X The Case of the Pencil Pushin... : CASE: The Case of the Pencil Pushing Process (A): Drawing a Current State Value Stream Map Columbus Writing Instruments (CWI) produces and sells a variety of writing instruments to retail outlets such as drug stores, grocery stores, and office supply stores. They manufacture plastic pens, highlighters, mechanical pencils, and wooden pencils. Although the products are standardized, cwl packages the product in boxes imprinted with the customer logo and artwork to create a generic store-brand writing instrument For instance, Joe's Office Supply and Carol's Grocery each carry a store-brand of plastic ballpoint pens. The pens, manufactured and packaged by CWI, are exactly the same. But Joe sells a package of 10 pens with his logo and artwork on the package and Carol sells a package of 12 pens with her logo and artwork on the package. Because of their consistent quality, and fast delivery, CWI's sales have been steadily increasing at a rate of over 60% each year for the past three years. They have several clients that have been ordering writing instruments consistently. Additionally, new clients are being acquired each week who demand customized packaging and fast delivery. However, the additional volume and new clients seem to be creating a variety of problems in the manufacturing process. The Problems CWI is currently experiencing a variety of problems: Purchasing and overhead costs have been steadily increasing. Profits have been decreasing. To address this problem, the CFO has mandated that the Purchasing Department should buy raw materials in bulk to take advantage of volume discounts. The facility is quickly running out of room. The production space is so full of parts and products that CWI is considering building a second production facility and warehouse. The facilities manager comments, "The Sales Department wants us to make more products more quickly, but we do not have the space." CWI quotes an order lead time of 2 weeks, and they are shipping approximately 15% of the orders late. To compound this problem, within 8 - 10 days of placing an order, several customers call to change the specifications on the artwork for the packaging. Because of the customized packaging, any finished products must be scrapped or reworked to accommodate these updated customer requests. Recently, termites ruined CWI's stock of wood for making pencils. The purchasing manager had to expedite a new shipment of wood, incurring $7.000 in additional shipping costs. To prevent this problem from happening again, the purchasing manager ordered twice the usual amount of wood saying, "We'll store twice as much wood in two places in the plant so that if this happens again, we will still have some raw materials to work with." 1 The Operations Manager takes Initiative The president of CWI has told Victoria S. Morgan, the operations manager, to solve the production problems and increase the throughput speed of the manufacturing process. Because of the recent decrease in profits, money for capital investment and hiring more workers will be severely limited. Victoria Morgan decides to buy a copy of Learning to See and use value stream maps to highlight how the production process should be improved. Although CWI manufactures pens, highlighters, mechanical pencils, and wooden pencils, Victoria realizes that placing all of these product families on a single value stream map would be very difficult and confusing. The first step is to decide which family of products should be mapped. Each family of products (pens, highlighters, mechanical pencils, and wooden pencils) uses a unique sequence of steps in their production. Pencils are the highest profit margin product produced at CWI and demand for pencils has been increasing recently. Therefore, Victoria S. Morgan chose the pencil family of products to value stream map first. The Pencil Family of Products CWI manufactures a variety of pencil related products. They make three (3) sizes of pencils: 4 inch, 6 inch, and 8 inch. They offer 5 colors: red, blue, yellow, green, and white. The pencils are packaged in boxes imprinted with the customer logo and artwork. Therefore, CWI manufactures 15 unique configurations of pencil , each packaged in customized boxes for specific customers. All 15 configurations of pencil are considered part of the pencil family of products because they are processed using similar methods and equipment. The process and specific sequence for using various machines is approximately the same for all 15 variations of pencil made. CWI receives orders for approximately 24,000 pencils each week. The average order size is 100 pencils. Orders are evenly distributed among each of the five colors. CWI operates one shift (8 hours each day) running 5 days each week. The Pencil-Making Process Victoria S. Morgan decides to walk the process with her production staff to collect the data required for value stream mapping. The team carries paper and pencils to document the process steps, and stop watches to time the various steps of the process. The Raw Materials Storage Area The team documents the raw materials in stock for making pencils: Wood: 20 days Graphite: 8 days Erasers: 9.5 days Metal Tops: 12 days Boxes: 32 days 2 Victoria S. Morgan decides to concentrate on following the wood through the process because (a) wood is one of the most expensive and plentiful inventory items and (b) wood is a primary raw material that is incorporated early in the pencil-making process. The wood supplier, Timber Incorporated, makes shipments once every other week (once every 2 weeks). The wood dowels come pre-painted in each of the five colors offered by Cwi. The Cutting Department In the Cutting Department, wood dowels are cut to the correct length; 4, 6, or 8 inches long to make a pencil "blank." Victoria and her team watch the process for a while. The Cutting Department makes 10,000 of a single length and color before sending the blanks to the Insert Department. First, the machine used in this department requires 5 minutes to set-up for the particular length to be cut Next, an operator cuts the painted dowel. Victoria times how long it takes for the operator to create a pencil blank. After watching the process run for 15 minutes, 409 pencil blanks have been made. Therefore, the processing time is 2.2 seconds [15 minutes x 60 seconds / 409 pencil blanks]. One person works in this department. Cutting Department Summary: Employees in Department = 1 person Setup Time, S/U = 5 minutes per batch Batch Size = 10,000 pencil blanks Processing Time = 2.2 seconds per pencil blank Inventory after Cutting The improvement team notes that there are 6000 completed pencil blanks sitting in the Cutting Department and another 44,000 pencil blanks sitting in a staging area waiting to be processed by the Insert Department. Therefore, there are 50,000 pencil blanks in work-in-process inventory between the Cutting and Inserting. The Insert Department In the Insert Department, the operator inserts a graphite rod into the center of the pencil blank. The Insert Department makes pencils in batches of 10,000. There is no setup required for this operation. After watching the Insert Department for 20 minutes, 375 pencils were processed through the department. One person works in this department. Inventory after Insert The improvement team notes that there are 9000 pencils sitting in the Insert Department that have completed the graphite inserting process. An additional 151,000 pencils are sitting in an inventory staging area waiting to have erasers attached. Eraser Department In the Eraser Department, the pencils are banded with a metal band and an eraser is crimped into place. Because each pencil is the same diameter, there is no setup required for this process. Currently, six eraser installers work in this department, each operating one of six eraser installing machines. To operate a machine, an operator places five pencils in a fixture and then presses a start button. The machine then installs erasers on all five pencils. Then the operator removes the finished pencils from the machine and loads five more. After watching one of the operators work at this process, Victoria and her team observe that it takes an average of 87 seconds for each group of five pencils to be processed through this machine. Because each pencil spends 87 seconds in this process, Victoria records this as the Processing Time. Erasers are attached to pencils in batches of 10,000 before being sent to the Boxing Department Inventory after Eraser The improvement team notes that there are 10,000 pencils sitting in the Eraser Department that have erasers attached. The team notices that there are an additional 240,000 pencils in an inventory staging area waiting to be boxed. Boxing Department The Boxing Department boxes the pencils into custom imprinted boxes. The boxes are supplied by the Printing Department who prints the boxes for all the products at WI. Each day, the box workers receive a list of orders that should be packaged that day. Each worker in the Boxing Department takes a single order, boxes that order, and takes the order to the finished goods storage area. Because the operators box one order at a time, and the average order consists of 100 pencils; the average batch size for the Boxing Department is 100 pencils. Fourteen (14) people work simultaneously during the shift. Approximately 20% of the orders filled by the Boxing Department are for pencils. Victoria is able to calculate the Full Time Equivalent (FTE) number of people that work on pencils by multiplying 14 people x 20% of time working on pencils (2.8 FTE people). After watching the department for 20 minutes, the improvement team notes that one of the average workers has boxed 60 pencils. Victoria calculates the Processing Time for this operation by dividing 1200 seconds [20 minutes 60 seconds) by 60 pencils resulting in 20 seconds per pencil. Cycle Time is the average time that occurs between individual parts being completed by all the employees in a process. Therefore, Victoria calculates the Cycle Time to be 7.14 seconds by dividing the Processing Time by the Full Time Equivalent (FTE) number of people working on pencils (20 seconds /2.8 people) Finished Goods Storage Area CWI maintains boxed products in the finished goods storage area for customers that order on a routine basis. Victoria and her team note that there are currently 160,000 pencils in finished goods storage. 4 Information Flows Customers place orders for pencils primarily by e-mail and online ordering through the CWI website. The Customer Service Department enters the order into the Customer Order Database. The Billing Department accesses this database to create invoices that are sent to the customers once every 30 days. The Procurement Department accesses the database to place monthly orders for raw materials. The Scheduling Department accesses this database to try to forecast what products should be made in each of the manufacturing departments to meet the customer demands. Each day, the Scheduling Department sends a schedule of what product should be made to each of the manufacturing departments. The Scheduling Department also sends a schedule of what custom printed boxes should be made by the Printing Department, which supplies the boxes used in the Boxing Department. Your Tasks Are to: 1. Collect the relevant numerical data from the case. 2. Calculate the Processing Time and Cycle Time for each process step. 3. Determine how much WIP is between each process step. 4. Calculate Takt Time (refer to Learning to See, page 44) 5. Draw the current state map including a timeline bar and information flows. X The Case of the Pencil Pushin... : CASE: The Case of the Pencil Pushing Process (A): Drawing a Current State Value Stream Map Columbus Writing Instruments (CWI) produces and sells a variety of writing instruments to retail outlets such as drug stores, grocery stores, and office supply stores. They manufacture plastic pens, highlighters, mechanical pencils, and wooden pencils. Although the products are standardized, cwl packages the product in boxes imprinted with the customer logo and artwork to create a generic store-brand writing instrument For instance, Joe's Office Supply and Carol's Grocery each carry a store-brand of plastic ballpoint pens. The pens, manufactured and packaged by CWI, are exactly the same. But Joe sells a package of 10 pens with his logo and artwork on the package and Carol sells a package of 12 pens with her logo and artwork on the package. Because of their consistent quality, and fast delivery, CWI's sales have been steadily increasing at a rate of over 60% each year for the past three years. They have several clients that have been ordering writing instruments consistently. Additionally, new clients are being acquired each week who demand customized packaging and fast delivery. However, the additional volume and new clients seem to be creating a variety of problems in the manufacturing process. The Problems CWI is currently experiencing a variety of problems: Purchasing and overhead costs have been steadily increasing. Profits have been decreasing. To address this problem, the CFO has mandated that the Purchasing Department should buy raw materials in bulk to take advantage of volume discounts. The facility is quickly running out of room. The production space is so full of parts and products that CWI is considering building a second production facility and warehouse. The facilities manager comments, "The Sales Department wants us to make more products more quickly, but we do not have the space." CWI quotes an order lead time of 2 weeks, and they are shipping approximately 15% of the orders late. To compound this problem, within 8 - 10 days of placing an order, several customers call to change the specifications on the artwork for the packaging. Because of the customized packaging, any finished products must be scrapped or reworked to accommodate these updated customer requests. Recently, termites ruined CWI's stock of wood for making pencils. The purchasing manager had to expedite a new shipment of wood, incurring $7.000 in additional shipping costs. To prevent this problem from happening again, the purchasing manager ordered twice the usual amount of wood saying, "We'll store twice as much wood in two places in the plant so that if this happens again, we will still have some raw materials to work with." 1 The Operations Manager takes Initiative The president of CWI has told Victoria S. Morgan, the operations manager, to solve the production problems and increase the throughput speed of the manufacturing process. Because of the recent decrease in profits, money for capital investment and hiring more workers will be severely limited. Victoria Morgan decides to buy a copy of Learning to See and use value stream maps to highlight how the production process should be improved. Although CWI manufactures pens, highlighters, mechanical pencils, and wooden pencils, Victoria realizes that placing all of these product families on a single value stream map would be very difficult and confusing. The first step is to decide which family of products should be mapped. Each family of products (pens, highlighters, mechanical pencils, and wooden pencils) uses a unique sequence of steps in their production. Pencils are the highest profit margin product produced at CWI and demand for pencils has been increasing recently. Therefore, Victoria S. Morgan chose the pencil family of products to value stream map first. The Pencil Family of Products CWI manufactures a variety of pencil related products. They make three (3) sizes of pencils: 4 inch, 6 inch, and 8 inch. They offer 5 colors: red, blue, yellow, green, and white. The pencils are packaged in boxes imprinted with the customer logo and artwork. Therefore, CWI manufactures 15 unique configurations of pencil , each packaged in customized boxes for specific customers. All 15 configurations of pencil are considered part of the pencil family of products because they are processed using similar methods and equipment. The process and specific sequence for using various machines is approximately the same for all 15 variations of pencil made. CWI receives orders for approximately 24,000 pencils each week. The average order size is 100 pencils. Orders are evenly distributed among each of the five colors. CWI operates one shift (8 hours each day) running 5 days each week. The Pencil-Making Process Victoria S. Morgan decides to walk the process with her production staff to collect the data required for value stream mapping. The team carries paper and pencils to document the process steps, and stop watches to time the various steps of the process. The Raw Materials Storage Area The team documents the raw materials in stock for making pencils: Wood: 20 days Graphite: 8 days Erasers: 9.5 days Metal Tops: 12 days Boxes: 32 days 2 Victoria S. Morgan decides to concentrate on following the wood through the process because (a) wood is one of the most expensive and plentiful inventory items and (b) wood is a primary raw material that is incorporated early in the pencil-making process. The wood supplier, Timber Incorporated, makes shipments once every other week (once every 2 weeks). The wood dowels come pre-painted in each of the five colors offered by Cwi. The Cutting Department In the Cutting Department, wood dowels are cut to the correct length; 4, 6, or 8 inches long to make a pencil "blank." Victoria and her team watch the process for a while. The Cutting Department makes 10,000 of a single length and color before sending the blanks to the Insert Department. First, the machine used in this department requires 5 minutes to set-up for the particular length to be cut Next, an operator cuts the painted dowel. Victoria times how long it takes for the operator to create a pencil blank. After watching the process run for 15 minutes, 409 pencil blanks have been made. Therefore, the processing time is 2.2 seconds [15 minutes x 60 seconds / 409 pencil blanks]. One person works in this department. Cutting Department Summary: Employees in Department = 1 person Setup Time, S/U = 5 minutes per batch Batch Size = 10,000 pencil blanks Processing Time = 2.2 seconds per pencil blank Inventory after Cutting The improvement team notes that there are 6000 completed pencil blanks sitting in the Cutting Department and another 44,000 pencil blanks sitting in a staging area waiting to be processed by the Insert Department. Therefore, there are 50,000 pencil blanks in work-in-process inventory between the Cutting and Inserting. The Insert Department In the Insert Department, the operator inserts a graphite rod into the center of the pencil blank. The Insert Department makes pencils in batches of 10,000. There is no setup required for this operation. After watching the Insert Department for 20 minutes, 375 pencils were processed through the department. One person works in this department. Inventory after Insert The improvement team notes that there are 9000 pencils sitting in the Insert Department that have completed the graphite inserting process. An additional 151,000 pencils are sitting in an inventory staging area waiting to have erasers attached. Eraser Department In the Eraser Department, the pencils are banded with a metal band and an eraser is crimped into place. Because each pencil is the same diameter, there is no setup required for this process. Currently, six eraser installers work in this department, each operating one of six eraser installing machines. To operate a machine, an operator places five pencils in a fixture and then presses a start button. The machine then installs erasers on all five pencils. Then the operator removes the finished pencils from the machine and loads five more. After watching one of the operators work at this process, Victoria and her team observe that it takes an average of 87 seconds for each group of five pencils to be processed through this machine. Because each pencil spends 87 seconds in this process, Victoria records this as the Processing Time. Erasers are attached to pencils in batches of 10,000 before being sent to the Boxing Department Inventory after Eraser The improvement team notes that there are 10,000 pencils sitting in the Eraser Department that have erasers attached. The team notices that there are an additional 240,000 pencils in an inventory staging area waiting to be boxed. Boxing Department The Boxing Department boxes the pencils into custom imprinted boxes. The boxes are supplied by the Printing Department who prints the boxes for all the products at WI. Each day, the box workers receive a list of orders that should be packaged that day. Each worker in the Boxing Department takes a single order, boxes that order, and takes the order to the finished goods storage area. Because the operators box one order at a time, and the average order consists of 100 pencils; the average batch size for the Boxing Department is 100 pencils. Fourteen (14) people work simultaneously during the shift. Approximately 20% of the orders filled by the Boxing Department are for pencils. Victoria is able to calculate the Full Time Equivalent (FTE) number of people that work on pencils by multiplying 14 people x 20% of time working on pencils (2.8 FTE people). After watching the department for 20 minutes, the improvement team notes that one of the average workers has boxed 60 pencils. Victoria calculates the Processing Time for this operation by dividing 1200 seconds [20 minutes 60 seconds) by 60 pencils resulting in 20 seconds per pencil. Cycle Time is the average time that occurs between individual parts being completed by all the employees in a process. Therefore, Victoria calculates the Cycle Time to be 7.14 seconds by dividing the Processing Time by the Full Time Equivalent (FTE) number of people working on pencils (20 seconds /2.8 people) Finished Goods Storage Area CWI maintains boxed products in the finished goods storage area for customers that order on a routine basis. Victoria and her team note that there are currently 160,000 pencils in finished goods storage. 4 Information Flows Customers place orders for pencils primarily by e-mail and online ordering through the CWI website. The Customer Service Department enters the order into the Customer Order Database. The Billing Department accesses this database to create invoices that are sent to the customers once every 30 days. The Procurement Department accesses the database to place monthly orders for raw materials. The Scheduling Department accesses this database to try to forecast what products should be made in each of the manufacturing departments to meet the customer demands. Each day, the Scheduling Department sends a schedule of what product should be made to each of the manufacturing departments. The Scheduling Department also sends a schedule of what custom printed boxes should be made by the Printing Department, which supplies the boxes used in the Boxing Department. Your Tasks Are to: 1. Collect the relevant numerical data from the case. 2. Calculate the Processing Time and Cycle Time for each process step. 3. Determine how much WIP is between each process step. 4. Calculate Takt Time (refer to Learning to See, page 44) 5. Draw the current state map including a timeline bar and information flows