FACULTY OF GRADUATE SCIENCE

UNIVERSITY OF COLOMBO

Project Report on

Analyze and Propose solutions to a

manufacturing management problem.
INTRODUCTION TO MANUFACTURING

SCIENCE (PGDip MM 5208)

I.A.S.D.JAYASINGHE
2020PGDMM18
Introduction

Variosystems is a modern and international electronics service company, which thinks and
acts comprehensively. Variosystems was founded in 1993 in Switzerland. Variosystems is began
as a small regional contract electronic manufacture. Throughout the mid to late 1990's
Variosystems expanded rapidly in Europe, Asia and the United States as well. Over the years,
company has constantly reinvested the profits of its business operation in new plants and
equipment's. Now the company is operating production facilities in Switzerland, United States, Sri
Lanka and China. The company sells a complete range of contract manufacturing products
including surface mount and through-hole assemblies, press-fit backplanes, turn-key box builds,
and cable assemblies. Main customer base is from central Europe and throughout the United
States.

In 1998 Variosystems started operations in Sri Lanka as a joint venture with swindo
Electronics Ltd and in year 2003 Variosystems with the following services in Sri Lanka: Complete
Turn Key THT, SMT, Box Built, System Integration, Cable Harness, In-circuit, Function Test etc,
Until 2012 our main customer was Variosystems Switzerland and USA. In 2012 we were able to
serve customers in Sri Lanka and Australiafully acquired Swindo Electronics Ltd. Variosystems
Sri Lanka was able to be a competitive contract Manufacturer.

But the vario has not paid much attention to storage, and only focus on its production;
sometimes they only produce when they get orders. It has a small storage to store their temporary
finished goods till customers get them away. As our main products are PCBs, Box assemblies and
wire harness which should go through series of processes (SMD machines, THT machines, Ovens,

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CNC machines, Conveyors and Packing Machines). This project is focusing on enhancement of
the efficiency by applying combination of push & pulls system (CONWIP) to the our factory
premises.

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Problem

The fluctuations in inventory levels in a push system are affected by forecasting errors, while
the fluctuations in customer demand affect the pull system. Most of the production problems can
be solved by using an appropriate combination of Push and Pull systems. The company currently
operating only on the base of push production as production orders is issued on the basis of
forecast demands and inventory information collected centrally from all the production stages. And
it has maintain a MRP (material requirements planning) is the most popular example of a push-
type production ordering system. Push scheduling and its associated inventory do not always help
companies to be more responsive. Being totally Pull Production is not practical because it is a
electronics manufacturing industry and seasonality changes and many things may leads to higher
variability within the system. Other than that managing small space finished good warehouse is
very much problematic.

The Company operates in a difficult market with a lot of competition. Especially at this time
of decreasing repeat business, it is important to attract new customers and keeping touch with the
existing Market. Short delivery times at controllable cost are a strong competitive advantage. To
this end, the management of Company has set up a number of objectives:

• internal lead times

• Increased effectiveness

• increased delivery reliability and quality

• Increased efficiency in fulfilling orders with less Work In Progress inventory and
reduced unnecessary movement of materials;

• Minimize operational cost.

Because production and planning are closely linked, the Company is looking for someone
who is able to take a critical look at the planning process and come up with rigid solutions. Highly
fluctuating demand makes it difficult to match demand with available capacity. Nevertheless, we
are looking for a method to control and reduce the internal lead time, and increase the chances of a
feasible schedule. Moreover, the intention is to make the planning process more transparent, more
understandable and easier.

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Review

The planning function of Company works with contracts and therefore does have some
insight into upcoming demand. In these cases it may decide to manufacture some parts upfront.
This is called push strategy.

Before any analysis can be carried out, the definition of lead time and waiting time is clearly
stated here. We define the lead time of any production order as the time between the orders
becomes available to be processed and the order is completed. This time period includes actual
time spent working on the product, and time spent waiting before capacity is available for
processing. Waiting time usually accounts for a large portion of the total manufacturing lead time.
Therefore most important to understand how waiting time can be decreased by understanding the
characteristics of the business process which cause it to originate. Therefore it is applying queuing
theory to explain the causes of waiting time.

The manufacturing process consists of a number of work centers (Manual, machines,

departments and categories) where work is performed. At each center, work arrives from the
previous work center, and after processing is completed it moves on to the next. This
manufacturing system can be expressed as a serial system of work centers, expressed in terms of
Kendall’s notation, general distribution (G) is used, such that the work center is expressed as a
G/G/1 queuing model (Assumption is that each work center has one resource). From queuing
theory it is known that waiting times are influenced by three factors; variability (V), utilization or
traffic intensity (U) and process time (T). The following formula known as Kingman’s formula is
used to explain and predict the occurring waiting time in a steady-state G/G/1 system with a first
come first serve.

Ca is the coefficient of variation in the inter-arrival time, Cs is the coefficient of variation in

process time, ρ is the utilization and 1/μ is the average processing time. Utilization (ρ), also
known as the traffic intensity, is the ratio , where λ is the number of arriving orders per unit of
time and μ is the number of processed orders per unit of time. The term U predicts the average
number of orders in queue and shows that if approaches 1, this mean explodes (increases towards
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 infinity). It is important to realize that these relationships are based on averages, an instantaneous
arrival rate may exceed the service rate. Production orders will back up in queue, but as long as the
arrival rate decreases afterwards the queue will not explode. On average however, the service rate
must always exceed the arrival rate to avoid the system from overflowing.

During the talking with the production manager, we knew that the wafer biscuit is the major
production, its production and demand is larger than others. Therefore, we decided to treat its
production line as our analyze target.

A warehouse is a commercial building for storage of goods. Warehouses are used by

manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are
usually large plain buildings in industrial parks on the outskirts of cities, towns or villages.

Material Management in warehouse

All material in company which needs to prepare PCBs is stored in warehouse. There are two main
sections in warehouse.

SMT component

THT component

All materials are stored in bins and bins are stored in racks. These materials are given a unique article
number. There is a Document called Object list which consist of all material which need to assemble a
complete PCB. According to Object list SMT component and PCB kitted to a bin and THT
component separately kitted to another bin.

So there are some other sections.

• Unloading bay

• Incoming quality control

• Material preparation

• Export

Materials are picked using bin list. Bin list is part of Bill of material according to order.

While the process working, all steps in the process should work follow the MPS to keep the
quantity and finish work on time. When one step has finished its production, the products will be
delivered to the next step, while the production report will be feedback to Production Planning
department. The Production Planning department should revise MPS depend on the current
situation and give the new missions to all steps. Traditional production management mode with
waiting prepensely.

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 RM – Raw Material WIP – Work In Progress WS – Workstation FG – Finished Goods

Push Production System

Methodology

Data is mainly used to support the total project, In Primary data part: It observed or collected
directly from first-hand experience. In our case, we collect and get the primary data by
interviewing managers of departments, thorough study of main processing line and referring past
records of production and sales. Questions that we have asked:

- What are the critical varieties? Where have they gone? What’s the output and market demands
per month?

- What kind of production mode is used in the company, Pull or Push? Can you explain the whole
production process? And how to control the production process (Is there any production planning?
How to limit WIP? )

- Can you supply the layout of your company? And the information of equipment? How do they
work? What is the lead-time for every production? How are the semi-productions delivered in the
production process? Is there any storage for raw materials or finished goods?

By thorough study of the shop flow, date were collected to the get the lead time and process times of
the process. The table given below shows the data collected.

SMT is the most popular technology and technique in the industry of Printed Circuit Board
Assembly (PCBA). Since its advent into market at the beginning of 1970s, SMT has become the
main trend of modern electronic assembly industry, replacing wave soldering assembly that has to
depend on manual insertion. This process has been regarded as the second revolution of electronic
assembly technology. Put it in another way, SMT has been a global trend in international PCBA,
leading to a large transformation of the whole electronic industry.

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 Through-hole technology refers to the mounting scheme used for electronic components that involves
the use of leads on the components that are inserted into holes drilled in printed circuit boards(PCB)
and soldered to pads on the opposite side either by manual assembly (hand placement) or by the use of
automated insertion mount machines

Table 1: Processing Time (T0)

Time (min : sec : mili.sec) Cycle Time/100

Element
1 2 3 4 5 Avg.Time PCBs

SMT 0.22.7 0.16.5 0.18.4 0.15.5 0.20.7 0.19.16 7.98

THT 0.46.2 0.47.5 0.46.8 0.46.7 0.46.8 0.46.8 19.5
Reflow 0.09.7 0.10.0 0.09.5 0.09.9 0.10.0 0.10.22 17.03
Wave soldering 0.01.0 0.01.0 0.01.0 0.01.0 0.01.0 0.01.0 20
Cooling (Conveyor) 0.03.1 0.02.59 0.03.2 0.03.0 0.03.1 0.03.49 17.45
Final inspection 0.04.2 0.04.1 0.04.2 0.04.1 0.04.2 0.04.16 20.8
Packaging 10.00.0 10.00.0 10.00.0 10.00.0 10.00.0 10.00.0 10

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 Product Varieties are demanded by the market as per the table given below. Table 2: Product
Varieties & the demand

Throughput Sales Target Required Required

Item
(SKU/Hr) (SKU) Hours Days

VZG 6425 117 6

VZG 3970 72 4
55
VZG S 2680 49 2

VZG V 6025 110 5

HMT C 1575 24 1

HMT O 798 12 1
65
HMT S 825 13 1

HMT V 1650 25 1

OKO C 8735 87 4

OKO O 3810 38 2
100
OKO S 3800 38 2

OKO V 9285 93 5

STL V 7850 52 3

STL C 150 7450 50 2

STL S 3850 26 1
Total Days Required 40

Working Hours – 16 hrs/day

(Change Over time + Set up Time) – 1 hr (approximately)

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Analysis

Push Production cannot match “Just in Time” in modern production process. If a company
selects Push Production, and ensures delivery on time in the whole process at the same time, it
must calculate exactly the time of all the production in every step and the date of finished goods.
And this is very hard work which costs much manpower and material resource. If there is any
exceptional situation or mistake in production process, the MRP has to be reconsidered and
transformed, such as working overtime, which also costs much manpower and financial resource.
Because of the various complexity and uncertainties in Push Production such as defective,
damaged equipment and so on, the company has to keep much inventory to ensure the delivery on
time. In the CONWIP concept, keeping much inventory will impropriate much capital, and cause
much cost on moving, placement and maintenance.

As we took our model plant as the wafer, above collected data shows that the bottleneck
station is the oven as per the average processing time. So the WIP within the production line is
decided by the Backing station. At the moment, non-bottlenecks of the production line are operated
at the optimum status. Production runs according to the 4 types of flavors and few varieties within
the flavors as shown in the table 2. As you can see target is exceeding the capacity at the moment.
So first of all it is required to identify the market requirement very accurately at the moment so that
the unwanted production can avoid and can prioritize the demand. That’s why it is said that the
pull system is better to implement here and then the very accurate MPS leads to successful MRP
processing by the planning department to push the production line. That is the concept of push
production system. Now the WIP within the line is limited by the most accurate production by the
CONWIP system implementation.

But there is a possibility of machine breakdowns happened at an unspecified way. So it is

better to plan a preventive maintenance plan to overcome that kind of issues and future plan should
consider about the capacity increment in bottleneck point because already BN as well as NBNs
(Non-Bottleneck) are operating at its optimal condition. As discussed in the Literature, the process
is general and single machine process it is required to consider about the capacity increment by the
top management.

By analyzing all the facts below table 3 shows the advantages and disadvantages of the
prevailing system.

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 Table 3: Advantages & Disadvantages of Push & Pull Production System

Advantages Disadvantages
Pull Production -Zero inventory -Increased rate of idle machines
-Overstocking of products with
low-stress conditions.
-Production at a high rate of
update frequency

Push -High utilization of equipment -High level of inventory

Production -High-stress conditions from
the market
-Low rate of update frequency
for market requirement

To avoid these disadvantages of Push Production and Pull Production the concept of
CONWIP has been developed. This is a way of production that all the work in the production
process is driven by market demand that means production depends on market demand.

Recommendations

According to the characteristics of existing process, the demand of product is unstable. The
market demand will be increased suddenly when there is seasonality changes, natural disasters
happened or some sudden incidents. However, the demand will be general when the sudden
accidents do not happen. Therefore, the company should be set up the appropriate safety stock to
aim at these sudden accidents, and make sure that it can be satisfied with the demand when the
demand increase suddenly. After we have analyzed the disadvantages of pure-push and pure-pull
production, we have already known that it would cause the situation of overproduction and the
waste of production if the company uses the pure-push production all the time. If the company uses
Pull Production, it would cause the production capability decreased, the prepare time will not be
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 enough, and cannot satisfy the order. Furthermore, the company cannot satisfy with the demand
increased suddenly. So, in our opinion, we suggest the company to use CONWIP. The primary
period of production line will start to work when the storage of WIP decreases to the planning
standard.

Purchase Department

Researching and analyzing the supply of market, choosing the supplier and managing
supplier performance.

Making purchase plan depend on user’s demand, and purchasing all materials.

Controlling negotiates of procurement price and purchase costs.

Developing and managing contract for purchase and order data collection.

Production Department

managing of the raw materials, semi-finished products, and finish goods.

based on the production planning, quality or craftwork, and send the report to managers.

Here are the important responsibilities of every department to achieve the target:

based on the production planning, quality or craftwork, and send the report to managers.

Engineering Department

Repair all facilities and equipment of the company, charging for surveillance,
measurement and maintaining measuring instruments.

Managing spares and warehouse, charging the outsourcing about repairing and project.

Developing preventive service system

Establishing technology order, managing data and giving report depend on demand of
other apartments.

Researching and giving improvement of technology, increasing performance and quality

of products, and supporting the development of production processes.

Increasing technology content about interaction of production and technology, providing

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Marketing Department

Opening up market and keeping relationship with customers.

Supplying market forecast regularly.

Cooperating with logistic department to delivery on time.

Charging and cooperating with quality department for treatment of complaint from
customers and feedback.

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Conclusion

This paper presented a real industrial case study of CONWIP system implementation in a
manufacturing company. The research findings showed that CONWIP system is essential in
ensuring the success of pull system as well as Push system to create smooth flow of
Parts/components throughout manufacturing system. Major problems like stock out and overstock
situations are solved effectively by this mechanism. Systematic and commitment in implementing
CONWIP system is crucial in ensuring the effectiveness in maintaining inventory at its optimal
level and critical WIP at the shop floor. The ultimate goal is to meet customer satisfaction.
Manufacturing pace will be well controlled and is synchronized with market demand. Therefore, it
can be concluded that implementation of CONWIP system has improved the efficiency of
manufacturing system and this should be a part of the core task of JIT practitioner.

References

1. Wallace J. Hopp, Mark L. Spearman, Factory Physics (Third Edition)

2. Fredrik Olsson (2010), Overview of production systems: Push, Pull, JIT, Lean, Etc, Industrial

Management and Logistics, Lund University

3. Mark L. Spearman, Michael A. Zazanis (1992), Push and Pull Production Systems: Issues

and Comparisons, Operations Research

4. Oscar.R.O, Adolfo.C.M(2003), Exploring the utilization of a CONWIP system for supply

chain management. A comparison with fully integrated supply chains

5. Maarleveld_MA_MBS_PUBLIC

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