x € 1000)
2006 2007 2008
Turnover 83.101 118.270 94.617
Total costs 77.493 108.999 87.417
Profit 5.608 9.271 7.200
Profit after taxes 4.443 7.043 5.503
February 27, 2009 14
3.
The second phase of TCS
This research targets on the second phase, consisting of the activities ‘assembly’, ‘testing’ and ‘disassembly and packing’. These activities will now be shown in more detail.
3.1
Assembly
First a number of subassemblies have to be assembled. These subassemblies are shown in table 4.
Table 4: Subassemblies TCS
Subassembly Location
Frame Hall 8
Crosshead guide Hall 8
Cylinder Main hall
Piston – piston rod Main hall Instrument rack Main hall
Oil skid Welding hall + Main hall
Cooling skid Welding hall + Main hall
During the subassembly of a cylinder, two tests have to be performed. Within the first test, the Non Destructive Test, the structure (strength) of molded cylinders is checked. By the second test, the hydro test, is checked if a cylinder is totally liquid- and gas proof.
The subassemblies ‘Oil skid’ and ‘Cooling skid’ sometimes are outsourced and sometimes are produced by TCS itself in the welding hall. The choice between outsourcing or production by TCS depends on:
- The availability of capacity of TCS (workers) - Production costs
- Special requests by customers (production in home country)
Oil- and cooling skids are welded and are for this reason considered as being part of manufacturing activities instead of assembly activities. Just the activities performed in the main hall, spooling of the oil- and cooling skids to ensure there’s no dirt in the pipes causing damage to a compressor, are part of the second phase.
Final assembly of a compressor, joining the subassemblies, is partially executed in hall 8 and partially in the main hall on a test facility. The total process for producing a compressor is shown in figure 4. The locations of the activities of the second phase are shown in appendix 4, where the current layouts of the main hall and hall 8 are shown. The relative position of these halls is shown in appendix 5.
3.2
Testing
February 27, 2009 15 inspection. If a compressor is disapproved, some parts might have to be replaced and sometimes the test needs to be performed once again.
TCS uses 5 test facilities being suitable for different types of compressors, as shown in appendix 6. The process of testing is, together with the assembly activities, shown in figure 4.
3.3
Disassembly and packing
When the compressor is approved by the customer, the compressor will be
disassembled from the test facility. From the moment all parts are disassembled and ready for packing, Meilink Industrial Packing, an external company, is responsible for packing the compressor.
February 27, 2009 16
Assembly frame Crankshaft in
frame Tubing in frame Subassembly ‘Frame’ Assembly crosshead guide Crosshead in crosshead guide Connecting rod in crosshead guide Crosshead guides on frame (+tubing) Subassembly ‘Crosshead guide’
Cylinder on Crosshead guide Subassembly Crosshead Subassembly ‘Crosshead’ Assembly of cylinder liner Subassembly part 2 Subassembly ‘Cylinder’ Non Destructive
Test Hydro test Paint preparation
Painting (External) Subassembly part 1 Piston rings on Piston Piston on Piston rod Subassembly ‘ Piston’ Production of Piston rod (Rollenbank) Piston-P.rod on compressor Check clearances and griding of shim Mechanical test Assembly of rack
Subassembly ‘Instrument rack’
Not in research Subassembly ‘Cooling system’
Not in research Subassembly ‘Oil system’
Disassembly and inspection of parts Packing Passed for test? Replace parts Yes No Painting and preservation Test required? Yes
No
Final inspection
February 27, 2009 17
4.
Problem introduction
The problem being researched will now be introduced. First, the direct trigger of the research will be presented. Next, the main problems within TCS are introduced and visualized by a Value Stream Map. These problems will be the input for the research design.
4.1
Trigger of the research
At the moment TCS uses the total space of hall 8, one of the production halls of TCS, as shown by the current layout in appendix 4. This hall is owned by the large
stockholder, the Kroymans Corporation, also owning Thomassen Machining (TM). TM is located in the same industrial zone as TCS. TM needs extra space for its production activities, so the Kroymans Corporation has assigned some floor space of hall 8 to TM. As a result the available floor space for TCS decreases resulting in the need of changing the layout.
4.2
Problems within TCS
As mentioned, the short term problem within TCS is the decreasing available floor space resulting in required changes in the layout. A problem occurring for a long time, is the increasing lead time of projects of TCS. The lead time of a project of TCS has increased from 10-12 months to 22-24 months in a period of three years. As a result, projects are overdue resulting in penalties.
The current lead time of the second phase, the phase being researched because of the layout problem, is shown in the Value Stream Map (VSM) (Rother & Shook, 2003) in figure 5. This VSM is created by counting inventories within the process and
analyzing the realized lead times by interviews (because they are too long to
measure). Inventories in figure 5 are representing ‘number of subassemblies’ before assembly / testing, and ‘number of compressors’ after assembly/testing. Because this VSM shows all compressor models in one VSM, the VSM provides an indication for possible problems in the total process of TCS. Shown inventories and lead times may be varying for different compressor models. The VSM in figure 5 shows there is a lot of waste through the total process of TCS. This results in an average production lead time of 186 days, while the average processing time is only 89 days. All ‘days’ mentioned in this report are ‘workdays’ making the total period, including non-working days, in fact being longer.
From the VSM can be concluded, especially the test facilities (assembly/testing) are having a long lead time. Besides this, high work in process is stretching the lead time and is requiring floor space. This makes the following problems to be researched:
- Long lead time of the test facilities
February 27, 2009 18 FRAME ASSEMBLY NDT / ASSEMBLY / HYDROTST CYLINDER ASSEMBLY INSTR. ASSEMBLY CHG ASSEMBBLY INSP./ PACKING ASSEMBLY / TESTING
1
1
0
0
5
1
1
3
4
1
SHIPPING WEEK PLANNING MS PROJECT PRODUCTION PLANNING SUPPLIERS CUSTOMER40 days 8 days 14 days 17 days 42 days 4 days 19 days
PRODUCTION LT: 186 DAYS PROCESSING TIME: 89 DAYS PAINTING (EXTERNAL)
5
6 days 6 days 30 days 6 days 6 days 5 days 0 days 12 days 0 days 9 days 9 days 9 days 17 days40 days 8 days 6 days 14 days
6 days 30 days
5x
February 27, 2009 19
5.
Research design
The Value Stream Map in figure 5, showed the bottleneck within the second phase of a project of TCS to be the test facilities. The lead time of these test facilities needs to be decreased. Besides this, the lead time of the second phase is stretched by a high work in process, meaning these have to be decreased too, in order to decrease the lead time of this phase. The method for researching these problems will now be presented.
5.1
Objective of the research
As mentioned, the lead time of a project has increased within TCS, partially caused by the second phase. TCS wants to decrease the lead time so penalties can be prevented. Besides this, the available floor space will be reduced, requiring layout changes. This makes the objective of this research ‘decreasing the lead time of the second phase while using less floor space’.
5.2
Problem statement
As a result of the problems of TCS and the objective of this research, the following problem statement will be researched:
‘Which layout and system of order releases should be used by TCS in order to decrease the lead time of the test facilities while using less floor space?’
Possibilities for reducing the lead time, will be researched by researching possibilities to decrease the lead time of the test facilities and to decrease work in process. By decreasing work in process, floor space might be reduced in order to fit within a smaller floor space.
5.2.1 Definitions
Within the problem statement, a number of terms are used that now will be defined: - Layout: The physical arrangement of economic activity centers within a
facility (Krajewski, 2002)
- Lead time: The nominal time between when an order for an item is released (sent out or initiated) and when it is received (completed) (Nicholas, 1998) 5.2.2 Type of problem
The problem as being researched by the mentioned problem statement is a reality problem (De Leeuw, 2005). TCS exceeds contract dates resulting in penalties and available floor space decreases while the current floor space is fully used.
5.3
Conceptual model
A conceptual model, shown as figure 6, has been designed, showing factors possibly influencing the two main problems:
February 27, 2009 20 Available resource capacity Work in process Orders released Layout type
Required floor space Parts availability
Amount of rework
Lead time of the test facilities
Number of resources
= Outside research perspective
Figure 6: Conceptual model
Within the shown model, 4 factors are influencing the ‘problems’ of TCS. All factors will be explained, but just the factors impressionable by the layout and order releases will be researched because of the situation with respect to the decreasing floor space. A note should be made, possibilities to decrease the processing time of the test facilities and to decrease the work in process, possibly are passed over.
5.3.1 Amount of rework
Rework influences the lead time of the test facilities. If rework is required because of for example not passing the test, the processing time of a test facility will be stretched, because extra work is required to pass the test.
The amount of rework can’t be decreased by the layout. Other factors, like parts quality or quality control are influencing the degree of rework, but these factors will not be researched.
5.3.2 Parts availability
Parts availability influences the lead time of the test facilities, because waiting time will occur if required parts are missing. Insufficient parts availability can have its origin in delayed parts deliveries or a high degree of rejected parts. Besides this, parts may be missing because of mistakes of the company itself (for example
administration problems). Parts can also be missing because of a lack of overview in production. This overview partially depends on the layout type.
February 27, 2009 21 5.3.3 Available resource capacity
Available resource capacity influences the lead time of a test facility. If no resources, workers as well as machines, are available, waiting time occurs resulting in a
stretched lead time of a test facility. On the other hand, the more resources available, the more floor space will be required.
The available resource capacity is determined by the layout type and the number of resources, resulting from a demand. This demand includes the number of products required and the variability within this products.
The layout type influences dependability and quality of labor (Bokhorst & Slomp, 2006), and in this way available resource capacity. Dependability is the degree in which a manufacturing system can be buffered from all kinds of disturbances. The lower the dependability, the higher available resource capacity will be. The quality of labor, determined by task characteristics, are varying for different layout types. The higher the quality of labor, the higher available resource capacity will be.
The number of resources directly determines the available resource capacity. The higher the number of resources, the higher the resource capacity. Because extra resources require investments, resource capacity has to be enough for fulfilling demand while there is a low amount of overcapacity.
5.3.4 Work in process
Work in process partially determines the required floor space. The more work in process, the more floor space required. This work in process can have its origin in the released orders. First, if more orders are released than can be processed by available resources, work in process will increase (queuing in front of bottleneck). Second, if the wrong orders are released, this can increase work in process as a result of this orders having to wait because other orders may be prioritized.
5.4
Research outline
In consideration with TCS the following research outline has been formulated: 1. The research will focus on the second phase of a project of TCS only. The
second phase has been formulated as ‘all activities performed in the
production facility of TCS in Rheden, between the moment parts are received, checked and ready for production, and the moment the final product is ready for distribution’
2. Activities performed on other places than the main hall or hall 8 will not be researched. As a consequence, production activities for oil- or cooling systems or piping parts will not be researched because these systems and parts are produced in a specialized hall (welding hall). Within this research the welding hall is approached as an internal supplier of the second phase
February 27, 2009 22
5.5
Preconditions
The direct trigger for this research, is a decrease in floor space being available for the production of TCS. The available floor space decreases from 11763 m2 to 10491 m2. The new layout should be fitting within the new floor space of 10491 m2.
5.6
Research model
The structure of the research is shown in the research model in figure 7. The structure is based on the DOV-model of De Leeuw (2005), using 3 stages: ‘Diagnosis’
(Diagnose), ‘Design’ (Ontwerp) and ‘Implementation’ (Verandering).
Diagnosis phase 1 The influence of work in process on the floor space(6.2.4) The influence of available resource capacity on the lead time (6.1.3) Diagnosis phase 2 Implications for design (7.3) Design of a layout Design of a system of order releases Design Selection of projects Implementation The influence of available resource capacity on the floor space (6.2.3) Improving available resource capacity (7.1) Decreasing work in process (7.1)
Figure 7: Research model
‘Diagnosis phase 1’ (chapter 6) will show the current situation of TCS, with respect to the lead time and the floor space, resulting in answers to the following research
questions:
1. What is the current lead time of the second phase of TCS? 2. How arises this lead time?
3. Is available resource capacity stretching the lead time of the test facilities? 4. How important is lead time in the context of the strategy of TCS?
5. What is the currently required floor space? 6. How arises this floor space?
7. Is available resource capacity increasing the required floor space? 8. Is work in process increasing the required floor space?
9. How important is a reduction of required floor space for TCS?
Next, in ‘Diagnosis phase 2’ (chapter 7), it will be analyzed how available resource capacity can be improved in order to decrease the lead time of the test facilities and the used floor space. Besides this, it will be analyzed work in process can be
decreased in order to decrease the required floor space. This will result in a number implications for ‘Design’.
February 27, 2009 23 10. What number of resources should be used in order to improve available
resource capacity?
11. What layout type should be used in order to improve the available resource capacity?
12. What system of order releases should be used in order to decrease work in process?
February 27, 2009 24
6.
Diagnosis phase 1
This chapter will describe the current situation of TCS, with respect to the lead time and the required floor space. Besides this, the importance of decreasing the lead time and the required floor space will be analyzed.
6.1
Lead time of TCS
This research aims on decreasing the lead time of the second phase of TCS. In order to analyze possibilities to decrease the lead time, first the current lead time will be determined. Next, the arise of this lead time and the impact of available resource capacity will be shown. Finally, the importance of the lead time in the context of the strategy of TCS will be analyzed. As a result the following research questions will be answered by this paragraph:
1. What is the current lead time of the second phase of TCS? 2. How arises this lead time?
3. Is available resource capacity stretching the lead time of the test facilities? 4. How important is lead time in the context of the strategy of TCS?
6.1.1 The current lead time of TCS
The current lead time of a project of TCS is 22 to 24 months. This is the lead time for a total project, consisting of the steps as shown in figure 3. The second phase
consisting of assembling, testing and packing a compressor has a lead time of 186 days according to the VSM, shown in figure 5. This VSM also shows the processing time within this lead time to be 89 days. This means, within the process of TCS there is a waiting time of 97 days in the work in process.
The VSM isn’t showing the waiting time within the stations. A test facility is shown to have a average lead time of 42 days. In fact, the lead time of a test facility consists of a number of activities resulting in some processing time and a high amount of ‘hidden’ waiting time.
6.1.2 Arise of the lead time of TCS
A compressor is built from a number of subassemblies being a ‘frame’, ‘crosshead guides’, ‘cylinders’ and ‘instrument racks’. Besides these main subassemblies there are more (small) subassemblies, but these are considered to be delivered as parts, being ready to be assembled on a compressor. In general, a high aggregation level has been chosen because of the high number of parts, being 1400.
February 27, 2009 25 The arise of the lead time will now first be analyzed for the different subassemblies. Next, the lead time of the test facilities will be analyzed in more detail, because of being the bottleneck as shown by the VSM in figure 5.
6.1.2.1 Processing time
Processing time of TCS consists of processing time for assembling the subassemblies of TCS, final assembly, testing and disassembly of a compressor and final inspection and packing of a compressor. These are the processing times as shown in the VSM (figure 5) and are representing the lead time for finishing all activities of a
workstation. These lead times can consist of processing time (assembly) and waiting time while a subassembly is in a workstation.
Subassemblies ‘frame’, ‘crosshead guide’ and ‘instrument rack’
The subassemblies ‘frame’, ‘crosshead guide’ and ‘cylinder’ are having an average lead time of 6, 5 and 12 days. The lead time of the subassembly ‘frame’ varies from 5 days for the smallest model (C7) to 7,5 days for the biggest model (C85). On the moment of counting buffers for the VSM, one frame was waiting on the shop floor to be assembled, making the lead time of a frame a total of 12 days. For the ‘crosshead guide’ the lead time varies from 3 days to 12 days depending on the model. This results in an average lead time of 5 days (just the C85 has a lead time of 12 days, all other models are having a lead time of 3 days). A note should be made, an average of 3 crosshead guides is required for an compressor, so in fact there is a lead time of 15 days. Instrument assembly (instrument racks) has an average lead time of 12 days varying from 10 days to 15 days.
Subassembly ‘cylinder’
Cylinders are having the longest lead time of the subassemblies because a number of tests and external operations have to be performed. The cylinder process is shown in figure 8. Production of cylinder Non Destructive Test cylinder Assembly of pressure valves for Hydro test Hydro test Repair / Definitive rejection
Preparation for painting Painting of cylinder Sub-assembly of cylinder Rejection Rejection
Lead time: 2 to 2,5 months
External External
45 days 1 day 3 days 1 day 1 day 8 days 14 days
Figure 8: Cylinder process of TCS
This figure shows, normally the process for testing and assembling a cylinder, takes 28 days excluding waiting times in buffers. Unfortunately, 35% of all cylinders is rejected. The time for a cylinder being rejected till the moment it is approved is an average of 2,5 months (appendix 7). This makes the lead time of cylinders having a high degree of uncertainty. Besides this, rework occurs because the test procedure has to be performed again after repairing a cylinder.
Test facilities
February 27, 2009 26 value, because there are no hard data about the realized test facility occupation. The lead time of 42 workdays is calculated by dividing the total available number of workdays for 5 test facilities by the total number of compressors being produced: 5 × 250
30 = 42
The test facility lead time of 42 workdays, is an average for all compressor types of the year 2008. No data are available about the realized lead times of the test facilities for the different compressor models, but there are data about the planned lead time of the test facilities for the different models. Assuming these planned lead times are having the right proportions, the realized lead times for the different models can be determined by multiplying the planned lead times by a factor 1.9 (realized lt; 42/ planned lt: 22). This results in the lead times as shown in table 5. These lead times are including the activities ‘final assembly, ‘testing’ and ‘disassembly’.
Table 5: Estimated lead times of test facilities in proportion
Model Planned Realized
CHS 20 37 C7 20 37 C12 20 37 C25 20 37 C35 23 43 C45 23 43 C85 31 58 Average 22 42
The planned lead times are determined by the shop planning and are based on experiences. These planned lead times are based on the required processing times excluding waiting times as a result of disturbances. Assuming the planned lead times can be realized if all circumstances are perfect, it can be concluded the extra required lead time, varying from 17 to 27 days, consists of waiting time or rework. Rework can be seen as extra processing time and will now be analyzed. Waiting time will be analyzed in the next paragraph. A note should be made, the difference between the planned and the realized lead time can vary a lot, as a result of the lead time of 42 days being an average value. The precise variation in the lead times, compared with the planned lead time is unknown. This makes the realized lead times in table 5 being estimated values.
Rework is labor costs to correct a defect, incomplete operation, or nonconforming situation (Segar, 1981). Rework on the test facilities of TCS can occur in different ways. First, because of mistakes of the design rework can be necessary. Second, rework can be necessary because of parts having to be replaced after the testing procedure.
February 27, 2009 27 these new parts, and second causing extra processing time because of rework. These mistakes are having their origin in the first phase, so further research is required to determine how to prevent mistakes in the design of a compressor.
After testing, a compressor is disassembled and parts like bearings are replaced, if showing too much wear. After replacing parts, a compressor needs to be tested again occasionally. TCS already tries to prevent from replacing parts by requiring a high quality level of parts of its suppliers. If a replacement of parts still is required, TCS currently always replaces these parts while a compressor is on a test facility. If a compressor doesn’t need to be tested again, these parts can be replaced while the compressor already is disassembled from a test facility, so the test facility occupation can be decreased.
Final inspection and packing
After disassembling a compressor from a test facility, Meilink Industrial Packing is responsible for preservation and packing. Preservation means fixating parts and protecting these parts before getting packed. Besides this, small damages on the paint of these parts are repaired. These activities are having a lead time of 5 days. Next, a final inspection of the compressor by TCS takes place, requiring a lead time of 4 days. Finally the compressor and all its parts is packed in containers, a operation having a lead time of 9 days. When all parts are packed in containers, the client does a final packing inspection before the containers are transported. This inspection has a lead time of 1 day. This makes the total lead time of ‘final inspection and packing’ being 19 days.
As shown by the ‘research outline’, because ‘final inspection and packing’ are performed by an external company, these activities are considered as not being impressionable. As a result, this research will not decrease the lead time of these activities. Further research is required in order to decrease the lead time of packing, because as a result of packing being the final step of the second phase, a decrease in the lead time of packing, directly decreases the lead time of the second phase. 6.1.2.2 Waiting time
Because the test facilities are the bottleneck of the second phase of TCS, waiting time will be analyzed just for these test facilities. Nicholas (1998) mentions a number of forms of waiting time that will now be analyzed:
- Waiting for parts
- Waiting for items from preceding processes - Waiting for orders
- Waiting for materials
- Waiting for equipment repairs
Besides this, waiting time because of a lack of available resources and extra processing time because of rework will be analyzed.
Waiting for parts and items from preceding processes
February 27, 2009 28 caused by cylinders that are rejected sooner in the process. Missing parts and
cylinders are stretching the lead time because:
- An order is released to a test facility while not all parts are available - An order is released to a test facility while the required cylinders for this
compressor still are in the risky process (35% is rejected) of testing
The process of order releases will be analyzed in chapter 7. This chapter will analyze options to improve the process of order releases in order to decrease waiting time on a test facility because of a lack of resources and subassemblies ‘cylinder’ not being available. Parts availability will not further be analyzed because this already has been researched.
Waiting for orders
Waiting for orders doesn’t occur on a test facility of TCS. On moments with a lack of work, a request is sent to shop planning for a new job on the test facility. Despite of not all parts being available for the next shop, shop planning releases a new job in this case to provide the workers new work to prevent indirect hours. As a result, soon part shortages are occurring. As mentioned before, the process of order releases causing these problems, will be analyzed in chapter 7.
Waiting for materials and equipment repairs
Waiting for materials isn’t occurring because on a test facility just assembly activities are performed, requiring parts instead of materials. The equipment being used on a test facility, the test engines, are having a good reliability, so equipment repairs neither are stretching the lead time of the test facilities of TCS.
Waiting for resources
Waiting for resources occurs in front of the test facilities if no test facilities are available, resulting in a compressor waiting before it can go to a test facility. This is shown in the Value Stream Map (figure 5) where a waiting time of 17 days exists in front of the test facilities. Besides this, waiting for resources (workers) occurs on a test facility itself. Capacity of workers of TCS isn’t matching the requested worker capacity of the process, resulting in a lack of workers or a surplus of workers resulting in indirect hours.
February 27, 2009 29
Figure 9: Indirect hours as a percentage of the worked time
Available capacity of workers not matching the required capacity of workers will further be analyzed in chapter 7.
6.1.2.3 Transporting time
In the second phase of production of TCS. Transport takes place within the production halls and between the production halls (main hall and hall 8). Transport between the production halls concerns:
- Subassemblies ‘frame’ and ‘crosshead guide’ from hall 8 to the main hall - Disassembled and preserved parts from the main hall to hall 8
This transport is performed with an special transport carriage because of the weight of these subassemblies and parts. The transporting time related to these transport moves is a matter of minutes. This makes the transporting time between the production halls compared with the processing and waiting time negligible.
Transport within the production halls is done by overhead cranes and a transport carriage for the heavy parts and subassemblies while small parts are transported with forklifts. Just like the transporting time between the production halls, the transporting time within the production halls is a matter of minutes and is compared with the processing and waiting time negligible.
6.1.2.4 Conclusion
February 27, 2009 30 Besides this, the impact of rework on the lead time of the test facilities of TCS will have to be reduced. This has to do with the sequence of operations and the assigning of tasks to work stations. Rework activities can partially be performed besides a test facility instead of on a test facility itself.
6.1.3 The influence of available resource capacity on the lead time of TCS The previous paragraph showed, the realized lead time of the test facilities are exceeding the planned lead times because of:
- Extra processing time because of rework
- Waiting time because of part shortages and subassembly shortages (cylinders) - Waiting time because of test facilities not being available
- Waiting time because of workers not being available at the right moment Rework and part shortages aren’t analyzed within this research so further research is required for decreasing rework and improving parts availability on the test facilities. Workers not being available at the right moment (resource capacity not being
available) is resulting in a stretched lead time of the test facilities. Because of the stretched lead time of the test facilities, occupation of these test facilities has increased resulting in a lack of test facilities. This results in waiting time before the test facilities so a lack of available test facilities (resource capacity) is also stretching the lead time. This is shown in figure 10.
Lack of available workers (resource
capacity)
Waiting time on test facilities > Stretched lead time test facilities
Lack of available test facilities (resource
capacity)
Waiting time before test facilities > Stretched lead time total process
Lead time of test facilities
Impact on lead time of second phase
Figure 10: Lack of available resource capacity on different levels
From figure 10 can be concluded possibilities for decreasing the lead time of the test facilities by changes in the system of hiring workers have to be analyzed. Next, it has to be analyzed if the decrease of the lead time of the test facilities results in enough capacity in order to produce 42 compressors a year. This analysis will be performed in the following chapter.
6.1.4 Strategic importance of the lead time for TCS
The structure and infrastructure of an organization should be in line with its
competitive priorities. The key competitive priorities are cost, quality, flexibility and delivery (Karturia & Partovi, 2000). A firm outperforms its competitors by
February 27, 2009 31 6.1.4.1 Orderwinners of TCS
The order winners of TCS are ‘flexibility’ and ‘quality’. Within TCS the emphasis on flexibility manifests in the ability to customize products. TCS distinct itself from its competitors by its custom engineered compressors resulting in an optimal solution for every specific situation, making flexibility an order winner of TCS.
Performance and reliability are important dimensions of quality in the sector of TCS. A good performance directly generates financial advantages for customers because it improves the performance of a total industrial installation. A good reliability is very important for customers of TCS, because a defect on a compressor can result in the need of totally shutting down an installation resulting in high costs.
6.1.4.2 Qualifiers of TCS
Cost is a qualifier of TCS. The cost of a compressor needs to be on a same level as the cost of the competitors of TCS. Contractors especially look at the first investment while customers are looking more at the Total Cost of Ownership (TCO). Especially on TCO, TCS scores well because of the low degree of maintenance being required on its compressors.
Delivery, consisting of 2 dimensions being ‘delivery reliability’ and ‘delivery speed’, is an important qualifier for TCS. If the delivery speed (delivery time) of TCS doesn’t fit within the project planning of a contractor or a customer, the order will be lost. To be a player in the market of compressors, the delivery time needs to be a maximum of 18 months. Because the delivery time of TCS being between 12 and 24 months at the moment, it is important for the company to reduce the lead time, although still no orders are missed because of good contacts with customers and contractors. Besides this, TCS has a poor delivery reliability resulting in penalties reducing the profit of the company.
Karturia & Partovi (2000) are providing managerial tasks for the competitive priority ‘delivery’. While for the strategy of TCS the lead time is a qualifier, within this research it is the main goal. One of the key managerial tasks for ‘delivery’, being an input for the layout of TCS, is operators should be operating in a team-oriented way and these teams should be multi-functional. A product-oriented layout, a product line or cell, has these characteristics.
6.1.4.3 Conclusion
The strategic importance of lead time is low for TCS. Because ‘delivery’ is a qualifier of TCS, the lead time should be maintained at a certain required level to qualify for competing with others. For TCS this means the lead time should be 18 months, meaning a decrease of 6 months is required. A note should be made, this decrease cannot be obtained by just decreasing the lead time of the second phase. Lead times should also be decreased within the first and the third phase.
6.1.5 Conclusions for the lead time of TCS
With respect to the lead time of TCS the following conclusions can be drawn: 1. The current lead time of the second phase of TCS is 186 days.
February 27, 2009 32 caused by waiting for parts and items from preceding processes, waiting caused by a lack of resource availability (workers) and rework.
3. Missing cylinders are stretching the lead time of the test facilities because of orders being released to a test facility while the required cylinders for this compressor still are in the risky process of testing.
4. Workers not being available at the right moments are stretching the lead time of the test facilities.
5. The disturbances on the test facilities are increasing the lead time of these test facilities causing a lack of available test facilities.
6. Lead time has a low importance in the context of the strategy of TCS. Despite of this, there is a need of decreasing the lead time so it will be a good qualifier. 7. The competitive priority ‘delivery’ can be improved by using a
product-oriented layout.
6.2
Floor space of TCS
The direct trigger for this research is a decrease in available floor space. To research possibilities for decreasing the required floor space in order to fit within the new available floor space, the current use of floor space and the importance of a decrease in required floor space will be analyzed by answering the following research
questions:
5. What is the currently required floor space? 6. How arises this floor space?
7. Is available resource capacity increasing the required floor space? 8. Is work in process increasing the required floor space?
9. How important is a reduction of required floor space for TCS?
6.2.1 Currently required floor space by TCS
In the current situation TCS fully uses the main hall and hall 8 for activities of the second phase. The main hall, consisting of hall 1 till 5 and the warehouse, has a total floor space of 9243 m2. Hall 8 has a total floor space of 2520 m2. Because all
available floor space is currently used, this makes the total currently required floor space 11763 m2.
6.2.2 Arise of the floor space of TCS
The currently required floor space by TCS for the main categories of activities within the second phase are shown in table 6. The floor space used by assembly is the
remaining space of the total floor space minus the activities ‘warehouse’, ‘testing’ and ‘packing’.
Table 6: Used floor space by TCS
Location Used floor space by activity Total
Warehouse Assembly Testing Packing SRS Others
Hall 1 0 645 96 0 1529 98 2368
Hall 2 0 777 180 0 132 25 1114
Hall 3 0 722 120 0 99 25 966
February 27, 2009 33
Hall 5 0 0 0 1012 204 0 1216
Hall 8 786 504 0 594 0 636 2520
Warehouse 2686 0 0 0 0 30 2716
Total 3472 3367 540 1606 1964 814 11763
The use of floor space by the different activities will now be further described. 6.2.2.1 Warehouse
The category ‘warehouse’ consisting of expedition, warehouse, quality control and calibration activities requires a floor space of 3472 m2. The main warehouse is located in the main hall. In this warehouse parts are stored for new compressors as well as parts being used for servicing compressors of customers. Besides the main hall, hall 8 partly is used for warehouse activities. In hall 8 big parts and subassemblies like oil- and cooling skids are stored.
6.2.2.2 Assembly
‘Assembly’ consists of all assembly activities including assembly of the instrument racks and disassembly of a compressor and excluding the final assembly on test facilities. This category uses a floor space of 3367 m2 in the current situation. 2863 m2 of this floor space is used in the main hall for assembly activities. Cylinder assembly is performed in hall 1 and uses a floor space of 300 m2. The floor space of 504 m2 in hall 8 is used for assembling ‘frames’ and ‘crosshead guides’. The remaining 2563 m2 has a variable use (varying assembly activities) and is used for disassembled parts that need to be preserved and for work in process.
Use of floor space by machines
For assembling, no machines are used by TCS. During the process of assembling a cylinder, a hydro test installation is used. TCS has one hydro test installation, located in the main hall. This machine is needed by TCS to test whether or not cylinder are fully gas proof. This hydro test installation uses a floor space of 120 m2.
Besides this, 1 spooling installation is used for spooling oil- and cooling skids. These skids need to be spooled to be sure no dirt is in them, possibly causing damage to a compressor. This spooling installation uses a floor space of 204 m2.
Use of floor space by work in process
As shown by the Value Stream Map (figure 5), there is a lot of work in process within production of TCS. Because a VSM shows the situation of only 1 moment, work in process within this VSM might not give a good view of the situation within TCS with respect to the work in process. That’s why work in process of subassemblies has been counted for a period of 2 weeks within TCS resulting in the amount of work in process of TCS as shown in table 7.
Table 7: In process inventory
Subassemblies / Parts Work in process
Subassembly frame 5
Subassembly crosshead guide 5
February 27, 2009 34
Subassembly piston – piston rod 5
Subassembly oil- / cooling system 2
Subassembly instrument rack 25
Pistons 13
Piston rods 17
Crankshaft 1
Table 7 represents the total number subassemblies being on the shop floor, some of them being processed while others are waiting to be processed. A average number of 5 subassemblies are really processed, while the other subassemblies are waiting. Although the number of subassemblies ‘instrument rack’ seem very high, these are the instrument racks for only 1 compressor.
The counted high work in process is increasing the space required for production activities of TCS. For example, ‘frame’ and ‘crosshead guide’ assembly are requiring a space of 504 m2 in the current situation because especially frames require a lot of space. As mentioned before, the high work in process is caused by early order releases. This will be further analyzed in chapter 7.
6.2.2.3 Testing
‘Testing’ consists of the 5 test facilities and requires a floor space of 540 m2 .
The next paragraph will analyze if there is a surplus of test facility capacity, resulting in unnecessary use of floor space. Besides this, because on every test facility there can be a maximum of 1 compressor, work in process of the test facilities has a maximum of 5 compressors. In front of the test facilities, work in process can occur, but these have already been shown within ‘assembly’.
6.2.2.4 Packing
‘Packing’ consists of all packing activities performed by Meilink industrial packing and requires a floor space of 1606 m2. Packing is considered here as a independent department meaning that a surplus of capacity of machines and work in process requiring extra floor space will not be analyzed within this research.
6.2.2.5 SRS
Besides of activities for building new compressors, in the main hall also activities are performed for maintaining, revamping and repairing existing compressors. These activities are performed by the Service Repair Shop (SRS) requiring a floor space of 1964 m2. Activities performed by the Service Repair Shop are outside this research so an surplus of work in process requiring extra floor space will not be analyzed. 6.2.2.6 Others
The category ‘others’ consists of space required for offices, canteens and floor space with no purpose and requires a floor space of 814 m2. No machines are used within this category and work in process is not occurring here. Especially within hall 8, there is a lot of space belonging to the category ‘others’. This is a result of the wide
February 27, 2009 35 6.2.3 The influence of available resource capacity on the floor space
It has been shown in paragraph 6.1.3 that TCS has a lack of test facility capacity in the current situation. As a result, it can be concluded that with the current lead time of the test facilities, TCS has no surplus of test facility capacity resulting in a waste of floor space.
Chapter 7 will analyze possibilities for decreasing the number of test facilities and as a result the use of floor space.
6.2.4 The influence of work in process on the floor space
Paragraph 6.2.2 showed, within assembly a lot of work in process is occurring. This work in process is requiring floor space so decreasing this work in process will decrease the floor space required by assembly. The next chapter, chapter 7, will analyze how order releases are increasing the buffer stocks of TCS, and what system of order releases should be used in order to decrease these buffer stocks.
6.2.5 Importance of reducing the required floor space
Hall 8 has a total area for production of 2760 m2, completely used by TCS while TCS officially hires only a area of 1488 m2 of this hall. The costs for renting this part of the hall are € 65 a year per square meter resulting in a total amount of € 96.720 a year. As mentioned before, TCS will lose floor space of hall 8 partially. When TCS doesn’t increase its totally required floor space, this floor space will have to be rent anywhere else. Assuming, renting this other hall offers the same costs per square meter as in hall 8, this will result in extra costs of renting floor space. The floor space that will have to be rented when floor space isn’t decreasing, is 1272 m2
, the floor space that will be lost. This will result in extra costs of renting floor space of € 82.680.
It can be concluded that a reduction in required floor space is important in order to decrease the yearly extra costs of renting floor space.
6.2.6 Conclusions for the floor space of TCS
With respect to the floor space of TCS the following conclusions can be drawn: 1. The currently required floor space of TCS is 11529 m2.
2. This floor space arises by a number of categories of activities being
‘warehouse’ (3841 m2), ‘assembly’ (3364 m2), ‘testing’ (540 m2), ‘packing’ (1642 m2), ‘SRS’ (1964 m2) and ‘others’ (178 m2).
3. There is no surplus of available resource capacity causing a unnecessary amount of required floor space.
4. Buffer stocks are increasing the required floor space for production activities of TCS.
February 27, 2009 36
7.
Diagnosis phase 2
The first phase of the diagnose has shown the current situation of TCS, with respect to the lead time and the use of floor space. This chapter will analyze the influence of available resource capacity of TCS, on the lead time and the floor space of TCS. Besides this, the influence of Work in Process on the floor space of TCS will be analyzed. Possibilities for improving available resource capacity and decreasing Work in Process will be provided, resulting in a number of implications for design.
7.1
Improving available resource capacity
This paragraph will analyze how to improve available resource capacity in order to decrease the lead time of the test facilities of TCS and the required floor space. In order to improve available resource capacity, possibilities for improving the number of resources and the layout type will be analyzed.
7.1.1 Number of resources
First, it will be shown what causes the lack of workers on test facilities stretching the lead time of these test facilities. Next, it will be shown if the current number of test facilities with the current lead times are having enough capacity in order to produce 42 compressors a year.
7.1.1.1 Number of workers
A lack of available workers (resources) is stretching the lead time of the test facilities of TCS. This is caused by workers being hired according to a project planning having no direct connection with procurement so it isn’t actual. A increase in delivery times of parts is not incorporated in the project planning. Because some parts arrive later than originally planned, this planning can’t be executed but the workers already are hired. Figure 11 shows there is no connection between procurement data and the project planning resulting in an impracticable project planning and workers being available at the wrong moments.
Procurement Shop Shop planning Delivery times Planning in Excel Suppliers Order Delivery time Delivery time Required capacity Required part delivery timing
Workers
Planned order release Order releases Parts availability Capacity request Hired capacity
February 27, 2009 37 Because the hired capacity doesn’t fit the real capacity there are indirect hours, but there are also moments there is too much work for the available workers. As a result the lead time of the test facilities is stretched because a choice has to be made on which test facility to work. This causes waiting time on the other test facilities. 7.1.1.2 Number of test facilities
TCS uses 5 test facilities that all can be used for testing a limited number of compressor models as shown in table 8.
Table 8: Test facilities of TCS
Test facility Suitable for compressor models
1 CHS, C7, C12
2 C25, C35, C45
3 C25, C35, C45
4 C45, C85
5 C45, C85
In order to determine if these test facilities are having enough capacity to produce 42 compressors a year with the current lead time, first the current lead time for all compressor models and the number of compressors to produce per model are calculated in appendix 8. For these calculations, it is assumed the proportions in the product mix will remain constant. The number of test facilities depends on the product mix that needs to be produced. Further research, for example simulations and a
sensitivity analysis, is required in order to determine the influence of a changing product mix on the number of test facilities being required.
Second, it is calculated if the current test facilities are having enough capacity for producing the proposed number of compressors with the current average test facility occupation of an average of 2 months per compressor. This calculation, shown in appendix 9, shows the current test facilities are not having enough capacity with the current average lead time of these test facilities of 2 months. The results of the calculation are shown in table 9. The results shown in this table should be seen as an indication for the required test facilities, because there are a number of uncertainties:
- Variations are possible in the product mix influencing the number of test facilities
- Variations are possible in the realized lead times compared with the planned lead times for the different compressor models
Table 9: Load of current test facilities
Test facility Compressor types Nr. of test facilities Load
1 CHS, C7, C12 1 86%
2,3 C25, C35, C45 2 193%
4,5 C45, C85 2 134%
February 27, 2009 38 to produce 42 compressors a year. Besides this, it will be analyzed if there are
possibilities for decreasing the required floor space by the test facilities. 7.1.2 Improving available resource capacity by the number of resources
It will now be analyzed if available resource capacity can be improved, by changing the number of resources. First it will be analyzed how the number of workers being available for the test facilities can better fit the required number of workers for these test facilities. Next, it will be analyzed if the current test facilities are having enough capacity for producing 42 compressors, when the lead time of these test facilities has decreased.
7.1.2.1 Number of workers
To match the available number of workers (available resource capacity) with the requested capacity, the planning used as a basis for hiring workers should be actual meaning the required parts for executing the activities mentioned by the planning should be available. This can be obtained by continuously actualizing the planning by data of delivery times. Besides this, by hiring workers as late as possible, so actual required capacity is known when hiring workers, the number of hired workers can better match required capacity.
7.1.2.2 Number of test facilities
In a perfect situation, meaning all parts are available, resources are available and there is no rework, lead times are decreasing. Project planning made, together with the shop, based on experiences a evaluation of realizable test facility lead times (planned lead times). As a result the load of the current test facilities with this realizable lead time (planned lead time) decreases as shown in table 10 (Calculation: appendix 10).
Table 10: Realizable test facility load
Compressor types Nr. of test facilities Load
CHS, C7, C12 1 48%
C25, C35, C45 2 92%
C85 2 88%
Unfortunately, a perfect situation cannot be obtained by TCS because rework still occurs within TCS. Besides this, it is not possible for TCS to wait till all parts are available for performing the tasks on a test facility because this will increase the delivery time of TCS as a result of long delivery times of some parts. As a result, if it concerns parts being required later on in the process of final-assembly, TCS should be able to start assembling a compressor while it is not resulting in the risk of a long test facility occupation.
It will now be analyzed how the risk of a long test facility occupation can be
decreased. Besides this, the number of test facilities possibly can be decreased if the number of models a test facility is able to test increases. The impact of increasing capabilities on the number of required test facilities will also be analyzed here. Decreasing the risk of disturbances on the test facilities
