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SMEDA-Industry Support Program Application of Lean Production Case Study from Garment Sector of Pakistan SMEDA-Industry Support Program Application of Lean Production Case Study from Garment Sector of Pakistan 28 March, 2011 Presenters: Mr. Haider Sagheer Mr. Qasar Wasique Ahmed Dr. Nabeel Amin

Background of the Project n Labor intensive n Huge variety of products with small Background of the Project n Labor intensive n Huge variety of products with small quantity orders n Inefficient production systems n High need of flexibility n Large employment Opportunities and increased share in export market

Evaluation Phase 1. 2. 3. 4. 5. 6. House Keeping Factory Current Efficiency Level Evaluation Phase 1. 2. 3. 4. 5. 6. House Keeping Factory Current Efficiency Level Factory Current Defect Rate Material Handling Space Utilization Style Change Over Analysis

1 - House Keeping-before 1 - House Keeping-before

House Keeping-before House Keeping-before

House Keeping-before House Keeping-before

2. Factory Efficiency Following were the major steps taken for calculating factory current efficiency 2. Factory Efficiency Following were the major steps taken for calculating factory current efficiency level: 1. SAM Calculation of major products 2. Calculation of Over time 3. Data Collection from Bundle induction to sewing lines 4. 5. Data Collection of finished Bundles Idle Time Calculations

2. Factory Efficiency 22% 2. Factory Efficiency 22%

3. Defect Rate n Data collection by introducing appropriate format's. n Data collection at 3. Defect Rate n Data collection by introducing appropriate format's. n Data collection at end line and finishing stage. n Appointed end line checkers. n After collection of data for one month an average of defect rate was observed. 35 -40%

Inspection Sheet Finishing Inspection Sheet Finishing

4. Material Flow Analysis 840 Ft 4. Material Flow Analysis 840 Ft

Target Setting Phase Following Key Performance Indicators were defined as project target metrics: 1. Target Setting Phase Following Key Performance Indicators were defined as project target metrics: 1. Efficiency 2. Defect Rate 3. Material Handling 4. Space Utilization 5. Throughput Time 6. Cost/Pc

Implementation Phase n n n n Implementing 5 S/Visual Control Systems across the Factory Implementation Phase n n n n Implementing 5 S/Visual Control Systems across the Factory Implementation of IE functions Conducting Style Change Over Analysis by SMED (Reducing throughput time) Running of Sewing Line at target efficiency level Implementing Hourly Based Quality Monitoring System Implementing SQC techniques Introducing Incentive System for Quality Control

5 S Before After 5 S Before After

5 S in Store 5 S in Store

Before After Before After

n Savings of machinery 135, 000 PKR by sale of obsolete n Savings of machinery 135, 000 PKR by sale of obsolete

Assignment Sheet Assignment Sheet

Standard Allowed Minutes (SAM)- Gundo CT Short Standard Allowed Minutes (SAM)- Gundo CT Short

Critical path Analysis- Gundo CT Short Pkt bag OL n Frnt rise OL, Back Critical path Analysis- Gundo CT Short Pkt bag OL n Frnt rise OL, Back yokes OL Frnt rise att, Back Yoke Att Pkt bag att, Pkt TS CP Time = 9. 63, SM = 1. 31 Frnt rise TS, Back yokes TS Back Rise OL Bk yoke edge OL Side seam OL O/L time = 1. 31 Back rise att, Piping making Back rise TS, Piping att to bk yokes, Back yokes att to back body Side seam att & lbl att Button hole Bartack 4 pts Inseam att In seam OL W. B elastic mkg, Side label att, Elastic att at W. B, Main label att Bottom hem Store Room W. B TS

Style Change Analysis (Model Line) Bundle Size: 15, Date: 13/5/10, Style: Short Time: 10: Style Change Analysis (Model Line) Bundle Size: 15, Date: 13/5/10, Style: Short Time: 10: 30

Activities to introduce Flexible Production Line n Reduction of Bundle Size n Hourly Basis Activities to introduce Flexible Production Line n Reduction of Bundle Size n Hourly Basis Monitoring System n Advance Cutting in Shelves n Implementation of Checklist for Accessories n Layout – Shifting of Special Machines n Selection Criteria of Operators, Payments, Disciplinary Issues,

Improved Material flow 328 Ft Improved Material flow 328 Ft

Overhead cost Comparison (for 17 no of machines for one month) Before After (Model Overhead cost Comparison (for 17 no of machines for one month) Before After (Model hall) Items Description Overhead Cost per Month for 170 machines 1, 000, 000 Overhead Cost per Month for 17 machines 100, 000 225 No. of pcs/day produced @32% 325 No. of Pcs per mth @22% 5625 No. of Pcs per mth @32% 8125 overhead Cost/pc per mth @22% 18 overhead Cost/pc per mth @32% 12. 31 No. of pcs/day produced @22% OH cost Difference per piece = 18 -12. 31 = 5. 47 OH Cost Savings = 5. 47*8125 = Rs. 44, 443

Quality Control System n n Introduced Hourly Basis Reports End Line Finishing Check Sheets Quality Control System n n Introduced Hourly Basis Reports End Line Finishing Check Sheets – Major Defects ISSUES: Reports could not be properly filled due to large buddle size Operators were not submitting small bundles on time Low DHU is Key Factor for running model line, therefore immediate action must be taken to properly fill the Q. C Reports

Introducing Incentive System Introducing Incentive System

Defect Rate DR reduces Upto 5% Defect Rate DR reduces Upto 5%

Cost Savings Through Defect Rate Reduction n Avg. Production per Month = 60, 000 Cost Savings Through Defect Rate Reduction n Avg. Production per Month = 60, 000 Pcs n DR Before =30%, Rework in Nos = 18000 pcs n DR After = 5%, Rework in Nos = 3000 pcs n Rework Difference = 18000 – 3000 = 15000 pcs n Avg. Operation Time =0. 5 min n Total time = 15000*0. 5=7500 min n Total time consumed in RW is 7* times of the operation 1 st time performed. n Total time saved= 7500 * 7 = 52500 min n Avg. SAM per pc = 12 min *According to KSA study this factor ranges from 7 to 14 times of the operation 1 st time performed.

Cost Savings Through Defect Rate Reduction n No. of pcs that can be produced Cost Savings Through Defect Rate Reduction n No. of pcs that can be produced = 52500/12*32 = 1400 pcs n Avg. Profit per pc @15% (FOB=Rs. 425) = Rs. 64 n Cost saving in RW/[email protected]% per Mth = 1400 * 64 = Rs. 89, 600 n Projected saving by sustaining the RW @5%over one year = 89, 600*12 = Rs. 10, 75, 200

Cost Savings Through Defect Rate Reduction (Inspection Cost) n n n Salary per month(25 Cost Savings Through Defect Rate Reduction (Inspection Cost) n n n Salary per month(25 working days) = Rs. 7000 Per day income (salary)=7000/25 = Rs. 280 Avg. pcs inspected per day per Inspector=250 No of days needed by one inspector=15000/250=60 days Savings/Month By Reducing Inspection = 60*280 = Rs. 16800 n Projected Saving over one year through Inspection = 16800*12 = 201, 600

Total Savings Per Month Cost Savings by Reducing DR/month + Cost Savings By Reducing Total Savings Per Month Cost Savings by Reducing DR/month + Cost Savings By Reducing Inspection = Rs. 89600 + Rs. 16800 = Rs. 106400

Results Sr. No KPI Before After Percentage improvement 1 Efficiency 22% 32% 45% 2 Results Sr. No KPI Before After Percentage improvement 1 Efficiency 22% 32% 45% 2 Defect Rate 35% 5% 85 % 3 Material Handling 840 ft 328 ft 61% 4 Space Utilization 0 sq ft 1254 sq ft 100% 5 Through Put Time 3 days 1 day 66% 6 Cost per piece 18 Rs 12. 31 Rs 31%