BLOCK 4

Indira GandhiNational Open UniversitySchool of Engineering & Technology

MWR-02Advance Inventory Planning

and Control

Modern Concepts: Materials ManagementPerspective

Indira GandhiNational Open UniversitySchool of Engineering & Technology

MWR-02Advance Inventory

Planning and Control

Block

4Modern Concepts: Materials Management Perspective

UNIT 13Value Management

UNIT 14Waste Management, MUDA

UNIT 15KAIZEN – Change for Better (The Continuous Improvement)

UNIT 16KANBAN Inventory Management System

GUIDANCEProf. Nageshwar Rao Prof. Satyakam Prof. Ashish AgarwalVice-Chancellor, IGNOU PVC, IGNOU Director, SOET, IGNOU

COURSE CURRICULUM DESIGN AND DEVELOPMENT COMMITTEE

Programme Coordinator Course Coordinator Block CoordinatorProf. Ashish Agarwal Prof. Ashish Agarwal Prof. Ashish AgarwalProf. N. Venkateshwarlu Prof. N. Venkateshwarlu Prof. N. VenkateshwarluSchool of Engg. & Tech., IGNOU School of Engg. & Tech., IGNOU School of Engg. & Tech., IGNOU

BLOCK PREPARATION TEAM

Unit 13, 14, 15 & 16 Block 4 Editor Language & Format EditingM. Pradeep KumarAssistant Professor,Department of Civil Engineering,KITS, Telangana

M. Pradeep Kumar Prof. Ashish AgarwalProf. N. VenkateshwarluSchool of Engg. & Tech., IGNOU

PRODUCTION

Mr. Tilak RajMPDD, IGNOU, New DelhiJanuary, 2022©Indira Gandhi National Open University, 2022ISBN: 978-93-5568-286-4All rights reserved No part of this work may be reproduced in any from, by mimeograph or any other means, withoutpermission is writing from the Indira Gandhi National Open University.Further Information on the Indira Gandhi National Open University courses may be obtained from the University’s office atMaidan Garhi, New Delhi-110068.Published on behalf of the Indira Gandhi National Open University by Director SOET.Laser Typesetting by School of Engineering and Technology, IGNOU, New Delhi-110 068. Phone 29532863Printed at XXXXXXXXXXXXXXXXXXXPaper Used: XXXXXXXXXXXXXXXXXXX

Prof. Abid Haleem,Professor, JMI Delhi

Prof. P Srinivas KumarProfessor in Civil Engineering, School of Engg. & Tech.,IGNOU, New Delhi

Prof. Ravi Shankar,Professor, DMS, IIT Delhi,

Prof. Subhasis MajiProfessor, School of Engg. & Tech.IGNOU, New Delhi

Prof. S.K Garg,Professor, DTU, Delhi

Prof. Ashish AgarwalProfessor in Mechanical EngineeringSchool of Engg. & Tech., IGNOU, New Delhi

Prof. R.K. Singh,Professor, MDI Gurugram

Prof. K T MannanProfessor in Mechanical EngineeringSchool of Engg. & Tech., IGNOU, New Delhi

Prof. M.L. Mittal,Professor MNIT Jaipur

Prof. N VenkateshwarluProfessor in Mechanical EngineeringSchool of Engg. & Tech., IGNOU, New Delhi

Prof. N.V.S. RajuJNTUH Telangana

Dr. Sanjay AgrawalAssociate Professor in Electrical Engineering, School ofEngg. & Tech., IGNOU, New Delhi

Dr. B.K. Narkhede,NITIE Mumbai,

MODERN CONCEPTS: MATERIALSMANAGEMENT PERSPECTIVEBlock 4 of MWR-02 is on Modern Concepts: Materials Management Perspective.It contains four units.

In Unit 13 Value: The meaning and concept is explained.

Types of values have described. Value Analysis/Value Engineering is discussed.Function Analysis System Techniques (FAST) is explained.

Challenges of Waste management, Types of wastes, logistics of waste, wasteminimization, reuse/recycling etc have been explained in Unit 14.

KAIZEN - change for better is discussed in Unit 15.

The mean and concept of KAIZEN is explained. 5-S-KAIZEN has been described

Unit 16 describes the concept and history of the Kanban Push Vs Pull Kanban isexplained. Types of Kanban system, the kanban process and implementation ofKanban have been discussed in the unit. You should attempt Self AssessmentQuestion after each section in the units.

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UNIT-13 VALUE MANAGEMENT

Structure

13.1 IntroductionObjective

13.2 Value: The Meaning and Concept13.3 Types of Values: Customer Perceptions

13.3.1 Functional Value or Use Value13.3.2 Cost Value or Monetary Value13.3.3 Social Value or Exchange Value or Resale Value13.3.4 Prestige Value or Esteem Value or Psychological Value13.3.5 Value: Organization’s Perception13.3.6 Value of a New Product13.3.7 Value: Learning Curve Effects

13.4 Value Analysis/ Value Engineering (VA/VE)13.4.1 Value Analysis (VA)13.4.2 Value Engineering (VE)13.4.3 VA/VE Approach13.4.4 Procedure of Value Analysis and Value Engineering13.4.5 Benefits of Value Analysis

13.5 Function Analysis System Technique (FAST)13.5.1 Objectives of FAST13.5.2 Function Analysis13.5.3 Procedure of Functional Analysis13.5.4 Applicability

13.6 Function Analysis System Technique (FAST) Diagram13.6.1 Benefits of FAST13.6.2 Drawback of FAST

13.7 Value Chain Analysis13.7.1 The Concept of Value Chain13.7.2 Levels of Value Chain13.7.3 Source of Information For Value Chain Analysis

13.8 The Activities of Value Chain Analysis13.8.1 Primary Activities13.8.2 Support Activities13.8.3 Applications13.8.4 Limitations of Value Chain Analysis

13.9 Value Reference Model (VRM)13.10 Summary13.11 Keywords13.12 Further Readings

13.1 INTRODUCTIONDifferent people define the term ‘value’ in different ways depending on thecontext such as product (material), human values, social values, and so forth.The value, in this unit is considered for a product or a material or a part or acomponent that depends on the performance of its functions or its aestheticbeauty, applicability and need. As a general statement, the qualities of thematerial such as high level performances, capabilities, emotional appeal, style,all compared to cost is commonly what we consider as value.

ObjectiveAfter studying this chapter, you should be able to

understand value chain analysis,

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know the different levels of value chain, explain the seven wastes waiting in MUDA, discuss 5S kaizen and its application, and bring awareness on quality function deployment

13.2 VALUE: THEMEANING AND CONCEPT

Value in the customer-perception, is the difference between a prospectivecustomer's evaluation of the benefits and costs of the product when comparedwith others.

Thus value may also be expressed as a straightforward relationship betweenperceived benefits and perceived costs:

Value = Benefits – Cost

The basic underlying concept of value for a material depends on human needs.The basic human needs may include food, water, shelter, belongingness, love,self expression and so forth. Both culture and individual personality shapehuman needs in what is known as wants. When wants are backed by buyingpower, they become demand for the product. With a consumers' wants andresources (financial ability), they demand products and services with benefitsresulting in satisfaction to add up the value for the product. This is illustratedin figure 13.1.

Figure 13.1: Need to Value continuumValue can be defined by both qualitative and quantitative measures. On thequalitative side, value is the perceived gain composed of individual's emotional,mental and physical condition plus various social, economic, cultural andenvironmental factors. On the quantitative side, value is the actual gainmeasured in terms of financial numbers, percentages, and rupees.

13.3 TYPES OF VALUES: CUSTOMER PERCEPTIONS

The sources of value are not equally important to all consumers. Howimportant a value is, depends on the consumers’ perceptions. Strictly speaking,the values should always be defined through the "eyes" of the customer.

Thus, according to the customer’s perceptions the value of a product or an itemcan be considered through the following four conceptual dimensions.

1. Functional or Use Value,

2. Monetary or Cost Value,

3. Resale or Social or Exchange Value, and

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4. Esteem or Prestige or Psychological ValueIt is perhaps worth taking a few lines to develop the word “value”. So, we shalldiscuss about these.

13.3.1 Functional Value or Use ValueThis type of value is what the product can offer solution or an operation to thecustomer’s need. It is the value that the customer is prepared to pay forpurpose fulfilled by the product.

13.3.2 Cost Value or Monetary ValueThis is where the function of the price paid is relative to an offering perceivedworth. This value invites a trade-off between other values and monetary costs.It is the cost of manufacturing and selling an item.

13.3.3 Social Value or Exchange Value or Resale ValueIt is the price a customer is prepared to pay for the product, or service. Theextent to which owning a product or engaging in a service allows the consumerto connect with others. This value also considers the expected returns when itis resold or exchanged.

13.3.4 Prestige Value or Esteem Value or Psychological ValueThis value takes into account of the extent to which a product allowsconsumers to express themselves to feel better or the esteem. It is the prestige acustomer attaches to the product. It often carries the psychological perceptionthat the customer adds to himself than the actual cost of the product.

Example:

Suppose you are the seller or dealer of chairs.

Now, if a customer simply wants something upon which to sit, s/he would notbe willing to pay for a reclining leather chair and s/he simply pays the costvalue.

Otherwise, a second customer would be prepared to pay a premium price for aluxury item of its kind or the one which may raise her/his prestige, then, s/hemay be prepared to pay for the esteem value.

While a customer may feel to pay more for the additional functional features,such as revolving, it may be a functional value.

In case the customer counts on its reselling price, it could be an exchangevalue.

13.3.5 Value: Organization’s PerceptionThe value on the whole, includes generally, the reputation of the organization,staff representation, material benefits, and technological characteristics ascompared to competitors' offerings and prices. For a firm to deliver value to itscustomers, they must consider what is known as the "total market offering".Value can thus be defined as the relationship of a firm's offerings to those of itscompetitors.

Further, for an organization to deliver value, it has to improve its value/costratio. Here are two paradigms regarding value

When an organization delivers high value at high price, theperceived value may be low.

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When it delivers high value at low price, the perceived value maybe high.

Thus the key to deliver high perceived value is attaching value to each of theindividuals or organizations.

– make the consumer (or user) believe that what is offered is beyondexpectation

– help the consumer (or user) and making them happy by

offering a solution,

solving a problem,

giving results

Value is subjected to changes based on time, place and people in relation tochanging environmental factors. It is a creative energy exchange betweenpeople and organizations through materials or services in marketplace.

Very often managers conduct customer value analysis to reveal the company'sstrengths and weaknesses compared to other competitors. The steps are asfollows.

To identify the major attributes and benefits that customers valuefor choosing a product and vendor.

Assessment of the quantitative importance of the different attributesand benefits.

Assessment of the company's and competitors' performance on eachattribute and benefits.

Examining how customer in the particular segment rated companyagainst major competitor on each attribute.

Monitor customer perceived value over time.

Therefore Value = Function / Cost13.3.6 Value of a New ProductWhen a company introduces a new product into the market place it can chooseto focus on

on costs, i.e. work towards the lowest possible cost and hopefullybe able to set a selling price that secures a large percentage of themarket, and achieve a high level of profit, or

on differentiating its product to make it more attractive tocustomers.

It’s important to start with target costing because it effectively opens the doorto the other techniques. Target costing is an activity aimed at reducing the life-cycle costs of new products, while ensuring quality, reliability, and otherconsumer requirements by examining all possible ideas for cost reduction atthe product planning, research and development and prototyping phases ofproduction. But it is not just a cost reduction technique; it is part of acomprehensive strategic profit management system. “Target costing is aproactive cost control system. The target cost is calculated by deducting thetarget profit from a predetermined selling price based on customer’s views.Functional analysis, value analysis and value engineering are used to changeproduction methods and/or reduce expected costs so the target is met”. Targetcosting establishes the relationships between cost, price and profit. The

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traditional approach to pricing centred on developing a product, thendetermining the expected cost based on the expected volumes, and then settinga selling price that would recover all indirect costs and generate sufficientprofit to satisfy company objectives. However, when a target costing approachis followed, the company develops a product and then determines the pricecustomers are willing to pay. The desired profit margin is deducted from theprice leaving a figure that represents the maximum total cost. The companythen have to ensure the product can be produced for this amount. If this cannotbe achieved, the product will not be produced.

It is obviously not so simple, but would need to be consider-

The effects of Kaizen costing could gradually reduce the cost, whichmeans, over a period of time, the selling price could be brought down.

The usual reductions/efficiencies would naturally result from anincrease in volumes

13.3.7 Value: Learning Curve EffectsUsual cost reduction techniques should have a positive effect and reduce costs.It is for these reasons that a company may go ahead with production, eventhough the target cost is below the current estimated, attainable cost. It wouldbe confident that reductions would accrue as above plus the company mightintroduce better methods of recruitment and training, use different grades oflabour, buy as opposed to making some of the components and so on. Suchcosts won’t take place without a systematic approach to cost reduction, oneapproach being.

Value Analysis is a standardized, multi-skilled team approach which aims atidentifying the lowest cost way and ensuring the highest worth to accomplishthe functions of a product, process or service. Value analysis means to assessproduct functions and value-to-cost ratios, and to find opportunities for costsreduction.

SAQ – 13.1a) What do you understand by Value?

b) What is the Value in the customer-perception? Explain.

c) Explain the continuum from Need to Value?

d) What are the different types of values in customer perceptions?

e) Briefly describe

i. Functional or Use Value,

ii. Monetary or Cost Value,

iii. Resale or Social or Exchange Value, and

iv. Esteem or Prestige or Psychological Value

f) Why do managers conduct customer value analysis frequently? Whatare the steps they follow?

g) Explain the Value in the Organization’s perception?

h) When a company introduces a new product, on which factors does itfocus? Explain.

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ACTIVITY 13.1While purchasing your mobile phone as a customer, how many dimensionsamong the four conceptual dimensions of customer’s perceptions of the valuehave you considered? Elaborate your answer.

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13.4 VALUE ANALYSIS/ VALUE ENGINEERING (VA/VE)

Value Analysis / Value Engineering (VA/VE) is an extremely powerfulapproach with over a century of worldwide application and it can be applied toany cost generating areas with equal success.

In 1961, in his book “Techniques of Value Analysis and Engineering”,American engineer Lawrence D. Miles stated:

“Value analysis is a problem-solving system implemented by the use of aspecific set of techniques, a body of knowledge, and a group of learned skills.It is an organized creative approach whose purpose is the efficientidentification of unnecessary costs, i.e. cost that provides neither quality noruse nor tool life nor appearance nor customer features.”Lawrence D. Miles continues:

“Value analysis approaches may assist all branches of an enterprise-engineering - manufacturing, procurement, marketing, and management – bysecuring better answers to their specific problems in supplying what thecustomer wants at lower production costs. Quite commonly, 15-25 % and oftenmore of manufacturing costs can be made unnecessary without any reductionin customer values by the use of this problem-solving system in significantdecisional areas.”The term Value Analysis / Value Engineering originated in the early days oftechnique development and its first approach was to increase value, rather thanto reduce costs. Therefore there was a need to analyze value. So, let us defineand describe value analysis first and then distinguish it from value engineering.

13.4.1 Value Analysis (VA)Value addition and cost reduction do not happen by accident, it results from asystematic approach when introducing a value analysis study.

Value Analysis is a planned, scientific approach to cost reduction and thencethe value addition which reviews the material composition of a product andproduction design so that modifications and improvements can be made whichdo not reduce the value of the product to the customer or to the user. (i.e.quality for purpose should not be compromised.)

Value Analysis is “systematic inter-disciplinary examination of factorsaffecting the cost of a product or service, in order to devise means of achievingthe specified purpose most economically at the required standard of qualityand reliability”.

So, the value and quality of a product must be kept the same, or improved, at areduced cost.

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13.4.2 Value Engineering (VE)Value Engineering is the application of value analysis to new products. Valueengineering is “Redesign of an activity, product or service so that value to thecustomer is enhanced while costs are reduced (or at least increased by less thanthe resulting price increase)”.

Value engineering relates closely to target costing as it is cost avoidance orcost reduction before production.

Value analysis is cost avoidance or cost reduction of a product already inproduction; both adopt the same approach i.e. a complete audit of the product.

As said above, Value Analysis is the application of several techniques toidentify the functions of a product (or service) and provide them at the lowestcost. But, Value Engineering is broader concept that includes design anddevelopment aspects.

Value Engineering (VE) generally refers to the design stage and this approachis more applicable to new products. Therefore the same principles andtechniques to pre-manufacturing stages such as concept development, designand prototyping are applied.

13.4.3 VA/VE ApproachAccording to the principles of “Techniques of Value Analysis Engineering”there are different phases of VA/VE:

1. Information Phase

2. Analysis Phase

3. Creativity Phase

4. Judgment Phase

Exhaustive accumulation of information and identification and improvement ofassumptions.

Penetrating analysisWhat senses of direction does this informative provide us with?

What specific problems will, when solved, bring important cost benefits?

Creative mental activity, in which all judgement is temporarily deferred toform the roots of a variety of different solutions to each of the specificproblems developed in the preceding analysis.

Judgment-type mental activity, in which what results from creative thought issearched for ideas roots to minimize disadvantages and maximize advantagessufficiently to meet the need for cost and/or operation improvement.

During the information phase, the project and its requirements are analyzed,and then the function analysis studies the possible room for improvement. Inthe creative stage ideas to increase performances are developed: from theresulting list of ideas only a short set is evaluated in order to find the ones withbest potential to reach the goal. The following step is development ofalternatives and their presentation to decision makers and, eventually,implementation.

To sum up, VA / VE is an orderly and systemic method to increase the valueof an item, which can be a product, system, process, procedure, plan, machine,

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equipment, tool, service or working method. Function analysis is part of VA asits purpose is to identify product functions compared to cost and price; designand construction assessment is done through VE with the goal of eliminatingelements which are not contributing to function.

Product's function should not be conceived solely as its application andpractical uses. It can also include aesthetic factors, or the union of the twofollowing dictates of functional beauty philosophy. This theory is based on thecoexistence of aesthetics and performance. What matters the most in drafting aVA / VE is that the function is clearly defined, so that it can be analyzed indetail and sub-segmented to enable the analysis easier.

In VA/VE the function of a product or service, defined by customers to meettheir requirements, is first identified, the monetary value for that function isestablished, the specified performance and requested reliability provided at thelowest life-cycle cost.

Following a VA/VE approach it is possible to increase customer satisfactionand add value to the investment.

Even the best and most innovative designs can age and become uncompetitive.In these cases VA/VE can support both customers and suppliers in finding andoptimizing any value mismatches in products, components, processes, projectsor low performing functions.

A correct segregation between necessary and unnecessary functions ofproducts leads to a creative development of alternative ways of accomplishingthem - as requested by customers - at lower cost.

VA/VE enables a company to highlight areas that need to be analyzed andimproved, with a standardized method which generates ideas and alternatives,considerably increasing the value of goods and services.

A project completed with VA/VE technology is more successful and efficientthan a project developed without that approach, because goals andrequirements are pursued in a customer centric way. VA/VE is almostunlimited in identifying area of potential savings, as it can be used to reachquality, improve efficiency and reduce risks, in a cost saving way.

VA/VE tools are extremely powerful and fundamental to reach objectives suchas decreasing costs, improving quality and shortening time-to-market.

13.4.4 Procedure of Value Analysis and Value EngineeringA value analysis and value engineering team exercise might involve thefollowing series of questions:

Can a different (cheaper) material be used that is better than thematerial currently used?

Can a different grade of labour complete the manual tasks?

Can the use of material components be standardised to facilitatelonger production runs if manufactured internally, or gain benefitsfrom bulk buying if purchased

Usually a company establishes a value analysis team who may adopt thefollowing processes:

1. Selection of Product or Service

2. Data Collection and Recording Information

3. Analysis and Evaluation of Product Information

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4. Consideration of all alternatives5. Selection of the Least Cost Alternative

6. Recommendation

7. Implementation and Follow-up

We shall briefly discuss about these.

Step 1: Selection of Product or Service for study.The product selected should be generally the one which accounts for a highproportion of the organisation’s costs, since the idea is to get the greatest costsavings from high cost areas. The choice should also consider the ‘life cycle’stage of the product as a product reaching the end of its marketable life isunlikely to offer scope for substantial savings.

Step 2: Collection and Recording the Information.While collecting the information the following questions may be positivelyanswered.

1. What is the product or service supposed to do?

2. Does it succeed?

3. Are there alternative ways of making or providing it?

4. What do these alternatives cost?

The answers obtained for the above questions may have to be judiciouslyanalyzed and recorded.

Step 3: Analysis and Evaluation of Product Information.Here, each aspect of the product or service should be analysed. Any costreductions must be achieved without the loss of use or esteem value. Or at least,cost savings should exceed any suffered loss in value, and customers wouldthen have to be compensated for the loss in use or esteem value in the form ofa lower selling price.

Introspections for the analysis stage might be:

a) Are all the parts necessary?

b) Can the parts be obtained or made at a lower cost?

c) Can standardised parts be used?

d) Does the value provided by each feature justify its cost?

Step 4: Consideration of All the Alternatives.Following the analysis, this stage asks for innovations. A variety of options canbe devised and considered for analysis. This is the ‘new ideas’ stage of thestudy, and alternative options would mix ideas for eliminating unnecessaryparts or features or standardising certain components or features.

Step 5: Selection of the Least Cost Alternative.Comparing the costs (and all other aspects of value) of each alternative.Various optimization techniques and operations research methods may be usedfor the analysis of cost minimization.

Step 6: Recommendation.The VA/VE team at this stage recommends the preferred alternative andforwards the report to the decision makers for approval.

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Step 7: Implementation and follow-up.The next step of the analysis focuses on planning and co-ordination of anapproved and accepted value analysis proposal. The VA/VE team shouldreview the implementation and, wherever appropriate, improve the newproduct or method in the light of practical experience.

13.4.5 Benefits of Value AnalysisBy following value analysis approach, the company will be able to reap hugebenefits such as:

A reduction in costs without compromising quality

Improving product quality and attracting more customers

Increased sales might lead to economies of scale and either increaseprofits or reduce selling prices

The company may decide to increase selling prices if the quality hasimproved

Finally, it is important to know and note that value analysis is not an exactscience, and there is no single approach that fits all situations. Value analysis issimply one of the many tools and techniques available to organizations forbringing a balance or trade-off among costs, price and profit. Organizationsoften operate in a dynamic environment and need to accommodate theevolution of new products, new competitors, and changing economic situations.

SAQ – 13.2a) Write a detailed note on Value Analysis (VA)

b) Define the terms Value, Value Chain and Value Chain Analysis?Explain them.

c) Discuss Value Engineering (VE).

d) Explain different phases of VA/VE?

e) Describe Procedure of Value Analysis and Value Engineering.

f) List out the Benefits of Value Analysis.

ACTIVITY 13.2Visit a manufacturing/ service company and observe the apply value analysisprocess on the company. List out your observations.

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13.5 FUNCTION ANALYSIS SYSTEM TECHNIQUE (FAST)

The Function Analysis System Technique (FAST) helps thinking about theproblem objectively and in identifying the scope of the project by exhibitingthe logical relationships between functions. The organization of the functionsinto a function-logic, FAST diagram enables participants to identify of all therequired functions.

13.5.1 Objectives of FASTThe objectives of FAST diagram are

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to verify if, a proposed solution achieves the needs illustrate how to achieve the needs of the project, and

to identify unnecessary, duplicated or missing functions.

13.5.2 Function AnalysisFunctional analysis is similar to VA/VE analysis. The basic difference is thatthe VE focuses on the development stage of a new product, but FAST uses thefunctions of a product (or service) as the basis for cost management.

Definitions“Functional analysis is concerned with improving profits by attempting toreduce costs and/or by improving products by adding new features in a costeffective way that are so attractive to customers that profits actually increase”.

“Functional analysis is an analysis of the relationship between productfunctions, their perceived value to the customer and their cost provision”.

An Example of Functional AnalysisThis case refers to the days of telecoms industries at the forefront of telephonemanufacture, sales, and inventing new telephones and telephone exchanges.When a new telephone was developed, and before production took place, atarget cost exercise was undertaken by the marketing team to establish whatthe customer would be willing to pay, and working backwards, the companycould establish a target cost. At this stage a functional analysis exercise wasundertaken. A complete breakdown was made of the product, in particular,listing all the functions the telephone would perform, and a second, moredetailed research investigation was undertaken to establish and identify theimportance the customer attached to each feature/function of the telephone. Itwas pointless including “nice to have” features that customers did not value,did not use, and were not prepared to pay for. When the exercise wascompleted the unnecessary features were removed and an overall target costwas calculated. What the company was doing was establishing a ‘use value’ asopposed to simply catering for the few customers who were prepared to paythe higher price for ‘esteem value’. The company was placing a cost of theprovision the customer wanted and valued. As with value analysis, a systemicapproach needs to be followed by a company adopting a functional analysisexercise.

13.5.3 Procedure of Functional AnalysisThe technique could involve:

Step 1: Select the object of analysis (Product/Service or Overhead)If it is not a new product, the better is to choose a high volume product with acomplex design and relatively large production cost. Other reasons forselecting a particular product might include apparently high cost, low yieldrates, manufacturing problems, market demand (such as remodelling required)or a need for a more compact design. The product selected will determine theprecise objective of the analysis exercise (reduce weight by 25%, reduce costby 30% while maintaining the existing level of quality).

Step 2: Choose members for the team.There no hard and fast rule for the number of members in the team. Less thanfive members is too less for obtaining sufficient number of ideas and alsosuffers myopic judgment. More than ten is too large and decision makingbecomes difficult. It resembles an octopus for moving further. So, usually it is

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better to form a group with six to eight (6 to 8) members from a number ofdifferent departments (such as accounting, production, purchasing, engineering,design and marketing).

Step 3: Collect information.This stage is the spine of the analysis. At this step, the information from bothsides (i.e. inside and outside) of the organization is collected. The informationand data that are collected often constitute the following.

Information from inside the organisation:

detailed design, material specification material properties manufacturing process and marketing information) and

Information from outside the organisation

information about new technologies, market survey report, customer complaints trends and changing environment

Step 4: Define the functions of the object.The various functions of the product should be defined in terms of a verb and anoun.

For example:

A mobile smart phoneThe major function: The main function can be described as talk to the peoplefar away from any place. So, it is now stated as –

The Main Function:‘To talk to the people far away’The Supporting Functions:These, in turn are many. However, these may be classified into secondary,tertiary and so on. One such way is given below

Secondary Functions:Photography (camera), messaging, mailing, data storage, money transfer, etc.

Tertiary Functions:Calculator, watch, timer, alarm, data transfer, data search, news andinformation flow, chat etc.

Step 5: Draw a functional family tree.The functions identified in step 4 should be arranged in a logical order in afamily-tree diagram. A table illustrating the relationship between the functionsand the parts of the product, as well as relevant existing costs, should also bedrawn up. The improved version of this exercise is known as FAST diagram.We shall discuss about the FAST Diagram in the next section afterunderstanding the procedure of functional analysis.

Step 6: Evaluate the functions.

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Estimate or calculate the relative value of each function to a total target costfrom the customers’ point of view (either using market research or by eachmember of the team placing values and a consensus being reached for eachfunction). These relative values provide a target cost for each function. Thosefunctions where the actual cost is greater than the assigned target cost shouldbe highlighted as potential problem functions. Of course, the absolute amountof money involved should also be taken into consideration.

Step 7: Suggest alternatives and compare with the target cost.Alternatives might include the use of new materials or parts, a differentmethod of manufacturing, suggestions for completely new products or newproduct functions, modifications to the functions of the product, thecombination of different functions or even the elimination of certain functions.

Step 8: Choose the alternatives for manufacturing.Various alternatives obtained from the evaluations in above step, it is the mostimportant point that counts on decision making. Assessing the alternatives andchoosing which to implement is not an easy task as those of the earlier tasksbecause this activity unlike the others, is filled with more responsibility andaccountability. Therefore, it should have a judicious thinking and backed up bythe evidential support or proper justification.

Step 9: Review the actual results.After taking a decision and implementing the best suitable alternative, it shouldbe given sufficient time to produce results. An audit or review of the changesimplemented should be conducted promptly and findings reported to seniormanagement. It should not have any prejudices. Moreover, this will preventover-optimistic assessments of the functional analysis exercise and providefeedback to improve future functional analysis.

Finally, the functional analysis exercise can result in a cost-effective designand will ultimately produce in an improved competitive advantage. As 90% ofa product’s life cycle cost is determined at the decision stage of the product, itis essential that the tightest control is exercised at the design stage.

13.5.4 ApplicabilityAs a general rule, this exercise can be conducted with the principles of

value engineering and function analysis for new products value analysis for existing products

Further, the three most important messages for companies providing productsor services are:

1. Do not produce a product/service that the customer does not want

2. Do not include features that are not required

3. Do not produce in the hope that someone will buy.

13.6 FUNCTION ANALYSIS SYSTEM TECHNIQUE (FAST)DIAGRAM

It is a graphical representation showing the logical relationships between thefunctions of a project, product, materials, process or service based on theappropriate questions of the 5W1H analysis (What, Who, When, Where, Why,and How). The questions of ‘Who’, ‘What’ and ‘Where’ are already answered

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at the problem selections stage while the remaining three questions that are tobe answered are:

How?

Why? and

When?

These are considered important here. Refer figure 13.2, which helps indescribing the logical relationships during the 5W1H analysis.

Fig. 13.2: Logical relationship diagram to develop 5W1H analysisThe Function Analysis System Technique (FAST) diagram is usually preparedin a workshop setting and led by someone with experience in preparing FASTdiagrams. Input for the diagram is received from workshop participants.

Three key questions addressed in a FAST Diagram are:

How do you attain the functional objective? Or, How do you achievethis function?

Why do you perform this function?

When you perform this function, what other functions must you do?

The following diagram illustrates how a function is expanded in "How" and"Why" directions in a FAST diagram.

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Fig.13.3: Developing a FAST DiagramSteps in constructing the FAST DiagramStart with the Functions as identified using Function Analysis (explained theprevious section) and then referring the above diagram Fig no. 13.3, follow theprocedure prescribed below:

Expand the functions in the "How" and "Why" directions: Build along the "How" path by asking 'how is the function achieved'?

Place the answer to the right in terms of an active verb and measurablenoun.

Test the logic in the direction of the "Why" path (right to left) byasking 'why is this function undertaken?'

When the logic does not work, identify any missing or redundantfunctions or adjust the order.

To identify functions that happen at the same time, ask "when thisfunction is done, what else is done or caused by the function?"

The higher order functions (functions towards the left on the FASTDiagram) describe what is being accomplished and lower orderfunctions (functions towards the right on the FAST Diagram) describehow they are being accomplished.

"When" does not refer to time as measured by a clock, but functionsthat occur together with or as a result of each other.

Example Fast Diagram: Mouse TrapObserve the following FAST diagram for a mouse trap using the how and whylogic as described above.

Figure 13.4: FAST Diagram13.6.1 BENEFITS OF FASTThe development of a FAST diagram is a creative thought process whichsupports communication between team members.

The development of a FAST diagram helps teams to:

Develop a shared understanding of the project

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Identify missing functions. Define, simplify and clarify the problem.

Organize and understand the relationships between functions.

Identify the basic function of the project, process or product.

Improve communication and consensus.

Stimulate creativity.

13.6.2 DRAWBACK OF FASTThe basic drawback of the FAST diagram is that, there is no ‘perfect’ or'correct' FAST diagram, but there is a valid method of representing the logicsin a diagram. The validity of a FAST model for a given situation depends onknowledge and scope of the workshop participants. The FAST diagram aidsthe team in reaching consensus on their understanding of the project.

SAQ – 13.3a) What is Function Analysis System Technique (FAST)?

b) What are the objectives of Function Analysis System Technique(FAST)?

c) Explain Functional analysis with an example.

d) List out the steps involved in the Functional analysis and explain them.

e) Describe Function Analysis System Technique (FAST) diagram withan example.

f) Briefly explain the steps used in constructing the FAST Diagram.

g) Discuss the benefits and drawback of the FAST diagram.

ACTIVITY 13.3Can you think of other ways to achieve the basic function of kill mouse or thehigher order function to eliminate mice?

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13.7 VALUE CHAIN ANALYSIS

The Value Chain is a business management concept, first proposed andpopularized by Michael Porter in his 1985 best-seller, Competitive Advantage:Creating and Sustaining Superior Performance. Since then, this frameworkhas been used as a powerful analysis tool for the strategic planning of anorganization to develop its sustainable competitive advantage. It aims tomaximize value creation while minimizing costs.

13.7.1 The Concept of Value ChainAll organizations consist of chain of activities such as purchasing,manufacturing, distribution and marketing etc. that link together to develop thevalue of the business, and together these activities form the organization’svalue chain.

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The value chain framework of Michael Porter (1990) is “an interdependentsystem or network of activities, connected by linkages”. When the system ismanaged carefully, the linkages can be a vital source of competitive advantage.The competitive advantage of an organization depends on its ability to performthe crucial activities along the value chain better than its competitors.

A diamond cutter, as a profession, can be used to illustrate the difference ofcost and the value chain. The cutting activity may have a low cost, but theactivity adds much of the value to the end product, since a rough diamond issignificantly less valuable than a cut diamond.13.7.2 Levels of Value ChainFirm LevelA value chain is a chain of activities for a firm operating in an industry. Notthe divisional or corporate level, but the business unit is the most appropriatelevel for construction of a value chain where products pass through allactivities of the chain in order and at each activity the product gains somevalue. The chain of activities gives the products more added value than thesum of the independent activity's value. It is important not to mix the conceptof the value chain with the costs occurring throughout the activities. Typically,the described value chain and the documentation of processes, assessment andauditing of adherence to the process routines are at the core of the qualitycertification such as ISO 9000 of the business.

Industry LevelAn industry value chain is a physical representation of the various processesthat are involved in producing goods (and services), starting with raw materialsand ending with the delivered product (also known as the supply chain). It isbased on the notion of value-added at the link level. The sum total of link-levelvalue addition yields total value.

13.7.3 Source of Information for Value Chain AnalysisSources for finding information on value chain analysis include three yearsannual reports of the particular company and its key competitors, SWOT andPEST analyses, company websites, journal articles, and other reputed trademagazines etc. Use of other planning tools and techniques like Porter’s genericstrategies, analysis of critical success factors etc. is suggested in conjunctionwith the value chain framework for a more comprehensive analysis of acompany’s strategic planning.

13.8 The Activities of Value Chain AnalysisThe value chain analysis essentially entails the linkage of two areas. Firstly,the value chain links the value of the organizations’ activities with its mainfunctional parts. Then the assessment of the contribution of each part in theoverall added value of the business is made. In order to conduct the valuechain analysis, the company is split into primary and support activities.Primary activities are those that are related with production, while supportactivities are those that provide the background necessary for the effectivenessand efficiency of the firm. The costs and value drivers are identified for eachvalue activity.

The "Primary Activities"

Inbound > Operations > Outbound > Marketing > Service

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Logistics (Production) Logistics & Sales(Demand)

The "Support Activities"

Infrastructure >HumanResourceManagement

> Technology (R&D) > Procuremen

t

Figure 13.5: Primary and Secondary Activities of VCAThe primary and secondary activities of the firm (refer figure 13.5) arediscussed in detail below.

13.8.1 PRIMARY ACTIVITIESThe primary activities (Porter, 1985) of the company are explained in theparagraphs to follow (refer figure 13.6):

1. Inbound logistics: These activities are concerned with receiving thematerials from suppliers, storing these externally sourced materials,and handling them within the firm.

2. Operations: These are the activities related to the production ofproducts and services. This area can be split into more departments incertain companies. For example, the operations in case of a hotelwould include reception, room service etc.

3. Outbound logistics: These are all the activities concerned withdistributing the final product and/or service to the customers. Forexample, in case of a hotel this activity would entail the ways ofbringing customers to the hotel.

4. Marketing and sales: This functional area essentially analyses theneeds and wants of customers and is responsible for creatingawareness among the target audience of the company about the firm’sproducts and services. Companies make use of marketingcommunications tools like advertising, sales promotions etc. to attractcustomers to their products.

5. Service: There is often a need to provide services like pre-installationor after-sales service before or after the sale of the product or service.

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13.8.2 SUPPORT ACTIVITIESThe support activities of a company include the following:

1. Procurement: This function is responsible for purchasing the materialsthat are necessary for the company’s operations. An efficient procurementdepartment should be able to obtain the highest quality goods at the lowestprices.

2. Human Resource Management: This function is concerned withrecruiting, training, motivating and rewarding the workforce of thecompany. Human resources are increasingly becoming an important way ofattaining sustainable competitive advantage.

3. Technology Development: This is an area that is concerned withtechnological innovation, training and knowledge that is crucial for mostcompanies today in order to survive.

4. Firm Infrastructure: This includes planning and control systems, such asfinance, accounting, and corporate strategy etc.

Porter used the word ‘margin’ for the difference between the total value andthe cost of performing the value activities (see Figure). Here, value is referredto as the price that the customer is willing to pay for a certain offering. Otherscholars have used the word ‘added value’ instead of margin in order todescribe the same. The analysis entails a thorough examination of how eachpart might contribute towards added value in the company and how this maydiffer from the competition.

Summary Table of VCA Activities

Primary Activities

Field Activities

Inbound logistics receipts, warehousing and inventorycontrol of input materials

Operations(Production)

the value-creating activities that transformthe inputs into the final product

Outbound logistics warehousing, order fulfilment, distribution,installation etc

Marketing & Sales getting buyers, including channel selection,advertising, pricing, etc.

Services Maintain/enhance the product's value suchas customer support, repair services, etc

Support Activities

Field Activities

Procurement purchasing the raw materials and other

Fig13.6: The Value Chain AnalysisSource: Porter (1985)

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inputs

TechnologyDevelopment

research and development, processautomation, and other technologydevelopments

Human ResourceManagement

recruiting, training and compensation ofemployees

Firm Infrastructure finance, legal, quality management

13.8.3 ApplicationsThe value chain framework quickly made its way to the forefront ofmanagement thought as a powerful analysis tool for strategic planning. Thevalue-chain concept has been extended beyond individual firms. It can apply towhole supply chain and distribution networks. The delivery of a mixof products and services to the end customer will mobilize different economicfactors, each managing its own value chain. The industry wide synchronizedinteractions of those local value chains create an extended value chain,sometimes global in extent. Porter terms this larger interconnected system ofvalue chains the "value system". A value system includes the value chains of afirm's supplier (and their suppliers all the way back), the firm itself, the firmdistribution channels, and the firm's buyers (and presumably extended to thebuyers of their products, and so on).

The new approach taken by many management strategists is capturing thevalue generated along the chain. For example, a manufacturer might require itsparts suppliers to be located nearby its assembly plant to minimize the cost oftransportation. By exploiting the upstream and downstream informationflowing along the value chain, the firms may try to bypass the intermediariescreating new business models, or in other ways create improvements in itsvalue system.

Value chain analysis has also been successfully used in large PetrochemicalPlant Maintenance Organizations to show how Work Selection, Work Planning,Work Scheduling and finally Work Execution can (when considered aselements of chains) help drive Lean approaches to Maintenance. TheMaintenance Value Chain approach is particularly successful when used as atool for helping Change Management as it is seen as more user friendly thanother business process tools.

Value chain analysis has also been employed in the development sector as ameans of identifying poverty reduction strategies by upgrading along the valuechain. Although commonly associated with export-oriented trade, developmentpractitioners have begun to highlight the importance of developing nationaland intra-regional chains in addition to international ones.

13.8.4 Limitations of Value Chain AnalysisOne of the limitations of the value chain model is that it describes an industrialorganization which essentially buys raw materials and transforms these intophysical products. Notably, at the time when the model was introduced (Porter,1985), service industries in the western countries employed lesser workforcecompared to today’s statistics of the same. Academics and practitioners alikehave critiqued the model and its applicability in the context of service

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organizations such as universities, educational institutions, hospitals etc.Partnerships, alliances and collaboration along with differentiation and lowcosts are common drivers of value today.

The limitations of the model include the fact that ‘value’ for the final customeris the value only in its theoretical context, and not practical terms. The realvalue of the product is assessed when the product reaches the final customer,and any assessment of that value before that moment is only something that istrue in theory. Despite this limitation, analysts can effectively use the valuechain model to determine the value to the final customers in a theoretical way.Use of other planning tools and techniques like Porter’s generic strategies,analysis of critical success factors etc. is recommended in conjunction with thevalue chain framework for a more comprehensive analysis of a company’sstrategy and planning.

13.9 VALUE REFERENCE MODEL (VRM)

QUICK REFERENCE GUIDE – V3R0Value Reference Model (VRM) is developed by the trade consortium ValueChain Group to offer an open source semantic dictionary for value chainmanagement encompassing one unified reference framework representing theprocess domains of product development, customer relations and supplynetworks. The integrated process framework guides the planning, modelling,design, and measurement of business performance.

The Value Chain Group claims VRM to be next generation Business ProcessManagement that enables value reference modelling of all business processesand provides product excellence, operations excellence, and customerexcellence.

The Six business functions of the VRM are:

1. Research and Development

2. Design of Products/Services or Processes

3. Production

4. Marketing & Sales

5. Distribution

6. Customer Service

The value chain framework has been used as a powerful analysis tool fororganizational strategic planning for nearly two decades now to identifying andunderstanding crucial aspects of a company to achieve competitive strengthsand core competencies in the marketplace. The model is built by the 5-primaryvalue chain activities (Inbound, Operations, Outbound, Marketing and services)and 4-support activities (Infra structure, HRM, Technology and Procurement)that form an interdependent system but connected by linkages. It is importantto determine strategies that focus on those activities that would enable thecompany to attain sustainable competitive advantage.

SAQ – 13.4a) What do you mean by value chain? What are the levels of value chain?

b) List out the primary and support activities used in Value ChainAnalysis?

c) Briefly explain the activities of value chain analysis.

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d) Explain the primary and support activities in detail.e) List out various areas where value chain can be applied and also

explain how it can be applicable in those areas.

f) Explain how to conduct a Value Chain Analysis?

g) Write the applications and limitations of Value Chain Analysis?

h) Describe the levels of Value Chain Analysis.

i) What are the pre-requisite that are needed to conduct Value ChainAnalysis?

j) What is Value Reference Model (VRM) and what are the businessfunctions of the VRM?

ACTIVITY 13.4Visit any manufacturing industry nearby you and observe the factors using toimprove the value of the products. Briefly summarize them below.

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Write an essay on the contributions of Michael Porter towards the modernmanagement thought.

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Discuss the applicability of Value Chain Analysis for Indian Industry.

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13.10 SUMMARY

Value is the most expected factor in any product. It has different perceptionslike customer perception and organization’s perception. Value Analysis is aplanned, scientific approach to cost reduction and thence the value addition toa product. Value Engineering is the application of value analysis to newproducts. Value engineering is “Redesign of an activity, product or service sothat value to the customer is enhanced while costs are reduced. According tothe principles of “Techniques of Value Analysis Engineering” there aredifferent phases of VA/VE such as Information Phase, Analysis Phase,Creativity Phase and Judgment Phase. Procedure of Value Analysis and ValueEngineering is discussed in the chapter. The Function Analysis SystemTechnique (FAST) helps thinking about the problem objectively and inidentifying the scope of the project by exhibiting the logical relationshipsbetween functions. FAST diagram is a graphical representation of the logical

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relationships between the functions of a project, product, materials, process orservice based on the appropriate questions of the 5W1H analysis (What, Who,When, Where, Why, and How). The Value Reference Modelling of allbusiness processes provides product excellence, operations excellence, andcustomer excellence.

13.11 KEYWORDS

Value: the qualities of the material such as high level performances,capabilities, emotional appeal, style, all compared to cost is commonly whatwe consider as value.

Value Analysis: It is a planned, scientific approach to cost reduction.Value engineering: “Redesign of an activity, product or service so that valueto the customer is enhanced while costs are reduced (or at least increased byless than the resulting price increase)”.

The Function Analysis System Technique (FAST): It helps thinking aboutthe problem objectively and in identifying the scope of the project byexhibiting the logical relationships between functions.

Functional analysis: It is concerned with improving profits by attempting toreduce costs and/or by improving products by adding new features in a costeffective way that are so attractive to customers that profits actually increase.

Value chain: It is an interdependent system or network of activities, connectedby linkages”. When the system is managed carefully, the linkages can be avital source of competitive advantage.

Value Reference Model (VRM): Value Reference Modelling of all businessprocesses provides product excellence, operations excellence, and customerexcellence.

13.12 FURTHER READINGS

[1] N.V.S.Raju. (2018), Operations Research, Theory and Practice, BSPublications, Hyderabad, India, and CRC Publication (A unit of Taylor&Francis) ISBN: 978-93-5230-190-4

[2] N.V.S.Raju. (2013), Industrial Engineering and Management, CengageLearning India Pt. Ltd, New Delhi, ISBN-13: 978-81-315-1948-6

[3] N.V.S.Raju. (2013), Plant Maintenance and Reliability Engineering,Cengage Learning India Pt. Ltd, New Delhi

[4] Buffa; E.S. (1990): Modern Production/Operations Management, WileyEasternLimited.

[5] Everett E. Adam, Jr and Ronald J. Ebert (1986): Productions andOperationsManagement: Concepts, Models and Behaviour, Prentice HallInternational.

[6] Sunil Chopra, Peter Meindi, D.V. Kalra, Supply Chain Management,Strategy, Planning and Operations, 6/e June 2016, Pearson EducationIndia

[7] Robert B. Handfield, Nichols, Introduction to Supply ChainManagement, Prentice Hall India Learning Private Limited; 1e , August2015

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UNIT – 14 WASTE MANAGEMENT – MUDAStructure14.1 Introduction

Objective14.2 History14.3 Challenges Of Waste Management

14.3.1 International Waste Movement: The Basel Convention14.3.2 Challenges In India And Other Developing Countries

14.4 Types Of Wastes14.5 The Waste Hierarchy14.6. Logistics Of Waste: Handling And Transport

14.6.1 Waste Handling Practices: Global Scenario14.6.2 Waste Segregation14.6.3 Financial Supports

14.7 Waste To Wealth (W2w)14.8 Reduce

14.8.1 Waste Minimization, Avoidance/ Reduction Methods14.8.2 Disposal methods: Landfill14.8.3 Incineration

14.9 Reuse / Recycling14.9.1 Stages of Recycling/Reuse14.9.2 Waste Material Collection: Kerbside or Single-Stream Recycling14.9.3 Acceptance of Waste Material14.9.4 Segregation of Materials: Types of Solid Waste Materials14.9.5 Biological reprocessing

14.10. Recover: Waste To Energy (W2e)14.10.1 Combustion14.10.2 Pyrolysis14.10.3 Gasification14.10.4 Process of Pyrolysis14.10.5 Resource Recovery

14.11 Outcomes Of Waste Management14.11.1 Economic Outcomes14.11.2 Social Outcomes14.11.3 Environmental Outcomes14.11.4 Inter-generational Equity Outcomes

14.12 Waste Valorisation14.13 Liquid Waste-Management14.14 MUDA – The Seven Wastes

14.14.1 Defects14.14.2 Overproduction14.14.3 Inventory14.14.4 Transportation14.14.5 Over-processing14.14.6 Waiting14.14.7 Motion

14.15. Summary14.16. Keywords14.17. Further Readings

14.1 INTRODUCTION

Waste management (or waste disposal) is one of the major challenges ofmaterials management because waste is also a kind of materials and itsmanagement includes the activities and actions required to manage from itsinception to its final disposal. This includes the collection, transport, treatmentand disposal of waste, together with monitoring and regulation of the wastemanagement process and waste-related laws, technologies, economicmechanisms.

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ObjectiveAfter studying this unit, you should be able to understand

What is waste and its logistics The waste management hierarchy The waste management strategies MUDA and seven wastes in industry

14.2 HISTORY

Throughout the history, the amount of waste generated by humans has beeninsignificant, perhaps due to low levels of population density and exploitationof natural resources. The common waste produced during pre-modern timescould be chiefly ashes and human biodegradable waste. These were recycledinto the ground locally, with minimum environmental impact. Further, theproducts were made mostly out of wood or metal and these were generallyreused or passed down to the generations.

With the industrialisation and the sustained urban growth of large populationcentres in England, the waste pile-up in the cities caused a rapid deteriorationparticularly in levels of sanitation and the general quality of urban life. Thestreets used to be choked with filth due to the lack of waste clearanceregulations. This urged to call for establishing a mechanism of a municipalauthority with waste removal powers during early 1750s, when CorbynMorris in London announced, "... as the preservation of the health of thepeople is of great importance, it is proposed that the cleaning of this city,should be put under one uniform public management, and all the filthbe...conveyed by the Thames to proper distance in the country".

However, the importance was recognized during the mid-19th century, whenincreasingly devastating cholera outbreaks occurred and the first legislation onthe issue emerged. The social reformer, Sir Edwin Chadwick's report in 1842,The Sanitary Condition of the Labouring Population was probably, influentialin for passing the first legislation aimed at waste clearance and disposal.

In the UK, the Nuisance Removal and Disease Prevention Act – 1846,installing the process of the provisions of regulated waste management inLondon. The Metropolitan Board of Works was the first citywide authority forcentralized sanitation regulation for the rapidly expanding city. Further,the Public Health Act-1875 made it mandatory for every household to depositthe weekly waste in "moveable receptacles" for disposal — the first conceptfor a dust-bin.

The dramatic increase in waste demanded for faster disposal that led to thecreation of the first incineration plants, which were then called, "destructors".In 1874, the first incinerator was built in Nottingham by Manlove, Alliott &Co. Ltd. to the design of Alfred Fryer. But, these were opposed strongly due tothe large amounts of ash produced that spread over the neighbouring areas.

Similar municipal systems of waste disposal came up in the 20th century inother large cities of Europe and North America. In 1895, New York City wasrecorded as the first U.S. city with public-sector garbage management.

The early garbage removal was simply done by an open bodied dump truckspulled by horses. They were motorized in the early 20th century and the firstclosed body trucks eliminated odours with a dumping lever mechanism in the

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1920s in Britain. Soon they were also equipped with 'hopper mechanisms'where the scooper gets loaded at floor level and then hoists mechanically todeposit the waste in the truck. The Garwood Load Packer was the first truck in1938, to incorporate a hydraulic compactor.

14.3 CHALLENGES OFWASTE MANAGEMENT

Of course, the waste transport within a country could be controlled by nationalregulations, but, the trans-boundary movement of waste posed the challenges.

14.3.1 International Waste Movement: The Basel ConventionThe hazardous waste was the major concern of many countries in the world,particularly in Europe. The Basel Convention, ratified by 172 countries,deprecates movement of hazardous waste from developed to less developedcountries. The provisions of the convention were integrated into the EU wasteshipment regulation. Radioactive waste, though considered hazardous, was nottaken under the jurisdiction of the Basel Convention.

14.3.2 Challenges in India and Other Developing CountriesWaste management practices are not uniform among countries(developed and developing nations); regions (urban and rural areas),and residential and industrial sectors can all take different approaches.

The most challenging part of waste management is lying with the countries ofdeveloping economies, such as India. These are often experiencing exhaustedwaste collection services, poor governance, inadequately managed anduncontrolled dumpsites, which are worsening the problem. It is an ongoingchallenge in these countries and cities due to weak organisations, chronicunder-resourcing and rapid urbanization. In addition to these challenges, thelack of understanding of different factors contributing to the hierarchy of wastemanagement, affect the treatment of waste.

In developing countries, such as India, the waste management activities areusually carried by poor, for their survival. It has been estimated that 2% ofpopulation in Asia, Latin America and Africa are dependent on waste for theirlivelihood. The waste management practices are often involved by familyorganized, or individual manual scavengers with very little supportive networkand facilities with increased risk of health effects. Further, their poverty ispreventing their children from further education. In addition, the participationlevel of most citizens in waste management is too low and particularly, theresidents in urban areas are not actively involved in the process of wastemanagement.

Proper management of waste is important for building sustainable and liveablecities, but it is still remaining a challenge for many developing countries andcities. A report found that effective waste management is relatively expensive,usually comprising 20%–50% of municipal budgets. Operating this essentialmunicipal service requires integrated systems that are efficient, sustainable,and socially supported. A large portion of waste management practices dealwith municipal solid waste (MSW) which is the bulk of the waste that iscreated by household, industrial, and commercial activity.

In a systematic review of global waste, its management and its impact onhuman health and life, it was concluded that about one fourth of all themunicipal solid terrestrial waste is not collected and another one fourth ismismanaged after collection, often being burnt in open and uncontrolled fires.Altogether, this is about one billion tons per year.

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It is also noticed that priority areas also lack a "high-quality research base",due to the absence of "substantial research funding", which is the need ofmotivated scientists often.

In some cases, waste can pose a challenging threat to human health. Healthissues are associated throughout the process of waste management. Healthissues can also arise indirectly or directly; directly, through the handling ofsaid waste, and indirectly through the consumption of water, soil and food.Waste is produced by human activity, for example, the extraction andprocessing of raw materials. Waste management is intended to reduce adverseeffects of waste on human health, the environment, planetary resourcesand aesthetics.

Yet another, the recent challenge is disposal of electronic waste (e-waste) thatincludes discarded computer monitors, motherboards, mobile phones andchargers, compact discs (CDs), headphones, television sets, air conditionersand refrigerators and so forth. According to the Global E-waste Monitor 2017,India generates approximately 2 million tonnes (MTe) of e-waste annually andranks fifth among the e-waste producing countries, after the US, China, Japanand Germany.

Measures of waste management need to consider integrated techno-economicmechanisms, effective disposal facilities, export and import control andoptimal sustainable design of products.

TechnologiesTraditionally, the waste management industry has been a late adopter of newtechnologies such as RFID (Radio Frequency Identification) tags, GPS andintegrated software packages which enable better quality data to be collectedwithout the use of estimation or manual data entry. This technology has beenused widely by many organizations in some industrialized countries. Radiofrequency identification is a tagging system for automatic identification ofrecyclable components of municipal solid waste stream.

14.4 TYPES OFWASTES

Based on the physical appearance, waste can be solid, liquid, or gaseous andeach type has different methods of disposal and management. Some authorseven include two more types as solidous (semi-solid or gel) and liquidous(vapour). However, depending on the characteristics of the waste inventorywhere and how it is produced, and the methods of its management, the wastescan be classified as

1. Industrial wastes2. Biological wastes3. Household wastes4. Municipal wastes5. Organic wastes6. Biomedical wastes7. Radioactive wastes

SAQ – 14.1a) What is waste management?b) Why is waste management important?c) How the waste management is one of the major challenges of

materials management?d) Explain the challenges of waste management?

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e) List out the different types of wastes.ACTIVITY 14.1Visit a manufacturing company which is nearby you. Observe the process ofwaste management in the company.

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14.5 THEWASTE HEIRARCHY

The waste hierarchy refers to the following "3Rs"

Reduce, Reuse and Recycle,

The above three basic principles classify the waste management strategiesdepending on their suitability in terms of waste elimination or minimisation.The waste hierarchy is the cornerstone of most waste minimization strategies.The objective of the waste hierarchy is to derive the maximum practicalbenefits from products and to generate the minimum amount of end waste(refer: resource recovery).

The waste hierarchy can be represented as a pyramid because the basic premiseis that policies should promote measures to prevent the generation of waste.Thus the first step is to reduce or restrict the generation of waste.

The second step or the next preferred action is to seek alternative uses for thewaste that has been generated i.e. by re-use.

The next step is to consider recycling which includes composting. Followingthis step is material recovery and waste-to-energy (often referred to as WtE orW2E).

The final action is disposal, in landfills or through incineration without energyrecovery. This last step is the final resort for waste which could not beprevented, diverted or recovered.

The waste hierarchy represents the progression of a product or materialthrough the sequential stages of the pyramid of waste management. Thehierarchy represents the latter parts of the life-cycle for each product. This isdiagrammatically shown in figure 14.1.

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Fig 14.1: The Waste HierarchyLife-Cycle of a Product Vs Waste HierarchyThe life-cycle begins with design, and proceeds through manufacture,distribution, and primary use and then follows through the waste hierarchy'sstages of reduce, reuse and recycle. Each stage in the life-cycle offersopportunities for policy intervention, to rethink the need for the product, toredesign to minimize waste potential, to extend its use. Product life-cycleanalysis is a way to optimize the use of the world's limited resources byavoiding the unnecessary generation of waste.

Resource EfficiencyResource efficiency reflects the understanding that global economic growthand development cannot be sustained at current production and consumptionpatterns. Globally, humanity extracts more resources to produce goods than theplanet can replenish. Resource efficiency is the reduction of the environmentalimpact from the production and consumption of these goods, from final rawmaterial extraction to the last use and disposal.

Polluter-Pays Principle

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The polluter-pays principle mandates that the polluting party pays for theimpact on the environment. With respect to waste management, this generallyrefers to the requirement for a waste generator to pay for appropriate disposalof the unrecoverable material.

14.6 LOGISTICS OF WASTE: HANDLING ANDTRANSPORT

Moulded Wheeled Plastic Waste-BinWaste collection systems vary widely among different countries and regions.One of the most common waste collection systems uses the Moulded WheeledPlastic Waste Bin (see fig.14.2*) Domestic waste collection services are oftenprovided by local government authorities, or by private companies forindustrial and commercial waste. Some areas, particularly those in underdeveloped countries, do not have formal waste-collection systems.

Fig 14.2: Waste Bin14.6.1 Waste Handling Practices: Global ScenarioCurb-side collection is the most common method of disposal in most Europeancountries, Canada, New Zealand, United States, and many other parts of thedeveloped world where waste is collected at regular intervals by specialisedtrucks. This is often associated with curb-side waste segregation.

In some countries such as Europe and North America, vacuum collection isused in which waste is transported from the home or commercial premises byvacuum along small bore tubes.

In rural areas, waste is collected and taken to a transfer station with anappropriate disposal facility.

In some areas unsegregated waste is collected at the curb-side or from wastetransfer stations and then sorted into recyclables and unusable waste. Suchsystems are capable of sorting large volumes of solid waste, salvagingrecyclables, and turning the rest into bio-gas and soil conditioner.

The local government of San Francisco, in support of its goal of "ZEROWASTE BY 2020", imposed its Mandatory Recycling and CompostingOrdinance , mandating everyone in the city to maintain "Fantastic 3" binsystem (Blue for recyclables, Green for compostables, and Black for landfill-bound materials) provided to residents and businesses and serviced by SanFrancisco's sole refuse hauler, Recology. The three streams are collected with

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the curb-side. The city's "Pay-As-You-Throw" system charges customers bythe volume of landfill-bound materials, which provides a financial incentive toseparate recyclables and compostables from other discards. The ‘Zero Wasteby 2020’ Program by the Department of the Environment in the city achieved80% diversion, the highest diversion rate in North America.

In India, the 2-bin system (Green for Wet and Blue for Dry Waste) and thecollection of wet waste and dry waste through motored trucks is implemented.

14.6.2 Waste SegregationThis is the activity of separating of wet waste and dry waste. The idea is torecycle dry waste easily and to utilize wet waste as compost. When segregatingwaste, the amount of waste that gets land-filled reduces considerably, therebyreducing the pollution of air and water. Most important here is that the wastesegregation should be done based on the type of waste and the mostappropriate treatment and disposal. This also eases application of differentprocesses to the waste, like composting, recycling and incineration. One wayto practice waste management is to ensure there is awareness. The process ofwaste segregation should be explained to the community.

Institutions/Government should make it as easy as possible for their staff tocorrectly segregate their waste. This can be sought by proper labelling,ensuring sufficient accessible bins and clearly indicating why segregation is soimportant. Labelling is more important particularly, when dealing with nuclearwaste due to its harmful effects to human health. Recommended colour codingof containers

Yellow - for infectious waste Brown - for chemical and pharmaceutical waste Black - for general waste

Segregated waste can provide the advantages in the following dimensions.

cheaper and easy way to dispose of reduced manual sorting as compared to that of mixed waste less legal obligations, cost savings protection of human health and the environment safety

14.6.3 Financial SupportsIn many countries, domestic waste disposal is funded from a national or localtax which may be obtained from income tax or property tax. Commercial andindustrial waste disposal is typically charged for as a commercial service, oftenas an integrated charge which includes disposal costs. This practice mayencourage disposal contractors to opt for the cheapest disposal option such aslandfill rather than the environmentally best solution such as re-use andrecycling.

The governments usually encourage projects on solid waste management andoften come forward for financing, because it is seen as an important servicerendered to the citizens. Several Government organizations (such as UGC,DST in India), donors and grants are a funding mechanism depending on theinterest of the donor organization as much as it is a good way to develop acity's waste management infrastructure, attracting and utilizing grants is solelyreliant on what the donor considers as important.

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In some areas like Taipei, the city government charges its households andindustries for the volume of rubbish they produce. Waste is collected by thecity council only if it is put in government issued rubbish bags. This policy hasbeen quite fruitful in reducing the volume of waste the city produces andincreased the recycling rate and generate funds also.

The World Bank finances and advises on solid waste management projectsusing a diverse suite of products and services, including traditional loans,results-based financing, development policy financing, and technical advisory.World Bank-financed waste management projects usually address the entirelifecycle of waste right from the point of generation to collection andtransportation, and finally treatment and disposal.

SAQ – 14.2a) Discuss the waste hierarchy in detail.b) Explain handling and transportation methods of waste.c) Briefly explain different strategies used to collect and transport the

waste.d) Why is Waste Segregation done? What are its advantages?e) How should the Institutions/Government make their staff to segregate

their waste correctly?f) Why is the financial support given to domestic waste disposal?

ACTIVITY 14.2Observe municipal waste collection vehicle. Enquiry them why they collect thewet waste and dry waste separately.

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Visit a hospital and observe the waste collecting containers or bags. Ask thestaff the reason behind using the different colours. Enquiry them what happensif they don’t use recommended colour coding of containers in the hospital.Write your understanding here.

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14.7 WASTE TOWEALTH (W2W)

There is no item useless on this world. Every matter or material has some useand its own identity and utility if it exists. Its existence itself is evidence of thisfact. The intelligence of the manager lies in finding the right utility of thematerial may it be fresh new product or used product or the so called waste.Thus, waste can be converted to wealth.

To see the wealth in waste, the waste management can use the followingstrategies

1. Reduce2. Reuse or Recycle

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3. RecoverThe first strategy is to produce zero waste. When this is impossible, we try tominimize the waste. If this is also not possible, then we think of reusing it orrecycle it. Further, if it is not reusable or not recyclable and we may next thinkto recover some utility or energy. We hall discuss these strategies in detail now.

14.8 REDUCE

Reducing refers to lowering or minimizing the waste generation if not totallyeliminated.

14.8.1 Waste Minimization, Avoidance/ Reduction MethodsFirst and foremost strategy of waste management for anybody is the preventionof waste material being created, also known as waste reduction. WasteMinimization focuses on reducing the quantity of harmful and/or hazardouswastes through a thorough application of innovative or alternative procedures.

Some methods of avoidance or reducing the waste could be

reuse of second-hand products, repairing broken items instead of buying new ones, designing products to be refillable or reusable (such as cotton instead of plastic shopping bags), encouraging consumers to avoid using disposable products (such

as disposable cutlery), removing any food/liquid remains from cans and packaging, and designing products that use less material to achieve the same

purpose (for example, light-weighting of beverage cans)

14.8.2 Disposal methods: LandfillLandfill has been easy and the most common method of organized wastedisposal and is remaining so in many places around the globe.

The landfill is a site for the disposal of waste materials by burial. Of course,landfill is the oldest conceptual method of waste treatment by dumping in pitsat a outhouse or a place away from regular movements. Historically, refusewas simply left in piles or thrown into pits. May be, the burial of the waste ismodern. Landfills must be open and available to users every day. While themajority of its customers are municipalities, commercial and constructioncompanies, residents are also allowed to use the landfill in most cases.

14.8.3 IncinerationIncineration is a disposal method in which solid organic wastes are subjectedto combustion so as to convert them into residue and gaseous products.Incineration can be carried out in various ranges, on a small range byindividuals and on a large range by industry.

In many traditions there is a day in a year, particularly dedicated toincineration of waste and useless materials. For example, in Hindu traditions, anight before Holi, the festival of colours, a HOLY fire is performed in whichall the wastes, unused and old materials (usually made up of wood in oldendays) are burnt. In some parts of of India, the holy fires are performed even onfestivals like Bhogi, Dhuni, Dussera, Lohri etc. where the old useless wastematerials are incinerated.

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This method is very useful for disposal of both municipal solid waste and solidresidue from waste water treatment. About 80 to 95% by volumes of solidwaste can be reduced by this process.

Incinerations are often described as "thermal treatment" since these are hightemperature waste treatment systems, which convert waste materialsinto heat, gas, steam, and ash.

It is used to dispose of solid, liquid and gaseous waste. It is identified andbelieved as the best and practically feasible method of disposing ofcertain hazardous waste materials (particularly biological medical waste).

In the countries where land is scarce (e.g.Japan), the incineration is the onlyoption, since the facilities generally do not require as much area as landfills.

Waste-to-Energy (WtE) or Energy-from-Waste (EfW) or Waste to Wealth(W2W) are broad terms for facilities that burn waste in a furnace or boiler togenerate heat, steam or electricity. However, there is a controversy on thismethod of waste disposal, due to issues and problems associated with emissionof gaseous pollutants including substantial quantities of oxides of carbon,nitrogen and sulphur (COx, NOx and SOx).

Further, the combustion process in an incinerator is not always perfect andthence, it raises the worries regarding pollutants in gaseous emissionsproduced from incinerator stacks. More particularly, focus is on verypersistent organic compounds produced such as dioxins, furans, and PAHs,which have serious impact on environment. Further, some heavy metals suchas mercury and lead may get volatilised in the combustion process.

14.9 REUSE / RECYCLING

Recycling, as the name suggests is a resource recovery process that refers tothe collection and reuse of waste materials e.g. bottles, empty beveragecontainers. This process is carried out in the following four stages,

14.9.1 Stages of Recycling/ReuseStage 1: Collection of waste materialStage 2: Segregation or categorizationStage 3: Breaking down or mutilatingStage 4: Regenerating or RemakingStage 5: Reusing or Realizing

14.9.2 Waste Material Collection: Kerbside or Single-Stream RecyclingMaterials to be recycled may be collected separately from general waste usingdedicated bins and collection vehicles. This procedure is called kerbsidecollection. In some communities, the producer of the waste is asked to separatethe materials into different bins (e.g. for paper, plastics, glass and metals) priorto its collection. In other communities, all recyclable materials are placed in asingle bin for collection, and the sorting is handled later at a central facility.The latter method is known as "single-stream recycling."14.9.3 Acceptance of Waste MaterialThe type of material accepted for recycling varies from city to city and countryto country owing to different recycling programs and practices. However, thevariation in acceptance can be understood from the resale value of the materialafter reprocessing. The acceptance of these materials can even affect the globaleconomies also. One good example is; in July 2017, the China announced an

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import ban of 24 categories of recyclables and solid waste, including plastic,textiles and mixed paper. This caused tremendous impact globally, ondeveloped countries who exported directly or indirectly to China.

14.9.4 Segregation of Materials: Types of Solid Waste MaterialsThe following are the most common consumer products asked in kerbsidecollection which can be recycled or reused (the list under each category is notexhaustive). Such collected material are often segregated into the variouscategories are listed below.

Metallic type

aluminium such as beverage cans, copper such as wire, copper winding iron material such as old furniture/equipment, steel from food/aerosol cans, utensils

Plastic type

rubber tyres, mats leather material polyethylene and PET bottles, PVC, LDPE, PP, and PS (see resin identification code)

Paper type

paper board cartons, newspapers, magazines, notebooks and light paper, packing papers, used decoration paper corrugated fibre board boxes

Glass/Ceramic type

glass bottles and jars, broken glass tumblers Beverage (beer/whisky etc), Cool drink/soft drink bottles, Burnt electric bulbs/tubes, mirrors, table glass etc. Broken cups/saucers/jars, ceramic metrials

Textile type

Jute/fibre bags, cement bags Used bed sheets, curtains, Used/torn out cloths, dresses Used school bags, uniforms etc.

Complex materials

Electronic gadgets, part and components Computer peripherals, components Products of combinations of the above

Most of the items may be composed of a single type of material, making themrelatively easy to recycle into new products. But, the recycling of complexproducts (such as computers and electronic equipment) is more difficult, due tothe additional dismantling and separation required. Sometimes they areimpossible or infeasible or uneconomic to recycle.

There are several benefits of recycling. Moreover, with the advent of newtechnological advancements, even more materials are recyclable and morekinds of materials are taking birth, perhaps, rising a hope to clean up theEarth.

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Recycling is beneficiary in for not only the environmental sustenance but alsoenhances the economy. The materials from which the items are made can beproduced into new products.

14.9.5 Biological reprocessingMaterials that are organic in nature are recoverable. Such materialsinclude plant material, food scraps, and paper/wood products etc. These can berecovered through composting and digestion processes by decomposing theorganic matter.

Results of RecyclingThe resulting organic material is then recycled as

mulch or compost for agricultural or landscaping purposes. gas from the process (such as methane) for generating electricity generating heat (CHP/ cogeneration) as fuel

There are different types of composting and digestion methods andtechnologies. They vary in complexity from simple home compost heaps tolarge scale industrial digestion of mixed domestic waste.

Methods of Biological ReprocessingThe different methods of biological decomposition are classified as

aerobic methods or anaerobic methods hybrid methods

The anaerobic digestion of the organic fraction of solid waste is moreenvironmentally effective as compared to landfill, or incineration. Theobjective of biological processing in waste management is to control andaccelerate the natural process of decomposition of organic matter.

SAQ – 14.3a) List out the strategies to see wealth in waste.b) What does the word ‘REDUCE’ indicate?c) Explain the strategies involved in ‘REDUCE’.d) Write the Waste Minimization, Avoidance/ Reduction Methods.e) Briefly discuss Disposal methods.f) What is Incineration? Explain.g) Describe the different stages of Recycling/Reuse.h) What is kerbside collection?i) How does the Acceptance of Waste Material become a global issue?j) Explain Segregation of Materials in detail.k) What is Biological reprocessing?l) State the Results of Recycling.m) Write the Methods of Biological Reprocessing.

ACTIVITY 14.3How is Waste to Wealth (W2W) possible in your vicinity? Explain it with anexample by considering the above discussed strategies.

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14.10 RECOVER: WASTE TO ENERGY (W2E)

Energy recovery from waste is the conversion of non-recyclable wastematerials into usable heat, electricity, or fuel through a variety of processes aslisted below

combustion, gasification, pyrolysis or pyrolyzation anaerobic digestion, and landfill gas recovery.

This process is often referred to as waste-to-energy or W2E, which accountsfor 16% of global waste management.

14.10.1 CombustionWaste to Energy (W2E) recovery is in fact a part of the non-hazardous wastemanagement hierarchy. Conversion of non-recyclable waste materials intoelectricity and heat, means generation of renewable energy source and canlower the carbon emissions by offsetting the need for energy from fossilsources as well as reduce methane generation from landfills.

The energy content of waste products can be extracted directly by combustionas direct fuel, or indirectly by processing them into another type of fuel.Thermal treatment ranges from using waste as a simple fuel source (forcooking/heating/gas fuel) to fuel to generate steam for boilers and electricity ina turbine.

14.10.2 PyrolysisPyrolysis and gasification are two more forms of thermal treatment wherewaste materials are heated to high temperatures with limited oxygen supply.The process is normally carried out in a sealed vessel under high pressure.

Pyrolysis of solid waste converts the material into solid, liquid and gasproducts. The liquid and gas can be burnt to produce energy or refined intoother chemical products (chemical refinery).The solid residue (char) can befurther refined into products such as activated carbon.

14.10.3 GasificationGasification and advanced Plasma arc gasification are the processes ofconverting organic materials directly into a synthetic gas (syngas) composedof carbon monoxide and hydrogen, which in turn can then be burnt to produceelectricity and/or steam.

14.10.4 Process of PyrolysisPyrolysis is often used for conversion of many kinds of domestic and industrialresidues into a recovered fuel. Different types of waste input (such as plantwaste, food waste, tyres) placed in the pyrolysis process potentially yield analternative to fossil fuels. It is a process of thermo-chemical decomposition oforganic materials by heat in the absence of stoichiometric quantities of oxygen;the decomposition produces various hydrocarbon gases. During pyrolysis, the

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molecules of object vibrate at high frequencies to an extent that molecules startbreaking down. The rate of pyrolysis increases with temperature. In industrialapplications, temperatures are above 430°C (800°F). Slow pyrolysis producesgases and solid charcoal. Pyrolysis of waste wood and plastics can potentiallyproduce fuel. The solids left from pyrolysis contain metals, glass, sand andpyrolysis coke which does not convert to gas.

Compared to the process of incineration, certain types of pyrolysis processesrelease less harmful by-products that contain alkali metals, sulphur, andchlorine. However, pyrolysis of some waste produces gases which can impactthe environment such as HCl and SO2.

14.10.5 Resource RecoveryResource recovery is the systematic diversion of waste, which was intended fordisposal, for a specific next use. It is the processing of recyclables to extract orrecover materials and resources, or convert to energy. These activities areperformed at a resource recovery facility.

Examples:

1. Wood chippings in pallets and other packaging materials can berecycled to useful products for horticulture.

2. The recycled chips can cover paths, walkways, or arena surfaces.3. Many items thrown away, consists of metallic components, are

recycled to create a profit, such as the components in circuit boards.4. The composite materials can be produced out of wastes

Resource recovery, in contrast to waste management uses life cycle analysis(LCA) to offer alternatives to waste management. For mixed Municipal SolidWaste (MSW) the process goes in the sequential path as administration,sourcing, collection, categorization & separation, followed by reuse andrecycling of the non-organic fraction and energy and compost/fertilizerproduction of the organic material through anaerobic digestion.

Advantages of Resource RecoveryThe chief advantages of resource recovery can be as listed as follows

The resource recovery not only protects but also improvesenvironment and focuses on the environmental sustenance too.

The resource recovery practices are cost-effective It lowers down the amount of waste for disposal, It saves space in landfills, The recovery practices conserve natural resources.

14.11 OUTCOMES OF WASTEMANAGEMENT

Application of rational and consistent waste management practices can yield arange of development economically, environmentally, socially. Its output canalso out-speak inter-generational equity, and the beauty of W2E is that it usestechnology, tools and techniques of cross-functional areas of engineering,medicine, agriculture, pharmacy, economics and so forth.

We shall now discuss about the major outcomes of Waste Managementthrough the following paragraphs,

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14.11.1 Economic OutcomesImproving economic efficiency through the means of resource use, treatmentand disposal and creating markets for recycles can lead to efficient practices inthe production and consumption of products and materials resulting in valuablematerials being recovered for reuse and the potential for new jobs and newbusiness opportunities.

14.11.2 Social OutcomesBy reducing adverse impacts on health by proper waste management practises,the resulting consequences are more appealing civic communities. Better socialadvantages can lead to new sources of employment and potentially liftingcommunities out of poverty especially in some of the developing poorercountries and cities.

14.11.3 Environmental OutcomesReducing or eliminating adverse impacts on the environment through reducing,reusing and recycling, and minimizing resource extraction can result inimproved air and water quality and help in the reduction of greenhouse gasemissions.

14.11.4 Inter-generational Equity OutcomesFollowing effective waste management practises can provide subsequentgenerations a more robust economy, a fairer and more inclusive society and acleaner environment.

14.12 WASTE VALORISATION

Waste valorisation also called beneficial reuse, value recovery or wastereclamation is the process of valorising (given economic value) towaste products or residues, by reuse or recycling in order to createeconomically useful materials. The term comes from practices in sustainablemanufacturing, economics, industrial ecology and waste management. Thisterm is often used in industrial processes where residue from creating orprocessing one wasted product or material to be used as a raw material orenergy feedstock for another industrial process. Industrial wastes in particularare good candidates for valorising because they tend to more consistent andpredictable than other waste, such as household waste.

Historically, most industrial processes treated waste products as something tobe disposed of, causing industrial pollution if not handled properly. However,increased regulation of residual materials and socioeconomic changes, such asthe introduction of ideas about sustainable development and circular economyin the 1990s and 2000s increased focus on industrial practices to recover theseresources as value add materials. Academics focus on finding economic valueto reduce environmental impact of other industries as well, for example thedevelopment of non-timber forest products to encourage conservation. Thenew innovative products in construction field onother good example in thiscase.

14.13 LIQUIDWASTE-MANAGEMENT

Liquid waste is considered very important category of waste management as itis difficult to deal with. The major challenge is that, unlike solid wastes, liquidwastes cannot be easily picked up and removed from an environment. Liquid

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wastes spread out, and easily pollute other sources of liquid if brought intocontact. Further, this kind of waste also soaks into objects to pollute soil andgroundwater. This in turn carries over to pollute the plants, the animals in theecosystem, as well as the humans within the area of the pollution.

Sewage sludgeSewage sludge is produced by waste water treatment processes. Due to rapidurbanization, there has been an increase in municipal waste water that results0.1–30.8 kg of sewage per population equivalent per year(kg/p.e/year). Common disposal practices of sewage sludge are incineration,composting, and landfill.

SAQ – 14.4a) List the processes used for Energy recovery from waste.b) Briefly explain the following processes.

i. combustion,ii. gasification,iii.pyrolysis or pyrolyzation

c) Explain the Process of Pyrolysis.d) What is Resource recovery? Give some examples.e) Write the Advantages of Resource Recovery.f) How Energy recovery from waste is possible? Explain in detail.g) What are the outcomes of waste management? Briefly explain them.h) What is Waste valorisation?i) Discuss Liquid Waste-Management.

ACTIVITY 14.4We often listen that our daily domestic waste is useful. How does our dailydomestic waste become wealth? Suggest your opinion on implementation ofusing waste.

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14.14 MUDA – THE SEVENWASTES

Waste reduction is undoubtedly the best and the most effective way to enhanceprofitability. Taiichi Ohno, the chief engineer of Toyota Production System(TPS), was the first to identify this as a key concept under the head MUDA.

“MUDA” is a traditional Japanese term which means, ‘be careful’ about:None and not useful or wasteful or unproductive or does not add value.In fact, Toyota has identified three types of wastes, these are

1. MUDA – The Waste,2. MURA – The Unevenness and3. MURI – The Overburden

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TPS chose the above three words starting with the prefix mu; these are largelyrecognized in Japan for product improvement campaigns. However, MUDAhas drawn more attention than the other two since many lean practitionersfailed to see in the same prominence in the other two wastes, mura(unevenness) and muri (overburden).

A process adds value by producing goods or providing services for which acustomer pays. Obviously, processes consume resources and waste occurs ifmore than required resource is consumed. If these wastes are identified andforestalled, this not only adds to profitability but saves the resources too.

The Seven Wastes in IndustryThe key of lean manufacturing is the detection of the activity of the processthat adds value and that does not. Once all the activities are classified into thetwo categories, it is possible to start actions for improving the former andeliminating the latter. After value-adding work has been separated from thewaste, it (waste) can be subdivided into pure waste and “needed but non-valueadding” waste. While products significantly differ between factories, thetypical wastes found in manufacturing environments are quite similar. Thus toeliminate waste, it is important to understand exactly what a waste is andwhere it exists.

“The seven wastes” is a tool to further categorize MUDA. (Remember theseven wastes with an acronym ‘DO-IT-OWM’ framed by the first letters of theseven wastes as shown below)

D for Defect

O for Over-production

I for Inventory

T for Transportation

O for Over-processing

W for Wait

M for Motion

These are briefly discussed here below.

14.14.1 DefectsOccurrence of a defect attracts additional cost incursion due to reworking thepart, rescheduling production, etc. Having a direct impact down the line,defects result in in rework or scrap and hence heavily cost organizations inseveral forms such as costs of

reworking, rejection, re-inspecting, quarantining inventory, rescheduling, capacity loss, overuse of machine, material loss, manpower loss and overheads

In the recent days revolutionary changes have made organizations to becomeworld-class or lean enterprises. The first step to achieve this goal is to identify

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and attack the seven wastes. Like Toyota and other world-class organizations,it is high time for any organization to realize that

“Customers will pay for value, but never for waste.”14.14.2 OverproductionOverproduction refers to procuring or producing an item before it is actuallyrequired or manufacturing or purchasing more than what is needed. Generally,it often occurs during the production of large batches, supplying more thanwhat the consumer needs.

Overproduction is as dangerous as cancer or a virus and is considered theworst MUDA since it hides and/or generates all the others. It results in excessinventory, excess motions, and more transportation which then incur theexpenditure of resources on storage space and preservation and so on. Theseactivities do not benefit the customer. On realizing this fact, the TPS observesJIT manufacturing, i.e., every item is made just as it is needed. The concept isto schedule and produce only what can be immediately sold/ shipped andimprove machine changeover/setup capability.

A simple solution to overproduction is

“Turn off the tap when pot is filled”However, this requires a lot of courage as the problems that overproduction ishidden will blow up.

14.14.3 InventoryInventory, may it be in the form of raw materials (R/M), in-progress (I/P), orfinished goods (F/G), is a capital expenditure that has not yet produced anyincome either by the producer or by the consumer.

Further, the excess inventory hides problems on the shop floor. This should berecognized and resolved to improve operating performance. Further, excessinventory

delays the identification of problems, increases lead times, consumes productive floor space, delays the identification of materials, inhibits communication, and so forth

The concept of JIT inventory system thence took birth and is the best solutionto arrest this waste. By achieving a seamless flow between work centres, manycompanies have cut down inventories and their associated costs to better theircustomer service. Modern materials managers realized the fact that theinventory not only eats away the capital but also kills profits. So, the materialsmanagers often call

‘Inventory store is Industry’s Graveyard’.14.14.4 TransportationWhenever a product is transported, it has the risk of damage, loss, delay, etc.Transportation does not make any transformation to the product that theconsumer pays for. A good exercise is needed to find the optimal way toreduce the transportation cost. Operation research techniques (transportation,trans-shipment, assignment, travelling salesman problem, sequencing, etc.),mappings, string diagram, REL chart, trip frequency chart, flowcharts, etc.,

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along with the latest computerized techniques, are available to use in thesecases.

Transportation is considered as the waste for a simple reason and the knownfact that,

Transportation adds a cost but never the value.14.14.5 Over-processingOver-processing means more work is done on a piece than what is needed bythe customer. many organizations use expensive high precision equipmentwhere simpler tools would be sufficient. This also includes using tools that aremore precise, complex, or expensive than absolutely required. This oftenresults in poor plant layout and attracts high asset overutilization in order torecover the high cost of the equipment. Toyota is famous for its use of low-cost automation, combined with immaculately maintained, often oldermachines. A simple example everybody knows is that over-processed foodloses all the nutrients. Another good example is with an over cautious hyper-diabetic patient who if over-controls his/her diet may fall short of glucoselevels in the body.

“Over Processing is like using a sledgehammer to crack a nut”.14.14.6 WaitingIf goods are not in transport nor are being processed, then they must be waiting.Typically, more than 99% of a product’s life in traditional batch and queuemanufacture will be spent waiting to be processed or in shelf in stores waitingfor issuing. Most of a product’s lead time is eaten away in waiting for the nextoperation. The waiting often occurs due to

poor material flow, too long production runs, logistic problems, non-availability of tools or materials in time, long distances between work centres, etc.

Keeping to the above reasons in mind, the process has to be intelligently linkedup in such a way that one feeds directly the next, which can drastically reducewaiting. An hour lost in a bottleneck process is an hour lost to the entirefactory’s output, which can never be recovered, because…

“Time and tide waits for none”14.14.7 MotionMotion refers to the movements of producer, worker, or equipment. This wasteis more concerned with ergonomics and is seen in all instances of bending,stretching, walking, lifting, reaching, etc. The issues under this waste arerelated to health, safety and security of humans, machinery, and assets. Hence,jobs with excessive motion should be analyzed and redesigned forimprovement with the involvement of plant personnel, because everymovement has energy and so,..

“A wasted movement means wasted energy”.After understanding all the seven wastes, we can notice that for each waste,there is a strategy or a method and a reason to reduce or eliminate its effect ona company, thereby improving the overall performance and quality (Table14.**).

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Table 14.** Methods to Prevent/Avoid Waste

The Waste Prevention/Avoidance Method

Defect Perform each Operation without error, Establishquality in every process

Over Production Produce only the amount of goods necessary,not faster/sooner/more

Inventory Provide material exact quantity needed by thecustomer at right time

Transport Minimize distance between processes and avoidtemporary material locations.

Over Processing Put required amount of effort and time only forprocessing each operation.

Waiting Assure Machine availability; Performpreventative maintenance. Use man machinechart to ensure optimization of operators’ time.

Motion Simplify & standardize work sequence toeliminate unnecessary movements.

Do You Know

The Eighth WasteThe Eighth Waste In the latest ion of the lean manufacturing classic LeanThinking, underutilization of employees has been added as an eighth waste toOhno’s original seven wastes. Organizations employ their staff for their nimblefingers and strong muscles but forget to ensure that the employees come towork every day with a free brain. It is only by capitalizing on employees’creativity that organizations can eliminate the other seven wastes andcontinuously improve their performance.

SAQ 14.5a) Discuss the contributions of Taiichi Ohno toward MUDA and its

application in Toyota.

b) What is MUDA? Briefly explain the concept of MUDA. What are theadvantages of MUDA.

c) Explain the nature and scope of MUDA in Indian industrial backdrop.

d) What are the seven wastes in MUDA? Brief out each.

e) With suitable examples discuss how wastes occur in the followingaspects in an industry:

i. Inventory

ii. Transportation

iii. Overproduction

iv. Waiting

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f) What are the seven wastes described under MUDA? How do youforestall or avoid them?

g) Distinguish between over-processing and under-processing withexamples. Are both considered as wastes? Why?

h) What do you understand by the concept of “turning of the tap” inproduction in an industry? Explain.

ACTIVITY 14.5Just observe the seven wastes discussed here in day-to-day activities at yourhome. (For example, waste occurs in kitchen commodities.) Try to reduce orstop these wastes for about one week and find the difference.

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Do you think the application of MUDA is a successful formula for Indianindustry? Discuss.

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14.15 SUMMARY

Waste management is one of the major challenges of materials management.Based on the physical appearance, waste can be solid, liquid, or gaseous andeach type has different methods of disposal and management. The wastehierarchy refers to "3Rs" Reduce, Reuse and Recycle. The first step is toreduce or restrict the generation of waste. The second step is to seek alternativeuses for the waste that has been generated i.e. by re-use. The next step is torecycle which includes composting. Next step is material recovery and waste-to-energy. The final action is disposal, in landfills or through incinerationwithout energy recovery. “MUDA” is a traditional Japanese term which means,‘be careful’ about none and not useful or wasteful or unproductive or does notadd value.

14.16 KEYWORDS

Reduce: It refers to lowering or minimizing the waste generation if not totallyeliminated.

Recycle or Reuse: It is a resource recovery process that refers to thecollection and reuse of waste materials e.g. bottles, empty beverage containers.

Recovery: Conversion of non-recyclable waste materials into usable heat,electricity, or fuel through a variety of processes.

Combustion: Conversion of non-recyclable waste materials into electricityand heat.

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Pyrolysis: Pyrolysis of solid waste converts the material into solid, liquid andgas products. The liquid and gas can be burnt to produce energy or refined intoother chemical products (chemical refinery). The solid residue (char) can befurther refined into products such as activated carbon.

Gasification: Gasification and advanced Plasma arc gasification are theprocesses of converting organic materials directly into a synthetic gas (syngas)composed of carbon monoxide and hydrogen, which in turn can then be burntto produce electricity and/or steam.

LCA: Life Cycle Analysis to offer alternatives to waste management.Waste valorisation: It is beneficial reuse, value recovery.MUDA: The Waste

MURA: The UnevennessMURI: The Overburden

14.17 FURTHER READINGS

[1] N.V.S.Raju. (2018), Operations Research, Theory and Practice, BSPublications, Hyderabad, India, and CRC Publication (A unit of Taylor&Francis) ISBN: 978-93-5230-190-4

[2] N.V.S.Raju. (2013), Industrial Engineering and Management, CengageLearning India Pt. Ltd, New Delhi, ISBN-13: 978-81-315-1948-6

[3] N.V.S.Raju. (2013), Plant Maintenance and Reliability Engineering,Cengage Learning India Pt. Ltd, New Delhi,

[4] Buffa; E.S. (1990): Modern Production/Operations Management, WileyEasternLimited.

[5] Everett E. Adam, Jr and Ronald J. Ebert (1986): Productions andOperationsManagement: Concepts, Models and Behaviour, Prentice HallInternational.

[6] George Chobanoglus and Frank Crete, Handbook of Solid WasteManagement

[7] Robert B. Handfield, Nichols, Introduction to Supply ChainManagement, Prentice Hall India Learning Private Limited; 1e , August2015

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UNIT – 15 KAIZEN – CHANGE FOR BETTER(THE CONTINUOUS IMPROVEMENT)

Structure:15.1 Introduction

15.2 Kaizen – the meaning and concept

15.3 History and background

15.4 Kaizen approaches15.4.1 Kaizen blitz or point Kaizen

15.4.2 Kaizen burst or system Kaizen

15.4.3 Kaizen alignment

15.5 Integrated Kaizen

15.6 Organization structure and hierarchy of Kaizen

15.7 5 S- Kaizen15.7.1 Seiri (Sort or clear out)

15.7.2 Seiton (Straighten or configure)

15.7.3 Seiso (Scrub or clean and check)

15.7.4 Seiketsu (Systematize or conform and continue)

15.7.5 Shitsuke (Standardize or custom and practice)

15.8 Expected contributions of 5s kaizen

15.9. Summary

15.10. Keywords

15.11. Further readings

15.1 INTRODUCTION

Kaizen, the Japanese word for "improvement", is a concept referring tobusiness activities that continual improvement process of all functions andinvolve all employees from the CEO to the lowest workman. Kaizen alsoapplies to processes, such as purchasing and logistics that cross organizationalboundaries into the supply chain. It has been applied inhealthcare, psychotherapy, life coaching, government, and banking.

ObjectiveAfter studying this unit you should be able to

Understand the meaning and concept of Kaizen Understand the Kaizen approaches and underlying principles Discuss and conduct 5S Kaizen Understand the Kaizen implementation and organization structure Importance and benefits of Kaizen in materials management

15.2 KAIZEN – THE MEANING AND CONCEPT

The Japanese word kaizen means "change for better", inherent meaning ofeither "continuous" or "philosophy" in Japanese everyday use.

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The word refers to any improvement, in the same sense as the English word"improvement" means -

May it be one-time or continuous, or May it be large or small or May it be at purchase or storage or sales May it be short term or long term or May it be in shop floor operations or a corporate office May it be anywhere, anyhow, any time or anything, it is a better one

than earlier

However, given the common practice in Japan’s industrial environment, theindustrial or business improvement techniques under the term "kaizen",particularly the practices spearheaded by Toyota, the equivalently in English istypically applied to the techniques and measures for implementing continuousimprovement, especially those with a "Japanese philosophy". The discussionbelow focuses on such interpretations of the word, as frequently used in thecontext of modern management discussions.

15.3 HISTORY AND BACKGROUND

By improving standardized programmes and processes, kaizen aims toeliminate waste and redundancies (lean manufacturing). Kaizen was firstpracticed in Japanese businesses post Second World War (WW-II), influencedin part by American industry and quality gurus, and most notably as partof The Toyota techniques. It spread throughout the world and has been appliedto environments outside business and productivity, one such is inventory andmaterials management.

The small-step work improvement approach was developed in the USAunder Training Within Industry (TWI Job Methods). Instead of encouraginglarge, radical changes to achieve desired goals, these methods recommendedthat organizations introduce small improvements, preferably ones that could beimplemented on the same day. The major reason was that during WWII therewas neither time nor resources for large and innovative changes in theproduction of war equipment. The essence of the approach came down toimproving the use of the scarce materials with existing workforce andtechnologies.

After WW-II, the Economic and Scientific Section (ESS) was tasked toimprove Japanese management skills and Edgar McVoy was instrumental inbringing Lowell Mellen to Japan to properly install the TWI programs in 1951.The ESS group as a part of TWI developed the "3J" programs: Job Instruction,Job Methods and Job Relations. Titled "Improvement in Four Steps" (Kaizeneno Yon Dankai) it thus introduced kaizen to Japan.For the pioneering, introduction, and implementation of kaizen in Japan,the Emperor of Japan awarded the ‘Order of the Sacred Treasure’ to Dr.Deming in 1960. Subsequently, the JUSE instituted the annual DemingPrizes for achievement in quality and dependability of products.

Kaoru Ishikawa took up this concept to define how continuous improvement orkaizen can be applied to processes, as long as all the variables of the processare known.

15.4 KAIZEN APPROACHES

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In the Toyota Way Field book, Liker and Meier discuss the kaizen blitz andkaizen burst (or kaizen event) approaches to continuous improvement.

There are two kaizen approaches in practice

1. Kaizen Blitz or Point Kaizen approach2. Kaizen Burst or System Kaizen approach

15.4.1 Kaizen Blitz or Point KaizenOne of the most commonly implemented types of kaizen that happens veryquickly and usually without much planning is Point Kaizen or Kaizen Blitz. Akaizen blitz, or rapid improvement, is a focused activity on a particular processor activity. The basic concept is to identify and quickly remove waste.

Thus this is the kaizen ‘on the spot’ i.e. as soon as something is found unevenor incorrect, quick and immediate remedial measures are taken.

These measures are usually small, isolated and easy to implement. But thebeauty of this kaizen is that, it can have a huge impact.

For example, during a shop inspection by a supervisor, when he finds brokenmaterials or other small issues, and then asks the owner of the shop to performa quick kaizen (5S) to rectify those issues.The compressive force applied on a body along X-direction, can cause tensileforce in Y-direction on the same body. So also, possibly the positive effects ofpoint kaizen in one area may curb the benefits of some other area.

For example, a line worker notices a potential improvement of efficiency byplacing the materials needed in another order or closer to the production line inorder to minimize downtime, but it could give rise to a shortage at that place.

15.4.2 Kaizen Burst or System KaizenAnother approach is that of the Kaizen Burst or System Kaizen, a specifickaizen activity on a particular process in the value stream. Kaizen facilitatorsgenerally go through training and certification before attempting a Kaizenproject.

System kaizen is accomplished in an organized manner and is devised toaddress system level problems in an organization. It is an upper level strategicplanning method with a specific period of time.

The system kaizen can be approached in the following three ways

(i) Line Kaizen(ii) Plane Kaizen and(iii) Cube Kaizen.

Line KaizenThis is the upper level of point kaizen, in that several points are connectedtogether. It can be visualized as changes or improvements made to one line orprocess being implemented.

Plane KaizenThis is the next advanced level of line kaizen, in which several lines areconnected together. In modern terminologies, this can also be described as avalue stream, where instead of traditional departments, the organization isstructured into product lines or families and value streams. It can be visualized

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as changes or improvements made to one line being implemented to multipleother lines or processes.

Cube KaizenCube kaizen describes the situation where all the points of the different planesare connected to one another and no point is disjointed from any other. Thisresembles a situation where Lean has spread across the entire organization.Improvements are made up and down through the plane, or upstream ordownstream, including the complete organization, suppliers and customers.This might require some changes in the standard business processes as well.

15.4.3 Kaizen - ZenkaiAfter understanding the approaches of the kaizen, it is important to align thesedepending on the activities and systems of the organization. For this alignment,we should first establish the link between the two approaches.

While Blitz Kaizen delivers small improvements, the culture of continuous andregular practice of aligned by Burst Kaizen in cubic dimensions, these smallimprovements and standardization yields huge results in terms of overallimprovement in productivity.

The Kaizen methodology also includes making changes and monitoring results,and adjusting. Further, the beauty of kaizen is that large-scale pre-planning andextensive project scheduling are replaced by smaller experiments, and simpleamendments, which can be rapidly adapted.

ZENKAIIn modern days, it is designed to address a particular issue over the course of aweek and is referred to as a "kaizen blitz" or "kaizen event" These are limitedin scope, and issues that arise from them are typically used in later blitzes. Aperson who makes a large contribution in the successful implementation ofkaizen during kaizen events is awarded the title of "ZENKAI". In the 21stcentury, business consultants in various countries have engaged in widespreadadoption and sharing of the kaizen framework as a way to help their clientsrestructure and refocus their business processes.

SAQ-15.1a) What is Kaizen? Explain Kaizen approaches.b) Explain Kaizen Blitz or Point Kaizen approach.c) Explain Kaizen Burst or System Kaizen approach.d) What is Kaizen Alignment? What do you understand by Zenkai?

ACTIVITY-15.1Spend some time on identifying the areas where there is ‘waste’ in you or yourteam for once in a month. List out them. Work out on each waste listed above.How Kaizen is useful to eliminate the ‘waste’? How could things be improvedby using Kaizen techniques?

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15.5 INTEGRATED KAIZEN

Kaizen is a continuous process, the purpose of which is more than simpleproductivity improvement. The Kaizen implemented in Toyota resulted in agreat success because the concept of kaizen is supported by its variouscontemporary productive and developmental features embedded into itinherently. Thus the term KAIZEN has been worldwide adapted to variousfields such as production, materials, marketing, finance, quality assurance,what not! Wherever there is a scope for improvement, Kaizen is integratedwith it whatsoever the other modern management technique is.

The contemporarily developed concepts and techniques, those are integratedwith Kaizen include Taaichi Ohno’s TPS, Lean Manufacturing, Kanban, JIT,MUDA, MURA, MURI, Lean inventory, Root cause Analysis, KaoruIshikawa’s Fishbone diagrams, Shigeo Shingo’s Single Minute Exchange ofDie (SMED), POKAYOKE, Andrew Shewart’s P-D-S-A, Edward Deming’sP-D-C-A quality cycle and so forth.

Taiichi Ohno’s Muda-Mura-Muri in KaizenWe have already understood the 7-wastes (described under Muda viz. Defects,Overproduction, Inventory, Transport, Over processing, Waiting and Motion)result in improvement of productivity. The kaizen process backs up mudaprocess while the core concept for waste elimination (muda) is essentialfeature of 5S-Kaizen. Further, we understood it from the concept of kaizen caneliminate excessive hard work (muri). It brings out the method to ease howexperiments can be performed at their work spots using the scientificprocedures. Further, it gives fair scope to learn, to identify and to eliminatewaste in business processes. In all, the process suggests a humanized approachto workers and to increasing productivity:

Total Employee Involvement (TEI) in Kaizen"The idea is to nurture the company's people as much as it is to appraise andencourage participation in kaizen activities."

The success of implementation depends on "the wholehearted participation ofworkers in the improvement." People at all levels of an organization participatein kaizen, from the General Manager to janitorial staff, as well as externalstakeholders when applicable. Kaizen is the most commonly related tomanufacturing operations, as at Toyota, but has also been used in supportingactivities such as purchase, stores, materials management, plant maintenance,quality etc. and even non-manufacturing environments such as personnelmanagement. The format for kaizen can be individual, suggestion system,small group, or large group. At Toyota, it is an improvement within aworkstation or local area and involves a small group for bettering their ownwork environment and productivity. This group is generally guided through thekaizen process by a line supervisor; and at times the line supervisor may playkey role. Kaizen on a broad, cross-departmental scale in companies,approaching total quality management, and reduces human efforts throughenhancement of productivity using machines and computers.

Deming’s P-D-C-A: Kaizen P-D-C-AThe Toyota Production System is known for kaizen, where all line personnelare expected to stop their moving production line in case of any abnormalityand along with their supervisor, suggest an improvement to resolve theabnormality which may initiate a kaizen.

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The cycle of kaizen activity can be defined as:"Plan → Do → Check → Act".

This is also known as the Shewhart cycle P-D-S-A, Deming cycle, or PDCA.

The Kaizen also works on the same and similar lines where the Deming’s P-D-C-A cycle. The Kaizen P-D-C-A indicate

P for Problem finding

D for Display

C for Clear

A – Acknowledgement

Fig: The Quality PDCA cycle Vs KAIZEN PDCA cycleTaiichi Ohno’s Root Cause Analysis and Ishikawa’s Cause & EffectFishbone diagrams in 5S KaizenAnother technique used in conjunction with PDCA is the 5 Whys as suggestedby Taiichi Ohno, popularly known as Y-Y analysis or Root Cause Analysis.

A Kaizen is Opportunity in DisguiseTaiichi Ohno says “Having No Problems Is the Biggest Problem of All.”Taiichi Ohno (29th February 1912–28th May 1990), a prominent Japanesebusinessman and the father of the Toyota Production System (TPS), called leanmanufacturing in the U.S., devised the seven (7) wastes (or muda in Japanese)as a part of TPS (Refer Unit 14, Section 14.14),. Of his several books, thepopular are Toyota Production System: Beyond Large-Scale Production; andWorkplace Management. Ohno is the single person most responsible for theToyota Production System (the roots of lean manufacturing, lean thinking,Kaizen, JIT, kanban, and muda). Perhaps, the supermarket concept providedthe basis for JIT and muda. Ohno never saw a problem as negative, but in factas “a kaizen opportunity in disguise.” He used to encourage his staff toexplore problems first-hand until their root causes were found. “Observe theproduction floor without preconceptions or prejudice,” he suggested, “Askwhy five times about every matter.”

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It is the base for the root cause analysis in which the user asks a series of five"why" questions about a failure that has occurred, basing each subsequentquestion on the answer to the previous. There are normally a series of causesstemming from one root cause, and they can be visualized using fishbone(propounded by Kaoru Ishikawa) diagrams or tables. The Five Whys can beused as a foundational tool in personal improvement, or as a means to createwealth.

Masaaki Imai’s Four Foundation Keys of KaizenMasaaki Imai made this term popular with his book “Kaizen: The Key toJapan's Competitive Success.” In the 1990s, Professor Iwao Kobayashipublished his book “20 Keys to Workplace Improvement” and created apractical, step-by-step improvement framework called "the 20 Keys". Heidentified 20 operations in focus areas which should be improved to attainsustainable change. Further he identified the 5 levels of implementation foreach of these 20 focus areas. Four (4) of the focus areas are called FoundationKeys. According to the 20 Keys, these foundation keys should be launchedahead of the others in order to form a strong constitution in the company.

The Kaizen’s success can be attributed to the following Four Foundation Keys

Key 1 – Clean and Organize to ease the work through 5S Kaizen Key 2 – Goal Alignment/Rationalizing the System Key 3 – Small Group Activities Key 4 – Leading and Site Technology

Masaaki Imai’s Three Pillars for Implementation of KaizenMasaaki Imai also refers three major pillars for effective implementation ofkaizen

1. Overall Equipment Effectiveness (OEE) – A lean tool used to measureproduction performance.

2. Single-Minute Exchange of Die (SMED) – A lean production method ofreducing waste devised by Shigeo Shingo.

3. Gemba – Real place such as the production floor.Depending upon an organization's needs, there are different kaizenorganizational hierarchies that can be used, but the kaizen functional structureis the most popular.

SAQ-15.2a) Write some concepts and techniques, those are integrated with Kaizen.b) Discuss the significance of Taiichi Ohno’s Muda-Mura-Muri in

Kaizen.c) Explain Total Employee Involvement (TEI) in Kaizen.d) What is Deming’s P-D-C-A?e) What is Kaizen P-D-C-A?f) Compare Deming’s P-D-C-A and Kaizen P-D-C-A.g) What is Y-Y analysis or Root Cause Analysis?h) Describe Masaaki Imai’s Four Foundation Keys of Kaizen?i) Brief out Masaaki Imai’s Three Pillars for Implementation of Kaizen.

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ACTIVITY-15.2Apply Y-Y analysis or Root Cause Analysis to a problem in your project or jobwhich you are dealing with. Summarize your observations.

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15.6 ORGANIZATION STRUCTURE AND HIERARCHYOF KAIZEN

A Kaizen organizational structure or hierarchy is the foundation on whichkaizen is implemented in a firm. A kaizen hierarchy is a set of rules andpolicies that determine:

How a firm delegates tasks and controls responsibilities.

How decisions are passed and adopted throughout the firm.

How information flows within a firm.

15.6.1 Functional Kaizen Organizational Structure1. Kaizen Steering Committee (KSC)The first and the most important prerequisite for implementation of kaizen isManagement understanding as well as commitment. Anything you don’tbelieve, you cannot achieve. Therefore, the managements must thoroughlyunderstand the nature of the entire process and then be committed to it.

Then, few committed employees within the organization have to be chosen andcommittee is formed. This committee is often named as “Kaizen SteeringCommittee (KSC)”. The members of the Kaizen Steering Committee, could beat least one from each category of thefollowing

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Fig 15.2: Kaizen Hierarchy – The organization Structure of KaizenKaizen Steering Committee MembersLevel of member No. of members• Top Management 1

• External consultants 1

• Kaizen manager (usually Production Dept) 1 or 2

• Unions council 1 or 2

• Team leader (experts) 1

Tasks of Kaizen Steering CommitteeThe Kaizen Steering Committee performs the following tasks:

to determine the scope of activities.

to set the direction of the process

to ensure that the necessary resources are available.

to provide support and knowledge in difficult situations.

to carry our audit regularly and ensure the corrections are made whenevernecessary.

Activities of Kaizen Steering CommitteeA Kaizen Steering Committee performs the following activities:

Hold regular meetings

Frequency of meetings 4 to 6 weeks.

The meetings duration for about 90 minutes.

Prepare a defined structure for holding meetings.

Results and decisions are visualized and communicated to the entireorganization.

2. Kaizen External Consultants (KEC)External consultants have wider consultation training than managers. They arehighly qualified and experienced (subject experts). They spend most of theirtime advising people.

Employees should feel free to discuss problems with an external consultantthan they would with a line manager. In fact, these issues might become vitalin the process of improvement. Perhaps! This is because external consultantsare not influenced by the firm's internal politics and thence, there will be noprejudices and are more likely to offer even sensitive feedback. The maintainconfidentiality and objectivity too. Owing to these benefits, externalconsultants (subject experts) are at times incorporated into the organization'skaizen coaching team. For example, a consultant inventory management orfinance management could be hired to support improvement of the storesmanagement team during a kaizen event.

Tasks of Kaizen External ConsultantThe Kaizen External Consultant (KEC) performs the following tasks:

To suggest and offer support in entire process of change.

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To train and educate the relevant employees.

To assist in difficult tasks and processes.

To implement a system of result control and visualization.

To facilitate implementation immediately.

To secure the Kaizen process via regular audits.

Activities of Kaizen External ConsultantThe Activities of Kaizen External Consultant are as follows:

To conduct GEMBA workshops according to standards.

To help in the creation of a roadmap of implementing Kaizen.

To conduct regular audits.

To help to build-up a continuous improvement organization.

3. Kaizen Manager and Coordination TeamThe natural types of organizations such as self-organizing organizations,network organizations, self-managed teams, are permitting firms to be moreadaptable and responsive in today's rapidly changing world. Further, theseorganizations empower the employees more than the strictly structured firmsof the past.

The nature of organizations has drastically changed in the recent past andthence the nature of managerial control also. Strictly speaking, management isthere to help workers to be totally productive to communities as well as toorganizations but should not to control the employees. Kaizen structurematerializes this fact and this is set as the primary role of the Kaizen Managerand Coordination Team.

Tasks of Kaizen Manager and Coordination TeamThe Kaizen Manager and Coordination Team perform the following tasks:

To serve as the link among the affected departments, the teams of experts,and the steering committee.

To organize the workshops – documents, invitations, etc.

To verify the implementation steps and actions.

To review the qualification of staff.

To coordinate meetings, workshops, training, etc.

Functions of Kaizen Manager and Coordination TeamThe Kaizen Manager and Coordination Team functions in the following way:

create and control standards for codes

determine the qualification measures for employees

design the roadmap and even coordinate the action plans

organize training methods as well as techniques

present and visualize the success

4. Kaizen CoachesEvery kaizen organization needs a good guidance and coaching because it isalways a god idea to learn a process from a person who has been successful inone before. The coach can do well as this individual has already tested and

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proven that the kaizen works. Of course, on the other side of the coin, theemployees must also absorb all the information they require from the coach – akaizen coach is like a captain of the ship in an ocean like organization. Thisconcept, in Japanese organization culture is often referred to as HOSHINKANRI.

Usually, every individual wants to change for better and wants to be successfulbut most unfortunate is that they fail to invest in themselves and thus miserablyfail. They presume that they can teach themselves or they can learn themselves.Never this is a right path to follow. We all need coaches.

Tasks of Kaizen CoachThe Kaizen coaches perform the following tasks:

educate and train employees.

coordinate and implement Kaizen activities in the department.

help the adoption of Kaizen actions.

help in maintenance of Kaizen board for their team.

The Activities of Kaizen CoachThe Kaizen Coaches activities are as follows:

take part in the development of standard codes.

organize the adoption of standards.

document and monitor different actions.

plan for audit in their own department.

visualize the success of their team or department.

5. Kaizen Pillar Expert TeamsThe kaizen expert team is but a group of co-dependent professional teammembers with high level task expertise and also mastery in the improvementprocess. A kaizen team member needs to have task-related job skills for jobperformance as well as teamwork skills to function efficiently as part of a co-dependent team.

Tasks of Kaizen Pillar Experts TeamsThe Kaizen Pillar Experts Teams perform the following task:

create rules guiding the relevant knowledge pillars.

establish organization-wide standards as well as guiding rules.

offer one ground support for teams with know-how and technicalcompetence.

audit the processes regularly.

Activities of Kaizen Pillar Experts TeamKaizen Pillar Experts Team activities are as follows:

to provide information on factory-wide rules and standards.

to conduct the preparatory work for the Steering Committee when makingthe final decisions.

to organize frequent team meetings of the experts.

6. Kaizen Action Team

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Kaizen Action Team frames the goals, missions, and vision. Action planninghelps producing fast and visible results. The Kaizen Action Team strategizes,prioritizes, assigns tasks and even evaluates the progress. It takes easy,attainable steps that assist it to move forward.

The team is responsible for creating momentum through working onmanageable-size kaizen projects.

Tasks of Kaizen Action TeamThe Kaizen Action Team performs the following tasks:

attend regular improvement meetings.

participate in further training.

help in the process of solving problems in the team.

assume personal responsibility as well as sponsorship.

actively participate in the adoption of ideas.

Activities of Kaizen Action TeamThe Activities of Kaizen Action Team as follows:

coordinate themselves in different shifts.

use similar methods and even inform their colleagues about changes.

hold meeting together and plan these meetings together.

7. Kaizen Department and Line Managers at GEMBAA line manager, also known as direct manager, is an individual who directlymanages business operations and other employees while reporting to a higher-rank manager.

The department and line managers play a significant role while theorganization is operating. They are responsible for managing resources andemployees in pursuit of perfection and specific organizational or functionalgoals.

Tasks of Kaizen Department and Line ManagersThe Kaizen Department and Line Managers perform the following tasks:

To support the process of continuous improvement.

To participate in change workshops.

To aid in implementation of actions.

To take part in the shaping of reasonable and feasible processes.

To lead to improve activities.

Activities of Kaizen Department and Line ManagersThe Kaizen Department and Line Managers activities are as follows:

To create an environment for continuous improvement.

To organize backfill or release for staff.

To also organize the release of facilities and machine.

To also support visual management.

To also maintain the qualification matrix of employees.

Kaizen Involvement and Roles

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The table below shows the hierarchy of Kaizen involvement.

TopManagement

Middle Management andStaff Role

Supervisors Role Employees Role

Determined tointroduce Kaizenas anorganizationstrategy.

Deploy and adopt Kaizenobjectives as directed byTop Management viapolicies deployment aswell as cross-functionalmanagement.

Implement Kaizen infunctional roles.

Participate inKaizen via thesuggestionsystem as wellas small groupactivities.

Offer supportand direction forKaizen byprovidingresources.

Use Kaizen in functionalcapabilities.

Design plans for Kaizenand offer guidance toemployees.

Practicediscipline in theworkshop.

Enacts policiesfor Kaizen aswell as othercross functionalobjectives.

Design, upgrade, andmaintain standards.

Improve communicationwith employees andmaintain high morale.

Support individualsuggestion system andsmall group activities suchas quality circles.

Attain Kaizenobjectives viapoliciesdeployment andaudit.

Make workers Kaizen-conscious via intensivetraining programs.

Maintain discipline in theworkshop.

Participate incontinuousimprovementprocess tobecome betterproblem solvers.

Buildprocedures,structures, andsystemsconducive toKaizen.

Assist workers developtools and skills forproblem solving.

Offer Kaizen suggestions. Improve skillsas well as job-performancewith cross-education.

SAQ-15.3a) Explain hierarchy of Kaizen in detail.

b) Who are the members of Kaizen Steering Committee (KSC)? List outthe tasks of Kaizen Steering Committee.

c) Who are the members of Kaizen External Consultants (KEC)? List outthe tasks of Kaizen External Consultants (KEC).

d) List out the tasks and functions of Kaizen Manager and CoordinationTeam.?

e) Who are the Kaizen coaches? What are their tasks and activities?

f) What is Kaizen expert team? What are its tasks and activities?

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g) What is Kaizen Action Team? What are its tasks and activities?h) Who are the Kaizen Department and Line Managers? What are their

tasks and activities?

ACTIVITY-15.3How can Kaizen relate to daily routine jobs? How is effective timemanagement achieved by Kaizen. How is the waste in our time eliminated?List out few more daily routine jobs where Kaizen is applicable.

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15.7 5S-KAIZEN

In continuation to the discussion on kaizen, a special type called 5-S kaizen isdiscussed here at length. The 5S kaizen is composed of 5 terms originallyframed in Japanese language. These are explained in the subsections to follow.The 5S steps of housekeeping, with Japanese titles (starting with S), theirequivalent English names (starting with S), and their meanings (equivalentnames starting with C) are given in the following tabular form.

S No Japanese Title EquivalentEnglish S

EquivalentEnglish C

1. SEIRI SORT CLEAR OUT

2. SEITON STRAIGHTEN CONFIGURE

3. SEISO SCRUB CLEAN & CHECK

4. SEIKETSU SYSTEMATIZE CONFORM & CONTINUE

5. SHITSUKE STANDARDIZE CUSTOMIZE & PRACTICE

15.7.1 Seiri (Sort or Clear Out)Under this principle, first we classify all items into two categories—in terms ofnecessary and unnecessary. All these will be exhibited to all employees tocheck if anyone requires the items categorized under ‘unnecessary’. Then thiswill be discarded or removed if nobody requires them.

Usually, a limit on the number of necessary items should be demarcated,otherwise everything may seem to be necessary in one way or the other. Inusual situations, the department is found often with lots of unused machines,jigs, dies and tools, rejects, work in process, used/unused materials, suppliesand spare parts, sleeves, containers, desks, work benches, files of documents,carts, racks, pallets, and many more other materials.

A rule of thumb can be taken as to remove anything that will not be usedwithin the next 30 days.

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Procedural steps of SEIRI1. Seiri starts with a red tag campaign.

2. Choose an area for Seiri.

3. Designate appropriate 5S team and delegate suitable authority.

4. Team members visit the site with a handful of red tags and attach them onthe items they believe are unnecessary.

5. If red tags are found on items actually required by the site managers, theymust justify by demonstrating the necessity for such items.

6. The specific materials that are not required in the next thirty days but maybe needed or expected to be used in the near future are moved to theappropriate place so demarcated for, such as warehouses.

15.7.2 Seiton (Straighten or Configure)Seiton or straighten means configuring the items marked as “useful” and toarrange them so as to minimize the time and effort for search. The necessaryitems can be of no use if they are stored too far from the workstation or in aplace where they cannot be found.

Procedural steps of SEITON1. Each item must have a designated address, name, and volume.

2. Floor space for bins containing Work In Process (WIP) or supplies mustbe marked by painting.

3. Maximum allowable number is indicated clearly.

4. In a nutshell, each item should have its own address and conversely eachspace should have its designated wall address.

5. Each wall can be numbered.

6. The gangways should be marked clearly.

15.7.3 Seiso (Scrub or Clean and Check)Seiso is cleaning and also checking. Clean the premises of work environment,including machines and tools, floors, walls, and other areas of the shop floor,because if the equipment is covered with oil, soot, and dirt, it is not easy toidentify any problem that may be developing underneath. Most of themachines would be subjected to breakdown due to vibration or wear debris orintroduction of foreign particles or due to inadequate lubrication.

Seiso would be a great learning experience for the operators of the machine,since they can make many useful innovations regarding the cleaning of themachines. Of course, naked electrical wires may be covered safely whilecleaning the machines.

15.7.4 Seiketsu (Systematize or Conform and Continue)Seiketsu is operated in two ways.

First one is to keep each individual safe, clean, neat, and tidy, wear proper andsafe working dresses, use safety glasses, gloves, and maintain a clean andhealthy working environment.

The second is to adhere to work on seiri, seiton, and seiso continually andevery day, i.e., systematically observe the seiri, seiton, and seiso as the partand parcel of the job in the system.

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15.7.5 Shitsuke (Standardize or Custom and Practice)Plant managers must determine who should be involved and the frequency, i.e.,how often the 5S team should visit the entire factory. This is so designed thatthe 5S program should not disturb the regular work and should not cost interms of money and time. Thus, a standard procedure, duration, frequency,responsible and authorized persons, etc. for this job are to be determined.These people have to be trained properly about the 5S system and understandthe significance of housekeeping, cleanliness, orderliness, and traceability ofthe items.

15.8 EXPECTED CONTRIBUTIONS OF 5S KAIZEN

Following are some ways 5S kaizen can help organizations:

Reducing work-in-process inventory:

Optimal stock of material for the process can be identified. The lot size can be reduced to small. Reconsideration of decisions regarding the volume of the finished

product is possible. Material handling can be reduced and hence rejections or reworking

can be reduced. Small and frequent transport runs can be avoided. Quality can be

enhanced: A system can be built up that makes it easy to understand the causes. Measures can be taken to stop the process immediately whenever

defects occur. Enhancing production capacity: Providing simple and in-house developed machine to minimize

manual work. Finding out bottlenecks in process or machine.

Advantages due to re-layout:

No delays in the flow of material. Possibility of better working space and condition. Possibility of standardizing operations. Quality built into the process. Consideration on proper space for the movement of trolleys, forklifts,

etc. Ability to realize flexible manpower line. Attentive maintenance. Safety and hygiene.

Installation visual control on line:1. Display of standard worksheet at the stations.

2. Pre-warning to the operators on approach.

3. Provides rhythm on the line.

4. Makes line supervisor alert regarding delays in operation.

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5. Production control board – To display actual production figures on anhourly basis and the reason for shortfall in the planned schedule alongwith the counter measure taken.

Optimizing Manpower

Systematizing can identify the the excess manpower employed can beidentified

Standardizing can optimize the manpower through proper load balance.

SAQ –15.41. Write a detailed note on the 5S concept.

2. Write short notes on

i. Seiri

ii. Seiton

iii. Seiso

iv. Shiketsu

v. Shitsuke.

3. Describe how to do (perform) each of the 5S briefly.

4. What are the expected contributions of the application of the 5Sconcept?

5. List out the Japanese terms of 5S and explain them. What are theirequivalent S’s and C’s?

6. How do 5S help in improving the work environment? Discuss.

ACTIVITY 15.4Visit an organization of your choice and observe whether 5S kaizen is beingapplied. If yes, Analyze and evaluate the situation. If not, how 5S kaizen isimplemented. Summarize the information in the below given paragraph.

………………………………………………………………………………..…………………………………………………………………………………..…………………………………………………………………………………..…………………………………………………………………………………..…………………………………………………………………………………..…

15.9 SUMMARY

Kaizen, the Japanese word for "improvement". There are two kaizenapproaches in practice Kaizen Blitz or Point Kaizen approach, Kaizen Burst orSystem Kaizen approach. The system kaizen can be approached in thefollowing three ways Line Kaizen, Plane Kaizen and Cube Kaizen. IntegratedKaizen include Taaichi Ohno’s TPS, Lean Manufacturing, Kanban, JIT,MUDA, MURA, MURI, Lean inventory, Root cause Analysis, KaoruIshikawa’s Fishbone diagrams, Shigeo Shingo’s Single Minute Exchange ofDie (SMED), POKAYOKE, Andrew Shewart’s P-D-S-A, Edward Deming’sP-D-C-A quality cycle and so forth. A kaizen hierarchy is a set of rules andpolicies that determine how a firm delegates tasks and controls responsibilities,how decisions are passed and adopted throughout the firm and howinformation flows within a firm is the name of a workstation organization

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technique that uses a list of 5 Japanese words (seiri, selton, seiso, seiketsu, andshitsuke).

15.10 KEYWORDS

Kaizen: it is a Japanese word refers to "improvement".System kaizen: It is accomplished in an organized manner and is devised toaddress system level problems in an organization.

Line Kaizen: This is the upper level of point kaizen, in that several points areconnected together. It can be visualized as changes or improvements made toone line or process being implemented.

Plane Kaizen: This can be described as a value stream, where instead oftraditional departments, the organization is structured into product lines orfamilies and value streams.

Cube Kaizen: Cube kaizen describes the situation where all the points of thedifferent planes are connected to one another and no point is disjointed fromany other.

Kaizen Alignment: After understanding the approaches of the kaizen, it isimportant to align these depending on the activities and systems of theorganization.

Integrated Kaizen: It includes Taaichi Ohno’s TPS, Lean Manufacturing,Kanban, JIT, MUDA, MURA, MURI, Lean inventory, Root cause Analysis,Kaoru Ishikawa’s Fishbone diagrams, Shigeo Shingo’s Single MinuteExchange of Die (SMED), POKAYOKE, Andrew Shewart’s P-D-S-A,Edward Deming’s P-D-C-A quality cycle and so forth.

Total Employee Involvement (TEI) in Kaizen"The idea is to nurture the company's people as much as it is to appraise andencourage participation in kaizen activities."

Deming’s P-D-C-A: "Plan → Do → Check → Act"

Kaizen P-D-C-A: “Problem finding → Display → Clear →Acknowledgement”

Overall Equipment Effectiveness (OEE): A lean tool used to measureproduction performance.

Single-Minute Exchange of Die (SMED): A lean production method ofreducing waste devised by Shigeo Shingo.

Gemba: Real place such as the production floor.KSC: Kaizen Steering CommitteeKEC: Kaizen External ConsultantsSeiri: Sort or Clear OutSeiton: Straighten or ConfigureSeiso: Scrub or Clean and CheckSeiketsu: Systematize or Conform and Continue

Visual management: This is a lean management technique designed to helpemployees to easily understand a work processes.

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Just in Time Inventory Management (JIT): A lean inventory managementstrategy that organizations use to boost efficiency of inventory managementand to eradicate waste from the production process – thus minimizing theinventory costs.

5S framework: This is the name of a workstation organization technique thatuses a list of 5 Japanese words (seiri, selton, seiso, seiketsu, and shitsuke).

15.11 FURTHER READINGS

[1] N.V.S.Raju. (2018), Operations Research, Theory and Practice, BSPublications, Hyderabad, India, and CRC Publication (A unit of Taylor&Francis) ISBN: 978-93-5230-190-4

[2] N.V.S.Raju. (2013), Industrial Engineering and Management, CengageLearning India Pt. Ltd, New Delhi, ISBN-13: 978-81-315-1948-6

[3] N.V.S.Raju. (2013), Plant Maintenance and Reliability Engineering,Cengage Learning India Pt. Ltd, New Delhi

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UNIT – 16 KANBAN INVENTORY MANAGEMENTSYSTEM

Structure16.1 Introduction

Objective

16.2 The Kanban concept – origin and history16.3 Kanban strategies: push vs pull Kanban

16.3.1 Push Kanban: Unlimited WIP and Demand Dependent16.3.2 Pull Kanban: Limited WIP and Demand Focused16.3.3 Push, Pull, or a combination of both?16.3.4 Key characteristics of Pull-based Lean Manufacturing

16.4 Lean Inventory16.4.1 Lean Inventory Guidelines16.4.2 The six rules of Toyota of Lean Inventory

16.5 Types of Kanban systems16.6 The Kanban Process

16.6.1 Kanban rules16.6.2 A demand driven system16.6.3 Kanban cards16.6.4 Kanban bins16.6.5 Three-bin system16.6.6 Heijunka box

16.7 Virtual or Electronic Kanban (e-Kanban) Systems16.8 Kanban Inventory Management System

16.8.1 Kanban Inventory Beliefs16.8.2 Kanban Signalling16.8.3 Functioning of Kanban Inventory System16.8.4 Kanban cards for specific inventory items16.8.5 Kanban boards: solution for inventory management issues16.8.6 Outcomes of Kanban inventory management system

16.9 Implementation of Kanban16.9.1 Ideal environment for Kanban implementation16.9.2 Care while implementing Kanban inventory system16.9.3 CONWIP Systems16.9.4 Benefits of Kanban inventory system

16.10 Calculating Kanban quantities16.11 Summary16.12 Keywords16.13 Further readings

16.1 INTRODUCTION

Kanban is a visual scheduling system for lean inventory and leanmanufacturing also called just-in-time (JIT) inventory/ manufacturing. TaiichiOhno, an industrial engineer at Toyota, developed kanban to improveproductivity.

Objective

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After studying this unit you should be able to

Understand Kanban concept

Know the Kanban strategies Learn Lean Inventory Know Types of Kanban systems Discuss the Kanban process Understand Virtual or electronic Kanban (e-Kanban) systems Explain Kanban Inventory Management System Implement the Kanban Calculate Kanban quantities

16.2 THE KANBAN CONCEPT – ORIGIN AND HISTORY

Kanban (means signboard or billboard in Japanese) is a visual schedulingsystem with ‘visual signal’ or ’card’ related to just-in-time (JIT)inventory/production that tells “what – when – how much” to procure/produce.Kanban, in the automotive industry is also known as the Toyota NameplateSystem because the system takes its name from the cards, which track theproduction. Kanban is used to facilitate to proper movement of the parts withinthe same manufacturing plant or between plants. Thus Kanban system is asystem of inventory and production control (pull inventory system). In simplewords, it is ‘information transmission device’.

Kanban system can visualize both – the planned workflow and the actual workpassing through the flow. Thus, it helps avoiding supply disruption andoverstocking of raw materials or in-process material at any stage in the valuechain. So, it does not allow the incoming stock unless there is a space for it.

Kanban system gradually improves the existing process – May it be softwaredevelopment, or recruitment, or sales, or procurement, etc., rather than changingeverything from the core.

Kanban is an effective tool to support running a production system particularlywhere inventory is involved and is an excellent way to promote improvement.Problem areas are pinpointed and highlighted with the help of lead time andcycle time of the full process and stages of process.

The beauty of kanban can be witnessed when it establishes an upper limitto work in process inventory and thence avoids overcapacity. One of theobjectives of the kanban system is to limit the build-up of excess inventory atany point in production. Limits on the quantities of items waiting at supplypoints are instituted, so that the inefficiencies are identified, reduced and/orremoved. Thus when a limit is found exceeded, then that point of inefficiencycan be addressed.

The Empty Box Concept – Two-bin SystemThe system originates from ‘an empty box’, the simplest visual stockreplenishment signalling system. Its first development could be seen in the UKfactories producing Spitfires during the WW-II, which was named “two-binsystem”.

The Supermarket Shelf-Stock ConceptDuring late 1940s, Toyota started studying the idea of shelf-stocking techniquesin supermarkets to apply to the factory floor. In a supermarket, customersgenerally retrieve what they need at the required time—no more, no less,

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because the customer has a assurance of getting whenever it is required if notnow. On the other side, the supermarket stocks only what it expects to sell in agiven time, based on what its customers take or what they need. Further, it canassure future supply. This observation led Toyota to view a production processand its various stages as customers while the inventory stores as thesupermarket.

Kanban aligns inventory levels with actual consumption. A signal tells asupplier to produce and deliver a new shipment when a material is consumed.This signal is tracked through the replenishment cycle, bringing visibility to thesupplier, consumer, and buyer.

Kanban uses the rate of demand to control the rate of production, passingdemand from the end customer up through the chain of customer-storeprocesses. In 1953, Toyota applied this logic in their main plant machine shop.

.16.3 KANBAN STRATEGIES: PUSH VS PULL KANBAN

A manufacturer always desires to make what the customers want. Thechallenge is to know what exactly they want, and when they want it. In general,approaches to supply chain management in manufacturing include a pushsystem or pull system, but the question is, which is the best strategy for thecompany?

While designing the best suitable strategy for a given the following strategicapproaches are considered

1. Push Kanban: Unlimited WIP and Demand Dependent and

2. Pull Kanban: Limited WIP and Demand Focused

3. A combination of Push and Pull Strategies

We shall have little discussion on these.

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Figure 16.1: Push Vs Pull Kanban

16.3.1 Push Kanban: Unlimited WIP and Demand DependentThis strategy is built up on two main aspects viz, the first is that WIP is notlimited and the second is that the production is demand driven (Ref: Figure 16.1)

Thus Push-based inventory strategy is better applicable for maintaining thelowest possible inventory when Material Requirement Planning (MRP) processis driven by demand forecast to ensure the availability of materials forproduction. However, the forecast may not always be accurate so there could beexcess inventory, especially when shifts occur in lead times.

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Figure 16.2: Material Flow in Push ProductionThe push manufacturing, or push inventory (Refer figure 16.2) will tend to havea lot of work in progress (WIP) due to high variety products and the materialfeatures also have complex structures. Therefore, Push productionenvironments tend to be characterized by long lead times and/or make to stock(MTS) situations. This will have processing large batches of items at amaximum rate, based on forecasted demand, then moving them to the nextdownstream process or into storage.

16.3.2 Pull Kanban: Limited WIP and Demand FocusedThis strategy also stands on two main aspects viz, the first is that WIP is limitedand the second is that the production is demand focused (Refer fig: 16.3).

The pull-based lean manufacturing environment works on the assumption as, tomake nothing until there is demand. So, finished goods are not producedwithout a specific customer order. Replacements for intermediates andmaterials are not acquired before existing items have been used.

Pull manufacturing strategy works best when demand is high and steady for arelatively small variety of products.

Figure 16.3: Material Flow in Pull Production16.3.3 Push, Pull, or a Combination of Both?Both these approaches have merits and demerits. In present world, theorganization needs strategies and tools to support more efficient and effectiveperformance shrinking product cycles, product proliferation, global competition,mass personalization, and volatile demand. MRP’s forecast-driven approachalone may not be up to the mark, given its tenuous ties to demand. By the sametoken, pull-based lean manufacturing means we need to be constantly on top ofdemand. A suitable blend of the two might be the best approach.

16.3.4 Key characteristics of Pull-based Lean ManufacturingThe manufacturers can observe the following key characteristics while planningtheir production and materials management in pull based lean manufacturingenvironment

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Ensured continuous flow of production from raw materials tofinished products

Buffering critically constrained resources.

Maintains full utilization and establishes supplier relationships andsupply management practices

synchronized delivery of raw materials (and sub-assemblies) to thepoint of use at the time of production.

Enables faster throughput,

shorter manufacturing lead times, and

reduced the amount of inventory needed

support to customer service objectives

lowered production costs

Limited work in progress (WIP) inventory levels.

Just-in-time (JIT) material deliveries

demand-pull scheduling that restricts the excess inventory.

To start producing parts it relies on Kanban production to signal upstream workcentres. (Thisis analogous to work order). The upstream station does not beginmanufacturing the parts until it receives a signal. Thus Kanban signals controlthe movement of raw materials and semi-finished products through subsequentworkstations. Of course! Notall Kanbans on a production line are of the samesize—they depend on the nature and usage of the part.

Accounting for cycle time intervals using buffer—the time it takes productionto shift back to making a part after making other parts. The buffer also accountsfor transportation time, safety stock, seasonality, and promotions. Finally, thebuffer puts a cap on the amount of WIP in the system and enables the start ofcontinuous improvement initiatives to reduce lead times through setup andbatch-size reduction.

The outcomes with a pull-based lean environment,

deliveries go on-time,

meet customer demand, and

improve the reliability of the supply chain.In contexts where supply time is lengthy and demand is difficult to forecast,often the best one can do is to respond quickly to observed demand. Thissituation is exactly what a kanban system accomplishes, in that it is used as ademand signal that immediately travels through the supply chain. This ensuresthat intermediate stock held in the supply chains are better managed, and areusually smaller. Where the supply response is not quick enough to meet actualdemand fluctuations, thereby causing potential lost sales, a stock building maybe deemed more appropriate and is achieved by placing more Kanban in thesystem.

SAQ-16.1a) Briefly explain Kanban concept?b) What is ‘The Empty Box Concept’?c) What is ‘The Supermarket Shelf-Stock Concept’?

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d) List of Kanban strategies.e) Explain Push Kanban Strategy in detail.f) Explain Pull Kanban Strategy in detail.g) Explain combination of Push and Pull Strategies in detail.h) Discuss Key characteristics of Pull-based Lean Manufacturing.i) Write outcomes with a pull-based lean environment.

ACTIVITY-16.1In which manufacturing company is Push Kanban Strategy (Unlimited WIP andDemand Dependent) used? Explain your answer with an example.

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In which manufacturing company is Pull Kanban Strategy (Limited WIP andDemand Focused) used? Explain your answer with an example.

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16.4 LEAN INVENTORY

Lean manufacturing/ inventory is a philosophy of continuous flow of productthrough the manufacturing process. Excessive amounts of inventory in a leanenvironment lengthen the cycle time for any one part in the production flow.The increased cycle time for a part is a form of waste in the lean productionenvironment. High levels of inventory also tie up company funds and occupywarehouse space. When an organization stocks a high level of inventory, thepotential exists for stocking defective materials for a longer period before itsdiscovery.

16.4.1 Lean Inventory GuidelinesTo be effective, TaiichiOhno stated that kanban must follow strict rules ofuse. Adhering and close monitoring of these rules is a never-ending task,thereby ensuring that the kanban does exactly what is required.

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Figure 16.4: The Six Rules of Toyota of Lean Inventory16.4.2 The Six Rules of Toyota of Lean InventoryToyota made the following six simple rules (Refer figure 16.4), and

1. Never Pass Defective ProductsUpstream processes must meet the level of quality and standards that areexpected of them. Remove all defective products; they are dealt with outsidethe production line.

2. Take Only What’s NeededDownstream processes should only take what is needed to preventoverproduction. This also lowers costs and makes operations reflect marketdemands.

3. Produce Exact QuantityAvoid overproduction, which leads to excess inventory and more costs.

4. Level the ProductionKeep production to capacity to achieve a steady flow of work.

5. Fine-Tune and Optimize ProcessAfter implementing kanban, continue to explore ways to add efficiencies.

6. Stabilize the ProcessMaintain quality level production and optimize processes to gain stability, andthence it can be standardized.

Under the kanban inventory system, we can summarily understand thefollowing.

Each process issues requests (Kanban) to its suppliers when it consumes itssupplies. Each process produces according to the quantity and sequence ofincoming requests. No items are made or transported without a request. Therequest associated with an item is always attached to it. Processes must not sendout defective items, to ensure that the finished products will be defect-free.

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Limiting the number of pending requests makes the process more sensitive andreveals inefficiencies.

16.5 TYPES OF KANBAN SYSTEMS

There are two most important generally applied types of Kanban Systems inindustry classified under General types here for convenience while others arecategorized under customized Kanban.

A. General Types of Kanban Systems1. Withdrawal Kanban2. Production Kanban

B. Customized Types of Kanban Systems

The concept of Kanban when applied to other fields, they assumed thefollowing names

(i) Transport Kanban(ii) Express Kanban(iii) Emergency Kanban(iv) Through Kanban(v) Supplier Kanban

We shall now briefly discuss these.

A. General Types of Kanban SystemsIn an industry, the kanban system adjacent upstream and downstreamworkstations communicate with each other through their cards, where eachcontainer has a kanban associated with it. It also uses Economic Order Quantityas an important input. A brief description on these kanban is given below:

1. Withdrawal Kanban SystemThis system is used to indicate the type and amount of product which the nextprocess should withdraw from the preceding process.

A Withdrawal Kanban gives the following information

(a) Name and identification number of the item.

(b) Quantity in each box or container and its type.

(c) Preceding and succeeding workstations and/or processes.

(d) Store shelf location

(e) Name or identification number of the final product where this item isused.

(f) Sequence number of Kanban i.e. the sequel number of Kanban in totalof the Kanbans. For example, out of 2/5 indicates 2nd Kanban of 5Kanbans.

(g) This also known as move cards or conveyance kanbans. Whenever acomponent is to be shifted from one production part to another thistype of kanban are used for signaling. The card is usually connected toa stipulated number of parts that are taken to the working place where

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they are needed. When these parts are used, the cards are returned as asignal for sending the same part with the same number back.

2. Production Kanban System

This system is used to indicate the type and quantity of product which the nextprocess must produce. A Production Kanban can be designed in two ways,

1. A Kanban that does not immediately initiate production and

2. A Kanban that immediately initiates the production

The former contains the same information except items (e) and (f) as mentionedabove while the latter one indicates the need for starting manufacture of thenext production lot. It is usually of a different shape and is called SignalKanban. A Signal Kanban would also contain the same information as abovealong with some additional information such as Production Lot Size, Re-OrderLevel (ROL) and Machines to be used for production.

Thus Production (Signal) Kanban provides the following information:

(a) Name and identification number of the item.

(b) Quantity in each box or container and its type.

(c) Preceding and succeeding workstations and/or processes.

(d) Store shelf location

(e) Need for production

(f) Production Lot Size

(g) Re-Order Level (ROL)

(h) Machine/Equipment used

(i) Delivery Due Dates

B. Other Types of Kanban SystemsWhile the above discussed two kanban are most common Kanban systems inmanufacturing industries, the concept applied to different areas have shaped upinto some the customized Kanban systems as described below:1. Transportation (T) Kanban

A Transportation Kanban or simply T-kanban authorizes the transportation ofthe full container to the downstream workstation. The T-kanban is also carriedon the containers that are associated with the transportation to move through theloop again.

2. Express KanbanThis is a type of Kanban is used when there is an unanticipated shortage ofparts. They signal the increasing number of a particular part is required. Thechief objective is to make sure that there is no slowing down of themanufacturing process. Express Kanban is sometimes called signal Kanban.They are purposely used for triggering purchases.3. Emergency KanbanThis set of Kanban is applied to the replacement of defective parts or forsignalling a sudden change in the quantity of the product to be manufactured.

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Indifference from the express Kanbans, the organizations make use ofemergency Kanbans when a part fails to work to its rated/expected efficiency orwhen there are certain alterations in the manufacturing conditions. The expressKanban is also utilized to make the original production to run seamless.4. Through KanbanThese kanban comprises of production and withdrawal Kanbans. They are usedin a situation whereby both the work centres aresituated adjacent to each otherso that it speeds up the process of production. For instance, the storage for thecomponents is exactly beside the assembly of the product, to save time thisKanban system can be employed.5. Supplier KanbanThis Kanban moves right away to a supplier, which is in fact, an organizationfrom where the manufacturer purchases material. The supplier type of kanban isentered as a representation of that of the manufacturer.Kanbrain

A third type involves corporate training. Following the just-in-time principle,computer-based training permits those who need to learn a skill to do so whenthe need arises, rather than take courses and lose the effectiveness of whatthey've learned from lack of practice.

SAQ-16.2a) What is Lean inventory?b) Describe the Six Rules of Toyota of Lean Inventory.c) List out the types of Kanban Systems.d) Write General Types of Kanban Systems.e) Write Customized Types of Kanban Systems.f) What is Withdrawal Kanban? Which information does it give?g) What is Production Kanban System? Which information does it give?h) Briefly explain the following Kanban systems.

i. Transportation (T) Kanbanii. Express Kanbaniii. Emergency Kanbaniv. Through Kanbanv. Supplier Kanban

ACTIVITY-16.2How the six Rules of Toyota of Lean Inventory can control inventory cost in amanufacturing company? Explain it with an example.

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16.6 THE KANBAN PROCESS

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The process of functioning of the Kanbans is listed below:1. Used as a means for process improvement to help reducing the level of

in-process inventories.

2. To tie different manufacturing processes together i.e. to check theinterchangeability between a preceding workstation supplying partiallyprocessed items or components to a succeeding workstation.

3. To ensure that the right amount of materials and parts reach the rightplace at right time.

16.6.1 Kanban Rules The later process collects product from the earlier process

The later process informs the earlier process what to produce

The earlier process only produces what the later process needs

No products are moved or produced without Kanban authority

No defects are passed to the later process

16.6.2 A Demand Driven SystemKanban cards are a key component of kanban. Theysignal the need to movematerials

from an outside supplier into the production facility or within a production facility

The kanban card is a message that signals a depletion of product, parts, orinventory. When received, the kanban triggers replenishment of that product,part, or inventory. Consumption, thus drives demand for more production, or inother words, the kanban card signals demand for more product—so Kanbancards help create a demand-driven system.

It is widely held by proponents of lean production and manufacturing thatdemand-driven systems lead to faster turnarounds in production and lowerinventory levels, helping companies implementing such systems be morecompetitive.

16.6.3 Kanban CardsKanban cards, in keeping with the principles of kanban, simply convey the needfor more materials. These are usually simple cards or sheets of paper that areattached to a batch of material. Usually there are just two or three cards for eachproduct in the system although there may be more if larger batches are handledand if the product size itself is large. These cards will typically detail what theproduct is, where it is used, and the quantities that should be there. For multiplecards systems it will also say which card it is in the total set (for examplesecond card among five cards is denoted as Card 2 of 5 or 2/5).

When a process finishes using the materials to which the Kanban card isattached the card is returned to the previous process. This is then used asauthority for that previous process to manufacture replacement parts. Inmultiple card systems, the process will typically have to wait for a set numberof cards to be returned before they start to manufacture the next batch. A redcard lying in an empty parts cart conveys that more parts are needed.

16.6.4 Kanban BinsBins are used in a very similar way to Kanban cards. However, instead of theirbeing cards attached to the materials the container that they are kept within

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becomes the actual Kanban. These will usually be labelled with similarinformation to the cards and will be returned to the previous process asauthority to produce when they are emptied.

As with cards, we can have 2-bin Kanban systems, 3-bin systems and upwardsdepending on the amount of stock that is required within the system.

16.6.5 Three-bin systemA simple kanban system is a "three-bin system" for the supplied parts, wherethere is no in-house manufacturing. The three bins usually have a removablecard containing the product details and other relevant information are placed asgiven below:

First Bin: On the factory floor (the initial demand point)

Second Bin: In the factory store (the inventory control point)

Third Bin: At the supplier (the supply point)

“To Do’’ —> “On-going” —> “Completed”

Figure 16.5: A Three Bin Kanban BoardWhen the bin on the factory floor is empty because the parts in it were used upin a manufacturing process, the empty bin and its kanban card are returned tothe factory store i.e.the inventory control point. The factory store replaces theempty bin on the factory floor with the full bin from the factory store, whichalso contains a kanban card. The factory store sends the empty bin with itskanban card to the supplier. The supplier's full product bin, with its kanban card,is delivered to the factory store; the supplier keeps the empty bin. This is thefinal step in the process.

16.6.6 Heijunka BoxThe process never runs out of product—and could be described as a closed loopthat provides the exact amount needed, with only one spare bin so there is neveroversupply. This 'spare' bin allows for uncertainties in supply, use, andtransport in the inventory system. A good kanban system calculates just enoughkanban cards for each product. Most factories use kanban with the colouredboard system.

SAQ-16.3a) Write the process of functioning of the Kanbans.

b) List out the Kanban Rules.

c) What is Demand Driven System?

d) Discuss the Kanban Cards.

e) Explain Kanban Bins.

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f) What is Three-bin system? What are the three bins? Explain them.

g) Describe Heijunka Box.

ACTIVITY-16.3Identify any national or international company in your vicinity which is usingKanban Process. Explain the procedure how the company is using KanbanProcess.

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16.7 VIRTUAL OR ELECTRONIC KANBAN (e-KANBAN)SYSTEMS

With the advent of developments in technology, it is often possible to havepaperless kanban systems with the use of scanning barcodes or each machinesimply telling the previous that it has cycled. Kanban system uses the electronicprocessing and transmission of data works in the same way as that of any othersystem.

Many manufacturers have been implementing electronic kanban (e-kanban)systems to eliminate common problems such as manual entry errors and lostcards. The e-kanban systems can be integrated into enterprise resourceplanning(ERP)systems, enabling real-time demand signalling across the supplychain and improved visibility. Data pulled from e-kanban systems can be usedto optimize inventory levels by better tracking supplier lead and replenishmenttimes.

In the recent past, sending kanban signals electronically has become morewidespread. Though this trend is reducing the physical use of kanban cards inaggregate, it is still in practice in modern lean production facilities. In varioussoftware systems, kanban is used for signalling demand to suppliers throughemail notifications. A "kanban trigger" (manual/ automatic) occurs when stockof a particular component is depleted by the quantity assigned on kanban card.Then a purchase order is released with predefined quantity for the supplierdefined on the card, and the supplier is expected to dispatch material within aspecified lead-time. Today’s online markets are successfully practicing this.

IT enabled Kanban SystemAfter noticeable improvements to the productivity and efficiency of Toyota, theKanban system was also introduced to IT and Software Development in the year2004 by David J. Anderson.IT enabled e-kanban is a signalling system that uses a mix of technology totrigger the movement of materials within a manufacturing or production facility.Electronic Kanban differs from traditional kanban in using technology toreplace conventional elements like kanban cards with barcodes and electronicmessages like e-mail or Electronic data interchange.

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Figure 16.6: Electronic-Kanban (IT-enabled) SystemTypical IT-enabled e-kanban system (Refer figure 16.6) uses barcodes forinventory, which can be scanned at various stages of the manufacturing processto signal usage. The scans relay messages to internal/external stores to ensurethe restocking of products. The e-kanban uses the internet for routing messagesto external suppliers and as a means to allow a real-time view of inventory, viaa portal, throughout the supply chain.

16.8 KANBAN INVENTORYMANAGEMENT SYSTEM

Kanban is a visual tool, ideal for managing inventory flow. As developed byTaiichi Ohno, an industrial engineer at Toyota, Kanban boards made the carcompany restock its inventory only when needed. This revolutionary approachraised Toyota to such a big heights.

As discussed in the beginning of this unit, the Kanban concept evolved from theobservation of operations in the supermarkets. They didn’t touch or restock theproducts already in ample quantity. They closely monitored the products whichwere continually getting sold. Stocks of only those products were replenished.This concept is taken as the core of Kanban Inventory.

16.8.1 Kanban Inventory BeliefsKanban Inventory Management System works on the following two basicbeliefs

Belief-1: Always initiate with whatever is there!Kanban does not believe that something would fall from heaven. It does not goon trying to get beyond what is there now, because a bird in hand is worth two ina bush.

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Further, Kanban must be applied to an existing inventory system. There arechances of getting hung at times, but it believes that a gradual acquaintance isguaranteed. Ensure that the inventory management approach remains unchanged,as this decreases the efficiency rather than optimizing the workflow.

Belief-2: Better to grab an evolutionary change rather than revolutionary.Slow and steady wins the race. Eye a small, incremental change. Outcomeswould need patience. And it is strongly believed that patience pays. Unlikeother methods, the Kanban inventory system doesn’t impose any organizationalor functional changes to existing inventory system.

This gradually happens. So, neither pressurize the team for sudden changes norexpect sudden outcomes.

We have understood that Kanban Inventory Scheduling System (KISS) allowscompanies to stock only needed components. Lean systems use the Kanban asa technique to keep inventory levels lowest. In lean manufacturing, theprocess pulls materials through the production or distribution and the Kanbansystem provides a signal for reordering or replenishing stock.

As already mentioned above, the Kanban Inventory Management System (KIMS)doesn’t possess any additional functions, but simply optimizes the processflow. Kanban system controls the entire chain – from suppliers to the end-sellers.

The main reason for the Kanban inventory system to be more efficient method isthat it facilitates maintaining a minimum amount of stock in the inventory.

Thus, kanban inventory management is a way to have ‘only the minimumamount of stock on hand’ that is necessary at that time. This avoids purchasingexcess than needed and also avoids allocating space to warehouse for the extrainventory. Moreover, kanban avoids bottlenecks in the workflow.

Customers anticipate faster fulfilment than ever, particularly with mobile access,yet supply chains are increasingly complex and often distributed acrossfacilities. Having an efficient inventory management system sets competitiveedge and a kanban inventory system can save costs off bottom line and givethat edge.

16.8.2 Kanban SignallingA company can use several methods to signal stock replenishment whileKanban signalling is one such. For instance, coloured bins or reorder cards aresome of the kanban that signal to replenish materials.

Companies can apply Kanban system at two points…

on the production floor to signal replenishment from inventorystock or

in the stockroom to signal a repurchase

In a Kanban system, the following three actions are occur for three possiblesignalling conditions:

RED SIGNALCondition-1: Bin emptyKanban Action: Order the stock internally or pass the information topurchasing for a stock purchase,

YELLOW or ORANGE SIGNALCondition-2:Bin having some quantity

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Kanban Action: Estimate the time to empty referring to customer’s demand,and supplier’s lead time to supply and plan replenishment accordingly.

GREEN SIGNALCondition-3:Bin FullKanban Action:No material movement, observe consumption patterns andprevious recordsIf any of the above three conditions prevail unchanged continuously for morethan a predetermined specified period (usually 2 or 3 weeks), plan fordiscarding or redesigning the kanban.

Customer demand is an alarmBest way to identify the restocking threshold is the customer demand for aspecific product. As per the Kanban inventory management, there is no need toreplenish the stock unless there is an empty slot for the incoming volume.If aparticular product selling amazingly then can there be a plan for another stock forthe same.

16.8.3 Functioning of Kanban Inventory SystemHere’s how to setup a functioning kanban inventory system

A traditional kanban board is divided into three columns (can edit their namesto suit the business needs).

1. “To-Do” column, which is where identified tasks are collected

2. “Doing” column for those tasks that are being worked on currently

3. “Done” column to place tasks that have been successfully completed

These tasks move across the column boards as they are being worked on, whichprovides an easy way to track the work.

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16.8.4 Kanban Cards for Specific Inventory ItemsWith the kanban inventory system, the production is split into tasks, so that amanager can control and track the work through the production cycle. Eachinventory item, shipment (or some metric) is placed on an individual card.These are then transferred from column to column on the board as they’reworked on.

Each card in turn has the specific information that is needed for that task at eachstage of production, such as supplies and materials that is required further ondown the line. These can be represented on the kanban card in the form ofcomments, files and task descriptions.

Of course, the more complex the production and inventory, the more detailedkanban can accurately reflect the process.

Whatsoever, never forget to follow the Toyota’s six principles.

16.8.5 Kanban Boards: Solution for Inventory Management Issues

Stock-Out and Lead Time Issues:To prevent stock outs, anorganization should decide the appropriate levels of stock on hand,lest,it leads to production shut downs or outages. The lead-time forparts and materials from vendors is one factor to determining theoptimum level of inventory. Of course, the organization needs toadjust the Kanban levels several times before finding the best quantityof material to keep on hand for production or distribution.

Issues with multiple supply points: There are many stress points thatcan cause a supply chain to slow down, particularly when suppliedfrom multiple warehouses or multiple countries. However, kanbancards can represent each of these various links in the supply chain andmake it easier to know where to coordinate delivery.

Issues with identification and evaluating business needs: Inventorymanagement can also suffer from inaccurately identifying andevaluating the business needs. It’s important to know the gaps in thesystem, to prioritize and fill them. A kanban inventory system offers aclear visual map of whatever, whenever and wherever itis needed. Butit is often challenging to align with business plan to make sure bothsides are realistic.

Issues with inventory system optimization:If inventory system is notoptimized, then it is not known what or when needed, in turn, it makesforecasting future inventory needs impossible. The cards on kanbanboard are capturing the inventory and identifying where it is in thepipeline. This makes it easier to see opportunities, so can act and addmore efficiency to the supply chain.

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Issues with balancing inventory level and customer needs:Monitoring and optimizing the inventory levels, while meetingcustomer needs, is the major issue for a balanced business venture. Thisreduces the level and cost of inventory and avoids unnecessary storagecosts by only stocking what and, when it’s needed, and timelyresupplying.

16.8.6 Outcomes of Kanban Inventory Management SystemThe implementation of Kanban Inventory system is expected to produce thefollowing outcomes.

1. Reduced inventory costsWhen inventory in the store is less, there will be a lot of unused space and thatadditional space can be occupied by work stations. These savings as the profitgained out of business is not invested in purchasing any extra (unnecessary) stock.

2. Streamlined order fulfilmentThe kanban system acts as a watch-tower over the entire supply chain,particularly order-flow process, from the point of receiving an order fromdifferent channels to confirming the order to shipping and completing the orderfulfilment.One can set orders on priority as per the demand or any concurrentconditions and fulfil them accordingly in a streamlined manner.

3. Access to progress reportsA Kanban system focuses on tracking continuously on the entire supply chain.When applied to efficient inventory management system, the same idea enablesaccuracy in the record of the sales and inventory also. This helps the managementto realistically plan, practically organize and optimally improvise the businessworkflow.

4. Avoids over-stockingThere are cases when organizations wrongly or over estimate the demand for aspecific product, only to end up stocking it unnecessarily for months. Oversight,over expectations and ignorance are few reasons for leading to such situationsoverstocks. This situation then compels them to either dispose of that stock orsell it off at discounted rates. In such cases, it eventually becomes hard to keepthe right track of stock. The Kanban system helps avoiding such situations at theearlier stage itself.

5. Meet Customer DemandsKanban maintains minimum inventory levels, at the same time, it also respondsto customer demands. It identifies the products selling more and restocks thembefore depleted, thus focuses on what is needed and ‘on hand’. The customer isthe treated as driving force to inventory and meeting customers demand isviewed on top priority.

6. Quick Status ReportsKanban inventory system provides the added benefit for managers by givingeasy access to progress reports. They can see what’s been started, where it is inthe production cycle and when it’s been completed. Thence, they can decide orrevise the delivery due dates vis-à-vis prepare a good promising forward plan.

7. Cleaner Warehouse

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Kanban also keeps the production area clean by removing all unnecessarystorage. It makes sure only the parts to the production line when needed aredelivered. This also makes the production space focused, means production, notstorage. This all nicely cuts nails and tails, which naturally grow without addingany value or productivity. Thus Kanban fits into lean manufacturing, which is aphilosophy of continuous flow of product through the manufacturing process.

SAQ-16.4a) Explain virtual or electronic Kanban (e-Kanban) systems.b) How does IT enabled Kanban System work?c) What is Kanban inventory management system?d) Explain Kanban Inventory Beliefs in detail.e) Discuss Kanban Signalling?f) What are the three actions for three possible signalling conditions of

kanban?g) Explain how to setup a functioning kanban inventory system?h) What is the significance of Kanban Cards?i) What are the Kanban Boards? Explain them in detail.j) What are the Outcomes of Kanban Inventory Management System?

ACTIVITY-16.4How do you suggest whether the Virtual (e-kanban) system is useful or not forthe Indian Industries? Justify your answer.

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16.9 IMPLEMENTATION OF KANBAN

Rome was not built in a day. No one gets fruits immediately after the tree isplanted. Kanban is not something that is going to work overnight, nor is itsomething that can be just dropped into place without explanation or training.There is also no ‘one size’ fits all solution that is going to be right. Further, theresistance due to machine unreliability, set-ups are other issues and challenges.

So, the organization should prepare the ground and an ideal environment beforeimplementing, patience and careful monitoring during implementation.

16.9.1 Ideal Environment for Kanban ImplementationThe following are the ideal conditions necessary for the application of Kanban.The farther from these conditions, the harder it will be to implement and thelarger the safety margin into the system to prevent problems:

Regular demand from the customer: If the customer demand ishighly irregular and it is difficult to predict and so is hard to holdKanban stocks in the traditional supermarket style. Holding larger thannecessary stock and work in progress levels without some carefulthought about organizing the system can ruin the entire. So, it needs toensure the regular demand and focus on these products.

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Low product variation:If many different products are maintained,then hold stocks of them could easily increase the carrying cost. Toreduce this burden, ensure making or holding commonly usedparts/products and if not unique, see that they are latest.

Clear flow: Facilities that are organized in a silo style with all similarprocessing being done in one location are hard to control with a kanbansystem, although not impossible by any means. A better arrangement isone in which all processes are organized together to provide a flow lineor cell.

Small dedicated machines: Many companies will invest on large massproducing machines. Often these machines will drive the use of largebatches and may create a bottleneck for the facility. Far better ifsmaller dedicated machines are used within product flow lines.

Quick changeovers: Many machines and processes can take a longtime to set up to run a new product or variant. This again drives largebatches and can create significant bottlenecks within the productionline. The use of Shigio Shingo’s concepts of Single Minute Exchangeof Die can make a significant impact in this area.

Repeatable and reliable processes: If machines are vulnerable tobreaking down and processes are not repeatable then it will be hard tocontrol any form of production system let alone Kanban. The use ofTotal Productive Maintenance (TPM), 5S Kaizen, operator drivenquality improvements, and standardized operations will help to put inplace the foundations that are required.

Reliable suppliers: Supplier’s reliability is a vital part of Kanbanprocess and needs ensuring that they are able to support the kanbanprocesses to implement reliably.

16.9.2 Care while Implementing Kanban Inventory SystemThere are tons of benefits of implementing a Kanban inventory system inbusiness. It saves money, efforts, time and space and thus enhances the efficiency.But, before introducing the Kanban inventory management system to thebusiness, there are a few obstacles that needs attention.

Carefully monitor inventory quantity to be ordered to restock. A littlecarelessness can mess up whole system

It will surely make the process go slow for some time. So, marginal upsand downs can be expected initially. But, the moment things arestreamlined, it will start showing results.

Figure out the numbers that will go into a single bin and how much timeit will take for them to be in that bin. If it is to be restocked in a bin insay 10 days, make sure that supplier sends the stock within 6 to 8 days soas to avoid production delays.

A Kanban System needs to observe the following 6 principles during theimplementation process.

Earlier processes never push production onto later processes

Nothing is ever made without Kanban authority

Nothing is made if there are no Kanbans

Defects are identified as close to the source as possible

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Large batches or lots of plan changes should not be planned Wherever possible demand should be smoothed

Not having these conditions does not mean that implementation of Kanban andJust in Time is impossible. It just means that a little more thought is to be givenon how the systems are designed and how they will work. Irregular demand andlarge variations in products for instance needs to apply CONWIP systems ratherthan the more usually seen cards or bin systems. Unreliable machines need alarger factor of safety in the quantities.

Often,companies starting with JIT and Kanban with large Kanban quantitiesand slowly reduce the amount of stock over time in a planned fashion tohighlight and remove problems. Lowering the inventory levels may uncover themany issues.

16.9.3 CONWIP SystemsCONWIP is CONstant Work In Progress. This system is more like the actualidea of using supermarket shelves where the Kanban is the actual location onthe shop floor. So when a process removes a product from the previous processthe empty space is the Kanban and the previous process will work to fill thehole.

This works well for systems in which one can achieve near to one-piece flowand within which variation is limited.

However, that being said it can also be used very successfully within thoseareas in which there is a large amount of variation if combined with a “make toorder” type approach to planning. If the Kanban location becomes vacant, theprocess will simply build the next component or batch on their list.

16.9.4 Benefits of Kanban Inventory SystemA Kanban system allows a company to reduce inventory levels, which reducesthe cost associated with stocking and storing materials in the organization.Cost reductions occur in the expense of the inventory itself as well as the costof warehousing and maintaining inventory. Companies that use a Kanbansystem in a lean environment allow actual customer demand to determine theneed for materials and not forecasts of the demand.

By summarizing the concept of Kanban Inventory Management System(KIMS), the benefits of kanban can be listed as given below:

1. Kanban boards help monitor and optimize inventory levels, so thecompany can always get whatever it wants and whenever it needs

2. Customer needs drive production, so inventory is always at the rightlevel to deliver only what the customer wants

3. Because only needed inventory is stocked, the production floor isclutter free

4. Managers are able to easily track progress and see where there are gapsor bottlenecks in their supply chains

5. Limiting inventory to what is needed, which means there is no moneywasted on warehouse space and storage

16.10 CALCULATING KANBAN QUANTITIES

One of the main aims for any Just in Time system utilizing Kanban is to try toreduce the amount of stock held within the system. Therefore, it is necessary to

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know how to calculate the number of component within each bin or batch andthe number of actual Kanbans in the system.

Kanban CalculationKanban Quantity = D.LT.F / CWhere D = Daily DemandLT = Lead Time in daysF = Factor of SafetyAnd C = Container CapacityIllustration-16.1

Suppose 20 units are used per day and if the lead time is say 5 days with onefactor of safety. Calculate the number of kanban with the containers of 25capacity.

Solution:Demand (D) = 20 per day

Lead Time (LT) = 5 days

Factor of safety = 1

Container Capacity (C) = 25

No of Kanbans =DLTF/C = 20X5X1/25 = 4 Kanban

Calculating Daily DemandIt is always better to use real data than making a rough guess the daily demand.Demand may vary seasonally and may be affected by a host of other issues souse a figure for Kanban that effectively copes with any situation. In most cases,it is best figure is around 90% and above of peak demand. If more variation indemand is larger, then higher safety factor may be used.

Calculating Lead TimeAs with demand use actual data and aim for a figure that is 90-95% of the peak.A lot of variation in lead times will indicate that the problems with machinereliability and repeatable processes so as to look at improving them. If leadtimes are long then large batches should really be looking to implement SMEDto reduce them.

Factor of SafetyThis factor should be defined by the confidence in the system used. If theconfidence on the reliability of processes is high, then it can be set as 1. If thereare issues with anything from machine reliability to supplier deliveryperformance then it is set higher. A higher safety factor will help to protectfrom stock outs when issues do occur; however, they will increase stockholdings.

Reducing Kanban QuantitiesOne of the largest wastes of the seven wastes (MUDA) is inventory. To removeas much inventory from the system as possible as this hides many of the issuesthat are within the processes:

By reducing the size of Kanban quantities, problems will start to break thesurface, and force to take action. This is an effective way to highlight issues andto start making continuous improvement within processes.

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Decreasing the size or number of Kanbans within the system will increase thesystems sensitivity to changes or problems. This is often the best way tohighlight issues within the process and to drive improvements.

SAQ-16.5a) What are the ideal conditions necessary for the Implementation of

Kanban?b) What type of care should be taken while Implementing Kanban

Inventory System?c) List out the 6 principles during the implementation process.d) What is CONWIP System?e) What are the Benefits of Kanban Inventory System?

ACTIVITY-16.5List out few national or international companies which need Implementation ofKanban? Explain any one among them why it needs Kanban.

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16.11 SUMMARY

Kanban (means signboard or billboard in Japanese) is a visual schedulingsystem with ‘visual signal’ or ’card’ related to just-in-time (JIT)inventory/production that tells “what – when – how much” to procure/produce.Kanban system can visualize both – the planned workflow and the actual workpassing through the flow. A manufacturer always desires to make what thecustomers want. The challenge is to know what exactly they want, and whenthey want it. Lean manufacturing/ inventory is a philosophy of continuousflow of product through the manufacturing process. There are Six Rules ofToyota of Lean Inventory. There are two most important generally appliedtypes of Kanban Systems General Types of Kanban Systems, CustomizedTypes of Kanban Systems. In the Kanban process, there are Kanban Rules,Kanban Cards, Kanban Bins, three-bin system and Heijunka Box.Manymanufacturers have been implementing electronic Kanban (e-Kanban) systemsto eliminate common problems such as manual entry errors and lostcards. Kanban inventory management is a way to have ‘only the minimumamount of stock on hand’ that is necessary at that time. This avoids purchasingexcess than needed and also avoids allocating space to warehouse for the extrainventory. Moreover, kanban avoids bottlenecks in the workflow. Theorganization should prepare the ground and an ideal environment beforeimplementing, patience and careful monitoring during implementation Kanban.CONWIP is CONstant Work In Progress. This system is more like the actualidea of using supermarket shelves where the Kanban is the actual location onthe shop floor.

16.12 KEYWORDS

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Kanban: a visual scheduling system for lean inventory and lean manufacturing.JIT: Just-In-TimeWIP: work in progressPush Kanban:Unlimited WIP and Demand Dependent

Pull Kanban: Limited WIP and Demand Focused

MRP:Material Requirement Planning

MTS:Make To Stock

ROL: Re-Order LevelKanban cards: convey the need for more materialsHeijunka Box:The process never runs out of productERP: Enterprise Resource PlanningKISS: Kanban Inventory Scheduling SystemKIMS: Kanban Inventory Management System

Red Signal: Bin emptyYellow or Orange Signal: Bin having some quantityGreen Signal: Bin FullTPM: Total Productive Maintenance

CONWIP: CONstant Work In Progress.

16.13 FURTHER READINGS

[1] N.V.S.Raju. (2018), Operations Research, Theory and Practice, BSPublications, Hyderabad, India, and CRC Publication (A unit of Taylor&Francis) ISBN: 978-93-5230-190-4

[2] N.V.S.Raju. (2013), Industrial Engineering and Management, CengageLearning India Pt. Ltd, New Delhi, ISBN-13: 978-81-315-1948-6

[3] N.V.S.Raju. (2013), Plant Maintenance and Reliability Engineering,Cengage Learning India Pt. Ltd, New Delhi.

MPDD-IGNOU/P.O.5H/___________2022 (Print)

ISBN- 978-93-5568-286-4

MWR– 02ADVANCE INVENTORY PLANNING AND CONTROL

BLOCK 1 : MATERIAL PLANNINGUnit 1 : Materials Management – An OverviewUnit 2 : Issues and Challenges of Materials ManagementUnit 3 : Material Requirement Planning (MRP)Unit 4 : Manufacturing Resource Planning (MRP II)

BLOCK 2 : ADVANCED MATERIAL PLANNINGUnit 5 : Strategic Materials ManagementUnit 6 : Master Production ScheduleUnit 7 : Aggregate PlanningUnit 8 : Just in Time

BLOCK 3 : SUPPLY CHAIN MANAGEMENT AND ERPUnit 9 : Supply Chain ManagementUnit 10 : Supply Chain LogisticsUnit 11 : Vendor ManagementUnit 12 : Enterprise Resource Planning

BLOCK 4 : MODERN CONCEPTS: MATERIALSMANAGEMENT PERSPECTIVE

Unit 13 : Value Management and Value Chain AnalysisUnit 14 : Waste Management, MUDA & 7-WastesUnit 15 : Kaizen – The Continuous ImprovementUnit 16 : Kan-ban Systems and Modern Concepts