Analysis Of Kanban Warehouses- Flextronics Doumen Campus

Presented By DHL Supply Chain

August 2009
Contents
Contents

Executive Summary

Overview

Overview
Methodology
Methodology

Project
Project Team
Team

Analysis Part I - Calculated Efficiencies

Analysis Part 2- Estimated Efficiencies

Analysis
Analysis Attachments
Attachments For
For Reference
Reference

Information Technology

Conclusion & Next Steps

Page 2
 Executive
Executive Summary
Summary

As part of the vision to make Doumen a Super Low Cost campus Flextronics requested DHL to review
the material flow across the 10 kanban warehouses and identify opportunities for efficiency.
On the 2nd of August 2009 DHL started the analysis of the material flows and finished off with a
presentation to the local Flextronics team on 14th Aug 2009 outlining the key findings.
The analysis identified potential headcount savings of 206 personnel across the 10 kanban
warehouses. The analysis also identified quite a number of further opportunities for efficiency within the
kanban warehouses, in the external flows in/out of the kanban warehouses and in the i-hubs/inbound
flows to the campus. In addition the analysis also found, through the use of better visibility tools and
system consolidation, material control performance can be greatly improved resulting in lower inventory
levels and further improved efficiency. A consolidated system will also greatly assist the implementation
of standardised processes for existing and new programs.
In the first phase of the analysis DHL have identified significant opportunity for efficiency gains and very
much expect this is the beginning of a process that will see inbound logistics make a substantial
contribution to the overall Flextronics goal of a Super Low Cost campus.

Page 3
Overview

Scope
The scope included the receipt, storage and despatch (production line feed) activities for the 10 kanban
warehouses in the Mobile & Consumer business unit on the Doumen campus.

Timeline
DHL commenced the analysis on Friday 2nd of August and completed it by Friday 14th August.

Approach
The key steps taken were
(i) Understand and document the process flow for each kanban warehouse.

(ii) Identify inefficiencies in the process and take sample times for observed activities .

(iii) Present the efficiency savings in two categories- calculated and estimated.
(iv) Highlight observations

Page 4
Methodology

DHL used our warehouse operations process improvement methodology. The area marked
in red outlines the general scope of the project.

Page 5
Project Team

Steering Group:

Chuck Bryant Andrew Mitchell

VP Supply Chain Development VP DHL Supply Chain

Janet Tan- Director, Asia Operations David Ringrose- Director, Technology

ST Cheah- Director Trade & Transport
Joe Prachyl- Global Management
GC Ch’ng –Senior Manager
Paul Dennis- Global Management
Peter Hao - ILD Analyst
Ayda Gwie- Solution Design Director
Mark Gatenby- IT Director

Page 6
Analysis

Page 7
 Calculated Efficiencies (1)
Applicable to

Estimation of HC Impact CE Microsoft Mobile

85% Calcu- B15
Time Perform- Volume lated (Sony B17 B17 B13 B13 B13 B16 B16 B6 B6
Findings for Improvement Detailed Description (sec) ance (per mth) FTE /RSA) 1F 3F 3F 4F 2F SMT BB SMT BB
Inbound 85%
Proper sequencing will save Kanban
operator from sorting the reels by part
1 Mixed SMT loose reels from iHUB number again 5 5 147,429 1 Y Y Y
In CD, DN may not come together Operator from recording part-number and
2 with shipment qty manually 15 18 50,103 1 Y Y Y
for B15 for example, operator for each
individual product group need to come
down to first floor to receive and collect
3 Common receiving material 227 267 9,171 4 Y Y Y Y Y Y
Outbound
For BB, pick-list can sequenced by feeding
points and warehouse locations is slotted in
the same sequence;
Picklist is not sequenced with for SMT, at least picklist can follow
location, system does not capture sequence of physical location to improve
4 location picking productivity 22 26 44,700 2 Y Y Y
Picked reels is mixed on trolley Totes with divider can be used on trolley to
thus it requires sorting during hold reels vertically and by part number;
inspection by production or keep the sequence of picked reels by
5 another kanban operator picklist 5 5 147,429 1 Y Y Y

• Calculation is based on sample time measured. Volume is the sum for all Kanbans where the subject process improvement applies with indication “Y”
• FTE is “full time equivalent” of 40 hours per week
• Refer to attachment “Summary of Kanban Study” for detailed explanations, such as the UOM of volume, any assumption for calculation in Excel
comments

Page 8
 Calculated Efficiencies (2)
Applicable to

Estimation of HC Impact CE Microsoft Mobile

85% Calcu- B15
Time Perform- Volume lated (Sony B17 B17 B13 B13 B13 B16 B16 B6 B6
Findings for Improvement Detailed Description (sec) ance (per mth) FTE /RSA) 1F 3F 3F 4F 2F SMT BB SMT BB
Outbound
B6 Level 3 for example, there are 3
inspections for picked products: another
operator, material handler at kanban
Mutiple inspection for picked entrance, and production multi-task at
6 materials hand-over to production production line 22 25 15,060 1 Y Y
Some kanban has picked reels
lying flat on trolley and operator Totes with divider can be used on trolley to
walks slowly to prevent reels from hold reels vertically and prevent reels from
7 falling falling 39 46 9,829 1 Y Y Y

Pack-out lines have many feeding

points and delivery operator may
need multiple confirmation with A common/shared inspection by production
8 individual feeding points can reduce the total inspection time 321 378 473 1 Y Y
This activity can be shared/multi-tasked with
rest delivery-to-lines if harddisk flow is
For Microsoft 1st floor dedicated 2 properly monitored and controlled.
operators are handling harddisk For example, scanning part-number and
9 one item for feeding to lines badges number for issuing 2 Y
Other
Some detrashing is to remove the loose
plastic pack for inners , no inner package
cutting and repackaging needed; For this
type of "detrashing" is left for production, it
will be similar time for production to pick the
Detrashing by removing loose inners but save kanban operators from
10 plastic pack for inners at kanban touching inners 1 1 2,252,032 8 Y Y
In some kanbans material card is
just recorded based on DNs and
11 Picklists There are kanbans not using kanban card 24 28 146,021 7 Y Y Y Y Y Y

Page 9
 Calculated Efficiencies (3)
Applicable to

Estimation of HC Impact CE Microsoft Mobile

85% Calcu- B15
Time Perform- Volume lated (Sony B17 B17 B13 B13 B13 B16 B16 B6 B6
Findings for Improvement Detailed Description (sec) ance (per mth) FTE /RSA) 1F 3F 3F 4F 2F SMT BB SMT BB
Other
Some operator still cut outer label
during detrashing even there are for example, small pizza boxes from Texas
12 labels on inners Instrument 36 42 7,371 0.5 Y

This HC is to remind in/out sign the record

book; however IC room is separated and
Dedicated gate keeper on production material handlers will not come
13 Microsoft level 3 into kanban for picking 1 Y
If production pulls materials from Kanban
every two hours and the replenishment
cycle time is within 30 mins (e.g. B6 3rd),
what tasks will be for the Kanban operators
Task fluctuation within the day for during the rest 1 hr + time?
14 Mobile -Scheduling pulling from different lines and 45 Y Y Y Y Y Y Y
share Kanban resources between product
lines
Unscheduled inbound truck arriving time,
especially with local supplier for example
Task fluctuation within the day for B16 BB, further contributes to fluctuation
15 Consumer Digital within the day 39 Y Y Y
• Task fluctuations within the day results from fixed replenishment cycles to production lines and unscheduled inbound shipment receiving. Operation can
generally complete production replenishment within half an hour during each two-hour cycle. For calculation purpose, assume out of the non-delivery time
1.5 hour, 80% time operators are doing other activities, e.g. detrashing, collect empty cartons ,etc, but the rest 20% of the balance 1.5 hours is idle

Page 10
 Observations in Processes (1)
Applicable to

Estimation of HC Impact CE Microsoft Mobile

85% Calcu- B15
Time Perform- Volume lated (Sony B17 B17 B13 B13 B13 B16 B16 B6 B6
Findings for Improvement Detailed Description (sec) ance (per mth) FTE /RSA) 1F 3F 3F 4F 2F SMT BB SMT BB
Observations In The Process

As iHUB dispatch SMT in cartons/packs,

some location over-loaded, e.g. stacked
SMT from iHUB issued in carton behind flat or need to store some reels in
16 level, not reel level original cartons in temporary storage area 117 138 16,645 4 Y
multiple parts in one flow rack location. E.g.
6 materials in a six pallet-deep location for
Monaco program
for loose carton, consider other pickface
17 Loose cartons on flow rack such as shelving or ground-floor pallet 15 18 145,970 4 Y
notched pallets with no bottom deck used
cannot flow smoothly on flow rack rollers,
sometimes operators need to push from
18 Notched pallet on flow rack behind and back 30 35 9,731 1 Y
the trolley for small items has only one level.
if multiple levels, one trip operator can feed
more materials as these two operators are
19 Trolley for small items feeding 12 lines 1 Y

Congestions in the kanban when shipment

arrives, putaway goes the same time with
picking. JIT materials are staged in the aisle
from docks to production. And Fujitec
materials staged in production and also
20 Congestions kanban due to big size of package 8 Y
At B15 one reach truck is used to put-away
and pick pallet on 3rd level of racking: lifting
time, searching for driver, and waiting time
21 RT at B15 for RT 165 194 5,702 2 Y
• Headcount is derived from assumption rather than actual measurement. Volume, if used in estimation, is the sum for all Kanbans where the subject
process improvement applies with indication “Y”
• Total headcount estimated from above process improvement from no. 16 to no. 21 is 19 (rounded)
• Refer to attachment of “Summary of Kanban Study” for details such as the UOM of volume, any assumption for calculation in Excel comments
Page 11
 Observations in Processes (2)
Applicable to

Estimation of HC Impact CE Microsoft Mobile

85% Calcu- B15
Time Perform- Volume lated (Sony B17 B17 B13 B13 B13 B16 B16 B6 B6
Findings for Improvement Detailed Description (sec) ance (per mth) FTE /RSA) 1F 3F 3F 4F 2F SMT BB SMT BB
Observations In The Process
B15, location of supermarket should be
22 Layout at B15 close to production Y
Picklist is not updated into BAAN so in
BAAN WIP and Kanban is one location; this
Limitation of visibility for kanban make it hard to manage inv. at kanban, e.g.
23 inv. level in system aging report Y Y Y

Several materials have high inventory due

to high demand. E.g. 22 reels per item.
Reels are stacked flat on racking shelf with
multiple deep, relatively difficult to manage
FIFO
in Zone 5 for example, one side big items
are put on 6th level of racks thus it requires
Some reels lying flat on racking ladder. On the other side for the same zone,
24 shelf some small reels are lying flat Y

One item SIMH-M***40863 has five stacks

of item
Another item occupies whole rack location
but last issue data was only May
Kanban should have regular check the inv.
on aging and production plan and return to
iHUB wherever necessary in order to make
25 Inv. is not tracked by age in time efficient use of kanban space Y
Some cartons containing small items are
too big, so it requires operator to pull whole
carton out to pick inners and put the
remaining carton back
There are big tags of part-number, every
pick requires operator to move the tag away
Double handling at shelf for small for picking and then put the tag back after
26 items at B6 BB picking Y

Page 12
 Observations in Processes (3)

Applicable to

Estimation of HC Impact CE Microsoft Mobile

85% Calcu- B15
Time Perform- Volume lated (Sony B17 B17 B13 B13 B13 B16 B16 B6 B6
Findings for Improvement Detailed Description (sec) ance (per mth) FTE /RSA) 1F 3F 3F 4F 2F SMT BB SMT BB
Observations In The Process

SNEE H zone shelf tilt. Some loose stacks

27 Tilt shelf at B6 4th floor may drop from high level for racking shelf Y
Some shelf location is already empty (e.g.
BB xbox) while some shelf still use 5 or 6
28 Empty location level of shelving Y

• Observations from no. 22 to no. 28 are difficult to quantify in terms of headcount impact
• However these observation are listed for improvement consideration and action

Page 13
Further Estimated Efficiencies

DHL observed the following opportunities as major efficiency wins. The observation
and estimated efficiency gains are based on DHL‘s experience on previous internal and
customer warehouse process improvement projects.

No. Area Actions & Examples Of Wins Calc FTE

Detrash is currently fragmented per buidling. Location of a consolidated
detrash zone in the main inbound hub. Consolidated headcount drives
29 Consolidate Detrash efficiency and location in ihub reduces reverse flows of detrash. 28
Deploy fixed point scanning and RF scanning to reduce manual data
entry and allow data entry plus physical tasks to take place in the same
30 IT Solution place reducing tarvel time. 11

Cross train headcount to allow sharing of resource both within the

31 Extensive Cross Training Program kanban warehouse and with finished goods/other activities. 25

Question need for kanban warehouse in all buildings. In addition review

layout and need for racking (esp gravity flow racking as it slows material
32 Kanban Warehouse Layout flow) 8

Headcount, equipment, administration, supervision, space and transport

33 Combination of i-Hubs delivery schedule. N/A

Page 14
Summary Of Analysis

Calculated Process Change 1 9

Calculated Process Change 2 20
Calculated Process Change 3 86

Observations In Process 1 19
Observations In Process 2 N/A
Observations In Process 3 N/A

Further Estimated Efficiencies 72

Total
Headcount
Reduction 206

Page 15
Attachments For Reference

Summary of Kanban Study

Please refer to the enclosed template for calculation of process change and observations in processes.

Summary of Flex
Kanban Study

Process in Kanbans
Please refer to the enclosed file for mapped existing process in all studied Kanbans.

Process in Kanbans

Labour Planning Template

Please refer to the enclosed file for labour planning template with all measured timing data.

Labour Planning
Template

Page 16
Information Technology

A number of the efficiencies outlined in the analysis on slides 8 to 15 are dependent on

optimising the IT platform. Therefore DHL see the consolidation/enhancement of the IT
solutions as an essential element of maximising the kanban warehouse efficiency.

Standardisation of the IT solution and the optimisation of all warehouses under one
system (10 kanban warehouses and 2 i-hubs) are also key to achieving the optimum
inbound logistics flow.

In addition, the appropriate visibility tool will greatly assist inventory control from much
further back in the inbound supply chain. This will facilitate better inbound planning to
optimise labour resource, more effective expediting, further implementation of JIT, and
better utilisation of the Supplier Managed Inventory model.

Page 17
Conclusion & Next Steps

Page 18
Conclusion & Next Steps

The opportunities outlined in this analysis will greatly assist Flextronics develop a Super Low
Cost campus through improvements in efficiency, standardisation, visibility and inventory
reduction.

Implementation
A number of the findings can be implemented in a short time frame and independent of the
other actions. However to achieve a more efficient standardised approach to the inbound
material flow for current and new programs across the campus DHL strongly recommend all
the improvement actions are implemented across all appropriate kanban warehouse as part
of an overall improvement/standardisation program.

DHL also recommend to start with a pilot kanban warehouse that can quickly act as a
benchmark. Measurement and accountability of the performance of all kanban warehouses
via a daily scorecard (Labour Utilisation, On Time Receipt, On Time Delivery To Line and
Inventory Accuracy) are a key component in driving the implementation and returns.

Page 19
Conclusion & Next Steps

Scope

To achieve the optimum return from the analysis the scope should be widened to
include the inbound material flow to the inbound freight, customs, Cross Border
Industrial Zone (CBIZ) process, the 2 i-hubs and the Microsoft warehouse.

As the inbound supply chain elements are interrelated changes in one without clear
understanding of the impact on the other could result in the transferring of problems
rather than resolutions.

Page 20
Conclusion & Next Steps

In Conclusion

DHL are of the opinion there is a clear competitive advantage Flextronics can create by
optimising the inbound supply chain at the Doumen campus. Once the model is established
it can not only be replicated for new programs at the campus, but also extended to other
geographies that Flextronics operate in/will operate in. This will greatly assist standardising
process across the global operations that should compliment the manufacturing services
model, reduce complexity and ultimately drive down cost.

The members of the DHL consultancy team have found this a very interesting project and
very much appreciated the opportunity to work with the Flextronics organisation.

At time of document release further discussions were in progress regarding the next steps
and expanding the project scope.

Page 21