LEAN SIX SIGMA VSM APPLYING VSM TO IMPROVE WAREHOUSE OPERATION PROCESSES IN UNILEVER DC
| APPLYING VSM TO IMPROVE WAREHOUSE OPERATION PROCESSES IN UNILEVER DC |
|
APPLYING VALUE STREAM MANAGEMENT TO IMPROVE WAREHOUSE OPERATION PROCESSES – A CASE STUDY IN UNILEVER DISTRIBUTION CENTER Nguyen Nhu Phong*, Nguyen Tien Phat **, Nguyen Thuy Phuong Vy ***. Industrial Systems Engineering, Bach Khoa University – HCM National University. Email: * Địa chỉ email này đã được bảo vệ từ spam bots, bạn cần kích hoạt Javascript để xem nó. , Địa chỉ email này đã được bảo vệ từ spam bots, bạn cần kích hoạt Javascript để xem nó. * *, Địa chỉ email này đã được bảo vệ từ spam bots, bạn cần kích hoạt Javascript để xem nó. ***.
Abstract: Unilever distribution center is an important link in the supply chain of Unilever, a multinational corporation well known for FMCG products. At the moment, waste still exist in warehouse operation processes, which lead to high operation costs, low rate of order fulfillment and negatively affect the company’s competitive advantages. This research used Value stream management (VSM) to improve warehouse operation processes with the aim to reduce none-value-added time and lead time, hence reduce operation costs and late order rate. Key words: Warehouse Operations, Value Stream Management.
1. INTRODUCTIONUnilever is one of the most famous multinational corporations for FMCG products. Unilever Distribution Center VSIP is one of the largest and most modern distribution centers in Vietnam, also a critical link Unilever’s supply chain. Products at the distribution center include homecare, personal care, foods, and promotion products. Unilever VSIP distribution center has just started operating warehouse D, storing finish goods (FGs) and promotion products (Gifts). Finish goods are accounted for 60% in stock, stored together with promotional items and are moved through warehouses A, B, C. Gifts are accounted for 40%, including promotional items, non-Unilever products, and POS (point of sale) items (used to support marketing at stores). The company concerns that the late order rate in warehouse D (up to 20%), which is lower than the other warehouses in the distribution center, will negatively affects the customers service level. Analysis shows that there are a lot of waste in logistics management in the center. Causes of these wastes lie in warehouse layout, storage and materials handling equipment (MHEs) planning, and operations. Causes of problem are represented in the following diagram.
FMEA analysis indicates that two main reasons are warehouse layout planning and operations. This paper used Value stream management (VSM) to improve warehouse operation processes with the to reduce none-value-added time and lead time, hence reduce operation costs and late order rate. Scope of the research also limits to Warehouse D with 2 types of products - finished products and Gifts.
2. LITERATURE REVIEW The literature used in this paper is related to lean production and warehouse management. 2.1. Lean productionAccording to lean thinking, waste can be defined as any activity that consumes resources but creates no value for the customer. Wastes in warehouse operations can be movement waste caused by unreasonable space allocation, waste of resources or time caused by uncareful resource planning,.. An important method used in lean manufacturing is value streams management. Value streams management is the process of planning and implementing activities to eliminate wastes in supply chain processes. The value streams management approach consists of several steps, with two important steps - the development of the current value chain and the future value chain. 2.2. Warehouse managementWarehouse is a point in supply chain, where the products are paused, processed, and continue to move on the supply chain. Warehouses need both storage space and time of labor operating inside, these are the costs that need to be taken into account when it comes to warehouse management. Warehouse management includes warehouse planning and operations. Warehouse plannning includes layout planning, materials handling equipments (MHEs) planning, and inventory planning. Warehouse operations include receiving, loading, picking, inspecting, packing, shipping. Warehouse managers need to develop models to minimize storage space requirements and labor time, thereby minimizing warehouse costs. Warehouse managers also need to consider to use storage space and labor time effectively to minimize warehouse costs. They need to understand the role in which warehouses serve in the supply chain and means by which warehouses can perform this role. In addition to the above theories, the study also uses the articles on value chain, inventory planning as listed in the references. 3. CURRENT STATE VALUE STREAM MAPPINGThis distribution center consists of 4 warehouse areas: Warehouse A, B, C and D, which is the largest warehouse and is also the subject of the study. At present, warehouse D store 2 types of product – Finish goods (FGs) and Gifts. Finish goods are products produced by Unilever. Gifts includes promotion products which are produced by different manufacturers and POS products (to support point of sale activities such as poster, shelf,...). Warehouse D layout is shown in below figure.
Figure 2. Warehouse D layout Finish goods storage area is categorized as pallet layout, using double deep racking system. Finish goods are stored with dedicated storage policy and are always picked in full pallet with single cycle operation. Gifts storage area is categorized as case-picking layout which includes reserve area, product gathering area and forward area. Warehouse operation processes consist of receiving, put away, picking, packaging and shipping activities. Beside storage time and delivery time (from suppliers to DC and from DC to customers) other operation time can be reduced by eliminating non value added activities. We consent that value added activities are activities that are essential for warehouse operations and to customers. Non value added activities are wait and movements. In order to assess the current warehouse operations, current value stream mapping for FGs and Gifts are developed. 3.1. Current value stream mapping of FGs operation processFor FGs, processes for receiving, put away, picking, packaging and shipping were shown in these following figures.
Figure 3. FGs receiving process
Figure 4. FGs put away process
Figure 5. FGs picking process
Figure 6. FGs packaging process
Figure 7. FGs shipping process Time distributions at each station of the processes were shown in the below table Table 1: FGs time elements
From the table above, the current state map for FGs was drawn as in figure 10.
Figure 8: Current value stream map of FGs From the current state value stream map, we collected values of current performance indexes in the table below. Table 2: FGs index value
According to this table, the PCE value (69.18%) infers that there was still room for improvement in operation process. The LT was rather high and need to be reduced. 3.2. Current value stream mapping of Gifts operation processFor Gifts, processes for receiving, put away, picking and shipping were shown in these following figures
Figure 9. Gifts receiving process
Figure 10. Gifts put away process
Figure 11. Gifts picking process
Figure 12. Gifts shipping process Time distributions at each station of the processes were shown in the below table. Table 3: Gifts time elements
From the table above, the current value stream mapp for Gifts was drawn as in figure 15.
Figure 13. Current value stream map of gifts From the current value stream map, we collected values of current performance index in the table below. Table 4. Gifts index value
According to this table, the PCE value (57.37%) was quite low, which means there was still room for improvement in operation process. The LT was rather high and need to be reduced. From the index values of the two current value stream map, the research objectives of reducing wasted time and lead time were set up by improving PCE and LT value by 20%, as shown in table 5. Table 5. Objectives for operations improvement
4. FUTURE STATE VALUE STREAM MAPPINGThe current state value stream maps of FGs and Gifts operation processes were analyzed and improved in order to create leaner mapps to achieve the above objectives. 4.1. Future state mapping for finish goodsNon value added activities were analyzed to define causes and solutions to the problems. They were all shown in table 6. Table 6. Analysis of NVA activities for FGs
After solutions were given, processes in stations were reengineered as in these following figures.
Figure 14. FGs receiving process after improvement
Figure 15. FGs put away process after improvement
Figure 16: FGs picking process after improvement
Figure 17. FGs packaging process after improvement
Figure 18. FGs shipping process after improvement Time distributions at each station of the processes were shown in the following table. Table 7. FGs time elements
The future value stream map for FGs were drawn in the following figure.
Figure 19. Future value stream map of FGs System indexes were summarized in the following table from the future value stream map. Table 8: FGs index values
Looking at the table, it was obvious that the operation lead time was reduced, PCE index was increased, and wasted time in system was also reduced. These indices nearly reached the objectives of 20% reduces of PCE and operation lead time. 4.2. Future state mapping for GiftsNon value added activities were analyzed to define causes and solutions to the problems. They were all shown in table 9. Table 9. Analysis of NVA activities for Gifts
After solutions were given, processes in stations were reengineered as in these following figures.
Figure 20. Gifts receiving process after improvement
Figure 21. Gifts put away process after improvement
Figure 22. Gifts picking process after improvement
Figure 23. Gifts shipping process after improvement Time distributions at each station of the processes was shown in the following table. Table 10. Gifts time elements
Future value stream mapping for Gifts were drawn in the following figure.
Figure 24. Future value stream map of Gifts & POS System indexes were summarized in the following table from the future value stream mapping. Table 11. Gifts index values
Looking at the table, it was obvious that the operation lead time was reduced, PCE index was increased, and wasted time in system was also reduced. These indexes reached beyond the target objectives of 20% reduces of PCE and operation lead time. 6. CONCLUSIONThis research had defined and anlyzed the problems, then proposed solutions to improve warehouse operation process. Value stream management methodology was applied in order to improve operation processes for FGs and Gifts with the objectives of reducing wasted time and operation time. Improvement results were shown in table 12. Table 12. FGs and Gifts improvement
Comparison of future value stream map indexes to objectives is shown in the following table. Table 13. FGs and Gifts improvement compared to objectives
It was shown that this research had nearly reached the objectives, set for FGs and reached beyond objectives, set for Gifts. Overall, this research had advantages of using scientific methods to solve problems, and solutions that were practical and applicable. However, the research still had some disadvantages such as solutions were not implemented to assess the effectiveness, some data were not fully collected. These weaknesses will guide us to future studies.
REFERENCES
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Figure 1. CED of late orders
