Lean Manufacturing and Process Improvement

INDE 8900-34
Winter 2022

Assignment 1

“Production efficiency improvement in batch production system using value

stream mapping and simulation: a case study of the roasted
and ground coffee industry”

Prepared by:
Hariprasath Thangavelu – 110006151

Submitted to:
Prof. Sardar Asif Khan

Date:
February 21, 2022
Lean Manufacturing and Process Improvement Hariprasath Thangavelu - 110006151
Assignment I

1. Abstract
In Thailand, as the demand for coffee grows, more coffee processing factories, coffee importers,
and foreign franchises enter the market. In this case study the small and medium enterprises
(SMEs) manufactures two types of products. Figure 1 represents the steps involved in the
production of products Z and T, where Z is premium roasted coffee beans and roasted and ground
coffee products sold under their own brand. T is a house-brand roasted and ground coffee product,
which is produced for a major catering company contractually in 250 grams cans.

Fig 1. Production processes for T and Z products.

During the last few years, the producers have seen a steady increase in demand for the products
under their brand, resulting in a manufacturing capacity shortage, particularly in the manual sorting
of coffee beans prior to roasting. Capacity expansion by increasing the staff at this bottleneck
sorting process was chosen as the short-term solution. However, the optimal workforce was
unclear.
Furthermore, there was an imbalanced workload other than sorting operation where manual
operations were done. For production resource efficiency improvement another alternative was to
formulate a workforce management plan for balancing the workload better. As a long-term
solution, they were considering replacing the manual sorting operation with automatic sorting
machine.
Since investing in inventory of finished goods of roasted coffee is a huge risk, as chances are high
for product rejection by customers predominantly when demands are highly uncertain. The two
main reasons for not having an alternative to stock inventory of finished roasted coffee products
are: (1) large retailers will not accept products that have crossed certain shelf lives and (2) the taste
and flavor characteristics will be lost if product held longer in warehouse and therefore, they must
be produced and sold fresh.
According to previous year data of weekly production, product T had been constantly produced as
per agreement. Product Z’s demand was lower but there had been a significant rise and huge
fluctuation in the demand. The demand for product T was six times that of product Z.

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2. Methods used to analyze and improve the process

To solve the capacity shortage problem and to show the gains achieved through it, two methods
were used.
I) Value stream mapping (VSM) is used to display current state map in the production
system, and so, alternatives can be formulated for areas that need efficiency
improvement.
II) Computer simulation – OptQuest tool in ARENA is used to imitate the real time
production system through a logical model and any proposed solutions can be evaluated
without disturbing the actual production process. Also, it offers a tool which can
optimize the workforces at the bottleneck operations.
Firstly, the current state VSM of the production system was constructed leading to the
improvement solutions. Secondly, the solutions from the VSM were subjected to simulation
modelling through which any improvements were made through an optimization tool in the
simulation program.

2.1 Current State Map

When the weekly orders are placed by the customers, they are transferred for a weekly production
plan, and so, the current state map is started. The operations which receive production plans, will
have inventory storage points before them (Fig 2). The regular production time 480min/day is
affected and reduced because of operators share in some operations.
The grading process of both Z and T products is 0.48min/batch and this is for 162 batches per
week. Raw materials are graded three times a week, includes 10min of setup time, 30min for
inventory withdrawal, and 15min for sorting the coffee beans, resulting 242.76min/week as the
average time for grading raw materials for these two operators. 10 operators are working
6days/week in sorting operation for product T. Calculating all the above, the total time for this
operation is 28,314.48min/week or 472min/operator-day.
(10 x 6 x 480) – (2 x 242.76) = 28,314.48 min/week
(The time two operators spent in grading.)
Preparing the foil bags at the beginning of the day and the packing of the products later are carried
by the packing operators from the Z production line. Withdrawing the inventory of packages from
stockroom and to prepare them it took 85min/operator-day. Hence, the total time for filling the
bags, weighing the product, sealing and packing into cases is 395min/operator day. The
manufacturer also makes sure that the remaining amount of inventory at a day’s end is sufficient
for the process steps that follow are not well-fed next morning. For example, 405kg in front of
grinding step of T is calculated an average daily demand of 1620cans x 250g/can = 405kg, that is
left for degassing one day.

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Fig 2. Current state VSM

The results of current state VSM are as follows:

1. For product T’s higher production rate, the assigned sorting operators was not
proportionately higher. higher. Due to the constant demand for T, the uptime in the
operation with T production line with 10 operators was 86.23% is significantly lower than
Z’s where with 6 operators achieved 93.75%. On account of product Z’s high variability
in its demand the manufacturer employs more sorting operators to handle it.
2. The bottleneck operation in both Z and T production lines was the sorting operation
because of insufficient capacity. The constant increase in demand was due to the
insufficient number of sorting operators.
3. Despite both production lines were sharing the same roasting machines, the manufacturer
did not specify any proper sequence. Therefore, all production batches for that day are
completed by two roasting operators. To improve the production efficiency, we need to
find an appropriate roasting sequence.
4. Time was wasted by the packing operators as they waited for a job from the previous
operation i.e., bottleneck operation which made them underutilized.

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2.2 Computer Simulation Model for Coffee Production Lines

ARENA 11.0 was used to develop a simulation model based on the real coffee production system.
One year production data was collected to fit into appropriate probability distribution for the model
which is a discrete-event simulation (Fig 3). All attributes and systems variables needed for the
logic are implemented in this model. Whenever two operations are performed at the same time,
the entity is separated into two duplicate entities. Each of these operations involves a lot of modules
which are aggregated into sub-models for presentation purpose.

Fig 3. Computer Simulation Model

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3. Alternative Methods

3.1 Production resource efficiency improvement in roasting operation

Sequence 1: Product Z ca be completed in shorter time because it has lower demand than product
T. On the other hand, T has to left one night for degassing before being packed. Therefore, there
is no use to finish processing product T early and so, all product Z could be processed first. All
batches are sequenced to machines based on SPT rule (shortest processing time).
Sequence 2: At first, there are two independently working roasting machines, one for Z and the
other for T. Later, when all jobs of one machine is finished, it can be used to help the other
production line to complete unfinished jobs.

3.2 Production resource efficiency improvement in sorting operation

For this operation the following 3 alternatives were proposed:
Alternative 1: Increasing the workforce at sorting operation because the cause of bottleneck at
sorting was due to insufficient manpower.
Sorting operation cycle time (Z) 41.60min/batch
Total sorting time (Z) (6 operators) 249.61min/batch
Sorting operation cycle time (T) 24.05min/batch
Total sorting time (T) (10 operators) 240.46min/batch
Table 1. Sorting time from current state VSM
Two of product T operators should grade raw materials 3 times a week making 242.76min/week.
Demand for T is constant and so, the total working time required for the sorting operations for T
was (240.46min/batch x 23 batches/day x 6day/week) + (2 operators x 242.76min/week) =
33,669min/week. Therefore, the optimal number of sorting operators of T is: [ 33,669min/week /
(480min/day x 6day/week) ] = 12 operators.
Demand for Z is varied, and it might require as low as 8 productions batches/week or as high as
90 batches/week, making an average of 24batches/week. From the fitted distribution there was
95% chance that Z’s demand could be up to 72batches/week. The required number of sorting
operators required would be: [ (249.61min/batch x 72batches/week) ] = 7 operators. Therefore
now,
Sorting operation cycle time (Z) 35.66min/batch
Sorting operators for Z 7
Sorting operation cycle time (T) 20.04min/batch
Sorting operators for T 12
Table 2. Resultant sorting time after alternative

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Alternative 2: A new workforce management plan was made from the current state VSM. The plan
consisted of three tasks: (1) rescheduling underutilized packing operators’ tasks; (2) determining
the optimal number of sorting operators for both products; (3) workforce pooling of manual
operators.
Due to the underutilization of packing operators in T, their task is rescheduled to work in sorting
operation during the first 3 hours of the day and later, returning to their main task. Workforce
pooling is carried by all manual operators assisting in sorting operation once their main tasks are
completed.
Alternative 3: Replacing the manual sorting operations to an automatic sorting machine. Based on
the sorting capacity of the machine, an entire weekly production of raw beans can be sorted only
once a week. Therefore, the packing operators can perform both grading and sorting operations
while the former sorting operators can be rescheduled to work in warehouse.

3.3 Analysis of production efficiency improvement and capacity expansion based on

simulation
Along with computational experiments, financial investment analysis was also conducted using
the simulation model under different scenarios (Fig 4).

Fig 4. Average utilization rates of roasting resources

Scenario 1: Linear trends in demand for product Z
Demand is assumed to fluctuate by 5%, 10%, 15%, and 20% per year for the consecutive five
years with a combination of different interest rates.
Scenario 2: Constant changes in demand for product Z
The demand is predicted to increase by 5%, 10%, 15%, and 20% and set to remain the same for
next five years with different interest rates.

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4. Results
Under both sequencing methods, the loads on roasting resources were evenly distributed which
proves that the capacity of the operation was sufficient to satisfy current demand. On occasion of
higher demand for Z, the sequence 1 will have longer wait period because no T will be able to
grind until Z batches are finished. Therefore, second sequence was appropriate for plant’s
production.
Current state VSM suggested 7 sorting operators for Z and 12 operators for T eliminating
underutilized workers. To handle the variability in demand for product Z, high level of sorting
workforce is required.

Performance measures Current VSM OptQuest Simulation

Number of sorting operators Z: 6 Z: 7 Z: 9
T: 10 T: 12 T: 12
Average overtime hours Z: 5.18 Z: 4.59 Z: 3.77
T: 3.23 T: 2.15 T: 2.15
Sorting cycle time (hours/batch) Z: 2.34 Z: 2.34 Z: 2.34
T: 0.49 T: 0.49 T: 0.41
Table 3. Production efficiency after increasing number of operators

Performance measures Current Alternative 2

Number of sorting operators Z: 6 Z: 7
T: 10 T: 7
Average overtime hours Z: 5.18 Z: 3.95
T: 3.23 T: 3.86
Sorting cycle time (hours/batch) Z: 2.34 Z: 1.53
T: 0.49 T: 0.29
Table 4. Production efficiency after rescheduling operators’ task

Performance measures Current Alternative 3

Number of sorting operators Z: 6 Z: 0
T: 10 T: 0
Average overtime hours Z: 5.18 Z: 0.00
T: 3.23 T: 0.00
Average working (hours/day) 10.30 3.36

Table 5. Production efficiency after investing an automatic sorting machine

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Fig 5. Future state of VSM with manual sorting machine

Fig 6. Future state of VSM with automatic sorting machine

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5. Conclusions
In this study, a new workforce management plan was derived from the current state VSM and the
future state VSM (Fig 5 and Fig 6) is designed involving user’s participation. Later using
simulation, the improvement made from VSM is validated, the effectiveness of alternatives is
measured, and a proper setting is determined using OptQuest. An optimal workforce of total 14
workers are determined by the combination of VSM and simulation. The validation of current state
VSM also led to the solution of shared resources. Shorter waiting time for subsequent operations
were gained from machine sharing.
Thus, using VSM in combination with simulation can be used for production efficiency
improvement. The other alternative was to replace the manual sorting operation with automatic
sorting machine and rescheduling the tasks of sorting operators thus saving time and money
without compromising quality. Based on all the alternatives, the manufacturer can choose one that
fits their budget.

6. If I were the person leading the process improvement

The VSM paved the way for a significant solution to this problem and using of a computer
simulation is a great way to find a solution without disturbing the production. If I were the person
leading the process improvement, I would have started this by calculating the Overall Equipment
Effectiveness (OEE) to have a clear idea of the sorting and roasting operations time. I can extract
the data needed about the performance of these operations with OEE.
Secondly, I would have used Single-Minute Exchange of Die (SMED) to reduce the time taken for
equipment changeovers particularly in the sorting operation. Since, sorting is the bottleneck
operation, I would benchmark the timing. Next, I would try to remove unnecessary steps involved
or any underutilized operators in this area and reschedule their tasks. Later, I would reduce the
waiting time for product T by changing the internal operations to external operations as it will be
waiting for product Z to be finished. Here, again I will measure the effects it has on the existing
system using OEE.
I would repeat the process and continue to move as much as internal operations to external by
using Plan, Do, Check, and Act (PDCA) model and by applying critical thinking. This all could
be effective only if we train the staffs to improve sustainability, therefore I would recommend
doing it as well. I would also implement using parallel operations. This will add the number of
workers, but it will reduce any non-value adding time and balance the workload.
I would recommend to continuously improve the improvements achieved using SMED. If the
manufacturer can afford an automatic sorting machine, I would ultimately recommend that and
rescheduling those workers to tasks that require more manpower and to have balanced operation.