ADDIS ABABA UNIVERSITY

ADDIS ABABA INSTITUTE OF TECHNOLOGY

SCHOOL OF MECHANICAL AND INDUSTRIAL ENGINEERING

APPLICATION OF LEAN SIX SIGMA FOR PROCESS

IMPROVEMENT: THE CASE OF
ETHIOPIAN PAPER AND PULP S.C.

BY: AYISHA YASIN

ADVISOR: DR TAFFESSE GEBRESENBET

A thesis submitted to The School of Mechanical and Industrial Engineering

Presented in Partial Fulfillment of the Requirements for Degree of

Master of Science in Industrial Engineering

June 2014

Addis Ababa
ACKNOWLEDGEMENT

First, I would like to express my deepest gratitude for my advisor Dr Taffesse Gebresenbet

for his help and guidance throughout this work. I also would like to thank Ato Eshetie

Birhan who helped me during the preparation of the thesis proposal and Ato Ephrem Gidey

who gave me his comments and suggestions on the work I have done.

Next, I want to thank the general manager of Ethiopian Paper and Pulp Share Company

Engineer Melaku Teshome for allowing me to work in the company and being supportive of

the study. I also would like to thank production planning department workers specially Ato

Dawit Kassa, Ato Wondwosen Gizachew and Ato Kassahun Mamo for their support and

voluntariness to give me the data I needed and all the other employees of EPPSC since all of

them were cooperative.

Finally I would like to express my thank and love for my family and friends who has always

been by my side whenever I needed them.

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ABSTRACT

Reducing manufacturing wastes and variability plays a very important role for the

improvement of yield and financial conditions of any company. Lean Six Sigma (LSS) is one

such strategy commonly used to improve process efficiency and quality. This thesis presents

a process improvement study conducted in Ethiopian Paper and Pulp Share Companys

(EPPSC) packaging plant based on a customized LSS methodology. Specifically, the Define,

Measure, Analyze, Improve and Control (DMAIC) methodology to streamline process and

enhance quality for companys packaging plant. In particular, the study aims to identify the

extent of the seven LSS wastes and determine which of those wastes plays a significant role

in the Companys profitability and competitiveness. Data for the study was collected by

reviewing companys document and reports, by conducting observation and interview.

Collected data was analyzed and presented inform of percentages. Findings have indicated

that material reject rate (MRR), down time and inventory were identified as the three main

wastes of the company. Based on the findings, various improvement opportunities are

forwarded for implementation to reduce the level of the identified wastes. Implementing the

opportunities could benefit the company by achieving a potential reduction of 55% in the

level of DPMO, improving raw material inventory consumption to 65%, reduced the level of

WIP to 7.1ton/month and reduce the cost of WIP by 73%. This study benefits the company

and other industries in their effort towards improved productivity and efficiency.
Table of Contents
Acknowledgement.iii
Abstract..iv
List of Figures...viii
List of Tablesviii
List of Acronyms.x
CHAPTER ONE: THE STUDY AND ITS APPROACHES1
1.1. INTRODUCTION...1
1.2. PROBLEM STATEMENT.3
1.3. OBJECTIVES OF THE STUDY..4
1.4. RESEARCH METHODOLOGY5
1.5. BENEFITS AND BENEFICIARIES.6
1.6. SCOPE OF THE STUDY...7
1.7. SIGNIFICANCE OF THE STUDY......8
CHAPTER TWO: LITERATURE REVIEW.......9
2.1. THE HISTORY OF TOYOTA PRODUCTION SYSTEM9
2.2 OVERVIEW OF LEAN MANUFACTURING....10
2.2.1. VALUE CREATION...10
2.2.2. KINDS OF WASTES..11
2.2.3. OPTIMIZING WIP INVENTORY LEVEL...14
2.3. SIX SIGMA....17
2.3.1. SIX SIGMA AS A METRIC..18
2.3.2. SIX SIGMA AS A METHODOLOGY.19
2.3.3. SIX SIGMA AS A MANAGEMENT PHILOSOPY ..19
2.4. INTORDUCTION TO LEAN SIX SIGMA...20
2.5. DMAIC METHODOLOGY........21
2.6. FACTORS FOR LSS MANUFACTURING IMPLEMENTATION...23
2.6.1. INVOLVEMENT OF EMPLOYEES IN THE IMPLEMENTATION....23
2.6.2. SENIOR MANAGEMENT COMMITMENT.24
2.6.3. EDUCATION DURING IMPLEMENTATION....24
2.6.4. COMMUNICATION AND INFORMATION25
2.6.5. PROJECT MANAGEMENT..25
CHAPTER THREE: DATA COLLECTION AND PRESENTATION....27
3.1. BRIEF DESCRIPTION OF THE COMPANY (EPPSC).......27
3.2. PRELIMINARY STUDY.29

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 3.2.1. OVERVIEW OF CORRUGATED BOARD MANUFACTURING PROCESS...30
3.2.2. PRODUCT DESCRIPTION..32
3.2.3. EPPSCS CARTON BOX CUSTOMERS.......35
3.2.4. ARRANGEMENTS OF THE FUNCTIONAL UNITS OF EPPSC ....36
3.2.5. THE CURRENT STATE OF RM WAREHOUSE.....37
3.5.6. THE MODEL OF THE MANUFACTURING SYSTEM..38
3.3. DATA TYPE SELECTION...39
3.4. DATA PRESENTATION AND ANALYSIS...40
3.5. LEAN WASTES IN EPPSC .48
3.5.1. DEFECT (MATERIAL REJECT RATE)..48
3.5.2. DOWNTIME...49
3.5.3. INVENTORY....49
3.5.4. OVERPRODUCTION.50
3.5.5. OVER PROCESSING..51
3.5.6. MOTION....51
3.5.7. MATERIAL TRANSPORTATION...51
CHAPTER FOUR: DMAIC MODEL FOR LSS IMPLEMENTATION IN EPPSC54
4.1. INTRODUCTION.54
4.2. DEFINE PHASE.55
4.2.1. SIPOC DIAGRAM...55
4.2.2. DETAILED PROBLEM UNDERSTANDING.58
4.2.3. PROJECT CHARTER...61
4.3.MEASURE PHASE..61
4.3.1. DEFECTS PER MILLION OPPORTUNITIES (DPMO) AND SIGMA LEVEL...62
4.3.2. PARETO DIAGRAM FOR THE PROCESS LOSS (MRR)..64
4.3.3. PARETO DIAGRAM FOR DOWNTIME..65
4.4. ANALYSIS PHASE.69
4.4.1. ISHIKAWA ANALYSIS FOR MRR....69
4.4.2. CAUSES OF HIGH RATE OF DOWNTIME72
4.4.3. COST ANALYSIS OF THE WASTES..74
4.4.4. 5WHY TOOL FOR ROOT CAUSE ANALYSIS OF WASTES..79
4.5. IMPROVE PHASE.81
4.5.1. IMPROVING MATERIAL REJECT RATE..82
4.5.1.1. 5S Implementation ............................................................................................................83
4.5.1.2. Cost of 5S Implementation .............................................................................................91
4.5.1.3. Training on Waste Reduction .......................................................................................91

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 4.5.1.4. Sigma Level After Improvement ...................................................................................93
4.5.2. IMPROVING DOWNTIME.94
4.5.2.1. Raw Material Substitute / Benchmarking .................................................................96
4.5.2.2. Increasing The Product Mix ..........................................................................................97
4.5.2.3. Outsourcing ........................................................................................................................98
4.5.2.4. Company Downsizing .....................................................................................................99
4.5.3. INVENTORY LEVEL IMPROVEMENT....99
4.5.3.1. Improving RM Inventory ................................................................................................99
4.5.3.2. Two Machines-One Buffer Line................................................................................ 100
4.6. CONTROL PHASE..103
4.7. OUTCOMES OF THE STUDY.104
CHAPTER FIVE: CONCLUSIONS AND RECOMMENDATIONS .....106
5.1. CONCLUSIONS.106
5.2. RECOMMENDATIONS..107
5.3. FUTURE WORK AREAS..108
REFERENCES...109
APPENDICES...114

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List of Figures

Figure 1: Single wall (3ply) corrugated board

Figure 2: Process flow diagram

Figure 3: EPPSCs corrugated box product types

Figure 4: Product types Pareto chart

Figure 5: Shares of customers

Figure 6: Sketch of some of the functional units of EPPSC

Figure 7: Raw material warehouse

Figure 8: Damaged paper roll

Figure 9: EPPSCs two stations-one buffer production line

Figure 10: Reject at each machine for each shifts

Figure 11: Downtime graph

Figure 12: SIPOC for packaging plant
Figure 13: High-level process map

Figure 14: Material reject rate Pareto chart

Figure 15: Pareto chart for the main reasons of downtime

Figure 16: Ishikawa diagram for the causes of before load rejects

Figure 17: Ishikawa diagram for causes of after load rejects

Figure 18: Existing (L) and proposed (R) state of the warehouse

Figure 19: Necessary cleaning tools

List of Tables

Table 1: Conceptual Model Of Lean Manufacturing

Table 2: Level Of Wastes At Paper And Carton Box Plant
Table 3: EPPSCs Carton Box Product Types
Table 4: Customers Of EPPSCs Carton Boxes
Table 5: Waste Identification Method
Table 6: Monthly MRR In 2004EC
Table 7: Reject At Each Machines For Shift A (Day Shift)

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Table 8: Reject At Each Machines For Shift B (Night Shifts)
Table 9: Downtime Summary For Corrugating And Converting Machines
Table 10:Raw Material Inventory In Store
Table 11:Monthly WIP Inventory Level From July2011-June 2012
Table 12:Annual Cost Data
Table 13:2004ECs Production And Utilization Data
Table 14:Educational Status Employees
Table 15:Process Metrics For The Main Wastes
Table 16: Sample Project Charter For LSS Implementation
Table 17:The Current Performance Of EPPSCs Corrugating Plant
Table 18: Sigma Calculation
Table 19: Categories Of Downtime Causes
Table 20: Summary Of Operational And Others Causes Of DT
Table 21:Beginning And Ending WIP Inventory Level
Table 22: Cost Of The Main Wastes
Table 23: 5why Tool for Root Cause Analysis
Table 24: Set Up Of Activity Time
Table 25: Cost Benefit Analysis For 5S Implementation
Table 26:Parameters Value For Calculating WIP Level
Table 27:The Results Of The Study

List of Acronyms

BPPI/PPI: Burayu Packaging And Printing Industry

DF: Double Facer
DMAIC: Define, Measure, Analysis, Improve And Control
DPMO: Defects Per Million Opportunities
DTA/DT: Down Time Analysis/Down Time
EC: Ethiopian Calendar
EPPSC: Ethiopian Paper And Pulp Share Company
FG: Finished Good
FM: Fluting Medium
H: Height
Inv: Inventory
KL: Kraft Liner
KPI: Key Performance Indicators
L: Length

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LSS: Lean Six Sigma
M/Cs: Machines
MRR/RR: Material Reject Rate
RM: Raw Material
SF: Single Facer
UP: Unlimited Packaging
W: Width
WIP: Work In Process

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 CHAPTER ONE

THE STUDY AND ITS APPROACHES

1.1. INTRODUCTION

In the modern world of manufacturing, to improve the performance of the process and

ensure on time delivery, there are numerous approaches available. There is no doubt that

manufacturing industries are always embracing changes and improvements in their key

activities or processes to cope with the challenges. One way to stay competitive in the

globalized market is to become more effective and efficient.

The role of continuous improvement within organizations has changed and matured

throughout history. From the first improvements made through the invention of machines

that sped up production to using empirical or statistical methods and scientific methods to

analyze processes, individuals and organizations have pursued improved operating

methods. [1, 19] Certain industries including healthcare and pharmaceuticals focus the

majority of their continuous improvement efforts on maximizing the quality of their

products and services. For others, continuous improvement is viewed as a mechanism for

driving down cost. [1]

In addition to cutting costs and improving quality, successful continuous improvement

initiatives ultimately change the culture of an organization like Toyota. The culture change

focuses on the motivation and desire of the organizations members to continually improve

business processes and policies. This fundamental change in operating and managing

processes requires the stimulus of a structured method or program of continuous

improvement. Lean Six Sigma has been receiving a lot of attentions in many industries these

days. [1]
Lean Six Sigma (LSS) is a combination of two continuous improvement methodologies: Lean

manufacturing and Six Sigma. Lean and Six Sigma focus typically on improving the

production and transactional processes of an organization. Although each uses different

methodologies and principles to effect the improvement, both have complementary effects.

Lean offers a unique method that helps identify possible improvement areas on a

production line. On the other hand, Six Sigma offers a unique approach that is widely used

in industries in order to improve the process and thereby reduce the number of defects.

DMAIC which is an acronym for Define, Measure, Analysis, Improve and control is a lean

six sigma model which helps to improve business process to reduce defects and wastes.[1]

This thesis addresses the implementation of Lean Six Sigma production system to the

continuous production/process sector with the focus on Ethiopian Paper and Pulp Share

Company (EPPSC) specifically the packaging plant. EPPSC is half a century old Company

that produces two products in two separate manufacturing plants. However, despite being

in market for decades, through time the company lost most of its customers for newly

emerging companies and the companys profit declined continuously even to the level that

is almost close to not making profit at all. EPPSC can be characterized by low profit, high

level of wastes like material loss and down time, lack of detailed expertise and not working

for continuous improvement, lack of customer, etc.

Hence, much of the research has focused on identifying the extent of wastes and developing

DMAIC model for LSS application in the case company because it offers the greatest

opportunity for improvement in cost, quality and customer satisfaction.

2
1.2. PROBLEM STATEMENT

In Ethiopia, regardless of the stern global competition in modern business, most industries

are still very inefficient and are competing under suboptimal conditions. Similarly, EPPSC is

one of those companies that suffer from many challenges/problems. High concentration of

waste, high production cost, low profit, high rate of downtime due to frequent lack of order,

machine failures and maintenance are some of the companys problems. There is also a

problem of not working for continual improvement, unable to meet customers

requirements and unable to integrate their workers and departments.

For instance, the packaging plant which the study focuses on, has lost more than 3.5 million

birr a year due to the materials rejected or lost. Up to 5 million birr become locked up in

inventory because only 40% of the RM inventory is consumed at the end of each month and

about 85% of the product cost in manufacturing carton box is cost of raw material (paper

rolls). Companys record shows that the plant has been down for an average of 60% of its

time mainly because of lack of order. There is a very high loss of customers. They lost most

of their customers instead of having more than 300 Companies at present they only have a

few customers. In fact, six month data shows that 65% of the products manufactured are

ordered by the top ten customers of the company only.

Companies that adopt Lean Six Sigma like GE were able to increase their profit by 1 billion

US dollar [9]. Similarly, if there is willingness and determination of the companies to

change the culture and existing mindsets and behaviors and the management is committed,

it is possible to launch the concept of LSS to Ethiopian industries. Hence, the objective of this

research is to study the possible implementation of Lean Six Sigma in EPPSC in order to

increase their income in a measurable amount and at the same time to make them customer

based and dominate the domestic market.

3
Particularly, the research questions raised includes (for packaging plant):

What are the main wastes of the company that have significant impact on

companys profitability and competitiveness?

How much is the current rate of defects or material rejects of the company?

How the implementation of Lean Six Sigma (LSS) helps to avoid the main wastes of

the company and reduce the manufacturing variability to 3.4 parts per million

opportunities (PPM)?

How DMAIC model will be used for application or implementation of Lean Six

Sigma?

In short, this research seeks to identify which key issues must be addressed to successfully

and continuously manage or eliminate non-value adding activities and manufacturing

variability (defects).

1.3. OBJECTIVES OF THE STUDY

General Objective

The general objective is to identify and reduce or eliminate all kind of wastes and defects by

using Lean Six Sigma in EPPSC in order to increase the companys profitability and make

the company dominate the domestic market.

Specific objectives

The specific objectives are:

To study the existing system and determine the level of wastes like the extent of

material reject rates, idle times, levels of inventory, ways of processing and

producing the products, over production rate, etc

To identify the causes of defects/ reworks and to measure them

4
 To improve the sigma level of the company by reducing DPMO (defects per million

opportunities) by 50% in each year

To study ways of reducing downtime frequency

To determine which Lean Six Sigma model to implement for waste elimination

1.4. RESEARCH METHODOLOGY

The study intends to investigate the extent of manufacturing wastes in EPPSC in order to
improve customer satisfaction and companys profitability. For this study, the research
methodology requires gathering relevant primary and secondary data. Primary research
conducted using interviews and visits. The interviews used to provide qualitative insights
into the data collected. Secondary data collected from recent literatures, specified
documents and company records in order to analyze the material and arrive at a complete
understanding of lean six sigma waste level in EPPSC. The methodologies employed to
achieve the objectives are:

A. Literature Survey: - Different related reading materials like books, journals, previous

research works on similar topic, and the Internet sources are referred to have

thorough understanding of Lean Six Sigma manufacturing, its implementation and

analysis of manufacturing processes. The state-of-the-art of the subject matter is

assessed in this part.

B. Consultation: consultation was held with my advisor and representative of EPPSC

(especially with the General Manager and production planning department head)

C. Data collection: consists of reviewing companys records, workplace observations

and interviews. The extent of material rejects data is collected from the companys

Broke analysis record which shows how much material used to manufacture the

products and how much of this material input goes to waste. Similarly inventory and

downtime data is gathered from companys material consumption and time study

record respectively. A direct observation of physical operation provides a thorough

5
 understanding of the manufacturing process thus during visit, the presence of

wastes like transportation, motion and over processing is investigated. Having

informal discussion or interview with employees specifically with production

planning department confirms non existence of over production waste since

products only manufactured when customer places an order. One-year data

regarding material reject rate, downtime, WIP inventory, cost, and production

capacity collected from the companys records. One-month data of RM inventory is

taken to determine the monthly consumption of raw material and one month data of

materials rejected at each stage starting from loading the materials to corrugators

and passing through each manufacturing process to determine the percentage of

materials loss at each stage. All collected data are for year 2004EC because it is more

recent and shows the current state of the plant more.

D. Analysis: Upon collecting the qualitative data derived from interviews, observations

and companys records and databases, different analysis performed like percentage

of the extent of the manufacturing wastes, defects per million opportunities to

determine Sigma level of the company, Ishikawa analysis, inventory cost analysis, etc

to provide statistical insight into the data collected and draw conclusion.

E. Model Development: the implementation model of lean six sigma which is DMAIC

is used for the case company.

1.5. BENEFITS AND BENEFICIARIES

The first and the main beneficiary of the thesis is EPPSC because first they are under

suboptimal conditions since they have high rate of downtimes, material reject rate and non

value adding activities. Second, the concept of LSS helps to address and eliminate

manufacturing and quality related problems of the company and these are the core areas

for profitability and success of any manufacturing company.

6
Lean Six Sigma helps to eliminate all kinds of wastes that the company is having and reduce

the rate of defects/reworks to 3.4 PPM opportunities. This means it leads the company to

have improved flexibility, response time, inventory turnover, product quality and

productivity. It also means that the customer satisfaction will be improved and profit will be

maximized. Thus, these are some of the benefits that will be gained if the company properly

implements LSS. The customers, suppliers, other government and private manufacturing

companies can also be one of the beneficiaries by becoming familiar with the concept of

LSS, its outcome and its implementation.

1.6. SCOPE OF THE STUDY

The scope of the study include Identifying the major wastes of the company, investigating

and identifying the root cause of the problems, Defining the voice of customers, measuring

rate of defects and reworks. It also includes determining inventory levels and waiting time

and finally, implementation detail will be prepared which will minimize or eliminates the

wastes and defects and improves the system by integrating various lean manufacturing and

six sigma tools and techniques into one.

The scope of the research is limited to consider only EPPSC as a case study, which means if

others want to use the document they have to make it compatible with their condition. It is

also limited in considering only the main wastes that will have a great impact in

profitability of the company. moreover, the company focuses on developing a DMAIC model

for lean six sigma implementation in the case company however it did not go through the

actual implementation because whether to use this document is up to the organization not

to the author of this project.

7
1.7. SIGNIFICANCE OF THE STUDY

The study is devoted to investigate the solutions to the manufacturing and quality related

problems in EPPSC and proposing the appropriate model of Lean Six Sigma for

implementation. Therefore, the primary merits of the study goes to the company itself and

hopefully, they will get important concepts on continuous improvement and will motivate

them to work for it. Since there are few and shallow studies in the area, it will give a

comprehensive starting point for researchers on continuous improvement through the

implementation of Lean Six Sigma. In addition, anybody who is interested in reducing or

eliminating manufacturing wastes and quality defects can also get good ideas from this

thesis. Finally, the study will contribute a lot in providing a step-by-step, unambiguous

roadmap of improvement that leads to predictable results. This roadmap provides the self-

confidence, punch, and power necessary for action and is the principal subject of this

research.

8
 CHAPTER TWO

LITERATURE REVIEW

2.1. THE HISTORY OF TOYOTA PRODUCTION SYSTEM

After World War II, Japanese manufacturers were faced with the dilemma of vast shortages

of material, financial, and human resources. The problems that Japanese manufacturers

were faced with differed from those of their western counterparts. These conditions resulted

in the birth of the "Lean" manufacturing concept. Toyota Motor company (TMC), led by its

president Toyoda recognized that American automakers of that era were out-producing

their Japanese counterparts; in the mid- 1940's American companies were out performing

their Japanese counter parts by a factor of ten. In order to make a move toward

improvement early Japanese leaders such as Toyoda Kiichiro, Shigeo Shingo, and Taiichi

Ohno devised a new, disciplined, process-oriented system, which is known today as the

"Toyota production system", or "Lean manufacturing." Taiichi Ohno, who was given the task

of developing a system that would enhance productivity at Toyota, is generally considered

to be the primary force behind this system [1]. Ohno drew upon some ideas from the west

and particularly from Henry Ford's book "Today and Tomorrow". Ford's moving assembly

line of continuously flowing material formed the basis for the Toyota production system.

After some experimentation, the Toyota production system was developed and refined

between 1945 and 1970, and is still growing today all over the world. The basic underlying

idea of this system is to minimize the consumption of resources that add no value to a

product. [1, 9]

9
2.2 OVERVIEW OF LEAN MANUFACTURING

Lean Production System is the world famous production system developed and practiced by

Toyota Company for a long time. The basic ideas behind the lean manufacturing system are

waste elimination, cost reduction and employee empowerment. [1, 9, 24]

The Japanese philosophy of doing business is totally different than the philosophy that has

been long prevalent in the US. The traditional belief in the west had been that the only way

to make profit is to add it to the manufacturing cost in order to come up with a desired

selling price (Ohno, 1997; Monden, 1998).

Even though the lean concept was introduced by Toyota in the 1950s as a part of the Toyota

Production System (TPS), it did not become famous until Womack and Joness best-seller

book The Machine That Changed the World: The Story of Lean Production was published in

1990 (Andersson et al., 2006). The lean concept can be defined as a dynamic process of

change, driven by a set of principles and best practices aimed at continuous improvement

(Womack et al., 1990). It is a systematic approach of identifying and eliminating non-value

adding activities with a focus on flowing the product at the pull of the customer in pursuit

of perfection (NIST, 2000). Over time, the lean concept evolved and extended its meaning

from lean production to a whole enterprise model, and finally even to an extended lean

enterprise model (Ricondo and Viles, 2005). There are five fundamental steps involved in

applying the lean concept. These steps are: value identification, value stream analysis, flow,

pull, and perfection (Nave, 2002; Ricondo and Viles, 2005; Tracy and Knight, 2008). [34,

39]

2.2.1. Value Creation

One of the principles of Lean as documented by Maskell and Baggaley (2003) which were

derived from Womack and Jones (1996) is value. Value can only be defined by the ultimate

customer, and it is only meaningful when expressed in terms of a specific product that

10
meets the customers needs at a specific time. Value is created by the producer and from the

customers point of view. Everything that does not add value to the product is waste and is

something that the customer is not willing to pay for. Identification and elimination of

waste makes it easier to focus on value adding activities and become more cost efficient. So

in Lean, if it is not adding value it is waste and elimination of this waste is the basic

principle of lean manufacturing. For industrial companies, this could involve any of the

following kind of wastes. [1, 29]

2.2.2. Kinds of Wastes

The literatures offers either seven (Womack and Jones, 1996; Shingo, 1997; Maclnnes,

2002; George, 2002; Ohno, 1998) or eight forms of waste (McAdam, 2003).

The eight wastes are uncovered through the determination of what the customer values.

The list of the wastes that has been modified and expanded by various practitioners of lean

manufacturing includes:

1. Over-production is unnecessarily producing more than demanded or producing it

too early before it is needed

2. Defects In addition to physical defects that directly add to the costs of goods sold,

this may include errors in paperwork, production to incorrect specifications, use of

too much raw materials or generation of unnecessary scrap

3. Inventory means having unnecessarily high levels of raw materials, WIP and

finished products. Extra inventory leads to higher inventory financing costs, higher

storage costs and higher defect rate

4. Transportation - includes any movement of materials that does not add any value to

the product, such as moving materials between workstations

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 5. Waiting is idle time for workers or machines due to bottlenecks or inefficient

production flow on the factory floor. Waiting results in a significant cost so far as it

increases labor costs and depreciation costs per unit of output

6. Motion includes any unnecessary physical motions or walking by workers that

diverts them from actual processing work

7. Correction (rework) is when something has to be re-done because it wasnt done

correctly the first time

8. Over-processing is unintentionally doing more processing work than the customer

requires in terms of product quality or features such as polishing or applying

finishing on some areas of a product that wont be seen by the customer

9. Knowledge Disconnection This is when information or knowledge isnt available

where or when it is needed. [8, 14, 29, 42]

Waste sources are all related to each other and getting rid of one source of waste can lead to

either elimination or reduction in others. Perhaps the most significant waste is inventory.

When inventory is reduced, hidden problems can appear and actions can be taken. There

are many ways to reduce the amount of inventory, one of which is reducing production lot

sizes. Reducing lot sizes however, should be followed by a set up time reduction so as to

make the cost per unit constant as the famous economic order quantity formula states

(karlsson and Ahlstrom, 1996). At Toyota, Shingo developed the concept of single minute

exchange of dies (SMED) to reduce set up times (Shingo, 1997); for instance, setup times in

large punch presses could be reduced from hours to less than ten minutes. This has a big

effort on reducing lot sizes. Another way to reduce inventory is by trying to minimize

machine downtime [53]. This can be done by preventive maintenance. It is clear that when

inventory is reduced other sources of waste are reduced too. For example, space that was

used to keep inventory can be utilized for other things such as increase facility capacity.

12
Also, reduction in setup times as a means to reduce inventory simultaneously saves time,

thus is reducing time as a source of waste.

Transportation time is another source of waste. Moving parts from one end of the facility to

another end does not add value to the product. Thus, it is important to decrease

transportation times within the manufacturing process. One way to do this is to utilize a

cellular manufacturing layout to ensure a continuous flow of the product. This also helps

eliminate one other sources of waste, which is energy. When machines and people are

grouped into cells, unproductive operations can be minimized because a group of people

can be fully dedicated to that cell and this avoids excess human utilization. Another source

of waste is defects and scrap materials. Total productive maintenance is one way to

eliminate defects and scrap. Manufacturing parts that are fault free from the beginning has

profound consequences for productivity [1, 8, 14, 51].

Kaufman Group (2000) developed a conceptual model of Lean Manufacturing, which is

illustrated in Table 1. The seven wastes identified by Taiichi Ohno in the Toyota Production

System are categorized by the sources of waste People; Quantity and Quality. The model

also details what waste reduction approach can be used for source of waste, the most

appropriate tools and the desired results in each case.[23]

Sources of Type of Waste Waste Reduction Tools Desired Results

waste Approach
People Processing Workplace Standardization Highly efficient
Motion Management Workplace Safe work areas
Waiting organization(5S) with high output
Quantity Inventory Just In Time Kanban, Levelling What you need
Making too much Quick set up When you need
Moving things (SMED), TPM It
Quality Defects Built in Error Proofing Good Quality
Quality

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 Table 1: Conceptual model of lean manufacturing

2.2.3. Optimizing WIP Inventory Level

Two machines-one buffer lines

Throughput time is the time that a part spends in the system. The shorter the throughput

time is, the faster the system can respond to customer orders, and the sooner that tardiness

can be reduced. Throughput time consists of waiting times in buffers and processing times

on machines. Thus, Lots of effort in manufacturing system research has gone towards

minimizing buffer capacities or eliminating buffers. As the buffer size decreases, the impact

of uncertainties, such as machine failures increases and leads to higher risks (average loss).

Hence, finding the right buffer size for a manufacturing system is critical.

Decomposition methods have been developed for the performance evaluation of some large

systems for which exact analytic methods do not exist and numerical methods are

infeasible. These techniques approximate the original large system with a set of smaller

systems that satisfy a set of carefully chosen relationships. Networks with finite buffers are

the major focus of attention. Early work focused on tandem systems with unreliable

machines and finite buffers (Gershwin 1987; Dallery, David, and Xie 1988); more recent

papers extended it to assembly/disassembly networks (Mascolo, David, and Dallery 1991;

Gershwin 1991). [13, 33]

1. Introduction to Two Machine-One Buffer Line Analytical Model

Consider a manufacturing system defined by the following assumptions:

I. The system consists of M machines, mi, i= 1,..., M, arranged serially, and M - 1

buffers, Bi, separating each consecutive pair of machines, mi and mi+l.

II. The machines have identical cycle time T. The time axis is slotted with the slot

duration T. Machines begin operating at the beginning of each time slot.

14
III. Each buffer is characterized by its capacity, Ni, i = 1,... , M - 1, where Ni is a positive

integer.

IV. Machine mi is starved during a time slot if buffer Bi-1 is empty at the beginning of

this slot; mi is blocked during a time slot if at the beginning of this time slot buffer Bi

is full and machine mi+1 is either down or blocked. Machine ml is never starved, and

machine mM is never blocked.

V. Machine ml, being neither blocked nor starved, produces a part during a time slot

with probability Pi=1-ki and fails to do so with probability ki, i=1,.., M, where 0

< e << 1 and ki 0 is independent of e. The ki's are called the loss parameters.

Manufacturing systems defined by assumptions (I-V) are referred to as asymptotically

reliable serial production lines. An asymptotic technique for their performance analysis and

design has been developed. In many practical situations, however, serial production lines

include a quality control system that identifies and discards some or all of the defective

parts produced by the machines. To account for this possibility, introduce the following

assumptions: [13, 33]

VI. A non-defective part is made defective by machine mi with probability bi i=1,..,

M where the bi 0 are independent of e. The bi's are referred to as the quality loss

parameters. The defects introduced by machine mi cannot be removed by the

subsequent machines mi+l,.. mM.

VII. A defective part can be identified as such and discarded from the system by the

quality control devices, Qi, placed between each two machines, mi and mi+l, and after

the last machine. Each quality control device identifies a defective part with

probability 0 < Di < 1, i=1,.., M. The Di's are referred to as the measurement

accuracy parameters. The raw material is assumed to be free of defects. Two

15
 different assumptions could be made with regard to the positions of the quality

control devices between each two machines. Specifically,

VIII. Quality control devices are placed immediately after each machine and the

defectives identified are removed from the system before being placed into the

subsequent buffer. This is referred to as the output quality control architecture.

VIII'. Quality control devices are placed immediately after each buffer. A discarded part

is instantaneously replaced with another part from the buffer, if available. This is

referred to as the input quality control architecture.

Manufacturing systems defined by (i-viii or viii') are called asymptotically reliable serial

production lines with a quality control system. The performance of such lines can be

described by the following characteristics: [13, 33]

a. The line production rate, PR, i.e., the average, steady state number of parts produced,

per cycle, by the line.

b. The line production rate of non-defective parts, PRnd, i.e., the average, steady state

number of non-defective parts produced, per cycle, by the line.

c. The line consumption rate, CR, i.e., the average, steady state number of parts utilized,

per cycle, by the first machine.

d. The line work-in-process, WIP, i.e., the average, steady state number of parts in the

system.

Based on these performance characteristics, the problem of analysis of serial production

lines with a quality control system can be formulated as follows: Given the parameters ki, bi,

Di, i =1,...,M and Ni, i =1,...,M- 1, find PR, PRnd, CR and WIP as functions of these parameters.

[13,33]

THEOREM 1: The performance of production lines defined by (i-viii) with M = 2 can be

characterized as follows: [11, 27]

16
 a. The production rate is:
1 + 1
PR = 1 [1 +1 + 2 , 1 + 2 ] + ( 2 ) ,
2

Where,
1
Q (, N1) = , 0 , N1 Z+ , ( 2 ) =K1 b1*D1
1 1

d1=b1D1, d2= [(1-D1) b1+b2] D2

b. The production rate of non-defectives is:

1 + 1
PRnd=1 [1 +1 + 2 , 1 + 2 ] + ( 2 ) ,
2

c. The line consumption rate is:

1 + 1
CR=1 [1 +2 , 1 ] + ( 2 ) ,
2

d. Finally, the work-in-process is:

1 1 +1 1 +1 1 +1
WIP = + ( 2 ) ,
1 (1 1 )

2
Where: =
1 + 1

This two machine-one buffer analytical formula is used in this study to calculate the

optimal WIP inventory level to hold for EPPSCs packaging plant.

2.3. SIX SIGMA

The Six Sigma approach was initially developed in Motorola and greatly refined during its

application in GE. The enormous savings reported by GE fuelled interest in Six Sigma in late

1990s (Krishna et al., 2008). Six Sigma refers to the capability of a process to deliver units

within the set quality limits (Klefsjo et al., 2006). For a company to be classified as a Six

Sigma company, it should not have more than 3.4 defects per million opportunities in any

process, product, or service (Rajamanoharan and Collier, 2006). If a company focuses on

achieving Six Sigma, it tries to systematically eliminate the defects in a process to be able to

get as close to perfection as possible. As such, over time, Six Sigma has evolved into a

business process change (BPC) initiative, which combines statistical control tools and total

17
quality management with an emphasis on customer satisfaction (Arnheiter and Maleyeff,

2005; Rajamanoharan and Collier, 2006). [19, 20, 51] Since Six Sigma has evolved over the

last two decades, its definition is extended to three levels [2].

Six Sigma as a metric

Six Sigma as a methodology

Six Sigma as a management

Six Sigma approach satisfies all the three levels at the same time.

2.3.1. Six Sigma as a Metric

Sigma is the Greek letter . It is a statistical symbol and metric of process variation

which used to measures something called standard deviation. In its business use, it indicates

defects in the outputs of a process, and helps to understand how far the process deviates

from perfection. The probability density function is shown below where is the mean and

2 is the variance. [2, 9, 50]

In Six Sigma approach, Sigma is used as a scale for levels of process capability or quality.

According to that, Six Sigma equates to 3.4 Defects Per Million Opportunities (DPMO).

Therefore, as a metrics, Six Sigma focuses on reducing defects. If we achieve 68% of aims,

then we are at the 1 Sigma level. If we achieve 99.9997% of aims, then we are at the 6

level, which equates to 3.4 DPMO. From this point of view, Sigma level shows how well the

product is performing. It seems this level can never be achieved. However, the Sigma level is

not the purpose, the real purpose is to improve quality continually. The higher Sigma level

we have reach, the higher quality we get. [2, 20, 21]

18
The calculation of Sigma level is based on the number of defects per million opportunities

(DPMO). The formula is:

= 106

Where D means the number of defects, N means number of units produced, and O is the

number of opportunities per unit. A part of DPMO to sigma conversion table is given in

APPENDIX B. [2, 21]

2.3.2. Six Sigma as a Methodology

Six Sigma approach is not just counting defects in a process or product, but it is a

methodology to improve processes. The Six Sigma methodology focuses on: [2]

Managing the customer requirements

Aligning the processes to achieve those requirements

Analyzing the data to minimize the variations in those processes

Rapid and sustainable improvement to those processes

When we look at Six Sigma as a methodology, there are many models available for process

improvement like DMADV, DMAIC, Breakthrough strategy, Eckes method, Six Sigma

Roadmap, IDOV, and DMEDI [39]. The most widely used models are DMAIC and DMADV.

The DMAIC model is used when a process or product is in existence but is not meeting the

customer requirements. And the DMADV model is used when a process or product is not in

existence or is needed to be developed. [2, 27]

2.3.3. Six Sigma as a Management philosophy

Through experience, Motorola has found that using Six Sigma as a metric and as a

methodology are not enough to drive the breakthrough improvements in an organization.

Motorola ensures that Six Sigma metrics and methodology are adopted to improve

opportunities, which are directly linked to the business strategy. Now Six Sigma is also

applied as a management system for executing the business strategy. Six Sigma approach

19
provides a top-down solution to help the organization. It put the improvement efforts

according to the strategy. It prepares the teams to work on the highly important projects. It

drives clarity around the business strategy. [2, 42]

2.4. INTORDUCTION TO LEAN SIX SIGMA

LSS can be defined as the combination of the best features of lean and Six Sigma in the

pursuit of sustained improvement (Carreira and Trudell, 2006). It is a business

improvement methodology, which focuses on maximising value by achieving a faster rate

of improvement in customer satisfaction, cost, quality, process speed, and invested capital

(Arnheiter and Maleyeff, 2005; Berryman, 2002). Believing in the synergetic effect of

converging lean and Six Sigma, several leading organizations including Xerox Corporation,

GE, Johnson and Johnson and Dell have successfully implemented the LSS approach in their

organizations (Brett and Queen, 2005). [3, 40]

In order to become a successful LSS organisation, an organisation should bring together the

following lean and Six Sigma principles (Arnheiter and Maleyeff, 2005):

The organization must focus on maximizing the value-added content in all

operations and processes (lean principle)

The top management must implement a decision-making process that bases every

decision on its impact on the customers (lean principle)

The organization must constantly evaluate all of its incentive systems to ensure that

they result in global optimization (lean principle)

The organization must utilize data-driven methodologies to ensure that all the

changes are made based on scientific studies rather than making ad hoc decisions

(Six Sigma principle)

The organization must utilize methodologies to minimize variations in quality

characteristics (Six Sigma principle)

20
 The organization must implement a companywide and highly structured education

and training programme (Six Sigma principle). [3]

2.5. DMAIC METHODOLOGY

George (2002) defines Lean Six Sigma (LSS) as a methodology that helps companies achieve

better cost, quality, speed, customer satisfaction and rates of improvement. LSS projects will

often implement a Define, Measure, Analyse, Improve, and Control (DMAIC) procedural

framework for existing processes to achieve customer satisfaction with regards to quality,

delivery and cost. Process of DMAIC was developed in order eliminate waste in

manufacturing and service process (Andersson et al., 2006; Pande et al., 2000). After

starting a LSS project, it may evolve to use more Six Sigma or Lean tools or a mix of both as

suitable to the nature of the project where all tools are LSS tools (Hendricks and Kelbaugh,

1998). [3, 23,]

Define is the first phase in the DMAIC model. During this phase, the projects definition is

developed. The projects definition includes the overall scope, objectives, and goals of the

project. It also determines the project leader, team members, sponsor, stakeholders, and

schedule. During the Define phase, the process is also defined (Antony and Banuelas, 2002).

This is accomplished by utilizing various tools such as flow charts, process mapping, and

supplier-input-process-output-customer (SIPOC) diagrams. Teams are formed during the

Define phase and selecting team members is a serious part of the phase. The team leader has

a critical role in any Lean Six Sigma project and it is the leaders job to keep the team

focused on the stated objective, scope and goal (De Koning and De Mast, 2005). The team

leader also sets the ground rules and ensures to resolve all the conflicts. Driven by daily

pains and the need for instant fixes, projects may commence with measure, analyse and

improve pooled together in one giant step. But by skipping Define phase, practitioners miss

an opportunity for making valuable process discoveries. Like morning leads the day,

21
similarly a well-defined, well-scoped Lean Six Sigma project is more prone to be completed

successfully and lead to huge savings. (Hussain, 2004b). [3]

Usually, a significant amount of head scratching is done before practitioners can unveil the

right xs and have a clear understanding of their impacts on the Y (Yang, 2004). This is why

the Define stage in the DMAIC model of Lean Six Sigma is so important. This phase consists

of qualitative tools, such as project charters, problem statements, process maps and critical-

to (CT) trees. Because team members are human and miscommunication can happen, so it is

important to answer all of the questions regarding current situation and constraints and

record the answers in a go-to document. This can serve as a source of backup information

when anyone asks Why are we doing or what we are doing? This also helps to build

consensus about the current state, desired future state and any other goals (Patel et al.,

2002). D also acts as a refresher to the team members about the process and sometimes this

review causes team members to look at the process with a fresh pair of eyes (Snee and

Hoerl, 2003). [3, 40, 45]

In the second phase of DMAIC model that is Measure the baseline performance is studied

using LSS metrics and VSM of current chain. Also, brainstorming is performed to identify

the list of the potential inputs. The Measure phase is typically characterized by the

collection of data, in an effort to gain an overall greater understanding of the problem. This

data is then investigated in the Analyze phase to determine cause and effect relationships

and prioritize the sources of product failure or wastes. The Analyze phase verifies the

critical few negatively affecting the outputs such as product quality and flow. In the

Improve phase, solutions are generated by examining modifications to the manufacturing

process or by using optimization techniques. And finally, in the Control phase, the

optimized procedure is institutionalized and monitoring systems are emplaced to facilitate

sustaining a high level of product quality. This means, in this last phase the inputs and/or

22
outputs of the improved processes will be monitored on a day-to-day basis to ensure that

the anticipated gains are maintained. These five phases of DMAIC model is summarized as:

Define: the problem, the voice of the customer, and the project goals, specifically

Measure: key aspects of the current process and collect relevant data

Analyze: the data to investigate and verify cause-and effect relationships

Improve: or optimize the current process based upon data analysis

Control: the future state of a process to ensure that any deviations from target are

corrected [3, 23, 46]

2.6. FACTORS FOR LSS MANUFACTURING IMPLEMENTATION

Changes in the organization are often met by suspiciousness and resistance from employees.

People are afraid of the unknown and might think things are already just fine and do not

understand the need of changing. The resistance towards new ideas is to high extent

dependent on the culture in the organization, which can repel attempts to implement lean

manufacturing. It is therefore vital to understand the culture in order to create an

appropriate and cost effective implementation plan. Several factors must be considered to

successfully implement LSS manufacturing and some of the most important are discussed

below. [5, 15, 35, 55]

2.6.1. Involvement of Employees in the Implementation

On every organization where changes are desired, one needs to deal with people. The

motive for a change must be understood and accepted by the individual, in order to achieve

sustainable improvements in the organization. [5, 15, 35, 55]

Human beings are very habitual and tend to do things the way they have been trained to do

or just as they have always done. The problem is that there are some employees who, even

after sufficient training in LSS principles, are not able to perform at the expected level. The

reason for this can be: [5, 35]

23
 They dont agree that changes are necessary (everything is fine the way it is)

They are going to retire in a few years and do not want to do more than necessary

They have been through many improvement projects that have failed (believe

changes are not sustainable)

They do not want to reallocate their time from production work to improvement

work

The approach that seems to be necessary is that a pre specified period is set for the

employees to attain the necessary performance. If it does not occur during this period, they

have to be reassigned. Lean manufacturing is dependent on everyone doing what is

expected and there is no room for employees who can or do not want to perform. It is

important to find those employees that really are interested in participating in a change and

involve them in the implementation process. Those real enthusiasts can inspire their

colleges and motivate them to participate in the change. [5, 35]

2.6.2. Senior Management Commitment

The focus of senior management commitment is critical, and it is important to win the

heart and mind of a major sponsor from the top team. The entire management team must

support the implementation and it is important to achieve unity before the project is

communicated to the organization. Top management should set the direction for the project

and establish the vision and mission. Case studies show that senior management

commitment is often absent or vague in organizations where major improvement projects

have failed. Good management during the implementation is characterized by credulity,

consistency and support. [5, 15, 35]

2.6.3. Education during Implementation

LSS manufacturing involves principles that might not be familiar to many of the employees.

Appropriate education and training is therefore needed at different levels in the

24
organization before and during the implementation. Top management must be taught

enough to be convinced that LSS production is worth their attention and create unity.

Workers in the affected area need booth theoretical education and practical training, since

they must understand both why and how to use LSS. Others that may have to be educated

are union managers, process engineers and middle management. [5, 15, 35]

Many organizations do not have enough knowledgeable people with sufficient experience

to initially teach the in-house courses effectively so it is better to include consultants for this

purpose. However, it is important that the consultants just act as a support and not

accomplish the entire implementation with little involvement from the resident staff. Too

much involvement of consultants often leads to failure, because they do not have enough

knowledge about the internal processes. Another risk is that the sense of ownership for the

project declines. [5, 15, 35, 55]

2.6.4. Communication and Information

Comprehensive information before and during the implementation is important in order to

avoid confusion and create motivation. The focus should be on the results and benefits

rather than the use of particular tools. Different levels of information are needed during

different phases in the implementation. General information to large groups should be held

before the operational changes take place and more specific information to smaller groups

during the change. [5, 35]

2.6.5. Project Management

When starting a project it is only important to have clear and good project goals but also to

have part goals. Part project goals are goals that different departments or people want to

achieve during the project. These goals will help the project on its way, especially if it is big

and comprehensive project. Apart from the project goals, the projects plan is important.

The plan is the core of the project management. All projects have to have a plan with all

25
part goals, milestones and activities pointed out. When the implementation starts, it is

important to have a detailed plan. During the project, this plan will have to be updated and

changed as factors changes and new solutions might come up. The important thing is to

have a plan with fixed dates when part goals should be reached. when project plan is

created it will not be evaluated for its logical elegancy but for its part in the success of the

project. [5, 35]

26
 CHAPTER THREE

DATA COLLECTION AND PRESENTATION

The status of the existing system should be thoroughly analyzed in order to implement LSS

in EPPSC. Thus, in this chapter the existing system is studied, the data collection methods

used, the presentation of the data and some of the discussions for the data presented along

the way and finally the extents of the seven wastes of LSS are defined for the company in

focus based on the collected data and observation of the manufacturing process. A brief

description of the industrial unit where the study has been carried out is also given.

3.1. BRIEF DESCRIPTION OF THE COMPANY (EPPSC)

EPPSC, located at Wonji which is12km from Adama city was established in August 29, 1955

Ec. the share holders of this companys were ministry of finance, Ethiopian Development

Bank, Ethiopian Investment Bank and Panser and Witmor Company with a beginning

capital of 50,000 birr. When it started production in 1962 the total expenses were 22

million birr and at the same time its capital was pumped to 10 million birr. During its

establishment, the company produces paper product of 25 ton daily and 8,500 ton

annually. Ethiopian government 70% and IFC 30% are the current shareholders of the

company.

EPPSCs production unit consists of two plants, which are the paper plant that has been

upgraded in 1989 GC to increase production capacity to 10,000 ton/annum and a carton

box manufacturing plant. The mill produces about 10,000 tons of printing and wrapping

paper with different grades, and is dependent on imported pulp. The company also

produces corrugated boxes mainly of 3 and 5 ply with an annual capacity of 11470 ton.

Paper can be made from a wide variety of materials such as cotton, wheat straw, sugar cane

waste, flax, bamboo, wood, linen rags, and hemp. Regardless of the source, fiber is what is

27
needed for paper production. In EPPSC fiber comes mainly from two sources: from the pulp

imported and recycled paper products. The raw material that the company uses for paper

production includes softwood pulp (short fiber), hardwood pulp (long fiber), and

unbleached Kraft pulp. EPPSC brought these raw materials from the worlds leading

suppliers found in Saudi Arabia, Sweden, Canada and Indonesia. The company also recycles

papers, which they collect it from different institutions like universities, government and

private industries, etc. On the other hand, the corrugated box production requires paper

rolls that resist tearing, splitting and bursting and different chemicals.

Currently, the factory creates job opportunity for 572 employees out of whom 451 are

permanent and 121 are contract. In addition to that, EPPSC has organized more than 158

youths in association for the processing and supplying of recyclable paper.

The study focuses on EPPSCs packaging plant. This plant added a new Corrugators machine

with a capacity of 17,500 ton/annum and a box printer in 2001 GC. The new Corrugators

(Box making machine) was supplied and installed in 2001 by Yantai Star Packaging Co. Ltd

(China). The machine has a trim width of 1600 mm and a design speed of 120 m/min;

however, the normal operating speed achieved by the company is only 45-50 m/minute.

Above this speed it has been found that the fluting is crushed in the process, or skipping

occurs. At speeds of 60-80 m/min, there also were reports of a drying limitation. The

process has a total steam demand of 2,500 kg/h and a power demand of 180 kW. A Flexo-

printer-slotter from Ming Wei Paper ware Machinery Co., Ltd. (Taiwan) used to print,

score, fold, and glue to produce the finished corrugated boxes. [50]

The raw materials required for carton box manufacturing are Kraft liners, test liners and

fluting medium paper rolls and chemicals like ink, starch and glue. The rolls requirement of

the carton box plant (80-90%) is meet by the paper mill of EPPSC even if sometimes the

28
company imports paper rolls from abroad like white liners. The chemicals are purchased

from both local and foreign suppliers.

Even though the corrugated box product is good in quality and used to have many

customers, the problem here is their product cost is high when it is compared to the cost of

the product that their competitors provide due to their high cost of material, labor, etc,

which leads them to losing most of their customers. Therefore, the annual production

volume dropped from year to year and now the number of units produced per year is much

less than what the company is expected to produce. EPPSC only has a 15% market share in

corrugated box market (less than 11% in wrapping paper).

3.2. PRELIMINARY STUDY

As explained above, EPPSC (EPPSC) is a combination of two companies, which are big

enough by themselves; which are paper Mill Company and corrugated box-manufacturing

company that produces paper rolls and carton boxes respectively. This thesis chose the

corrugated box-manufacturing plant because the extent of various wastes in carton box

manufacturing plant is more than that of paper manufacturing plant, which is shown in

table 2. The EPPSCs box corrugating plant works in two shifts for 16hrs/day and 22days

/month and sometimes the workers expected to work overtime. In addition, since it is

possible to extend the good outcomes of LSS implementation to the other plant or

department it is justifiable to choose one of the two department/plants.

Waste type Paper department Corrugated box

(average) department(Average)
Downtime 32.25% 59%
Inventory turnover 1.072 0.98
Defect
Customer complaint 4.33 6.67
Product rejection 74.5ton 271.682 ton
Table 2: Level of wastes at paper and carton box plant

29
 3.2.1. Overview of Corrugated Board Manufacturing Process

Corrugated packaging industry holds major portion of the packaging industry with its

varied use in engineering, food, textile, glass and many other sectors.

The process of making corrugated box starts with a Corrugators in the corrugating line.

Three large rolls of paper are necessary. One forms the corrugated (fluting) medium, and

the other two form the liner boards on either side of the medium. The top board is normally

called the single-face linerboard (test liner) and the bottom layer often called a double-face

linerboard (Kraft liner).

To make the board, the corrugated medium which will become the wavy middle layer in the

typical three-layer corrugated board sandwich, is pre-heated and steamed in order to

soften the natural ingredients in the paperboard and making it easier to form into flutes by

pressing it in between meshed rolls which fit together like huge gears. As the web (long

sheet of paper unwinding from the roll) emerges from the forming operation, it is held close

to the corrugating roll while corrugum starch is placed on the tips of the flute. The starch is

applied to the tips of the flutes, which are then pressed against the linerboard, also been

pre-heated. The adhesive sets up quickly following which the single-faced material is

moved up onto a bridge where the glue finishes the setting operation.

In the next section of the machine, known as the double-backer or double-facer, a second

layer of liner board is added. This layer is also pre-heated and adhesive is applied to the

outside of the flute just as before. Again, the glue set up is rapid. However, in order to cure

the adhesive, more heat is used. This is followed by an unheated section which allows the

board to cool. Figure 1 shows 3ply corrugated board (blank)

30
 Figure 1: single wall (3ply) corrugated board

At the end of corrugators, a slitter-scorer trims, slits and cuts the completed corrugated

structure into flat sheets called box blanks just the right size for making the boxes that have

been ordered by the customers (L*W*H).

For double-wall or triple-wall board, the double backing process is repeated, normally in

line with the original single back operation.

Finally, the box blanks are fed through the converting machine (printer-folder-gluer) in

order to convert them into finished containers. Thus, as each blank passes through the

rollers of the converting machine, it is printed, folded, glued and formed a carton box. From

the converting, the finished boxes are automatically stacked and sent to a banding machine

to be wrapped for shipping. Even if the banding machine exists in EPPSC, operators do the

wrapping manually. Throughout the manufacturing process, quality of the product is

checked by inspecting different attributes. Figure 2 summarizes the above manufacturing

process using flow process diagram.

31
 Figure 2: process flow diagram

3.2.2. Product Description

The EPPSCs Box products include mainly three and five ply carton boxes with different

designs. They are used for packing in different industrial sectors like horticulture, food and

beverages, soap and detergent, pharmaceuticals, bottle and glass, Pint, chemicals and

cosmetics and for apparel and textiles. EPPSC provide the following corrugated box

products with required print, which are applicable for variety business activities.

Normal box - a standard type of box which is used for packing different types of

products like Pasta and biscuits paints, garment, detergent, horticultures and many

others.

32
 Partition box - most of the time three layer corrugated box with a number of

partitions/rooms in it and is applicable in packing chemicals, cosmetics, soft drinks,

beers and medicines.

Flower box A special type of corrugated box with colorful print used for packing

and exporting flowers and vegetables.

Self locked box - these groups of boxes are designed to be locked by themselves

without having glue or stitched

Corrugated board - A flat board in three and five layers with different flat

dimensions. It used for packing logistics and bulky materials like furniture.

Pannal and angle types of boxes - Panel and angle are special types of boards, which

creased as per the customers specification. Most of the time applicable to safe

guard logistics. Figure 3 shows EPPSCs corrugated box product types.

Figure 3: EPPSCs corrugated box product types

Even if the company is capable of producing the above listed types of products, most of the

products the company currently manufactures are normal boxes and some partition boxes

mostly because the company lost most of its customers to other packaging plants in the

market. The boxes manufactured with brown and white colors and with different ply types

33
mainly with 3ply and 5ply. Table 3 summarizes product types manufactured in 2004EC

and figure 4 shows these products using Pareto chart.

Product type Quantity Percentage (%)

produced(ton)
3Ply Normal Box brown 1564.14 73.70752
3Ply Normal Box White 309.21 14.57101
3PLYPartition/Board brown 79.75 3.758088
5ply Normal Box Brown 129.03 6.080326
5plyNormal Box White 39.96 1.883049
Total 2122.09 100
Table 3: EPPSCs carton box product types

Figure 4: product types Pareto chart

The Pareto analysis (figure 4) performed using the above data reveals that from the six type

of products mentioned, normal box with three ply products are the most frequent products

manufactured at the company, these product contributed to more than 88% from the total

products manufactured.

34
 3.2.3. EPPSCs carton box customers

The Company used to have many customers but now they have only few. Zenith G/Eshet,

National Tobacco, Kality Food, Nazareth Soap, Upper Awash, etc are the some of the main

customers with big volume of product orders. Table 4 and figure 5 shows shares of

customers from 1438 ton of ordered products.

S.N Customers Wight (Kg) % Share of total

productions
1 Zeneith G/Eshet 182227 12.7
2 National Tobacco 142780 9.9
3 Kality Food S.C 123540 8.6
4 Nazareth Soap 113896 7.9
5 Upper Awash 82354 5.7
6 Maranque Plants 82289 5.7
7 Africa Food Complex 71137 4.9
8 Dire Dawa Food Complex 59029 4.1
9 Epharm 41129 2.9
10 Rayal Candy 39632 2.8
Total top ten 938014 65.2
Others customers 500248 34.8
Over all total 1438262 100
Table 4: Customers of EPPSCs carton boxes

Figure 5: shares of customers

35
 3.2.4. Arrangements of The Functional Units of EPPSC

EPPSCs Corrugating plants manufacturing system is a continuous manufacturing process

and has two production lines which are, the one that starts from the Corrugators to the NC

cutter, and the other line is printer-gluer line. The first manufacturing line contains the

machines corrugators, heater-cooler, slitter and NC cutter and the second line contains

printer, folder and gluer.

Figure 6 shows the layout of the manufacturing departments, the raw material and finished

goods warehouses, steam houses and the relationships between them. The line from the

steam room to the first manufacturing line is steam transferring line. Trying to move the

first manufacturing line in order to reduce material transportation will automatically affect

the steam line and eventually results new steam line installation.

Figure 6: sketch of some of the functional units of EPPSC

36
 3.2.5. The Current state of RM warehouse

The raw material warehouse contains the three main materials for manufacturing of

corrugated board, which are test liners, Kraft liners and fluting medium with different

GSM, length, color, locally manufactured and the imported paper rolls. The grammage of

the paper rolls are usually between 170-175 g/m2 for Kraft liners, 145-160g/m2 for test

liners and 127-140g/m2 for fluting mediums. The length ranges from 90-160cm based on

standards and the colors are usually brown and white (most of the imported rolls) but based

on past data only few type of paper rolls frequently manufactured like more than 95% of

the rolls are brown.

After the paper rolls are manufactured in paper plant, they transported to the raw material

warehouse with their product ID tagged on the them and placed randomly here and there.

The warehouse is cluttered and it is unbelievable that the organization produces parts and

throws them in so-called warehouse which is full of dust that is eventually deteriorating

or fading the products. Beside working in dusty environment is not only harmful for the

products but also for the employees who work in stock even from health perspective. The

other thing that damages the rolls is the material handling equipment, i.e. the forklifts

clamp tears the papers. Figure 7 shows the state of the warehouse and figure 8 shows

sample damaged paper roll.

37
 Figure 7: Raw material warehouse Figure 8: Damaged paper roll

The figure shows that the materials are placed on the dusty floor, which is very intolerable

and in appropriate because the rolls need to be placed in a very clean area in order to avoid

the deterioration of the products especially since the material cost is very high. Moreover,

appropriate placement and management of the materials have a big role in being

competitive in the market.

This problem clearly shows that the companys management work is very poor since the

state of the warehouse results high amount of financial loss and the problem can be solved

simply by using the appropriate material handling equipment and placing the materials in

organized way and in a clean room.

3.5.6. The model of the manufacturing system

A production line is a manufacturing system where machines are connected in series and

separated by buffers. The inclusion of buffers increases the average production rate of the

line by limiting the propagation of disruptions, but at the cost of additional capital

investment, floor space of the line and inventory. The profit of a production line is the

38
revenue associated with the production rate minus the buffer space cost and average

inventory holding cost.

Work-in-process (WIP) inventory or a buffer is the number of unfinished parts in the

system. EPPSCs manufacturing system is not a large system; it is a two machine-one buffer
(two station-one buffer) system. Blank boards exist as a buffer between corrugating and
converting machines (stations). Figure 9 shows EPPSCs two stations-one buffer production
line.

Figure 9: EPPSCs two stations-one buffer production line

The first station represents the first manufacturing line which is the corrugating and

includes corrugators, heater and cooler and NC cutter machine. The second station, which

is the converting line includes the printer, folder and gluer machine. even if each line

contains three or more machines, all are placed consecutively and work continuously thus

they can be considered as one big machine.

The first line corrugates the liners and transforms them into a rectangular boards. The

converting line prints the customers brands and folds the board in to carton box. This

boards are the WIP inventories. The manufacturing process is subjected to both line

starvation and blockage.

3.3. DATA TYPE SELECTION

In order to attain the objectives of the research, some means of collecting data must be

developed. Here, the methodology used must incorporate the advantages of most data

collection techniques. Therefore, it is aimed to use Personal interaction which includes

interviews of personnel both directly and indirectly related to the process, document

39
review and direct observation of the actual working environment and the condition of the

shop floor. Table 5 shows how to collect data related to Lean Six Sigmas defect and wastes.

SN Type of waste Data collection Waste identification method

1 Defect Total number of products made, Difference of output and input
Number of good parts made. Difference of products made
Scrap & rework during and products supplied.
processing.
2 Inventory Total raw material in store, Data from material
WIP and Finished goods in stock consumption records
3 Transportation Distance between machines, Direct measurement on shop
and motion Distance operators travel floor
4 Waiting Idle time of the machineries due From time study records
to operational, technical and
other reasons
5 Overproduction Total number of parts produced, Difference in total number of
Total requirement of parts. parts made and demanded.
6 Over processing Using wrong set of tools, From records and observation
procedures or systems
Table 5: Waste identification method

3.4. DATA PRESENTATION AND ANALYSIS

Data has been collected from EPPSCs corrugating department records regarding LSS wastes

such as material reject rate, causes of downtime and the hours lost, the level of raw material

and WIP inventory. On the other hand, direct observation of the actual working

environment and the condition of the shop floor reveals the level of the other wastes such as

transportation and motion is small. The aim of data analysis is to communicate the results of

the information gained through data collection. These data should be analyzed in a way that

one can convey the raw data and its analysis and draw conclusion from it. Therefore, the

data is analyzed using a standard statistical means and graphs are included wherever

required to illustrate the trends that the data shows.

40
 A. Material reject rate

Waste from defects in EPPSC is measured in terms of materials rejected in the process.

Rejects happen starting from before loading the material to the corrugators until it passes

through each machines or stages of the manufacturing process, i.e. from corrugators to

printer-gluer.

Table 6 shows collected data on monthly material rejection rate in the process of

manufacturing carton box. The material rejected is the paper that is before and after it is

loaded to corrugators. During manufacturing different chemicals used, thus this loss also

includes the chemicals applied during the manufacturing process.

Month quantity used Quantity Quantity rejected Percentage

(kg) accepted (kg)
July 209757 180126 29631 14.13
August 202015 179586 22429 11.11
September 220669 198933 21736 9.85
October 214627 194952 19675 9.17
November 115436 100663 14773 12.8
December 297585 264498 33087 11.1
January 218014 206585 11429 5.2
February 158250 147984 10266 6.5
March 182961 154695 28266 15.4
April 150966 133648 17318 11.5
May 172712 151545 21167 12.3
June 251641 211086 40555 16.1
Total 2394633 2124301 270332 11.3
Table 6: Monthly MRR in 2004EC

Hence, the Company reported annual process loss of 11.3% in a year 2004 EC which is

about 270.3ton. The high percentage of material loss in the production of carton box

reveals the existence of large amount of loss in terms of material, machine time, labor,

energy and other resources. The rejected materials cannot be re-processed in corrugating

plant but they can be re-processed in paper Mills.

41
The company works for two shifts and the reject rates vary in each shift. The following one-

month reject data shows the level of rejects in each shift and the percentage of material loss

in each stage of the manufacturing process. Some of the days of the month are not included

in the list because the company has been down in those days. Thus, there was no production

in those days. Table 7 and 8 shows rejects for day and night shifts respectively.

Reject at each machines(Kg)

Reject before load DF reject SF reject SF reject Blank reject Print
Date (Kraft (test liner) (fluting) (NC cutter) reject
KL TL FM
liner)
20/06/04 - - - - - - - -
21/06/04 5 - 15 - 12 20 20 -
22/06/04 7 5 10 - 25 35 18 10
23/06/04 - 26 40 - 30 35 16 3
24/06/04 13 37 33 - 28 39 21 -
25/06/04 16 15 16 - 29 47 20 30
26/06/04 - - - - - - - -
27/06/04 17 33 25 - 30 34 9 6
28/06/04 - - - - - - - -
29/06/04 73 40 43 40 70 18 -
30/06/04 - - - - - - - -
31/06/04 - 7 25 - 25 30 23 2
Total 73 163 207 219 310 145 51
Total reject 1168
%age 6.25 13.96 17.73 18.75 26.54 12.41 4.37
Table 7: Reject at each machines for shift A (day shift)

Reject at each machines(Kg)

Reject before load DF reject SF reject SF reject Blank reject Print
(Kraft (test (fluting) (NC cutter) reject
KL TL FM
Date liner) liner)
20/06/04 10 74 15 15 25 15
21/06/04 40 55 100 50 60 20 3
22/06/04 18 - 30 - 33 40 22 5
23/06/04 5 15 47 - 45 65 25 10
24/06/04 25 25 50 - 35 50 10 10

42
25/06/04 57 25 43 - 50 67 44 4
26/06/04 - - - - - - - -
27/06/04 6 10 20 - 25 35 10 -
28/06/04 - - - - - - - -
29/06/04 - 10 13 - 7 9 6
30/06/04 25 27 30 - 30 35 20 -
31/06/04 27 17 30 - 35 50 29 -
Total 213 258 378 325 436 201 32
Total reject 1843
%age 11.56 13.99 20.51 17.63 23.66 10.91 1.74
Table 8: Reject at each machines for shift B (night shifts)

The bold figures show that more than one product type has been produced in that day. The

above data shows that rejects before load increases at night shifts and other rejects decrease

in night shifts. The amount of material used and the number of units produced during the

night shift is less than that of produced during the day shift. The level of rejects at each

machine for each shift is summarized in figure 10 using histograms.

Reject at each machine

30

25
percentage (%)

20

15

10

0
reject reject reject blank
DF reject SF reject SF reject print
before before before reject(NC
(KL) (TL) (FM) reject
load(KL) load(TL) load(FM) cutter)
shift A 6.25 13.96 17.73 0 18.75 26.54 12.41 4.37
shift B 11.56 13.99 20.51 0 17.63 23.66 10.91 1.74

Figure 10: Reject at each machine for each shifts

43
 B. Downtime Analysis

Annual data of downtimes of the company for the year 2004EC which lists each and every

cause for the plant being down is collected and shown in appendix A.

Table 9 and figure 11 summarized the list of downtimes in to operational, technical and

others category of DT causes for each workstation.

Work station Operational Technical Others (hrs) Production lost

downtime (hrs) downtime (hrs) (tons)
Corrugating 199.6 456.2 2188.4 3393.7
Converting 794 495 1077.94 2787.3
Table 9: Downtime summary for corrugating and converting machines

Down Time
3000

2500

2000
Hours

1500

1000

500

0
Total
Power techinic Total
Producti Operati Electric Instrum Mechan
Others interupt hal down
on hrs on al ent ichal
ion down time
time
Corrugator 1844.9 199.6 176.9 70.3 209.2 2143.9 45.09 456.5 2845
Converting 1720.4 794.3 87.5 73 337.3 1030.7 47.3 497.8 2370

Figure 11: Downtime graph

Therefore, from the above table and figure of downtime the company has been down for an

average for 59% of its time.

44
 C. Inventory Analysis

An inventory is a stock of materials used to facilitate production or to satisfy customer

demands. Inventories typically include raw materials, work in process (WIP) and finished

goods. In an operation, the raw materials inventories scheduled for use in making a product

and waiting to enter the productive process, work in process inventories in the intermediate

stage and finished goods inventories already completely transformed by the production

system and ready for sale to customers.

I. Raw material inventory

EPPSC has two raw material stores; one for the paper rolls and the other for the chemicals

that the manufacturing process needs. The paper roll warehouse contains the Kraft liner,

Test liner and Fluting medium usually with frequent grammage but various lengths.

The paper roll warehouse holds up to 500-600 tons of materials in each month. In order to

show the monthly consumption of materials stored in warehouse, one month data

regarding materials available and materials consumed is taken. Month June is randomly

selected from the months that customer order becomes high. Table 10 shows the beginning

and ending inventory as on 30 June 2004EC.

Stock code Stock Beginning Ending Inv

description Inv.(ton) (ton)
04-16L150 Local KL 3.89 3.89
04-16L155 Local KL 2.14 2.14
04-16L175 Local KL 72.4 24.98
04-17L140 Local TL 37.2 17.68
04-17L150 Local TL 52.77 22.96
04-17L160 Local TL 181.65 103.85
04-18L127 Local FM 3.83 3.56
04-18L140 Local FM 206.52 119.93
04-19L175 White KL 106.07 96.82
Total 666.47 397.09
Table 10: Raw material inventory in store

45
Thus, the material consumed is only 40% of the raw material (269.38ton) available in stock,

which indicates that only about 2/5th of the raw material inventory is utilized every month.

II. WIP inventory

The WIP inventories are the box blanks between corrugating and converting stations.

Table 11 shows the monthly WIP inventories level.

Month Total WIP at the Total WIP at Balance

beginning of the the end the
month(kg) month (kg)
July 10248 34518 +24270
August 34518 24758 -9760
September 24758 71248 +46490
October 71248 45229 -26019
November 45229 6420 -38809
December 6420 35357 +28937
January 35357 24538 -10819
February 24538 14317 -10221
March 14317 17155 +2838
April 17155 20542 +3387
May 20542 43452 +22910
June 43452 28441 -33204

Table 11: Monthly WIP inventory level from July2011-June 2012

The + sign indicates the increase in WIP inventory at the end of the month and the sign

indicates the decrease in WIP Inventory and based on the above data in average 30.5ton of

WIP inventory exist at the end of each month.

D. Product Cost

Product costs include all the costs that are involved in acquiring or making the product. In

EPPSC, finance department records cost of manufacturing the good (carton box) in the

category of materials cost, labor cost, energy, manufacturing overhead and prorated

overhead.

46
Material cost is cost of all raw materials used to manufacture the finished product, which

are Kraft liner, test liner, fluting medium, chemicals and stichers. Labor cost includes wages

as well as employee benefits, payroll taxes paid by the company for the workers and costs

for training customers. Overhead costs are all other costs associated with running the

manufacturing firm and prorated overhead is allocation of overhead accounts on firms

actual total overhead in proportion to some base to an activity, department or product.

Table 12 shows a summarized annual cost incurred in EPPSCs corrugated board

manufacturing plant.

SN Description Cost (Birr)

1 Material cost 32148141
2 Labor cost 2086908
3 Energy (fuel) 385229.94
4 Energy (Electricity) 669456.68
5 Overhead cost 871963.16
6 Prorated overhead cost 1681786.28
Total 37843485.06
Table 12: Annual cost data

The material cost is the sum of cost of the raw materials used to manufacture the boxes (the

paper rolls and chemicals) and also the cost of the broke which is cost of the materials that

become defective. Therefore, from the total material cost 2,779,548.3br (from the

companys data) is the cost of the broke.

E. Production capacity and utilization (2004 EC)

The following table shows production capacity and utilization data

Description Planned Actual

Annual production (ton) 3201 2124
Annual production in amount (birr) 77,193,000 40,036,072
Labor hour (Hr) 61077 67618
Machine hour (Hr) 2242.5 1367.7
Labors production capacity Kg/hour 52.4 31.4
Machine production capacity kg/hour 1427.4 1553.2

47
 Design production capacity (ton) 11470.3 2124.3
Possible production capacity ()ton 7649.9 2124.3
Actual capacity compared with design capacity, % 18.5%
Actual capacity compared with possible production capacity, % 27.8%
Actual capacity compared with planned production capacity, % 66.3%
Table 13: 2004ECs production and utilization data

F. Human resource

According to 2004 data, the Company has 451 permanent and 121 contract employees

which makes the total 572 for both EPPSC plants. Table 14 shows the level of education of

workers.

SN Level of education No % from total

1 Professionals(MA, MSC, BA, BSC) 20 4.43
2 Semi professionals(diploma) 71 15.74
3 9th-12th grade 227 50.33
st th
4 1 -8 grade 112 24.84
5 Below grade 1 21 4.66
Total 451 100
Table 14: Educational status employees

The table shows that less than 5% of the employees have above diploma educational level

status and only 20% of them have diploma and above diploma.

3.5. LEAN WASTES IN EPPSC

Based on the seven lean wastes are defined for EPPSC as follows, which determines their

cause, level of the wastes and how LSS helps in avoiding them and it also justifies why some

of the wastes are not included in the study.

3.5.1. Defect (material reject rate)

Defect or material rejects (loss) in EPPSC is measured as process loss and it is one of the

main wastes. Material rejects happen due to various reasons like when the dust in the

warehouse damaged the paper, forklift tears the paper during transportation, heavy starch

application and touching the surface of the liners, boards being soft, over heated or cracked,

48
light glue application, Glue line has white appearance/incomplete starch gelatinization,

Shallow glue bond, Flutes not glued, etc. It also happens due to side trimming allowance and

due to printer-gluer problem like misalignment of prints, missing some prints, heavy ink

application, glue touching the surface, etc are the main reasons for EPPSCs corrugating

plant process loss happening. This material reject rate reaches up to 11.3% per year that is

about 270 ton and it costs the company high amount of money.

3.5.2. Downtime

The downtimes recorded as the times that the plant fails to produce parts (corrugated

boxes) due to technical, operational and others different kind of reasons. The technical

causes of downtimes are breakage of blade, printer ink pump problem, problem on die

cutter, steam line problem, problem on starch agitator, etc and the operational downtimes

are the times for glue and ink preparation, cleaning, machine set up times etc. There are

also other reasons like lack of order, power interruption, steam shifting to paper machine,

lack of the appropriate type of raw material etc that are neither technical nor operational.

and based on those records, the workstations (machines) both corrugating (corrugators-NC

cutters) and converting (printer-gluer) are down for more than half of their time which is

in average around 60% of the time.

3.5.3. Inventory

The raw materials for corrugated box manufacturing are paper rolls of KL, TL and FM and

different chemicals like inks, starch and glue. The paper rolls are the main raw materials for

box production and their material cost is high which reaches up to 60-80% of the product

cost and about 85% in EPPSC. The company holds 15day safety stock of the materials. Even

if the company has to function for 16hrs/day, 22days/month and 264days per year, the

company produces parts in only 40% of the total time, which is 106days/year (264*0.4).

2384.953 tons of the paper rolls are consumed per year that means in average 22.5tons of

49
materials consumed per day. So the 15day safety stock amount is 337.5ton but the average

monthly production rate is 177ton which makes the safety stock level high. But not only the

safety stock level is high but also the amount of the RM in store is high since it reaches upto

600ton in each month which makes the inventory cost high since the Material cost is very

high beside the raw materials manufactured in house. Even if shortage of materials is the

main downtime cause and it makes the shortages cost very high, those shortages happen

when the customers requirement of the paper roll grades are different from what the

company is frequently using to produce the products. Therefore, this high level of raw

material inventory has to be reduced or optimized to reduce the capital that the material

locks up which should have been invested in other sectors of the company.

On the other hand, the WIP inventories are the box blanks between corrugating and

converting machines and its level reaches on average 30.5ton per month. In carton box

manufacturing the material always locks up high level of cost therefore, it needs

optimization. WIP inventory level seems a little high even if both starvation and blocking of

the manufacturing line exists.

3.5.4. Overproduction

Overproduction is not that common in the company, since all carton boxes made to

customer order. A bigger problem is that the customers will not take their orders in time

(the due date) as a result the carton boxes which are ready for dispatch moved to the

finished goods warehouse. According to the companys workers, the reasons for not taking

the products on time is, most of the customers do not have enough storage area for the

carton boxes so they expect the manufacturers to store for them until they need it.

Therefore, even if there is no issue of over production in the company but in some way the

parts in the finished goods inventory could be considered as overproduction because the

carton boxes are produced before they actually can be delivered. But the problem here is if

50
they did not provide this service (storing parts) to their customers they lose them thus

providing storage service is one way of keeping their customer. Thus, overproduction (FG

inventory) is not studied in this paper.

3.5.5. Over Processing

Activities in processes can either add value to the customer, be necessary for the function of

the process or non-value adding. Incorrectly designed processes are a source of waste. In

EPPSC, the process that transforms the raw material into carton box is simple, clear, easy

and necessary. Even if the rework after the rejection can be considered as excessive

processing and it exists, usually the reworks of the rejected materials is made in paper mill

plant. Sometimes rejected box boards can be used for partition box production in

corrugating plant but the annual rate of this rework is very minimum which is about

0.08%. Therefore, the amount of the inappropriate processing in EPPSC is very low that is

why this waste is not studied in this paper.

3.5.6. Motion

There is no also that much of unnecessary motion since the only job of the workers is to

load, unload and inspect the products from the machines they are assigned too. Therefore

one of the lean wastes called motion is not studied since it is not that much of a waste for

the company.

3.5.7. Material Transportation

The unnecessary transportation of material is not a common cause of waste in the company

since it is of process type of company. In this case, the material does follow a specific line

flow due to which material moves from one machine to another in a sequential manner and

does not travel long distances. The only two material transportations that exist in this plant

are, when RM (paper rolls) transported from RM stock to the corrugators machine and the

other is when blank board (box blanks) transported from NC cutter to printer machine.

51
the feasible way of reducing the transportation waste is to optimize the distance that the

material travels by proposing new layout by rearranging the machines but as for EPPSC,

rearranging the machines in order to minimize transportation distances results building

new steam house and steam lines for heater-cooler section of the manufacturing process.

However building the steam house and the steam line is very difficult because the company

does not have expansion area and the layout of the plant does not have space for new steam

line beside the fact that trying to build a new one is very costly. But it is possible the reduce

distance that the blank boxes travels by simple bringing the second manufacturing line a

little close to the first line. Usually reducing the distance that the materials travels have a

great impact in reducing cycle time and increasing production rate but for EPPSC, reducing

cycle time means increasing another downtime since the company already has too much

idle time due to lack of order and other various reasons.

Therefore, each lean waste defined for the case company (EPPSC) and then identified which

wastes are the main one by thoroughly looking on the recorded data, observing the

manufacturing department and the warehouses specially the paper roll and interviewing

the operators especially with production planning department of corrugating plant and

shop floor workers. Hence, the study summarizes after investigating all kinds of wastes

existed through inspection and interviewing workers the author concluded that the main

wastes, which needs further study are defects or the process loss, downtimes and

inventories (RM and WIP) based on their level, their impact on the companys profitability

and customer satisfaction. Thus, these three wastes are defined and summarized in the table

15. The rejects measured as the amount of materials lost in the process of producing of

corrugated box, downtimes as the numbers of hours the company has not been

functioning/producing due to various reasons and inventories as the number of units

remained in stock.

52
Process metrics Description Data to measure
Rejects Measure the material reject From daily, monthly and
rate in the process of yearly reject data
producing the parts
Downtimes Measure the number of From the Company record
hours the Company has been
down
Inventories Measure the number of units From the Company record
remained in stock
Table 15: Process metrics for the main wastes

This project uses a Lean Six Sigma approach to reduce waste and variation in the process of

carton box manufacturing. Lean Six Sigma manufacturing helps the company to

continuously simplify and organize the working environment or the process so that the

Company can reduce waste, and keep its people, equipment, and workspace responsive to

what's needed right now. Moreover, it helps to meet the changing demands of the

customers quickly and effectively, and adapt to a rapidly changing business environment

and it also improves the companys profitability. Lean Six Sigma has been used worldwide

to improve processes not only in manufacturing but also in service industries.

The project used DMAIC model, which stands for Define, Measure, Analysis, Improve and

Control phases as a base since it is a backbone of Lean Six Sigma implementation. DMAIC

cycle used as a guideline to define the problem, measure the data and current situation,

analyze the causes, improve the process, and control the final benefits. Most of the projects

done on implementation of lean six sigma also used DMAIC model to study a process and

come up with the improved one. Moreover, the model plays an important role in making

LSS initiatives a success for business since it is a phased approach and also very easy to

understand, follow and implement.

53
 CHAPTER FOUR

DMAIC MODEL FOR LSS IMPLEMENTATION IN EPPSC

4.1. INTRODUCTION

The waste identification and measurement analysis done in chapter three revealed the three

main wastes of EPPSC, which are material loss, downtime and inventory. Theses wastes have

a major & direct influence in the companys profitability, competitiveness and existence in

the market.

For instance, the total amount of materials that got rejected cost the company hundreds of

thousands of dollars a year and it contributes to 7% of the product cost. This makes cost of a

product higher that leads to loss of a number of customers since other companies provide

the product in lower price. Moreover, the total cost of the materials rejected is higher than

what the company is getting as profit.

Similarly, the company being down for more than half of its time results a loss of possible

revenue since it is producing way less than its manufacturing capacity. Workers wait for

hours with nothing to do and this contributes to huge increases in manufacturing costs.

Employees are underutilized since capabilities of employees are not fully revealed and

engaged to create maximal profit and benefit for the company employing them. The

employees idle time is accounted as costs of direct labor for employees so their work is

compensated as usual but the organization is not obtaining the proper labor outcomes,

therefore the idle time incurs loses to the organization. The same can be said for the idleness

of machines.

The high level of inventory also plays the same role since it contributes to more than 80% of

the product cost. Its consumption is low so that it locks up capital that could have been

54
invested in different process improvement projects. In addition, the state of the RM

warehouse deteriorates the materials.

Thus, the high level of these wastes calls for immediate improvement and Lean Six Sigma is

proven effective for driving waste out of manufacturing process and save money. Lean Six

Sigma improves manufacturing process by using its effective model DMAIC that stands for

Define, Measure, Analysis, Improve and Control. Therefore, this chapter presents the

complete step by step analysis carried which is defining the problem and process,

measuring the current status, identifying the problems root cause, suggesting

improvement methods and developing control mechanisms and identifying the things that

the company needs to keep doing for continuous improvement.

4.2. DEFINE PHASE

In this phase, the process and its metrics defined with the help of tools like SIPOC diagram

and process map. The problem is also defined in detail and project charter is prepared.

4.2.1. SIPOC Diagram

SIPOC stands for Suppliers, Inputs, Process, Outputs and Customers is a process map viewed

from a great distance. This diagram helps by making the process viewed by all team

members (employees) in the same way and everyone understands the process where to

focus in terms of the project. Figure 12 shows the whole process for packaging plant

however the study focuses on the raw material (paper rolls) warehouse and in the

manufacturing department.

55
SUPPLIERS INPUTS PROCESS OUTPUTS CUSTOMERS

EPPSCs paper Paper rolls Corrugated Various local

mill and Adhesives box manufacturing
Local and (glue & starch) companies like
abroad ink & & Inks Zenith, Acos, etc
adhesives
manufacturers

RM warehouse

Receiving an Production Manufacturing Dispatch

order planning the product/ box

Receive customer Enter data to computer RM Receive the 50%

requests, Quantity
Corrugating payment on
Box size, style
delivery
Board specifications
Determine the type
and printing required Converting
and amount of
or not Deliver the
materials to use and
the due date product and the
Packing
Determine whether it invoice
can be manufactured
or not?
Send the order for Transport the
manufacturing product to FG
Yes stock
Receive 50%
payment in
advance
No
Cancel the order

Figure 12: SIPOC for packaging plant

56
In addition, a high-level process map that is shown in Figure 13 shows the main production

operations that can affect the performance of the production process.

Figure 13: high-level process map

Effective use of resources and materials can be controlled with the use of KPIs (Key

Performance Indicators). Key performance indicators measure the performance of a process

and indicate the yield of processes so objectives can be achieved. The seven wastes of Lean

Six Sigma can be seen as KPI because the level of these wastes show how efficiently the

company is working.

EPPSC have four very important KPIs that measure productivity, efficiency and costs. The

performance measures are identified as production volume (ton), machine hours used

57
(uptime), labor hours used and MRR. For example even though the company has a design

capacity of producing more than 7500 ton per year by working for two shifts and plans to

produce 3201 ton, they only manufactured 2124ton in 2004 EC which is clearly below

what the company is capable of and what they planned to manufacture.

This study focuses on the MRR (material Reject Rate) KPI since it is one of the lean wastes

and also on downtime and inventory. These wastes are discussed in detail below.

4.2.2. Detailed Problem Understanding

Companies today are forced to save money and resources if they want to compete in

globalized markets. For EPPSC, packaging plant this is very important when competing with

different manufacturers of packaging products that can provide the products in much more

capacity, with lower price and good quality. The Company used to manufacture the

packaging products for more than 300 different companies/customers but now they lost

many of those customers for newly emerged packaging companies like MIDROCs UP,

Burayu PPI and other small-scale carton box manufacturers in the past couples of years.

Any production process can be inherent to either Process loss or product loss. The process

loss, which usually happens in process industries like EPPSC, is associated with raw

materials being lost while going through the production process and it happens due to

various reasons like because of the nature of the material itself, nature of the process or

some other conditions.

In EPPSC, the process loss that is the materials reject or loss happen at each stages of the

manufacturing process starting from before loading the paper rolls to the Corrugators until

the end product comes out from printer folder machine. The rejects happen due to various

reasons like flute wave length variation, overheating, trimming, missing prints, smearing

inks, etc and it also includes damaged parts of the paper rolls that got removed before

58
loading it to the Corrugators. This material rejection rate reaches up to 11.3% (271682kg)

per year and that is too much for the company whose annual production rate is only

2124ton.

The rejected materials cannot be reworked in corrugating plant except for some rejected

box blanks, which can be used to manufacture partition boxes. However, that does not

mean that the rejected materials are a total waste because even if they cannot be reworked

in corrugating plant they can used as a raw material in paper mill plant. Therefore, those

rejected materials can be sold for paper manufacturing company (EPPSCs paper Mill) for

re-processing. Thus, this high level of MRR is one of the main non-value adding activities of

the Company.

The other major waste of the company that is downtime is recorded for each station

(machines) which are corrugating and converting. According to 2004EC data, the

Corrugating machine has been down for 2845hrs and converting machine for 2370hrs

that means in average the production line has been down for about 60% of its time. Even if

the company works for two shifts (16hrs/day), the average time that the company able to

produces parts does not exceed 6.5hrs/day, which clearly indicates that the company is in

trouble. The sum of production hours and downtime hours exceed the annual available

hours and that is because overtime exists.

The other waste which needs consideration is inventory but as explained in section 3.6 FG

inventory is not included in this study. Thus, the study considers RM and WIP inventory as

a waste because the level of RM inventory is high because only few amount of it is

consumed in each month. In addition since both line starvation and blockage exists, the

optimal level of WIP inventory needs to be determined for EPPSCs two station-one buffer

59
system. The wastes of EPPSCs corrugating plant that the thesis focused on are summarized

and defined as follows:

The amount of materials that got rejected in each machines because they did not

meet the quality requirements is about 270 ton per year. This means 11.3% of the

materials go to waste which costs the company a high amount of money and also the

customer also pays for this non-value adding activity which ultimately drives them

away.

The corrugating machine has been down due to various reasons for 60.66% of the

total hours and the converting machine for 57.94% which shows that the plant is

down for more than half of its time.

Only 40% of the RM inventory is consumed per month and the average WIP

inventory level at the end of each month is 30.5ton.

Thus, the goal here is to use Lean Six Sigma methodology in order to improve and control

the above waste levels, this means eliminating waste and variation in the process of making

the carton boxes. Specifically,

o To reduce process loss to 3.4 PPM, so that the materials and carton boxes will not be

lost in the process and operation costs will decrease.

o To reduce downtime so that the company will able to manufacture more and

increase the level of revenue that the company can earn.

o To optimize RM and WIP inventory level, so that the locked up capitals can be

invested in other improvement programs of the Company.

o To increase the profit at least by 50% by eliminating the wastes identified yet.

60
4.2.3. Project charter

After the problems are defined properly, team members, objectives, goals and how long the

project will take will be defined using project charter. Table 16 shows the template of

project charter.

Sample Project charter

Project name Reducing before load reject
Company EPPSC
Department Corrugating plant
Analyzed process Paper roll warehouse
Problem statement: high level of MRR which reaches 11.3%/year
Goal /objective: to reduce the 42% before load rejects by implementing 5S
Project mission: to increase customers satisfaction and companys profit
Constraints:
Teams
S.N. Name Members Department Role
1 Mr/Ms X Team leader Production planning Leading and organizing the team
2 Members
3 Members
4 Members
Savings Milestone
Financial benefits: Phases Start date Completion date
Define
Measure
Other benefits: Analysis
Improve
Control
Table 16: Sample project charter for LSS implementation

4.3. MEASURE PHASE

The second phase of DMAIC in Lean Six Sigma implementation is Measurement. Thus, this

phase is about collecting data regarding the extent of wastes. Since the collected data is

presented in chapter three, this phase summarizes the problems identified in terms of their

values with the help of diagrams like Pareto and measures the sigma level of the process.

61
Table 17 summarizes the level of lean waste in EPPSCs packaging plant based on the

collected data.

Lean Wastes
Process loss Downtime Inventory
MRR Hours lost/year Corresponding Raw material WIP inventory
production loss
11.3% of process An average of 3398ton of Only 40% of the An average of
loss exists which 59.3% of products didnt RM (paper rolls) 30.5 ton of WIP
is about 270.3 available time produced that in the inventory exists
ton/yr has been lost should have warehouse are at the end of
been produced consumed per each month.
in those lost time month

Table 17: The current performance of EPPSCs corrugating plant

4.3.1. Defects Per Million Opportunities (DPMO) and Sigma Level

In process improvement techniques, defects per million opportunities (DPMO) are measures

of process performance or non-conformities per million opportunities. A defect is also

known as a nonconformance of quality characteristic to its requirement and specification.

Six Sigma as a metric equates to 3.4 defects per million opportunities (DPMO). Many

companies use this metric to lead their defect reduction effort. Many improvement experts

contend that most companies today work at a sigma level between three and four. For

example if the company is operating at a three sigma level, it is producing 66,800 defects

per million opportunities; a 4 sigma level is 6,210 DPMO. Reducing defects will obviously

lead to higher customer satisfaction, lower cost of quality, increased capacity and most

importantly increased profits.

62
The sigma metric is often used as a management tool to evaluate and compare performance

between dissimilar processes, and DPMO can be used in many situations to relate impact

and cost. DPMO can be calculated as:

DPMO = *106
/

Where:

Total defect is the total number of units lost (units fails to meet customer expectations)

Total units produced is the number of parts produced

Opportunities/unit is events where the critical characteristics of the sampled entity could

either meet or fail customer expectations or simply it is the total quantity of chances for a

defect. In many manufacturing situations, there may be multiple opportunities per entity.

As explained before, rejects in EPPSC can occur at different levels starting from before

loading the rolls to the corrugators until it passes through printer-gluer. Thus, from rejects

at each stage data the product has a total opportunity of eight to be defective. These are

three before loading the material to Corrugators and five after the material is loaded and

passes through each machine. The three opportunities of before load are for Kraft liner, Test

liner and Fluting medium paper rolls and the five after load opportunities are for single

facer (TL), single facer (FM), double facer (KL), NC cutter and printer. The reject

opportunities are summarized in table 18. Daily rejects are calculated by adding the rejects

of each shift, which then described in terms of percentage.

To measure the overall manufacturing process more closely, production data of one year

has been taken and defects per million opportunities (DPMO) calculated (as shown below),

which comes out to be 15907.11DPMO and further sigma value is generated as 3.65.

63
 Production results for year2004
Total quantity produced 2124301Kg
SN Reject opportunities Reject value(Kg) Percentage (%)
1 Before loading(KL) 25677.5 9.498505
2 Before loading(TL) 37798 13.98207
3 Before loading(FM) 52522.16 19.42876
4 Double facer 0 0
5 Single facer(TL) 48841.12 18.06709
6 Single facer (FM) 66976.98 24.77582
7 Blank reject (NC cutter) 31064.39 11.4912
8 Printer reject 7451.862 2.756559
Total quantity rejected 270332 100
No. of opportunities 8
DPMO 15907.11
Sigma level of process 3.65
Table 18: Sigma calculation

Thus, DPMO for EPPSC is calculated as:

DPMO = =
/

DPMO= 15907.11

The companys sigma level shows the existence of high rate of material loss and for carton

box manufacturing companies the sigma level has to be high enough because the material

cost is very high.

4.3.2. Pareto diagram for the process loss (MRR)

In EPPSC, the quantity of the materials rejected has a huge effect in increasing the cost of

the product in addition to the fact that Millions of Birr become lost. A Pareto diagram with

the major categories of the process loss (MRR) created to check in which problems we can

focus on. Figure 14 shows the vital few reject opportunities in contrast to the useful many.

This will help to solve the problems in stepwise manner.

64
 Figure 14: Material reject rate Pareto chart

Hence, from the chart, FM and TL before load rejects and FM and TL single facer rejects are

76.3% of the total material lost. It helps by identifying which parts need immediate

improvement since it identifies the vital few cause of the problems in having high MRR.

Since the grammage of Kraft liner is relatively high, it relatively does not get easily

damaged.

Moreover, from reject opportunities data, it is known that before load rejects covers 42.9%

and after load reject covers 57.1%. The 57.1% after load reject is the sum the rejects happen

in the first manufacturing line (corrugating line) which is 54.3% and the reject happen in

the second line (converting line) which is 2.7%.

4.3.3. Pareto diagram for downtime

Downtime analysis is an essential part of plant operations management, as it provides a

powerful tool that enables a better understanding of the underlying issues that affect plant

65
availability and rate loss. DTA enables identification and quantification of lost production

capacity by accurately collecting data and measuring actual overall output against

theoretical or rated capacity.

DTA provide easy-to-understand and comprehensive Key Performance Indicators (KPIs),

which show the causes, duration, and timing of downtime and rate losses. It helps the

Production management and process engineers to implement continuous process

improvement programs that can reduce the level of downtime and increase production

rates by using reports about the DT.

Downtime costs EPPSC millions of dollars (birr) each year in lost production, downgrade,

and loss of customers. That is why it is important to know what is causing the downtime

and how to use this information to correct the problem and improve the system.

DT causes can be grouped together to create a hierarchy of faults with major classifications

such as mechanical, electrical, raw materials, procedural, personnel, and availability being

expanded into more detailed causes but In EPPSC, downtime are measured manually by

operators and the causes of the idle times categorized in to three; which are:

A. Technical lost time: are idle times of the machineries due to hardware failures

and it could be due to mechanical, electrical or instrumental reasons and it also

include maintenance or repair time.

B. Operational lost time: are the times that the operators spent to adjust the

machines or to prepare the materials like ink, glue, etc for the manufacturing

process

C. Others: This category includes all causes of downtime that are neither technical

nor operational. For example idle time when steam shifted to paper machine,

power interruption, etc.

66
The annual summarized total downtime for the whole line of manufacturing is shown in

the table 19.

Description Downtime Percentage, % Corresponding

(Hrs) production loss (ton)
Technical causes 952.1 18.3 1120.5
Operational causes 993.9 19.1 1162.8
Others 3266.34 62.6 3898.4
Table 19: Categories of downtime causes

From the above table it is clear that the plant is down in average for 59.3% of its time and

reasons categorized in others is about 62 % is the main cause for having such a high rate

of DT and with operational causes of DT, they cover more than 80%. EPPSC implements

frequent and scheduled preventive maintenance and that is the main reason for relatively

reduced technical downtimes. The following Pareto chart identifies which type of

operational and others categories of downtime causes are the main one.

As major causes of downtime are uncovered and underlying reasons addressed, the focus on

particular downtime causes will change with some categories being expanded, with less

significant causes being grouped together. The following table and Pareto chart summarizes

the causes.

SN DT causes Lost time, hrs

A Shortage of raw materials 837.2
B Lack of order 781.3
C Due to electric boiler problem, steam shifted to Paper machine 574.7
D Lack of blank inputs due to Corrugating machine stoppage 359.63
E Stereo being damaged and adjusted operationally 283.65
F Waiting for print sample from customer 273.12
G Lack of black ink 177.42
H Shortage of yellow printing ink 142
I Glue and Ink preparation 96.70
J Power interruption 91.17
K Place being crowded 71.70

67
L Print problem and adjustment operationally 67.8
M Manpower shifted for output packing 60.9
N Single facer clearance adjustment 40.0
O Single facer problem and operational adjustment 28.4
P Cleaning dirt from stereo 27.51
Q Lack of pallet 26.33
R Company meeting/cleaning 24.67
S Board being curled 23.29
T Work space being crowded 20.8
U Cleaning for Company's yearly celebration 19.5
V Folder belt operational problem 19.0
Others 213.9
Table 20: Summary of operational and others causes of DT

Figure 15: Pareto chart for the main reasons of downtime

The chart shows that shortage of raw material, lack of order, steam shifting to paper

machine, lack of blank inputs from corrugating machine, stereo damage and adjustment,

waiting for print sample from customer and lack of inks (i.e. black and yellow) are 80%

contributors of the idle times and production loss (3393.6ton). Thus, the DTA helps to

68
achieve the objectives of identifying the main non-productive times and helps to prepare

the improvement plan that reduces the downtimes and making the company run to its rated

throughput.

4.4. ANALYSIS PHASE

In this phase, the root causes of the wastes are analyzed so that the process can be improved

or redesigned.

There are three ways to analyze the roots cause of problems:

1. Exploring: Investigate data and the process with an open mind to see what can be

learned from them.

2. Create hypothesis about the causes: Use new knowledge to identify the causes that

produce more defects.

3. Verify or eliminated the causes: Use data or a more detailed analysis of the process

to check which of the causes contribute the most to the problem.

Thus, in this phase the collected data analyzed using different tools like fish bone diagram,

5Why, etc. in addition cost analysis for wastes is also included.

4.4.1. Ishikawa Analysis For MRR

When there is a problem, it is important to explore all of the things that could cause it

before starting to think about the solutions. That way it is possible to solve the problem

completely first time round rather than just addressing part of it and having the problem

run on and on. The Ishikawa diagram gives a useful way of doing this. The MRR analysis

identifies the main reasons for the materials loss and show them using fish-bone diagram.

In identifying the root causes of having a high rate of MRR or process loss, the causes

categorized in to two. Causes of Before load rejects and after load rejects since 43% of the

rejects happen before loading the material to Corrugators machine and the rest 57%

material rejects happens when the material passes through each machines. In both before

69
and after load causes of rejects, the FM and TL paper rolls are the main one to be damaged

and that is mainly because their grammage is less than that of Kraft liners.

Figure 16 and 17 shows the causes of before load and after load material loss using

Ishikawa diagram.

Figure 16: Ishikawa diagram for the causes of before load rejects

Thus, from the cause and effect analysis two causes are identified as the main root causes

for having a high level of before load rejects. These are:

The warehouse being dirty and unorganized specially since the paper rolls easily

absorb the dirt and this immediately damage the materials

The forklift tears the paper rolls during handling the rolls and transporting them to

the corrugators machine

Cause and effect diagram for causes of after load rejects is shown in Figure 17.

70
 Figure 17: Ishikawa diagram for causes of after load rejects

Thus, from the cause and effect analysis, the operators are identified as the main root causes

for having a high level of after load rejects. That is the operators (mainly Shop floor

workers) lack of skill and training leads to:

The operators improperly adjusting machines and

The operators applying inks and chemicals incorrectly happen to be the two main

reasons for having after load rejects.

From the 57% of the after load rejects, the 11% of them that happened in NC cutter are

unavoidable because they are the 14cm allowance given for side trimming (each side).

However, it is possible to avoid the allowances that exceed 14cm that happens when there

is lack of the standard length of material in store.

71
4.4.2. Causes of High Rate Of Downtime

Based on the Pareto chart from figure 12, the main causes for having a very high rate of idle

time is because of lack of order and lack of the appropriate type of material in store, i.e.

when either the right type of the grammage of the rolls or the length is not available in the

warehouse.

The following points identified as the causes for losing customers that leads to lack of order

and poor MRP, which happens to be the main causes for the high level of idle time.

Government involvement: EPPSC is a company owned by the government. In

business world, companies have to be flexible enough and do whatever it takes to

cope up and dominate the market. However, when the government owns the

company there are certain rules that they are expected to follow and even if it is for

the benefit of the company, they cannot break it. The board of directors has the

highest power (chain of command) in leading the organization; the problem is it

takes too much time to present different matters and get approval from the board.

High cost of material: more than 80% of the paper rolls are produced in house

(paper mill). Even if different grades of paper rolls exist, the company only

manufactures certain grades of the materials frequently. For example, the company

doesnt use below 170g/m2 for Kraft liner,127g/m2 for fluting medium and

140g/m2 for test liners whether the ordered product has to be manufactured using

this grade or not. On the other hand the competitor companies use Kraft liner with

grade up to 140g/m2, fluting medium up to 100g/m2 and test liner up to 120GSM to

produce the box products. Which means their cost of product is less than that of

EPPSCs because basically the grammage of the material is proportional with the

amount of fiber used per square meter that means high grammage means high cost.

72
 Usually, those lower grade (not the quality) rolls are imported from foreign

suppliers since EPPSC is the only paper mill company in Ethiopia and they dont

manufacture those grades of the paper rolls. The reason why they do not import is

that the material locks up high amount of capital if they do not get customer for it.

High labor cost: based on data from human resource, they have 572 workers

(2004EC) and only 5% of them have first degree and more. If we assume only 20%

of this employees work in corrugating plant that is about 115 employees. The

company does not need this much employees especially to produces 2124 ton/year

and since the company is down for almost 60% of the time so is the employees. The

author realized that most of the time the employees are idle and if the general

manager is out for business and does not come to office neither some of the

employees. Simply put, the companys labor cost is high.

This high unnecessary labor cost affect how the business operates because it can

influence how money spent elsewhere like in marketing, in production

improvement, etc. But most importantly, this cost makes the product cost high and

which obviously drives potential customers away.

Payment terms: are the conditions under which a seller will complete a sale.

Typically, these terms specify the period allowed to a buyer to pay off the amount

due, and may demand cash in advance, cash on delivery, a deferred payment period

of 30 days or other similar provisions. EPPSC payment terms are 50% in advance

50% on delivery (set by the government) but the competitors terms of payment is

cash on delivery which clearly drawn them many customers because people usually

wants to pay when they received their product.

73
 Quality of the raw materials: the critical quality parameters of paper rolls are

grammage, thickness, tensile strength, tearing strength, bursting strength, Cobb

sizing, porosity and wax pick test. EPPSCs papers are good in some of those qualities

such as in its strength (specially bursting and tearing) and imported materials in the

others. Even if the existing customers of EPPSC chose those qualities, the competitors

companies customers wants the other quality parameters. Therefore, they have to

start providing the alternatives for the customers.

Note: when grammage is quality parameter, lower grammage does not mean that lower

quality. It is the consistence throughout the roll what makes it quality parameter.

Delivery date: sometimes there are customers who wants their product to be

manufactured immediately and the company will not able to do that when they

already have orders which enters production or there might not be the exact raw

material.

In general, the company has inflexible system and the product cost is high which makes the

company lose their customers day by day until their existence become in danger. The

reason why they are surviving the market is that because their profit margin is very low in

fact there were quality products times there were not getting profit at all.

Hence, the company needs to win over the lost customers and gain a new one by providing

with minimum cost and at the right time.

4.4.3. Cost Analysis of the Wastes

Cost of the wastes is the cost the company incurred due to having lean wastes. These can

include cost due to defects/rejects, lost revenues, lost production time, cost incurred for

holding goods in stock, etc.

74
 1. Cost of the rejected materials

Cost of rejected materials is cost of wasted raw material, labor and overhead that is invested

during the manufacturing process. The amount of the materials that got rejected is

270.3ton which costs the company about 14031br/ton which results a financial loss of

more than 3.7 million birr. However, the materials rejected by the process which is called

broke is not a total waste, i.e. it can be re-processed in paper manufacturing plant in fact

it is raw material for paper Mill. Hence, the paper mill Company buys the broke at a cost

of 3.75birr/kg from box plant that is a total of 1,013,745br (270332*3.75) and this sell

makes the net cost of the process loss 2,779,548.3br/year (3,793,293.3-1,013,745).

Since the company adds this cost to the cost of the product, reducing it not only have impact

on getting financial savings for the company but also reduces the cost of the product by

more than 7% which helps to keep and get customers and increases customer satisfaction

by avoiding non value adding costs. Moreover, the cost of the materials rejected is more

than from what the Company is currently getting as profit.

2. Cost of downtime

The cost of the other main waste of the company that is downtime is measured interms of

the amounts of revenue lost. The Company is idle for 60% its time and has a capacity of

producing 1.6-1.8 times more from what the Company is producing now and this clearly

shows that the level of lost revenue is very high. So reducing this high level of downtime not

only have impact on increasing revenue and profit but also it helps the company to get

benefit from economies of scale.

3. Cost of RM inventory

Raw material inventories provide a stable source of input required for production but when

the inventory level is not optimized, it locks up money that should have been invested in

different sectors or assets become tied up in investments that are not producing any return
75
in fact it incurs a borrowing cost. They also incur costs for the care of the stored material

and are subject to spoilage and obsolescence.

The cost of carrying RM inventory is the sum of three inventory costs, which are holding

cost, ordering cost and shortage cost.

A. Holding cost

This is the cost of holding a raw material for some given unit of time specifically for a year.

holding the rolls in stock leads the company to a number of costs like utility, salary,

insurance, depreciation, and other costs. The annual holding costs of the materials in the

warehouse calculated as follows.

i. Utility cost: is the cost for electricity, water, etc. It is assumed that only 1% of

electricity cost goes to this department because most of the annual electricity cost is

incurred for the manufacturing department to run the machines.

ii. Labor cost: is the cost incurred for store workers, guards, inventory management

department employees, etc. so from the annual labor cost incurred in corrugating

company it is assumed 10% of it goes to stock related workers.

iii. Depreciation cost: is cost of the material rejected before load because it has been

absorbing dust while it was in store. Around 32% materials rejected due to this.

Total holding cost = 0.01*669456.68 + 0.1*2086908 + 0.32*2779548+

THC= 6694.6+208,690.8 + 889,455.36= 1,104,840.76br

At the end of the year, the amount of materials in store was 397.09tons that makes unit

holding cost 2782.3br/ton (THC/397.09).

B. Ordering cost

Ordering cost is the cost incurred starting from setting an order to the time of receiving that

order. This costs include transportation , clearance, telecom and mailing, etc but for EPPSC

76
since the papers manufactured in house those costs are not that much significant so the

ordering cost considered as zero.

C. Shortage cost

It is a cost of not making a sale and loss of customer good will. Currently the company

makes a profit of 5.8%, which is 1032.4br/ton. Since there are other companies that provide

packaging products in fair price and good quality, shifting of customers happen in high

range if they do not get the product they want. Cost of customer good will loss that is

shifting of customer to another company, is assumed to be 30% of losses due to unable to

make sales which makes customer good will loss 309.7br/ton (0.3*1032.4br/ton). Therefore,

the total shortage cost becomes 1342.12br/ton (1032.4+309.7).

Hence, total RM inventory cost becomes the sum of the above three costs which is

4124.42br/ton. This cost does not include the cost of the material or purchasing cost for RM

in the warehouse (397.09ton) at the end of the year, which is about 5,907, 377.13br.

4. Cost of WIP inventory

WIP inventory consists of all inventory items that have begun but not completed the

transition from raw material to finished goods. Since WIP inventory items are not complete

units, accountants need special calculation to determine the total cost of ending WIP

inventory.

The cost of WIP inventory can be calculated first by adding the number of inventory units

that have been completed during the period in question with equivalent number of

inventory units on which work has begun but has not been completed (i.e. WIP * the

percentage of their completion) to find total number of the equivalent units. Then the total

production cost divided by the total number of equivalent units produced to determine cost

per unit. Finally, multiply the cost per unit by the equivalent units sitting in WIP inventory

77
at the end of the period to calculate the value of ending WIP inventory. The following

assumptions are made during cost of WIP inventory calculation.

Assumptions:

I. The beginning WIP inventory is assumed to be zero because the total units of

products produced and the total costs includes the beginning inventories and

beginning inventory costs

II. The companys inventory flow assumption is FIFO (first in first out)

Thus, the data regarding WIP inventory for year 2004 (EC) is summarized in table 21.

Beginning inventory Jobs/year Ending inventory

(ton)
Units 0 2124 tons of products 28.441tons of units
are produced and 28.4 with 85%
tons of products started completion
but not completed
Costs incurred 0birr 37843485.06birr
Table 21: Beginning and ending WIP inventory level

Moreover, 85% of the materials (the liners and corrugum starch) are used in Corrugators

machine and so did the other conversion costs such as fuel and electricity so this makes the

WIP inventory found between corrugators and converting machine to be completed by

85%. Thus, the cost of ending WIP inventory becomes:

Cost of ending WIP = cost per unit * equivalent units of WIP

Cost of ending WIP = 17616.62birr/unit * 24.17ton

Cost of ending WIP = 425793.7birr

Where:

Equivalent units = 2124ton completed units + 28.441 WIP unit 85% complete

Equivalent units = 2124+24.17= 2148.17ton, and

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 37843485 .06
Cost per unit: = =
2148 .17

Cost per unit = 17616.62birr/ton

The following waste-cost matrix summarizes and shows that how much money could be

saved if reject rate reduced and the company optimizes the level of RM and WIP inventory.

Moreover, reducing downtime even by 20% will have a great impact in the companys

revenue and it will be a remarkable achievement and success for the company if they able

to reduce the level of wastes. Table 22 summarizes cost of the main wastes.

Cost of company wastes Financial loss (Birr)

1 Rejected material cost 2,779,548.3
2 WIP inventory 425, 793.7
3 RM inventory
Material (purchasing) cost 5,907,377.13
Inventory cost 4124.42br/ton
4 Downtime 1.6*the current revenue > 60,000,000
Table 22: Cost of the main wastes

4.4.4. 5Why Tool For Root Cause Analysis Of Wastes

5 why analysis is a technique that helps to determine the root cause. This tool is used when

asking the major cause, five times the question why to find the underlying cause of the

problem. This tool helps to identify the root cause and create an action plan for

improvement. It is possible to obtain the roots cause of the problem without asking 5 times

why, so it is important for the team to be able to know when to stop asking this question.

Table 23 shows the 5Why tool used to identify the root causes of the major wastes.

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80
4.5. IMPROVE PHASE

The main objective of the improve phase is to improve the process by eliminating wastes.

Different methods of LSS are used to help the Company develop solutions for improving

process performance and increase customer satisfaction.

Once the Analyze phase of the project is finished, the best improvement ideas for the root

causes that affect the process discussed in this phase. In the improvement phase, it is

important to remember the following:

The selected improvement method for implementation should be addressed to

attack the root cause of the problem and achieve the goal proposed in the project

charter

The selected solutions should be tested to guarantee their effectiveness before they

are completely implemented

Solutions should not be expensive or go over the departments budget, the cost

should not surpass the benefits

There are many Lean Six Sigma improvement methods that can help in reducing the

manufacturing wastes. For instance, TPM is an effective tool in increasing equipments

capacity, reducing maintenance cost and increasing productivity. However it is the most

difficult tool of Lean Six Sigma to implement and also very costly more specifically during

initial stage of its implementation. Similarly, VSM is another LSS tool that examines the

physical system, process and interconnections. It gives visual perspective to materials and

information flows. However, even if it can be easily implemented and not costly at all, the

map does not begin to capture all specific actions and ignores the human element. For

example 5S can clean up the plant, improve safety and further raise productivity and

profitability. VSM addresses none of those directly.

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Thus, even though there might be many lean six sigma improvement methods that can help

in reducing the manufacturing wastes, the remedies are selected based on the following

criteria.

o Ease of implementation

o Cost of implementation and

o Its impact on companys profitability

Hence, the following methods proposed as improvement methods for MRR and downtime

based on the expected benefits they will bring in terms of both process improvements and

financial savings.

Implementation of 5S or Kaizen, providing training for employees and Buying or replacing

the old machine are suggested for eliminating/reducing the level of material reject rate.

Moreover, different alternatives like substituting raw materials, Company downsizing,

outsourcing, increasing product mix, marketing and benchmarking proposed in order to

improve the level of downtime and some of them chosen for implementation.

In addition, in order to improve the level of WIP inventory level two machine- one buffer

analytical method is used and new set of Quantity to hold and re-order level (Q,R) proposed

to improve the level of RM inventory.

4.5.1. Improving material reject rate

From the above-proposed methods, implementation of 5S and providing training is selected

as improvement methods to reduce the high level of rejects because one they properly

address the root causes of the problems of rejects, simple for implementation and they are

cost effective. However, the training not only helps in reducing rejects but also helps in

reducing wastes in general.

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4.5.1.1. 5S Implementation

From cause and effect analysis, the root causes for before load rejects are identified as the

status of the warehouse, which is unclean and unorganized, and the material handling

equipment.

Thus, 5S is chosen as improvement method to reduce this high level of before load rejects

because it is a continuous and never-ending methodology for creating and maintaining an

organized, clean, and safe high-performance environment. It is used as a basic,

fundamental, systematic approach for productivity, quality and safety improvement in all

types of organizations.

The 5S are derived from 5 Japanese words that translate to sort (seiri), set in order (seiton),

shine (seiso), standardize (seiketsu) and sustain (shitsuke) which are discussed below.

The work of improving EPPSCs paper roll warehouse follows the following 5S

implementation steps, which helps to decrease cost of material loss, create healthy and safe

environment for workers and to provide quick accessibility of materials. As with most lean

concepts the steps are simple and easy to follow, however sustaining these ideals will be the

challenge.

1. Surfacing the floor / renewing the warehouse

Warehouse floor is the important surface that affects the speed, efficiency and the safety

and movement of the stocks operators and the material handling equipments. But as for

EPPSCs it is beyond improving speed and efficiency because the floor is full of sands or

dusts which fades almost all of the products which results loss of very high amount of

money due to this materials damage. So surfacing the floor have a great monetary value for

the company by removing those rejects that happen before loading the rolls to the

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Corrugators machines. The author also thinks painting the room will be nice for its

aesthetics value and creating visible room.

Thus, surfacing the floor and/or renewing the warehouse is the first step in implementing

5S in EPPSCs raw material store, which is before starting sorting out the materials and it

has major role in reducing the 43% of before load rejects and in creating healthy working

environment for the workers.

2. Sorting

The sorting activity is to get rid of unnecessary things and leave only what is truly necessary

at the workplace. In this stage, damaged and undamaged rolls will be identified and

separated. However, when the roll is said damaged that doesnt mean that the whole paper

roll become a waste rather it means part of the paper is damaged after all a single Kraft

liner paper roll weights up to 1000kg.

The procedure for sorting is first to identify and separate damaged and undamaged paper

rolls and then place a red tag on the damaged ones with a reasons why. The current

reasons are that the rolls have been absorbing dusts for as long as they were in store and the

roll clamp of the forklift tears them. The next step is making unused article list for

damaged paper rolls, tear or rip out the damaged parts and place a product ID on

remaining part of the material. The product ID that is tagged on the roll is on A5 sized paper

(currently) and it will be better if it written on A4 sized paper to provide a clear view of the

products type but it is unnecessary to write any kind of identification on cover of the roll.

Finally, dispose the removed part of the material. The other thing that needs to be removed

and replaced with a new one with the right standards is the forklifts roll clamp so that it

can handle the materials properly and not tear (damage) them.

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As for undamaged materials, make a list of them on shop stock list sheet which includes

mentioning their frequency of use since it helps in setting them in order and their amount

in order to know whether the materials available are surplus or necessary quantity. After

preparing this, the materials are ready to be organized.

However, before directly going through sorting activity some preparations needs to be done.

These are:

Determining target workplace and Setting a target value

Since the 5S implementation is proposed to improve the state of the paper rolls warehouse

because it is leading to a very high amount of material loss, it becomes the target workplace.

Currently, the companys material loss in this warehouse is 115.9ton. Thus, the target value

is to reduce the 42.9% before load reject (i.e. the warehouse reject) to 2.9%, which reduces

the material loss to 7.84ton.

Making an activity plan of sort activity

All the sort activity should be done while the warehouse is being renewed or floor surfaced

which is estimated to be one month.

Preparing red tags and documentations

Before starting sorting activity red tags and documents should be prepared. A red tag is a

tag that will be affixed on a machine, a facility or a part that is considered unnecessary at

the workplace. It should be prepared based on the Red Tagging Criteria Sheet. Some of the

other documents that needs to be prepared are shop stock list sheet, unused article list sheet,

activity plan sheet, etc. sample red tag and some sample documents are included in

Appendix C, D, E and F.

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 Deciding where to put unnecessary things

Since the material that can be disposed are raw material for the paper milling plant,

disposed materials will be sent to where raw materials for paper manufacturing plant are

being placed.

Holding a briefing session

A briefing session on procedure and purpose of red tagging, how to use various

documentations, etc should be prepared for employees before actually going through the

sorting activity.

3. Set in order

This stage is about deciding where and how things should be put away and what rules

should be obeyed to insure that it is maintained. The guidelines for deciding where things

belong is keeping the product close if it used very often and designating location and label.

Which means it is very important to place each type of the paper rolls in their designated

location that is all Kraft liners, test liners and fluting mediums should be placed in specified

and their own area based on their frequency of use; no mixing up with each other and no

placing materials here and there. In addition making products ID very clear for everyone to

see and understand is also very important because it helps employees mostly forklift

operators easily know which material is placed where.

the area required for the materials that will be stored in the warehouse can be calculated

based on the diameter of the rolls (d2/4) and the maximum level allowed to put one roll on

the other (i.e. 3).

The current layout of the warehouse looks like U-shaped but it is not exactly U-shaped

because materials placement does not exactly follow the shape due their placement of here

and there. L-shaped layout is proposed because it will be more organized, more economical

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in terms space and provide clear path for forklifts. Figure 18 shows the existing and

proposed layout of the warehouse.

Figure 18: existing (L) and proposed (R) state of the warehouse

4. Shine/Cleanliness

Cleanliness is the abstract state of being clean and free from dirt and the process of

achieving and maintaining that state. Thus, after the warehouse is renewed, damaged parts

disposed, the room is physically organized and dirt is eliminated, the store is clean and they

have to work hard to keep it that way. In order to do that frequent inspection should be

done on the cleanness of the warehouse and everything is placed on its specified location. In

order to do that team efforts is required thus awareness needs to be created on how

improper placement of materials affect the company.

Moreover, in order to eliminate dirt and keep the room always clean, necessary tools for

cleaning needs to be prepared based on the number of workers. In addition, cleaning tools

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should be available for employees who are assigned to cleaning tasks and cleaning should

be done on daily, weekly, monthly, etc basis. Table 24 shows set up of activity time.

Type of cleaning Time Frequency/timing

Daily cleaning 10-20 Min Before and after working hour
Weakly cleaning 20-30 Min Weekend
Monthly cleaning 30-60 Min End of month
General cleaning 1-2 Hrs Before consecutive holidays
several times a year
Table 23: set up of activity time

5. Standardize/visual workplace

Standardizing is setting up rules for sort, set in order and shine and the standards should be

simple and easy to follow. In this stage, systems and procedures needs to be created to

monitor the above phases. The following simple and easy procedures are set for the workers

to keep the workplace clean and visual.

Thus, the standard for sort is to place a red tag on paper rolls whenever it is damaged with a

reason why on it. Then the damaged rolls should be taken to temporary red tag holding area

and then remove the damaged part. Finally, measure the waste, specify the time to clear it

out and dispose the waste.

The next standard is for setting in order. The following activities should be done in order to

keep the room organized:

Make sure the product ID is visible

Placing the rolls on their respected area

Making sure the first line is full before moving to the next

Using the forklifts properly

Finally the standards for shine are

o Making sure the room is clean every time and frequently inspecting it

o Showing the task, person responsible, items needed, etc very clearly

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 o keeping cleaning supplies in specified place and replenish them when they are

finished

The managers of 5S must set the tone and lead by example. As leaders, managers need to be

committed, have time to develop other leaders, provide guidance and support 5S changes.

The author suggests the following general points to the company in order to keep the work

place organized, clean, and functional. These included:

o Based on the companys stock data it is possible to know that which types of KL, TL

and FM are used the most so when every time material comes to the warehouse and

organized, prioritizing the materials should be done.

o The operators need to know the proper way of handling rolls using forklifts.

o Name individuals who have ownership of the stocks task and will take

responsibility (i.e. forming 5S committee)

o Identify and document the sources of dirt or waste and how to keep them from

recurring and the good outcomes has to be documented too

6. Sustain

The warehouse management team have to do what is required on a regular basis rather

than take stock every few weeks and implement the first four phases all over again. In order

to sustain, every ones involvement, support, commitment, and good communication is

needed. In short, 5S activities should become part of everyday life which means establishing

routines and procedures for maintaining and improving the first four Ss.

Thus, the things that needs to be done in order to keep what is being done in the above

phases are:

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 a. Patrol: is the most effective way to maintain and stabilize the effects of 5S activity.

Some of the patrol types can be:

o Top management patrol: giving feedbacks to 5S committee and checking up

comprehensively.

o 5S committee and promotion office patrol: making sure the use of 5S

checklist, checking the progress based on the overall plan and identifying

problems in each 5S group

o Camera patrol: visibly highlighting the problems and progress of the activity

using photographs

b. Use of slogan and poster of 5S activity: it helps by encouraging all the participants

Some slogans that can be used are:

o Refresh yourself and workplaces by 5S activity

o Lets maintain current 5S activity for tomorrow

o We polish our minds as well as our factories etc and posters can be added

too.

c. Awarding: for 5S promotion results on group or individual basis based on different

types of evaluations is recommended. Awards can be:

o For Good performance

o For good efforts, and/or

o For good Ideas

In conclusion, the author strongly believes that properly implementing 5S to paper roll

warehouse will minimize the before load materials loss by up to 93-98%. Because as

explained in the analysis phase the two main causes of before load material loss is the state

of the warehouse (i.e. being full of dusts) and forklift tearing the papers and 5S is a perfect

tool to avoid these problems.

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 4.5.1.2. Cost of 5S Implementation

An evaluation of conducting full 5S process and providing quality training would also cost

the company money. Financially, it would cost the company several hours spread across

several weeks that would go into planning, training staff, and preparing to conduct a 5S in

addition to renewing the raw material warehouse. However, it will kick off the overall

implementation of lean manufacturing into the company culture. Cost benefit analysis is

made for 5S implementation and summarized in table 25.

Name of cost Cost (birr) Quantity Total cost Notes

Floor surfacing
1 Cement 220 50 11,000 Per bag
2 Construction 5000 1 5,000
aggregates
3 Labor (2 weeks) 150 3 5,400 Per employee
4 Paint 140 12 1,680
5 Miscellaneous 20000 1 20,000
Forklift (roll clamp) 1 85,000 85,000
Total cost of implementation 128, 080
Benefits from cost In birr Quantity
Savings 0.4*2,779,548.3 1,111,819.32 Per year
Payback period Unit time
Days 31 days 264 working days/year
Table 24: Cost benefit analysis for 5S implementation

4.5.1.3. Training on Waste Reduction

Employee training and development is very important as companies are increasingly relying

on the knowledge, skills and abilities of their human capital to drive firm performance and

enhances employee competencies. Organizations provide training for different reasons such

as improving product quality, introducing technology to gain operational efficiency,

reducing errors, etc.

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EPPSC usually provides training for its employees but the problem is it is only provided for

the workers in management position like for workers in production planning, etc. for the

company whose 95% of their employees educational level is diploma and below grade 12

level, the training should have been provided for those workers. Developing the skills of the

workforce is one way that organizations can enhance their competitiveness in the market.

From the reject data, we know that about 43% of the rejects happen before load, 54.3% in

corrugating machine and 2.7% in converting machine. From those 54% of the rejects

happened in corrugating machine the 11% are happened in NC cutter which are mostly

due to trimming allowances (the standard is 14cm each side). However, the other rejects

happened on the other machines like on heater cooler (for example over heating), on

corrugators like glue touching the surface of the liners, flute wavelength variations, etc are

operator related because those things happened when the operators did not set the

machines properly or did not apply inks and glues properly. The operators are also the

main reason for the 2.7% reject in converting machine since it happens when the stereo is

not placed properly on the cylinders of the printer machine.

From downtime data in the measure phase, almost 20% of the downtime causes are

operators related. Most of the time that the operators waste is unnecessary; for example one

of the main operational downtime reasons which is glue and ink preparation which is 96.7

hrs/year shows that too much time has been lost since preparing those materials does not

require this much time. Preparing ink is 15-20 minute job.

Because the employees are one of the reasons in having high rate of MRR and downtime, it

is clear that they need training. Even if they do their job well based ob their many years of

experience, the problem with them is not understanding wastes like MRR, downtime, etc

have a great impact on the company profitability, reducing product cost, etc. Therefore, the

company needs to provide training for the workers specially for shop floor employees on
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reducing errors, on reducing the time they take to prepare materials, their role in increasing

the companys revenue, profit and customer satisfaction. In general, they need training on

waste reduction or Lean Six Sigma. Finally, the Company need to analyze the effectiveness

of training by identifying operational results that the training had on employee

performance like measuring how much employees performance improved in reducing the

amount of errors, etc.

4.5.1.4. Sigma Level after Improvement

As identified in the analysis phase the main causes of before load rejects are dusts

deteriorating the material and the forklift (clamp) tearing the papers. Thus, by

implementing 5S is these problems will be removed since it cleans up the room and replaces

the forklift. A clean room does not provide a room for material deteriorations and a new

forklift roll clamp with advanced electronics controls and optimizes roll clamp operations.

It uses optimized and lowest possible clamping force for all situations or paper grades.

Checking the efficient clamping force for each contact pad on digital display reduces

damages out of roundness. Paper rolls are weaker and most sensitive for damages when

clamping on or near to the roll edges. In this case, the driver will easily adjust the height of

the clamp to fit rolls to be handled. The advantage is a secure grip on all rolls together with

reduced risk to damage edges on paper rolls. In short, a new forklift provides efficient and

reliable performance. Therefore, implementing 5S avoids these two main causes of material

loss as a result the level of before load reject is expected to reduce to 2.9% from the current

level of 42.9%. This means 5S implementation improves the level of before load rejects by

93%.

Similarly, the operators are the main cause for after load rejects because they improperly

adjust machines and incorrectly apply inks and chemicals. Even if the employees do their

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job from experience, they do not exactly know the material losses are costing the company

money. Thus, providing training for employees on waste elimination in general or more

specifically on reducing the material losses will help the employees to acquire new skills

and build self esteem. This will help the company to reduce after load rejects and save

money. Since there is no record of how much these rejects are due to operators, it is

assumed that providing training for employees will reduce the 57.1% of after load rejects to

42.1%. This means providing training improves the level of after load reject by 26.3%.

Hence, after the implementation of 5S and providing training for the workers especially for

shop floor on proper adjustment of machines and the advantages of reducing material

rejection and its monetary value, reject rate is expected to reduce by 55%. This improves the

defects per million opportunities and reduces it by more than a half (DPMO= 7158.202),

which in turn improves the sigma level to approximately four (3.95). The company has to

work continuously for improvement so that the reject level will be reduced and the Six

Sigma level will be achieved.

4.5.2. Improving Downtime

The main waste of the company is downtime since the time the company fails to produce

exceeds the time that the company produces parts and when the time is converted in to the

production loss, it is 1.6-1.8 times greater than what the company is currently producing

which leads to high level of lost revenue. Beside the companys design production capacity

(in 3 shifts) is more than 11,000 tons per year but currently the company is producing only

2124tons (by working in 2shifts) which is only 18% of the companys design capacity, 26%

from what the company is capable of producing in two shifts and 66% from what the

company has planned to produce. Moreover, 80% of the causes for downtime are not

related to machines or machine parts failing which is the case for most companies; that

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means those causes are operator related and other various reasons like lack of order,

shortage of materials, power interruption, etc.

Reducing this downtime rate is quite a challenge because trying to improve one cause leads

to another cause for increasing downtime or has its own problem. For example, trying to

avoid boiler (steam shifting to paper machine) and stereo related problems by replacing

those things might increase the rate of downtime because when new boiler is installed and

stereo is changed they have their own impact in reducing cycle time. But even if reducing

cycle time is a good thing since the company able to produce more and product delivery

due date will be reduced, if the company is not producing parts on those improved times,

those times are just an increase to the list of downtime.

It is also the same in trying to reduce shortage of materials because the plant is factory-to-

order kind of company, which means they cannot produce parts unless the customer places

an order. Holding high level of inventory specially the paper rolls leads to very high

inventory cost since as explained above 60-80% (up to 85% for EPPSC) of the cost in

producing carton box is material cost. Hence, the first thing the company needs to do in

order to decrease downtime is to get more customers by providing the product with great

quality and the lowest possible cost.

Currently, despite the fact that EPPSC has more than 20 years experience and being the first

company ever for providing packaging products (carton) in Ethiopia, the company lost most

of its customers to newly emerged competitor companies. For example, from being the only

carton box supplier for flower companies, they only have one customer from flower

companies now. They not only lost flower companies but also most of their customers and

one of the reasons the existing customers work with them is they specifically need EPPSCs

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paper rolls grade like the Kraft liners grade to be 175g/m2 which most of the competitor

companies do not have.

The companys annual production volume is way less than what the company is expected

to produce and one of the main reasons for having such a high rate of downtime is lack of

customer orders which makes their market share below 15%.

The reasons for losing their customers and not gaining a new one are various and it starts

from the government being the largest shareholder of the company. The causes are

identified and discussed in section 4.3.2.

Therefore, the company needs to win over the lost customers and gain a new one by

providing quality products with minimum cost and at the right time. The following methods

are suggested to improve their customer level and reduce downtime.

4.5.2.1. Raw Material Substitute / Benchmarking

As explained, the main raw materials for corrugated box manufacturing are the three types

of paper rolls with different length and grammage. EPPSCs corrugating box plant uses the

frequent grammages of paper rolls whether it is that type of material needs to be used or

not. Since the cost of the material increases as the grammage of the roll increases, it is not

appropriate to use the same kind of material to produce different types of boxes.

For example: the cost of 140GSM (competitors companies paper roll grade) Kraft liner is

very different from 170GSM (EPPSCs roll grade) Kraft paper roll. Even if the competitor

companies import these products from abroad and this makes them subjected to additional

costs like custom related costs, transportation costs, etc relatively, their cost of material is

less than that of EPPSCs. Therefore the company needs to benchmark what other companies

in this industry are doing like substituting the grades of the materials they are using to

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produce the parts either by importing the material from abroad or starting to manufacture

different grades of paper rolls in house.

The other problem related to the materials grade is the length. As explained, there is a 14cm

(each side) allowance for trimming during the manufacturing process. But, sometimes the

trimming allowance exceeds 14cm (15-17cm) when the standard length of the material is

out of stock which also increases the cost of the material. Since the material cost is about

85% of the manufacturing cost, reducing this cost plays a huge role in reducing the product

cost and this can be started by using the right material to produce the boxes hold the right

material in store. For example, there is a 150GSM Kraft liner in store, which they do not use

it that often.

4.5.2.2. Increasing the Product Mix

A product mix is the variety of products a company sells. Product mix also known as

product assortment refers to the total number of product lines that a company offers to its

customers. The four dimensions to a companys product mix include width, length ,depth

and consistency.

Currently, the company produces six/seven different types of boxes based on customer

order, which makes the product mix width of two, length of seven and depth equals with

customers dimension requirement and with high level of the products consistency.

Since the company is down for about 60% of its time, there is a high level of labor hours

unused, machine hours unused and materials unused. Therefore increasing the product mix

helps in using those unused resources specially unused materials and human resources.

Therefore, the company has to add new products to the mix like paper bags and/or cement

bags, which will have a very big demand since all of the countrys cement companies

import the bags from abroad except Muger Cement Factory. This mix helps the Company in

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using their labor properly and the materials in store which will increase the motivation of

the workers and also helps in reducing the inventory level. The only thing the Company

needs is to add paper making machine to the plant and importing some materials like anti-

oil paper.

The other product that needs to be added to the mix is producing colored boxes especially

for textile and shoe Companies. Currently the Company does not have any customer from

shoe Companies and most of shoe and textile factories production volume is high which

means their demand for carton box is high too. For example peacock shoe factory produces

more than 500,000 pairs of shoe per year. adding this products to the mix helps in

reducing the machine hours unused.

4.5.2.3. Outsourcing

Outsourcing is a practice used by different companies to reduce costs by transferring

portions of work to outside suppliers rather than completing it internally or simply it is the

contracting out of an internal business process to a third party organization.

EPPSC needs to outsource portions of works not only to decrease cost but also to keep

customers. As explained one of the reasons for losing potential customers is when they do

not able to deliver products in the customers due date like to deliver it within two or three

days or within a week. The other is when they do not manufacture products with

customers raw material grade requirement and mainly that is because they do not

manufacture those grades of the raw materials in-house.

When this kind of customers come, it is possible to outsource portions of the work like

outsourcing the job of manufacturing the blank boards and doing the rest of the work in

the company like printing, folding and gluing. Thus, when customers come with different

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product requirements better to outsource some of the works rather than sending them away

because once the customers has gone to other companies they may not come back.

4.5.2.4. Company Downsizing

Downsizing is a strategy which reduces the scale and scope of a business to improve its

financial performance (Robbins and Pearce, 1990).

The corrugating line worked for 1844.9hrs/year and the converting line worked for

1720.4hrs/year, which means in average each line worked for 6.99hrs/day & 6.52hrs/day

respectively. This figure clearly shows that the average working hours per day is less than a

single shift hours (i.e. 8hours) and the amount of products that the company is currently

producing (2124tons) is capable of producing it in a single shift. Moreover, when we say

the Company is down for 60% its time it also means that the operators are also idle for 60%

of the time. Thus, the extra shift that the company is using is costing the company extra

labor and other related costs.

Therefore, unless the company is planning to expand what the company is currently

providing and use the two-shift hours properly, they do not need to work double shift to

produce 2124 ton per year. The company is capable of producing up to 3800tons of carton

boxes in a single shift. Reducing the working shift reduces the labor cost by 30-50% which

reduces the cost of the material by 1.7-2.8%.

4.5.3. Inventory Level Improvement

Inventory improvement focuses on improving both the raw material and WIP inventory

level in order to reduce the level of locked up capital.

4.5.3.1. Improving RM Inventory

Raw material inventories are the paper rolls and chemicals but since the 80% of the

material cost is related with the paper rolls its warehouse optimization takes the priority.

Even if it is possible to improve the RM inventory level using different methods like

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simulation and other inventory models, there is another simple method which is based on

the current level of inventory.

The companys current safety stock is 330 ton but the current average material

consumption per month is 199ton and only 40% of the inventories are consumed each

month and the maximum monthly consumption for year 2004EC was 297.6 ton. Inventory

model with (Q, R) suggested based on the current average monthly consumption rate

(Q=199ton) and the re-order level based on the frequent lead time which is one week

(R=210ton) and it improves the consumption rate to 65%. Since the ordering cost is zero,

the lesser the quantity the company is holding the lesser the total inventory is going to be.

4.5.3.2. Two Machines-One Buffer Line

In order to optimize the level of the WIP inventory, analytical model that analyzes the

performance of two machine-one buffer system is used (see section 2.2.3). Thus, the optimal

numbers of WIP inventory for EPPSC calculated as follows.

Step 1: the probability that the company is operating and probability of producing defective

units will be determined.

For corrugating station:

Production time per year = 1844.9hrs

Downtime per year = 2845 hrs

Therefore total available time becomes:

Total AT =production time + downtime = 1844.9+2845

Total AT= 4689.9hrs

Thus,

a) probability that the corrugating station fails to produce parts calculated as:
Downtime 2845
Z1 = k1 = = , Z1 + P 1 = 1
Total AT 4689.9

100
 Z1 = k1 = 0.61

b) The probability of making the material defective in corrugating station is calculated as:

Units materials entered the manufacturing process per year = 2394633 kg

Units of materials becomes defective ( single facers and NC cutter rejects) per

year = 146882.49 kg

Therefore :
146882 .49
b1 = =
2394633

b1 = 0.061

i. The quality control devices probability of identifies a defective part in station 1 is

D1 = 0.85

ii. The units of buffer existed at the end of the year between the two station is equal to

28441kg

For converting station:

Production time per year = 1720.4hrs

Downtime per year = 2370 hrs

Therefore, total available time becomes:

Total AT =production time + downtime = 1720.4+2370

Total AT= 4090.4hrs

Thus,

a) The probability that the corrugating station fails to produce parts is calculated as:
Downtime 2370
Z2 = k2 = = , Z2 + P2 = 1
Total AT 4090.4

Z2 = k2 = 0.58

b) The probability of making the material defective in corrugating station is calculated as:

Units materials entered the manufacturing process per year = 2394633 kg

101
 Units of materials becomes defective ( single facers and NC cutter rejects) per

year = 7451.9kg

Therefore :
7451 .9
b2 = = 2394633

b2 = 0.003

c) The quality control devices probability of identifies a defective part is D1 = 0.9

The above parameters for the two stations i.e. corrugating and converting is summarized

using the table 26.

Stations ki bi Di ( ) d1 1/ N1 N1 N1+1 Q
(1/, N1)
Corrugating 0.61 0.061 0.85 0.032 0.052 0.88 1.14 28.44 0.03 0.02 0.0035
Converting 0.58 0.003 0.9
Table 25: Parameters value for calculating WIP level

Therefore, the optimal level of WIP that the production process of EPPSC needs to have is

calculated using the above analytical method as follows.

a. The optimal level of WIP inventory for the line becomes:

1 1 +1 1 +1 1 +1
WIP = + ( 2 )
1 (1 1 )

129.44 0.03 +28.44(0.02)

WIP = +0.032
10.88 (10.03)

WIP= 7.6ton

Since The unit cost of WIP is 17616.62*0.85= 14974.13 br from the WIP cost calculation,

the cost of the WIP inventory for the improved system is:

Cost of WIP= unit cost *number of units

Cost of WIP = 14974.13birr/ton* 7.6 ton

Cost of WIP= 113,803.4birr

102
Thus, if the company reduces the level of WIP inventory to the optimal level which is 7.6

ton, the company will save money by 73% which was locked up in the WIP inventory so

that the money could be invested in other aspects like for promotion since lack of order is

one of the main reasons for downtime.

4.6. CONTROL PHASE

The last phase of the DMAIC methodology is control. Once the suggested improvements

methods are implemented, it is time to set controls so everything achieved in the other

phases will not be lost through time. After the project is finished and a process improved

(i.e. after IMPROVE phase), if no monitoring is given the process goes back to where it was.

Thus, in this stage yields needs to be continuously measured, operations should be adjusted

when data indicates to do so or customer requirements need to be changed and outcomes

results should be shared throughout the organization. Different statistical tools like

histograms, Pareto charts, etc should be used in order to show the before and after level of

wastes. The things that needs to be done in order sustain the changes made in the improve

phase and guarantee lasting results are:

Forming LSS implementation committee or management

Project documentation (both good outcome and the problems faced)

Reward and recognition

Since control phase is all about identifying variations in the process and keep an eye on the

process or track of the system, the following points outlined for EPPSC to focus in this phase

after LSS implementation.

o Whatever improvements has achieved, they need to make sure its continuity

o Ensuring the process being managed and monitored properly

103
 o Expanding the improvements achieved throughout the organization. For example,

results achieved in the production process and warehouse by eliminating wastes

should be extended to other departments such as technical department.

o Having visual factory, i.e. displaying schedule boards, production boards, tool

boards and many other devices in the production floor or warehouse floor. The idea

of this is to provide management and workers an idea of what is happening in the

plant.

o Sharing and celebrating the successes achieved because it leads to greater

momentum of change within the company. The marketing and publicizing of each

success increases the speed with future gains and helps in building a good image

about the company.

4.7. OUTCOMES OF THE STUDY

The presence of a clear manufacturing and quality related problems provide a room for

improvement thus this research on application of LSS is conducted in order to improve the

process of EPPSC. As a result, the model called DMAIC is used to study the existing system of

the company and come up with improved one.

The results expected from this research implementation are that Lean Six Sigma will reduce

the level of those wastes and increase customer satisfaction with better final products. After

use of Lean Six Sigma techniques, the process will have standards, whereby the bottlenecks

will be identified and eliminated. The suggested improvement methods, as featured in

section 4.5, vary in implementation complexity and in value. As the concept of LSS

continues to grow and the team works for continuous improvement and did not expect

changes over night, the Company will become more productive and more efficient. This

research will help in understanding the current operations and sigma level of the process

104
plus ways to reduce DPMO and other LSS wastes. The expected results of the study are

summarized in the following table.

Waste Before Expected outcome

MRR
1 DPMO 15907DPMO 7158.2 DPMO
2 Cost of defect 2,779,548.3Br 1,250, 796.4Br
3 Sigma improvement 3.65 3.95
4 Product cost 17817.1br/ton 17097.3br/ton (4.04%)
Downtime
1 Machine idle time 60% 30%
2 Labor idle time 60% 20%
RM Inventory
1 Consumption 40% 70%
WIP Inventory
1 Average WIP level 30.5ton/month 7.6ton/month
2 Cost of WIP 425,793.7 br/month 113,803.4br/month
Table 26: The results of the study

Reiterating what was said previously, the LSS wastes identified as main problems in EPPSC,

which are MRR, downtime and inventory offer the largest room for improvement. Table 27

shows what the future state of the company could look like if certain opportunities for

improvement are capitalized on based on those illustrated process and financial

improvements in addition to the enhancement of customer satisfaction by providing quality

product with the lowest possible cost. The implementation of Lean Six Sigma grants

improvement opportunities that can benefit everyone.

105
 CHAPTER FIVE

CONCLUSIONS AND RECOMMENDATIONS

5.1. CONCLUSIONS

To be competitive in todays market, it is essential for companies to reduce manufacturing

variability and avoid non-value adding activities so that their customers will be satisfied

and their profitability and competitiveness will increase. LSS is not only a perfect

methodology for EPPSC but also for Ethiopian companies as a whole because it is a

continuous improvement method and it helps to avoid quality and manufacturing related

problems by eliminating variation and wastes.

The study executed the DMAIC cycle to achieve its objective, going through the Define,

Measure, Analysis, Improve, and Control phases to improve the process by reducing

manufacturing wastes. The research findings indicate that from the seven types of

manufacturing wastes, downtime, MRR and inventory become the most significant one in

terms of their level and cost. Thus, different improvement opportunities are forwarded for

implementation to reduce the level of the identified wastes. Implementing the opportunities

could benefit the company by achieving a potential reduction in the level of DPMO,

reducing the level of WIP, improving raw material inventory consumption, reducing the

cost of a product and reducing machine and employee idleness.

In conclusion, the study shows that how rewarding implementation of LSS could be by

showing how those wastes are affecting the company and the outcomes of its

implementation. The study benefits the company and other industries in their effort towards

improved productivity and efficiency. The study able to answer all of the research questions

raised.

106
5.2. RECOMMENDATIONS

The companys existence in the market relies on its ability to produce and deliver quality

products and keeping and getting customers. In order to achieve the benefits of customer

satisfaction and cost reduction EPPSC should implement Lean Six Sigma production system.

The procedures necessary to implement LSS production system are simple yet powerful in

eliminating wastes. The author recommends that the following should be avoided to

increases the success of LSS Implementation:-

The data that the company record seems a little bit over rated. Besides, one

departments report about something differs from the other departments report in

2.5-5%. For example, broke (rejected material) report shows a 2.5% difference in

shift and SIV (stock) report. LSS requires properly measuring and recording data.

The company pays attention to technical things as a result technical related

problems are relatively less but they also have to pay to attention to others kind of

problems too specially when they have a great impact in companys profitability

like operator related problems. For example, one of the reasons for their high

products cost is their labor cost, operators are also one of the three reasons for

downtime but the company does not seem to care unless the problems are technical.

LSS implementation focuses on the root causes of the problems.

The educational background difference between operators is very high which is

making communications and implementation of improvement methodologies

difficult. The Company has to reduce this gap.

Implementation of 5S is expected to reduce more than 90% of before load material

losses and this in turn will save more than one million Ethiopian birr thus it is highly

recommended to extend the outcomes of 5S implementation to other departments

and/or plant of the company.

107
5.3. FUTURE WORK AREAS

The following points are outlined for further extension of this work.

From the 11 % rejects that happened in NC cutter, 6-9% is due to corrugated board

side trim. Material rejects which are related to extra trimming i.e. >14cm can be

optimized using operation management methods like linear programming. So

optimizing NC cutter rejects will be a natural extension of this work.

There are some customers who demand the company to produce and deliver them a

products with in 2 or 3 days or within a week and the company wont able to

produce it due to various reasons like the company already having an order. The

products in finished goods inventory are a waste as over production. Thus, it is

important to investigate how supply chain management application would avoid

such problems.

Currently, the company is down for 60% of its time. After measuring the outcomes

of the suggested down time improvement methods, furthers study needs to be

conducted to reduce the level of both machine and employee idleness.

108
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113
APPENDICES

Appendix A: downtime causes for corrugating and converting machines.

Lost time description Lost Total Corresponding

Converting machine time, hr share, production loss,

% tons
Operational Lost Time
Stereo being damaged and adjusted
operationally 283.65 35.7 344.7
Waiting board from corrugators out put 127.83 16.1 155.3
Glue and Ink preparation 96.70 12.2 117.5
Print problem and adjustment operationally 67.8 8.5 78.9
Manpower shifted for output packing 60.9 7.7 70.8
Cleaning dirt from stereo 27.51 3.5 33.4
Board being curled 23.29 2.9 28.3
Work space being crowded 20.8 2.6 23.8
Folder belt operational problem 19.0 2.4 22.1
Ink became dry 17.75 2.2 20.3
Die and apron problem and adjusted
operationally 12.3 1.6 16.0
Removing glue dirt from folder m/c and glue
line adjustment 11.92 1.5 13.6
Lack of pallet 6.5 0.8 8.4
Stacker belt operational problem 6.0 0.8 7.8
Waiting for die preparation 3.3 0.4 4.2
Lack of water 3.0 0.4 3.5
Drive belt problem and adjusted operational 2.5 0.3 3.2
Feeder unit adjustment 2.0 0.3 2.3
Trim fan filled with trim 0.8 0.1 1.0
Operational adjustment of counter ejector 0.5 0.1 0.6
waiting for machine order 0.25 0.0 0.3
Total Operational Lost Time 794.3 100.0 925.3

114
Technical Lost Time
Feeder machine problem 106.1 21.4 128.9
Problem on flaps knife/bolt defect 79.5 16.0 90.9
Slotter blade problem 77.7 15.7 94.4
Glue line and pump defect 50.21 10.1 57.4
Folder unit problem 42.6 8.6 49.5
Printer cylinder problem 25.0 5.0 28.6
Die cutter anvil defect 21.8 4.4 25.3
Print no 2 problem(anilox roll, rubber roll and
cylinder) 18.1 3.6 21.0
Print hose defect 18.0 3.6 20.6
Driver belt problem 17.50 3.5 20.0
Printer ink pump problem 9.83 2.0 11.9
Counter injector problem 7.7 1.5 8.9
Air stream line problem 6.0 1.2 7.0
Cylinder bolt being broken 5.5 1.1 6.7
Stacker belt problem 5.3 1.1 6.1
Kicker unit problem 3.83 0.8 4.4
Print no 1 problem 1.3 0.3 1.6
Total Technical Lost Time 495.9 100.0 577.7
Waiting for print sample from customer 273.12 317.5
Lack of blank inputs due to corrugators
machine being stopped. 231.80 281.7
Lack of black ink 177.42 215.6
Shortage of order 148.8 180.9
Shortage of yellow printing ink 142 164.5
Power interruption 47.27 57.4
Company meeting/cleaning 24.67 28.2
lack of pallet 13.83 15.8
Cleaning of work space 7.25 8.4
Glue line clogging with dirt 3.42 4.0
Waiting for ink from quality inspections 3.00 3.9

115
Print no 2 move out of rail 2.25 2.9
lack of glue 1.75 2.0
lack of water 1.33 1.5
Drying of ink because of power interruption 0.50 0.6
Others 1077.94 1285
Corrugating machine
Operational Lost Time
Place being crowded 49.00 24.6 56.0
Single facer clearance adjustment 40.0 20.0 52.9
Single facer problem and operational
adjustment 28.4 14.2 32.5
Man power shifted to packer 16.0 8.0 20.2
Adjustment of raw materials 14.5 7.3 18.3
Waiting for machine instruction for new
order 13.17 6.6 16.9
Felt being tear 10.2 5.1 11.6
Starch preparation 8.25 4.1 10.9
Board being curled 5.5 2.8 6.3
Removing dirt from double facer dryer 4.0 2.0 5.1
Slitter blade adjustment operationally 3.0 1.5 3.8
Adjusting starch viscosity 1.5 0.8 1.9
Glue/starch painting problem adjusted
operation 1.5 0.8 1.7
Starch roll operational problem 1.3 0.7 1.7
Removing dirt from starch pipe line 1.25 0.6 1.4
Vacuum pump problem and adjusted
operationally 1.0 0.5 1.1
C-flute roll problem and adjusted
operationally 0.5 0.3 0.6
Removing trim from fan pipe 0.5 0.3 0.6
Total Operational Lost Time 199.6 100.0 237.5
Thechnical Lost Time

116
Problem on slitter blade/pin defect 125.7 27.6 160.9
Boiler problem and maintained 88.3 19.4 116.7
Double facer`s felt shaft being broken 67.1 14.7 85.8
Problems on single facer 53.50 11.7 68.5
Problem on NC cutter 29.8 6.5 37.7
New Electric boiler test 23.8 5.2 27.2
Steam line defect 16.0 3.5 20.5
Electric tripped in double facer 14.6 3.2 18.7
Tearing of double facer's felt 9.2 2.0 11.7
Double facer felt's motor defect 6.7 1.5 8.4
Starch line defect 5.00 1.1 6.6
Stacker electric problem 2.7 0.6 3.4
Starch cleaner problem 2.5 0.5 3.2
Starch roll defect 2.5 0.5 3.3
Double facer`s starch roll problem 2.0 0.4 2.6
Starch tanker electric defect 2.0 0.4 2.6
Electric tripped in single facer 1.5 0.3 1.9
Starch motor defect 1.33 0.3 1.5
Vacuum problem 1.00 0.2 1.1
Fan belt problem 0.5 0.1 0.6
Fan motor defect 0.5 0.1 0.6
Total Technical Lost Time 456.2 100.0 542.8
Shortage of raw materials 837.2 957.1
Lack of order 632.5 723.1
Due to electric boiler problem, steam shifted
to Paper machine 574.7 759.4
Power interruption 43.9 50.2
Place being crowded 22.7 30.0
Cleaning for Company's yearly celebration 19.5 22.3
End month counting 18.0 23.0
Lack of pallet 12.5 14.3
shortage of water from Awash 11.3 14.5

117
 Poor quality of raw material paper 8.5 10.7
New electric boiler test 7.7 8.8
Others 2188.4 2613.4

APPENDIX B. DPMO VALUE TO SIGMA LEVEL CONVERSION TABLE

DPMO Sigma DPMO Sigma DPMO Sigma DPMO Sigma
level level level level
933,193 0.00 500,000 1.50 66,807 3.00 1,144 4.55
926,471 0.05 480,061 1.55 60,571 3.05 986 4.60
919,243 0.10 460,172 1.60 54,799 3.10 816 4.65
911,492 0.15 440,382 1.65 49,471 3.15 687 4.70
903,199 0.20 420,740 1.70 44,565 3.20 577 4.75
894,350 0.25 401,294 1.75 40,059 3.25 483 4.80
884,930 0.30 382,088 1.80 35,930 3.30 404 4.85
874,928 0.35 363,169 1.85 32,157 3.35 337 4.90
864,334 0.40 344,578 1.90 28,717 3.40 280 4.95
853,141 0.45 326,355 1.95 25,588 3.45 233 5.00
841,345 0.50 308,537 2.00 22,750 3.50 193 5.05
828,944 0.55 291,160 2.05 20,182 3.55 159 5.10
815,940 0.60 274,253 2.10 17,865 3.60 131 5.15
802,338 0.65 257,846 2.15 13,904 3.70 108 5.20
778,145 0.70 241,964 2.20 12,225 3.75 89 5.25
773,372 0.75 226,627 2.25 10,724 3.80 72 5.30
758,036 0.80 211,856 2.30 9,387 3.85 59 5.35
742,154 0.85 197,663 2.35 8,198 3.90 48 5.40
725,747 0.90 184,060 2.40 7,143 3.95 39 5.45
708,840 0.95 171,056 2.45 6,210 4.00 32 5.50
691,462 1.00 158,655 2.50 5,386 4.05 26 5.55
673,645 1.05 146,859 2.55 4,661 4.10 21 5.60
655,422 1.10 135,666 2.60 4,024 4.15 17 5.65
636,831 1.15 125,072 2.65 3,467 4.20 13 5.70
617,911 1.20 115,070 2.70 2,980 4.25 11 5.75
598,706 1.25 105,650 2.75 2,555 4.30 9 5.80
579,260 1.30 96,800 2.80 2,186 4.35 7 5.85
559,618 1.35 88,508 2.85 1,866 4.40 5 5.90
539,828 1.40 80,757 2.90 1,589 4.45 4 5.95
519,939 1.45 73,529 2.95 1,350 4.50 3 6.00

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Appendix C: Sample Red Tag

119
Appendix D: Red Tagging Criteria Sheet

120
Appendix E: Sample unused article list

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Appendix F: Shop Stock List Sheet

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Appendix G: Sample Activity Plan

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