IMPLEMENTATION OF ORDERING KANBAN FOR SUPPLIER AT COMPANY PROREKA (M) SDN BHD LIM QIAN BING Thesis submitted in partial fulfillment of the requirements for the award of the degree of Bachelor of Manufacturing Engineering Faculty of Manufacturing Engineering UNIVERSITI MALAYSIA PAHANG JUNE 2012 vii ABSTRACT Lean Production System is a manufacturing management in which time can be shortened for customer order and delivery time; and service parts order can be increased through the elimination of all forms of waste. The main component for “Just-In-Time”, one of the pillars of Lean production System is "Pull System" or Kanban System. Kanban system is a pull system of inventory control that typically uses cards or bins to signal when materials or work-in-process should be moved forward; stock inventory is moved through production stages only when it is needed, and minimizing stock inventories. This is an important revolution in the concept of the Lean Production System. The objective of this research is to simulate Kanban policies for three major materials in warehouse of Proreka (M) Sdn Bhd which is a Malaysia Tier-1 vendor and manufacturer of automotive components. Another objective is to investigate the stock control efficiencies between Material Requirement Planning and Kanban System. The main target of this research is to implement small lot ordering by using Kanban policy to reduce the stock inventories. A simulation model of delivery frequency was developed for the replenishment process of the selected stocks to analyse the delivery frequency from supplier after Kanban implementation. The average stock holding before and after Kanban implementation was analysed to compare the stock control effectiveness between Material Requirement Planning and Kanban System. Interview session and survey by questionnaire were conducted to analyse the performance of Kanban System in point of view of employees. The result obtained indicated that Kanban policy can reduce stock inventories and improve the efficiency in stock control. Other significant improvements with the implementation of Kanban are such as physical condition of the manufacturing environment, production efficiency, and motivation of workers. viii ABSTRAK Sistem Pengeluaran Berpada adalah pengurusan pembuatan yang membolehkan masa untuk pesanan pelanggan dan masa penghantaran dipendekkan, dan perkhidmatan untuk komponen dapat dipertingkatkan melalui penghapusan semua bentuk sisa. Komponen utama bagi “Just-In-Time”, salah satu tunggak Sistem pengeluaran Berpada adalah “Sistem Tarik” atau Sistem Kanban. Sistem Kanban adalah sistem tarik kawalan inventori yang biasanya menggunakan kad atau bekas bertutup untuk memberi isyarat apabila stok atau kerja dalam proses harus bergerak ke hadapan; stok inventori bergerak melalui peringkat pengeluaran hanya apabila ia diperlukan, dan meminimumkan stok inventori. Ini adalah revolusi penting dalam konsep Sistem Pengeluaran Berpada. Objektif kajian ini adalah untuk mensimulasikan polisi Kanban pada tiga stok utama dalam gudang Proreka (M) Sdn Bhd yang merupakan vendor dan pengilang komponen automotif tahap satu dalam negara Malaysia. Objektif lain adalah untuk menyiasat kecekapan kawalan stok antara Perancangan Keperluan Bahan dan Sistem Kanban. Sasaran utama kajian ini adalah untuk melaksanakan pesanan lot yang kecil dengan menggunakan polisi Kanban untuk mengurangkan inventori stok. Model simulasi bagi kekerapan penghantaran untuk proses pengisian semula bagi stok yang dipilih dihasilkan untuk menganalisis frekuensi penghantaran daripada pembekal selepas perlaksanaan Kanban. Purata pegangan stok sebelum dan selepas perlaksanaan Kanban dianalisis untuk membandingkan keberkesanan kawalan stok antara Perancangan Keperluan Bahan dan Sistem Kanban. Sesi temuramah dan kaji selidik dengan pengunaan borang soal selidik dijalankan untuk menganalisis prestasi Sistem Kanban dari persepsi pekerja. Hasil kajian yang diperoleh menunjukkan bahawa dasar Kanban boleh mengurangkan stok inventori dan meningkatkan kecekapan dalam kawalan stok. Peningkatan lain yang ketara dengan perlaksanaan Kanban adalah seperti keadaan fizikal persekitaran pembuatan, kecekapan pengeluaran, dan motivasi pekerja. ix TABLE OF CONTENTS Page SUPERVISORS’ DECLARATION iii STUDENT DECLARATION iv DEDICATION v ACKNOWLEDGEMENT vi ABSTRACT vii ABSTRAK viii TABLE OF CONTENTS ix LIST OF TABLES xii LIST OF FIGURES xiii LIST OF ABBREVIATIONS xv CHAPTER 1 INTRODUCTION 1.1 Introduction 1 1.2 Problem Statement 2 1.3 Objectives of the Research 3 1.4 Hypethesis of the Research 4 1.5 Scope of Project 4 CHAPTER 2 LITERATURE REVIEW 2.1 Introduction 6 2.2 History of Lean Production 6 2.3 Lean Production System (LPS) 9 2.4 Just-In-Time (JIT) 12 2.4.1 Kanban System 15 2.5 Jidoka 19 2.6 Other Methods in LPS 23 2.6.1 Standard Operating Procedure (SOP) 23 2.6.2 Continuous Improvement (Kaizen) 24 2.6.3 Cellular Manufacturing 24 x 2.7 Success Factors of LPS 26 2.7.1 Implementation of LPS Leadership 26 2.7.2 Requirements of Culture 27 2.8 Barriers of LPS 28 2.9 Conclusion 30 CHAPTER 3 METHODOLOGY 3.1 Introduction 31 3.2 Design of Research Procedures 31 3.2.1 Flow Chart 33 3.3 Research Location 34 3.3.1 Corporate Information 34 3.3.2 Research and Development 34 3.3.3 OEM Parts and Components 35 3.4 Model Selection 36 3.4.1 ABC Classification 36 3.5 Research Instruments 37 3.5.1 Packaging and Storage 37 3.5.2 Kanban Card Design 37 3.5.3 Questionnaire and Interview Session 38 3.6 Data Collection and Analysis Methods 38 3.6.1 Delivery Frequency Simulation 38 3.6.2 Stock Holding Calculation 39 3.7 Project Report Writing 39 3.8 Summary 39 CHAPTER 4 RESULTS AND DISCUSSION 4.1 Introduction 40 4.2 Material Storage before Kanban Implementation 40 4.3 Part Selection 41 xi 4.4 Kanban Sizing 42 4.4.1 Stock Holding Calculation 42 4.4.2 Kanban Quantity and Number of Kanban 44 4.5 Delivery Simulation 45 4.5.1 Material Number: 1036/2HSUV1-7C52 45 4.5.2 Material Number: C218V15-Grey2236 48 4.5.3 Material Number: 90137-TCP-PP42136 51 4.5.4 Reponds from Suppliers 54 4.6 In-house Preparation 54 4.6.1 Kanban Card Design 54 4.6.2 Kanban Board Design 55 4.6.3 Standard Pull Schedule 56 4.6.4 Storage Method 57 4.7 Achievements 58 4.7.1 Stock Holding Day 58 4.7.2 Time for Issuing Out Material 65 4.7.3 Storage Space 66 4.8 Survey Analysis 68 4.8.1 Questionnaire 68 4.8.2 Interview Session 71 CHAPTER 5 CONCLUSION AND RECOMMENDATIONS 5.1 Introduction 73 5.2 Conclusion 73 5.3 Problems Encountered 74 5.4 Countermeasure 74 5.5 Recommendations 75 REFERENCES 76 APPENDICES I Survey Questionnaire On Performance Of Lean (Kanban) 80 II Value Stream Mapping Of Proreka Before Kanban Implentation 82 III Value Stream Mapping Of Proreka After Kanban Implentation 83 IV Gantt Chart Of Kanban Implementation 84 xii LIST OF TABLES Table No. Title Page 2.1 Barriers of LPS 29 4.1 Stock Holding Calculation for Material Number: 43 1036/2HSUV1-7C52 4.2 Stock Holding Calculation for Material Number: 43 C218V15-Grey2236 4.3 Stock Holding Calculation for Material Number: 44 90137-TCP-PP42136 4.4 Material Quantity per Kanban and Number of Kanban Cards 44 4.5 Feb 2012 Stock Holding and Delivery Simulation 45 (1036/2HSUV1-7C52) 4.6 Mar 2012 Stock Holding and Delivery Simulation 46 (1036/2HSUV1-7C52) 4.7 Feb 2012 Stock Holding and Delivery Simulation 48 (C218V15-Grey2236) 4.8 Mar 2012 Stock Holding and Delivery Simulation 49 (C218V15-Grey2236) 4.9 Feb 2012 Stock Holding and Delivery Simulation 51 (90137-TCP-PP42136) 4.10 Mar 2012 Stock Holding and Delivery Simulation 52 (90137-TCP-PP42136) 4.11 Standard Pull Schedule for Material Kanban Ordering 56 4.12 Apr-May 2012 Kanban Ordering Stock Holding and Delivery 59 (1036/2HSUV1-7C52) 4.13 Apr-May 2012 Kanban Ordering Stock Holding and Delivery 61 (C218V15-Grey2236) 4.14 Apr-May 2012 Kanban Ordering Stock Holding and Delivery 63 (90137-TCP-PP421) xiii LIST OF FIGURES Figure No. Title Page 2.1 Production System Developed by Toyota Motor Corporation 8 2.2 Push System 14 2.3 Pull System 14 2.4 Kanban System 19 2.5 Andon System in the Making 20 2.6 Visual Control in the Workplace 22 2.7 Traditional and U-shape Work Cell 25 3.1 Research Flow Chart 33 4.1 Material Storage before Kanban Implementation 41 4.2 ABC Classification for Average Monthly Material Usage 42 4.3 Feb 2012 Simulation Stock Holding Graph 47 (1036/2HSUV1-7C52) 4.4 Mar 2012 Simulation Stock Holding Graph 47 (1036/2HSUV1-7C52) 4.5 Feb 2012 Simulation Stock Holding Graph 50 (C218V15-Grey2236) 4.6 Mar 2012 Simulation Stock Holding Graph 50 (C218V15-Grey2236) 4.7 Feb 2012 Simulation Stock Holding Graph 53 (90137-TCP-PP42136) 4.8 Mar 2012 Simulation Stock Holding Graph 53 (90137-TCP-PP42136) 4.9 In-house Kanban Card for Material 1036/2HSUV1-7C52 55 4.10 Kanban Board for Selected Material 56 4.11 FIFO Tag Implementation 57 xiv 4.12 Allocate and Standardize Material Storage Location 58 4.13 Apr-May 2012 Kanban Ordering Stock Holding Graph 60 (1036/2HSUV1-7C52) 4.14 Feb-May 2012 Average Stock Holding Days 60 (1036/2HSUV1-7C52) 4.15 Apr-May 2012 Kanban Ordering Stock Holding Graph 62 (C218V15-Grey2236) 4.16 Feb-May 2012 Average Stock Holding Days 62 (C218V15-Grey2236) 4.17 Apr-May 2012 Kanban Ordering Stock Holding Graph 64 (90137-TCP-PP421) 4.18 Feb-May 2012 Average Stock Holding Days 64 (90137-TCP-PP421) 4.19 Material Issuing Out Time before and After Kanban 65 Implentation 4.20 Material Storage Condition Before Kanban Implentation 66 4.21 Material Storage Condition After Kanban Implentation 67 4.22 Material Storage Space Area Before and After Kanban 67 Implentation