University of Twente Student Theses


Decreasing the down time in the factory due to delivery delays after moving to a new dedicated distribution center

Phijffer, S.R. (2022) Decreasing the down time in the factory due to delivery delays after moving to a new dedicated distribution center.

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Abstract:Mead Johnson is a nutrition company that produces Infant Formula and Child Nutrition, feeding up to 1 million babies worldwide. The research is conducted at their site in Nijmegen, where the factory and offices are located. At this site, there is only not enough space to store all materials. Therefore, the distribution centers called Frigolanda and Cornelissen are used. The main problem is that there is too much down time in the factory due to a lack of material at the moment of production. This is often because the materials are delivered not On Time In Full from the distribution centers to the factory. Because of this, it was decided to move from the two distribution centers to only one dedicated distribution center at Nabuurs. Therefore, as part of the solution approach, the following knowledge problem is formed: How can the late deliveries to the factory be decreased by onboarding all materials successfully to the new dedicated distribution center at Nabuurs? This knowledge problem is solved on the basis of five research questions. These are answered with the help of the seven steps of the Managerial Problem-Solving Method of Heerkens & Van Winden, 2016. In order to validate whether the research is successful, three Key Performance Indicators are determined which together fully cover the performance of the operations. For all KPIs, targets are set in advance and after all, the performances before and after will be compared and it is checked whether the targets have been achieved. As a first step to understand the problem better, a problem analysis has been made. This is first done by investigating the current supply chain to make clear where the problems occur, which is almost at the beginning of the supply chain between the raw material suppliers and the factory. This is the place where the inbounds from the distribution centers to the factory take place. Secondly, the definition of a successful onboarding plan is made by going deeper into its restrictions. There restrictions are the time restriction issue of a two-month transfer window, not having clear which materials are needed for production in these two months to keep it cost-efficient and some resource restriction issues like the availability of trucks, the truck capacity, and the loading/unloading capacity. Thirdly, an overview of the planning and logistics department of Mead Johnson is made including external employees that are relevant in the process. Also, the agreements between Mead Johnson and Nabuurs from the Service Level Agreement are clarified. What particularly strikes here is the fact that there is little specific information about delivery delays and possible sanctions. Nevertheless, the preference was on first focussing on making the whole process run better rather than immediately imposing sanctions. Also, a Swimlane Value Stream Map is made of the whole delivery process in which it is indicated where the problems occur. The five main problems are no steady flow in the delivery of loads, the communication about deviations between Nabuurs & Mead Johnson, not having an escalation model, the updating of the statuses of the Transfer Orders and its problems, and the reporting and analysing of the delays. Last, the consequences of the delivery delays are explained. The worst-case scenario is that the production lines must be stopped due to a lack of material. In this case, Overall Equipment Effectiveness loss occurs. The percentage of this OEE loss due to a lack of materials before implementing the solutions was 5,8% and the goal was to reduce this to 3%. 5 The second step is to review the literature about this problem. First, the Lean Principle and its link with the Toyota Production System and the renewed Toyota Way 2001 Model is investigated. The main goal, based on the lean principle, is to eliminate waste, which is the non-value-added activity from the viewpoint of the customer. According to Slack, in modern supply chain management these wastes are not only in the flow of products and materials, but also very much concerned on managing the information flows. This supports to the idea that the information flows must get optimally streamlined to reduce these wastes. All problems are based on the principles of the Toyota Production System, which is actually a culture where every employee is allowed to report problems to continuously improve the processes. After this, the ‘Seven Deadly Wastes of Logistics’ based on the seven primary sources of waste from the Toyota Production System were reviewed and compared to the situation at Mead Johnson. The wastes that were most relevant to the situation of Mead Johnson were Inventory, Space and Errors. Inventory in case of unnecessary inventory in the pre-staging area when deviations to deliveries occur. Space when the truck capacity cannot be used optimally due to bulging powder pallets. And last Errors as all deviations to deliveries causes rework, unnecessary adjustments and/or returns. Currently, this rework is not done in the most time-efficient way. This will be solved by the renewed Escalation Model. Based on the problem analysis and the findings in the literature, the five solutions has been generated. First, the most cost-efficient onboarding plan which is made by using Pivot Tables and the right Excel functions. In this way it is found which materials must be moved and which not. Second, a legend for the statuses of the Transfer Orders in which the deviations are categorized into the following four categories: green for On Time In Full, yellow for Incomplete/Incorrect/Damage, red for After Requirement Date and white for not delivered but before Requirement Date. Thirdly, a renewed day schedule, using timeslots to create more steady flow in the deliveries by anticipating on the number of Transfer Orders per day and divide them evenly on a day. Fourthly a dashboard of the delivery delays by making lists and tables of the delays per category and making graphs out of this. Next to the categories of delivery delays, also the causes has been analyzed. This is done by composing eight different reason codes to keep it uncluttered. Last, the escalation model to solve possible deviations as time efficient as possible. Shorty, in this Escalation Model, a streamline of tasks is made that needs to be executed by different teams within 4 hours. After this, in the implementation phase, it becomes clear that all targets of the KPIs have been met. KPI 1, the total extra costs of transferring materials to Nabuurs before going to the factory is positively influenced by the consequences of the onboarding plan which led to an outcome €34644, with which the target of lower than €36000 has been more than achieved. KPI 2, the percentage of deliveries from the distribution center to the factory that are On Time In Full has gone to 98,74% within a half year which is an increase of 2,12% and so the target of 98% is achieved. The most occurring reason code ‘No time left (end of the day)’ has enormously decreased from 9 to 0 between the first and last month, which is mainly due to the renewed Day Schedule. Also, the target of the last KPI, the percentage of OEE loss due to a lack of materials, has been achieved by a decrease from 5,8% to 3%. After all the solutions are successfully reviewed with some small remarks. This is done with the help of a review form filled in by the employees that have the most to do with the solutions.
Item Type:Essay (Bachelor)
Mead Johnson B.V.
Faculty:BMS: Behavioural, Management and Social Sciences
Programme:Industrial Engineering and Management BSc (56994)
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