IMPROVEMENT OF INBOUND LOGISTICS USING QUALITY CHECK … · 2018-07-29 · IMPROVEMENT OF INBOUND LOGISTICS USING QUALITY CHECK TRIGGER (QCT) METHOD 1S. Jaisankar, 2C. Julian GnanaDhas,

IMPROVEMENT OFINBOUND LOGISTICS USING

QUALITY CHECK TRIGGER (QCT) METHOD

1S. Jaisankar,

2C. Julian GnanaDhas,

3Dr. Manivel,

1Associate Professor, Department of Management, Kumaraguru College of Engineering, Coimbatore,

Tamil Nadu, India,

2Research Scholar, School of Management, Sri Krishna College of Engineering and Technology,

Coimbatore,Tamilnadu, India.

3Professor, Department of Mechanical Engineering, Kumaraguru College of Technology, Coimbatore,

Tamil Nadu, India.

[email protected]

ABSTRACT

Competitive landscape has forced the companies to embrace lean approach in their

supply chain. New challenges now include a focus on supply to determine the right time and

place for product delivery (Chin et al., 2004; Robinson &Malhotra, 2005). International business

competition is no longer limited to organizations but now includes supply chains (Kuei et al.,

2001). The aim of this study is to visualize the inbound logistics of OEMs from Tier-1 suppliers

by adopting VSM to explore the possibilities of reducing supply lead time. The literature

evidences indicate that in recent past, Value Stream Mapping (VSM) technique has been used in

Supply Chain Management (SCM) to eliminate non-value adding activities to optimize the

supply chain performance. An attempt has been made through this study to introduce the VSM in

inbound logistics and improving the supply process by automating the inward quality check

using Quality Check Trigger (QCT) method. This QCT model would reduce the quality check

lead time without compromising the quality of the supplier and helps to increase the efficiency of

the inward logistics. The current paper also explains how standardization and flexibility optimize

International Journal of Pure and Applied MathematicsVolume 119 No. 17 2018, 2411-2424ISSN: 1314-3395 (on-line version)url: http://www.acadpubl.eu/hub/Special Issue http://www.acadpubl.eu/hub/

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the inbound process by identifying waste elimination through eliminating non-value adding

motions and waiting time.

Keywords: Supply Chain, Value Stream Mapping, Inbound Logistics, Quality Check Trigger

1. INTRODUCTION

Supply chain management is gaining momentum among the business community in

recent decades. One of the most significant paradigm shifts of modern business management is

thatindividual businesses no longer compete as solely autonomous entities, but rather assupply

chains. Business management has entered the era of inter-network competition. Inthis emerging

competitive environment, the ultimate success of the single business willdepend on

management's ability to integrate the company's intricate network of businessrelationships

(Drucker, Peter F, 1998). Understanding the importance of managing the network across the

supply chain, the companies are directly overseeing the entire supply chain network.

Dealing with the dynamics between delivery of product / service along the chain and

offering a quality product / service to the customer or end user is a critical issue in managing

today‟s organization. The Original Equipment Manufacturers (OEM) positioned in the middle of

the supply chain are facing the challenges of product variety, lower cost and better quality. Lean

thinking which aims eliminating wastes, reducing cost and improvementcontinuously provides a

strategic guiding tool for OEMs so as to gain competitiveadvantages (M.A. Lewis, 2000).

Therefore, the lean production approach pioneered by Toyota is beingadopted by lots of OEMs.

The term 'lean' embodies a system that uses less of all inputs to createoutputs similar to the mass

production system but offering an increased choice to theend customers (J.P. Womacket al.,

1994). For full effectiveness, the lean production system must beextended down through the

supply chain (M. Ronan, 2001).

Lean Manufacturing uses Value Stream Mapping (VSM) as a necessary tool to eliminate

muda (waste) from organizations (Suarez et al., 2016).However, both in literature and in practice

there are few tools that allow a visualization of the supply chain from the perspective of Lean

Thinking or Kaizen (continuous improvement) (Vokurka et al., 2007). Understanding and

visualizing (Irfan Ahmed Mohammed Saleem, Dr. S. Jaisankar2018),supply chain management

is a crucial practice for all managers seeking to deliver quality products and / or services. Lee

International Journal of Pure and Applied Mathematics Special Issue

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(2004) goes even further by indicating that only organizations that devise agile, adaptable and

aligned supply chains will be able to continue competing in today's environment.

The purpose of this study is to (M. Lawanyashri,G.Priya, M.B.Benjulaanbumalar, Deepa

Mani, K.Santhi 2017) describe the implementation of VSM in inbound logistics of the supply

chain by mapping the inbound process. An attempt has been made to eliminate muda (waste)

from Tier I supplies to OEM. Further,this paper proposes to automate the inward quality check

using Quality Check Trigger (QCT) model to improve the supply process. In this study along

with QCT model, importance of lean characteristics such as standardization and flexibility in

optimizing the inbound supplies are also recommended.

2. PROBLEM STATEMENT

The inbound logistics of OEM is constrained because large number of parts are getting

flowing into the company which are supplied by Tier 1 suppliers. All the components delivered

by these Tier 1 suppliers are being loaded, transported and delivered to the manufacturer. Once

the materials are received the inward inspection department undergoes a rigorous inspection

process before taking into factory production line. Critical parts are inspected 100% and non-

critical items are inspected using acceptance sampling method. The inspection process takes

longer duration due to presence of non-value added activitieswhich greatly affect the efficiency

inward supply chain logistics. There is no strong evidence from the literatureon reduction of non-

value adding activities in the inspection process.ManyOEMs are facing problems in inward

logistics or adoptinganinward inspection policy based on the combination of factors likerejection

rate, inward frequency and critical aspects of the incoming components that largely affects the

efficiency supply chain.

The lack of pull system and distance between the Tier 1 supplier and OEM forced the

companies to carry large amount of inventory. There is a need to address these issues as most of

the literatures of value stream mapping are focusing on reducing the non-value added activities

in the production process and not the upward stream of the supply chain. The present paper

attempts to analyze the non-value adding activities in the inbound logistics using value stream

mapping (supply stage between Tier 1 suppliers and OEM) in order to enhance the supply chain

efficiency.


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3. Application of VSM in Inbound Logistics

Originating from Toyota's production management optimisation, VSM is a tool that

allows visualisation of transport, material and information flow throughout all processes in the

supply chain or a part of it. Mapping the current situation, the total time of production and total

value adding time can be assessed (Liker J. K., 2004) as well as attention to hidden problems or

waste of time/resources can be discovered (Liker J. K. 2006)

Following the mapping of current value stream and defining of the bottlenecks, the suggestions

for avoiding waste can be suggested. Eliminating the sources of waste is a process following the

defining of the structure and details on selected types of wastes (Liker J. K. 2006).

4. Methods of Implementation

The methods of implementing VSM as anoptimisation tool involve modeling the

movement/flow of activities, information and material (Liker J. K. 2006). Among the mapping,

assessment of processes involves measuring time use of the activities as well as stating whether

the process is a value adding or non-value-adding process (Rother, M, Shook, J., 2003); the first

involving material unpacking or delivery of materials and the latter involving mainly assembling,

folding, painting (Lasa, I. and et al, 2009). The results are in addition to calculations, presented it

visually.

The method involves mapping the current value stream and suggesting a future value

stream. The map of the future value stream can be compiled through consultations with all

stakeholders, such as production participants, operations managers and company's management

(Liker J. K., 2004).

Current State Map

The first step is to define the current map as shown in fig. 1. A typical value stream

between Tier 1 supplier and OEM is mapped in the figure.


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Figure 1: Current State Mapping of Tier 1 supplier and OEM

The Tier 1 suppliers produces products based on the forecast and supply parts to OEM

mostly based on push system. Once the goods are delivered by the supplier, the parts are stored

before carrying out the inspection. The map stated bottlenecks and wastes in the process due to

the non-value added activities storage and inspection before taking up the components for final

assembly. At inspection stage most of the parts are being inspected 100% and no inspection

policy being followed based combination factors like rejection rate, inward frequency and

critical aspects of the incoming part. This has resulted in adding wastes in the production

process, extending the cycle time and inefficiency in the supply chain.

5. QUALITY CHECK TRIGGER (QCT) METHOD

The mapping of current status of OEM in the previous section states that non-value added

activity of 100% inspection is undertaken before using the parts in final assembly. Hence there is

a need to develop a mechanism to trigger the quality check based on inspection policy which in

turn reduces the cycle time of production and improve the supply chain efficiency. A study had

been carried-out using quantitative research design to develop a Quality Check Trigger (QCT)

Method with the help of secondary data available with ERP system of a leading OEM in

Coimbatore.


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The main objective of this study is to assess the quality level of the supplier based on their

rejection rate and to develop an inspection policy based the combination of factors likesupplier

quality, inward frequency, criticality and non-criticality of the parts. The inward data of all Tier 1

suppliers for the last one year were retrieved from the ERP system of the organization in MS-

Excel worksheet format. The raw data obtained from the system look like,

MS-Excel was used to carry out two analysis on the collected secondary data from the system.

Analysis 1 - creation of inward trigger based on material inward frequency.

Analysis 2 – creation of inspection plan based on material criticality and rejection rate.

Analysis 1 – Creation of Inward Trigger Based on Material Inward Frequency

From the analysis, it was observed that the frequencies of a single item are different and

there is no symmetrical pattern in material entry was found. By considering the most occurring

frequency, final frequency of each and every item has been arrived using Excel spreadsheet

analysis. The frequency ranges from daily, weekly, fortnight, monthly, bimonthly, quarterly and

annually.

Analysis 2 – Creation of Inspection Plan Based on Material Criticality and Rejection Rate

With the help of rejection rate analyzed using Excel spreadsheet and material criticality, a

new inspection plan has been created to minimize the non-value added activities in inspection

process.

The new inspection plan for each and every item is as follows:

Figure 2:Data on inward items


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Critical

100% inspection recommended for critical parts

Non-critical

If rejection rate is 75% & above - 100% inspection recommended for at least next

quarterly and then repeat the recommended class.

If rejection rate is 50% to 75% - 80% inspection recommended for at least next quarterly

and then repeat the recommended class.

If rejection rate is 25% to 50% - 60% inspection recommended for at least next quarterly


If rejection rate is up to 25% - 30% inspection recommended for at least next quarterly


If rejection rate is 0% - Inward without inspection until next rejection identified.

Working of QCT

This new inspection plan for critical and non–critical parts forms the basis for modeling Quality

Check Trigger with the aid of MS-Excel. The QCT will act as a trigger once a part is getting

inwarded and furnish the criticality status, rejection rate, the recommend action and the model

picture.

Figure 3Quality Check Trigger Sheet


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The inspection in-charge may act according to the trigger and do the quality check as

suggested by the trigger.

Calculation of time taken to do quality check using the old inspection plan and the new one

for all the critical and non-critical parts reveals that 43 hours is saved if the new inspection plan

and QCT method is used. Time saved in inspection would bring down the non-value added

activities during inward quality check and could enhance the efficiency of supply chain.

6. LEAN PHILOSOPHY

In short lean is a systematic approach to enhance value to the customer by identifying and

eliminating waste through continuously improving the flow of the product to the customer

(Manrodt et al., 2008). The lean concept as we know it nowadays is the result of the evolution of

the Toyota Production System (TPS), developed and gradually evolved from 1948 onwards.

The term „lean production‟ was first used by Krafcik in 1988, but it did not become globally

known in the academic world until the book „The machine that changed the world‟ (Womack et

al., 1990) was released. In this book lean production is seen as the next paradigm of

manufacturing beyond mass production, of which the TPS was considered the best-known

example and thus became the model on which the book‟s description was based (Lander et al.,

2007). Within the TPS system it became clear that the only activities which count within a

production system are the activities that add value for the customer, and thus eliminate all other

activities which were labeled as waste (Ohno, 1988).

Two Lean principles from the study conducted by (Yuheng Zhu), standardization and

flexibility are applied in inbound logistics to optimize the Tier 1 supplies to OEMs.

Standardization

A „lean‟ organization means „an organization which uses its entire action principles of

leanness and flexibility‟ (Kosonen, 1994). The basic idea is to do all the organization‟s activities

as lean as possible. Standardization has been seen as a fundamental building block for the lean

philosophy; it supports and maintains organizations‟ lean workplace and structure. Successful

implementation of standardization will determine whether the organization is able to transform to

a sustainable lean structure. It improves flow, simplifying the management of the physical

inventory, reduces mistakes and motion. Standardization should also be used as an indicator to


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check daily performance and identify infraction. Furthermore, it helps to develop organization

internal reliability.

Standard Procedure

In the lean philosophy, standard procedure is regarded as a useful tool to reduce waste. In

5S systems, standardization is described as maintain cleanliness and order – perpetual neatness

(Slack, 2004). Standard procedure could help to eliminate all types of waste, such as waste

related to uncertainty, waiting, searching and so on. By eliminating what is unnecessary and

making everything clear and predictable, clutter is reduced, hence, the work process is made

easier and faster. In order to reach this step, the process needs to be designed; standard procedure

should be easy and simple. The whole complex process can be broken down into a group of ease

procedures, and standardize them to make sure the procedures are kept simple and waste free.

Behind this concept, the operation needs to focus on simplicity, repetition and experience breed

competence (Slack, 2004). The internal organization needs to focus in each process on limited,

manageable sets of products, technologies and volumes. And between all the standard procedures

there should be a coherent structure, rather than inconsistency and conflicts.

Standard Time

Standard time in a process means trying to satisfy the customer‟s demand in time. This is

to reduce waste such as waste of inventory, unnecessary waiting time, and so on. Amongst the

lean philosophy, the JIT production system is a key method to achieve significant reductions in

production lead times by having all processes produce the necessary parts at the necessary time

with the minimum stock, which is necessary to hold the processes together (Reichhart, Holweg,

2007). In lean processes, any stoppage will affect the whole process. The waste in a process can

be measured by the throughput time. The longer items are being processed, are held in inventory,

moved, checked orsubject to anything else that does not add value, the longer they take to

progress through the process. Hence, paying attention at what exactly happens to the items

within a process is a good method to identify the waste. Setup time reduction could also help to

reduce waste in the process, and it supports the standard time. Setup time reduction is a process

of reducing the time taken to change a process from one activity to the next (Slack, 2004).

Standard time helps the organization to reduce the waste by creating a smooth, continues flow

and holding less inventories.


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Flexibility

The lean philosophy focuses on enriching value from the customer perspective (Harrison

and van Hoek, 2008). The aim of lean production is to increase efficiency, by means of

decreasing total lead time and increasing flexibility in processes. Hence, a high level of

standardization is not the only key for elimination of rework and waste, but it also opens the way

for capacity and flexibility (Balle, 2005). Flexibility is the degree to which an operation‟s

process can change what it does, how it is doing, or when it is doing (Slack, 2004). According to

Womack (1990), the basis of a lean enterprise is dynamic, multi-skilled groups. These groups do

the main part of work and they carry the responsibility of these tasks. This makes the entire

organization more flexible. Furthermore, flexibility shows in employees‟ involvement. By

instituting observations as practical learning, employees can provide more feedback about how

regular daily operations can be executed more efficiently and result into lean practice, in order to

reduce the number non-value adding activities.

7. CONCLUSION

The present paper proposed a roadmap to enhance the supply chain efficiency by

introducing value stream mapping for OEM to tier-1 supply chain optimization using quality

check trigger method. The current status of inward process was mapped and found non-value

added activities during the inspection process of inward parts quality check. This study has

developed a quality check trigger (QCT) method using MS-Excel. This QCT proved to be

reducing the quality check lead time without compromising the quality parts supplied by the

suppliers and thus increases the efficiency of the inward logistics. The conceptual study on Lean

principles in this article suggests, OEMs may adopt standard procedures and standard time to

continually eliminate waste, create value and improve material flow between Tier 1 supplier and

OEM. Furthermore, this paper also discussed that the standardization is the basic of flexibility.

Standardization reduces the waste, thus, lead to more resource to dealing with flexibility. The

current paper clearly stated how standardization and flexibility optimize the inbound process by

identifying waste elimination through eliminating non-value adding motions and waiting time.


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Documents

IMPROVEMENT OF INBOUND LOGISTICS USING QUALITY CHECK … · 2018-07-29 · IMPROVEMENT OF INBOUND LOGISTICS USING QUALITY CHECK TRIGGER (QCT) METHOD 1S. Jaisankar, 2C. Julian GnanaDhas,