implementation of dmaic methodology for reducing the scrapped materials in an adhesive manufacturing company

VIETNAM NATIONAL UNIVERSITY OF HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY NGUYEN THUY LINH IMPLEMENTATION OF DMAIC METHODOLOGY FOR REDUCING THE SCRAPPED MATERIALS IN AN ADHESIVE MANUFACT

VIETNAM NATIONAL UNIVERSITY OF HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY

NGUYEN THUY LINH

IMPLEMENTATION OF DMAIC METHODOLOGY FOR REDUCING THE SCRAPPED MATERIALS

IN AN ADHESIVE MANUFACTURING COMPANY

Major: Industrial Engineering Major ID: 8520117

MASTER’S THESIS

HO CHI MINH CITY, January 2024

THIS RESEARCH IS COMPLETED AT:

HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY – VNU HCM Instructor 1: Assoc Prof PhD Do Ngoc Hien

Instructor 2: Assoc Prof PhD Le Ngoc Quynh Lam Examiner 1: PhD Do Thanh Luu

Examiner 2: PhD Nguyen Duc Duy

Master’s Thesis is defended at HCMC University of Technology, VNU-HCM on January 27, 2024

The Board of The Master’s Thesis Defense Council includes:

1 Chairman: PhD Nguyen Vang Phuc Nguyen 2 Secretary: PhD Le Song Thanh Quynh

3 Counter-Argument Member: PhD Do Thanh Luu 4 Counter-Argument Member: PhD Nguyen Duc Duy 5 Council Member: PhD Duong Quoc Buu

Verification of the Chairman of the Master’s Thesis Defense Council and the Dean of the Faculty of Mechanical Engineering after the thesis is corrected (if any)

ENGINEERING

VIETNAM NATIONAL UNIVERSITY HCMC

VNUHCM UNIVERSITY OF TECHNOLOGY

SOCIAL REPUBLIC OF VIETNAM Independence – Liberty – Happiness MASTER’S THESIS ASSIGNMENTS

Date of birth: April 01, 1998 Place of birth: Thanh Hoa Major: Industrial Engineering Major ID: 2070335

MANUFACTURING COMPANY / NGHIÊN CỨU THIẾT KẾ GIẢI PHÁP GIẢM SỐ LƯỢNG VẬT LIỆU HUỶ TRONG CÔNG TY SẢN XUẤT KEO DÁN CÔNG NGHIỆP

- Research to apply DMAIC cycle into operation, production process and material monitor in an Adhesive Manufacturing Company

- Determine potential root causes creating scrapped materials

- Recommend actions and control plans to optimize process and monitor the quantity of scrapped materials

Ngoc Quynh Lam

Ho Chi Minh City, January 27, 2023

DEAN OF FACULTY OF MECHANICAL ENGINEERING

ACKNOWLEDGMENT

If my youth is a long journey, HCMC University of Technology would be the best wonderful destination Some people said that Bach Khoa was a mistake of their youths, but from the depth of my mind, it still was a mistake, but was sweetest fault in my life In this university, I had chances to meet my friends and my teachers, who are always ready to listen to my problems and give me a hand whenever I have troubles And also in this university, it taught me that difficulties and challenges are set to us to try best to overcome instead of ceasing us succeed

The thesis namely “Implementation of DMAIC methodology for reducing the scrapped materials in an adhesive manufacturing company” likes a milestone marking my success in applying all of knowledge I have learned two years into practice In order to complete well my thesis, I was lucky to receive help from school, my teachers and my colleagues

First of all, I would like to send respectful greetings and honest thanks to teachers in the Department of Industrial SystemEngineering Concerns, thorough instructions and kind helps from lecturers are important things supporting me to finish the thesis successfully

Especially, I would like to express my endless thanks and gratefulness to my instructor Assoc Prof Do Ngoc Hien and Assoc Prof Le Ngoc Quynh Lam My teachers always are devoted to instructing and take care of me during the research period, and their sound advices like magnetic needles for me to go on the right way Without their motivation and instruction, the thesis would have been impossible to done effectively On top of that, not only did they teach us valuable lessons, but also shared useful skills and working experiences in the daily life, which helped me grow better and avoid mistakes when working in any companies in the future

My special thanks devote to my family for their endless love, care and have most assistance and motivation me for the whole of my life I also would like to express my thanks to my friends for their support and care me all the time

Because of the time limitation as well as my limited understanding, this work still has several shortcomings I hope that I will receive suggestions as well as instructions from teachers to complete and improve better

ABSTRACT

Currently, to survive and thrive economy in a highly competitive market, business not only constantly build effective strategy of increasing production efficiency, improving quality and reducing defect rates, but also do pay more attention on meeting customer requirements In recent years, sustainability development has become a priority that most of companies aim for As one of organization which has defined importance of sustainability factors in getting more market shares, Adhesive Technology Vietnam Company have conducted projects to created eco-friendly products or reduce wastes disposed into environments However, according to data recorded in the 2021-2022 period, yearly average quantity of scrapped material is still high and alarmed It is indicated that there are some problems leading to waste in supply and production process DMAIC is well-known methodology to eliminated waste, improve product quality and increase production efficiency This study followed a structure Define, Measure, Analyze, Improve and Control approach to address the high quantity of scrapped materials Reasons causing high scrapped quantity have been classified and analyzed into four clues such as expiry, weak control methods in Internal warehouse and Cool warehouse, and Quality Issue happened for the highest consumed product – AQUENCE GL 92 ETICOL The achievement pointed out improvement in building work instruction and set up critical control points, which brought positive results As the results, this study helps company significantly reduce quantity of waste generated from approximately 70.5 tons in 2022 to about 50.6 tons updated until November 2023

In conclusion, according to collected results, it is proved that DMAIC cycles brought benefits and supported company to achieve the set-up target – reducing scrapped materials in the process to contribute to strategy of sustainability development

TÓM TẮT LUẬN VĂN

Hiện nay, để tồn tại và phát triển trong nền kinh tế mang tính cạnh tranh cao, các doanh nghiệp không chỉ tập trung vào việc xây dựng các chiến lược nâng cao hiệu quả sản xuất, cải tiến chất lượng, giảm tỷ lệ hàng lỗi mà còn tìm cách đáp ứng các yêu cầu từ khách hàng Trong những năm gần đây, phát triển bền vững đã và đang trở thành những ưu tiên hàng đầu mà các công ty hướng tới Là một trong những tổ chức nhận ra sự quan trọng của chiến lược phát triển bền vững trong viêc nâng cao thị phần, Công ty Sản Xuất Keo Dán Công Nghiệp Việt Nam đã tiến hành những dự án để tọa ra những sản phẩm thân thiện môi trường hoặc giảm số lượng hàng thải ra môi trường Tuy nhiên, theo dữ liệu ghi lại năm 2021-2022, số lượng hàng hủy trung bình hàng năm vẫn ở ngưỡng cao và báo động Điều này đã chỉ ra rằng vẫn đang có nhiều vấn đề tồn đọng gây ra những lãng phí, hàng hủy trong quá trình sản xuất và cung ứng sản phẩm

DMAIC được biết đến là một chu trình nhằm giảm lãng phí, cải tiến chất lượng sản phẩm và nâng cao hiệu quả sản xuất Nghiên cứu đã áp dụng cách tiếp cận của từng pha Xác định, Đo lường, Phân tích, Cải tiến và Kiểm soát để giải quyết vấn đề tỷ lệ hàng hủy cao Những nguyên nhân gây ra khối lượng hàng hủy lớn được phân tích và phân loại thành bốn manh mối như sau: hàng hóa hết hạn, hàng hóa không được kiểm soát tốt trong Kho Nội Bộ, hàng hóa không được kiểm soát tốt trong Kho Ngoài, và sản phẩm có vấn đề chất lượng – AQUENCE GL 92 ETICOL Những phương án cải tiến thông qua xây dựng hướng dẫn công việc, thiết lập điểm kiểm soát trong sản xuất đã đem lại những thành tựu đáng kể trong nghiên cứu này Cụ thể, nghiên cứu đã giúp công ty giảm khối lượng hàng hủy từ khoảng 70.5 tấn trong năm 2022 xuống còn khoảng 50.6 tấn ghi nhận vào tháng 11 năm 2023

Tóm lại, theo những dữ liệu thu nhập được, luận văn đã chứng minh chu trình DMAIC đã mang lại những lợi ích và giúp doanh nghiệp đạt được mục tiêu đặt ra ban đầu – giảm khối lượng hàng hủy tạo ra để đóng góp vào chiến lược phát triển bền vững

DECLARATION OF AUTHORSHIP

I hereby declare that this thesis with topic “Implementation Of DMAIC Methodology For Reducing The Scrapped Materials In An Adhesive Manufacturing Company” was carried out by myself and the work contained and the results in it are true by author and have not violated research ethics The data and figures presented in this thesis are for analysis, comments, and evaluations from various resources by my own work and have been duly acknowledged in the reference part

I will take full responsibility for any fraud detected in my thesis

Ho Chi Minh City, December 18, 2023

Nguyen Thuy Linh

4.2.1 Current Scenario 17 4.2.2 Process Mapping 18 4.2.3 Get Data Clues 21 4.3 Analysis Phase 28

4.3.2 Analyze root causes for high scrapped of materials stored in Internal

4.5.1 Standardize documentation 52 4.5.2 Product quality control plan 54 CHAPTER 5 CONCLUSIONS AND SUGGESTIONS 57

5.1 Conclusion 57

5.2 Suggestion 59

REFERENCES 61

APPENDIX A Statistic of Scrapped Materials in 2022 64

APPENDIX B Taguchi Design and collected experimental results 65

APPENDIX C Statis of Scrapped materials after improvement 66

APPENDIX D Handling Procedure for Non-conformance Materials 67

LIST OF FIGURES

Figure 3.1 Research Methodology 7

Figure 4.1: Adhesive product supplied 11

Figure 4.2: The strategy of research company in 2020+ 12

Figure 4.3: The overall procedure of material flow 13

Figure 4.4: SIPOC diagram for materials flow of process 16

Figure 4.5: Project Team Structure and Functions 16

Figure 4.6: I-MR Chart for scrapped quantity 18

Figure 4.7: Process mapping of monitoring materials 19

Figure 4.8: Pareto chart of scrapped quantity divided by material categories 23

Figure 4.9: Pareto charts of scrapped material divided by defect types 24

Figure 4.10: Pareto charts of scrapped material divided by Storage Location 25

Figure 4.11 5-WHY Brainstorming root cause of expired materials 29

Figure 4.12 The 5WHY Brainstorming root cause of scrapped materials in Internal Warehouse 32

Figure 4.13 The 5WHY Brainstorming root cause of scrapped materials in Cool Warehouse 34

Figure 4.14 Damaged trading goods when imported in Vietnam 34

Figure 4.15 Fish bond Diagram for analyzing cause of high viscosity issue 37

Figure 4.16 New procedure to control quantity of sale sample 39

Figure 4.17 I-MR chart of Scrapped Quantity of Sale Sample Before and After Improvement 41

Figure 4.18 New procedure to control quantity of Non-conformance Trading Goods 42

Figure 4.19 Imported goods before improvement (left) and after improvement (right) 45 Figure 4.20 Imported goods with torn bags before (left) and after (right) repacking 45

Figure 4.21 I-MR chart of Scrapped Quantity of Sale Sample Before and After

Figure 4.24 I-MR chart of trend of viscosity after 3 month for product 2241544 49

Figure 4.25 Result of Taguchi Design calculated via MiniTab 51

Figure 4.26 I-MR chart of Increase in viscosity Before and After Improvement 52

Figure 4.27 Template of Non-conformance Traded Good Handling Process 53

Figure 4.28 Disposal report in Arp 2023 54

Figure 4.29 8D report template for problem solving 55

Figure 4.30 Process parameters (temperature and speed) for batch produced in Aug 2023 55

Figure 5.1 Summary quantity of scrapped material YTD Nov 2023 58

LIST OF TABLES

Table 4-1: Scrapped materials in the 2020-2022 period 15

Table 4-2: Summary of VOC/VOB/ VOP 15

Table 4-3: Project team charter 17

Table 4-4: Cause and Effect Matrix 19

Table 4-5: Data Collection Plan 22

Table 4-6 Rating score of scrapped quantity 25

Table 4-7 Rating score of number of scrapped batches 26

Table 4-8 The Score of Materials Impacting on Y 26

Table 4-9 Summary of clues having high contribution to Y 28

Table 4-10 Classification of defect types and frequency for materials stored in the internal warehouse 31

Table 4-11 Analyze of Defected Goods Manufactured by Reaction Technologies 32

Table 4-12 Classification of defect types and frequency for materials stored in the Cool warehouse 33

Table 4-13 Re-inspection results of issue batches of Product 1338923 - AQUENCE GL 92 ETICOL 35

Table 4-14 Process Parameters of issue batches AQUENCE GL 92 ETICOL 36

Table 4-15 Improvement Plan Proposals 37

Table 4-16 Process parameters and their ranges 50

Table 4-17 Designed and collect results of experiments based on Taguchi 50

Table 4-18 Stability report of AQUENCE GL 92 ETICOL 56

CHAPTER 1 INTRODUCTION

1.1 Overview

Manufacturing industry is one of major parts, which contributes to thrive the economy, create employment, and drive innovations not only of developing countries but also developed ones Furthermore, it has to be mentioned about the significant contribution of small and medium scale enterprises (SMEs) towards financial development [1] According to the statistical results from Vietnam Ministry of Planning & Investment in 2021, SMEs accounted for 97% of over 800,000 operating enterprises and contributed 45% of GDP with 5 million positions for employees On the other hand, it is observed that the productivity performance of these businesses is somewhat unstable and poor As the results, defects and non-conformance materials sharply increase and impact directly on revenues and environmental sustainability Although industrialization is important for the economic growth, it cannot be ignored the negative effects on environment [2] Moreover, sustainability has become one of vital customer requirements and a competitive perspective among businesses recently [3], therefore, they are paying attention to look actions of reducing scrapped quantity as well as cost and increase efficiency

In fact, adhesive components play necessary parts in most of manufacturing industries including woodworking, packaging, automotive, fashion and footwears and so on [4] The huge demand generating from these industries is not only a chance of aiding but also a challenge of the adhesive market This is because, if every product does not meet the high standard and demand from customers, the non-conformance is created Meanwhile, adhesive manufacturing companies specialize in chemical adhesive products, which is paid high cost and efforts to treat wastes [5] In other words, beside the loss of benefit, companies also face the financial issues of disposal cost and legacies of environment protection Therefore, this study focused on one adhesive manufacturing

company, which is located in the South of Vietnam This factory is facing familiar issues others in the same business area such as high quantity of scrapped materials, large disposal cost and unstable process control Besides, competition among this company and competitor is very high, especially about the market share, therefore, sustainable strategy is one of their priorities in the period of 2023+

Six Sigma in general and DMAIC in specific are well-known as effective methodology for quality improvement and waste elimination [6] Meanwhile, scrap in the production process is defined as part of production that cannot be accepted as final product due to the production failure, and it is still classified as waste Therefore, it is potential to use a tool of Lean Six Sigma (LSS) to decrease the scrapped quantity This is the reason why “Implementation of DMAIC methodology for reducing the scrapped materials in the adhesive manufacturing company” has been chosen as the subject in this research

1.2 Research purpose

This paper is presented a DMAIC project, undertaken within a company for production adhesive products, which deals with identification and reduction of scrapped materials generated during processes By this way, project’s value contributes to save costs, bring company’s profit, increase business margin and achieve sustainable strategy

- Determine potential root causes creating scrapped materials

- Recommend actions and control plans to optimize process and monitor the quantity of scrapped materials

1.4 Scope and limitation

Due to the limited capability when collecting and analyzing data from the company, this project has the researching scope and limitation as below:

- Research object: Adhesive manufacturing factory is located in the South of Vietnam

- Product: all materials are used and controlled at plant - Research data: all data is collected from Jan to Dec 2022

- Chapter 5: Conclusion and Suggestion

CHAPTER 2 LITERATURE REVIEW

2.1 Six Sigma

In the mid-1980s, a statistic-based methodology was proposed by Motorola with the purpose of improving the process performance and reducing operational cost, which was call Six Sigma This methodology is simply defined to reduce defects via identifying the roots of variation, eliminate them and proof errors impacting on processes and focus on the whole-hearted satisfaction of the customer [7] In 2019, A Maged et al proposed Six Sigma approach into plastic injection molding, which is consider as one of the challenging processes to meet the requirements of good quality and low cost [8] The quality of finished good increasing from 4.06% to 4.5% and the cost of poor-quality decreasing by 45% are the positive results they obtained after researching In another research of Guerrero and colleagues in a Wood furniture firm from USA, implement of six sigma helped to reduce the defects up to 25% along with reduction in waste by 13% [9] Furthermore, Antony et al also proved the positive effect of six sigma in their study of three kinds of firm [10] In particular, commonly used tools such as SIPOC, fishbone diagram and hypothesis testing contributed to the improvement of their customer satisfaction, return on investment and product quality

Beside aforementioned benefits, problem solving by using the concept of statistical thinking could also gained from the application of Six Sigma [11] To illustrate this point, in the research in 2016, Lameijer et al pointed out that dimensions like TQM, improvement strategies and HRM affected strongly to employees’ attitude [12] Moreover, during the utilization of Six Sigma in this research project, several tools and techniques were employed Consequently, knowledge and skills of the people involved in the project would be enhanced

2.2 DMAIC cycle

DMAIC is one of major improvement methodologies in Six Sigma The DMAIC model refers to the five interconnection phases, which helps organization to solve the

problem and improve their processes’ performance The detailed DMAIC cycles was defined shortly by Dale et al as below [13]:

- Define (D): The problem and requirements of the customers are explicitly identified The define phase sets the expectations of the project’s improvement and maintenance of focus on Six Sigma strategy on customers’ requirement Furthermore, Project scope, team member’s role, and the object of project are well defined in this stage

- Measure (M): In this phase, the teams will take a snapshot of the existing processes or product using data analysis The current system will be measured using a variety of metrics

- Analyze (A): The Analyze phase of DMAIC helps project teams identify problems in the production process that cause product defects This phase of Six Sigma methodology is loaded with tools to help spot the problems in the production process and to determine if these problems are the root causes of defects

- Improve (I): This phase focused on determine a solution which is based on the uncovered problem in the first three phases Experimentational and statistical techniques to generate enable improvements solving problem or defects are applied

- Control (C): This is the fifth also a final phase as well within the DMAIC process The main activity in this phase is to control the improved process In other words, the control phase is about ensuring that the new process is implemented and do not revert to old ways

2.3 Recent Studies

A large number of research studies highlighted the success of DMAIC application in the context of manufacturing in general and in the aim of reducing scrapped rates in specific In 2016, Tiwari et al developed a model to optimize the process parameters and eliminate the casting rejection in Indian foundry industry [14] The results showed that after the implementation of DMAIC, the rejection rate reduced by 25.44% In addition, response surface methodology – one of the techniques in DOE - was employed in the

Improve phase to develop an empirical model, which correlated the casting process variables with the desire’s quality characteristics In another study, by using the DMAIC approach in the glass manufacturing section, Yadav and coworkers also achieved 93.57 percent yield compared to 88.4 as before improvement [15] Detailly, after identifying and setting target of reducing the defects as per management target, all inputs and controllable data are collected to identify process gaps and probable causes are found via cause-and-effect diagram in measure phase In the analyze step, their implementation of cause-and-effect matrix, statistical and hypothesis tests supported to funnel critical root causes Next, DOE is applied to find the optimal parameters setting for each defect, which are controlled well in the control phase

Meanwhile, scrapped elimination has attracted attentions from researcher Recently, a case study published in March 2023 showed that DMAIC cycles and six sigma tools contributed to obtained 90% of reduction in the number of wastes in the assembly process of refrigeration appliances [16] According to the conclusion of Ioana et al, reducing variability and enhancing process capabilities show that productivity has grown a result of removing the scrap-causing variables The research case study taken place in a water bottling factory in Greece of Panagiotis at el also was successful in decreasing the scrapped bottles via approaching DMAIC [17] In fact, their project improved the loss rate significantly from 0.5% to 0.2% This gives a yield of 77.78% which corresponds to the sigma level of 2.26 against old level of 1.6

CHAPTER 3 METHODOLOGY

The approach and methodology following by DMAIC cycles has been shown in Figure 3.1 as below:

Define research objective

Define the problem

Refer literature reviews and previous studies

Define the research target and limitation

Measure the current situation

Measure the impacts of input factors on research purpose

Identify the problems in the process

Determine the root causes of defects

Determine the solution

Verify and valid the effectiveness of solution

Meet Target?

Build the control plan

Conclusion and recommendation Yes

• SIPOC • Project Charter• VOC/ VOP analysis

• Process Map

• Cause and Effect matrix • Statistical Data Analysis

• Statistical Analysis• Ishikawa (fish bone) • 5 WHY method

• Statistical Analysis• DOE – Taguchi Design

• Control plan• Documentation

Figure 3.1 Research Methodology

In particular, every single step is described detailly as followings:

Phase 1: Define

The main purpose in this step is to understand object, define the problem need to be solved, set up the target and find out the research limitation

- Study the object: Collecting basic information of research object and understanding properties and characteristics of process and production system are the foundation to give effective solutions and improvement plans And these solutions are suitable and feasible to the nature of object

- Define the problem: Combining the VOC/ VOP analyze and pareto chart supports to define the problem as well as specific the scope of projects For collected data, it is confident and convinced the reason why this project should be started and implemented at the current time Furthermore, SIPOC is also a tool, which is applied in this step As the outcome, key metrics of processes are deeply understood, and team is established based on it

- Study literature review and related research: after identifying exactly the problem company is facing as well as main focus of study, it is necessary to learn deeply and find knowledge background, literature review and the way how to apply tools Furthermore, it is important to refer other previous case studies, which supports to understand how DMAIC cycle are implemented successfully

- Target setting up: This step sets up the target for the research The target should be clear, actual, measurable, and evaluable

- Define the scope and limitation: There is a variety of factors impacting to research object, therefore, project is well defined to conduct in specific conditions, scope and limitation

 Expectation results: General information of research object, the

urgency of conducting the project and the plan of research implementation

Phase 2: Measure

Measuring indexes to evaluate the current status and finding out input factors impacting significantly the problems are the main aims in this phase This is crucial to be clues and foundation to conduct next step

- Measure to evaluate the current status: Evaluating the problem is expressed via measuring indexes such as scrapped rates, process capacities, defect ratios, …

- Find the clues: Based on process mapping, the logic and flow of materials are revealed and understood Input variables are classified into controllable (C) or uncontrollable (U), which support to start the Cause-and-Effect Matrix (C&E matrix) Next, C&E matrix narrows down and prioritizes input factors having the strong relationship with output variables (issues) Those factors would be identified as clues causing problems directly and keep to be analyzed next

 Expectation results: Status of current scenario is identified and clues

contributing to problems are measured and determined before moving to the next step

Phase 3: Analyze

In this phase, finding out root causes of problem is the main requirement Ishikawa (fishbone) and 5-WHY methods are the popular technique in problem solving and root causes verifying, therefore, they are also applied in analyze phase In addition, if necessary, it is also recommended collecting more data and applying data analysis tools to clarify the problems and their root cause as well Real data also support to increase the convince level from others

 Expectation results: Main factors and root causes causing the problem are well

defined

Phase 4: Improve

Based on the identified root caused at Analyze phase, solutions and improvement ideas are discussed and proposed in this phase Improve process, re-design and standardize work instruction are potential approaches to eliminate defects and decrease the scrapped rate Application of DOE in this phase is useful to find out critical conditions and optimize the process After implementing improvement actions, it is important to check the effectiveness and feasibility of plan Comparison between before and after improving or hypothesis testing are effective methods applied in this phase

 Expectation results: Feasible solutions are given to solve the defined problem

CHAPTER 4 DMAIC APROACH

4.1 Define phase

4.1.1 Overall about research object

This case study deals with reduction of scrapped materials in an adhesive manufacturing company, which is located in the South of Vietnam This company provides a variety type of glue applying in many fields such as fashion and sport industry, packaging, consumer, metal products and so on

The business strategies are made to order (MTO) and made to stock (MTS) For some special items there is the hybrid of two models They supplied for both domestic customer and exported ones as well like Thailand, Indonesia, etc

Water-based adhesive and Solvent-based adhesive are two main products manufactured and traded in company Furthermore, hotmelt adhesive has accounted for the major consumption but it is imported into Vietnam Figures 4.1 displayed three main kinds of product, which are being monitored in the researched factory

Figure 4.1: Adhesive product supplied

Besides, System Analysis Program (SAP) and Manufacturing Execution System (MES) have been used in this company to monitor customer’s orders and material flows to production and delivery schedule However, during daily operations, there are some problems and struggles appearing and presenting, which have impacted significantly on the profit and margins, and created waste as well Meanwhile, sustainability is set up as key strategy to focus and thrive the business (Figure 4.2)

Figure 4.2: The strategy of research company in 2020+

Therefore, reducing the waste in general and decreasing the scrapped materials in specific are defined as the appreciated project to contribute directly to company’s vision

4.1.2 Overall procedure of materials flows

In this research, scrapped materials are not only defined as defected products, but also focused on non-conformance materials and exported good Therefore, every part in the supply and operation chains could generate waste if it is not monitored well So, the supply chain and production process are combined and described generally in the diagram below (Figure 4.3):

Figure 4.3: The overall procedure of material flow

In the process, depending on input data of customer order and forecast, Material Requirement Planning (MRP) system and planners analyze and finalize the quantity of raw materials or trading goods need to be bought Then, raw material orders are built, and suppliers ship ordered shipment to company

Whenever raw materials are available at the in-coming gate, Quality Control (QC) technicians pick samples and perform tests If tests are failed, this shipment is proceed followed by Supplier Complaint Management System (SCMS), which supports to handle failed shipment and find the way to improve with suppliers On the other hand, the received quantity of raw materials is stored in warehouse if all required properties of materials are qualified

Before production, materials providing to production order are prepared through picking and staging steps In this case, prepared materials are followed by First Expire First Out (FEFO) logic All available components are weighed and transferred to production floor by forklifts

Customer order

RM/ TG receiptRM in-coming

Prepare RM to production Batch

ProductionQC inspection

Filling Storage

Delivery NCMR control Finish

Batching production is conducted with the MES implementation Depending on the type of finished goods, production technologies are mixing, reaction or cooking with specific conditions At the end of manufacturing process, operators pick sample for QC to inspect Like which happens at incoming gates, if tests are passed, this batch is confirmed to fill and store at warehouse However, failed testing results give unsuccessful batch and move to Non-conformance Management and Review system (NCMR) In which, solutions and decisions are made after discussion, and two main popular ones are reworked and scrapped There are not only are failed batches which are created in production but also in other workstations such as warehouse or customer sites with the failure modes of expiry, damage logistic or quality issue Furthermore, those material always jump into NCMR and are handled in there

4.1.3 Problem Statement

As a part of define phase in DMAIC methodology, historical preliminary data were collected to define the size and nature of the existing problem The records of the scrapped materials in the 2020 – 2022 period were collected in Table 4-1 According to the data, although the percentages of waste were quite stable during the given time around 0.14%, the quantity increased significantly As the consequence, the cost for disposal and business margins were impacted sharply, moreover, the sustainability strategy was affected seriously In particular, scrapped materials in 2022 (including Finished goods, Semi-finished goods (SFG), Trading goods and Raw materials) were recorded with total quantity 70.51 tons, and the total impacted value is 215.5 TEUR Furthermore, few customers rated company has not been able to meet their requirements about sustainable production

Table 4-1: Scrapped materials in the 2020-2022 period

Year Total materials (Tons)

Scrapped materials (tons)

Table 4-2: Summary of VOC/VOB/ VOP

Voice of process Increase the workload to handle scrapped materials, which effects on processing time and labors Moreover, it is consumed cost and resource for inventory, which is used to contain scrapped materials

The SIPOC diagram prepared for this project by the project team can be seen in the Figure 4.4 This is a high-level process map was created by brainstorming session to review the relationship among process, suppliers, and customers Furthermore, it also

provided the background and information to build the effective team, which helps to ensure that the problem will be revised and solved perfectly with all aspects (shown as Figure 4.5)

Figure 4.4: SIPOC diagram for materials flow of process

Figure 4.5: Project Team Structure and Functions

To ensure that the research is in control and focuses on the project problem explicitly, the boundary of the project also had to be defined and clearly indicated For this clarification, project charter is used to summarize the project’s scope, boundary,

VOC/VOB//VOP, goal and team’s role in this research project This project charter is presented in Table 4-3

Table 4-3: Project team charter

Figure 4.6: I-MR Chart for scrapped quantity 4.2.2 Process Mapping

The inputs, actions and outputs of a process can be represented visually using a by-step process map The approach is clarified this graphical representation and illustrate description Furthermore, this graph also allows pinpoints controllable (C) and uncontrollable (U) inputs of process under study Those controllable factors are classified and brought to brainstorm with team to find out which one has significant impacts on the mentioned problems – scrapped materials Figure 4.7 below describes the process mapping of this study

step-Figure 4.7: Process mapping of monitoring materials

Causes and Effects Matrix is applied to evaluate critical inputs, which contribute significantly to output There are four main range rates from 0 to 9 Score 9 stands for the strong and direct relationship, while the opposite pattern is true for score 0 The moderate and low correlation is rated with 1 and 3 respectively [19] The Table 4-4 showed that there are 5 out of 45 inputs having the high contribute to the total scrapped quantity

Table 4-4: Cause and Effect Matrix

Prepare RM for production

Batch Production

QC inspection

FG storage

Delivery

NCMR control- Customer PO

- Forecast - Sale- SAP system

- Outstanding order - Data on SAP

- RM shipment - MES & SAP system - GR procedure - WH operator- Hand helds- Sampling method- Testing method - QC - Inspection lot - Samples - COA of RM - Qualified RM/ TG - Storage conditions - WH operators - Forklifts- Available space - Storage procedure- Facility (weight, printers, - Qualified RM - WH Operator - SOPs- MES & SAP - Hand helds

- Facility (vessels, )- Prepared RM - Operators- Production order- MES & SAP- Hand helds - Testing method- QC- Samples - Specification- SAP

- Qualified BULK - Filling confirmation- Operators - Package / label - SOP

Filling & Labeling

- FG products- Storage conditions - WH operators - Transportation - SAP- Salesman/ CS - Transportation- SAP - FGs - Sale orders- Picking list - NC materials - Inventory SOP - Sale/ CS/ production/ MM/ WH - SAP - Defect types - Forecast Accuracy

- Outstanding order- Data on SAP

- RM shipment

- Shipment schedule from supplier- RM replenishment

- Quantity of RM - RM within SL

- No damage/ leaking materials- input data in SAP

- Inspected RM - Testing results - Usage Decision

- Raw material (qualified, NC, - Data of current stock

- Right RM as PO requires- Right Qty as PO requires- A Kit of prepared RM with flags

- Production parameters - Started production order - BULK

- Testing results- Input data on SAP- Tested BULK - Usage Decision

- Finished Goods- Left Balance- Input data on SAP

- Finished Goods

- Information of Finished Goods

- Correct shipment and customer - On-time shipment- No damage/ leaking- COA/ invoice

- Reworked / Scrapped/ Resold materials

- Returned/ extend SL RM/ TG - U

- C- C- U

- C- C

- C- U- C- C- U- C- C- C- U- C- U- C- C- C- C- C- C- C- C- C- U- U

- C- C- C- U- U

- C- C- C- U- U

- C- C- C- C

- C- C- C- U- U- C- C- U- C- U- C- C- C- C- U- C

1 Forecasting Saleman 3 27

42 NCMR control Sale/ CS/ Production/ MM/

16 RM/ TG Storaged Forklifts 1 9 18 Prepare RM for production Facility (weight, printers, ) 1 9

4.2.3 Get Data Clues

The data collection plan is described detailly as the below table:

Table 4-5: Data Collection Plan

What to collect? (Y)

Operational Definition

Related condition (Stratification factors) to record

collection format

Scrapped quantity of materials

Quantity (KG) of scrapped

materials (RM, FG, SFG and TG) in 2022

▪ NC Material categories

▪ Defect types ▪ Storage location

▪ NC materials

SAP transaction records

Convert SAP data to excel format

4.2.3.1 Impact of materials categories on Y

There are four main materials monitored and controlled in the factory such as raw materials, semi-finished goods, finished goods and trading goods By the rule of Pareto, it is seen that trading goods and finished goods have a significantly contribution to Y (Figure 4.8)

Figure 4.8: Pareto chart of scrapped quantity divided by material categories 4.2.3.2 Impacts of Defect types on Y

Figure 4.9 indicates that scrapped materials due to quality issue, expired goods and customer returns pose the heavy impacts on Y Other defected types also have contributed but they are not significant

Figure 4.9: Pareto charts of scrapped material divided by defect types

4.2.3.3 Impacts of Storage locations on Y

There are four warehouses built in factory Because most of material are stored at normal conditions (ambient temperature and ventilation), two big warehouses are built for them, where one is internal warehouse located inside the factory (5016) and the other is external warehouse (SJJW), which is outside Cool warehouse (S5P6) is used to stored raw materials and trading goods at low temperature The last one is sample warehouse (SJJX), in which adhesive samples are available for sales to pick and introduce to customers

Similar practice for two above factors, Pareto approach shows that the scrapped materials from internal warehouse (5016) and cool warehouse (S5P6) accounted for a major portion of the total scrapped quantity of factory, 58.7% and 25.7% irrespectively (Figure 4.10) Therefore, two kinds of those warehouses are chosen to analyze root causes and found the ways to improve

Figure 4.10: Pareto charts of scrapped material divided by Storage Location 4.2.3.4 Impacts of NC materials on Y

In 2022, it is recorded that there are 185 products scrapped with 291 batches, which is equal to 70.5 tons It means that not only the quantity of products, but also scrapped frequency for one item impacts on total scrapped quantity Therefore, impact of NC materials on total scrapped quantity is evaluated via its scrapped quantity and batches, and they have the same weight The score of each range is defined in Table 4-6 and Table 4-7 Based on the current data, it is divided into five ranges and scale from 1 to 5

Table 4-6 Rating score of scrapped quantity

Table 4-7 Rating score of number of scrapped batches

Number of scrapped batches

Weight of Scrapped Quantity

Weight of Number of