INTERNSHIP REPORT ENGLISH

How Lean toolscan be applied in VIFON instant noodle manufacturing process.. In particular, the currentsituation of the manufacturing process is analyzed and wastes identification during

First and foremost, I would like to give my sincerest gratitude University of ForeignLanguages and Information Technology (HUFLIT) for offering the great program ofInternational Business Administration and to professors of HUFLIT university who havetaught and provided me necessary and valuable knowledge and skills during four years.Especially, I would like to say thank to the head and dean of Department of InternationalBusiness Administration of HUFLIT having given me a chance to conduct this research.

I am deeply indebted to my supervisor Prof MBA Nguyen Tan Thu Hien, who hassupported me through my paper with full of her enthusiasm and whole heart She hasprovided me a lot of necessary knowledge and skills and experience to conduct and finishthe paper successfully Also, she has guided me, continually given feedback, pointed me

in the right direction and always pushed me to do better

Also, I would like to thank all staff of VIFON company who gave me very goodconditions and contribute opinions as well as supply necessary documents to finish thispaper

Finally, I would like to give my special thanks to my family and my friends who help andencourage me to finish this paper

July 2014

Manufacturing industry is a key economics sector contributing to income of a country Inthe past, business traditionally produces in the batch and queue leading to many wastesduring the manufacturing process such as waste of inventory, waste of waiting, waste ofoverproduction, waste of motion, waste of transportation, waste of over processing, waste

of creativity, waste of defects and correction A considerable point is that most companiescommonly have not recognized those wastes and let them occur for several years Evensome companies apply some international standard like ISO, wastes still occur Somemanagers do not know these wastes, some identify but do not know how to eliminatethem Waste is one of the most headache problems for managers Therefore, one of themost important tasks of all managers and supervisors in the manufacturing process is toidentify wastes and to give solutions to eliminate them However, waste elimination is notsimple

One of the prominent answers for the concern of manufacturing business for reducingwastes is Lean tools application Lean is a continuous improvement which would helpbusiness to produce products with highest quality, lowest cost, shortest lead time byeliminating wasted time and activities It can be applied in not only manufacturingprocess but also in the offices

The graduation paper would like to provide some based Lean theories How Lean toolscan be applied in VIFON instant noodle manufacturing process In particular, the currentsituation of the manufacturing process is analyzed and wastes identification during themanufacturing process of VIFON company would be pointed out Then, some Lean toolsare suggested to reduce waste, the required conditions for VIFON when applying Leantools and some steps needed to conduct Lean application VIFON manufacturing process

is now working effectively However, for the further success of VIFON, this paper givessome solutions

ADVISOR’S COMMENT ii

COMMENTATOR’S ASSESSMENT iii

ABSTRACT iv

CONTENTS v

LIST OF FINGURES viii

INTRODUCTION 1

1 Thesis statement 1

2 Research paper objectives 2

3 Scope of the research 3

4 Methodology 3

5 Literature review 6

Chapter 1: BASED LEAN THEORIES 9

1.1 Definition of Lean 9

1.2 Lean principles 10

1.3 Tools of Lean 11

1.3.1 Value Stream Mapping 12

1.3.2 Five S 13

1.3.3 Kanban system 15

1.3.4 Poka-yoke (Error-proofing) 16

1.3.5 Kaizen 17

1.3.6 Work Standardization 19

1.3.7 Heijunka (Level scheduling) 20

1.3.8 One-piece flow 20

1.3.9 Visual management 21

1.3.10 Total Productive Maintenance 22

1.3.11 Changeover Reduction 23

1.3.14 Cellular operation 25

1.5 Deadly wastes of a manufacturing company 25

1.6 Benefits of Lean 27

Chapter 2: OVERVIEW OF VIFON COMPANY 30

2.1 Background (*) 30

2.2 Vision and mission (*) 31

2.6 S.W.O.T analysis 36

Chapter 3: CURRENT SITUATION OF VIFON MANUFACTURING PROCESS 38

3.1 VIFON instant noodle manufacturing process 38

Step 1: Raw materials preparation 39

Step 2: Compound extend 40

Step 3: Flour flattened into sheets 41

Step 4: Steam 43

Step 5: Quantitative cut, douse with soup 44

Step 6: Dry fan 45

Step 7: Fry, cool 46

Step 8: Packaging 49

3.2 Waste identification in VIFON manufacturing process 50

3.2.1 Waste identification 50

3.2.2 Causes of wastes 59

3.2.2.1 Waste of overproduction 59

3.2.2.2 Waste of inventory 60

3.2.2.3 Waste of defects and correction 60

3.2.2.4 Waste of waiting 61

3.2.2.5 Waste of motion 62

3.2.2.6 Waste of transportation 62

3.2.2.7 Waste of creativity 63

3.2.3 Consequences of wastes in manufacturing process 63

66

4.1 Some suggested Lean tools in the VIFON manufacturing process 66

4.1.1 Visual management 66

4.1.2 Five S (5S) 68

4.1.3 Total productive maintenance 70

4.1.4 Changeover reduction 71

4.1.5 Poka-yoke 72

4.1.6 Kaizen 72

4.1.7 Jidoka 73

4.1.8 Kanban 75

4.1.9 One-piece flow 76

4.2 The required conditions of VIFON to apply Lean 77

4.3.1 The managerial executives 77

4.3.2 All the workers and employees 78

4.3.3 Corporate culture 79

4.3.4 Supply Chain 80

4.3.5 Equipment condition 80

4.3.6 Design and technology 81

4.4 The size of Lean conduction 81

4.5 Application time 81

4.6 Expected results 82

CONCLUSION 85

REFLECTION 86

REFERRENCES ix

APPENDIX xi

Order Figures Page

12 Figure 3.5: Requirements of step 5_ Quantitative cut and douse

with soup

45

1 Thesis statement

Nowadays, efficiency is required for the survival of company especially inmanufacturing However, a great number of companies are facing many problemswith their process leading to a big waste of money, time, people and efforts.Consequently, it is essential for companies to improve their process to be morecompetitive in the market and to provide the best products and services to theircustomers Actually, one of the most considerable points is to reduce wastes

Company commonly faces with 8 main wastes including overproduction, waiting,transportation, inventory, over processing, motion, detects and creativity Byreducing those wastes, it would work more efficiently Capturing the demand ofwastes reduction, Lean was created by TOYOTA_ a famous Japanese automobilemanufacturer Lean manufacturing or Lean production is considered to be one ofthe effective business tools to achieve more profitable output with less input bycontinually eliminating non-value added activities, wastes, increase productivity andreducing working time to increase competitiveness The purpose of Lean is to createthe same amount of output with less input, less working time, less space, less laborforce, less machine, less material and less expense Realizing the benefits of Leanmanufacturing, many businesses in the world are applying Lean in their company Aprominent example of Lean implementation is TOYOTA production system Leanhelps it to be one of the biggest automobile manufacturing firm in the worldcompeting with General Motor and Ford

Also, some Vietnamese companies have applied Lean in manufacturing process andachieve considerable results like TOYOTA Ben Thanh, Nike Vietnam, Minh Phuseafood, Thien Long pen, Bitis shoes…

All things considered, the topic “Lean deployment to improve the manufacturingprocess of VIFON company” is conducted as a suggestion to eliminate wastes;therefore, to reduce costs, to create a comparative advantage for company toenhance profit, and to get more share in the market

2 Research paper objectives

The purpose of this paper is to study some Lean theories including definition, Leantools, wastes and clarify the advantages of Lean application in a business The studyalso aims to investigate wastes and some Lean tools to reduce wastes and to increasethe production efficiency Besides, after capturing an overview of VIFONcompany’s current manufacturing process situation during the internship period,wastes are considered through the whole manufacturing process of company.Solutions to reduce wastes to improve the manufacturing process are developed.Then, based on Lean philosophy, some lean’s techniques including Value StreamMapping, Work Standardization, Kaizen, Visual management are considered toapply in the process aiming to eliminate wastes, to reduce costs and to enhance thecompetitiveness of VIFON in the market

This paper is attempted to answer the main research question: “How can Leanapplication help VIFON eliminate wastes to improve its manufacturing process?”

In order to find the best answer for the main research question, some sub-questionsare raised including:

1 What is Lean?

2 What are Lean principles?

3 What are Lean tools?

4 What are benefits of Lean in manufacturing process?

5 What are main wastes in manufacturing process?

6 What are some Lean tools suggested to implement in VIFON instant noodlemanufacturing process?

7 What is the current situation of manufacturing process of VIFON company?

8 What are some steps to apply Lean tools in VIFON manufacturing process?

9 What are some conditions for VIFON to apply Lean tools in the manufacturingprocess?

10 What are some expected results for Lean deployment in VIFON manufacturingprocess?

3 Scope of the research

Waste elimination and Lean tools is a complicated subject that cannot be studied inshort time Due to the limited ability, time and distance, this study cannot analyze allissues of waste reduction and Lean tools It concentrates on some common Leantools and some certain wastes in the current situation of VIFON manufacturingprocess VIFON factory produces not only noodle but also other products such aschilly sauces, soya sauces, spice and rice instant noodle The author just focuses onthe noodle manufacturing process

4 Methodology

The purpose of this research was to capture the big picture of VIFON company thenrecommend the Lean implementation to the manufacturing process of VIFONcompany to eliminate wastes and increase profits Based on Lean philosophy, someLean tools were suggested to apply to the manufacturing process of company

Many procedures for this study have been chosen to meet each part of the study’sobjective

The subject of the paper was the manufacturing process of VIFON company

In order to fulfill the aim of the thesis, a general outline concerning how toundertake the research was conducted with following steps:

Data collection

Problemformulation

Data analysis

Figure 1.1: The researching process of the author

Source: From the ideas of the author

In particular, the research process is described as follow:

Step 1: Problem formulation

First, a brief literature review on the Vietnam’s business in supply chain field andthe Lean philosophy was conducted in order to acquire basic knowledge of thisresearch specialized field This was done to structure, shape and define the researchproblem, limitation, purpose, research questions and proposal outline for the paper

In order to give out the proposal for the paper, basic theories of Lean were required

to understand the researches Many books and Website were read to get an overview

of Lean including its definition, Lean tools, wastes, etc This helps the researcheranswer the questions 1) What is Lean? 2) What are Lean tools? 3) What are benefits

of Lean? 4) What are main wastes in manufacturing?

Second, the research was written as a theoretical thesis and it was based on asystematic literature review Literature review included some previous researches ofLean assumed to be relevant for the subject under study

The literature source was mostly identified from wide information range of Internetand some books in Lean field This provided the leading citation databases coveringthousands of researches worldwide Some previous researches and studies aboutLean field were chosen as a perfect example for Lean application in manufacturingfor reducing wastes Some of them were the researches of companies for the plansand results of Lean deployment in their companies Some were the graduation paper

of Bachelors or Masters of Economics

Step 2: Data collection

Most data of this research were secondary data Data were collected from manysources such as Internet, books, magazines and internship

Lean was not a new technical term; however, it was not familiar in Vietnam It washard to find much information in Vietnam As Lean was a foreign managerial tool,its application and theories from foreign countries were much wider Thus, it wasbetter to collect data and information from Internet The based theories includingLean definition, Lean tools, wastes in manufacturing process, benefits of Lean, how

to apply Lean, conditions to apply Lean were referred to Internet Also, someprevious researches were collected from Internet.

Some books were read to give a strong base for the researcher to conduct herresearch The most prominent books mostly giving her knowledge in this field and

being her main reference were THE TOYOTA WAY: 14 Management Principles

From The World’s Greatest Manufacturer by Jeffrey K Linker (2004).

Internship is important to understand the current situation of the company

Next step, the researchers conducted an internship in VIFON company to collectinformation and get an overview of the company from 17 February 2014 to 11 April

2014 In order to collect information needed to complete the project, the researcherwill work with the manufacturing supervisor This enables the researcher to have afirst hand knowledge of the product flow and to be familiar with the activities beingperformed at the factory The researcher went through the factory and identifiedeach operation process of the factory involved from raw material to finishedproducts, all the places when inventories were stored Besides, the researcherobserved how the inventories were stored in the factory

In addition, the researcher observed and collected all the necessary informationabout the company, the products and the products flow for the practical mapping ofthe products from raw materials to finish products Then, the researcher asked forthe support from the manufacturing supervisor to collect information concerning thecommunication with customers, suppliers about the pleasant of the manufacturingchannel of the company Packaging process was considered when collectinginformation for the research

Step 3: Data analysis

The data collected for this study was used to evaluate the opportunity to implementLean in the manufacturing process After being aware of the current situation of thecompany in the collection data step, the Fishbone or Ishikawa diagram is used toanalyze the root cause of the problems of company Lean will be activated throughValue Stream Mapping, Five S, Kanban and Poka-yoke tools in order to define andmeasure and analyze the problem This information will enable the researcher tovisualize the current state of the manufacturing process activities by mapping thematerial and information flow and looking for opportunities to eliminate wastes

Based on all the information gathered, the researcher gave out the reasons whyVIFON company should apply Lean in its manufacturing process and herrecommendations to improve and control effectively for better performance of themanufacturing process of company.

5 Literature review

Lean manufacturing is an operational strategy oriented toward achieving the shortestpossible cycle time by eliminating waste (Liker, 1997) Many companies in theworld have successfully applied Lean in manufacturing process

Some researchers conducted studies into the deployment of Lean in themanufacturing process A research conducted in Toyota Ben Thanh company,indicates that Toyota Ben Thanh is one of a perfect example for the success of Leanapplication in Vietnam It is one of the best automobile maintained center inVietnam Lean helps company to shorten more than ¾ of the periodical maintenancetime of a car from 240 minutes to approximately 50 minutes

First, Toyota Ben Thanh reduces its lead time spending ¼ of the total maintain time

Is it because that employees have to wait for receiving the materials between eachsteps Therefore, it is necessary for company to shorten the serve time to meet thedemand of customers Applying Lean, company reorganizes the working areas ofemployees, equips mew specialized machines and trains employees to use thosemachines Therefore, they can utilize time As a result, it is rather to reorganize anappropriate manufacturing and distribution process than to renew equipment andtechnology in order to increase labor productivity Although the capital for buyingnew equipment is only nearly 10,000 USD and the remained equipment is similar toother car maintenance center, Toyota Ben Thanh not only satisfies his customers butalso boosts economical profit that the number of maintenance car increases from 6

to 16 ones/ day Therefore, Lean helps company eliminate wastes and gain revenue.Another considerable Lean application result is in Nike company Nike hassignificantly improved its manufacturing by reducing wastes as its sustainabilityagenda, therefore achieving more efficiency in their supply chain Lean

manufacturing has definitely changed Nike’s business for good It has providedmany benefits like improved quality, reduced costs and shorter lead times whilereducing human effort, manufacturing space and investment in new tools.Tremendous improvements are that Nike has achieved 50% reduction in defect rates,40% faster delivery lead time Productivity increases of 20%, and reduction in timetaken to introduce a new model by 30% Mark Parker, CEO and President at Nike,said in a statement: “Sustainability at Nike means being laser-focused on evolvingour business model to deliver profitable growth while leveraging the efficiencies oflean manufacturing, minimizing our environmental impact and using the toolsavailable to us to bring about positive change across out entire supply chain.” Nikegains the benefits of transforming to Lean manufacturing with better manufacturingthat reduced wasted materials and time Thus, Nike’s supply chain has operatedmore efficiently Beside Nike, other Lean deploying company such as Kimberley-Clark Corporation, Caterpillar Inc., Intel also achieve considerable results Leanhelps improve customer satisfaction, throughput time, employee morale, inventorymanagement and overall productivity of the company.

A report investigated by Dong Nam Viet packing company staff showed that DongNam Viet is the first member of Vietnam packing association (Vinpas) havingsucceeded in Lean manufacturing deployment By applying the Lean toolsincluding 5S and visual management, company has achieved a considerable result

In the past, factory could produce only 2,500 dragon fruit boxes/shift After 3 month

of implementing Lean with 5S, the capacity improves and reaches 4,000-5,000boxes/shift, meeting the demand of customers The roll paper inventory, material,finished product are eliminated The productivity of print team, wave machine team,needle sticking team increases This increases the earning up to 1 billion VND/ year.The finished product department, warehouse …show their innovation as thequantity, information are directly updated This helps reduce a big amount ofinventory, save the working space, increase the capital flow… According to Mr.Cao Hong Quang- the chairman of Board of director of the company, in the end of

August 2009, the productivity of Dong Nam Viet increased 5-10% and the inventorydecreased 30.56-52.41% and the net income reached 70 billion VND Furthermore,the most valuable result reaching is the self-discipline and saving awareness,industrial cleanliness of employees Lean manufacturing is not to spend a lot ofmoney to buy new product but is to utilize the current asset effectively.

However, many Vietnam companies have not realized the importance of thereorganize the factory, equipped appropriate machines… in order to reduce thematerial transport time from warehouse to the manufacturing line that wouldincrease the productivity of employees and profit According to a recent research ofVietnam statistic, 75% Vietnam enterprises are searching Lean However, only 2%

of them succeed in Lean deployment 90% get no results, 8% is acceptable Thereason is that most enterprises apply Lean as a business trend without deeply Leanunderstanding

After capturing big picture of Lean in Vietnam and in the world, the manufacturingprocess of VIFON company is suggested to apply Lean to reduce wastes andimprove the process to gain higher profit for company

Chapter 1: BASED LEAN THEORIES1.1 Definition of Lean

Lean is a strategy for operational excellence based on clearly defined values toengage people in continuously improving safety, quality, costs, productivity, andmorale (Jeffrey Liker, 2004) Lean manufacturing is an operational strategy orientedtoward achieving the shortest possible cycle time by eliminating waste (Liker,1997) The core idea of Lean is to maximize customer value while minimizingwaste Lean focuses on maximizing or fully utilizing activities that add value fromthe customer perspectives From the customer perspective, value is equivalent toanything that the customer us willing to pay for in a product or the service thatfollows Simply, lean means creating more value for customers with fewer resources(James Womak & Daniel Jones, 2010) Lean manufacturing defines the value of aproduct or a service with the customer point of views (Aza Badurdeen, 2007) Themain idea of Lean is to reduce cost through continuous improvement that willeventually reduce the cost of services and products, thus growing more profit Leancan be implemented not only in manufacturing but also in services

The fundamental principle of Lean manufacturing is continuous improvement It cantake place in many forms such as reduction of inventory, reduction of defectiveparts Lean application with right directions and guidance can bring long-term profit

It is not mean that business can immediately get the immediate benefits in term Lean does not let company to reduce wastes including labors In fact, Leanmeans to find new ways to work at the most efficient, most qualified and fastestworking methods for the current responsive labors However, in some cases, Leanwould reduce some non-valued added activities; therefore, employees working inthese activities are not needed

short-1.2 Lean principles

Lean can be applied in any company, any organization, any sector, and in anycountries The Lean approach is distilled into five key principles

Figure 1.1: Lean principle

Source:Staying Lean: thriving, not just surviving(Peter Hines, Pauline Found, Gary

Griffiths and Richard Harrison, 2008)

1 Specify what does and does not create value from the customer’s perspective

2 Identify all the steps necessary to design, order and produce the products in theentire value stream and point out non-value-added wastes of the company

3 Create a value added product flow plan and implement new process withoutinterruption, backflows, waiting or scrap

4 Create the process responding to customer demands and produce only what thecustomer wants and when he needs it

5 Strive for perfection by continually improvement in manufacturing to reducewastes and to maintain the highest level of performance

1.3 Tools of Lean

1 Specify

value from the

perspective of the customer

2 Identify the value stream

3 Make the value creating steps follow

4 At the Pull of the customers 5.Strive for

perfection

Figure 1.2: Toyota production system

Source: Leanmanufacturing.com

According to Toyota Production System, Lean is depicted as a house withsupporting pillars (Jeffrey Linker, 2004) It is built on a solid foundation; thisfoundation is provided by some Lean tools including Hejiunka, Standard work,Total Productive Maintenance (TPM) and Value chain which provide you withreliable and predictable processes and standardized operations A stable and strongbasis leads to the development of the company

The main pillars of Lean then are Jidoka (Built in Quality) and JIT (Just in Time).These are supported by the participation of all staff within the company Everyindividual is respected and expected to perform as part of the team to continuallyimprove every aspect of the business All of this is focused on the top of the houseaiming to satisfy customers and to make a success business

Some common Lean tools applied in manufacturing include as follow:

1.3.1 Value Stream Mapping

A value stream is the set of processes including value-added and non-value-addedactivities required to transform raw materials into finished goods that the customersvalue (Womack & Jones, 1996)

Value stream mapping is used to analyze and design the flow of materials andinformation required to bring a product or service to a consumer (Shook, John(2003) It aims to find out the added value activities for developing and non-valueadded activities for eliminating Value stream management is a management toolfor planning, managing, implementing, sustaining and linking lean-manufacturingimprovements to daily work (Tapping, 2002).Value stream mapping aims toimprove the manufacturing time as it describes exactly the working manner andrequired time and detailed steps This tool is used for analyzing and improving theprocess by pointing and reducing the non-value-added working time

Those are some steps to conduct value stream mapping:

Step 1_ Identify product group

Some information relating to the product such as customer philosophy, suppliers,target market, employees… are required to collect

Step 2_ Identify the current flow

This step refers to create a current state map of how the manufacturing process isbeing operated To do that, customer requirement or customer demand must bedeeply understood Some key data such as number of units manufactured per month,hour of operation (available time), number of shifts worked and other pertinentinformation relating to the manufacturing process should be gathered

Step 3_Observe and confirm processes

Going around the working place is critical to have an accurate current state map.The process time between the manufacturing stages, inventory, material informationshould be collected

Step 4_Map the flow

The basic product flow is drawn by using large sheets of paper or a drawing board,filling in data boxes including cycle times, number of operators, defect and quality

data and the information flow Step 4 is important to fully understand wherebottlenecks may occur or efficiencies can be implemented.

Step 5_Create the implementation plan

Based on the current state map and the critiques, challenging the current thinking isencouraged to give new working plan to eliminate the wastes of the current state forbetter performance during the process

Step 6_ Implement the new plan

Step 7_Measure benefits

This step refers to ensure the benefits expected have been obtained, review eachchange made and analyze benefits based on some criteria of each company

1.3.2 Five S

People feel better when they work in a clean and well-maintained environment.They can work more productive when they do not have to spend time to look foritems Even so, 5S _a powerful system of workplace organization does more thansimply ensure that a work place is tidy and well-organized 5S is a management toolthat involves and empowers people with five traditional steps

Sort (Seiri) refers to sorting the workplace according to the importance of use of

items and eliminating needless items (Feld, 2000) It is means cleaning theworkplace and keeping only the necessary things on the work station Therefore, allunnecessary processes in the organization would be identified and removed

Set in order (Seiton) refers to arranging the selected items in a well organized and

meaningful manner for a more efficient performance This requires managementintervention to provide the means for appropriate storage which is convenient foremployees doing the tasks with time-saving There would be very little or no roomfor silly mistakes to occur

Shine (Seiso) refers to cleaning everything and doing periodic maintenance, sweep

or scrub means taking responsibility for the cleanliness of the workstation (Feld,2000) It also requires that management acknowledge that time for cleaning is a part

of daily jobs In this step, a regime and standards for cleaning are made

Standardize (Seitketsu) deals with the management strategies for institutionalizing

the standard activities (Feld, 2000) Managers must establish standardization ofpolicies and procedures for every employee to keep the area organized, ordered, andclean

Sustain of discipline (Shitsuke) refers to the leadership strategy to implement

housekeeping involving training, communications, and motivation as fundamentalsleadership practices in order to ensure that everyone follows the 5S standards (Feld,2000)

Safety_ Even though not common in the literature, a sixth S has been recognized by

some practitioners (DiBarra, 2002) It stands for safety and is positioned betweenShine and Standardize It refers to the safety of the work place and respectively ofthe employees

Figure 1.3: Five S process

Source: BP Trend (Forrest W Breyfogle, 2007)

1.3.3 Kanban system

Sort

Set in order

Shine &

check

Standardise

Sustain

A Kanban allows a company to achieve just-in-time production and orderingsystems, which allow them to minimize their work-in-process inventories while stillsatisfying customer demands (Monden, 1993) Lower production times and work-in-process have leaded to the idea of incorporating Kanban systems in manufacturingindustries (Monden, 1993)

Kanban is a Lean tool using Pull system to control and order the material to avoidexcess manufacturing A kanban signal can present itself in many different formsincluding empty box, a card, an electronic table or any visual instrument One of themost common forms is a kanban card The possession of the card serves as a signal

to replenish inventory A kanban card is usually full of information about the partsuch as the part number, lot size, locations, container size, transporting method…The work-in-process product is made necessarily with right quantity There are twotypes of Kanban card: production Kanban card and withdrawal Kanban card

Internal supplier is the material supply for any manufacturing process Internalcustomer is the person requiring the material Production Kanban card is a signalfrom internal customer to internal supplier announcing the needed material supplied.For instance, when working in a stage, workers start using material storing in acontainer They then take a production Kanban card and put in the post box Thematerial controller will take those production Kanban card in time of the scheduleand get back to the warehouse to supplement the quantity of material used in theprocess He will put another production Kanban card to the post box of thewarehouse to order the material quantity for the warehouse After that, othermaterial controller will take information of those production Kanban card to orderthe right quantity with the suppliers

Withdrawal Kanban card is a signal from internal supplier to internal customerforming that the material is already for usage In this case, the internal supplierwould not work until the completed internal customer’s consumption The previousstage produces the suitable quantity to match with the demand of the next stage Every stage can work efficiently with appropriate transportation during the process.Business can work without computer, it is simply done by the small Kanban card

1.3.4 Poka-yoke (Error-proofing)

A poka-yoke is a mechanism to prevent a mistake or make a mistake Poka-yokeaims to process from producing defects This activity is known by the Japanese termpoka-yoke, from poka (inadvertent errors) and yokeru (to avoid) The philosophybehind error proofing is that it is not acceptable to make even a very small number

of defects, and the only way to achieve this goal is to prevent them from happening

in the first place In essence, error-proofing becomes a method 100% inspection atthe source rather than down the line, after additional value has been added (wasted).Error-proofing is an excellent activity to involve the workforce in continuousimprovement Achieving extremely high levels of process capability requires thistype of focus on prevention rather than detection

There are three basic categories of error-proofing:

 WARNINGS _ the simplest level provides quick feedback of a potential problem

production

Poka-yoke offers solutions to organizations that experience frequent discrepancies inthe packaging of their products – e.g., someone forgot to include instructions orforgot to include a mounting screw Poka-yoke ideas or devices can be moreeffective than simple demands on workers to “be more careful.” Improvement focusshould always be given to what can be done to error-proof a process more than oninspecting the quality of the finished product

1.3.5 Kaizen

Kaizen involves continual improvement involving everyone within an organization(Ohno, 1988) Kaizen is a Japanese word meaning gradual and orderly continuousimprovement The Kaizen business strategy involves everyone in an organizationworking together to make improvements without large capital investments Kaizen

is a culture of sustained continuous improvement focusing on eliminating waste inall systems and processes of an organization This strategy begins and ends with

people, and involves leadership that guides people to continuously improve theirability to meet expectations of high quality, low cost, and on-time delivery

Generic steps for conducting a Kaizen event are

Prepare and train the team:

During event preparation, identify problem cells and select the cell that will be givenfocus Assemble the team and, if necessary, conduct training on waste control,standardized work, and continuous flow

Analyze present methods:

The team uses a videotape to analyze the cell in action to determine material flow,cycle time, cell layout, process waste, and other vital measurements During thistime they can generate a standardized work and work combination table The teamneeds to record the current number of operations over time, and the defect rates.Photographs should be used to document the overall Kaizen event

Brainstorm, test, and evaluate ideas:

Divide the team into smaller groups to discuss ways to improve the cell, using thecompiled work cell analysis statistics Groups then test potential improvementtactics on the work cell, assessing their impact Results from the tested ideas areshared with other team members This keeps other groups from making similarmistakes and inspires new ideas This cycle may be performed many times beforedesired results are achieved

Implement and evaluate improvements:

After the team has developed its plan for achieving results, a maintenance request isgenerated, if necessary, where modifications are fully described so that managementcan authorize changes to the work cell and its processes All of the workingpersonnel are then trained in the new process by Kaizen team members.Improvements are monitored, and progress is video taped and standardized Resultsare measured and items that require additional time are put on a future 30-day actionlist to be implemented by the team

Results and follow-up:

Team members document all improvement items and compile results to determinemonetary savings, improved space utilization, and time reductions Team membersmake a presentation to top management with a commitment to complete outstandingitems Management recognizes the team’s performance and makes suggestions forthe future.

The main approaches of Work Standardization of Lean tool are:Standardizedworking process_ this includes compulsory process for employees includingoperation and steps A clear job description ensures that all employees work in thesame manner and reduce mistakes leading to wastes

Standardized time_ Takt time is the frequency that a product is manufactured It isused to describe and control the working speed of a process to maintain thecontinuous manufacturing flow

Standardized inventory in the process_ This is the minimum material including one

on the manufacturing process and required one to keep the cell or process working

in the certain intensity The standardized inventory is to keep the continuous flowout of material shortage

1.3.7 Heijunka (Level scheduling)

Business can hardly predict the fluctuation of demand of customers This leads to 3types of wastes including overburden, unevenness and 8 non-value-added wastes(previously mentioned) Therefore, Heijunka tool is considered a solution

Heijunka focuses on balancing both quantity and categories of product in themanufacturing process Based on the demand of customers in a certain period,products are manufactured the similar quantity and categories in month

Heijunka tool is to manufacture in queue according to the clearly calculated demand

of customers with minimum change over time to balance the quantity and categories

of product

1.3.8 One-piece flow

Flow means that when order is made, suitable material procurement is started Rawmaterial is immediately transported to the factory and manufactured Aftercompleting finished product, it will be delivered to customers This process justtakes some hours or some days

A project process improvement could be a work flow change that reduces batch size

or changes from batch processing to single-piece flow (Forrest Breyfogle, 2007).One-piece flow describes the sequence of product or of transactional activitiesthrough a process one unit at a time In contrast, batch processing creates a largenumber of products or works on a large number of transactions at one time –sending them together as a group through each operational step

In one-piece flow, concentration is on the product or on the transactional process,rather than on the waiting, transporting, and storage of either One-piece flowmethods need short changeover times and are conducive to a pull system Whenthere is any error, the continuous process would be broken and stopped Every

worker has to cancel their jobs Hence, every member in the group has to find asolution for improvement which creates a tied coordination between them (TeruyukiMinoura, 2004).

1.3.9 Visual management

Visual management aims at making information available at the point of theoperation The information presented should be timely and understandable to helpeveryone manage and improve the process The visual management triangle is based

on the concept of knowledge and responsibility If information is visible at theworkplace, problems are detected earlier and improvements can be made, ormonitored more easily Compare this to information held in a computer andaccessible only to those people who have access to the computer screen Visualmanagement is much more immediate if it is available to groups of people who canshare the knowledge and participant in problem solving

Figure 1.3: Visual management triangle

Source: Andy & Me: Crisis and Transformation on the Lean Journet by PascalDennis

Visual management can address both visual display and control Visual displayspresent information, while visual control focuses on a need to act (Forrest Breyfogle,2007) Information needs to address items such as schedules, standard work, andquality and maintenance requirements Visual control can address whether aproduction line is running according to plan; it can highlight problems In bothmanufacturing and transactional processes, visual management systems can beapplied

We see together

We act together

We know together

1.3.10 Total Productive Maintenance

Total Productive Maintenance, or TPM, is a technique designed to optimize theperformance, reliability, and productivity of plant and equipment by applying goodmaintain to all steps of the process People often think that TPM refers only tomanufacturing or production, but the term is Total Productive Maintenance, and theconcept applies as much to the office environment as it does to the shop floor.Machines, computers and networks break down, causing availability issues.Networks run slowly affecting performance Incomplete or erroneous data causesrejects and rework, quality issues TPM involves passing the responsibility formaintenance into the hands of the operators

TPM aims to keep the machine work continuously without any mistake and defect

1 Improve the efficiency of the machine: identify all damages causing frommachine stoppage, declining speed, and defects

2 Achieve self-maintain: allow employees responding for some tasks includingrepairing level (workers solve the problems with guidance), preventive level(workers actively prevent the predicted problems), improvement level (workers notonly fix the problems but also suggest innovation to prevent the problems

3 Maintain with schedule: set maintain standardization to both maintain workersand operators The maintain workers develop plan to prevent and repair thedamages Sometimes, they train the operator how to identify the damages, how toplan and evaluate the maintenance The operator role is to assist the maintainworkers

4 Train the employees how to maintain suitably and continuously

5 Keep maintenance prevention: consider all the causes of damages and stability ofthe machine during the process TPM tries to identify possibility of damage anddelete it as soon as possible

1.3.11 Changeover Reduction

One of Lean’s major objectives is reduction of lead time To achieve this, the size ofbatches often needs reduction, which, inturn, creates a focus on reducing changeover

times – i.e., the time from the last piece of one batch to the first piece of the nextbatch Changeover time can have several components; e.g., internal, when a machine

is stopped, and external, which involves preparation Other types of changeovers aremanufacturing line changeover, maintenance operations, vehicle/aircraftloading/unloading, and office operations The classic changeover is, of course, theGrand Prix pit stop! It’s important not only to reduce the mean changeover time, butalso to reduce its variability using a standardized process Moving internal activities

to external ones, when possible, permits more up time for a machine since themaximum amount of preparation is accomplished before it is stopped Exampleapplications for improving external activities are placing tools on carts near a dieand using color codes to avoid confusion Example applications for improvinginternal activities are quick-change nuts and standardization of activities

1.3.12 Just-in-Time

Just-in-time (JIT) had been innovated in Japan since the early of 1970s It wasdeveloped and completed by Ohno Taiichi of Toyota corporation He developed thistheory as an instrument to satisfy demand of customer in the shortest time JITmeans that each process receives the right parts needed at the time they are neededand in the amount they are needed to produce an order from a customer with thehighest quality (Ohno, 1988) JIT is an important concept in the Toyota productionsystem Just-in-time allows companies to eliminate wastes such as work-in-processinventory, defects, and poor delivery of parts (Nahmias, 1997) The purpose of JIT

is to reduce the non-value-added activities and not to convey the inventory in themanufacturing process This leads to shorter working time, shorter delivery time,better machine utilization, lower cost, smaller required working space, lowerproduct defect rate, and higher profit

JIT helps firms minimize inventory at different stage of the manufacturing process.This requires a good combination between stages to make the exact required

quantity for the next stage The JIT system includes the manufacturing flow and thearrangement of the work station so as the material stream to flow smoothly to reducethe waiting time

1.3.13 Jidoka (Autonomation)

Autonomation is known as “Jidoka” or “automation with a human touch” (Levinson

& Rerick, 2002) It was developed by Sachiki Toyoda, the founder of Toyota MotorCompany in an effort for create a machine that stopped automatically if any problemoccurred in the early 20th century Jidoka is considered as an important pillar of theToyota Production system The goal of autonomation is zero defects, in order toeliminate the risk of a defective product Also, it aims to quickly identify and repairany error in the early stage of the manufacturing process For instance, instead ofwaiting until the end of the process to check the finished product, autonomation can

be applied at the earlier stage to minimize the added tasks of the error-fixing.Autonomation exists in an automated machine with an automatic stopping deviceattached, which makes it possible for machines to prevent problems by itself oversimple autonomation When the machine discovers any mistakes, it will stopworking and the maintenance is required

1.3.14 Cellular operation

Cellular operation is a new way to organize a plant that arranges machines in order

of production operations (Levinson & Rerick, 2002) Production in cells isperformed in the order in which operations must be completed to produce the enditem When a work cell operation completes the shop order then it is moved to thenext operation for additional processing by hand, forklift, or cart There are fourprimary characteristics of the modern work cell organization (Najarian, 2000):Product/process family focus, one at a time production, Flexible output levels,

Operator multi-tasking

1.5 Deadly wastes of a manufacturing company

There are three types of manufacturing activity: Value added activities, added activities, necessary non-value added activities

non-value-In the physical environment (manufacturing or logistics flow) the ratio betweenthe various activities is commonly:

■ 5% value added

■ 60% non-value added

■ 35% necessary, but non-value-added

According to Tapping (2002) “the ultimate lean target is the total elimination ofwaste Identifying and eliminating waste is fundamental to a Lean organization Waste, or muda, is anything that adds cost to the product without adding value(Shigeo Shingo, 2004 ) As a guide, the seven wastes were identified by ShigeoShingo as part of Toyota Production System

1.5.1 The waste of overproduction – company makes unordered goods This createssome wastes such as recruiting excess employees and enhancing the storage andtransport costs because of inventory

1.5.2 The waste of waiting – workers whose jobs are to observe the automaticequipment or have to wait for the next steps or tools or tasks… or simply just do nothave any task to do since lack of coordination in upstream and downstreamactivities;

1.5.3 The waste of needless transportation – movement of materials, which adds novalue, extends the process-time and may lead to handling damages The movement

of unfinished materials in a long distance, uncoordinated transport plan or themovement of materials or parts or finished products between steps or in and out thewarehouse would lead to wastes

1.5.4 The waste of over processing – unnecessary steps to makes parts It is due toimperfection of product design create the excess tasks and disable products Wastesare also from the over needed quality of the products It is the extra activities

connected with overproduction, excess inventory or handling of defective parts, e.g.rework, reprocessing, storage

1.5.5 The waste of inventory – this includes the raw materials, the material inprocess, and finished products which are not needed for the customers’ orders lead

to increase the working time, defective goods, unfashionable products, transportexpense, and working stoppage Over inventory would cause some problems such asunbalanced production, lead time increase…

1.5.6 The waste of motion– this refers to the motion of the personnel in vain, whichoccurs with processing of defects or from inefficient layout

1.5.7 The waste of defects – it is wastes of finished goods that confront with therequirements of the customers, or parts or products which have defects and requirecorrection leading to time consuming

1.5.8 The waste of creativity – the lack of utilization of creativity and ideas of theemployees in the improvement of processes and practices It is however arguable,whether this type of waste is inherent to the previous seven wastes (Hicks, 2007)

Figure

1.3: How much is waste

Source: Leanmanufacturing.com

As we can see from the picture, only 5% of the activity is value adding 95% isdeadly non-value added activities Waste impacts negatively to business operation.However, these wastes can be eliminated by a suitable Lean tools deployment

1.6 Benefits of Lean

The benefits of lean manufacturing generally are lower costs, higher quality, andshorter lead times (Liker, 1997) According to the statistic of the websitehttp://leanmanufacturingtools.org, Lean can help company

26% increase delivery speed

33% increase stock turns

 Improved Visual Management – Another benefit of lean manufacturing ismanagement by sight If done correctly, your plant will be set up so you can

evaluate an entire area with a visual scan Any abnormalities will stand out and beeasy to identify as a problem.

 Increased efficiency – Line balancing will ensure each person in the process isworking in the most efficient manner Standardized work will ensure they aredoing it correctly following the same method every time This leads to repeatabilityand increased efficiencies

with less people With standardized work and increased efficiencies, the ability to

do the job with less people becomes a very real possibility This does not mean youhave to send these people to the unemployment line The concept of lean wouldhave these freed-up people utilized to perform further kaizen activity, training toenhance skill level, or maintenance of the system once it is implemented

 Easier to manage – The work instructions and standardized work let people knowwhat they have to do and when This makes managing an area much easier Andproblems will still arise But they will be much easier to deal with in a teamenvironment where the support groups are eager to help solve problems

 Total Company Involvement – Lean is meant to involve the whole company It isnot intended to be put into action in only one area It is a management philosophywhich should include every part of your organization This helps promote theconcept that everyone in the company is part of the team

 Problem Elimination – Lean manufacturing forces you to attack an issue andcontinue to investigate it until it has been eliminated Root cause analysis andcross-functional teams are utilized to ensure a problem receives the level ofattention it deserves to correct it

 Reduced Space – As part of the waste reduction process, space will be created.Reduction of finished and raw inventory will save space vertically in your racking

as well as horizontally across your floor

things are out of place When unnecessary elements are removed from the

operation, the workplace becomes much more organized And an organized workenvironment is a safe work environment.

 Improved employee morale – This is a benefit that may not be realized during theinitial stages of your implementation (see resistance below) But once the concept

of lean starts to get accepted by the employees, you will see employee morale onthe rise Employee involvement and empowerment will make all members of yourcompany feel like a contributing part of the team And the reduction of uncertainty

in the workplace, as a result of lean, will reduce stress in your team members andlead to improved employee morale

Chapter 2: OVERVIEW OF VIFON COMPANY

2.1 Background (*)

Name: VIFON JOINT STOCK COMPANY

Address: 193 Truong Chinh Street, Tay Thanh Ward, Tan Phu district, Hoa ChiMinh city, Vietnam

 Import and export machines and materials for manufacturing

 Stock trade and construction

Main products:

 Rice products: rice instant noodle, vermicelli, gruel…

 Flavors, chili sauce, soya sauce…

Number of employees: 2200 people

As a leading manufacturer in the food industry of Vietnam, Vietnam Food IndustriesJoint Stock Company with the trade mark VIFON has been well known to theconsumers in Vietnam and all over the world After 50 years of establishment anddevelopment, VIFON not only achieves the trust and love of Vietnamese people butalso develops its export market to over 40 countries in the world

Since the 90s, VIFON has been the first manufacturer initiating the trend of packingthe special Vietnamese cuisine The delicious dishes of the North, South, andMiddle of Vietnam such as beef “Pho” rice noodle, sour crab soup vermicelli, crabrice pancake, and stewed pork noodle have become much more convenient to be

served for your meals than ever Located in an area of 67,000 m2, VIFON has thehuge production capacity with the qualified workers and staffs and the modernmanufacture line and machines using the new technology of German, Japan, andKorea to produce different types of products to meet the wide variety of consumerdemands.

Nowadays, VIFON has not hesitated to modernize the machines and technology andhas invested vigorously to the examination of making products to meet theinternational quality standards VIFON’s products have been launched to manycountries including the ones that have very strict quality requirements such as theUSA, Australia, Japan, and the EU VIFON has gained the very important certificate

of quality system management ISO 9001:2000 In 2004, VIFON trade mark wasgiven the international certificate HACCP, an essential for the instant-foodmanufacturers to develop to the world market

VIFON always focuses on the food hygiene and safety requirement and thenecessary nutrition regimen of the products before launching them to the market.The representative merchandises of VIFON which have been highly evaluated bythe consumers during the years include Instant Noodle VIFON, Instant Rice Noodle

“Pho” VIFON, Instant Noodle Hoang Gia, Instant Cup Noodle Ngon Ngon, CrabRice Pan Cake, and Instant Noodle Bon Mua

With the slogan “Vị ngon đậm đà – Vươn xa thế giới” VIFON not only is a trulyconcomitant to the consumers and does the best to be worthy of its long-timeprestige and of the trust and love from our customers but also affirms its role in theworld market

2.2 Vision and mission (*)

For sustaining a strong, stable and developed business, VIFON has set its goals asguidance for long-term and short-term business’s achievement

Vision

Contribute to the overall development of the society through the culinary path, and

at the same time commit to produce the best quality, high nutrition and safe products

to consumers

Mission

- Continue investments in new factories with advanced and modern production line

to improve product quality and protect the environment

- Expand market shares in existing markets and penetrates into global markets

- Diversify product categories to satisfy the demands and tastes of local and foreignconsumers

2.3 Business activities

2.3.1 The beginning of establishment:

On July 23, 1963, fourteen Chinese Vietnamese capitalists together invested 35,000stocks to establish the first company At the end of 1964 the budget increased to70,000 stocks; and then, in 1967 three factories were completed their constructionwhose name were VIFOINCO, VILIHICO, VIKAINCO Among those, VIFOINCOhad the common trade name VIFON

The factory went to operation afterward and its products had been achieved goodresponses from the consumers in Vietnam and oversea, including:

- Instant noodle: three production lines with capacity of 30,000 packages a shift

- Seasoning powder: three production lines with capacity of 2,000 tons a year

- Other products, such as starch powder, jam powder, sweety, soya been sauce, andcanned fish and meat

Employees: there were about 700 employees most of whom are Chinese; and theengineers were educated and trained in Japan and Taiwan

The machines and equipment were the best and latest in the South East Asia at thattime

2.3.2 VIFON after April 30, 1975

Ater 1975, VIFON company was possessed and managed by the government butstill maintained its production and business and kept extending and developing as aleading organization in the food industry of Vietnam

On May 9, 1992 the Light Industry Ministry made the decision number TCLĐ to merge the Union of Seasoning Powder – Instant Noodle Factory and TanBinh Seasoning Powder Factory into Vietnam Food Industries Company with thetrade name VIFON The new company included Vifon and the members:

336/QĐ- Thien Huong Food Factory

 Binh Tay Noodle Factory

 Tan Binh Machinery Factory

 Viet Tri Food Factory

 Associated with the organizations in Vietnam and oversea:

 VIFON – Hanoi Joint Venture Manufacturer

 VIFON – Vinh Joint Venture Manufacturer

 VIFON – Danang Joint Venture Manufacturer

From 1995 to 2004, VIFON associated with Acecook (VIFON – Acecook), afterthat, VIFON and ACECOOK separated

At the end of 2003, to perform the project of re-organizing the governmentalcompanies of the Industry Ministry of Vietnam, VIFON changed to a joint stockcompany with 51% of the government

In 2005, with the permission of the Industry Ministry of Vietnam, VIFON sells 51%

of governmental stocks to the market to become the 100% private joint stockcompany

2.4 Results of business activities