DESIGN of LEAN PRODUCTION SYSTEM WITH COST INTEGRATED

VALUE STREAM MAPPING IN FOOTWEAR INDUSTRY.

Andi Royhan Alby, a and Moses Laksono Singgihb

1
Magister Manajemen Teknologi
Institut Teknologi Sepuluh Nopember
Surabaya - Indonesia
a
andiroyhanalby@gmail.com and b moseslsinggih@ie.its.ac.id

Keywords: Lean Manufacturing, Value Stream Mapping, Cost Integrated Value Stream Mapping

Abstract. The business environment in footwear industry affects the competition where the current
condition of the company is perceived offer price too high. Prices that are too high can be caused by
waste on the production floor. Implementation of lean manufacturing is used to minimize waste. Then
value stream mapping is used to map the whole activity in production floor. And the identification
using by a questionnaire where obtained waste that occurs in the form of over motion and over
waiting. After the waste is known to occur then conducted gemba production and analyze the root
cause of the problem with the 5 why method. And the next step by doing activity mapping process to
see the use of time on the floor of production. The next step is doing the future state map plan by
giving the improvement plan where the result obtained is can reduce the operational time where
previously it takes 76533 hours, after the repair the operational time can be reduced to 73933 hours.
Transportation time decreased from 108 hours to 93 hours and inventory decreased from 2777 hours
to 1718 hours producing 60000 pairs of shoes. The result of the improvement is obtained the company
costs 4,461,207,515 rupiah and after repair the total production cost is 4,075,267,394 rupiah so it can
reduce the cost 385,940,120 rupiah.

Introduction
Nowadays the footwear industry in Indonesia gives great hope to the industrial sector by
giving a positive performance where 87 percent of world footwear production is in Asia and Indonesia
occupies the fourth position with production reaching one billion pairs per year or about 4.4 percent
of total production for the whole world (World Footwear Market, 2016). This development in the
business environment affects the current competitive level of the footwear industry where the
competitive element is not only the quality but also the value of the product, delivery, technology,
manufacturing process to meet the product expectation and also cost offered to consumers. Effective
and efficient working system is expected to create and maintain competitive advantage where it
becomes a duty of the company to continue to develop and improve so as to compete globally.
Currently a company that has establish for more than 60 years focusing on production for sneakers
shoes where the company's current capacity can produce 300,000 pairs per month. But the problem
is that the system of calculating the cost for a model is still calculated traditionally based on the range
of consumption of raw materials consumed, outsole, packaging and cost of CMT (cost manufacturing
target). Calculation system using CMT make it difficult for companies to compete with other
companies with more modern counting systems and can offer cheaper costs. So the company need to
revolutionize the manufacturing system by adopting lean manufacturing for the entire supplier to
address the product defect problem, time consumption on mass production, work productivity and
also reduction of time required to produce new models. In addition, lean implementation can also
improve working conditions at the company. Which can have a direct impact on product cost
reduction. This research aims to design a working method that can help management to understand
the flow of production with value stream mapping approach as a basis for mapping the process which
will then be used as a basis for development to get a better flow of process by focusing on eliminating
waste that is integrated with cost factors to analyze production costs so as to have a direct impact on
lower production costs.

Literature Review
Lean manufacturing is a manufacturing system that aims to continuously minimize waste and
also can make the production flow runs optimally. Lean manufacturing is all about raising awareness
about waste at different levels of the production system and working to eliminate it. In Toyota
Production System (TPS) there are seven general types of waste, including overproduction, waiting,
transportation, improper processes, inventory, motions, and defects[4]. Wastes are defined as
activities that are not value-added but consume time, resources and place in a process during product
creation. The implementation of lean manufacturing will focus on minimizing the consumption of
existing resources on activities including time. So that lean application is expected to improve from
quality with quality control system, then can decrease production cost by minimizing various
activities that are not added value. Then minimize inventory by improving the smooth production
flow. Lean concept in the company by focusing on targeted efficiency where lean will maximize work
with the least possible use of input to create equal or more output. Lean can also be interpreted as a
philosophy for the optimization perfomansi a manufacturing industry [1].

Value stream mapping is the mapping of all the value-added and non-value added activities
currently required to bring a product through the streams of each product, ie the production flow from
raw materials to the consumer, and the design flow from the concept until implementation. Value
Stream Mapping is used as information to identify waste in the production flow which is then carried
out an improvement process to eliminate the waste. VSM consists of three main parts: flow consisting
of a production process or material flow, communication or information flow and time line or mileage
[3]. So VSM is used as a planning process that connects lean to the collection, identification and also
process data analysis systematically to the flow of material and information on the manufacturing
process.

Value stream mapping tool or VALSAT is a tool used to find out more about waste and make
it easier to understand the value stream mapping that existed before making it easier to minimize and
eliminate waste that happend in production process. In VALSAT, there are seven commonly used
mapping tools: activity mapping process, supply chain response matrix, product variety funnel,
quality filter mapping, demand amplification mapping, decision point analysis and physical structure
[2]. Process acitivity mapping is used to map every stage of activity that occurs from operation,
transportation, inspection, delay and storage. The basic concept of PAM is to map each activity and
then group into the types of activities that exist. This activity is divided into 3 activities that are value
added activity, non value added activity or important but not necessary non value added activity. Cost
integrated value stream mapping used to analyze the impact of an activity can be done with cost line
approach to identify cost variation and analyze from every activity needed to make a product.

Methodology
This research done with several systematic steps to get the result which is structured and also
optimal.

Fig 1 Research methodology

The research object is in the footwear production process in one of the shoe manufacturers to
calculate the costs incurred by the budget calculations required to make footwear and then to flow
through the production process and eliminate waste with value stream mapping to achieve lean
manufacturing conditions. Research identification is an early stages of research to see the root of the
problems that occur so that it can determine the purpose of research and can prepare the data needs.
After looking at the current conditions it needs a method of improvement in the calculation system
and also process improvement. So in this research the approach used is lean manufacturing with value
stream mapping approach to map the use of time, the use of materials and map the activities of value
added or not added value. Then identify the waste with the method 5 why to be able to answer in
detail about the waste in the production floor. Then integrate with cost as information for decision
making.

Data Collection and Analysis

In the process of making footwear is divided into 4 major processes namely the process of
cutting, stitching, assembling and finishing. The cutting process is the process of cutting the sheet
material into a shoe component shape in accordance with a predetermined pattern. Stitching the
process of sewing components have shaped patterns and then stitched to follow the design which then
formed upper shoes. The lasting process is the process by which the result of stitching after being
upper in the fox into a shape that already resembles the foot with the help of laste. The assembling
process is a merging process between the upper produced by the previous stitching team coupled with
the bottom of the stockfit team to become a shoe form intact. The last process of finishing is starting
with the de-lasting process is the laste removal process and provide additional sockliner and
additional accessories such as stickers and hand tags.
The production process of footwear can be calculated from the arrival of the material until
delivery to the place of finish goods warehouse. Based on production process it can be seen if the
current production process needs to be improved. Some problems that arise due to these problems
cause frequent delays of delivery and also the needs of operators that are erratic which resulted in the
addition of working hours for some shoe models that require considerable time in the manufacturing
process. To ease the identification of waste, it is done by distributing questionnaires and discussing
with related parties about the frequent waste. The following recap of data from the questionnaire
distribution that has been done.
Aver
No Waste Total
age
1 Motion 37 3.7
2 Waiting 33 3.3
3 Tranportation 17 1.7
4 Defects 13 1.3
5 Inventory 9 0.9
6 Over Production 8 0.8
7 Inappropriate Processing 4 0.4
Table 1 Waste quisionare result

After being able to identify the waste that occurred on the production floor based on the
questionnaire. Then the next step is to perform production gemba to see the current process and the
results obtained after gemba and according to the results of the questionnaire then the waste that
happens then it can be known if the waste that is owned at least there are two things that are motion
and waiting. After that using root cause analysis with method 5 why to see the root cause of the
problem that happened. After obtaining the value of the waste that occurred in the production process
then made the selection tool to map the appropriate process based on VALSAT. Based on the results
obtained VALSAT the tool used to map this process is using process activity mapping. After see at
the overall activity using process activity mapping the result of process mapping as table 2.
 Activity Time (Hour)
Operation 73933
Transport 93
Inspection 500
Waiting 2.3
Storage 1718
Table 2 Process activity mapping current condition

Fig 2 Current stream map

After seeing the results of the identification of waste then the improvements plan is done by
making a new design to minimize waste waiting and also motion. The steps taken are by improving
the workings by improving operational standards of work with the implementation of tools that can
assist the operator during the process of workmanship. The other improvements is by performing
operations or work assignments that will be done right along the production line to minimize the
accumulation of material between work stations. The other improvements will be made by striking a
balance between the output of each process in the entire production line by way of the preparation of
the production line that has the same processing speed as the demand capacity level and the longest
operating time. And further improvement is by combining the stitching process and also assembling
without passing storage process first.

Time (Hour) Percentage

Activity
Before After Before After
Operation 76533 73933 95.8 95.8
Transport 108 93 0.135 0.135
Inspection 500 500 0.626 0.626
Waiting 3 2.3 0.003 0.003
Storage 2777 1718 3.475 3.475
Table 3 Process activity mapping before and after improvment

Table 3 shows that process improvements can lead to a decrease in operational time to do some
activities. Starting from the operational activities of the working hours needed to meet the demand
can be reduced where this will have a direct impact on the use of resources and the number of workers
required. By giving the improvement plan the result obtained can reduce the operational time which
previously takes 76533 hours after the repair then the operational time can be reduced to 73933 hours.
Transportation time decreased from 108 hours to 93 hours and save decreased from 2777 hours to
1718 hours. In addition, improvement plans also affect the activities of transportation where there is
a reduction in time allocation needs than before. This is caused by the planning of the future state
map fig 3 to remove some activities that are considered a waste that is by combining the stitching
process with the assembling process so that it can decrease the activity of transportation and also the
process of storing.

Fig 3 future stream map

After analyzing the process then the next step by analyzing the cost components that arise
from each activity on the production floor. The current condition price to produce 1 model shoes with
total quantity 60.000 pairs using CMT

Total cost = (material cost + CMT) × Quantity

= (43.353 +31.000) × 60.000

= 4,461,207,515.54

From the design of future state map in addition to analyzing the process then the cost analysis
was conducted to measure the difference in costs generated after making various improvements both
in terms of production process is to minimize waste that occurs by calculating the overall activity so
that the whole process is calculated and use the resources needed as well as changes in the cost of
calculating the cost. Where there is a structural change to calculate the cost of production where
calculation of production cost follow calculation for labor cost, machine, material and cost
management or cost indirect labor. To see detailed cost changes, these costs are transform into the
formulated previously described. Where the calculation system of production cost is calculated by
calculating the cost of materials used, direct labor costs, the cost of machine use and also the cost of
management

Total cost = material cost + labor cost + machine cost + management fee

= 2,601,207,515.54 + 973,018,410.00 + 450,000,000.00 + 81,041,469.45

= 4,075,267,394.99

After process improvements can reduce production costs where the previous cost of producing
60,000 pairs of shoes of the company costs 4,461,207,515 Rupiah after the repair process of the
company can lower the cost to 4,075,267,394 Rupiah or 385,940,120 Rupiah less than the previous
production cost.
Conclusion

1. Waste that exist in the production process is over motion and waiting.
2. The future state map is improved by providing the operator with a place to simplify the process
and also make the improvement plan by doing the balance between processes
3. By giving the improvement plan the result obtained can reduce the operational time which
previously takes 76533 hours to 73933 hours. Transportation from 108 hours to 93 hours and save
decreased from 2777 hours to 1718 hours.
4. Process improvements can lower production costs where the previous cost 4,461,207,515 Rupiah
after the repair process can lower the company's cost to 4,075,267,394 Rupiah or 385,940,120
Rupiah less than the previous production cost.

Reference
[1] Askin, Goldberg; "Design and Analysis of Lean Production System", John Wiley and Sons,
Inc., 2002.
[2] Hines, Peter and Taylor, Davis (2000). Going Lean, Lean Enterprise Research Center Cardiff
Bussiness School,USA.
[3] Nash, Mark and Polling, Seila. (2008). Mapping the Total Value Stream. Taylor and Francis
Group.
[4] Ohno, T. (1988). Toyota Production System. Cambridge: Productivity Press.