Analyzing the benefits of lean manufacturing and value stream mapping via simulation: A process sector case study

Abstract

The “lean” approach has been applied more frequently in discrete manufacturing than in the continuous/process sector, mainly because of several perceived barriers in the latter environment that have caused managers to be reluctant to make the required commitment. We describe a case where lean principles were adapted for the process sector for application at a large integrated steel mill. Value stream mapping was the main tool used to identify the opportunities for various lean techniques. We also describe a simulation model that was developed to contrast the “before” and “after” scenarios in detail, in order to illustrate to managers potential benefits such as reduced production lead-time and lower work-in-process inventory.

Introduction

Lean manufacturing is one of the initiatives that many major businesses in the United States have been trying to adopt in order to remain competitive in an increasingly global market. The focus of the approach is on cost reduction by eliminating non-value added activities. Originating from the Toyota Production System, many of the tools and techniques of lean manufacturing (e.g., just-in-time (JIT), cellular manufacturing, total productive maintenance, single-minute exchange of dies, production smoothing) have been widely used in discrete manufacturing. Applications have spanned many sectors including automotive, electronics, white goods, and consumer products manufacturing.

On the other hand, applications of lean manufacturing in the continuous process sector have been far fewer (Abdullah and Rajgopal, 2003). It has sometimes been argued that in part, this is because such industries are inherently more efficient and have a relatively less urgent need for major improvement activities. Managers have also been hesitant to adopt lean manufacturing tools and techniques to the continuous sector because of other characteristics that are typical in this sector. These include large, inflexible machines, long setup times, and the general difficulty in producing in small batches.

While some lean manufacturing tools might indeed be difficult to adapt to the continuous sector, this does not mean that the approach is completely inapplicable; for example, Ahmad et al. (2005), Melton (2005), Radnor (2000), Cook and Rogowski (1996), and Billesbach (1994). Abdullah et al. (2002) and Abdelmalek et al. (2006) examine aspects of continuous production that are amenable to lean techniques and present a classification scheme to guide lean implementation in this sector. The objective of this paper is to use a case-based approach to demonstrate how lean manufacturing tools when used appropriately, can help the process industry eliminate waste, maintain better inventory control, improve product quality, and obtain better overall financial and operational control. A large integrated steel mill is used to illustrate the approach followed. Since some of the information is confidential, the company is referred to as AB steel (or ABS) throughout this paper. In our approach, value stream mapping (VSM) is first used to map the current operating state for ABS. This map is used to identify sources of waste and to identify lean tools for reducing the waste. A future state map is then developed for the system with lean tools applied to it. Since the implementation of the recommendations is likely to be both expensive and time-consuming, we develop a simulation model for the managers at ABS in order to quantify the benefits gained from using lean tools and techniques.