Enterprise Management Through Kaizen-Lean Methodologies

Enterprise Management through Kaizen-Lean methodologies Ana Rita da Costa Ismael Departement of Engineering and Management, Instituto Superior Técnico Abstract The implementation of Kaizen methodology is increasing in several companies. The Kaizen methodology uses several Lean tools to reduce production and structural costs and to achieve the continuous improvement by reducing waste activities. Iberol, leader of the Portuguese biodiesel production market, needed to improve its processes and change the culture rooted in the company in order to better adapt to the new challenges. The implementation of Daily Kaizen in Iberol was very useful for the organization of the daily work by creating regular team meetings and cleaning and organizing the workplace through the implementation of 5S’s. Based on the Total Productive Maintenance approach, the Autonomous Maintenance and the Planned Maintenance were implemented to reduce maintenance costs. Other important Lean tool is the SMED (single-minute-exchange-of-die), this tool was implemented in the Iberol’s seed exchange process by mapping the whole process, detailing the internal and external tasks, normalizing procedures and finding improvement opportunities to a final aim of reduct the setup time. To gather all the important information and to create a historical data of the key performance indicators used in each Daily Kaizen, an Excel-based framework was created, named KaiDi, which could be used in the company’s sustainability assessment.

Keywords: Kaizen, Lean, continuous improvement, process improvement

1. Introduction minimal [Boca 2011; Black, 1999]. This The economic, cultural, political and method aims to improve continually and financial globalization significantly enhanced incrementally all aspects of a the company business opportunities and the process/organization through the extensive level of competition faced by companies. So, involvement of all employees in the company they tried to reduce their structural and [Imai, 1986; Thessaloniki, 2006] and having production costs through continuous as driver the Quality, Cost, Delivery (delivery process improvement and waste reduction services) and Motivation (QCDM) model. by using management tools [Mesquita et al, Kaizen created this model to improve QCDM 2003 e Mrak, 2000]. This approach was in the company and by eliminating waste particularly important in the last ten years (Muda in Japanese) and improving due to the general crisis that affected a great documentation processes. This leads to a part of the developed countries [IFR]. The sustained growth of earnings and sales Kaizen Method has been distinguished as a [Kaizen; Imai, 1997]. The reduction of waste good method for processes improvement can be carried out using Lean concepts and because its implementation costs are tools such as Single Minute Exchange of Die

(SMED), Work Standardization and 5S that every organization has problems. This [Lean&SixSigma]. provides opportunities of improving Quality, This paper describes the implementation of Control, Delivery and Motivation (QDCM Kaizen-Lean methodologies at Iberol, the model) [Kaizen]. The improvement process Portuguese leader of biodiesel production. follows next five steps: 1- Define Costumer Iberol intends to optimize its processes and Value, 2- Define Targets and Kaizen Teams, make a deep cultural change in its 3- Work on Gemba (the place where value is workforce. Kaizen implementation is a long- created), 4- Search for the three types of run process with no end data because waste: Muda (activities that are wasteful), improvement is a never-ending process. Mura (inconsistency of stocks) and Muri In Section 2 of this paper, it’ll be presented (overburden of procedures) [Typeswaste]. the Kaizen-Lean methodology. In Section 3 These ones are the main causes of the case study will be presented, Section 4, productivity losses, and 5- Kaizen the implementation of the methodology implementation. Kaizen-Lean in Iberol will be described and In order to achieve a successful the conclusions reached in Section 5. implementation, the Kaizen methodology follows the Kaizen Management System 2. Kaizen-Lean methodology (KMS). The KMS focus on: Mission – clarify 2.1 Kaizen the strategic objectives of the company, Kaizen is a Japanese word that means Initiatives – includes five initiatives: Total continuous improvement. The Kaizen Flow Management (TFM) that covers all the methodology was developed after the 2nd information/material flow activities World War during the Japanese economic [Synchrono, 2013], Total Productive crisis. At that time, it was created, in the Maintenance (TPM) that searches for the USA, Productive Centers to form Japanese productive excellence [TPMa], Total Quality engineers in the best practices at American Management (TQM) that focus on the industries [KHistory]. The knowledge improvement of quality at all levels [Holmes, acquired combined with the oriental culture 1993], Total Service Maintenance (TSM), lead to a new methodology named Kaizen. which is the TPM applied to services [TSMa] Thirty years later, in the seventies, the oil and Innovation and Development crisis change radically the international Management (IDM) that supports the market and the western companies revealed development of new projects [Kaizen], difficulties to adapt to this new reality, in Organization and Implementation of contrast to the Japanese companies that Kaizen – manages the change/transition practice Kaizen methodology. So, Western from an old culture to the new one, decided to implement the Kaizen Principles and Values – includes Kaizen methodology in theirs facilities [Kaizen]. thinking and the elimination of waste (Muda). This methodology of continuous Muda can be generated by people, improvement is based on three key points: resources or machines [Thessanoliki, 2006] Everybody, Every day and Everywhere and are associated to: over production, [Imai, 1986] and begins with the admission

2 inventory, defects, motion, over processing, The Lean methodology uses different tools waiting and transportation [Melton, 2005]. to identify wastes and improve processes: The Plan-Do-Check-Act (PDCA) is a four  Value Stream Mapping (VSM) – The VSM step cycle that many organizations used to tool, developed at Toyota, maps in high guide their improvement efforts. Plan: detail the flow of material and information identify the problem and plan a change/test. of a process [Irani & Zhou 2008]. A VSM Do: Apply the change/test. Check: analyzed involves: Define the Value for the the results. Act: Implement and standardize costumer, Map the initial state of the the procedures that had success [PDCA]. process, Analyze the data and create improvement proposals, Map future state 2.2 Lean of the process and Make an action plan. Lean is a socio-technological system whose  5S’s - The fives's was developed by Lean, main objective is to eliminate waste by in Toyota, with the main objective of concurrently reducing or minimizing creating a clean and organized workplace supplier, customer and internal variability [5Sa]. The five S’s refer to five Japanese [Shah & Ward, 2007].The Lean methodology words that represent five different focuses on eight key-points: Purpose, activities: Seiri (Sort) – Sort the objects and Process, People, Pull, Pull-Based, keep only the ones that are essentials in Prevention, Partnering, Planet, Perfection the work place, Seiton (Set in order) – [Hines, 2010]. Organize the workplace, Seiso (Shine) – Melton (2005) states that the implementation Keep clean the workplace, Seiketsu of Lean methodology involves five steps: 1) (Standardize) – Standardization of Collect data: Observe the current processes processes and maintain the three previous and search for non-added value activities or steps and Shitsuke (Sustain) – Keep all the waste activities. Involve the people who run standards in order [Fargher, 2006, Manea, these processes taking advantage of their 2013]. knowledge, 2) Analyze Data: Start to  SMED - Single Minute Exchange of Die diagnose the issues through data analysis (SMED) is a system for reducing the time and look for undesirable effects. 3) Design in manufacturing processes. The SMED the change: Based on the data analysis, implementation follows the following steps: design the change using the actual or a new 1) Observe the current methodology: the process having as objective the elimination process must be filmed for an exhaustive of waste, 4) Make the change: The process analysis, 2) Separate internal from external is put in place with appropriate training and activities; 3) Convert internal activities in measures. The team has the ability, if external activities; 4) Line up the Setup; 5) necessary, to monitor the sustainability of Continuous training: after the first the change and make adjustments 5) successful application of SMED, the Measure benefits: The new process is employees should be trained in the new monitored and the benefits evaluated on an procedures [Dave 2012, SmedA, SmedB]. ongoing basis. If necessary, further improvements can be made [Melton, 2005].

 Route Cause Analysis - Root Cause costs. The BPR reformulates the processes Analysis investigate and categorize the through its Redesign, Retooling and Re- causes of the problems that helps to orchestrating [Fitzgerald and Murphy, 1996; identify why an event occurred. It is also Hammer and [Hammer e Champy]. This applied to evaluate processes and risk method involves major improvements and management [Rooney, 2004]. This tool structural changes in terms technological, uses the Five Whys technique, i.e. the organizational and human [Zigiaris, 2000]. cause of the problems is questioned five A BPR project has a start and an end date, times, which helps the identification of the while the Kaizen methodology has no end true cause. [Sondalini, 2011]. date since its philosophy based on continuous improvement, which means is a 2.3 Comparative analysis of others never-ending effort to identify and eliminate methodologies root causes of problems [Bogdaniou; The Kaizen-Lean methodology is compared Gebrehiwot, 2010]. Changes in the with Six Sigma and Business Process processes, resulting from the Reengineering. implementation of BPR, are usually abrupt

2.3.1 Six Sigma because are usually associated with the use Six Sigma is a management-oriented of new technologies or equipment. The use approach to improve products, services and of Kaizen methodology introduces only slow, processes through a continuous reduction of continuous and incremental changes in the defects by using advanced statistical tools process because they are supported by [Kwak and Anbari, 2004; Antony 2004, common sense [Gebrehiwot, 2010]. Urdhwareshe, 2000]. The implementation of Six Sigma and BPR methods involve a the Six Sigma has as objective to attain a drastic change of procedures but do not act maximum of 3.4 defects per million of directly on a socio-cultural change at the processes, products or services, or achieve company. a success rate of 99.9997% [Kwak and 3 Case study of Kaizen-Lean Anbari, 2004; Thornton]. methodology in Iberol SIx Sigma and Kaizen-Lean is the fact that This paper addresses a real case study of a Six Sigma uses a statistical analysis to Portuguese manufactory company, Iberol. quantify the defects in the processes and The implementation of the Kaizen-Lean Kaizen-Lean makes many incremental or methodology in Iberol, aims to improve and small-step improvements in the whole restructure all the processes and, process over time [Lean&SixSigma, ABI]. simultaneously, to make a cultural change in 2.3.2 Business Process Reengineering its workforce, in order to reduce costs and According to Bogdanoiu, the Business reorganize work and flow of information. Process Reengineering (BPR) helps the Iberol produces biodiesel and flour from soy companies to rethink the way that certain bean and rapeseed. The first step of the work was performed in order to improve process involves the Preparation of the customer service and to reduce operational seeds. In this step, the seeds are crushed,

4 cooked and laminated. The rape seeds, procedures and finally the fourth level which contain 40-50% of oil, are pressed to improves the standard procedures. a partial oil removal. Next, soy bean and Iberol implemented the first level of Daily rape seed are expanded and then contacted Kaizen in all operational and administrative with hexane. The solid phase (bagasse), areas. It was build a team board (Fig. 1), after hexane removal, is transformed in flour which includes the performance indicators and sold to be incorporated in animal feed. (green area), the team’s plan (red area), the The liquid phase, a mixture of oil and action plan (red area), the outcome of the hexane, is separated by distillation. Hexane audit agenda (yellow area) and facultative is recycled to the process and the oil is sent fields (blue area). for biodiesel production unit. In this unit, the oil is subject to a chemical neutralization. The reaction of transesterification involving oil and methanol produces biodiesel and glycerin, a by- product. The previous mapping of all company activity (VSM) carried out in 2014 by Kaizen Figure 1 - Board of Daily Kaizen Institute has identified some opportunities The performance indicators must be easily for improvement in operational and obtained, simple, stable and measurable in administrative areas. order to be easily analyzed and to represent

the team’s work. The team’s plan is a daily 3.1 A3 plan that organizes the work. The action plan The “A3” was the first tool to be allows monitoring the improvement actions implemented. The “A3” is a sheet with nine through PDCA (Plan-Do-Check-Act). fields that resumes the relevant information During the implementation of Daily Kaizen of the project and facilitates its analysis. The level 1 it was noted some difficulties in A3 was used in all new projects of defining performance indicators, collecting continuous improvement. It worth noting that data and creating a routine for the team this sheet is usually accessible to all meeting. This meeting allowed to organize employees breaking the idea that some the scattered information and increased the information is only available to few.

effectiveness of response of the operators to 3.2 Daily Kaizen sudden changes of the process or even The Daily Kaizen is a fundamental step in breakdowns. The implementation of Daily Kaizen methodology and includes four Kaizen level 1 increased the worker’s levels. The first level organizes the team and motivation since they felt part of the change establish standardize team meetings. The process in Iberol. second level cleans and organizes the workspace. The third level standardizes

The second level of Daily Kaizen organizes 3rd defines cleaning, inspection and the workspace by using the 5S tool. This intervention actions (Fig.3), the 4th coach the level of Daily Kaizen was implemented only workers in AM and finally the 5th carried out in one area in Iberol. This action lasted one the AM [Kaizen]. month and created a healthy, pleasant and organized workplace, which increased the security and motivation of workers. An example of the implementation of the 5S is presented in Fig. 2.

Figure 3 - Example of the implementation of AM The AM in Iberol was implemented in the Biodiesel Unit Production (BUP). In the BUP, the ground zero and the 1st floor were analyzed and were created twenty maintenance routines involving eighty equipments. The Planned Maintenance (PM) is a TPM Figure 2 – Example of the implementation of tool that schedule maintenance routines to 5S’s reach zero breakdowns [Kaizen]. 3.3 Total Productive Maintenance The implementation of PM began with the TPM is a methodology that seeks for elaboration of a risk matrix that evaluated productive excellence. This methodology is and ranked, 781 equipments, on impact, used in companies with continuous probability of occurrence and detection of production processes like Iberol. In order to failure. It were selected 43 equipments that achieve the excellence it is necessary to presented the higher risks and were created implement Autonomous Maintenance and detailed plans of PM. These plans include Planned Maintenance. the human resources, the duration of each The Autonomous Maintenance (AM) task and the points of maintenance. involves the implementation of equipment Like AM the PM is also in the beginning of its maintenance routines. AM was not the result implementation so it’s not possible to of a desire to reduce maintenance costs or quantify its results. maintenance departments wishing to hand tasks over to production, rather it was the 3.4 SMED result of production teams wishing to control Iberol implemented SMED in the process of and improve their equipment [Jones, 2014]. seed exchange (setup). The seed exchange The implementation of the AM has five begins with the stoppage of the whole steps. The 1st step restores the initial process (Preparation and Extraction), conditions of the equipment, the 2nd follows the exchange of expander and the eliminates the contamination sources and start of the process (Preparation and improves the accesses to the equipment, the Extration).

As described in the section 2.2, the SMED the expander in order to reduce the has five steps. The 1st step (observation of variability of the process. the current process) was divided in two It was also suggested and later on tested, parts. The 1st part consisted of the with success, the reduction of time for observation of the stoppage of the process removing the old seed from the extractor in and the exchange of the expander. The 2nd 25%. part begins when the new seed is fed to the The 3rd, 4th and 5th steps weren’t followed expander. All process was video recorded. It due to the fact that the implementation of was registered the duration and frequency of SMED in Iberol was in an early state. each task in this process and also the tools 3.5 Key Performance Indicators (KPI’s) – used. The analysis to the overall process Daily Kaizen (DK) leads us to conclude that there are few An important part of theis to follow and to external tasks, i.e. tasks that can be analyze the KPI’s of each area. Because performed when the expander is in Iberol does not have a data base of the KPI’s operation. it was created an Excel file, named KaiDi, to In the 2nd step it was listed and analyzed all calculate KPI using process data. It includes the tasks/activities with the objective of results of eleven areas and fifty-two KPIs. separating the external tasks from internal This file eased the analysis of the evolution ones. The internal tasks only can be of each KPI and will become a very performed when the expander is stopped. important tool when it comes to evaluate the The external activities are few and because work that’s been done in each area. of this the modifications suggest did not change significantly the overall process. An 4 Future work example of an external activity is the As future work, it is suggested to create of preparation of the tools for the exchange of summary file in Excel containing the most the expander. It was decided that these relevant KPI of each area as a Global Metric activities must be carried out at the Evaluation (GME) for the company. The beginning of the changeover with the GME file should be included in monthly and expander in operation. The data collected annual Iberol reports of sustainability were compiled in a Gantt chart that helped accessible to administrators. the analysis of the whole process. The KPI’s present in the GME file was It was proposed to carry out a meeting two decided by the responsible of each area. days before the change of seeds with all the These KPI in this sheet can be easily players in the setup. This meeting will allow changed because this file is built in a system to plan, organize and communicate details called dynamic graphics that offers the and major tasks that will be performed in the chance to choose what KPI is displayed. setup. This prevents misunderstanding due to the lack of communication between the different areas. It was also decided to create a standard procedure for the exchange of

Inputs Outputs

Area 1 Area Charts

KPI chart selected

n Inputs Outputs KaiDi Charts Area KPI chart selected

(month)

+1 n Inputs Outputs KPI chart selected

Charts Area Figure 4 – Block diagram of the background of the Summary file As mentioned, the GME file is automatically After detailed analyses of all processes in updated when the data is introduced in the Iberol it was decided to implement the daily KPI file (Fig. 4). In the case of daily Kaizen in eleven areas. The Daily Kaizen indicators, the chart will include the include the creation of a standard meeting respective month and will be renewed on and the implementation of the 5S’s tool, 30th or 31th day of each month. For weekly followed by the implementation of indicators, the corresponding chart will maintenance procedures, like Autonomous include the four weeks of the month and will and Planned Maintenance and finally the be renewed after the fourth week. implementation of SMED. The use of 5S´s After the preparation of the monthly GME file tool allowed to clean and organize the it should be created an annually GME file workplace and to find some tools that have that is created based on the average of the been lost. The Autonomous and Planned monthly values. Maintenance lead to the reparation of small The GME file will centralize all information of equipment’s defects for restoring its initial and will simplify the analysis of important conditions. It was also defined new plan of indicators by the administration. This will be the equipment’s maintenance that will allows an important asset in future studies/analysis to reduce its costs. The SMED was applied and can also be used as a base for studies to the change of the expander and it was of improvement of processes, taking into possible to reduce the time of exchange in account the entire history created. 25%. It was created an excel file to calculate all the 5 Conclusions KPIs of each Daily Kaizen. This file will be Kaizen-Lean methodologies were fundamental to an easier analysis of the implemented at Iberol to make cultural processes and to create historical data. The changes, improve the organization of introduction of the Kaizen methodology in workspaces, the extended setup times and Iberol changed the way workers face daily the maintenance procedures. work, since day one, they’ve been more In order to solve those issues were motivated to face new challenges that come addressed several activities that used Lean with new procedures. The fact that everyone tools to study, analyze and improve the is involved in the change process provides a processes. healthier work environment in the company.

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