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Implementation of Lean and Logistics Principles to Reduce Non-conformities of

a Warehouse in the Metalworking Industry

Conference Paper · March 2021

DOI: 10.1109/ICITM52822.2021.00024

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 Implementation of Lean and Logistics Principles to
Reduce Non-conformities of a Warehouse in the
Metalworking Industry
Nicole Yarixa Espinoza Sanchez Peter Yuri Sanchez Santos Guillermo Eloy Marcelo Lastra
Engineering Faculty Engineering Faculty Engineering Faculty
Universidad Peruana de Ciencias Universidad Peruana de Ciencias Universidad Peruana de Ciencias
Aplicadas Aplicadas Aplicadas
Lima, Perú Lima, Perú Lima, Perú
[email protected] [email protected] [email protected]

Juan Carlos Quiroz Flores Jose Carlos Alvarez Merino

Engineering Faculty Engineering Faculty
Universidad Peruana de Ciencias Aplicadas Universidad Peruana de Ciencias Aplicadas
Lima, Perú Lima, Perú
[email protected] [email protected]

Abstract—The main objective of the work is to analyze the delivery indicator was 44.45%, which leaves a gap of 23.17%.
problem of non-conforming products in the warehouse, which It is for this reason that a model was made using Lean
affects delivery on time and perfect orders, directly impacting the Warehouse tools and 5S, using the VSM as a starting point.
OTIF (On Time, In Full) logistics indicator of manufacturing
companies in Peru. For this reason, the analysis was carried out The Lean philosophy's principles and instruments were
in XY, which accounts for 64.03% of non-conforming parts, "usually applied to enhance the company's internal logistics
composed of reprocessed products (72.93%) and discarded and not the warehouse. "The use of Lean Warehouse tools such
(27.07%), which causes costs to increase to $ 347,234.67. This is as Slotting is a decision that has a transverse impact on the
due to the following causes: Dispatch of unsolicited products operations of placing, storage, and order preparation. Slotting
(35.88%), damaged products (35.68%), fictitious stock (17.94%) impacts the arrangement because it determines in which
and delay in dispatch (10.94%). To reduce the impact of the storage positions the products should be located, considering
problem, Lean Warehousing, slooting and wave picking factors such as demand, the storage system, among others. The
techniques were used; and 5S developing the model with the Picking tool by waves or order preparation by waves, is a trend
PDCA methodology, using VSM for the analysis of the flow of in the preparation of orders in warehouses, which consists of
activities and measurement of the identified indicators. After the establishing a strategy by which several orders are grouped
implementation of the model, the process time was reduced by through a common criterion.
19.12%. The distance traveled to prepare an order was reduced
from 244.5 meters to 173.5 meters; and an OTIF value increased In the manufacturing industry in 2019, 14 facilities were
by 44.33%. The output of the model provides an example for identified that now provide an opportunity for learning and
potential application in warehouses of companies in the collaboration, these industries were considered as an example
manufacturing industry. to propose the model that is demonstrated in this research in
the following table shows the companies mentioned. Having
Keywords—5S, delivery in full – on time (DIFOT), lean explained the above, in this document we have the analysis of
manufacturing, metalworking, on time in full (OTIF), slotting, the problem identified in company XY which will be
VSM, warehouse, wave picking
developed in section II explaining the qualitative and
I. INTRODUCTION quantitative analysis of the causes. After this, a literature
review was carried out in section III, where the literary
It is for this reason that manufacturing companies are faced resources used to formulate the model will be explored,
with the need to rethink their activities to achieve the investigating the main lean practices and tools that will be
objectives that allow them to achieve the expected included in the model and to provide bibliographic support for
competitiveness within the market. Warehouses are a key the investigation. Section IV describes the innovative proposal
logistics process in the supply chain, which allow managing showing the proposed model and explaining its development.
inventories, regulating supply and demand, as well as meeting
the internal and external requirements of companies. Currently, In particular, the execution of the model is detailed in the
the OTIF delivery indicator of the best manufacturing practices case study using the PDCA methodology as part of the
in Peru is 67.62%, in the analysis of companies XY the OTIF implementation. Section V demonstrates the validation of the
model executed through the indicators found. In section VI a be analyzed to mitigate them with engineering tools. The non-
discussion about the results obtained was developed. Finally, conformities detailed in the table above cause the OTIF (On
section VII presents some final observations. Time In Full) to be lower than the estimated average, so the
company under study may lose its competitive capacity.
II. PROBLEM ANALYSIS
The gap between the number of dispatches in Peru and the
The analysis of the information aimed to know the company under study is 4.88%, although it seems a lower
procedures of the company. It was possible to know the main value, the next section will analyze the economic impact of this
processes, mission, vision, sales, documentation of non- indicator, Perfect orders delivered and OTIF. The differences
conformities, economic collection; Table I with these data, it between the company's indicators and those obtained by
was possible to identify the lack of standardization of processes, benchmarking must be translated into a monetary value to
and the lack of importance in reporting non-conformities. estimate the economic impact because of the indicators that are
Through this, an analysis of the non-conforming parts found in below the expected standard.
the areas of the company in 2019 could be carried out.
The economic impact of all non-conformities that give rise
TABLE I. NUMBER OF NON-CONFORMITIES PER AREA to a lower value in the OTIF indicator, in the warehouse area
Quantity of non-
are affected by the cost of raw material, man-hour cost,
Area conforming %CC
production cost, among other associated costs.
products An analysis of the detected causes is carried out, which are
Raw material warehouse 786 99.55% analyzed below in Table II.
Production 1213 99.31%
Quality control 1357 99.23% These causes, as indicated in the Ishikawa, can be due to
Main warehouse 8459 95.18% the methods used, internal factors, environmental effects,
Total units sold 11815 93.37% material, and personnel problems. These possible causes are
further investigated with the use of lean tools that will be
implemented in the proposed model and in the "analysis" phase
The above table indicates that the% of quality is lower in to delve into the root causes of the problem and to be able to
the main warehouse area, the causes of non-conformities will reduce or eliminate them.
TABLE II. DESCRIPTION OF NON-CONFORMITIES IN THE MAIN WAREHOUSE

amount of USD $ 335,194.48 which represents a margin of

2.58%.
Based on the analyzes carried out, a graph will be made
detailing the causes, the technique to attack the causes (Figure
2).

Fig. 1. Case study Ishikawa.

The Ishikawa identifies 4 reasons why the warehouse

management is deficient, which incurs that the lead time for
preparing orders is greater than the estimated, therefore it is
delivered out of time and due to the haste it is not properly
accounted for, thus obtaining a OTIF of 44.45%, finding that
Fig. 2. Proposed problem and tool linkage.
non-conformities impact on this indicator and in an estimated
 III. STATE OF THE ART it allows determining the dimensions of the warehouse (m2 and
This paper explains the usage of lean equipment followed meters of travel). Likewise, the analysis of the family of
by logistics strategies in a metalworking company's sales products according to the Purba [7] analysis, allows to identify
warehouse that supplies mine exploration goods. There are five the family or product that has the greatest impact - amount of
families, two that are buying and selling and three that enter the sales and income - within the organization in order to be the
warehouse from the production line. standard product or family for development following the
current process flow for the previous analysis. In the same way,
According to Carreño [1], there is a storage cycle the current indicators of the organization are required to be
consisting of 5 phases: It begins with the receipt of the comparable in the initial stage with the future one as Baby [8]
products which will be placed in the warehouse, followed by carried out, thus demonstrating the applicable improvements
the storage phase at this stage the products are placed in a before implementation.
specific location so that the physical state of the product is kept
in good condition and is easily located for the next stage, which
is the preparation of orders, where the operator moves through
the warehouse to collect the products that make up the order,
known as picking. Then the dispatch is given which consists of
the delivery of the order to the carrier or client. Finally, the
stock control is given where a physical check of the products
located in the warehouse is made.
It should be taken into account that the value chain is
defined as those activities that give added value to the customer Fig. 3. Proposed model.
and that involves the entire path that the product must follow
from receipt of the order to delivery to the end customer Previous information such as the area under study, products
according to Nash and Poling [2]. To determine the problems or product families, process flow and indicators allow the
associated with the process, the tool known as Value Stream application of the model in order to mitigate economic losses,
Mapping (VSM) or value chain mapping will be used, because reduce unproductive times and improve the performance of the
authors such as Nash and Poling [2] have managed to conclude area in which the program is applied. proposed model.
that this technique allows, visualizes and understand the At the beginning of the application, information will be
process; It also allows you to recognize value, differentiate it given about the changes that have occurred and the impact that
from waste and create an action plan to eliminate it within the the application of the tools has caused in similar manufacturing
process. The initial analysis to determine the problem begins industries within the study sector in order to mitigate the
with the development of a VSM. Morlock & Meier [3] develop resilience to change within the organization.
an adaptation of the value chain mapping model for a service
company, managing to improve the effectiveness of its V. RESULTS
processes, thereby verifying that the tool is functional in all The information of the case under study to validate the
kinds of real-life scenarios. model in an experimental way, Table III validating its
After the development of the VSM, it is planned to operability, is required for the correct execution of the model,
implement the 5S, a methodology that results in an orderly, is presented below. In the area under study there are 7 people
clean, safe and well-organized workspace, designed to help (6 assistants and a boss) the area is 550m2.
minimize waste and maximize productivity according to
ReVelle [4]. TABLE III. CASE STUDY DATA

IV. CONTRIBUTION
After presenting the analysis of the problem and
antecedents within the sector and previous works that analyze
similar situations and scenarios, an application model is
proposed in order to mitigate the causes that generate the non-
conformities that cause the indicators of delivery on time and
delivery -OTIF- are less than the standard (67.62%).
The proposed model (Figure 3) is influenced by models The previous information allows us to directly analyze the
applied in warehouses of manufacturing industries which are in P1 product family, as it is the standard family after applying
charge of dispatching the final customer, specifically it is based the product-process matrix. The current state of the case study
on pharmaceutical companies; Abideen [5], [6] presented is presented below by creating the value stream map.
models in this sector, as delivery time in this sector is of vital
The current value flow map shows the time it takes to
importance due to the importance of on-time delivery and
prepare an order from the receipt of products from the
quantity of complete order items.
production area until they are loaded into the corresponding
The main information required for the initial execution of means of transport and delivered to the end customer. The time
the model is the study area, since it limits the study area, since that the warehouse area adds value is only 270 minutes per
order in contrast to a non-added value time of 3,540 minutes, 85% equivalent to more than 295 thousand dollars that will not
more than 6 days without adding value in Figure 4. be absorbed as losses by the company under study

TABLE IV. RESULTS IN CASE STUDY

VI. DISCUSSION
The purpose of this research is to reduce non-conformities
and increase performance indicators within a warehouse by
Fig. 4. Current state value stream map.
reducing time that does not add value and waste. The increase
in the indicators is obtained by improving the order assembly
After the application of the previous tools (3S, current
method, a fundamental activity that involves handling and
VSM and layout design), a future VSM is carried out, Figure 5;
transportation in 65% of the activity. By comparing the current
prior to implementation, where the changes and improvements
working method by analyzing the current value stream map
obtained after the application of the techniques are analyzed.
and 5S implementation status checklist.
presented in the initial model.
The application of the proposed model allowed mitigating
the VNA activities, thus reducing the non-conformities
originating within the warehouse under study of the
metalworking sector, since these products that are not sold
already have operating costs being absorbed by the
organization, which leads to loss of products, sales and utility.
A reduction of more than 295 thousand dollars is obtained
by investing in the model only 10 thousand dollars; the
estimated reduction is projected in mitigating non-conformities
within the case study and increasing the performance indicators
of the warehouse under study.
Fig. 5. Future state value stream map.
VII. CONCLUSION
Making the comparison between the current VSM and the This research aimed to relate Lean Manufacturing tools
future VSM, the following figure is obtained. with specific logistics tools in the implementation within a
warehouse of the Peruvian manufacturing sector and propose
an appropriate model. The implementation of VSM, 5S, wave
picking, and slotting could contribute to the improvement of
the performance of a warehouse by reducing waste, improving
the operating procedure, and reducing non-conformities with
the 5S, VSM and logistics tools. This study provides a
perspective for the development of Lean tools within a
warehouse.
Therefore, the implication of this study is considered
important and useful to increase knowledge, propose
dimensions and propose a conceptual framework or model
accompanied by VSM and 5S integrating more areas related to
the warehouse as it is an initiative to improve current
Fig. 6. Mudas between operations in warehouse. performance in the metalworking industry from Peru. Finally,
it can be provided as a guide and reference for professionals
The reduction of seedlings - waste according to LM Figure
and academics within the manufacturing sector.
6- had a positive impact since the time of non-added value was
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