A Case Study about Following Four Steps to a Lean Material-Handling System Leads to a Leap in

Performance

By Chet Marchwinski

Gaps

The PFEP manager is the only person who is authorized to input data, entering a large amount of
data can be time-consuming and may become unmanageable for a single person to handle manually.

As stated in the last part of the case study, there is a gap about the disparity or difference
between the old method of working, where operators were used to having an abundance of parts
readily available, and the new material-handling system, which aimed to streamline operations and
reduce excess inventory. Workers are not able to trust and adapt the new system, which can cause
delays and conflict to the company because of not following the established rules and procedures for
inventory management.

Process

Prior to implementing any modifications, the team at Kokomo Operations conducted an analysis
of their current material-handling system. They conducted a comprehensive analysis of the existing
procedures and found instances of unnecessary resource utilization and inefficient performance. The
first step in creating a lean material-handling system was to thoroughly understand where every part
came from, where it went, and how it was used. In an effort to get better control over inventory and
clear it from floors, Kokomo Operations began planning the current system with formation of a cross-
functional group drawn from production control, industrial engineering, operations, shipping, quality,
hourly employees, and safety representatives. The team’s objective was to develop and implement an
overall vision and system for material handling. Below are the steps or process to a lean material-
handling system:

 Creating a plan for every part

 Establish the purchased-parts market
 Establish precise deliver routes
 Integrate the material and information management systems

Turning Point

Process 1: Creating a plan for every part

Creating a comprehensive database (PFEP) that contains detailed information about every part
entering the plant, including specifications, suppliers, storage points, points of use, and usage. This step
is essential for gaining a clear understanding of the material flow within the plant and setting the
foundation for a lean material-handling system.

Process 2: Establish the purchased-parts market

When inventory levels reach the minimum level required to sustain production without a stock
out. This minimum level is set to ensure that there is enough material on hand for the supplier to
expedite the part's delivery in time to prevent a production shutdown. When inventory levels hit this
minimum point, it signals that there is a problem that needs investigation and resolution, such as issues
with the reordering process or supplier-related problems. This minimum level serves as a critical
indicator in the inventory management system.

Process 3: Establish precise deliver routes

It involves designing and implementing precise delivery routes to move materials within the
plant. This step includes setting up designated delivery points and using vehicles like tuggers to transport
materials. The routes are carefully planned to ensure timely and efficient delivery to the production cells.
Additionally, there are few steps mentioned such as the route design and planning, one-way and two-
way aisles, delivery points, and timing scheduling.

Process 4: Integrate the material and information management systems

The new material-handling system was integrated with the information management system
through pull signals such as kanban cards. These signals ensured that only the parts consumed by the
cells would be replenished. They used decoupled delivery routes where the work was divided between a
market attendant who loaded parts and the driver who delivered them.

Results

The introduction of a lean material-handling system at Delphi Delco Electronics' Kokomo plant
yielded substantial operational improvements. This comprehensive system significantly bolstered
efficiency and productivity by ensuring precise and frequent material deliveries to production cells,
reducing downtime, and mitigating the need for excessive inventory. Inventory control was enhanced
through meticulous calculations of maximum stock levels and the utilization of pull signals, leading to
minimized carrying costs. Additionally, the optimization of floor space via gravity racks and enhanced
material organization fostered a safer and more efficient working environment. The system's success was
evidenced by the time saved for management, estimated at two to three hours daily, allowing them to
focus on manufacturing issues and cost reduction. Moreover, the streamlined and organized work
environment contributed to heightened employee morale. They can work more efficient with reduced
stress, develop self-skills, and improve health and safety. The system further facilitated improved control
over material movements, promoted standardized work processes, and supported a sustainable lean
transformation. Moreover, the lean material-handling system at Delphi Delco Electronics' Kokomo plant
achieved remarkable advancements across multiple facets of their operations, bolstering efficiency,
inventory management, and overall excellence.

Concluding Statement

In summary, the introduction of a lean material-handling system at the Kokomo facility of Delphi
Delco Electronics brought about significant improvements in operational efficiency, leading to enhanced
productivity, cost-effectiveness, and satisfied workers. Through a thorough and systematic examination
and reevaluation of all elements pertaining to their material flow and inventory management, Delphi
Delco Electronics successfully attained significant progress in their manufacturing procedures. This
transition not only optimized operational processes and minimized surplus inventory, but also enhanced
employee productivity and safety.
 This case study serves as evidence of the significant impact that lean approaches can have, not
only on enhancing a company's financial performance but also on fostering a culture of ongoing
improvement and empowering employees. The progress made by Delphi Delco Electronics in
implementing lean material handling practices can serve as a valuable model for firms aiming to enhance
their operational efficiency, boost their overall performance, and foster long-term sustainability and
prosperity.

Group Members:

 Dexter Avejero
 Christoher Almeron
 Aliza Andrei Damaso
 Arman Jay Bravo