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Int. J. Production Economics 107 (2007) 223236


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Analyzing the benets of lean manufacturing and value stream


mapping via simulation: A process sector case study
Fawaz A. Abdulmaleka, Jayant Rajgopalb,
a

Industrial and Management Systems Engineering Department, Kuwait University, Kuwait


Department of Industrial Engineering, University of Pittsburgh, Pittsburgh, PA 15261, USA

Received 1 November 2005; accepted 1 September 2006


Available online 28 November 2006

Abstract
The lean approach has been applied more frequently in discrete manufacturing than in the continuous/process sector,
mainly because of several perceived barriers in the latter environment that have caused managers to be reluctant to make
the required commitment. We describe a case where lean principles were adapted for the process sector for application at a
large integrated steel mill. Value stream mapping was the main tool used to identify the opportunities for various lean
techniques. We also describe a simulation model that was developed to contrast the before and after scenarios in
detail, in order to illustrate to managers potential benets such as reduced production lead-time and lower work-in-process
inventory.
r 2006 Elsevier B.V. All rights reserved.
Keywords: Lean manufacturing; Value stream mapping; Simulation; Process industries; Steel

1. Introduction
Lean manufacturing is one of the initiatives that
many major businesses in the United States have
been trying to adopt in order to remain competitive
in an increasingly global market. The focus of the
approach is on cost reduction by eliminating nonvalue added activities. Originating from the Toyota
Production System, many of the tools and techniques of lean manufacturing (e.g., just-in-time (JIT),
cellular manufacturing, total productive maintenance, single-minute exchange of dies, production
smoothing) have been widely used in discrete
Corresponding author. Tel.: +1 412 624 9840;
fax: +1 412 624 9831.
E-mail address: rajgopal@pitt.edu (J. Rajgopal).

manufacturing. Applications have spanned many


sectors including automotive, electronics, white
goods, and consumer products manufacturing.
On the other hand, applications of lean manufacturing in the continuous process sector have been far
fewer (Abdullah and Rajgopal, 2003). It has sometimes been argued that in part, this is because such
industries are inherently more efcient and have a
relatively less urgent need for major improvement
activities. Managers have also been hesitant to adopt
lean manufacturing tools and techniques to the
continuous sector because of other characteristics
that are typical in this sector. These include large,
inexible machines, long setup times, and the general
difculty in producing in small batches.
While some lean manufacturing tools might
indeed be difcult to adapt to the continuous sector,

0925-5273/$ - see front matter r 2006 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2006.09.009

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this does not mean that the approach is completely


inapplicable; for example, Ahmad et al. (2005),
Melton (2005), Radnor (2000), Cook and Rogowski
(1996), and Billesbach (1994). Abdullah et al. (2002)
and Abdelmalek et al. (2006) examine aspects of
continuous production that are amenable to lean
techniques and present a classication scheme to
guide lean implementation in this sector. The
objective of this paper is to use a case-based
approach to demonstrate how lean manufacturing
tools when used appropriately, can help the process
industry eliminate waste, maintain better inventory
control, improve product quality, and obtain better
overall nancial and operational control. A large
integrated steel mill is used to illustrate the
approach followed. Since some of the information
is condential, the company is referred to as AB
steel (or ABS) throughout this paper. In our
approach, value stream mapping (VSM) is rst
used to map the current operating state for ABS.
This map is used to identify sources of waste and to
identify lean tools for reducing the waste. A future
state map is then developed for the system with lean
tools applied to it. Since the implementation of the
recommendations is likely to be both expensive and
time-consuming, we develop a simulation model for
the managers at ABS in order to quantify the
benets gained from using lean tools and techniques.
2. Background
We begin by providing a brief overview of the
principles used in this work, followed by some
background information on the company where the
work was conducted.
2.1. Overview of lean manufacturing and its tools
After World War II Japanese manufacturers were
faced with vast shortages of material, nancial, and
human resources. These conditions resulted in
the birth of the lean manufacturing concept
(Womack et al., 1990). Kiichiro Toyoda, the
president of Toyota Motor Company at the time,
recognized that American automakers of that era
were out-producing their Japanese counterparts by
a factor of about ten. Early Japanese industrial
leaders such as Toyoda, Shigeo Shingo, and Taiichi
Ohno responded by devising a new, disciplined,
process-oriented system, which is known today as
the Toyota Production System, or Lean Man-

ufacturing. The system focused on pinpointing


the major sources of waste, and then using tools
such as JIT, production smoothing, setup reduction
and others to eliminate the waste. A very brief
description of the most common lean tools is
given below (Monden, 1998; Feld, 2000; Nahmias,
2001); the interested reader is referred to one of the
many books on lean manufacturing for more
details:
 Cellular manufacturing: Organizes the entire
process for a particular product or similar
products into a group (or cell), including all
the necessary machines, equipment and operators. Resources within cells are arranged to easily
facilitate all operations.
 Just-in-time (JIT): A system where a customer
initiates demand, and the demand is then
transmitted backward from the nal assembly
all the way to raw material, thus pulling all
requirements just when they are required.
 Kanbans: A signaling system for implementing
JIT production.
 Total preventive maintenance (TPM): Workers
carry out regular equipment maintenance to
detect any anomalies. The focus is changed from
xing breakdowns to preventing them. Since
operators are the closest to the machines, they
are included in maintenance and monitoring
activities in order to prevent and provide warning
of malfunctions.
 Setup time reduction: Continuously try to reduce
the setup time on a machine.
 Total quality management (TQM): A system of
continuous improvement employing participative
management that is centered on the needs of
customers. Key components are employee involvement and training, problem-solving teams,
statistical methods, long-term goals, and recognition that inefciencies are produced by the
system, not people.
 5S: Focuses on effective work place organization
and standardized work procedures.

2.2. Overview of VSM


A value stream is a collection of all actions (valueadded as well as non-value-added) that are required
to bring a product (or a group of products that use
the same resources) through the main ows, starting

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225

with raw material and ending with the customer


(Rother and Shook, 1999). These actions consider
the ow of both information and materials within
the overall supply chain. The ultimate goal of VSM
is to identify all types of waste in the value
stream and to take steps to try and eliminate these
(Rother and Shook, 1999). While researchers
have developed a number of tools to optimize
individual operations within a supply chain, most of
these tools fall short in linking and visualizing the
nature of the material and information ow
throughout the companys entire supply chain.
Taking the value stream viewpoint means working
on the big picture and not individual processes.
VSM creates a common basis for the production
process, thus facilitating more thoughtful decisions
to improve the value stream (McDonald et al.,
2002).
VSM is a pencil and paper tool, which is created
using a predened set of standardized icons (the
reader is referred to Rother and Shook, 1999 for
details). The rst step is to choose a particular
product or product family as the target for
improvement. The next step is to draw a current
state map that is essentially a snapshot capturing
how things are currently being done. This is
accomplished while walking along the actual
process, and provides one with a basis for analyzing
the system and identifying its weaknesses. The third
step in VSM is to create the future state map, which
is a picture of how the system should look after the
inefciencies in it have been removed. Creating a
future state map is done by answering a set of
questions on issues related to efciency, and on
technical implementation related to the use of lean
tools. This map then becomes the basis for making
the necessary changes to the system.

these. As a result, management decisions on


implementing lean manufacturing often come down
to their belief in lean manufacturing, reported
results of others who have implemented lean
techniques, and heuristic rules of thumb on the
expected payback. For many managers this is
insufcient justication, and lacks the quantiable
evidence needed to convince them to adopt lean
(Detty and Yingling, 2000). This raises the question
of how we can make lean and VSM more viable.
While in some situations the future state map can
be evaluated with relatively modest effort, it is not
as easy to do so in many others. For example,
predicting inventory levels throughout the production process is usually impossible with only a future
state map, because with a static model one cannot
observe how inventory levels will vary for different
scenarios (McDonald et al., 2002). In general, we
need a complementary tool with VSM that can
quantify the gains during the early planning and
assessment stages. An obvious tool is simulation,
which is capable of generating resource requirements and performance statistics whilst remaining
exible to specic organizational details. It can be
used to handle uncertainty and create dynamic
views of inventory levels, lead-times, and machine
utilization for different future state maps. This
enables the quantication of payback derived from
using the principles of lean manufacturing, and
the impact of the latter on the total system. The
information provided by the simulation can enable
management to compare the expected performance
of the lean system relative to that of the existing
system it is designed to replace (Detty and Yingling,
2000), and assuming that this is signicantly superior, it provides a convincing basis for the adoption
of lean.

2.3. Simulation in support of VSM

2.4. Company and process background

For companies that have long relied on traditional approaches to their manufacturing systems, it
is often difcult to gain from management the
commitment required to implement lean manufacturing. Doing so is hard because of differences in a
number of aspects including raw material procurement, inventory management, employee management, and production control. For traditional
manufacturers, the reluctance to implement many
lean ideas arises because their distinctive requirements often make it hard to predict the magnitude
of the gains that can be achieved by implementing

ABS produces several grades of steel that are used


primarily in appliance manufacturing. The focus of
this VSM is on one product family: annealed
products, of which there are three types produced;
open coil annealed, hydrogen batch annealed, and
continuous annealed. Average customer demand
was estimated as 76,500 tons per month, and the
distribution by product is as follows:
 8500 tons per month of open coil (OCA),
 10,000 tons per month of continuous (CA),
 58,000 tons per month of hydrogen batch (HBA).

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The processes for this product family start with a


blast furnace where on a daily basis raw material
including skips of iron ore, coke, and limestone are
charged at the top of the furnace. The melted raw
material is then poured into sub-ladles (essentially,
large bins for holding liquid iron) from the tap hole
at the bottom of the furnace. The liquid iron travels
in the sub-ladle to the basic oxygen process (BOP)
where scrap is added and oxygen is blown in to burn
off excess carbon and obtain the initial form of
liquid steel. Depending on the grade of the nal steel
to be produced this initial liquid steel can go either
to a ladle metallurgical facility (LMF) or a Degasser
to further rene and remove impurities from the
liquid steel. The rened liquid steel then goes to a
dual-strand continuous caster where steel slabs are
cast in accordance with specic customer widths.
The hot slabs are then shipped on railroad and rack
cars from the continuous caster process to the
nishing mill facility for further rening processes,
which include the hot strip mill (HSM), pickling,
cold reduction (CR), annealing (OCA, HBA or
CA), temper mill (TM), and nally, shipping.
At ABS the business planning department receives demands from two types of customers: repeat
and spot business (open market). The repeat
demand is received on a weekly basis, where major
ABS customers call or send through EDI their
requirements for the weeks ahead. Since these are
committed customers the quantity and the order
delivery time are more or less xed. On the other
hand, spot customers generate daily schedules.
There are currently two separate scheduling groups:
one is for the hot end liquid steel, which usually
includes the blast furnace and caster, and the second
is for the nishing mill, which handles the product
from the HSM through shipping. When an order
arrives, business planning enters it into the planning
system, estimates the date by which they think they
can complete it, and rough-schedule orders on the
production units on a weekly basis. Next, they afx
a routing on the order and assign a plan week to
it. This schedule on the operating side becomes the
basis to monitor day-by-day and week-by-week
increments against how closely they are in accordance with the schedule. The schedules can then be
updated further on an as-needed basis to daily or
even bi-daily schedules. ABS uses three types of
transportation modes: truck, rail, and barge. The
shipments go to different customers on a daily or
weekly basis. The plant works on a continuous basis
for 24 h a day all year long except for major

shutdowns and runs a three-shift operation in all


production departments except for continuous
annealing, which runs two shifts. Each shift is 8 h
long.
3. VSM: current state map
All data for the current state map were collected
according to the approach recommended by Rother
and Shook (1999). Data collection for the material
ow started at the shipping department, and worked
backward all the way to the blast furnace process,
gathering snapshot data such as inventory levels
before each process, process cycle times (CTs),
number of workers, and changeover (CO) times.
Fig. 1 shows the current state map that was
constructed; the small boxes in the map represent
the process and the number inside the box is the
number of workers at each process. Also, each
process has a data box below, which contains the
process CT, machine reliability (MR), the number
of shifts, and the CO time. It should be noted that
this data was collected whilst walking the shop oor
and talking to the foreman and operators at each
workstation. The processing and set-up times are all
based on the average of historical data.
Note that there are two inventory triangles ahead
of some processes, one for annealed products and
one for all other products. This simply indicates that
other products could be scheduled to use the process
in addition to the annealed products considered
herein, so that the total inventory is actually higher
than what is shown. After collecting all the
information and material ows, they are connected
as indicated by arrows in the map, representing how
each workstation receives its schedule from business
planning.
The timeline at the bottom of the current state
map in Fig. 1 has two components. The rst
component is the production waiting time (in days),
which is obtained by summing the lead-time
numbers from each inventory triangle before each
process. The time for one inventory triangle is
calculated by dividing the inventory quantity into
the daily customer requirements. For example, the
lead-time for the inventory triangle ahead of
pickling is 17.65 days; this is calculated by dividing
45,000 tons (the total inventory ahead of the
pickling) by 2550 (the daily average demand rate
for the annealed product). The total observed value
for the waiting time is around 46 days. Other than
about three days that are required for the coils to

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227

Fig. 1. Current state map.

cool down after processing at the HSM, the rest of


this time is non-value added time. Note that we do
not consider the amount of raw material at the
beginning of the production, since ABS owns the
mines and raw material sources, so that and raw
material is not an issue for them.
The second element of the timeline is the
processing (or value-added) time, which is about
two days. This time is calculated by adding the
processing time for each process in the value stream.
The CT for each process is the average CT, which
was determined by using actual data from the
company. Thus the total lead time is around 48
days. If we are conservative and include the
approximately three days required for the coils to
cool down after processing at the HSM we get a
total of about ve days (429,030 s) of value-added
time; this works out to slightly over 10% of the total
production lead time.
4. VSM: future state map
The process of dening and describing the future
state map starts while developing the current state

map, where target areas for improvement start to


show up. Looking at the current state map for ABS
several things stand out: (a) large inventories, (b) the
difference between the total production lead-time
(around 51 days) and the value added time (5 days),
which is under 10% of the total, and (c) each
process producing to its own schedule. Inventory
and lead time may be viewed as two related issues
since the more the inventory, the longer any item
must wait for its turn and thus, the longer the lead
time. In creating the ideal future state map we try to
identify lean manufacturing tools to drive both of
these down, while looking at the schedule across the
entire value stream. We follow a systematic
procedure where we try to answer a series of
structured questions; this allows us to come up with
an ideal future state map that will help in eliminating or at least reducing different types of waste in
the current manufacturing system.
Question 1. What is the takt time?
Takt time refers to the rate at which customers
are buying products from the production line; i.e.,
the unit production rate that is needed to match

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customer requirements. It is calculated by dividing


the total available time per day by the daily
customer demand. The throughput required for
the annealed products is an average of 76,500 tons
per month. Assuming 30 days per month, the
average daily requirement is thus 2550 tons per
day. With an average coil weight of 20 tons, this
translates into approximately 127 coils per day.
ABS continuously runs three shifts per day, which
translates to 1440 working minutes per day, so that
the takt time is thus approximately 1440=127
11:3 min per coil.
Question 2. Will production be directly to shipping
or to a nished goods supermarket?
A supermarket is nothing more than a buffer
or storage area located at the end of the production
process for products that are ready to be shipped
(Rother and Shook, 1999). On the other hand,
producing directly to shipping means that only the
units that are ready to be shipped are produced.
Currently ABS produces all the annealed products
and sends them to a holding area where they are
stored with other products waiting to be shipped.
However, this is done based on a push system, and
coils of steel can wait a long time in this area before
being shipped. Our recommendation was that ABS
produce to a supermarket (warehouse) and move
the coils based on a kanban system. Whenever the
supermarket inventory is below a certain level this
would trigger the TM (the last production stage) to
schedule the annealed products to replenish the
supermarket according to the pitch, which is
addressed in more detail under Question 7.
Question 3. Where will ABS need to use pull system
supermarkets inside the value stream?
The hot end at ABS is a continuous ow process
by design, so that a supermarket at this end does not
make sense. The introduction of supermarkets is
necessary only at the nishing end where large
amounts of inventory exist between different workstations. In addition to the shipping supermarket
recommended in Question 2, six additional supermarkets are needed to create a continuous ow at
the nishing mill (cold end): one before the pickling
line, one before the CR process, one before each of
the three annealing processes (HBA, OCA, CA),
and one before the TM (the reader is referred to the
ow displayed in Fig. 1). Once a shipment of coils is
withdrawn from the shipping supermarket, the
corresponding kanban is sent to the TM where it

is placed in a load-leveling (heijunka) box. This in


turn, triggers the production and movement of
material from the earlier stages as described below.
The rst supermarket recommended is ahead of
the pickling area after the HSM. The latter currently
pushes coils to pickling, which causes inventory to
accumulate in two lines in front of the latter. Both
of these lines are shared resources (i.e., other
products can use them), and a kanban pull system
was recommended to regulate the replenishment of
this supermarket. A pull signal from the shipping
area is eventually transmitted to the HSM to
replenish the supermarket in front of the pickling
area, whenever the number of coils in the latter
drops to a trigger point.
The second supermarket is recommended to
stabilize the CR process for the annealed products.
The inventory after pickling and before CR is large
and both workstations are shared resources. Also,
ABS runs its schedule in batches according to coil
width, gauge, and product, so that it is necessary to
set up a supermarket to accommodate schedule
changes. Again, a kanban pull system can be used to
regulate the replenishment of this supermarket.
Note that whenever this supermarket is full, the
pickling process could run other products (nonannealed products) so that it is not idle. Also,
pickling will no longer receive a schedule from
business planning for the annealed products.
The third, fourth, and fth supermarkets are
recommended after CR and ahead of each of the
three annealing workstations. Thus the supermarket
in front of the HBA process will be used for coils that
are ready to be placed in the HBA furnaces. The same
thing will apply for the supermarkets ahead of CA
and OCA. Once again, the CR mill that supplies
annealing will no longer need to receive a schedule for
the annealed products from business planning and can
run other products types when those supermarkets are
at their capacities. The last recommended supermarket
is ahead of the TM. Since 96% of the products that go
to the TM come from annealing, this supermarket
area can for all intents, be completely dedicated to the
annealed products.
The kanbans at the supermarkets follow the
standard rules of a pull system. For example, the
pickle line (supplier) is allowed to process the next
coil in line as long as there is an empty coil spot in
the supermarket for the coil before CR (customer).
By denition, if the supermarket is at its capacity
then this means that CR does not need another coil.
In this case there are two things that can be done;

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either the pickle line can slow its production rate to


match that of CR or it should be halted. The rst
option is costly in a steel mill, while the second is
almost always infeasible. Therefore if the supermarket at the pickle line is full our recommendation
is that it be switched to satisfy other product types
until the time of the next order for the annealed
product is reached. In doing so we prevent
producing more than the capacity of the supermarket and also satisfy requirements for other
product types, while avoiding shutting down the
pickle line.
In the following questions we will address how a
production order will be released and the time
increment at which those orders will be released.
Question 4. Where can continuous ow be used?
Manufacturing assets in the steel industry are
such that they cannot easily be moved into the
classical cellular arrangement, and batch sizes are
typically xed. However, the steel industry does
have a signicant amount of continuous ow
manufacturing at the hot end. For example, starting
from the blast furnace through the BOP, the
degasser/LMF, and nally the continuous caster,
the ow is continuous since the liquid steel moves in
a ladle in a batch size of one. At the nishing mill
however, the slab can move through one of many
possible routings using expensive general purpose
reduction equipment, which precludes cellular ow.
Different CT and down times of the workstations
also make it difcult to introduce continuous ow,
and many of the workstations are restricted to
different schedules depending on width, gauge and
product type, so that it is unrealistic to join these
workstations at the nishing mill to obtain a
continuous ow. Therefore, the focus at the cold
end should be on developing a system to enable pull
by the customer, rather than continuous ow. In
most steel mills, the hot end (liquid steel) and the
nishing mill (solid steel) are located in the same
area; however, at ABS the two are actually about
nine miles apart, purely based on historical circumstances. This actually enables a natural decoupling
of the two phases and allows a pull system to be
incorporated.
The introduction of supermarkets that are controlled by a kanban system forces the entire cold end
to pace every workstation to the speed of the
bottleneck, which as the current state map indicates
is between the pickling line and the CR mill. Thus
the mill begins to take on the characteristics of an

229

assembly line where every product starts to ow


rather than stop and start.
Question 5. What single point in the production
chain (the pacemaker process) should ABS
schedule?
To stop overproduction at any workstation in the
value stream, only one point in the supplier-tocustomer value stream needs to be scheduled. This
point is called the pacemaker process, because this
point sets the pace of production for all the
upstream processes and ties the downstream and
upstream processes together. Every workstation
upstream produces by a pull signal from the next
downstream process and ows downstream from
the pacemaker must occur in a continuous manner.
The pacemaker is typically the continuous ow
process that is farthest downstream in the value
stream, so there should be no supermarket (other
than nished goods) downstream of it (Rother and
Shook, 1999).
For ABS, since the hot end is located in a
different facility than the nishing mill, the scheduling of a single process is unrealistic. For this reason
one schedule will be released to the continuous
caster to set the base for the hot end production
area and the pacemaker process for the nishing
mill is the TM; this is the nal process and sets the
base for the entire production at the nishing mill.
Question 6. How should ABS level the production
at the pacemaker process?
The basis for addressing this question is to
distribute the production of the three annealing
processes uniformly over the production time at the
pacemaker process. This means that several batches
of the same sequence must be scheduled. This will
allow ABS to avoid long lead-times, large amounts
of in-process and nished goods inventory, quality
problems, and in general, help them avoid wastes
related to overproduction. We consolidate the
scheduling width and gauge for the coils so that
we deal with only three different products; adjustment for width and gauge within a particular type
can be made as required. The key idea is for ABS to
send a schedule to the pacemaker process (TM) that
ensures that each product is produced at a constant
rate. We use a simple formula (Monden, 1998) to
determine the product sequence that levels the mix
and has a constant rate for the three different

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230

products:
d ij j  0:5  T=Di i 1; 2; . . . ; n and
j 1; 2; . . . ; Di ,
where n is the number of different products to be
made, Di the number of units demanded per day for
product i. T D1 D2    Dn is the total
number of units of all products to be made each
day, j the index for the job (unit) of product i, d ij the
ideal position index for job (unit) j of product i in
the overall sequence.
For our case n 3, while the Di values are: 98, 14
and 15 for HBA, OCA, and CA, respectively. Thus
T is equal to 127. Ordering these jobs according to
d ij sorted (shown in Table 1) one can see a pattern
start to develop, yielding the following approximate
sequence for smooth production (HBA-HBA-HBACA-HBA-OCA-HBA-HBA-HBA), (HBA-HBA-HBACA-HBA-OCA-HBA-HBA-HBA),yetc. We could
just simplify the sequence to (HBA-HBA-HBAHBA-HBA-HBA-HBA-CA-OCA).
Question 7. What increment of work (the pitch)
will be consistently released to the pacemaker
process?
Depending on the sequence determined by the
last question, how often should we release and
withdraw (the pitch) the increment of production
Table 1
Position index calculation for annealed products
Product i

Unit j

d ij

d ij (sorted)

Product-unit

HBA

1
2
3
4
5
6
7
8
9
10
11
12
13
14

0.648
1.944
3.240
4.536
5.832
7.128
8.423
9.719
11.015
12.311
13.607
14.903
16.199
17.495

0.648
1.944
3.240
4.233
4.536
4.536
5.832
7.128
8.423
9.719
11.015
12.311
12.700
13.607
13.607

HBA 1
HBA 2
HBA 3
CA 1
HBA 4
OCA 1
HBA 5
HBA 6
HBA 7
HBA 8
HBA 9
HBA 10
CA 2
HBA 11
OCA 2

OCA

1
2

4.536
13.607

14.903
16.199
17.495

HBA 12
HBA 13
HBA 14

CA

1
2

4.233
12.700

from the pacemaker process? The pitch is the basic


time unit of the production schedule for a product
family. In other words, it is the material transfer
interval at the pacemaker process. The pitch is
calculated by multiplying the takt time by the
nished-goods transfer quantity at the pacemaker
process. Since there is no container size involved in
the steel industry (we move one coil at a time), the
number of kanbans will be the same as the current
daily demand for OCA and CA. However one
kanban will correspond to seven coils for HBA.
Table 2 shows the number of kanbans required.
Given a takt time of 11.3 min, and considering that
the transfer lot size is nine coils, the pitch is
approximately 1:40 h. Thus ABS will perform paced
release of work instructions and a paced withdrawal
of nished goods at the TM according to this pitch.
This means that the material handler will arrive at
the TM, remove the required kanbans from the
heijunka (or load leveling) box of the TM corresponding to the next increment of work, and move
the coils just nished from the previous pitch to the
shipping area supermarket. The number of pitches
required for every product is calculated as the daily
requirement for every product divided by the
transfer quantity, while the time interval required
for every product to remove each kanban from the
heijunka box is calculated by dividing the available
daily time by the number of pitches for every
product (Table 3). The heijunka box is thus divided
into 14 columns, each equivalent to about 1:40 h
that represent the frequency of introducing the
kanban (work increment) to the TM. The column
for each pitch interval will have three rows of
kanban slotsone for each of the annealed
products.
Question 8. What process improvement will be
needed to achieve the future state design?
In order to accomplish the material and information ow envisioned by ABS, improvement and
actions must take place to implement the future
Table 2
Number of kanbans required by product
Product

Daily demand Transfer lot


(coils)
size (coils)

Required number
of kanbans

HBA
OCA
CA

98
14
15

14
14
15

7
1
1

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Table 3
Number of pitches and material transfer times
Product

Pitches per day

Material transfer time

HBA
OCA
CA

98=7 14
14=1 14
15=1 15

1440=14 102 min


1440=14 102 min
1440=15 96 min

state. It is unrealistic to expect to obtain the benets


of the supermarkets, kanban control, takt time, the
pitch, production leveling, continuous improvement, and other changes discussed in the previous
questions without process improvement steps involving specic lean tools; these are described in the
next section.
5. Tools for process improvement
Since our goal was to identify the potential
dynamic gains from implementing lean and to
develop a desirable future state map, we focused
on three lean manufacturing techniques that can be
quantied and modeled objectively: a modied pulltype production system, setup reduction and total
productive maintenance (TPM). To analyze and
evaluate different scenarios for the future state map,
a full factorial experimental design was planned for
the simulation, with the three factors being the
techniques just mentioned. Two levels were selected
for each factor, thus resulting in 23 distinct
combinations for each replicate. These factors are
now discussed further.
5.1. Production system
A push system and a hybrid pushpull system are
the two levels for comparison that are used for the
production system factor. The push system represents the current situation at ABS where coils are
pushed through the system. The hybrid system
however, is designed with the future state map in
mind. In this system work will continue to be
pushed through the hot end. However, the cold
(nishing) end employs a pull system, starting with
the HSM at the beginning of this subsystem. From
the buffer area between the hot mill and the pickling
line and all the way to the shipping area, the system
will be based on a kanban pull system where the
annealed products will be pulled from upstream
workstations. The junction between the hot mill and
the pickling line thus forms the pushpull boundary.

231

In the simulation model, the portion of the system


up to the HSM is the same as the current one at
ABS. Starting with the pickling line the system was
modeled as a pull system using kanbans to control
the inventory between the workstations. This is
done by modeling each kanban between a pair of
workstations as a resource. An arriving entity seizes
one kanban and one workstation at the same time.
As soon as the workstation nishes processing
the entity, the workstation is released; however,
the kanban is retained. The entity then proceeds to
the next workstation. At this point the entity seizes
the workstation and a new kanban from the kanban
set for this latter workstation, while simultaneously
releasing the kanban from the previous workstation.
Thus a kanban from one workstation is held until
the entity receives a kanban from the subsequent
workstation. This ensures that the former does not
begin work until it gets a pull signal from the latter.
In other words, the part retains the kanban from the
former workstation until it receives the next kanban
authorization movement to the following workstation (Marek et al., 2001).
At the pull side of the hybrid system the total
WIP is limited to the sum of the number of kanban
cards across each kanban set, where the latter is
represented by a supermarket as dened in Section
4. Since each coil in the supermarket has a kanban
card attached to it, the average system WIP level
may be found by calculating the sum of the average
utilizations of the kanban resources in the simulation. The comparison of WIP inventory for the push
and the hybrid system is based only on the
inventory ahead of the pickle line and downstream
to the TM. The reason for this is that the difference
between the two systems in terms of WIP inventory
will be after the pushpull boundary point; all
earlier inventory levels are identical since the
systems being compared are identical up to this
point.
5.2. Total productive maintenance
The two levels for the TPM factor are labeled
without and with. The former identies current
maintenance procedures followed by ABS, while the
latter models a proposed TPM procedure that splits
the same scheduled maintenance time into smaller
increments, i.e., it separates the maintenance process into smaller portions that are performed more
frequently. Maintenance is planned in such a way
that it cascades through the process so that the

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232

inventory shortages created by work stoppage for


maintenance result in minimal disruption of ow.
As an example, when the pickle line is maintained
then the kanbans in its supermarket (the area ahead
of cold rolling) would empty; therefore, the next
maintenance operation is scheduled on the cold mill.
This permits the pickle line to restock its supermarket, and so on.
TPM can signicantly reduce random machine
breakdowns and in turn, inventory and lead-time. It
is usually dened in terms of an increase in overall
equipment effectiveness (OEE), which in turn is a
function of down time and other production losses
(Nakajima, 1989). Suehiro (1992) states that machine breakdowns and minor stoppages account for
2030% of loss in OEE; Ljungberg (1998) also
reports a 20% gure for the same. Volvo Gent
reports that the OEE in the company increased from
66% to 69% before implementing TPM to 90%
after TPM where most of the increase is a result of
the elimination of machine breakdowns and minor
stoppages (Ljungberg, 1998). Similarly, Avon Cosmetics report signicant increase of OEE after TPM
was implemented at its pump spray line (Ljungberg,
1998). Based on this experience we assume a 20%
increase in OEE at ABS.
Table 4 shows proposed TPM times at the
nishing mill. The maintenance times were chosen
based on optimistic but reasonable estimates after
conversations with oor personnel. One issue that
had to be taken into consideration with the
proposed TPM program is that the time for each
of the different maintenance tasks for a given
process should not exceed the total proposed
(reduced) maintenance downtime. This issue was
discussed with ABS and it was conrmed that the
proposed downtime should be feasible.

5.3. Setup time reduction


The two levels for the setup reduction factor are
also labeled without and with. The without
level models the current situation at ABS with setup
times the same as they are now, while with
denotes reduced setup times. Again, the changeover
reduction times were selected based on optimistic
but reasonable estimates, with values that are
realistic for ABS to drive their CO time down.
These were based on extensive discussions with oor
personnel including operators and engineers and are
summarized in Table 5. For example, we analyze a
setup time reduction for the HSM from 35 to 10 min
for the backup rolls and 12020 min for the work
rolls. For CR the reductions analyzed were from 15
to 5 min for the backup rolls and 12020 min for the
work rolls. Other setup times reductions are as
found in Table 5.

6. The simulation model


To evaluate potential gains based on the implementation of the tools described in Section 5 and
based on the questions analyzed in Section 4, a
detailed simulation model was developed using
System Modeling Corporations Arena 5 software.
We began with a model for the current system,
which was later modied to model the proposed
future state. Before evaluating the future state
considerable effort was expended to verify and
validate the model for the current system. Verication is the process that ensures that the simulation
model mimics the real system (Law and Kelton,
1991). Since this model is large with many types of
entities (grades and products) in the system,
verication required that every kind of product be
traced and checked to ensure that it follows its
required sequence. In order to see if the model
Table 5
Proposed setup reduction times at ABS

Table 4
Proposed TPM times at nishing mill

Process
Process

HSM
8400 Pickle
6400 Pickle
CRM
TM

Maintenance

Setup Times (min)

Day

Uptime (days)

Downtime (min)

7
7
7
7
7

240
240
240
240
240

Monday
Tuesday
Wednesday
Thursday
Friday

Hot strip mill


Pickling
Cold reduction
Temper mill

Work Rolls

Backup Rolls

Current

Proposed

Current

Proposed

120
15
120
90

20
5
20
20

35

15
7

10

5
5

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represents the real system adequately, the rst step


was to check the code and verify the model logic
and the experimental conditions; followed by a
careful trace study where various entities were
traced from the point of creation until the point of
disposal from the system. Finally, a detailed
animation was used to further verify that the model
sufciently replicated the real system.
Validation of the model calls for comparing
outputs of the simulation to those from the actual
system. Measures that we included were inventory
at the nishing mill and the total time in the system,
for both of which actual data was available. The
simulation model was run for a one-year period,
which is equivalent to an expected 11,520 heats
(furnace batches) out of the BOP, so that the model
can be validated when it is in steady state. Table 6
shows the actual values and the simulation results
that were obtained by running the model. It should
be noted that the gures represent average values.
From the table it is clear that the numerical outputs
from the simulation are all within the range of the
actual data.
Our simulation is non-terminating (Law and
Kelton, 1991) but initial conditions do inuence
the initial dynamics of the system. Starting with an
empty system at time zero, a transient (warm up)
period was used for the system to load itself with
entities and subsequently reach steady state. The
warm up period for our simulation model was
established by carrying out ve replications with
each having a run length of 1 year (11,520 heats
from the BOP). The ve replications examined
successive observations of various performance
measures. For example, Fig. 2 shows the plot for
the total work in process inventory in the system as
a function of time. Based on this type of analysis, a
warm up period of 60,000 minutes (42 days) was
adopted.
Table 6
Performance measures: actual vs. simulation
Performance measure

Actual range

Simulation

Entity lead-time
Hot strip mill inventory
Cold mill inventory
HBA inventory
CA inventory
OCA inventory
Temper mill inventory
Number of coils per month

[3049 days]
[10005000]
[2502000]
[2501750]
[100750]
[100750]
[150750]
[90009800]

34 days
3703 slabs
1755 coils
620 coils
121 coils
636 coils
653 coils
9466 coils

233

7. Simulation results and assessment


Once the simulation model for the current system
was veried and validated it was used to evaluate
the future state map and assess the relative impact
of adopting the lean approach detailed in the
previous two sections. It is worth mentioning that
there are other lean techniques like 5S and visual
systems, the benets from which are not directly
quantiable and cannot be modeled as part of a
simulation model. These have therefore not been
included in our analysis, but these techniques could
easily be applied at numerous places within the
production system at ABS, and can be expected to
further increase the potential gains from the
adoption of lean.
Based upon our initial observations from the
current state map and discussions with managers at
ABS it was decided that two primary performance
measures would be examined: production lead-time
and work-in-process inventory. The latter is evaluated as the sum of the WIP starting at the pickling
line and ending at the TM; only this portion of the
WIP is considered because the systems are identical
up to the push-pull boundary point at the pickling
line. As mentioned earlier for the hybrid production
system the WIP inventory is just the sum of the
average utilizations of the kanban resources.
Two sets of factorial design experiments were ran
to study the effect of the three factors on the
production lead-time and WIP inventory, respectively. Each factor had two levels, and for each levelfactor combination the experiment is replicated ve
times using the simulation model and is completely
randomized. Thus, eight simulation runs were carried
out, each with ve different replications. Analysis of
variance (ANOVA) was used to formally study the
results and determine the signicance and magnitude
of all effects and interactions. The statistical analysis
was done using Minitab with outputs displayed in
Table 7. The p-values indicate that for lead-time the
production system and TPM are signicant, while
setup reduction, and all two- and three-way interactions are not.
For the WIP inventory, once again the main
effects of the production system and TPM are
signicant. Interestingly, the table shows that the
two-way interaction between the production system
and TPM is also signicant here. To better
understand this interaction, Fig. 3 presents a plot
of the production system-TPM interaction, the
signicance of which is indicated by the lack of

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234
10
10
9
9
8
8
7

Avg WIP (X103)

7
6
Transient Period

6
5
5
4
4
3
3
2
2
1
1
0
0

10

20

30

40

50

60

70

80

90

100

110

Simulation Time

120

130

140

150

160

170

180

190

200

(X103)

Fig. 2. Transient period analysis for the average WIP inventory for ve replications.

Interaction Plot (data means) for Inventory


Table 7
p-Values for effects

Lead-Time
Constant
Prod Sys
TPM
Setup Red
Prod Sys  TPM
Prod Sys  Setup Red
TPM  Setup Red
Prod Sys  TPM  Setup

80

p-value

0.000
0.000
0.000
0.815
0.000
0.632
0.783
0.815

70

Inventory
0.000
0.000
0.000
0.815
0.000
0.632
0.783
0.815

Mean

Term

90

Prod System

60

Hybrid

50

Push

40
30
20
10

With
TPM

Without
TPM

Fig. 3. Main effect and interaction plot for inventory.

parallelism of the lines. In the gure, the lower solid


line represents the hybrid production system and the
upper dashed line represents the push system. The
interpretation of the interaction graph is that going
from no TPM to TPM when the production system
is a hybrid will not change the level of WIP

inventory, whereas going from no TPM to TPM


when the production system is a push system will
decrease the level of WIP inventory. An intuitive
explanation for this is that the WIP inventory in the
pull system is dependent on the number of kanban
cards that is predetermined before the run. This

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F.A. Abdulmalek, J. Rajgopal / Int. J. Production Economics 107 (2007) 223236

makes the change in WIP inventory for the hybrid


production system (WIP inventory is the sum of the
average utilization of the kanbans, which are
modeled as resources) insignicant when using
TPM. Even though TPM was found to be
signicant, the kanban pull system is so instrumental in reducing the WIP inventory that the effect
of TPM is relatively small.
Based upon our the simulation experiment the
actual magnitudes of the improvements in the two
selected performance measures were signicant. The
results indicate that using a hybrid production
system and TPM could potentially reduce the total
production lead-time from its current value of 48
days to under 15 days, a reduction of almost 70%.
Setup reductions in the amounts listed in Table 5
does not seem to have any signicant additional
effect on lead-time. In terms of the WIP inventory,
the experiment revealed that the new system could
potentially drive down the current average inventory level across all stations between the pickle line
and the TM from the current value of about 96 coils
to around 10 coils; a reduction of almost 90%.
In summary, the results indicate that a hybrid
production system with TPM can have enormous

235

effects on reducing both lead-times and WIP


inventory; for this particular instance setup reduction did not have a similar effect. However, this
does not necessarily mean that it is not a valuable
lean tool for ABS. Rather, the effect of the hybrid
system and TPM outweigh the advantages of setup
reduction in this particular case.
8. The future state map revisited
The future state map for the annealed product for
ABS is shown in Fig. 4. The results of the foregoing
analysis are documented on the future state map,
and the proposed lean tools are shown as kaizen
bursts to highlight the improvement areas. Also
shown are the supermarkets between each process
after the HSM. As we can see in the map, ABS
receives two schedules only; one at the continuous
caster for the push system at the hot end and the
other one at the TM for the pull system at the
nishing end. With the new improvements at ABS
the value added time (5 days) is up from approximately one-tenth of the production lead-time in the
old system, to approximately one-third of the total
production lead-time of slightly under 15 days

Fig. 4. Future state map.

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F.A. Abdulmalek, J. Rajgopal / Int. J. Production Economics 107 (2007) 223236

Table 8
Assessment of lean tools in the steel industry
Lean tool

Applicability

Cellular manufacturing
Setup reduction
5S
Value stream mapping
Just-in-time
Production leveling
Total productive maintenance
Visual systems

Probably inapplicable
Partially applicable
Universally applicable
Universally applicable
Partially applicable
Partially applicable
Partially applicable
Universally applicable

(12.84 in waiting plus about 2 in processing). Put


another way, non-value added time is about 8.6
times the value-added time according to the current
state map, but with the future state map the value of
this multiplier drops to about 2.
9. Summary
Applications of lean manufacturing have been
less common in the process sector, in part because
of a perception that this sector is less amenable to
many lean techniques, and in part because of the
lack of documented applications; this has caused
managers to be reluctant to commit to the
improvement program. This paper takes a casebased approach to address both issues. Many
industries in the process sector actually have a
combination of continuous and discrete elements,
and it is in fact quite feasible to judiciously adapt
lean techniques. We demonstrate this with the steel
industry where several lean techniques can be
suitably adapted. Table 8 summarizes this contention. Furthermore, for managers who might be
considering implementing lean manufacturing but
are uncertain about the potential outcomes, we
demonstrate that a detailed simulation model can be
used to evaluate basic performance measures and
analyze system congurations. The availability of
the information provided by the simulation can
facilitate and validate the decision to implement
lean manufacturing and can also motivate the
organization during the actual implementation in
order to obtain the desired results.
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