LEAN MANUFACTURING TOOLS AND TECHNIQUES IN THE PROCESS INDUSTRY WITH A FOCUS ON STEEL by Fawaz Abdullah BS in Mechanical Engineering, University of South Carolina, 1996 MS in Industrial Engineering, University of Pittsburgh, 1999 Submitted to the Graduate Faculty of School of Engineering in partial fulfillment of the requirements for the degree of Doctor of Philosophy University of Pittsburgh 2003 UNIVERSITY OF PITTSBURGH SCHOOL OF ENGINEERING This dissertation was presented by Fawaz Abdullah It was defended on May 13, 2003 and approved by Kim LaScola Needy, Associate Professor, Department of Industrial Engineering Bopaya Bidanda, Professor, Department of Industrial Engineering Harvey Wolfe, Professor, Department of Industrial Engineering G.G. Hegde, Associate Professor, Katz Graduate School of Business Dissertation Director: Jayant Rajgopal, Associate Professor, Department of Industrial Engineering i i Copyright, Fawaz Abdullah 2003 ii i ABSTRACT LEAN MANUFACTURING TOOLS AND TECHNIQUES IN THE PROCESS INDUSTRY WITH A FOCUS ON STEEL Fawaz Abdullah, PhD University of Pittsburgh, 2003 This research addresses the application of lean manufacturing concepts to the continuous production/ process sector with a focus on the steel industry. The goal of this research is to investigate how lean manufacturing tools can be adapted from the discrete to the continuous manufacturing environment, and to evaluate their benefits on a specific application instance. Although the process and discrete industry share several common characteristics, there are areas where they are very different. Both manufacturing settings have overlap, but at the extreme, each has its unique characteristics. This research attempts to identify commonalities between discrete and continuous manufacturing where lean techniques from the discrete side are directly applicable. The ideas are tested on a large steel manufacturing company (referred to as ABS). Value stream mapping is used to first map the current state and then used to identify sources of waste and to identify lean tools to try to eliminate this waste. The future state map is then developed for a system with lean tools applied to it. To quantify the benefits gained from using lean tools and techniques in the value stream mapping, a detailed simulation model is developed for ABS and a designed experiment is used to analyze the outputs of the simulation model for different lean configurations. Generalizations of the results are also provided. iv ACKNOWLEDGMENTS I would like to thank Allah my lord for giving me the strength, patience, and guidance to go through this research. I wish also to thank my country Kuwait and the University of Pittsburgh for giving me the opportunity to pursue my degree in higher education. I wish to express my genuine appreciation to my advisor, Dr. Rajgopal for his unlimited support, direction, advice, and patience with me during the preparation for this dissertation. I am very thankful to all my committee members Dr. Needy, Dr. Bidanda, Dr. Wolfe, and Dr. Hegde for their valuable comments and suggestion. I wish also to thank Dr. Needy for her guidance during this research. I would like to thank Mr. Bob Oster and Mr. Mark Lesnick for their assistance in collecting the data used in this research. I also would like to thank my wife Abrar for the invaluable support and patience during the course of this work. My thanks also go to my beloved son Abdullah for his good manners. I also would like to thank my parents for their moral support; without them I would not be where I am right now. v TABLE OF CONTENTS 1.0 INTRODUCTION.....................................................................................................................1 1.1 Background............................................................................................................................1 1.2 Problem Statement.................................................................................................................2 1.3 Research Objective................................................................................................................3 1.4 Research Approach................................................................................................................4 2.0 BACKGROUND AND LITERATURE REVIEW...................................................................5 2.1 The History of Lean...............................................................................................................5 2.2 What Is Lean?........................................................................................................................6 2.3 Lean Manufacturing Tools and Techniques........................................................................10 2.3.1 Cellular Manufacturing.................................................................................................10 2.3.2 Continuous Improvement..............................................................................................11 2.3.3 Just-In-Time..................................................................................................................13 2.3.3.1 Just-In-Time Production..........................................................................................14 2.3.3.2 Just-In-Time Distribution.........................................................................................16 2.3.3.3 Just-In-Time Purchasing..........................................................................................18 2.3.4 Production Smoothing...................................................................................................19 2.3.5 Standardization of Work...............................................................................................19 2.3.6 Total Productive Maintenance......................................................................................20 2.3.7 Other Waste Reduction Techniques..............................................................................21 vi 2.4 From Lean Manufacturing to Lean Enterprise....................................................................22 2.5 Overview of Supply Chain Management............................................................................25 2.5.1 Customer Integration.....................................................................................................26 2.5.2 Supplier Integration.......................................................................................................27 2.5.2.1 Level of Integration..................................................................................................28 2.5.3 Manufacturer Integration..............................................................................................29 2.6 Discrete vs. Continuous Manufacturing Systems................................................................30 2.6.1 Application of Lean In Discrete Industry......................................................................34 2.6.2 Continuous Process Industry and Lean.........................................................................35 2.7 Value Stream Mapping........................................................................................................38 2.8 Simulation and Value Stream Mapping..............................................................................43 2.9 Summary..............................................................................................................................45 3.0 A TAXONOMY OF THE PROCESS INDUSTRY................................................................47 3.1 A Common Misconception..................................................................................................47 3.2 Process Industry Groups......................................................................................................48 3.2.1 Product Characteristics..................................................................................................49 3.2.2 Material flow Characteristics........................................................................................53 3.2.3 When do Nondiscrete Units Become Discrete in the Process?.....................................56 3.3 Opportunities for Lean........................................................................................................59 4.0 OVERVIEW OF THE METHODOLOGY.............................................................................64 4.1 Overview of the Steelmaking Process.................................................................................65 4.2 A Brief Survey of the Steel Industry...................................................................................68 5.0 VALUE STREAM MAPPING AT ABS.................................................................................71 vii 5.1 Description of ABS.............................................................................................................71 5.2 Value Stream Mapping: Current State Map........................................................................75 5.3 Value Stream Mapping: Future State Map..........................................................................81 5.3.1 Takt Time......................................................................................................................82 5.3.2 Finished Goods Supermarket........................................................................................83 5.3.3 Pull System Supermarket..............................................................................................84 5.3.4 Continuous Flow...........................................................................................................87 5.3.5 The Pacemaker..............................................................................................................89 5.3.6 Production Leveling......................................................................................................90 5.3.7 The Pitch.......................................................................................................................93 5.3.8 Process Improvement....................................................................................................96 5.4 Setup Reduction...................................................................................................................96 5.5 TPM.....................................................................................................................................99 5.6 JIT......................................................................................................................................102 6.0 THE SIMULATION MODEL...............................................................................................104 6.1 Simulation Verification and Validation and Transient Period..........................................108 7.0 SIMULATION IN SUPPORT OF VALUE STREAM MAPPING......................................115 7.1 Production System.............................................................................................................116 7.2 TPM...................................................................................................................................118 7.3 Setup Reduction.................................................................................................................122 7.4 Lead-Time Performance....................................................................................................123 7.5 Inventory Performance......................................................................................................128 7.6 Discussion..........................................................................................................................134 viii 7.7 The Future State Map Revisited........................................................................................136 8.0 OTHER LEAN TOOLS: 5S AND VISUAL SYSTEMS......................................................138 8.1 5S.......................................................................................................................................138 8.2 Visual Systems..................................................................................................................145 8.3 Summary............................................................................................................................146 9.0 SUMMARY AND CONCLUSIONS....................................................................................149 9.1 Summary of the Research..................................................................................................149 9.2 Conclusions.......................................................................................................................151 9.3 Research Contributions and Future Directions..................................................................155 APPENDIX A (SURVEY)..........................................................................................................159 APPENDIX B (SIMULATION MODEL)..................................................................................164 BIBLIOGRAPHY........................................................................................................................228 ix LIST OF TABLES Table 1 Industries sets and types of products.............................................................................48 Table 2 Summary of the survey data............................................................................................70 Table 3 Summary of the data in the current state map for ABS...................................................77 Table 4 Due date calculation for the annealed products...............................................................92 Table 5 Number of kanbans required by product.........................................................................93 Table 6 Number of pitches for every product...............................................................................94 Table 7 The time interval required for every product to withdraw per shift................................95 Table 8 changeover times required at different processes at ABS...............................................97 Table 9 Maintenance time for hot end at ABS.............................................................................99 Table 10 Failures time distributions at ABS...............................................................................100 Table 11 Estimated process time distributions for ABS processes.............................................104 Table 12 Product types for each grade........................................................................................107 Table 13 Performance measures for Actual vs. Simulation........................................................111 Table 14 Proposed TPM times at hot end...................................................................................122 Table 15 Proposed TPM times at finishing mill.........................................................................122 Table 16 Proposed setup reduction times at ABS.......................................................................123 Table 17 Data for average lead-time (in days) for the factorial designs.....................................124 Table 18 Estimated Effects and Coefficients for Lead-time.......................................................125 Table 19 Analysis of Variance for Lead-time.............................................................................125 x