Analysis of Lean Manufacturing Principles: FEI Case Study Report

This report provides a comprehensive analysis of the Farm Equipment International (FEI) case study, focusing on the application of lean manufacturing principles to optimize the production of hydraulic control levers. The report begins with an overview of the current state value stream map, highlighting the inefficiencies in the existing production process, including a long lead time of 27 days. It then outlines the eight key questions for future state design, aiming to identify and eliminate waste. The analysis suggests several improvements, such as reducing the number of units at the cutting stage, optimizing welding and de-flashing processes, and streamlining the painting and assembly stages. The report proposes a future state map that incorporates lean principles like Kanban, aiming to reduce the lead time to 13 days. It also includes an implementation plan detailing the steps FEI should take to transition from the present state to the future state, and suggests improvements in dispatch and material ordering. The conclusion summarizes the benefits of implementing lean manufacturing, emphasizing the potential to reduce lead times, lower costs, and enhance capacity while minimizing waste.

Lean Manufacturing- Farm Machinery International Case

Background
FEI is an international agricultural machinery manufacturer that makes among others things, a
hydraulic control lever. At present, the company’s production is set such that it takes at least 27 days
for a hydraulic control lever to pass through the factory until it is ready for shipping to customers.
Because of this production lead time, FEI now gives customers a 60 day lead time. Customers have
a demand of 24000 hydraulic control levers with order sizes varying between 20 and 200 pieces; the
average order size is 50 pieces. Five units are packed in each box and several shipments are made
daily by truck to various customers and every customer order varies in terms of configuration and
quantity. The mix of the hydraulic lever configurations can be changed to a maximum of two weeks
before the date of shipping. The manufacturing process entails cutting the tubes, welding both ends
of the tube, flash removal, painting done by contractor, assembly, before delivery. This paper
discusses the FEI case in the context of lean manufacturing, a systematic production method with its
roots in Japan at Toyota Motors. The objective of lean is to minimize waste in manufacturing while
maintaining or improving productivity, and seeking ways by which continuous improvements can
be made (Suhardi, Anisa and Laksono, 2019).
The current value stream map

The above system results in an item taking at least 27 days to go through the production process and
be ready for delivery to the customer. After a review following the lean principles, the pull is seen
as being the demand which is 24000 pieces of hydraulic levers per month. This means the average
daily demand for the finished units is 1200 and while there is no known demand mix from
customers, this figure represents a rough demand estimate.
Cutting
The analysis shows that the problem lies in the number of units of products that start the process.
The cutting, though a manual process with a single operator, results in 3800 pieces of tubes being
cut every day, against a demand requirement of just about 1200 units. This means the production is
three times higher than the demand, so there is definitely going to be a backlog (Rahman, Sharif and
Esa, 2013). As such, this analysis recommends that the cutting process should have just a single
shift of eight hours with a one hour break. In the event of changes to product types and considering
the changeover times, the step can have overtime to cater for any additional orders. This will help
reduce the inventory of cut parts to 2 days.
Welding 1 and 2
This section will also have a reduced workload and does not need two shifts as the new number of
produced cut tubes can all be welded on both sides in a single shift. Alternatively, the step can have
a single welding station working two shifts to complete all welding (for both ends). The inventory
time is then reduced to just one day
De-Flashing workstation
This section will require two shifts to handle all the welded parts as the new total required work
time only is 14 and a half hours, taking into consideration changeover and the possibility of changes
to requirements, the two shifts are more than sufficient to handle all the work and still have
sufficient breaks. The inventory time is then reduced to just one day
Painting
This is a bottleneck in the system and determines the throughput for this system (Hannola and
Myller, 2012); it requires two days to paint the parts, based on the previous value stream map. At
the moment, the workload has been reduced by two thirds, meaning that the painter, working at
present rates, will require less than a day to complete the work. The inventory time is then reduced
to just one day
Connector assembly
Given the required time to assemble each part of 195 seconds, the step will still require two shifts
with the current staff to work on the now reduced workload but will complete the entire arriving
batch within a day. This means the inventory time is now reduced to just over one day, so we
assume two days.

Machining of castings
The castings require 30 seconds to complete and this means that all the materials completed within
a day at the connector assembly will be completely within a day, using just a single work shift.
Based on this production rate, there will be 1320 units ready after this process, based on an
estimated demand-pull of about 1200 pieces per day. But there can be changes so the total time
required is two days.
Dispatch
Dispatch will follow from the demand pull where dispatching is done based on a routing process
that uses routing software to aid in optimization (Fazlollahtabar and Saidi-Mehrabad, 2013). The
routing should be done such that fleet and fuel costs are reduced while deliveries are hastened,
using the JIT principle for customer order delivery.
Future State Mapping (FSM)
Based on this information, the value stream mapping can generate a new process, which,
maintaining the current average cycle times for each step, will result in greatly reduced inventory
and improve the system efficiency from 27 days to 18 days in the first week that the new approach
is used. Following the lean principle of Kanban (Rohani and Zahraee, 2015), this will lead to a
further reduction in the total lead time for the production of a hydraulic cast to 13 days. With these
new efficiencies, FEI can reduce the lead time given to customers to 14 days (2 weeks) from the
current 60 days. Dispatch can continue being done any time of the day, but following Kanban
principles, this can be improved such as using route planning for delivery trucks so that maximum
use is made of a truck delivery for each route (Nallusamy, 2015; (Chowdhury et al., 2016). Ordering
means that materials can only arrive every two weeks and lead times are 16 weeks and 12 weeks.
Ordering can then be planned so that materials are delivered every two weeks with prior ordering.
The result will be higher inventories but this is offset by there being no chance of materials
shortage, even if orders from customers spike in given periods.

Conclusion
Lean manufacturing entails analyzing production and identifying wastes that are reduced, on a
continual basis, without sacrificing productivity. Having evaluated the FEI case, the lead time gven
to customers of 60 days can be reduced to 14 days by optimizing production based on the estimated
daily demand pull to reduce materials worked on but reduce wastes of inventory days at each step.
It will also lower costs and allow for enhanced capacity should demand spike such as using
overtime while lowering wastes of labor and shifts by having single shifts for some work steps.

References
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Vehicle Scheduling and Routing Problems: A Review Study. Journal of Intelligent & Robotic
Systems, 77(3-4), pp.525-545.
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