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Process Oriented Measurements and Improvements ‐ an Analysis of the OFCE‐Process at Tetra Pak BU DBF

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Process Oriented Measurements and Improvements ‐ an Analysis of the OFCE‐Process at Tetra Pak BU DBF LUND UNIVERSITY FACULTY OF ENGINEERING Process oriented measurements and improvements ‐ An analysis of the OFCE‐process at Tetra Pak BU DBF Authors Ingemar Edman Alejandro Lisson Supervisors Leif Nilsson Dag Näslund June 2009 ii PREFACE Process orientation, measuring and improvement work are all important concepts in a contemporary business environment. To be able to study how these are practically implemented in a world market leading company has been both a great experience and a great challenge. We hope that the reader will be able to grasp the difficulties that exist related to the above mentioned topics and learn something from our efforts. The content of this report would not have existed without all the people that generously took time from their busy schedules to share their thoughts and answer our questions. Spending time at Tetra Pak has been a pleasure, and we hereby express our sincerest gratitude towards everybody who has helped us along the way. Special thanks go to our mentor Leif Nilsson who gave us the opportunity to conduct this master thesis and who supported us and challenged us throughout the whole project. Another person who has had great impact on the final results is our supervisor Dag Näslund at Lund University, Faculty of Engineering. His guidance has greatly influenced our work and, we believe, contributed to better results. We thus would like to thank him as well. Last but not least we would like to thank our opponent Nina Åxman, whose comments and ideas have helped to improve the readability of this report. Lund, June 2009 Ingemar Edman Alejandro Lisson iii iv ABSTRACT Title Process oriented measurements and improvements - An analysis of the OFCE-process at Tetra Pak BU DBF Authors Ingemar Edman, Industrial Management and Engineering, Faculty of Engineering, Lund University Alejandro Lisson, Production Engineering, USB Venezuela (Exchange student at Faculty of Engineering, Lund University) Supervisors Leif Nilsson, Operations Director, Tetra Pak Dairy & Beverage Systems AB Dag Näslund, Docent, Department of Engineering Logistics, Lund University Background During the last decades markets have become increasingly competitive due to globalization. This has forced companies to become process oriented to provide more value to the customer by focusing on the efficiency and effectiveness of the daily business. An important step in this work is to introduce a measurement system that can help to monitor performance and determine improvement areas. Tetra Pak BU DBF, a company within Tetra Pak, has during the last years become process oriented and are currently working with applying a lean philosophy. To overview this they have introduced a measurement system called ‘New Milestones’ in their order fulfilment process (OFCE). The system focuses on measuring the internal delivery accuracy, and the results from the last two years indicate issues in the process. The delivery accuracy target towards external customers is still met, but only through the use of overtime and excessive resources. Purpose The main purpose of this thesis is to conduct a critical analysis of the order fulfilment process (OFCE) at Tetra Pak BU DBF as well as of its measurement system in order to identify improvement possibilities. Method The study will be conducted as a case study, focusing on a single case. Triangulation between qualitative and quantitative data is used in order to increase the credibility of the thesis. The main source of information is interviews, which is complemented with operational data and observations. v Conclusions Deviations from the process descriptions In general the process design seems to be followed and only a couple of deviations from the directives were identified. On the other hand there are strong reasons to believe that these deviations are causing problems in the handling of the orders. All deviations from process directives should be eliminated to be able to observe the true process performance. Delays throughout the process The clarification of orders takes too much time and delays later stages of the process. At the same time, the engineering is suffering from delays due to revisions of the bill of materials (BoM). To reduce delays in these phases, feedback on the reasons of the delays should be collected. In relation with purchasing of components problems are related to late deliveries from the suppliers. To solve this problem, dialogue, incitements and fines could be used. In the testing of the produced equipment most of the interruptions are related to problems originated in the previous phases of the process. Here feedback is available but it is not always used for driving corrective actions. In general better feedback systems are needed. Evaluation of the measurement system The OFCE-process has, as mentioned, some issues but the bad results indicated by the ‘New Milestones’ are also related to problems with the measurement system itself. One issue is that the ‘Order confirmation Milestone’ does not take into consideration that some orders needs additional time to be clarified. Another issue identified was that the Milestones measuring the ordering of components are not measure what was intended. The results are therefore not indicating the real process performance and divert attention from a problem area. In general the Milestones need to be reviewed both in terms of design and measuring. Keywords Process, Process management, Performance measurement systems, Lean, WCM, Order fulfilment, Tetra Pak, case study, analysis vi TABLE OF CONTENT 1 INTRODUCTION .............................................................................................................. 1 1.1 Background .......................................................................................................................... 2 1.2 Purpose ................................................................................................................................. 3 1.3 Problem discussion .............................................................................................................. 3 1.4 Objectives ............................................................................................................................. 3 1.5 Delimitations and focus ....................................................................................................... 4 1.6 The target group ................................................................................................................... 4 1.7 Report structure ................................................................................................................... 4 2 METHODOLOGY .............................................................................................................. 7 2.1 Epistemology ........................................................................................................................ 8 2.1.1 Scientific viewpoints ................................................................................................... 8 2.1.2 Scientific philosophies ................................................................................................ 8 2.1.3 Epistemology of the thesis ........................................................................................ 10 2.2 Research methodology and credibility .............................................................................. 10 2.2.1 Research methodology .............................................................................................. 10 2.2.2 The research methodology of thesis ......................................................................... 11 2.2.3 Credibility ................................................................................................................. 11 2.2.4 Credibility of the thesis ............................................................................................. 12 2.3 Research strategies and design ........................................................................................... 13 2.3.1 Quantitative studies .................................................................................................. 13 2.3.2 Qualitative studies ..................................................................................................... 13 2.3.3 Type of studies .......................................................................................................... 14 2.3.4 Research strategy employed in thesis ........................................................................ 14 2.3.5 Data collection .......................................................................................................... 14 2.3.6 Data collection employed in thesis ........................................................................... 15 2.3.7 Research Design ........................................................................................................ 15 2.3.8 Research design employed in the thesis ................................................................... 17 2.4 Case studies ........................................................................................................................ 17 2.4.1 Case study procedures .............................................................................................. 17 2.5 Interview technique ........................................................................................................... 19 2.5.1 Structured interviews (Quantitative) .......................................................................
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