Lean Chapter 1

CHAPTER I THE PROBLEM AND ITS BACKGROUND This chapter presents the background of the study which focuses
mainly on what the research is all about, its objectives, framework, significance and scope, limitations and delimitation. This chapter also includes the definition of technical terms used in the entire study. Introduction There is a change occurring in any manufacturing industries. Most of them are now engaged in different philosophies leading not only in increased profitability but also in environmental consciousness. In the past, the rule of traditional business in the manufacturing industry was dictated by high volume of products offered at low costs in the market. Today, Lean Manufacturing has been a great interest for manufacturers not only in the United States but the whole world. It is because this principle affects companies of all sizes. Through adaptation of lean manufacturing system, companies gain improvements in quality, customer satisfaction and profitability due to decreased costs and wastes and shorter lead time. Moreover, lean manufacturing principles provide safe working environment, flexible work hours and improvement of manpowers efficiency. Although lean manufacturing has grown from the Toyota Production System (TPS), it can still be applied to shipbuilding. Shipbuilding first of all has a fixed layout. It is made to order and also highly customized. It is not appropriate to mass produce it since the product itself takes more than a month to complete. In here comes the role played by Lean Manufacturing principles, the basic principles of giving customers what they want with shortened lead times by eliminating waste applied to any process, high volume or low volume, customized or standardized. Worlds shipbuilders located in the Philippines indeed needs a lean manufacturing system that would attract higher orders and profit. Keppel Shipyard, situated in Bauan, Batangas is one of these shipbuilding companies aiming to achieve higher profit by reducing wastes in its operations. Upon knowing this, the researchers had seen its potentials to acquire a system in which the wastes including high inventory, transportation and motion, idle time, defects in manufacturing and overprocessing are reduced as the quality is improved, the response time is shortened, and continuous improvement is 1
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penetrating; all towards improved efficiency and competitive advantage. Thus, Keppel Batangas Shipyard is aiming to be a provider of choice and partner for solutions for the global offshore and marine industry, and so seeing dramatic improvements after its implementation of lean manufacturing in year 2010. Continuous efforts and investments to raise efficiency over the years have reaped substantial benefits for the Keppel Offshore and Marine Group. With the Keppels implementation of the lean manufacturing in 2010, they are aiming to manifest greater efficiency and boost their operational productivity. Keppel Batangas Shipyard conducted safety refresher sessions that covered the basic safety rules and regulations in the yard for all employees and subcontractors. To identify areas for improvement, Keppel Quality Productivity Improvement Team tracks and analyses trends in productivity performance. It has also successfully introduced the Workplace Improvement Campaign to educate workers on lean manufacturing practices and concepts, and discourage wastage. This study was committed to determine the relationship between the extent of lean manufacturing in the Keppel Batangas shipyard and its operational efficiency. Thus, the researchers consulted the production and quality engineers of Keppel shipyard about the workers perspective with lean manufacturing implementation. Furthermore, this study was intended to serve a basis for other shipbuilding industries that plan to apply the principles of lean manufacturing. It is mainly important to study the correlation since solutions for the problems are insufficient to ensure improvements. Thus, an evaluation assesses the solutions. Statement of the Problem The purpose of this study was to assess and determine if there is relation between the extent of lean manufacturing implementation in operational efficiency at Keppel Batangas Shipyard as perceived by its employees. Specifically, it aimed to determine the following: 1. What is the profile of the respondents in terms of 1.1 Age; 1.2 Educational attainment; 1.3 Length of service, and 1.4 Position?
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2. What is the extent of implementation of the following lean manufacturing concepts at Keppel Batangas Shipyard? 2.1 5S 2.2 Flexible manpower 2.3 Flexible working hours 2.4 Production flow/process 2.5 Group/team work models 2.6 Continuous improvement 2.7 Supplier development 2.8 Level Production 2.9 Quality control 2.10 Fast-response systems 2.11 Fast set up 2.12 Standardized workflows 2.13 Total Productive maintenance 2.14 Visual Management 2.15 Value stream methodology 3. What is the measure of efficiency affected by lean manufacturing implementation at Keppel Batangas shipyard? 3.1 Manpower 3.2 Materials 3.3 Methods 3.4 Machines, equipment and tools 4. Is there a significant relation between the extent of lean manufacturing implementation and operational efficiency at Keppel Batangas Shipyard? Conceptual Framework The researchers conducted a research regarding the impact of lean manufacturing in increasing productivity, waste reduction and competitive advantage. The researchers believe that there was a need to measure the current efficiency rating of the shipyard with regard to shipbuilding and repair operations. This study also determined the current condition of the Keppel Batangas shipyard with regard to the quality and maintenance of their operations in shipbuilding and repair and with its success in continual improvements. The researchers also considered the fact that before any implementation of a lean manufacturing system occurs, there is a need to understand first the measure of 3
the shipyards efficiency. Hence, this study involved the assessment of the lean manufacturing system in increasing operational efficiency at Keppel Batangas Shipyard. Figure 1 is a paradigm that shows the assessment on the implementation lean manufacturing system in increasing operational efficiency on shipbuilding and repair at Keppel Batangas Shipyard. There are three frames formulated to describe the independent variables, intervening variables and the dependent variables. The paradigm of the study shows the variables involved in the assessment of lean manufacturing system at Keppel Batangas Shipyard. The independent variable is the lean manufacturing system which comprises the quality of the operations, the total productive maintenance, waste reduction and safe working environment, the vision towards continuous improvements and other lean manufacturing concepts. This also includes extent of efficiency on manpower, materials, machines and methods which affect the inventory and inventory level, transportations cost, processing costs, waiting time, and the number of volume of defects which can either be scrapped or reworked. These variables are common wastes in any manufacturing industry which would lead to increase in costs and operation. The intervening variables are those that affect the data collected from the respondents. These cover their demographic profile which includes the age, educational attainment, length of service and position of the respondents. It also comprises the companys profile, year of lean implementation and its operations. Dependent variables on the other hand comprise the correlational study which serves as the output of the study, thus showing if there is a relationship between the extent of lean manufacturing implementation and the operational efficiency of Keppel Batangas Shipyard.
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Independent Variables Lean Manufacturing Implementation 5S Flexible manpower Flexible working hours Production flow/process Group/team work models Continuous improvement Supplier development Level Production Quality control Fast-response systems Fast set up Standardized workflows Total Productive maintenance Visual Management Value stream methodology Dependent Variables
Extent of efficiency in Manpower Machine Materials Methods
Intervening Variables Respondents Profile Age Educational attainment Length of service Companys profile Year of implementation Operations and services Figure 1 Paradigm of the Study
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Significance of the Study This research study entitled, Correlational Study between the extent of the implementation of Lean Manufacturing and Operational Efficiency in Keppel Batangas Shipyard:, is important not only to the Shipyards management team, but also to the workers, to the customers, to the suppliers, to other ship making industries, to the researchers and to the future readers of this research study. Since the study aimed to assess the system of lean manufacturing implemented, the researchers believe that it would help the Keppel Batangas Shipyard in determining if the implementation affects its efficiency in fabricating different ship design so as with ship repair. To the Keppel Batangas Shipyard, this study would measure if the extent of implementation of lean manufacturing has positive effects in manpower, machines, methods and materials efficiency. Hence, the main goal of lean manufacturing system is waste reduction and improved customer satisfaction. Through this, the Keppel would know the effects of lean manufacturing and the advantages and disadvantages it would bring as the company considers and understands its relation to operational efficiency. This would also help them in determining if the implementation of lean manufacturing relates in generating higher profit through reduced costs of manufacturing and inventory. Thus, this study regarding the relationship of the degree of lean manufacturing implementation and efficiency is intended to create a quality driven type of manufacturing of ships. To the workers of Keppel Batangas Shipyard, through this assessment of the lean manufacturing system, they would be guided on how to improve their performance in a more efficient way. Thus, lean manufacturing system is principled in greater employee involvement which would guarantee better work performance. Moreover, as the employees read the study and find out the relation of lean manufacturing implementation to their efficiency, they would be motivated in doing their duties and responsibilities for being one of the major factors that relate to the changes brought to the company by lean manufacturing implementation. To the Keppel Batangas Shipyards customers, this study would earn credit as the main goal of the lean manufacturing system is customer satisfaction. They would become satisfied if the ships are made in a shorter period of time, without longer waiting times and defects. This study looked on the importance of quality intended not only to reach but even to surpass their requirements. 6
To the researchers, this study would give them additional knowledge on the importance of lean manufacturing as a means of waste identification and reduction as well as quality observance as part of their endeavor in the world of industrial engineering. To the future researchers, this would serve as their basis in assessing the roles of lean manufacturing in increasing efficiency not only in line with the shipbuilding industries but also in other manufacturing firms. Other groups benefited by the study but not as direct as the aforementioned are the suppliers, other shipbuilding industries and the government. To the suppliers, through this study, the Keppel Batangas shipyard would become more aware on how important the supply chain is. To other shipbuilding industries, this study would serve as a basis as they become enthusiastic towards greater efficiency and lesser waste. Since, the trend is spinning towards the reduction of waste in the operation which include defects, scrap and rework, high inventory and stocks, high transportation costs, long waiting times, overproduction and over processing, more firms would be encouraged to pursue a system that alter these seven common wastes. One of the ways is through lean manufacturing. To the government, this study would serve as a forefront in establishing projects involving construction. Thus, the study would give them ideas that wastes in operations are no longer acceptable and must be avoided and that the Philippines should understand the importance of each resource, knowing that they are limited. Hypothesis There is no significant relationship between the implementation of lean manufacturing at Keppel Batangas Shipyard and the shipyards operational efficiency. Scope, Limitations and Delimitation This research aimed to determine if there is a relationship between the extent of the implementation of lean manufacturing system at Keppel Batangas Shipyard and its operational efficiency. The sample population consisted of employees working at the said shipyard. The sample also included the engineers, supervisors and managers. Based on the information from Keppel 7
Batangas Shipyard, there are around 1100-strong dedicated workforce whose skills and expertise are continuously upgraded to keep up with technological advancements in the marine industry. The number of respondents was limited to only 39 persons based on the computation to be presented in the following chapters. Also, the respondents include those who have at least one (1) year of experience working in the shipyard, making them capable to answer the questions raised by the researchers. The research design, data gathering techniques and statistical treatment are discussed in the Chapter 3. Unrestricted random sampling was used in the study (no restrictions imposed) and every member of the population had equal chance of inclusion in the sample. Correlational survey method was used in this study with the use of the questionnaire to determine the relationship between the extent of lean manufacturing implementation and the operational efficiency at Keppel Batangas Shipyard. The results of the study were interpreted with the use of weighted arithmetic mean and spearman rank correlation coefficient after testing the normality of the data using skewness and kurtosis. This study has the following limitations. First, the data collected relied on workers views which could be prone to evoke bias. Although it is considered to be primary data, the survey relies mainly on the employers recall of their experiences and what they know. Also, the data gathering instrument used, survey questionnaires have inherent limitations which may call for response bias. The respondents may not have revealed the truth and have answered with caution especially for information that they feel must be kept private. In addition to this, the questionnaire is composed of limited parts that limit the respondents views about the lean concepts. Hence, the questionnaire was only composed of four (4) parts considering the objectives of the study. Moreover, only manpower, machines, methods and materials were considered as factors in determining operational efficiency. The study was also prone to selection bias since the current study sample was not representative of the actual number of workers employed in the Keppel Batangas Shipyard, and there were limitations on selecting respondents since the shipyard allowed the researchers to give questionnaires to workers during their vacant times only. Thus, the researchers opted for 5% level of significance due to its higher degree of accuracy with 95% reliability. 8
The researchers resorted to assess the views of the workers in the quality assurance and inspection department and production department of the said shipyard regarding the importance of the lean manufacturing in their operations. The researchers believed that the department was committed and had deeper understanding about the importance of the lean manufacturing system. With this, the study limited itself to gather the responses of the workers at QA/QC and Production departments as they played part as the respondents of the study. Twenty nine from Production Department and the remaining came from the QA/QC Department because of accessibility of respondents. Based on the above conditions, the findings of the study were descriptive of the employees in production and QA/QC departments when the research was conducted in the Academic Year 2011-2012. The results and conclusions drawn would, therefore, be true for this group of subjects and for the period of time. However, the results could be used as basis for similar studies that might be observed and made use of in any future plan regarding the correlation between the extent of lean manufacturing implementation and operational efficiency in other shipbuilding industries. Definition of Terms To further understand the study, the following terms were presented with their corresponding meaning. 5s. This refers to a very popular tool in staring lean implementation. It involves cleaning up the workspace and placing the tools needed close to their point of use. (Schlichting, 2009). It is the methodology of organizing, cleaning, developing and sustaining a productive work environment. Cellular manufacturing. It is the actual practice of the pull system. The ideal cell is basically a pull system in which one piece is pulled by each machine as it needs the piece for manufacturing. (Faharani et al, 2011). It is a manufacturing approach in which equipment and workstations are arranged to facilitate smalllot, continuous flow production. Competitive Advantage. This term accrues to companies that possess distinctive capabilities. (Kotler and Keller, 2006) Competitive can be achieved by uniqueness in the operations, low cost leadership and flexible, quick and reliable 9
response to the customers. In the study, competitive advantage means companys lead over other shipbuilding and repair industries. Customer Lead Time. It is the length of time beginning when a customer places an order and ending when the customer receives goods to fill that order. It encompasses the Production Lead Time plus the time required to transmit the order to the factory and the time to ship the product to the customers. Customers are also referred to as the clientele. Defects. This term refers to a product or services non-fulfilment of an intended requirement or reasonable expectation for use. An error is the result of improper processing of the part, which leads to a defect only when the part is inspected and fails. Thus, errors can be fixed before they become defects. Efficiency. This term refers to doing things or jobs well. It results when the output is obtained at the least possible cost. It means doing things right. (Hiezer et al, 2010). It is the result of integration of increased productivity, waste reduction and competitive advantage. Employee involvement. This refers to getting employees involved with process improvement. (Zandin, 2004) Employee involvement will lead to enhanced development of their knowledge, skills, and attitudes. Ergonomics. It is the science of fitting the job to the worker. It seeks to minimize the physical demands on workers and optimize system performance. (Helms, 2006) Inventory. This refers to storage and stock goods. It constitutes waste and unnecessary items. Inventory is commonly used to compensate for inflexibility. Toyota considers inventory to be an indicator of weakness in the process, and the inventory is a constant reminder of the need to strengthen the process. (Liker and Meier, 2006) Inventory Control. This terms refers to a planned approach of determining what to order, when to order and how much to order and how much to stock so that costs associated with buying and storing are optimal without interrupting production and sales. (Kumar et al, 2008) Just-in-time. It refers to a set of principles and practices based on the philosophy that firms should hold little or no inventory beyond that required for immediate production or distribution.(Helms, 2006) It is the production control 10
philosophy based on the concept- produce necessary units, in the necessary quantities and at necessary time. Kaizen. It is a Japanese term which means, Continuous Improvement. In implementing lean manufacturing, kaizen can be done in large scale or smallscale projects. It is a management philosophy emphasizing employee participation, in which every process is continuously evaluated and re-evaluated for the elimination of waste. Lean manufacturing. Lean manufacturing is a manufacturing philosophy that shortens the time between the customers order and the product build/shipment by eliminating sources of waste. It is a set of principles used in identification and elimination of wastes. Manufacturing. This refers to the process of converting raw materials, components, or parts into finished goods that meet a customers expectations or specifications. Manufacturing commonly employs a man-machine setup with division of labor in a large scale production. Mass Production. This means manufacturing of a product on a large scale. The mass production of items is often done by using an assembly line, or another efficient means of production. The process is often carefully determined, to try to produce the greatest quantity of items while using the fewest resources such as labor and/or time. Operational Productivity. This refers to the capability of an industry to operate in the most economical ways. In the study, it is synonymous to efficiency. Overproduction. This refers to producing a product that is made faster than is sold. It is one of the seven wastes in any manufacturing organizations. In the shipyard industry, example of overproduction is when more pieces are cut in advance of need in order to use up all the material in the stock. Poka-yoke. This refers to a mistake-proofing device or procedure used to prevent defects from entering a work process. Poka-yoke is a technique for avoiding simple human error in the workplace. Also known as mistake proofing, goof-proofing, and fail-safe work methods, poka-yoke is simply a system designed to prevent inadvertent errors made by workers performing a process. The idea is to take over repetitive tasks that rely on memory or vigilance and guard against any lapses in focus. (Helms, 2006) 11
Pull System. It involves the replenishment of depleted and used goods only. It also refers to a system wherein each operation is responding to what the immediate customer needs. Quality Control. It provides the statistical techniques necessary to assure and improve the quality of products. (Chandra, 2001) Quality controls describe the extent of variation in processes or products that is considered acceptable. Quality controls influence the ultimate product or service outcome offered to customers. Scrap. This term refers to the waste that either has no economic value or only the value of its basic material content recoverable through recycling. Standardization. This refers to a set of process acceptable to the management that the operation has been complied at. Strategic Planning. This term refers to the process of determining a companys long-term goals and then identifying the best approach for achieving those goals. Supply Chain Management. Supply chain management (SCM) is a broadened management focus that considers the combined impact of all the companies involved in the production of goods and services, from suppliers to manufacturers to wholesalers to retailers to final consumers and beyond to disposal and recycling. (Helms, 2006) Teamwork. It refers to a job done by a team. A team is a collection of individuals organized to accomplish a common purpose, who are interdependent, and who can be identified by themselves and observers as a team. Teams exist within a larger organization and interact with other teams and with the organization. (Helms, 2006) Total Productive Maintenance. Total productive maintenance (TPM) is preventive maintenance plus continuing efforts to adapt, modify, and refine equipment to increase flexibility, reduce material handling, and promote continuous flows. It is operator-oriented maintenance with the involvement of all qualified employees in all maintenance activities. (Helms, 2006) Variability. This refers to the range of possible outcomes of a given situation. It believed that it has a indirect relationship to quality whereas the quality increases when the variability is reduced.
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Value Stream. This refers to the way to keep track of goods and materials as they move through the product creation process that helps business boost productivity and reduces waste. A typical value stream mapping process will begin with the delivery of raw materials, proceed through intermediate states of production, and then conclude with the creation of a finished product ready for sale to consumers. Value Stream Mapping. Value Stream Mapping (VSM) is a hands-on process to create a graphical representation of the process, material and information flows within a value stream. It is a waste recognition and elimination process. Waste reduction. The second important principle involved in lean manufacturing strategy is minimizing the waste. It suggests that wasteful activities which do not add to the significant improvement of the company, be eliminated. So, the companys resources (land, capital and people) are made use of efficiently. Waiting Time. This term refers to non-productive time, during which an employee is still paid, of employees or machines, or both, due to work stoppage from any cause. It is also called idle time, allowed time, or downtime.
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Lean Chapter 1

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CHAPTER I THE PROBLEM AND ITS BACKGROUND This chapter presents the background of the study which focuses

Extent of efficiency in Manpower Machine Materials Methods

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