Professional Documents
Culture Documents
Presented By: Noor al Husni 0797177 Thesis 05-07-2011 Rotterdam Business School
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ACKNOWLEDGEMENT
My grateful thanks go first of all to my God, the one who gives me hope, strength and to make me prosper in whatever I do. My sincere appreciation goes to my caring father and loving mother, who both stood beside me all this time. Who had the patience and understanding, and gave me the chance to enlighten my future. The word thanks wont be enough, comparing to all what they have done for me. Special thanks go to my supervisors Mr. Mein and Mr. Bulters who made it possible for me to write this thesis and to have the chance to broaden my experience and increase my knowledge in the field of logistics. Who also have guided and gave me positive advises with helpful comments throughout this project. My thanks goes to my supervisor at Lagaay International, Mr. ALberda, who gave me this opportunity to work together with him on this project. Who had all the trust and believe in me. It was a pleasure and an honor for me to be part of their esteemed company.
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ABSTRACT
Lagaay International is a global supplier of medicines and medical supplies for ships, located in Rotterdam. It is one of the most important ports in the world. The main activity of Lagaay is providing medicine, medical devices and safety equipment to several ships in the world's major ports and offshore related industries. Because of inefficient use of the warehouse department, the company has excessive workload. The main question in this report is: How to improve the warehouse department at Lagaay Lagaay International desires to improve the warehouse through Lean Thinking. The purpose of this study is to provide the company with an analysis of the warehouse department and how Lean strategies can contribute to increase the efficiency in the company. This will be done through primary and secondary data. Lean is recognized to be one of the most powerful and effective way of building and maintaining continuously improving businesses. Using Lean Thinking strategies, companies can improve itself continuously over the long term. The idea of Lean Thinking is it uses a smaller amount of human effort to carry out the work, less material to make products and services, shorter time to develop and less energy and space to produce it. Lean is powerful since it is so easily learned and applied by everyone. Lean is for everyone.
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Table of CONTENTS
Acknowledgement.........................................................................................................................................................3 Abstract ................................................................................................................................................................................4 Chapter 1 ...........................................................................................................................................................................7 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 Purpose ..............................................................................................................................................................7 Company ............................................................................................................................................................7 Organization Structure .................................................................................................................................9 Problems ......................................................................................................................................................... 10 Research Questions & Objectives .......................................................................................................... 10 Fishbone Diagram........................................................................................................................................ 11 Why Lagaay is interested in Lean? ....................................................................................................... 12 Chapter Summary ........................................................................................................................................ 12
Chapter 2 Literature Review .................................................................................................................................. 13 2.1 WHAT is Lean? ..................................................................................................................................................... 13 2.1.1 The Logic of Lean ........................................................................................................................................ 15 2.1.2 Where is Lean .............................................................................................................................................. 16 2.1.3 The Principles of Lean .............................................................................................................................. 17 2.2 HISTORY of Lean ................................................................................................................................................. 18 2.3 Methods and strategies of Lean .................................................................................................................... 20 2.3.1 The 5S System .............................................................................................................................................. 20 2.3.2 7 Types of Waste......................................................................................................................................... 21 2.3.3 The Just In Time System (JIT) ............................................................................................................... 22 2.3.4. Group Technology (GT) .......................................................................................................................... 22 2.3.5 Kanban ............................................................................................................................................................ 23 2.3.6 Value Stream mapping ............................................................................................................................. 23 2.3.7. Six Sigma ....................................................................................................................................................... 24 2.3.8 Total Quality Management (TQM)....................................................................................................... 25 2.3.9 Theory of Constraints ............................................................................................................................... 25 2.3.10 Total Productive Maintenance (TPM) ............................................................................................. 26 2.3.11 Business process management (BPM)............................................................................................ 27 2.3.12 Flow and Pull Tools................................................................................................................................. 28 2.3.13 Customer and Value-Stream Tools ................................................................................................... 28 2.3.14 Management Tools .................................................................................................................................. 29 2.3.15 Perfecting tools ......................................................................................................................................... 30 2.4 Summary ................................................................................................................................................................ 30
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Chapter 3 Methodology ............................................................................................................................................. 31 3.1 Primary Data ......................................................................................................................................................... 32 3.2 Secondary Data: ................................................................................................................................................... 33 3.3 Data reliability...................................................................................................................................................... 34 3.4 Methodology of the Research questions ................................................................................................... 35 3.5 Relevence Tree..................................................................................................................................................... 37 3.6 Summary ................................................................................................................................................................ 37 Chapter 4 Findings ....................................................................................................................................................... 38 4.1 What makes Lean Thinking challenge so special? ................................................................................ 38 4.2 What is the procedure of the warehouse at Lagaay? ........................................................................... 41 A brief description of the role of the employees ...................................................................................... 43 (Summary of the interviews)............................................................................................................................ 43 The Procedure When Products Are Received............................................................................................ 44 The Procedure When Products Are Collected ........................................................................................... 45 4.3 What are the problems occurring in the warehouse department? ................................................ 46 Products do not have a fixed location ........................................................................................................... 46 Too much inventory ............................................................................................................................................. 46 Products have two inventories ........................................................................................................................ 47 Identical number is too small ........................................................................................................................... 47 Poor job description ............................................................................................................................................. 47 4.4 What are the possible barriers of Lean Thinking at Lagaay? ........................................................... 48 4.5 Summary ................................................................................................................................................................ 49 CHAPTER 5 CONCLUSION ................................................................................................................................ 50 Chapter 6 Recommendation................................................................................................................................... 54 6.1 Making one inventory instead of two through Group Technology ................................................ 55 6.2 Solving bottleneck through Theory of Constraints ............................................................................... 56 6.3 Improving Job description through Business Process Management............................................. 57 6.4 Solving the problem of too much inventory through JIT system .................................................... 57 6.5 Map of the current warehouse (Ground Floor) ...................................................................................... 59 6.6 Map after implementation (Ground Floor) .............................................................................................. 60 6.7 Map of the current warehouse (First Floor)............................................................................................ 61 6.8 Map after implementation (First Floor) .................................................................................................... 62 6.9 Implementation plan ......................................................................................................................................... 63 Chapter 7 Bibliography ............................................................................................................................................. 65
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CHAPTER 1
In this chapter the reader will be informed about the purpose of the thesis, an introduction of Lagaay International and the problems which the company is facing. There will be also the research questions, objectives and a Fishbone diagram (also known as Ishikawa diagram) introduced.
1.1
PURPOSE
The main purpose of this thesis study is to provide Lagaay International with an analysis of the warehouse department and which Lean strategy approach could contribute to increase the efficiency in the company. The company wants to implement Lean strategy in the organization and therefore there will be a study made on Lean.
1.2
COMPANY
The following information regarding the company Lagaay, its mission and visions has been received from Salma (Quality Manager of Lagaay). Some parts were translated from Dutch to English by the researcher. Other parts which were already in English have not been changed. Lagaay International B.V. is an organization with a rich experience and history in supplying medi cal equipment and maintaining medical outfitting on board of vessels or oil platforms. The company was founded in 1879 by Abaraham Lagaay, with the name Apotheek Lagaay. After being successful in the Dutch market, Lagaay decided to go international. For some years the company has been ensured of a strong position on the world market for the so called medical care suppliers. Lagaay has a great experience and knowledge of medicines and supplies approximately 5000 different medical products to ships. Because of the core business and experience for many years' Lagaay it had a leading position in the market.
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Lagaay International B.V. has over 125 years of experience in stocking and maintaining medical outfittings on board of vessels or oil platforms. The medical outfitting on board of these ships or rigs falls under the shipping regulations of the country where the ships are registered. Lagaay is in close contact with these legislative institutions in every country to be sure that the products and information which are provided by Lagaay are up to date. The company does not only supply medicines and medical equipment but it also inspects the medical lockers on the board of the ships and certifies the stock on board when needed. Lagaay knows out of experience that the medicines on the ships do not get the necessary attention. Therefore the company decided to develop the Medical Care System. In short the Medical Care System (MCS) consists of: Getting a stock-list of the medical stock which is on board of the ship The list is inserted in an automated system Generating a quotation with the necessary replenishments for a new certificate for 1 year Delivery of the ordered medical products on board of the ships The system will notify when certificates expire again This system reduces the handling- and transport costs and is therefore very appreciated by customers. Additionally, because Lagaay keeps track of expire dates of the medicines on board, it can at all time share this information with the customers and informs them when medicines are outdated. By updating and improving the system and the contact between Lagaay and its customers the company makes sure that in this way it keeps a lead on the competition. Mission To take a total care of our customers need and consistently optimise the service and idea of our company (Joris Alberda)
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1.3
ORGANIZATION STRUCTURE
The organization structure of Lagaay International shows the tasks of supervisors and employees, it uses a hierarchical tasks performance within the organization. Lagaay has an open and informal communication that provides a favorable and comfortable working environment for employees. The values of Lagaay are based on good internal communication and teamwork. Employees are reflecting this social and positive attitude also towards its customers. During an interview Joris Alberda said: Customers do not depend on us, it is the other way around, we depend on the customers. Therefore customer satisfaction is an important daily job to carry out. The company has a total of 29 employees who are divided in different departments. Employees are regularly rewarded with bonuses or promotion when dealing in the correct way and showing effort. The following chart shows the hierarchical roles inside Lagaay International.
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1.4
PROBLEMS
Within every company there are certain problems, this also holds for Lagaay. The company faces several problems regarding efficiency. This study will focus on the warehouse department. One of the problems which the company faces is that it does not have a good structure that allows the employees to work efficient. Second, there is a lot of unnecessary inventory. Third, products are not placed in an efficient order; employees need to walk a lot to complete an order. Fourth, there is not a specific structure for new coming employees. Finally, the identical codes on the products are very small; it is a struggle to read them. Therefore there will be a study made to analyze the process and give recommendations for improvement.
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Research Questions What makes Lean Thinking challenge so special? What is the role of the warehouse department at Lagaay?
What are the problems occurring in the warehouse department? What are the possible barriers of Lean Thinking at Lagaay?
To examine what the barriers are to adopting Lean Thinking Strategies at Lagaay.
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1.6
FISHBONE
DIAGRAM
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1.7
The principles of Lean Thinking in an organisation are known as the worlds most powerful and effective way of building and maintaining continuously improving businesses. Using Lean Thinking strategies, Lagaay can improve itself continuously over the long term. Lagaay knows that there are many problems in the company and it is important to do something about it as they cannot just sit still. Sayers and Williams (2007) says that the days of doing things in the same old way are gone as the global pressures are forcing every company, organization and everyone to embrace some type of approach and strategy for improving performance and the management systems. The Lean strategies are getting more popular as it offers organisations a rational, proven and accessible path to long term success. It is not the same as other methods: Lean is something that everyone can use, understand, deploy and can benefit from (Sayer and Williams 2007). Lean Thinking principles and techniques are proven to have been practiced successfully by thousands of organisations of every type and size in every industry worldwide, spearheaded by nearly 50 years of continuous improvement by one of the worlds most successful corporations (Sayer and Williams 2007).
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CHAPTER SUMMARY
In this chapter the purpose of the thesis, an introduction of Lagaay International and the problems which the company is facing has been discussed. In addition, the research questions, objectives and a Fishbone diagram have been introduced. In the next chapter the literature review of Lean Thinking and its methods will be discussed.
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suppliers comparing it with other companies. When investigating the company further, they saw that Toyota needed lesser inventory at every step and they even had less employee injuries (Sayer and Williams, 2007:10). Womack and Jones came to the conclusion that a company like Toyota, which tries to use less of everything, is a Lean company. This is how the term Lean became related with the business industry - the skills to achieve more with less. According to Sayer and Williams (2007:10) the idea of a Lean organisation is using lesser amount of human effort to carry out the work, lesser material to make products and services, shorter time to develop them and less energy and space to produce them. They became familiar with customer demand and developed high quality products and services in the most efficient and economical way possible. Table 1 explains the similarity of mass production and Lean Enterprise.
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Several years ago Lean Thinking has become a worldwide movement; it has been practised by many companies around the world for decades. Therefore throughout the years, the term Lean has made a certain set of ideas and concepts: giving attention and focus on customer value, accepting a philosophy of continuous increase in development, providing exactly what is needed on time, which is based on customer demand, keeping things moving in a value-added and a useful way, using techniques for reducing and minimizing waste, respecting people and focusing on long-term vision and relationships (Sayer and William 2007).
Perfect processes make the most of customer value. The closer to excellence a process turn out to be, the more effective the making of value, the more pleased the customers, and the more successful the endeavour (Womack and Jones 1996) No one has ever experienced the ideal process, this is because when companies find the best way how to process, they find out that it can always be improved. Therefore, Lean is the strategy to move towards to give the methods and tools for pursuing the perfect process. (Sayer and Williams, 2007)
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The main types of Lean Manufacturing can be described as (Oliver et al, 1992): Team-based organisation involving flexible, multi-skilled workers taking a high degree of task responsibility for work in their areas Active shop floor problem solving structures, central to continuous improvement activities Lean operations, which strengthen problems to be surfaced and corrected High commitment human resource policies, which encourage a sense of shared destiny Joint destiny relations with suppliers, normally in the context of much smaller supply bases Cross-functional development groups Close links to the purchaser The implementation of Lean practices in the Japanese car industry has concluded that these companies have a better performance in terms of productivity and quality when compared to their European or North American counterparts (Oliver et al, 1994). On the other hand, although European and North American manufacturing companies have taken on board a few of the principles, very few have shown evidence of all aspects of the Lean Manufacturing model (Sohal et al 1994 and Sohal, 1996).
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2.3.5 KANBAN
Kanban comes from the Japanese word and means card or visible record (Schonberger 1982). A Kanban system ensures that inventories are supplied on the basis of its consumption. It rearranges parts and mechanism based on actual expenditure at the point of use. Stock-outs frequently lead to an over-buying of parts, creating waiting lists, and backorders which is in this case at the company Lagaay. The Kanban way is a pull system; it only supplies when its needed, not earlier or later (Shingo 1989). Consider two methods: one is being used and the other is full. When the first bin empties, the operator keeps working, using the second bin. The blank bin is sent out for replacement. A full one returns before the operator runs out from the second bin. The signal can come in many forms: a bin, a card, a signal, or any type of sign which is appropriate in the organization (Metty et al 2005; Sayer and Williams 2007).
In a single view, it provides a complete, fact-based, time-series, representation of the stream of activities, from beginning to end, which is required to deliver a product or service to the customer
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To be able to capture the voice of the customer, it is important to translate that information into language that the organisation can understand and use it. According to Sayer and Williams (2007) the interrelationships of quality are: Understand the voice of the customer and translate it into functional requirements Translates the functional requirements into product design requirements. Translates product-design requirements into process design requirements. Translates the process-design requirements into process-control requirements. This can be done by the organization through customer surveys, focus groups, personal interviews, product clinics, warranty data, or third-party industry reports.
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2.4 SUMMARY
In this chapter the Literature review has been discussed. The reader is now informed about Lean Thinking and its methods. 15 strategies have been elaborated. In the next chapter the methodology will be explained and how the research will be done.
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CHAPTER 3 METHODOLOGY
In this part an analysis will be made regarding the research aim and objectives of the research topic. It is based on the research onion-model of Mark Saunders et al. There will be elaborated which primary and secondary data has been chosen and its reliability. A relevant tree has been introduced at the end of this chapter. A research can be conducted very efficiently when is it well organized and planned (Olivier, 2004). It is important how to get the needed information when it is also important to be reliable at the same time. As Johnson and Clark (2006) state: as business and management researchers we need to be aware of the philosophical commitments we make through our choice of research strategy since this has significance impact not only on what we do but we understand what it is we are investigating. Therefore it is of great importance to know and plan the research strategy. To have a complete and reliable solution to the research questions it is necessary to gather information through various sources and observation techniques. Saunders et al (2008) classified research into six layers and labelled the model which presented as the research onion-model. This model includes the philosophies, approaches, strategies, choices, time horizons, techniques and procedures. The main idea of this onion-model is to present a clear outline for the most suitable methods and strategies when starting a research. It provokes knowledge and gives ideas to find an answer on a research question. For every research question the principles of the onion-model will be used in a general way.
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Advantages:
- If data is needed quickly - May have fewer resources requirements - Can provide comparative and appropriate data - Can result in unforeseen discoveries - Durability of data
Disadvantages:
- May be collected for a purpose that does not match your needs - Access may be difficult or costly - Aggregation and definitions may be unsuitable
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4) What are the possible barriers of Lean Thinking at Lagaay? The method which will be applied in chapter 4 for this research question is by primary data. The primary data will be done through observation, focus group and in-depth interview with all the departments. For all of the research questions there will be a limit of websites used as most of them are not reliable. Thus, essentially the research will be done in two ways: Primary research (surveys, observations and in depth interviews) and Secondary research (literature review).
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Second research Question What is the procedure of the warehouse department at Lagaay?
Third Research Question What are the problems occurring in the warehouse department?
Fourth Research Question What are the possible barriers of Lean Thinking at Lagaay?
Research Methods Secondary Data: - Books - Acedemic Journals - Acedemic Research Primary Data: Qualitative Research Methods: Primary Data: - Observation - Interviews - Focus groups Research Methods: Primary Data: - Observation - Focus group - Interviews 3.6 SUMMARY
In this chapter there has been an analysis made on how the research questions will be answered and how to perform it. The research has been broken into two studies, primary and secondary research. The types of methods are elaborated and a relevant tree has been introduced. In the next chapter the findings will be presented and the research questions will be answered. 37 | P a g e
Research Methods
- Archival Research
CHAPTER 4 FINDINGS
In this section the findings of the research questions will be presented. The main objective of this part is to find out which Lean strategies are best fitted for an efficient warehouse. This is done by answering the research questions and by executing the research methodology according to chapter three.
In real life there are many companies who are working hard and committed to their work. However, the question is, are they doing this efficiently? Companies do not have the time to visit their customers, employees are making many hours because systems crash that leads to delays, systems are updated manually which consumes time and energy.
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The principles of Lean Thinking in an organisation are known as the worlds most powerful and effective way of building and maintaining continuously improving businesses. Using Lean Thinking strategies, Lagaay can improve itself continuously over the long term. Sayers and Williams (2007) says that the days of doing things in the same old way are gone as the global pressures are forcing every company, organization and everyone to embrace some type of approach and strategy for improving performance and the management systems. The Lean strategies are getting more popular as it offers organisations a rational, proven and accessible path to long term success. It is not like the other methods, Lean is something that everyone can use, understand, and can do so everyone can benefit from (Sayer and Williams 2007). Lean Thinking, principles and techniques are proven to have been practiced successfully by thousands of organisations of every type and size in every industry worldwide, spearheaded by nearly 50 years of continuous improvement by one of the worlds most successful corporations, Toyota (Sayer and Williams 2007). Lean is a solid suitable for all types of problems. It is broadly appropriate in any situation, combining old way of thinking into new tools and techniques. Lean doesnt make any mistakes and is accessible to anyone, with any budget; it is a serious commitment which a company and employees need to make. It requires the whole company to work together to make the company as Lean as possible. Lean Thinking provides a way to specify value, line up value-creating actions in the best sequences, conduct these activities without interruption whenever someone requests them, and perform them more and more effectively. (Womack and Jones, 1996 :15) The framework of Lean is broad and it embraces tools and techniques to solve problems. The most important tools of Lean are already elaborated in the Literature review. Many performance improvement tools are strictly modified for special disciplines, it requires advanced skills but 39 | P a g e
however with Lean Thinking this is not necessary. Lean is powerful, in part, since it is so easily learned and applied by everyone and therefore it is for everyone (Sayer and Williams 2007). Lean is a philosophy and proven to improve the businesses and organisations for the long-term. Lean is about adjusting people and systems to deliver a continuous stream of value to the costumer and eliminate any kind of waste in the process. Lean is a practice at all levels and performs time after time, as well as to constantly improves companies performance (Williams 1996). To conclude this research question, the idea of a Lean organisations use a smaller amount of human effort to carry out the work, less material to make products and services, shorter time to develop and less energy and space to produce (Sayer and Williams 2007). That is why Lean Thinking is a special tool which seriously needs to be taken into consideration when, in this case, Lagaay wants to improve a process in the company, in this case the warehouse department.
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For loading and unloading products, the workers use a pallet truck (a tool used to lift and move pallets). To move products in the ground floor, it uses a normal pallet truck. For moving products to the first floor, workers use an electric pallet truck. There are a total of 2 pallet trucks and 1 electric pallet truck. When the products are checked they will be placed in the storage area. Within the storage area, products are then placed in pallets and/or shelves. The bulk products are placed in top of the warehouse, if there is no place for it in the shelves. Lagaay makes use of the semi- free location system. This means that certain product have a fixed location while other products are placed where there free space. The products are stored in such a way that is decided by the experience of the warehouse manager. Pallet (meters) Length Width Height 2,90 m 1,10 m 3,00 m Shelves (meters) 1,00 m 0,50 m 2,00 m
The order pickers then pick the products according to the picking list. They walk with a basket or cart (depends on the size of the orders list) through the warehouse and grab the product from the shelves by hand. Workers decide the route they want to walk, there is not a specific route to walk as every order is different. Between the shelves within the warehouse it is not possible to pass another cart, as the pathway is quite small. The workers know where to find the products, usually products are on stock. If not, workers need to go on the other floor to check if the products are there, as products can be placed in two places. This is quite frustrating for the workers, as it takes a lot of time and energy to go on the stairs and check if products are out of stock in both places. If articles are not available during collection, it will be placed on a 42 | P a g e
backorder list. Eventually, the orders will be scanned and packed by the workers and are ready to be shipped. The delivery is done by private courier, TNT, DHL or DPD. Within the warehouse department there are several employees involved. Each has their own visions, interests and responsibilities. The employees are an important influence when implementing Lean strategies in the warehouse and making it a success. The workers who are directly involved in the warehouse are: warehouse manager and the order pickers. Other employees who are indirectly involved are: sales staff, purchase staff, quality manager and director.
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Products received
The goods have arrived at Lagaay. Jan (Warehouse manager) signs for received products.
The Warehouse manager and courier quickly checks the amount of boxes received.
First Check: Are there any shortage? No Second Check: Checking products for any damage
No damage
Yes
After the first check, the products are carefully checked for any damage or missing part.
Damage
Manager will inform the purchase department about the amounts of defects, supplier will be contacted.
After passing all the checks, the products are noted in the computer system AccountView.
Workers will receive from the warehouse manager which products need to be repacked in smaller tubes or packages. (This information is provided in AccountView.)
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The basket / cart are being prepared to put all the products of the order in it. In the basket there are elastics or plastic bags to combine products which have the same identical code (products which are the same). When products are being collected, it is important to check the identical code on the product and compare it with the order list, as products might look the same, but can be very different.
The warehouse is divided in different laws of different countries. Every country has its own location. On the order list there is a clear description regarding the location of the product.
Workers need to look further to find the same identical number, if they did not find it in that location, workers need to look for the second location where the product might be.
No
When products match the identical number, they are placed in the basket / cart. If there is more than one of the same product needed, workers bound then with in a plastic bag or bound them with elastic.
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In this part the reader will be elaborated on the problems which the warehouse department is struggling with. This is done by partly through an observation of the researcher and partly through focus groups. For every problem the researcher asked different employees to make sure the problem is not personal but it is found in the whole department. The results of the meetings with employees, several interviews with Jan (warehouse manager) during the whole research, and observation of the researcher are combined together to have a full understanding of all the problems concerning the warehouse.
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For the purchase department they have to deal with several important factors, not only price and lead time, but for example expiry dates and inventory space. When implementing a new system or strategy, the purchase department asked if this can be taken into consideration they must know exactly if inventory space will be changed. One of the possible barriers which all departments agreed on is time. The company does not have time to implement a system. Time is a very valuable resource at Lagaay. Benjamin Franklin (1785) explains that time is money. Therefore when implementing a strategy, Lagaay asked the researcher to make it as short and quickly as possible, while in the same time it must be efficient. During an interview Joris explained that within the company, there are a lot of miscommunications. One of this is information within one department where employees from another department are not aware of it. This leads to a lot of miscommunication within the company. Joris is afraid that this will still be the case when implementing a new strategy in one department. The logistic department raised a possible barrier regarding transportation. For some medicines there are restrictions when transporting them. For example there is a federal regulation on the transport of narcotics. However, according to the researcher and the warehouse manager when implementing a new system in the warehouse, transportation will not be effected. All of these possible barriers will be taken into consideration when a new system will be implemented at Lagaay.
4.5 SUMMARY
In this chapter the findings of the four research question have been answered. In the next chapter the conclusion will be presented.
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CHAPTER 5 CONCLUSION
The purpose of this chapter is to present the reader with a conclusion of the research performed in this document. There will be a conclusion given on chapter 1, 2, 3 and 4. At the end of this chapter the reader will understand the motive why Lean is important for the warehouse department and how this can be made possible. Chapter one describes the principles of Lean, in a company Lean is recognized to be one of the most powerful and effective way of building and maintaining continuously improving businesses. Using Lean Thinking strategies, Lagaay can improve itself continuously over the long term. According to the missions, vision and problems of warehouse department a fishbone diagram has been executed. Research questions have been contributed to understand the concept behind Lean Thinking. Furthermore, the procedures of Lagaay warehouse and the possible barriers of implementing a new system have been elaborated. In the second chapter Lean thinking, its techniques and principles are elaborated. The idea of a Lean organisation it use a smaller amount of human effort to carry out their work, less material to make their products and services, shorter time to develop them and less energy and space to produce them. They became familiar with customer demand and developed high quality products and services in the most efficient and economical way possible. Lean is powerful since it is so easily learned and applied by everyone. Lean is for everyone (Sayer and Williams 2007). The tools which were described are: 5S, 7 types of waste, Just In Time System (JIT), Group Technology (GT), Kanban, Value Stream Mapping, Six Sigma, Total Quality Management (TQM), Theory of Constraints, Total Productive Maintenance (TPM), Business Process Management (BPM), Flow and Pull Tools, Customer and Value-Stream Tools, Management Tools and Perfecting Tools.
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The third chapter describes the methodology. It shows in which approach and methods the research questions will be studied. Reasons for primary and secondary data are showed and to know how / when is data reliable or not. In the fourth chapter the findings of the research questions are provided: What makes Lean Thinking challenge so special? This research question can be concluded by saying that Lean is a solid suitable key for all types of problems. The framework of Lean is broad and it embraces tools and techniques to solve difficulties. Lean strategies are getting more popular as it offers organisations a rational, proven and accessible path to long term success. It is not like the same as other methods, Lean is something that everyone can use, understand, and can do so everyone can benefit from (Sayer and Williams 2007). The most important tools of Lean are elaborated in the Literature review. Many performance improvement tools are strictly modified for special disciplines, it requires advanced skills but however with Lean Thinking this is not necessary. Lean is powerful, in part, since it is so easily learned and applied by everyone and therefore it is for everyone (Sayer and Williams 2007). What is the procedure of the warehouse at Lagaay? In this part there have been an in-depth analysis made regarding the process of the warehouse. There are basically three processes involved: Receiving products, products being stored and products going out. A short description of the procedure is as following: Products are picked by workers and made ready for shipment
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Within the warehouse department there are several employees involved. Each has their own visions, interests and responsibilities. The employees who are directly involved in the warehouse are: warehouse manager and the order pickers. Other employees who are indirect involved are: sale staffs, purchase staff, quality manager and director. What are the problems occurring in the warehouse department? In this part five problems of the warehouse have been discussed. The problems which examined were: 1) Products do not have a fixed location, products on the shelves shows a different location than what the system was showing. The products with different locations are time consuming to be found. 2) There is too much inventory, some products were ordered in huge amounts which caused extra inventory and inventory being placed in two (or more) places. 3) Products have two inventories; this was creating confusion among the workers. When a product was out of stock in one location, workers needed to go to the different location and look if it was on stock there. 4) Identical number of the product is written too small, the product description which is written on the boxes where the products are found, are very small. Workers concluded that looking on the product number on every product can be very frustrating. 5) Poor job description, for new employees and trainees was not a clear job description. Workers waste a lot of time finding the products and looking for a good strategy how to pick the order as quickly as possible. Which strategies would be best possible for the warehouse department? In this part there are four strategies of Lean Thinking are elaborated which can solve all five problems of the warehouse. The first strategy which was described is called Group Technology. Group Technology is to combine all the similarities of components, products, services and processes together to reduce movement and improve the product flow. The way how this will be implemented is products which are similar will be placed together on one fixed location, in this way that walking time will be minimized. 52 | P a g e
The second strategy which was described is called Theory of Constraints, the idea behind this theory is that in any process there can be a bottleneck. Find the bottleneck and destroy it. In the warehouse bottlenecks are the small identical numbers on the products. Workers need to read carefully the identical numbers and match this with the picking list; this process slows down the workers as these numbers are very small written. When taking this theory into consideration and implementing it, this can minimize the time what is spend on reading the identical number. The third strategy is called the Business Process Management, this strategy is about optimizing the business strategy. This is partly suitable for the warehouse, when considering the poor job description at the warehouse. According to Sayer and Williams (2007), a part of the BPM practises are making a model tool to help workers know what it is required of them and showing them, usually through job description, how to achieve this in the most efficient way. The last strategy which was discussed is called the Just In Time System (JIT), this shows that it is important to produces only the necessary products at the necessary time, in necessary quantity. The result when this theory will be implemented, the warehouse will have less inventory. When having less inventory there will be no need to place products in different locations because of the limited space This will also save space and will lead to a quicker flow in the production. During this research, when introducing Lean Thinking for the warehouse department, it was noticed that within the company there was a lack of clarity within the organization. (New) Employees didnt receive trainings and there was no job description to follow. These have been taken into consideration when new strategies will be implemented. The future of Lean across all industries is limitless, the principles, methods, tools and techniques can be applied in any business in any situation. In the business, organisation or any kind of industry through Lean, eyes will open up new pathways for development opportunities. Opportunities for industries improvements are all around. The potential for Lean is limitless. 53 | P a g e
CHAPTER 6 RECOMMENDATION
In this part there will be 6 strategies presented of which can improve the warehouse department and how to implement it. When studying the theories of Lean Thinking the researcher found out that it is important to consider several theories to make the warehouse as efficient as possible. The methods which are used to give a recommendation for Lagaay have been done partly through primary and partly through secondary data. The primary part has been conducted by the researcher, through observation and focus group; this has been done to see how these strategies can best fit the warehouse. Secondary data has been also included in this part; these are theories which are described in chapter two. The theories which are taken into consideration are the seven types of waste, Kanban, Group Technology, Theory of Constraints, Business Process Management and Six Sigma. As it is elaborated in the second research question, a short summary of the procedure in the warehouse are:
Products are received Input Products are being checked for amount and damage Products are being repacked in smaller amounts Products are placed in the warehouse
Process
Output
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6.4 SOLVING THE PROBLEM OF TOO MUCH INVENTORY THROUGH JIT SYSTEM
The Just-In-Time System (JIT) produces only the necessary products at the necessary time, in necessary quantity (Peter Berling 2010). For Lagaay, the JIT System will be a method where products are received at the necessary time and have on hand only the minimum stock necessary so that there will be no backorders. The result when this theory will be implemented, the warehouse will have less inventory. When having less inventory there will be no need to place products in different locations because of the limited space.
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The researcher has observed that to make this method more efficient it is important to make space in the inventory that will allow the product to be put in one spot /shelf. Meaning, when the box of the product is full, workers put the rest of the products above in the bulk area. When the box is empty, workers will refill the products (taking it from the bulk and refill the box). This procedure cost extra time and effort and can be easily solved. This can be done by calculating the size of the maximum inventory + the calculating the size of reorder point (when product hit the minimum level), thus calculating the size which is needed for minimum inventory + maximum inventory. When having this information make the box as big as the outcome of the formula so that all the products which are received can directly be put in the bigger box, however when products dont need that much space, place it in a smaller box. Lagaay uses three types of boxes. Small: 10x28x10cm, Medium: 17x38x10cm and large: 40x30x17cm. This will also save space and will lead to a quicker flow in the production. An example has been given in the table below.
FIGURE 9 TYPES OF BOXES
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The third step is making the inventory more efficient through the JIT-system. This is a medium term period and needs to be done after completing step 1 and 2. The time which is needed for this step is 3 months. The fourth step is solving the bottleneck problem, this need to be done after the products have been relocated. This has been indicated as a medium term period and can be finalized within 2 months. The fifth step is updating the system. This can only be done after the products have received new location; therefore it is placed as a long term period. The time which is needed for this process is 3 months. The last step to consider is to improve the job description. This step has been chosen as last since this focus on new employees only. At Lagaay the company deals on yearly bases 1-3 new employees and therefore it received a long term period.
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CHAPTER 7 BIBLIOGRAPHY
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