THE IMPACT OF EFFICIENT MATERIALS HANDLING IN A MANUFACTURING ORGANIZATION (A CASE STUDY OF AWOMMA PLC ENUGU, ENUGU STATE)
The highly competitive environment, linked to the globalization phenomena, demands from companies more agility, better performance and the constant search for cost reduction. The present study focused on improvements in internal materials handling management, approaching the case of a large company in the automotive industry. Materials handling is intrinsically associated with production flow. Because of this, it has direct influence on transit time, resources usage, and service levels. The objective was to evaluate, in a systematic way, the impact of implemented changes in materials handling management on the internal customers’ perceptions of cost, safety in service, service reliability, agility and overall satisfaction. A literature review preceded a case study in the company’s manufacturing unit and the questionnaires were completed by 26 employees directly involved in the process. Analyzing the answers, it was possible to suggest that internal customers understood that the new materials handling management system enlarged service agility and reliability and reduced costs, which caused an improvement in overall satisfaction.
1.1 BACKGROUND OF THE STUDY
There is a strong concern to adjust the supply system in a company (Machline, 2008) to achieve a higher service level internally and to the outside customers. This brings to a higher operational level and even a possible differential when compared with the other competitors (Milan, Paiva & Pretto, 2006; Paiva, Carvalho Jr. & Fensterseifer, 2004).
Materials handling management is among many factors that contribute to improve a company’s performance. The Materials Handling Industry of America [MHIA] defines materials handling management as “Material Handling is the movement, storage, control and protection of material, goods, and products throughout the process of manufacturing, distribution, consumption and disposal. The focus is on the methods, mechanical equipment, systems and related controls used to achieve these functions” (mhia.org/learning/glossary). Then it is observed that handling is broader than simple materials movement, although both terms are sometimes used as synonyms. The relevance of materials handling stems from the intrinsic relationship that it has with production flow. When it presents an imbalance, there is formation of extra stock or rupture in supply. When the flow does not have enough velocity, transit time is long and the system is not capable of serving the customers when they need it.
It is well understood that material handling improvement may have positive effects over production. However, it is not only production, but the way the employees see the new situation. When the perception is favorable, the benefits are possible; if not, behavioral issues can emerge. Evaluations are important when interventions into the work environment are implemented. The present work is specifically related to materials handling management. By means of effective materials handling management, the company’s operational performance may improve (Chopra & Meindl, 2001; Rosenbloom, 2003) aiming to satisfy the customers or meet their expectations in terms of their needs, desires and demands (Oliver, 2010; Stock & Lambert, 2001).
The case study related in this work was performed in an automotive industry located in the northeastern part of Rio Grande do Sul State of Brazil. It was founded more than 50 years ago and is classified as a large-sized company since it has more than 2000 employees. This region contains a cluster of industries of metal-mechanic, automotive and metallurgical sectors that in its majority belong to production chains which demand a high internal performance level from their partners.
The company in question, after analyzing production flow as a whole, identified that among other measures it would be necessary to improve materials handling management in the manufacturing process. This was motivated by the observed delay in forklifts service and their high maintenance cost. Forklifts were used both for parts handling and transportation and to assist in tooling changes, which many times resulted in excessive setup time leading to production delays. Changes were made in the materials handling process to address these concerns.
The main objective of this case study was to evaluate internal customers’ satisfaction levels after the change. In order to do this, it was necessary to identify the factors that explain overall satisfaction; to do it, open-ended questionnaires were applied. The respondents – 26 people directly linked to daily materials flow – were requested to identify the attributes and unfold them into sub-factors which represented the internal process in more details. The identified attributes were cost, safety in service, service reliability and agility. After this step, a second questionnaire with close-ended questions was applied to the same respondents in order to evaluate performance satisfaction at each factor and sub-factor and also overall satisfaction. The questions requested the respondent perception about the improvement – perceived or not – after the interventions.
The collected data were analyzed with multiple regressions. Data analysis indicated that the factors agility, service reliability and cost are able to explain overall satisfaction. In addition to that the satisfaction level of most of internal customers with the new materials handling management system is equal or even superior when compared to the previous one.
1.2 STATEMENT OF THE PROBLEM
The first sub-section describes the situation prior to the intervention, identifying the problems that were found. The second describes the factors that motivated the change. The third describes the changes and the situation after its completion. Besides variables and sub-variables, customers’ overall satisfaction regarding the implemented changes was also evaluated.
1.3 SITUATION PRIOR TO THE INTERVENTION
This study was conducted in the manufacturing sector of an automotive company. The manufacturing sector is responsible for almost all of the supply of assembly lines, including the components that go through a pre-assembly process before proceeding to final product assembly. In this sector are concentrated cutting and bending tools and dies required for components manufacturing to assembly lines. The whole process runs with the aid of forklifts. Often, the setup time is equal to or higher than the time needed for parts manufacturing. This situation, coupled with the cost of downtime, demonstrates the importance of the tooling exchange process.
Besides helping in the execution of setups and carrying out internal transport managed by an electronic scoreboard installed in the factory roof, forklifts also performed activities for transporting materials between pavilions. When executing this last activity, the forklifts often travelled on uneven roads, which caused great bouncing, burdening maintenance cost for equipment wear or premature breakage.
Often, when a forklift leaves its workplace to transport a container between pavilions, delays in machines’ setups are generated, causing unnecessary costs and stress on the forklift operator. The operator could do little besides feel forced to increase the speed during the route, creating risks of accidents with personal injury and / or materials damage. This activity as well as the studied process relate to Goldratt’s Theory of Constraints (TOC) to seek bottlenecks and reduce or eliminate them (Goldratt; Cox, 2004).
Although there were enough forklifts to meet the demand from the manufacturing sector, many times it was not possible to meet immediately the manufacturing needs due to reasons like long distances to travel and frequent maintenance due to excessive use of the equipment. This directly affected internal customers’ satisfaction.
The presented problem was: how to increase internal customer satisfaction, while stabilizing or decreasing forklifts’ maintenance cost?
1.4 CHANGE MOTIVATORS
Due to development of new markets, manufacturing demands for a large variety of components and final product assemblies increased. This demand growth led to speed increases and changes in how materials and tools were being handled and transported in order to monitor manufacturing requirements.
With these changes and demands for manufacturing to attain the company’s goals, there was also pressure for growth and lack of tolerance with forklift operators, since the work did not always run quickly and with quality. Additionally, forklift maintenance costs were increasing, demanding sometimes excessive spending that jeopardized the budget. The dissatisfaction and demotivation of forklift operators was notorious, and an increase was also noticed in the number of collisions between the equipments. Finally, boxes and containers were unsatisfactorily stored in the hallways together with the machines to attempt to reduce production interruptions.
1.5 THE CHANGES AND THE SITUATION AFTER THE IMPLEMENTATION
One suggested solution was to rent two forklifts as a way to solve the problem. But this only served to soften it, and brought a larger cost to the company. It was realized then that it was not the quantity of equipments that was going to solve the problem but the way material handling was being executed in relation to the necessity of the presented changes.
From this observation, processes and material flows were mapped and separated in two ways: (i) vertical movements which make greater efforts and little ground movement; and (ii) horizontal movements that rely on traction to travel longer distances, including transport out of the work units.
Another proposed solution was to use a tractor towing small “wagons”, forming a kind of train. Ballou (1993) states that this approach is more economical for larger volumes that must be moved over long distances along the same route.
Several cargo (pallets) units were constructed with special wheels, fitted with suspension coupled to support the material weight and traverse the gaps between the pavilions. Afterwards, several “cages” were made to be used for holding the parts that go through the processes of bath and painting. More robust containers for heavier and less delicate parts storage were also constructed.
The next step was to create spaces (pit stops) for pallets with their mobile parts on each workstation. In order to the truck driver to know when he could transport material, it was necessary to create an identification system. It was decided that every time that the operator finished the process in his station, he would put on the packaging a green sign indicating that the container would be ready to be transported to the next production step. The truck driver, when removing a filled container, should replace it with an empty one in the vacant post.
Tests were conducted with a timetable for the train passage, but this alternative did not meet the need for flexibility in case of emergencies (pieces to technical assistance and replacement of damaged materials in the assembly process).
It was then decided to set a path that would follow the manufacturing process sequence. To inform the train operator of some urgency, a mobile phone was given to him. Thus, the supervisor could communicate with the operator instantly when there were critical parts and / or components to be collected.
After the changes were completed, it was necessary to evaluate their impacts. This study evaluated internal customers’ satisfaction level with the new materials handling and transporting configuration.
1.6 ORGANIZATION FOR EFFECTIVE MATERIALS HANDLING
Good materials handling practice is the responsibility of all members of the manufacturing team, form the top management down to the trucker working in the aisle of the plant. Very few other elements of manufacturing activity must be so carefully considered by each function in the manufacturing organization. Optimum effectiveness of materials handling procedures can only be attained if each individual recognizes and plays his part. Education and training in materials handling are prerequisite to minimum materials handling costs. Responsibilities assigned such a staff group may well include:
- Determining all new methods for the handling of new materials or products and selecting the equipment to be utilized.
- Conducting research in materials handling methods and equipment.
- Conducting education and training for all manufacturing personnel in good material handling practices.
- Establishing controls of current materials handling costs by analysis of costs and comparison to budgets of either unit or total materials handling costs.
- Initiating and conducting a continuing materials handling cost-reduction or cost improvement program.
- Determining measurements for effectiveness of materials handling that can become the yard – sticks for progress in this activity.
- Developing and conducting a preventive maintenance program for all materials handling equipment.
1.7 DEFINITION OF MATERIALS HANDLING
In a broad sense, materials handling includes all movement of materials, in a manufacturing situation. It has been defined by the Materials Handling Division.
American Society of Mechanical Engineers, as follows: “Materials handling is the art and science involving the moving, packing, and storing of substances in any form.”
This is an all inclusive definition and can include fluids and semi-fluids, as well as discrete items. For the sake of simplicity, we shall limit our discussion in this chapter to the movement of discrete items, such as gears, tires, castings, and boxes. Similarly, we shall consider only the movement of materials within the plant or storage areas.
Movement of materials between plants- particularly when common carriers are used – is generally considered a problem in traffic and is frequently handled by a separate traffic department.
1.8 OBJECTIVES OF THE STUDY
The present study had as its objective to evaluate, in a systematic way, the impact of the implemented changes in materials handling management on the internal customers’ perceptions at the manufacturing department in Marcopolo S/A. unit located in Caxias do Sul – RS.
To reach this objective, the following specific objectives were established:
(i) describe the changes in material handling processes at the company;
(ii) evaluate internal material handling flow in manufacturing, verifying the improvements; and
(iii) Analyze internal customers’ satisfaction levels relative to the new system.
(iv) The simplest solution to the materials handling problem- “No movement, no cost” is hardly practicable for a complete manufacturing process. It is basically sound approach when one is attempting to improve a complete production cycle and when the number of handling can be reduced. It is also a good solution in the making of heavy industrial equipment.
(v) In the latter situation it is often more feasible to bring the tools and workers to the product than to transport the product to the machine or work area.
(vi) In addition to the objective of reducing the overall costs of materials handling by reducing the number of handling involved, the following may be considered as objectives of the engineer in his or her approach to this problem.
Asef-Vaziri, A. & Laporte, G. Loop based facility planning and material handling. European Journal of Operational Research, n. 164, 2005, p. 1–11.
Ballou, R. H. Logística empresarial. São Paulo: Atlas, 1993.
Bowersox, D. & Closs, D. Logistical management: the integrated supply chain process. New York: McGraw-Hill, 1996.
Chakravorty, S. S. Improving distribution operations: Implemen¬tation of material handling systems. International Journal of Production Economics, n. 122, 2009, p. 89–106.
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