Page|1

Assignment – Value Stream Analysis

Guangzhou Baiyun Shoe Factory
Background

Guangzhou Baiyun Shoe Factory, headquartered in Baiyun District of Guangzhou, Peoples’ Republic
of China, is a major manufacturer of popular brand, non-athletic leather shoes for adults. The
company’s shoes are mainly exported and sold in the United States, Europe, the Middle East, Russia,
Southeast Asia, and other countries and regions. Because of sizeable labor and material cost
advantages, the majority of its shoe production takes place in the 100,000 square foot manufacturing
facility in Guangzhou. The organization was established in 1996, and they employ a strong R&D team
and more than 500 employees in manufacturing operations. They have created an excellent reputation
among their global customers through their mission of “Quality and Customer First”.

The non-athletic shoe market has become increasingly fashion conscious resulting in the proliferation
of shoe designs and growing uncertainty in the demand for each shoe style. Guangzhou Baiyun’s senior
management, under the leadership of Kaven Huang, President, has determined that it is necessary to
improve the company’s response to unexpected demand fluctuations by targeting the long order-
todelivery lead times, starting with the total production lead time (TPLT). Consultants had visited the
facility and expressed the opinion that the production lead time could indeed be dramatically reduced
through systematic analysis of the value stream.

The Value Stream Manufacturing System

Guangzhou Baiyun’s factory currently operates at capacity, running a single shift of nine hours per
day, five days per week with a paid 30-minute lunch and two, 15-minute breaks per shift. A schematic
of the value stream is shown in Figure 1, and the detailed value stream map with the production
processes and inventory is exhibited in Figure 2. After the kitting process (described in detail later),
shoes move from process to process in batches of 100 pairs. Each batch is homogeneous – that is, each
pair in a batch is exactly the same style, size, and color. Generally, no two consecutive batches are
identical, and each process is responsible for the quality of its manufacturing (Jidoka).

Raw Warehousing
Order
Material Production Shipping and
Processing
Sourcing Distribution

Figure 1. The Order-to-Delivery Value Stream

 Page|4

Cutting Process

In the Cutting Process, as exhibited in Figure 3, individual leather hides are cut into the component
pieces for the shoe “uppers” – the leather components that comprise the shoe above the sole. Each
pair of shoes requires 12 distinct components – six for the left shoe and six for the right shoe. Each
of three stamping presses in the Cutting Process performs a different set of cutting operations; each
press cuts four of the 12 components.

Cutting Machine 3

Leather Sheets
To Cut Insole

Figure 3. The Cutting Process

For any particular style and size, there are dies or cutting templates that cut the leather into the shape
of a single component. The die on each stamping press must be changed to cut different component
shapes. Therefore, to cut the 4 components for a 100-pair batch, a stamping machine must be setup
or incur a changeover four times. To obtain quality components, the operator cuts one leather sheet
at a time. Setup times (die change) and processing run times (for a single stamping machine plus
loading and unloading) are shown in Table 1.

The Cutting Process works on only one batch at a time. Work on a batch is carried on simultaneously
on all three stamping presses and requires a full-time operator on each press. When all the
components required for the batch have been cut, they are transferred out of the Cutting Process and
work commences on the next batch.

Kitting Process

In the Kitting Process, an “assembly kit” is put together for each batch of shoes; each kit contains
the cut leather pieces (12 components 100 pairs) and most other materials required for assembly
of the 100 pairs in that batch. (A few components used at the Lasting Process are not included; these
 Page|5

are directly supplied to the Lasting Process). The entire kit is moved from process to process, and
within the Stitching and Steaming Processes, in a basket. Each basket is marked with a date and a
unique serial number indicating style, size, and color for purposes of identification and instructions
to material handlers and operators. The rationale for this design was to simplify the material and
information flows within the Guangzhou factory.

The time taken for kitting a batch is about 10 minutes. Except for the batch being worked on, no
inventory is held within the Kitting Process.

Stitching Process

The six components of each left and right shoe upper are stitched together in the Stitching Process.
There are three distinct stitching operations: prefit, join, and ornament. Table 1 shows the number
of workers assigned to each operation and the associated processing times. No setups are required
for the Stitching Process.
 Page|6

The process uses a conveyor system (see Figure 4) designed to allow for a two-way flow of baskets
(kits). A process supervisor is positioned at one end of the conveyors, and the operators and their
sewing machines are located along the length of the conveyors. While an operator stitches the shoes
from one kit, a second kit is kept alongside as inventory. When an operator is finished with a kit, it
is sent back along the conveyor to the supervisor, and the operator then starts working on the second
kit. The supervisor will send the operator another kit as soon as one is available; the kit then becomes
the inventory safety stock for that operator. Because of different times required for different sets of
operations, there may be periods when one or more operators are idle.

Prefit

Join

Figure 4. The Stitching Process

Steaming Process
 Page|7

Shoe uppers are steamed in a large oven for 6 hours to make the leather pliable for the Lasting
Process. Baskets are passed through the oven on a conveyor belt, going in one end and emerging out
the other. The oven has significant excess capacity, so batches never have to wait for space in the
oven.

Lasting Process

In the Lasting Process, the stitched uppers are attached to the sole and the completed shoes are
inspected, packaged, and readied for shipping. (The “last” is a wooden form in the shape of a foot).
In the Lasting Process, shoes are not carried in kits; each kit is separated into individual parts as it
enters the process. The setup time required for each kit (including the time required to separate kits
into individual parts) is negligible.

All operations in the Lasting Process are performed along a conveyor line designed to move at a rate
that matches the operators’ standard work. There are five stations and five operators along the
conveyor (see Table 1 for processing time data). Until all the shoes in a batch have been packed, a
new batch is not placed onto the conveyor.

Inventories

Raw material, finished goods, and work-in-process inventories are maintained in the Guangzhou
factory, as described in Table 2.
 Page|8

NOTE: This case reading is a revised and updated version of the “Stonehaven, Inc.” case reading published by Harvard
Business School Publishing. This case revision is used solely for the purposes of an assignment for students enrolled in
“OPS 460: Designing and Improving Lean Operations”.

ASSIGNMENT QUESTIONS

For the Guangzhou Baiyun Shoe Factory assignment, you must submit your calculations and specific
answers to the questions stated in Parts A and B. The questions in Part C will be discussed during
our class session on the case reading.

PART A

For this part of the analysis, consider each manufacturing process in the Guangzhou factory “in
isolation” – that is, when doing the calculations, imagine for the moment that the rest of the value
stream production system has no impact on the processes you are considering. For the purposes of
these calculations, material-handling time may be assumed to be negligible, and you can ignore
variability in processing times. Please be sure to show your detailed work and state your
assumptions. Note: MLT=Manufacturing Lead Time = CT WIP.

1. For the typical 100-pair batch, what is the daily capacity and manufacturing lead-time within
each of the following processes? (a) Cutting (b) Stitching (c) Lasting

2. If the batch size were reduced to 20 pairs, what would be the daily capacity and MLT within
each of the following processes? (a) Cutting (b) Stitching (c) Lasting

PART B

Now consider the factory as a value stream system, and take into account interactions between the
processes. Please be sure to show your work and state your assumptions.

3. Expand the value stream map to include the individual operations within each process.
Include the inventory and operations (using the process box) and show the Cycle Time (CT),
work-in-process inventory (WIP), and manufacturing lead time (MLT) for each process.

4. Assuming production in 100-pair batches, what is the Guangzhou factory’s daily capacity?

5. What is the total Manufacturing Lead-Time (MLT) for a 100-pair batch?

PART C (These are in-class discussion questions)

 Page|9

6. How would you go about deciding on the appropriate batch size for the Guangzhou factory?
What factors would you consider? How do they interrelate? (This is a conceptual question,
so you do not have to perform any computations)

7. Focus only on your highest priorities for improving the value stream at the Guangzhou
factory (be specific). Explain why they are important? What actions would you recommend?
How would you implement your recommendations?