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

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

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

1- House Keeping-before

House Keeping-before

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

2. Factory Efficiency 22%

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

Inspection Sheet Finishing

4. Material Flow Analysis 840 Ft

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

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

5S Before After

5S in Store

Before After

Savings of 135,000 PKR by sale of obsolete machinery

Assignment Sheet

Standard Allowed Minutes (SAM)- Gundo CT Short

Pkt bag OL Frnt rise OL, Back yokes OL Frnt rise att, Back Yoke Att Pkt bag att, Pkt TS Back Rise OL Frnt rise TS, Back yokes TS Back rise att, Piping making Back rise TS, Piping att to bk yokes, Back yokes att to back body Bk yoke edge OL Side seam att & lbl att Side seam OL Button hole Bartack 4 pts W.B TS In seam OL Inseam att Bottom hem W.B elastic mkg, Side label att, Elastic att at W.B, Main label att Store Room Critical path Analysis- Gundo CT Short CP Time = 9.63, SM = 1.31 O/L time = 1.31

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

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

Improved Material flow 328 Ft

BeforeAfter (Model hall) ItemsDescriptionItemsDescription Overhead Cost per Month for 170 machines 1,000,000Overhead Cost per Month1,000,000 Overhead Cost per Month for 17 machines 100,000Overhead Cost per Month for 17 machines100,000 No. of pcs/day of pcs/day No. of Pcs per of Pcs per overhead Cost/pc per 18overhead Cost/pc per OH cost Difference per piece = = 5.47 OH Cost Savings = 5.47*8125 = Rs. 44, 443 Overhead cost Comparison (for 17 no of machines for one month)

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

Introducing Incentive System

Defect Rate DR reduces Upto 5%

Cost Savings Through Defect Rate Reduction Avg. Production per Month = 60, 000 Pcs DR Before =30%, Rework in Nos = pcs DR After = 5%, Rework in Nos = 3000 pcs Rework Difference = – 3000 = pcs Avg. Operation Time =0.5 min Total time = 15000*0.5=7500 min Total time consumed in RW is 7* times of the operation 1 st time performed. Total time saved= 7500 * 7 = min Avg. SAM per pc = 12 min *According to KSA study this factor ranges from 7 to 14 times of the operation 1 st time performed.

Cost Savings Through Defect Rate Reduction No. of pcs that can be produced = 52500/12*32 = 1400pcs Avg. Profit per (FOB=Rs.425) = Rs. 64 Cost saving in per Mth = 1400 * 64 = Rs. 89,600 Projected saving by sustaining the one year = 89,600*12 = Rs. 10,75,200

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

Total Savings Per Month Cost Savings by Reducing DR/month + Cost Savings By Reducing Inspection = Rs Rs = Rs

Results Sr. No KPIBeforeAfterPercentage improvement 1 Efficiency 22%32%45% 2 Defect Rate 35%5%85 % 3 Material Handling 840 ft328 ft61% 4 Space Utilization 0 sq ft 1254 sq ft 100% 5 Through Put Time 3 days1 day66% 6 Cost per piece 18 Rs12.31 Rs31%