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2.4.

1 The Wastes Identified by the Lean System

Waste or non-value added activities, as defined in the lean terminology. These wastes can be
categorized into seven types: waste due to overproduction, unnecessary waiting, unnecessary
transportation, over-processing, excess inventory, unnecessary movement, and defects. The term
“overproduction” refers to the production of more product than the customer needs. Over-production
results in higher cost in manufacturing and other non-manufacturing business functions. The
overproduction can also lead to excessive inventory, long process set-up, and poor space utilization in
the warehouse.

Overproduction may also result in the consumption of too many resources, including labor,
machines, space, and energy. The term “unnecessary waiting” refers to non-productive human or
machine time, for instance; waiting for parts, work, quality, checking, and system downtime.
Unnecessary waiting may be caused by inappropriate communication, lack of skill or ineffective
production planning in the workplace. Unnecessary waiting can lead to stops in production, bottlenecks,
long lead times, and missed delivery dates. The term “unnecessary transportation” refers to excessive
moving or handling of materials or parts e.g., transporting work-in-process or transporting parts long
distances.

Transportation waste may be caused by inappropriate process and value stream flow designs.
Transportation waste can lead to increased production time, increased work in progress, and suboptimal
use of resources and floor space. The term “over-processing” refers to unnecessary or inefficient
process steps. For example poorly selected equipment, duplicate paperwork, etc. Over-processing may
be caused by inappropriate standard operating procedures or lack of process understanding. Over-
processing can lead to increases in production time and interruptions in production flow. The term
“excess inventory” refers to unused or unnecessary parts, materials, or products e.g., raw materials,
work-in-process, finished goods, office supplies or warehouse space.

Excess inventory is held to cover up problem areas, often stemming from unreliable raw
material suppliers, inaccurate forecasting, unpredictable machine breakdowns, or repair times. Excess
inventory can lead to increased costs and may create waste in many forms, including tracking, additional
storage facilities, etc. The term “unnecessary movement” refers to non-productive motion of workers,
for example searching for tools or unnecessary walking. Unnecessary movement may be caused by
inadequate worker training, lack of standard operating procedures, or poor work and equipment layout.

Unnecessary movement can lead to increased production time, costs, and/or energy usage. The
term “defects” refers to rework or errors in products or processes e.g., missing parts, scrap, rejects, and
recalls. Defects may be caused by inadequate worker training, too many product models, poor work and
equipment layout, or poor process documentation. Defects can lead to added costs, inventory
problems, delivery failures, and/or decreased customer satisfaction. The benefits of these various lean
tools have been documented in the literature.
2.4.2 Lean System for Warehouse Design and Production Scheduling

The idea of integration of production processes in a continuous flow was generated from Henry
Ford at Toyota (Levy, 1997). The lean system introduced at Toyota is called the Toyota production
system which aims to optimizer the production through elimination of waste,. It is also referred as lean
manufacturing system or Just-in-Time system. The term ‘lean’ is also referred as ‘lean thinking’ as it aims
for continuous improvement in production system. Therefore, it becomes important to study this
concept in-depth for designing warehouse design and production scheduling.
As per Levy (1997), lean system is one of the most efficient systems which need to be
incorporated in the warehouse design and production scheduling. Lean system is mainly based on
efficiency optimization which is the key objective of every organization.

(Lean system in warehouse Source: http://cmuscm.blogspot.com/2014/02/lean-software-development-


similarities.html)
Lean system aims to eliminate waste for increasing productivity and efficiency in the
organization. It leads towards cost effectiveness, efficiency and responsiveness. For warehouse
designing and production scheduling, it holds immense significance. According to Sertyesilisik (2014),
there are major principles of lean system for warehouse design and production scheduling. First of all,
identification of the value which is to be given to the consumers who are the end users in the supply
chain network. Value in terms of efficiency, responsiveness, cost effectiveness, and superior quality
needs to be assessed. Secondly, mapping the value stream, based on mapping processes that are used
for delivering value to the customer (Sertyesilisik, 2014). Thirdly, it aims to ensure the flow of the
processes which aims to minimize queues which slows down the process and activities in the value
chain. Fourthly, use of pull strategy which identifies the needs and demands of the consumers and
adjust accordingly.
The use of pull strategy aims to minimize waste by only delivering what is needed by the
consumers in the market. It is important o note that lean system aims for efficiency optimization.
Therefore, lean system gives major important to Just-in-time production and total quality management
approach for improving performance and efficiency. Then, achievement for excellence is the fifth key
principle which is based on continuous improvement and waste elimination in a repetitive manner for
consolidating the changing processes and activities (Sertyesilisik, 2014). Lastly, performance
measurement is conducted for improving the performance on continuous basis. Hence, it becomes
important for implementing lean system in the warehouse design for ensuring maximum performance
and efficiency.
Moreover, the study by Powell, Riezebos and Strandhagen (2013) indicated that in the present-
age, the use of technology is highly important for achieving efficiency optimization in production
scheduling. Therefore, the advanced production scheduling can be designed through the integration of
ERP which provides efficient and efficient production planning and scheduling. Production scheduling
can be optimized through efficient decision-making and time management. It helps in dynamic decision
making and contingency planning which are required in highly uncertain markets. The constraints for
resource utilization and capacity are also evaluated to make effective decisions. ERP further helps in
calculating lead rimes which enhance efficiency and result in timely production without delays. It is
important to achieve efficiency by minimizing time delays and resource wastage (Riezebos and
Strandhagen, 2013). The ERP systems assist in the appropriate utilization of resources. It also involves
the material and process management. There are several advantages of the implementation of ERP and
Lean system in the warehouse, while there are few limitations or barriers for the effective ERP system
integration with lean principles. Therefore, it is important to study the potential benefits and limitations
for the ERP systems with lean principles.

2.5.1 The Pull and Push Techniques

The techniques of pull and push are used in the lean manufacturing. Womack and Jones (2003)
defined the pull technique is the movement of inventory in the warehouse that signals the previous
stage for the replenishment is required for the next product. These signals are kanban. According to
Beamon & Bermudo (2000), there is less amount of inventory held within the pull environment, which
can compromise the situation if the lead time is too long. On contrary to pull, the push technique is
based on forecasts and involves functioning, which is even not required. This assists in availability of the
abundant goods at a time, while the back-inventory is available. Michael (2002) found the effectiveness
of the pull techniques in the multiple paths to achieve lean operations as compared to the pushing
techniques, which involves meeting the forecast by pushing the batch of inventory.

The concept pull is also linked with the traditional concepts of lean production material resource
planning (MRP), while the concept of push is related to the advance ERP systems. Langenwalter (2000)
and Beamon & Bermudo (2000) argued the pull systems are based on the production plans that are
initiated, when the orders are placed for the products. On the contrary, the push systems are based on
anticipating the demand of products, considering the warehouse environment forecasting the needs of
excessive products and allocating it. However, the pull technique in warehouse environment will
consider and manage the inventories depending on the customer demands (Greenwood, 2006). Thus,
there is inconsistency in the concepts of pull and push concepts. The flow of information and material is
also different, following these techniques. The push operations are based on the flow of information,
with respect to the orders and depend on the other operations. On the other hand, the pull system
focuses on the kanban signals, where the flow of information is opposing the flow of product. Beamon &
Bermudo (2000) suggests the implementation of pull and push systems together can help achieving the
customer demand and reducing the high cost for holding inventories. Beamon & Bermudo (2000) have
also provided the solution for implementing the pull and push techniques by avoiding the weaknesses of
each concept and driving the benefits. This automated solution proposed by Beamon & Bermudo (2000)
is known as the hybrid push/ pull algorithm. This algorithm is useful for the various stages of supply
chain in the industries, where the warehouse is an important component of the supply chain.

Seven types of Wastes in Corus

Waste can be defined as anything that does not add value to the services and products.

Since waste is the symptom not the root cause of the problem, it indicates the problems within

the organization and system. The seven forms of wastes that are common in Corus are listed

below:

 Overproduction – undertaking activity ‘just-in-case’ and/or in a batch.

 Inventory –holding too much of stock or inventory negatively impacts the effectiveness

and quality as it utilize large space and resources.

 Waiting – corresponds to the material and individual waiting rather than moving at a

speed of demand. Variations in the procedures can lead to waiting. Case in point, waiting

for the outcomes of the production processes, waiting in queues or ensuring that all the

equipment is geared for a specific action.

 Transportation – Transportation is the form of waste that involves any movement of the

individuals or items that does not add value. Even though the transportation cannot be

completely eradicated from a system, all possible steps must be taken to minimize it with

the passage of time.

 Defects – Every organization should aim for zero defects for the reason that a defect that

is passed along the processes can amplify the impact of the initial defect.
 Staff movement –Unnecessary movement of the staff is also considered as a waste.

 Unnecessary processing –This type of waste correspond to the utilization of the complex

equipment to complete a simple process.

Seven types of waste in Toyota

One of the most effective ways to increase the profitability of any business is to eliminate

the waste. Processes involved in the manufacturing of any machine either add value or waste to

the final product. In order to eliminate waste, it is highly imperative to comprehend what waste is

and where it exists. Seven deadly wastes were identified as the part of Toyota production system:

Transport

Every time a project is moving it stands risk for delayed, lost, damaged, and resulting in

additional cost. No transformations are made in the product due to transportation that a customer

is supposed to pay for. In fact transporting item between the processes adds cost instead of

adding value to the product. Moreover, excessive handling and movement may lead to damages

and deterioration of the products

Inventory

Inventory refers to holding too much of stock or inventory negatively impacts the

effectiveness and quality as it utilizes large space and resources. Abundance inventory tends to

shroud issues on the plant floor, which must be recognized and determined keeping in mind the

end goal to enhance operating performance. Overabundance inventory increases lead times,
devours profitable floor space, defers the distinguishing proof of issues, and represses

correspondence. By accomplishing a consistent stream between work focuses, numerous

producers have possessed the capacity to enhance client benefit and slash inventories and their

related expenses.

Motion

In contrast to transportation, motion corresponds to the equipment, worker, or producer

that has significance to safety, wear, and damage. It also entails the operating expenses and fixed

assets. This type of wasted associated to ergonomics and is found at all occasions of reaching,

lifting, walking, stretching and bending. Processes that involve excessive motions ought to be

analyzed and redesigned for enhancement with the involvement of plant personnel.

Waiting

Waiting corresponds to the material and individual waiting rather than moving at a speed

of demand. Variations in the procedures can lead to waiting. Variations in the procedures can

lead to waiting. Case in point, waiting for the outcomes of the production processes, waiting in

queues or ensuring that all the equipment is geared for a specific action

Overproduction

Overproduction is the type of waste that results due to production of goods more than

demand. Production of large batches is one common practice that leads to the waste for the

reason that customers often demand changes over long times large batches. Overproduction
results in excess inventory that in turn requires the expenditures of resources on preservations

and storage space.

Over Processing

Over processing manifest at any occasion when more work is done on a part than

required by the customers. This also includes utilization of tools that are more expensive,

complex, and accurate than absolutely required.

Defects

Additional cost is incurred whenever defects occur due to reworking of the defected part.

Associated costs include capacity loss, rescheduling, re-inspecting and quarantining inventory. In

majority of the firms, the total cost of defects is often a significant percentage of the total cost of

manufacturing.

Lean Principles implemented by Toyota

The concept of Lean was first introduced by Toyota to improve the flow and eradicate the

waste from processes. Generally, Lean refers to getting the right things at the right time at right

place and in the right quantities while being open and flexible towards changes and reducing

waste. Likewise, lean production corresponds to the production processes that minimize waste.

The ultimate aim of the Lean processes is to utilize resources such as time, materials and space in

an efficient manner.

In lean production smaller quantity of resources is utilized in more efficient manner;

thereby, increasing productivity as well as profitability. The just-in-time principle is one attribute

of lean production that allows the organization to save costs of the stock. The concept of just-in-
time implies producing and supplying the items and services when they are required. Any

manufacturing company or business acquire the limited volume of raw materials and just

finished products to fulfil the demands of the customers. Well-organized systems are required to

make sure that goods arrive and supply reach to the customers on time. This diminishes the cost

and, in turn, augments the return on assets on the investment for the stakeholders. Tools that

address the eradication of non-value added steps, visual control, standardization and workplace

organization are applied to surpass customer expectations, eliminate waste and improve the flow.

Womack and Jones (1996) introduced five core principles to represent Lean that are listed below:

 Indicate the value considered necessary by the customers

 For each product identify the value stream

 Ensure continuous flow of the products

 In circumstances where the continuous flow is impossible to achieve, introduce a pull

between the steps.

 Strive for the perfection so that the amount of time and number of steps as well as

information required serving the customers decline continuously.

In useful terms, one of the basic presumptions made by Lean is that associations are

comprised of procedures. Consequently, upgrades made in a Lean connection enhance the

procedure or client’s excursion instead of streamlining individual offices. This point of view,

which is generally connected in the industry, is often alluded to as the “procedure based

perspective” of associations.
Continuous Improvement Processes in Toyota

The underlying principle of continuous improvement is that the organizations should

continuously explore the strategies for enhancing the quality of their products and services,

operational systems and customer satisfaction (Zangwill & Kantor, 1998). The continuous

improvement process in Toyota is executed through following steps.

Communication

The leadership management of Toyota is responsible for communicating the values

governed by the continuous improvement and it emphasized the need of engaging each employee

in the strategic decisions

Involvement

The accomplishment of continuous improvement goals in Toyota involves the entire

workforce.

Process development

The initiation of continuous improvement process in Toyota partly involves the creation

of an infrastructure of involvement procedure and is also concerned with establishing assessment

procedures and appropriate tools.

Developing and training

To ensure smooth implementation of continuous improvement, Toyota organizes training

programs for its employees on regular basis. The purpose of these training programs is to
enhance the understanding of the employees regarding the significance of continuous

improvement. Such type of education and awareness courses encourage the employees to work

in groups and share their ideas. They additionally intend to change the behavior of the employees

as well as persuade them to adopt right form of attitude to improvement.

Implementing a continuous improvement culture

A continuous improvement culture implies that each employee can contribute his ideas

and opinions regarding the changes that should be made in the processes to enhance their

efficiency. This is termed as engagement. Continuous improvement requires teams work. In

Corus, the continuous improvement manager is responsible for coordinating all the procedures.

An association needs to know where it is going keeping in mind the end goal to have the capacity

to put in place the assets it needs to accomplish its goals. Scunthorpe plate plant has set out a 5-

year vision improvement arrangement which assist in establishing the continuous improvement

culture for the business. Everybody in the association needs to comprehend and effectively

bolster the arrangement. Workshops for all representatives have occurred to clarify the vision

and why the change is essential if Corus needs to stay competitive.

Process Mapping
With the assistance of the continuous improvement coaches, the employees of Corus

have constructed maps of their procedures. These maps display the link between the

manufacturing phases and the flow of information that is required. In addition, the map shows

the costs, delays, stocks, inspection points, rework cycles, number of products and details of

tonnages. Current state value stream mapping is the first step of this procedure. In the next phase,

the appearance of the future state map is decided. This indicates what the Corus needs to do to

accomplish this stage; for instance, investing in new equipments and procedures. Currently, the

plate mill of Corus consists of 16 system maps. All the maps link with each order in order to

provide an overview of the entire procedure.

 Stock rotation guarantees that the plates for one client don't get to be covered underneath

others and in this way postponed.

 The required measure of piece steel ('feedstock') must be before the factory by the

Tuesday of the week in which the material is to be rolled.

 By moving plates in the arranged week, the factory is legitimately paced and every single

"downstream" process, (for example, cutting, levelling and review) can be booked in like

manner.

 Utilizing the value stream maps has offered Corus to enhance processes flow with

processing streams and the workplace. It has likewise lessened superfluous movement,

transport and preparing.