implementing lean strategies.docx

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Implementing Lean Strategies

At Lagaay International

Presented By:

Noor al Husni

0797177

Thesis

05-07-2011

Rotterdam Business School


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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 ofCONTENTS

Acknowledgement......................................................................................................................................................... 3

Abstract................................................................................................................................................................................ 4

Chapter 1 ........................................................................................................................................................................... 7

1.1 Purpose .............................................................................................................................................................. 7

1.2 Company ............................................................................................................................................................ 7

1.3 Organization Structure ...................... ...................... ...................... ...................... ...................... ................... 9

1.4 Problems ......................................................................................................................................................... 10

1.5 Research Questions & Objectives .................... ...................... ...................... ...................... .................... 10

1.6 Fishbone Diagram........................................................................................................................................ 11

1.7 Why Lagaay is interested in Lean? ....................................................................................................... 12

1.8 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 anda Fishbone diagram (also known as Ishikawa diagram)

introduced.

1.1 PURPOSEThe 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 COMPANYThe 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 differentmedical 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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1.3 ORGANIZATION STRUCTUREThe 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.

FIGURE 1 COMPANY CHART


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1. 4 PROBLEMSWithin 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.

1. 5 RESEARCH QUESTIONS & OBJECTIVES

FIGURE 2 RESEARCH QUESTIONS AND OBJECTIVES

Research Questions ResearchObjectives

What makes Lean Thinking challenge so

special?

To evaluate how Lean Thinking strategies

are applied.

What is the role of the warehouse

department at Lagaay?

To examine and evaluate the procedures

and processes within the warehouse

department.

What are the problems occurring in the

warehouse department?

To examine and evaluate which problems

the warehouse department is dealing with.

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

FIGURE 3 FISHBONE DIAGRAM


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1.7 WHY LAGAAY IS INTERESTED IN LEAN?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).

1.8 CHAPTER SUMMARYIn 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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CHAPTER 2 LITERATURE REVIEW

In this part there will be a detailed explanation given regarding the secondary research. The

literature will be based on the Lean concept and its theories. There will be a total of 15 theories

discussed.

2.1 WHAT IS LEAN?

When hearing the word lean, it raises a thought of something being flexible. It can perhaps give

an image of athletic people. According to Sayer and Williams (2007:9) Lean also means light

weight, in the sense of speed and agility with a sort of edge or underlying aggressiveness that

recalls the rhyme lean and mean.Taking this idea into consideration lean is not only a physical

condition but it is also a discipline. The principles of lean are not only to make people flexible,

but to keep them in that shape. Sayer and Williams (2007:9) explain that: Lean people are

committed to being lean; they act a certain way in their habits and routines. Lean isnt a fad or diet

its a way of life.

It is important to know how this can be applied in the business world. Lean thinking strategies

are methods of how to improve business and companies productivity, efficiency and quality of

its products or services (Sayer and Williams 2007).

Approximately fifty years ago, American and Japanese specialists have developed new concepts

and methods of how to make the business more productive and efficient while improving the

quality as well. These techniques have been working successfully for many decades both in the

car - (Toyota) and aviation industry (Boeing).

When considering the company Toyota, in the year 1988 when Womack and Jones looked at this

company they saw a very interesting system in the company. When they investigated this, they

saw that this company needed lesser amount of effort to design and make their products. It

required less investment to achieve the set level of production capacity. In addition to this,

Womack and Jones saw that the company also had fewer defects. Toyota had even fewer


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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.

FIGURE 4 MASS PRODUCTION VS LEAN ENTERPRISE

Source: Sayer and William (2007:10)


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Perfect processes make the most of customer value. The closer to excellence a processturn 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)

2.1.2 WHERE IS LEAN

According to Womack and Jones (1990), Lean can be found wherever there is waste and

anywhere there is a chance for improvement, mainly it can be found everywhere. Lean is not

limited to any particular part of an organization or a function within a company, it is flexible.

Lean can be described as a business improvement plan. What a common misunderstanding

regarding Lean is that it many people describe it as a manufacturing quality program, however

this is not the case. The philosophy, principles and practices of Lean are appropriate anywhere

and are most helpful when applied across the entire organisation (Allen, 2000). Functions and

practices of Lean are as follows: Lean Production or Lean Manufacturing, Lean Office and Lean

Administration, Lean Management and Lean Thinking (James Womack and Daniel Jones 1996).

Each of these concepts represents a part of Lean in its own way, Lean is all of these and even

more, but its main focuses on the processes that create customer value (Bamber and et al, 2000).

Thus, Lean focuses on the processes that create value, which in its turns are cross-functional.

This means that the process is assisted by many well-organized and disciplined teams. In

addition to this individuals are cross trained as well.


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2.1.3 THE PRINCIPLES OF LEAN

According to Womack and Jones (1996) the main principles of Lean strategies are:

It is important to define the exact value from the perspective of the end customer, in termsof a specific product, with specific capabilities, offered at a specific price and time. All the

industrial thinking must realize the Muda (Japanese term for waste) from the customers

view(Womack and Jones, 1996)

Identify the whole value stream for each service or product and eliminate the waste. Byidentifying these value streams, it gives a clear picture and shows the unnecessary steps

which brings no value to the end product or service, and therefore can be removed

(Womack and Jones, 1996)

Make the remaining value creating steps flow smoothly towards the customer; this is byworking on each design, order, and product continuously from beginning to end, so that

there is no waiting, downtime, or any kind of waste between the steps (Alcazar, 2003 and

Montgomery, 2006)

Let the customer pull the product or service from the value chain, in this way there will beno waste in a way of overproduction. In other words, providing what the customers need

only when they want it(Ranky, 2006a)

Pursue perfection within the whole chain. For a company that uses the Lean Thinking itplaces a lot of emphasis on perfection. The idea of the total quality management is to

systematically and continuously remove the root causes of poor quality, achieving zero

defects (Ranky, 2006a)


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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 oftask 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 METHODS AND STRATEGIES OF LEAN

2.3.1 THE 5S SYSTEM

According to Christopher D. Chapman the 5S system is a systematic and organic to Lean

production, it is a business system for organizing and managing manufacturing operation that

will eventually requires less effort, employees, capital and time to make the same amount of

products with fewer defects. The 5S system will create a work environment that is disciplined,

clean and well ordered (Christopher D. Chapman 2006).

Seiri(Tidiness)keeping on hand only whats needed for the process the rest is red-tagged and removed; this will make it easy when looking at the naked process.

Seiton (Orderliness) a place for everything and everything in its place for immediateretrieval and use.

Seiso (Cleanliness) keep the workplace clean, spotless and shining. Seiketsu (Standardisation) it is the condition achieved when maintaining the first 3

pillars. Everyone plays a role.

Shitsuke (Discipline) Through the strength of personal will and self-esteem, one makesa habit of maintaining the established procedures every day.

The 5S is used as a platform for developing a management system by the similar use of total

productive maintenance (Bamber et al., 2000). The main definition of 5S in the West is

housekeeping (Becker, 2001; Christopher D. Chapman 2006). In Japan the 5S practice has

started in the manufacturing sector and then extended to other industries and services sector.


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2.3.2 7 TYPES OF WASTE

Waste can be found everywhere. Waste in time, wasting money, wasting time to travel, and

wasting energy on non-valuable things. T. Ohno identified seven forms of waste. These seven

forms are:

1. Waste of Overproduction producing more that the customer actually needs, meaning that

the supply is higher than the demand.

2. Waste of Time people can waste a lot of time, in the sense of waiting for machinery, waiting

for other people or on materials. This goes as well for machinery that needs to wait for people,

tooling or raw materials etc.

3. Waste of Transportation there can be a lot of waste on transporting products over long

distances which then need double or triple handling.

4. Waste of Processes unnecessary or inefficient processing e.g. removing burrs caused by dull

tools.

5. Waste of Inventories inventory hides problems and causes extra handling, extra

paperwork, extra space and extra cost.

6. Waste of Motions any motion of people or machines which does not add value to the

product or service.

7. Waste of Defective products

scrap, rework, customer returns and customer dissatisfaction.

(Garimella, 2006)


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2.3.3 THE JUST IN TIME SYSTEM (JIT)

The Just-In-Time System (JIT) produces only the necessary products at the necessary time, in

necessary quantity (Peter Berling 2010).

JIT System is a method where the production lead time is certainly shortened by having all

processes produce the necessary parts at the necessary time and have on hand only the

minimum stock necessary to hold the processes together. So, it minimizes the non value adding

operations and non-moving inventories in the production line. The result of implementing JIT

will be shorter throughput times, better on-time delivery performance, less inventory, lower

costs (which leads to greater profits), higher equipment utilization and a quicker response to

customers orders (Uchikawa, S.(1977).

Another important aspect of the JIT system is the use more of a pull system to move

inventories through the production line. JIT is most appropriate for companies that use

production flows that does not change, meaning that processes or products that are repeated in

the same way again and again.

2.3.4. GROUP TECHNOLOGY (GT)

According to Slack et al. the purpose of Group Technology is to combine all the similarities of

components, products, services and processes together to reduce movement and improve the

product flow. Therefore, all the products with similar characteristics and the machinery

necessary for producing the products are grouped together. The group is also called a cluster

group and can be based on the size, shape, process or treatment steps characteristics.

The goal is to identify a set of product with similar process requirements so that changeover

times or walking time are minimized. GT is viewed as an essential and necessary step in

maintaining a high quality level and profitable production (Slack at al 2007).


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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).

2.3.6 VALUE STREAM MAPPING

Mike Rother (2003) explains that the value stream map is a graphical image of how all the steps

in the supply chain of the product or service are being produced. It includes the process steps,

inventory, information flow, and lead time. So basically, these are all the steps from the raw

materials until the customer receives the product or service. It flows from left (raw materials) to

right (finished products). It can be seen as a flow of river channel, there can be seen which steps

gives a value to the product line and which not.

According to Sayer and Williams teachings (2007) the purposes of the value stream map:

It provides a common language and common view to analyse the value stream It shows how the information flows to trigger and support those activities It shows where the activities add value and where they dont It always has the customers perspective and is focused on providing to the customers

expectations


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In a single view, it provides a complete, fact-based, time-series, representation of thestream of activities, from beginning to end, which is required to deliver a product or service

to the customer

2.3.7. SIX SIGMA

Six Sigma was developed in the mid-1990s; it was announced as the worlds greatest problem

solving methodology. With a well-defined functioning, training and management structure, Six

Sigma gave form and focus to the request of quality tools and techniques. It was first developed

as an internal quality plan at Motorola, which was a big success (Harry and Crawford, 2005). Six

Sigma hit the national stage following its successful implementation by General Electric in 1996.

Six Sigma is a way to identify and control differences in the processes that most affect

performance and profits. Following a strict methodology, trained experts known as Black Belts

analysed the root cause and implement corrective action.

The goal of Lean Six Sigma is: identifying the customer, defining value stream, identifying the

waste defect, measuring the defect, identifying the root causes of the defect, identifying the best

solution, implementing the solution and monitoring the progress. (Adams, 2003)


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2.3.8 TOTAL QUALITY MANAGEMENT (TQM)

Total Quality Management (TQM) is a strategy for a quality driven organisations. TQM is for

quality to act, as the driving force behind an organisations entire leadership, design, planning,

and development efforts (Calingo, 1996).

Total Quality Management focuses on the culture of the organisation. The cultural part demands

a quality perspective in all aspects of the companys processes. Like other initiatives, TQM

highlights customer orientation, commitment from top management, constant improvement,

fact-based choice making, fast reply and worker participation. All the quality and statistical-

analysis tools are applicable under TQM.

TQM has been practiced in manufacturing, education, government and service industries

(Eisenhardt, 1989). Lean is in TQM principles and practices. Therefore, Lean is similar to TQM; it

can act as the umbrella strategy for the business corporation. (Madu et al, 1996).

2.3.9 THEORY OF CONSTRAINTS

The idea behind the Theory of Constraints (TOC) is that in any process there can be a bottleneck.

This means that processes are vulnerable because the weakest process or part can always

damage, break or at least reduce the outcome. TOC is from time to time referred to as constraint

management (Atwater, 1994). TOC centralised on removing the constraints that limit an

organisations performance from achieving its full potential. TOC, with its importance on process

flow and waste reduction, is an effective tool set for Lean practitioners that investigates

bottlenecks in the value stream. TOC is mainly useful with its focus on throughput (Feather and

Cross, 1989; Dettmer, 1995a+b).


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2.3.10 TOTAL PRODUCTIVE MAINTENANCE (TPM)

Total Productive Maintenance (TPM) is a business process improvement and a value-added

preservation concept. (Nakajima, 1988) TPM is about productivity improvement, with the first

approach to optimize and maintain plant and machine equipment. TPM centralise on

maintenance as an essential part of the business (Taguchi and et al, 1989). The goal of this

strategy is to ideally increase production while, at the same time, increasing employee morale

and job satisfaction. TPM has been developed from TQM and is proven as a successful

foundational methodology within a Lean framework (Billesbach, 1994; Sayer and Williams

2007).


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2.3.11 BUSINESS PROCESS MANAGEMENT (BPM)

Business Process Management is about optimizing the business processes. This strategy is a

broad management approach that strives for effectiveness and efficiency of the organization

with innovation and flexibility (Sayer and Williams, 2007).

In many cases BPM is linked with technology and software systems so that not every

department will have their own administrative. According to Sayer and Williams BPM practises

are:

Modelling tools help describe and classify standardized work. Data-integration ability captures significant supplier, inventory, cycle time, position,

delivery and other value-stream description parameters.

Activity-monitoring equipment regularly checks the presentation of processes againstcontrol limits.

BPM is the system matching portion to Lean, assisting Lean answer in technology. Lean practices

for a set of facilitating equipment and techniques that centralise the organisation on getting rid

of waste and making the most of customer value. Even though these tools are important, the

people are as much important.

A successful Lean journey puts as much importance on the people in the organisation as it does

on the methods, equipments and techniques of Lean practice. The journey must connect

everyone, repeatedly teach and train them, confront and empower them. Workers must be safe

and feel protected in their work surroundings and job situations. They have to be inspired and

motivated and salaried. People are highly appreciated in the Lean organisation. They are more

significant than tools, equipment, material and capital (Sayer and Williams, 2007).


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Lean Tool Box

2.3.12 FLOW AND PULL TOOLS

In the flow of value chain and especially focusing on pulling the products towards the customer

is the basic idea of Lean. Lean tools can improve and put in practice the flow and pull techniques.

These tools are to set the speed of the system and eliminate obstacles within the flow. According

to Emiliani (1998) he advices to apply the flow tools first, when implementing these tools, there

can be seen which obstacles there are and this can be eliminated (by e.g. kanban based tool).

The perfect Lean Toolbox consists of the customer and value-stream -, the perfection- and the

management tools. The organization will need all these tools to make Lean work efficiently. To

maintain balance in the organizations system, it is important to have a complete balance of the

tools. When not doing so, Lean practices can fail in the organization or not work as it should

(Sayer and Williams, 2007). This is usually the case when implementing a tool at the wrong time

or not fully. According to Karlsson (1996), the company cannot use only one Lean tool like

Kanban and hope to be widely successful throughout the organization. It is important to take the

whole system into considerations. To be successful, it is required to use every tool, all the

principles of Lean and apply it in the organization.

2.3.13 CUSTOMER AND VALUE-STREAM TOOLS

Within any organization, it is necessary to understand who their customers are and what

customer is all about. This is a basic need for business or company when implementing the Lean

strategies. Lean tools can help capture the voice of the customer, know what the customer wants

versus needs and measure the competitive marketplace. (Collins and Huge, 1993;Bounds et al,

1994; Best, 2004)


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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.

2.3.14 MANAGEMENT TOOLS

Lean requires not just a strategic vision, but a daily discipline. It is important to look at the short-

and long term vision of the company to implement the right tools. It is also necessary to learn

from the experiences, both the successes and the failures (Sayer and Williams, 2007). Within the

organization, everyone needs to be concerned and committed on an everyday basis, without

attention of management and the leadership of decision-making. The changes developed in a

Lean function are sustainable. Like other aspects of Lean, managerial tools are visual; along with

the customer and value-stream tools, the flow and pull tools, and the perfection tools. These

tools make up the Lean toolbox, which are needed to support Lean practices. (Womack and

Jones, 1996; Sayer and Williams, 2007)

A successful management team directs both the long-term strategy of the organisation and the

daily activities of the business. This goes as well for a successful Lean organisation. Creating the

master plan and measuring everyday progress to that plan is necessary. In keeping with Lean

basics, the process of strategy growth, deployment and measurement should be easy and visual.

(Ohno, 1988; Womack and Jones 1994)


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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.

FIGURE 5 ONION MODEL

Source: Sauders et al 2008


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3.1 PRIMARY DATA

According to Saunders et al. (2009) the primary data is data collected specifically for the

research project being undertaken.

The Business dictionary declares that primary research is experiments, investigations, or tests

carried out to acquire data for the first time, and not through books or published sources. In

other words, it does not exist yet.

The primary research which will be done for this research is through interviews with managers

of the warehouse, employees of Lagaay and through observation of the researcher. The aim of

the interview is to gain knowledge of the workers and to see their perspective as well as for the

managers. The type of interview which is used for this research is the semi-structure interview.

According to Saunders et al (2009), semi-structure, also referred as qualitative research

interview (King, 2004), are when the researcher has a list of questions to be answered, it allows

as well new questions to be brought up during the interview as a result of what the interviewee

has to say. Harris and Jud (2002) explain that proper interviewer behaviour can help greatly in

achieving their goals. It depends on the research question how many employees will be

interviewed.


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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 notmatch your needs

- Access may be difficult or costly

- Aggregation and definitions may be unsuitable

3.2 SECONDARY DATA:

Saunders et al.(2009) explains that secondary data are data used for a research project that

were originally collected from some other purpose in the first-hand. The secondary data which

are used in this research are books, academic journals, academic research, company reports and

reliable internet websites.

Saunders et al (2009) describes the advantages and disadvantage of the Secondary data, these

are summarized in the table below.

FIGURE 6 ADVANTEGES AND DISADVANTAGES

Source: Sauders et al (2009)


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3.3 DATA RELIABILITY

The questionnaire was so designed to make sure it collected all the data that was required for

the research questions. While making the questionnaire, the researcher made sure that the

questions were necessary, understandable, short and straight to the point.

According to Sauders et al. (2009) he states thatin context of research ethics refer to the

appropriateness of your behaviour in relation to the rights of those who become the subject of your

work or are affected by it.

In this research all the participants who were involved, through the questionnaires, had given

their agreement to contribute in this research and provided information which was necessary.

The warehouse manager and employees who were direct involved in the warehouse were

briefed on what the research was about, what it was for and what would happen with the data.

They were also informed that the information they gave would be dealt with in strict confidence

and it would only be used for this research project only.


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3.4 METHODOLOGY OF THE RESEARCH QUESTIONS

In this part of the methodology, four research questions will be presented and which techniques

are used to answer it. The questions are:

1) Whatmakes Lean Thinking challenge so special?To provide an answer for this research question it is important to do this through secondary

data. The tools which will be used are books, academic journals, and academic research.

2) What is the procedure of the warehouse at Lagaay?For this research question is it important to consider the qualitative research in the form of a

survey, observation and in-depth interviews. These methods of information gathering has a very

flexible form at Lagaay as the employees and managers will be available for this and it will be

most reliable source. Three employees will be interviewed for this to have a full perspective on

the procedures of the warehouse. The type of interview which will be used is the semi-structure

interview. There will be as well archival research used for this research question.

3) What are the problems occurring in the warehouse department?The method which will be used for this research question is through primary data. This will be

conducted by the researcher, through observation and focus group. There will be an in-depth

interview made with the manager and with two workers of the warehouse.

The reason for choosing the manager for an interview is because he is most experienced in the

department. The reason to consider the workers for this question is because they are dealing

with these things every day and therefore it is important to consider their opinion as well. They

can provide information which the manager might overlook.


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To improve the warehouse department

First Research

Question

What makes Lean

Thinking challenge so

special?

Research Methods

Secondary Data:

- Books

- Acedemic

Journals

- Acedemic

Research

Second research

Question

What is the

procedure of the

warehouse

department atLagaay?

Research Methods

Primary Data:

Qualitative

- Interviews with

employee's

- In-depth interview

with the manager

of the warehouse

- Archival Research

Third Research

Question

What are the

problems occurring in

the warehousedepartment?

Research

Methods:

Primary Data:

- Observation

- Interviews

- Focus groups

Fourth Research

Question

What are the

possible barriers of

Lean Thinking atLagaay?

Research Methods:

Primary Data:

- Observation

- Focus group- Interviews

3.5 RELEVENCE TREE

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.

FIGURE 7 RELEVANT TREE


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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.

4.1 WHAT MAKES LEAN THINKING CHALLENGE SO SPECIAL?

For this question it is important to know the thinking behind Lean. As described in chapter two,

the main idea of Lean is to maximize customer value while in the same time minimizing waste. In

other words, it is creating more value for customer with fewer resources. The story below gives

an idea how companies are working at the moment. Companies are working hard but not

efficient.

The story of a woodsman

There was once a woodsman who was cutting his woods and was working very hard. A passer was

walking and saw the man working so hard that he was sweating, so the passer decided to walk

towards him. The passer noticed that the axe of the woodsman was bold. He asks him why his axe

was bold and suggested him to blend it first and then to continue, as it would be easier for him to

cut his woods. The woodsman who was fully concentrated on his work looked at the passer

surprised and answered: No, that is impossible, I cannot stop, I need to continue my work, or

otherwise I will never finish my work on time.(Freek Dekker 2006)

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


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4.2 WHAT IS THE PROCEDURE OF THE WAREHOUSE AT LAGAAY?

In this part the reader will find the procedure of the warehouse. To answer this question it is

important to know a short history and current situation of the warehouse.

In 2000 Lagaay has bought warehouse in Van Helmonstraat, Rotterdam. The dimension of the

ground floor is 800m2, while the upper floor is 588m2. In total warehouse has approximately

5.000 different products, which together has a value of 700.000. The products are medicines,

medical equipment and safety equipment.

When arranging the store they did not take into consideration to arrange it in such a way that

products are placed in groups. The choice for placing the products was not based on a qualified

layout. In the last two years, the workers did not manage the warehouse in a specific system or

structure. New products were given free locations and not in their own groups. Therefore the

warehouse started to be disorganized, products groups started to have two locations or several

locations and they started to put these products in pallets.

During the researchers observation, it was noticed that there are three processes: Receiving

products, products being stored and products going out.

When receiving the products they will be unloaded at the entrance hall of the warehouse. In this

hall, all items are being checked for the correct amount, data, damage and quality. The items are

provided with a receipt and the warehouse manager will book these items in the system. The

system which Lagaay uses is called Account View. Finally the products will be stored in the

warehouse.

When the workers control the products and find damage in it, they inform the manager of the

warehouse, he then informs the purchase department how many items are damaged or lack. The

purchase department, in its turns, contacts the supplier to look for the necessary solution. The

manager of the warehouse will be updated over the decision.


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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) Shelves (meters)

Length 2,90 m 1,00 m

Width 1,10 m 0,50 m

Height 3,00 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

TABLE 1 DIAMENSIONS OF PALLET AND SHELVES


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THE PROCEDURE WHEN PRODUCTS ARE RECEIVED

Acceptance of the

products

First Check:

Are there anyshortage?

Second Check:

Checking products

for any damage

The orders are

placed in the

com uter s stem

Making notes on the

receipt of the courier,

purchase department

will be informed.

Products received

Products are placed

in smaller tubes

Damage

Yes

Manager will inform

the purchase

department about

the amounts of

defects, supplier will

be contacted.

No damage

The goods have arrivedat Lagaay. Jan

(Warehouse manager)

signs for received

products.

The Warehouse

manager and courier

quickly checks the

amount of boxes

received.

After the first check, the

products are carefully

checked for any

damage or missing part.

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.)

No

Products are placed in

the warehouse

After the products are

labeled and repacked

the products are placed

in the warehouse.


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THE PROCEDURE WHEN PRODUCTS ARE COLLECTED

Products are placed in

queue to be packed

Worker takes the

picking / order list

In the warehouse there is a

black box located, in that box

workers can find the picking /

order lists. These order lists

has been put by the sales

department. Workers need to

take the products which are

described in the order list.

Check: Does the

identical codematch?

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.

Collect the

productsWhen products are beingcollected, 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 verydifferent.

A basket / cart is

prepared

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

NoWorkers need to look

further to find the

same identical number,

if they did not find it inthat location, workers

need to look for the

second location where

the product might be.

Products are placed

in the basket / cart

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.

Yes

The queue is a place where

all the baskets / carts are

placed to be checked by thescanners and placed in

boxed to be transported.


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4.3 WHAT ARE THE PROBLEMS OCCURRING IN THE WAREHOUSE

DEPARTMENT?

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.

PRODUCTS DO NOT HAVE A FIXED LOCATION

As described in the previous part, Lagaay uses an ERP system AccountView. With this program

it is able to see where the products are located. However, the researcher noticed the location

showed on AccountView does not always match with the real location of the products. For

example products on the shelves have a different place than what the system shows. These

products, which do not have a fixed location, takes a lot of time to be found by the workers.

TOO MUCH INVENTORY

Some products are being ordered in huge amounts. During the interview the researcher asked

why it is done this way. Jan (warehouse manager) answered: to receive discount from the

supplier. The problem which occurs when ordering in huge amounts will not fit in one location;

therefore it will be placed in different place(s). In addition, the bulk supply is not placed in a

logical order as well. It takes extra time to find the correct medicine when it is out of stock.


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4.4 WHAT ARE THE POSSIBLE BARRIERS OF LEAN THINKING AT LAGAAY?

In this part the barriers of lean thinking at Lagaay will be elaborated and discussed. This is done by

the researchers observation andwith an in-depth interview with Joris Alberda. There is also

secondary data used to clarify some problems which might happen.

According to Mattew May (2010) many companies are afraid when it comes to change.

Companies rather do it how they always have been doing it. When interviewing Joris Alberda he

noted that there are some barriers when changing the warehouse department.

During the interview, Joris was explaining that Lagaay is dependent on the system

`AccountView`. This was implemented as a new ERP-system in 2009/2010. During the

implementation, the company adjusted this system in a way that it will be most beneficial and

efficient for the company. However, when they adjusted the system, it has become now a very

complicated system where there are a lot of possibilities for error if there is a small change in

the system. He concluded by saying: There is no will nor money to invest in a new system.The

manager and employees atLagaay all agree of this barrier.

According to the Sales department another possible barrier for Lagaay is because of the last

minute character of the business they are in, the company needs to respond in a flexible way to

the demand of the market. This makes automatization and standardization sometimes a

dangerous option. Some examples where it is important to be flexible are the package size and

labels. The warehouse department does not fully agree to this statement. Jan (manager of the

warehouse) says it is possible to have some standardized things, and the rest we can leave it

flexible. One of the workers said that there are some things that will almost never change, so why

wont we improve that system if it is not doing things efficiently?For the purchase department it

does not affect whether there will be standardization or not.


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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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Products arereceived

Products arechecked,

repacked andplaced in thewarehouse

Products arepicked by workersand made ready

for shipment

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:

Whatmakes 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:

FIGURE 8: SUMMARY OF PROCEDURE

IN THE WAREHOUSE DEPARTMENT


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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.


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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 theJust 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.


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6.2 SOLVING BOTTLENECK THROUGH THEORY OF CONSTRAINTS

According to Feather and Cross (1989) the idea behind the Theory of Constraints (TOC) is that in

any process there can be a bottleneck.

In this case, the 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.

So, the bottleneck of the identical number can be solved by printing the identical numbers

bigger. These numbers can then be placed on the shelves; in this way it is easier for workers to

see the match of the numbers.

FIGURE 8: BEFORE AND AFTER IMPLEMENTING THEORY OF CONSTRAINS (TOC)


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6.3 IMPROVING JOB DESCRIPTION THROUGH BUSINESS PROCESS

MANAGEMENT

Business Process Management is about optimizing the business processes. This strategy is a

broad management approach that strives for effectiveness and efficiency of the organization

with innovation and flexibility (Sayer and Williams, 2007).

This theory 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.

According to Sayer and Williams (2007) To be a successful company it is important to put as

much importance on the people in the organisation as it does on the methods, equipments and

techniques of Lean practice. It must connect everyone, repeatedly teach and train them, confront

and empower them. Workers must be safe and feel protected in their work surroundings and job

situations. They have to be inspired and motivated and salaried. They must know what it is

expected of them and know how to do this.

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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FIGURE 9 TYPES OF BOXES

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.

TABLE 2: USING THE JIT-SYSTEM


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6.5 MAP OF THE CURRENT WAREHOUSE (GROUND FLOOR)


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6.6 MAP AFTER IMPLEMENTATION (GROUND FLOOR)


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6.8 MAP AFTER IMPLEMENTATION (FIRST FLOOR)


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6.9 IMPLEMENTATION PLAN

In this part the time line for implementing Lean Thinking is presented.

Figure 12 shows the time line which is needed to implement all four strategies. Implementing

Lean thinking strategies at the warehouse department can be done in three terms: short,

medium, and long term. For this project the short consists of 2-3 months period. Medium term is

a 4-5 months period and the long term is a 7-8 months period.

The first step to consider is making one inventory. This has been chosen as the first step because

it is important to eliminate the additional inventory which is located elsewhere. After this a

calculation can be made of how much space is required to place it in one location. This step

needs to be completed in a short term period and the time which is calculated for this step is 2

months.

The second step is to place all similar types of products together, thus moving them from one

location to another. This step needs to be done in a short term period and the time which is

calculated for this step is 3 months.


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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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implementing lean strategies.docx

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