Application of Lean Manufacturing

Techniques to Increase On-Time Deliveries:

Case Study of a Metalworking Company
with a Make-to-Order Environment in Peru

Kenny Kishimoto1(&), Gabriel Medina1(&), Fernando Sotelo1(&),

and Carlos Raymundo2(&)
1
Ingeniería Industrial,
Universidad Peruana de Ciencias Aplicadas (UPC), Lima, Peru
{u201420868,u201416167,fernando.sotelo}@upc.edu.pe
2
Dirección de Investigación,
Universidad Peruana de Ciencias Aplicadas (UPC), Lima, Peru
carlos.raymundo@upc.edu.pe

Abstract. The purpose of this paper is to provide a proposal of a production

management model using lean manufacturing techniques to improve on-time
deliveries of a metal-mechanic company that works in a make-to-order (MTO)
manufacture of industrial fans environment. The proposal of the research refers to
the implementation of a production management model in a metal mechanic
company in Peru and analyze the effect in on-time delivery rate of the company.
In one month of operation after the implementation of the pro-posed model, the
on-time delivery rate of the company increased from 35% to 80%. Likewise, the
problems present in the metalworking research company may be the same in
many metalworking companies in the country, so the present investigation will
serve as an example for the possible solution of the problems of other companies.

Keywords: Lean manufacturing
Make-to-order
On-time deliveries

Metalworking company
Peru

1 Introduction

The metalworking industry is very important in Peru due to the great importance of this
industry for mining, the production of auto parts, wood products for export, food and
fishing for direct human consumption [1]. This industry has declined in the last 3 years,
as it has been affected, both by the lower internal demand derived from the paralysis of
mining and infrastructure projects, and by lower external demand [2]. Also, the met-
alworking industry is an industry that lives from mining and, as such, the mining
industry is the thermometer of this sector. Therefore, when mining investments fall, this
sector must look for other markets. This is how the metal mechanic sector is addressing
the energy and infrastructure sector, as well as commercial ports and buildings [3]. This
industry has been dominated by national companies. However, in recent years,
transnational companies have entered the market.

© Springer Nature Switzerland AG 2020

T. Ahram et al. (Eds.): IHIET 2019, AISC 1018, pp. 952–958, 2020.
https://doi.org/10.1007/978-3-030-25629-6_148
 Application of Lean Manufacturing Techniques to Increase On-Time Deliveries 953

On-time delivery is defined as the ratio of the number of orders delivered on time to
the total number of orders. This indicator can determine how efficient a company is
complying with the dates established in the contracts [4]. To ensure the success of the
product, one key component that a company must take into consideration is their on-
time delivery due to today’s highly competitive markets where technological innova-
tions and its growth occurs daily [5]. Companies in a make-to-order environments start
their production after an order is made by a customer.

2 Literature Review

Lean manufacturing consists of eliminating waste and delays in each process carried
out by the company, maximizing the added value of your products [6]. This technique
decreases the time between the order of the product by the clients and its delivery [7].
The main objective of lean manufacturing is to transform a company to be highly
competitive and responsive to customer demand by eliminating waste [8].
Lean manufacturing offers a variety of tools and techniques that help companies in
the reduction of waste such as: value stream map (VSM), 5S methodology, jidoka,
andon, kanban, heijunka, among others.
The value stream map (VSM) aims to develop a visual mapping of a family of
products within a company, where notes adding activities like that do not add value,
necessary to produce a product [9].
The 5S Methodology is a technique that is used to improve the working conditions
of the company through good organization, order and cleanliness of a job [10].
Also, the simplicity of kanban systems lies in the reliability of a target inventory
level. If we consider that the output inventory as a product in process, we can see the
kanban system maintaining a constant level of inventory of the total WIP for each type
of part [11].
The Kanban system works hand in hand with production leveling (heijunka), which
is one of the lean tools used to stabilize a manufacturing system, production leveling is
a kind of cyclic programming that creates uniformity of production and simplifies the
coordination of activities [12].

3 Case Study

3.1 Company Airtec S.A.

Airtec S.A. is a peruvian company dedicated to engineering of air movement, specif-
ically, to the manufacture of axial and special centrifugal fans for industrial and mining
processes. They have a factory of 2000 m2 located in the constitutional province of
Callao, Peru, with about 100 workers. With more than 50 years in the market,
Airtec S.A. covers 80% of the market.
The production environment in which the company Airtec S.A. is Make to Order
(MTO), due to the high influence of the customer on the product that will be delivered
and the variety of products, the company can be considered within the production
system of Workshop (Process).
954 K. Kishimoto et al.

The company has a wide variety of products in its catalog. Different fan lines (axial,
centrifugal and mining) as well as accessories for them.

3.2 Identifying Problems

As stated above, the company Airtec S.A. covers 80% of the market. However, in
recent years, the company has lost a significant number of contracts due to the bad
experiences of its customers regarding the delivery times of the product offered that
were not fulfilled. In summary, of the 503 orders, only 178 were delivered on time,
obtaining a KPI of on-time deliveries of 35.39%.
In comparison, in the IndustryWeek Best Plants Program, which recognizes
annually the leading plants that are highly competitive and enhance customer satis-
faction, world-class companies (Program winner and candidates) operate with an
ontime delivery rate of 97% [13].

3.3 Identifying Root Causes

To find the root causes of the low rate of on-time deliveries in Airtec S.A. a lean
diagnosis was developed in order to know which of the waste mentioned in the Lean
philosophy are the ones that most affect the company. For this, it was used the Value
Stream Map (VSM) to represent all the flow of information and material and the
process of manufacture of an industrial fan.

Fig. 1. Value stream map

Considering the Pareto principle, it can be identified that waste of waiting times and
defects represent around 80% of the non-value-added time in the company Airtec.
For the waste of waiting time, three root causes were found: the late start of order
manufacturing, the order prioritization and a poor order management to suppliers.
 Application of Lean Manufacturing Techniques to Increase On-Time Deliveries 955

In the case of the waste of defects, two root causes were found, including: the
disorder in work stations and the obstructed roads by in-process products or materials.

3.4 Proposed Tools

Once analyzed and obtained the root causes of the most impactful waste for the
company Airtec. It was evaluated and considered that the most favorable tools for
solving these causes are: the 5S Methodology, Heijunka and the Kanban-ConWIP
hybrid system.

3.5 Model of the Proposal

The model began with the preparation stage as indicated in Fig. 2. In this step the
conditions are organized and determine the criteria that will be considered to develop
the implementation. Likewise, employees are informed and trained in Lean philosophy
and principles, then the 5S methodology is implemented [14]. Before the implemen-
tation of the 5S Methodology it is important to plan the steps [15]. The first step of the
5S Methodology is to perform an audit, to know the current situation of the company in
terms of cleanliness in the work stations [16]. After the audit, the methodology is
disseminated through all the stations and areas of the company through training [17].
Then, the 5 phases of the methodology will be implemented, being the following: Seiri,
Seiton, Seiso, Seiketsu and Shitsuke [18].

Fig. 2. Methodology deployed for the study Source: Adapted from [14]

The second stage of the model is the part of the implementation that selects the
necessary tools so that the model can fulfill its objective [14]. To begin this stage, it
starts implementing the leveling of production using Heijunka [19]. Analysis Hierarchy
Process, which is a method to make difficult decisions based on multicriteria, is used to
generate the order prioritization of manufacture [20]. After performing the hierarchical
analysis and having the order of manufacture, production is leveled through the Hei-
junka box, since this tool harmonizes the processes by establishing periodic production
sequences [19]. As a last phase, the model is the implementation of the Kanban-
ConWIP system, which works together with the Heijunka box, since it is a tool for
production control and inventory in process [21]. In this stage of the model, the
956 K. Kishimoto et al.

Kanban-ConWIP cards are designed and the flow of the cards in the production area of
the company is established [22].

3.5.1 Preparation Stage

In this stage of the model, the conditions are organized, and the criteria are determined
under which the company will develop the implementation. With the training and
implementation of 5S, the indicators and goals to be met are generated, which are
focused on the reduction of waste.

3.5.2 Implementation Stage

The Heijunka system is a tool used to level the production of the company. For this you
must establish and analyze production criteria, to be able to launch the manufacturing
orders. Also, the Kanban-ConWIP system is a tool used to reduce inventory in process.

4 Validation

To validate the proposed model, the pilot test was used to evaluate the operation of the
proposed model. This pilot test has been made in the welding and rolling area, because
as shown in the VSM (Fig. 2), the fan housing is the part of the product that take the
longest time, and this part goes through the welding and rolling work stations. It is
considered that the development in these work stations will have a great impact in
solving the problem.
The type of validation is a pilot plan, which will be carried out in the area of
boilermaking and rolling, since, according to the VSM, the production of the fan
housing is the bottleneck. The development of the pilot plan in the bottleneck areas will
have a great impact on the solution of the problem. Likewise, the application of the
pilot plan was carried out during 20 days and during that time 22 fans of the standard
products VaV-32″, VaV-21″ and VaV-18″ were manufactured.

4.1 Implementation of 5S Methodology

The implementation of the 5S methodology in the areas of boilermaking and rolling,
allowed order and cleanliness of the area. The objective of the implementation was the
reduction of faulty products, improving the working conditions.

4.2 Implementation of Kanban-ConWIP and Heijunka

The cards were designed and placed in the case. When a fan order leaves the assembly
area, a Kanban card is generated requesting that the case that came out, be replaced.
The Kanban card travels at all times with the object, in this case it is the case until the
next process
• At the rolling station, the card indicates the necessary operations in order to gen-
erate the cylinder for the fan housing.
 Application of Lean Manufacturing Techniques to Increase On-Time Deliveries 957

• In the area of boilermaking a card placed on Monday, which corresponds to the

closing by welding the cylinder of the fan housing. Likewise, on Tuesday 2 cards
were placed, one for the production of the legs and the other for the production of
the accessories.
• On Wednesday at the assembly station, the card indicates the union of the cylinder,
the legs and accessories and also to replace the inventory that came out at the time
the order was requested.
For the measurement of results, after the implementation of a model, production
was started in the work areas for the pilot test in a period of 20 days.
With the application of specialized tools, not only the non-value-added time was
reduced, but also a more flexible production program for the company was achieved. It
is worth noting that after the implementation of the pilot plan there were no penalties
payments for deliveries out of time. This is one of the most important economic results
of the proposed model.

5 Conclusions

The test of the pilot plan carried out in the welding and rolling stations, shows that on-
time deliveries were increased by approximately 46%, providing great improvement for
the problem.
The implementation of the 5S methodology was of great importance for the
implementation of the Kanban-ConWIP and Heijunka tools, since without the initial
base of the 5S’s it is more difficult to implement other Lean tools.
In the implementation of the pilot plan, it is demonstrated that the Lean tools:
Kanban-ConWIP and Heijunka work very well together, since it allows to prioritize
orders and also allows to divide the workload equally throughout these two work
stations.

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