$1.$Create a present$-$state VSM$.$

$2.$What are six problems with the present$-$state VSM$?$

$3.$Create a future$-$state VSM$.$ The future$-$state map should address each of the six problems identified in Question $2.$

$4.$Sage

Sage

Sage Business Cases

$($c$)$ Craig Seidelson $2022$

To address some issues within the facility, senior management has asked for a present$-$state VSM covering all aspects of flange manufacturing, from incoming raw materials to outgoing finished products. Management has likewise asked for a future$-$state VSM to address any issues uncovered.

Outgoing Logistics

Flanges made in the factory are shipped to the company's distribution center in Muncie, IN $($Figure $2).$

Figure $2.$ Distribution Center

The distribution center's standing $12,000-$piece weekly production order is issued to the factory through SAP $($enterprise resource planning software$).$ The logistics department arranges for pick$-$up from the factory's finished product warehouse every Friday at the end of the production shift for evening delivery to Muncie. Recently, the logistics department at the distribution center has been complaining about excessively long manufacturing lead times as compared to the industry standard of two weeks.

Page $4$ of $14$

Value Stream Mapping at an Indianapolis, IN Flange Manufacturer

Sage BusinessIncoming Logistics

The factory manufactures flanges from steel bars $($igure $3).$ Each bar weighs $94kg$ and costs USD $88($ex$-$

cluding delivery fee$).$ The steel bar supplier is located in Gary, IN$.$ The bar vendor is capable of delivering

every week, every two weeks, every three weeks, and so forth. The purchasing department issues a pur$-$

chase order $($PO$)$ through SAP for $1,000$ steel bars to be delivered every four weeks. The transportation cost

is USD $300$ per truckload. A single truck can carry $20,000$ kgs of bar.

Figure $3.$ Steel Bars Made at Supplier

Every week, the purchasing department at the flange manufacturer sends a USD $700$ PO for a single pallet

of $25,000$ screws. Of that amount, USD $500$ is for screws $($i$.$e$.,$ USD $0\mathrm{.}02/$screw$).$ The courier charges USD

$200$ per pallet delivered. Pallets can hold up to $25,000$ screws. The distributor, which is located in Evansville,

IN$,$ is only able to offer weekly pallet shipments to Indianapolis out of its warehouse $($Figure $4).$Figure $4.$ Screw Vendor's Warehouse

Source: Free to use under Upsplash license

Presently, there are $1,000$ steel bars and $100,000$ screws in the raw materials warehouse at the factory. The

carrying cost of steel bar inventory is $3\%$ of the total amount spent on bars in inventory $($excluding transporta$-$

tion cost$).$ The annual carrying cost of screws is$,$ likewise, $3\%$ of the total amount spent on screws inventory

$($excluding transportation cost$).$ Delivery of bars from the vendor in Gary has been an issue. On average,

shipments are one day late. Screws, however, are always delivered on time.Manufacturing Operations

The flange$-$making factory is open $50$ weeks per year, five days per week, eight hours per shift, and three

shifts per day. The production office does not plan for processes to be running for all eight hours in a shift.

Actual production time available is assumed to be at $85\%$ overall equipment efficiency $($OEE$).$

Hot Forging

In the hot forging department, one flange is made from $2kg$ of bar stock $($not including scrap$).$ Forging involves

three steps: $(1)$ induction heating bar to $300C($see Figure $5)$; $(2)$ shearing bar into segments of appropriate

length; and then $(3)$ closed die shaping segments. The factory's two bar forging lines were purchased for USD

$500,000$ each. Each line is run by a single operator and runs a $90-$second cycle time. Uptime in the forging

department averages $94\%.$ Scrap is $3\%.($c$)$ Craig Seidelson $2022$

$200$ parts fit into a tub. The normalizing furnace $($as shown in Figure $6)$ was purchased for USD $1,000,000.$

Depreciation was done on a straight$-$line basis over $10$ years, as is standard at the facility. One person op$-$

erates the furnace and is capable of processing Source: Free

determine manufacturing lead time;

establish optimum inventory levels; and

calculate manufacturing cost.

Introduction to the Facility

The $200,000$ sq$.$ ft$.$ facility shown in Figure $1$ has been manufacturing flanges in Indianapolis, IN for the past $50$ years.

Figure $1.$ Flange Factory

Source: $-$ree to use under Upsplash IIcense

Flanges are bolted, steel plates used to connect pipes with one another. Manufacturing of flanges consists of five operations: $(1)$ hot forging; $(2)$ batch normalizing; $(3)$ turning; $(4)$ drilling; and $(5)$ assembly. As is typical of a facility of this age, all production assets are fully depreciated.

Page $3$ of $14$

Value Stream Mapping at an Indianapolis, IN Flange Manufacturer

Sage BusinessWhat is the future$-$state map impact on lead time and profitability?