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Value stream mapping and benefit-cost analysis application for value

visibility of a pilot project on RFID investment integrated to a manual
production control system - A case stud...

Article  in  The International Journal of Advanced Manufacturing Technology · May 2012

DOI: 10.1007/s00170-012-4383-x

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AUTHOR'S PROOF!

Metadata of the article that will be visualized in OnlineFirst

1 Article Title Value stream mapping and benefit–cost analysis application for
v alue v isibility of a pilot proj ect on RFID inv estment integrated
to a manual production control system—a case study
2 Article Sub- Title
3 Article Copyright - Springer-Verlag London Limited 2012
Year (This w ill be the copyright line in the final PDF)
4 Journal Name The International Journal of Advanced Manufacturing Technology
5 Family Name Tabanli
6 Particle
7 Given Name R. Murat
8 Suffix
Corresponding
9 Organization Istanbul Technical University
Author
10 Division Manufacturing Engineering Department, Faculty
of Mechanical Engineering
11 Address Istanbul, Turkey
12 e-mail tabanlir@itu.edu.tr
13 Family Name Ertay
14 Particle
15 Given Name Tij en
16 Suffix
Author
17 Organization Istanbul Technical University
18 Division Faculty of Management
19 Address Istanbul, Turkey
20 e-mail
21 Received 20 April 2012
22 Schedule Revised
23 Accepted 10 July 2012
24 Abstract The importance of responding to customer demand to stay
competitive in the global market and to increase market share has
been increasing for companies lately. Due to demand fluctuations
and difficulties to estimate it, gradually it becomes more difficult to
sustain profitability and to fulfill demand. The company’s main
problem is how to cut costs while producing small numbers of many
types of products. For that reason, cost-conscious companies have
AUTHOR'S PROOF!

focused on monitoring and controlling manufacturing and supplier-

related activities by means of manual/electronic control devices in
order to enhance the efficiency in the supply chain management
and logistics process. This paper presents a case study about
deployment of radio frequency identification (RFID)
technology-based electronic Kanban system in an automotive
industry supplier firm. In this project, by deploying RFID technology
in a pilot area within the current manual Kanban system of this
company, it has been possible to measure the true value added
time in the production process. Value stream mapping is used to
exhibit the mandatory requirements of RFID technology
deployment in the shop floor. As a part of the study, we generate a
current value stream map and a future value stream map, which
contain the recommended revisions for the automotive supplier
company. To evaluate the return of the investment, performance
metrics were established and benefit–cost analysis is made.
Obviously, future gains will include better inventory management
to reduce the inventory levels within the production system.
25 Keywords RFID - Electronic Kanban - Benefit–cost analysis - Automotive
separated by ' - ' supplier firm - Value stream mapping
26 Foot note
information
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Int J Adv Manuf Technol

DOI 10.1007/s00170-012-4383-x
1
3 ORIGINAL ARTICLE
2

4 Value stream mapping and benefit–cost analysis application

5 for value visibility of a pilot project on RFID investment
6 integrated to a manual production control system—
7 a case study
9 R. Murat Tabanli & Tijen Ertay

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10
11 Received: 20 April 2012 / Accepted: 10 July 2012

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12 # Springer-Verlag London Limited 2012

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13
14 Abstract The importance of responding to customer de- include better inventory management to reduce the invento- 40

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15 mand to stay competitive in the global market and to in- ry levels within the production system. 41
16 crease market share has been increasing for companies
17 lately. Due to demand fluctuations and difficulties to esti- Keywords RFID . Electronic Kanban . Benefit–cost
D 42
18 mate it, gradually it becomes more difficult to sustain prof- analysis . Automotive supplier firm . Value stream mapping 43
19
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itability and to fulfill demand. The company’s main problem
20 is how to cut costs while producing small numbers of many
21 types of products. For that reason, cost-conscious compa-
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22 nies have focused on monitoring and controlling manufac- 1 Introduction 44

23 turing and supplier-related activities by means of manual/
24 electronic control devices in order to enhance the efficiency The early usage of the radio frequency identification (RFID) 45
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25 in the supply chain management and logistics process. This systems go back to 1940s, in early military identification sys- 46
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26 paper presents a case study about deployment of radio tems. Harry Stokcman’s work has been considered as the initial 47
27 frequency identification (RFID) technology-based electron- foresight for the potential of the RFID systems. The articles of 48
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28 ic Kanban system in an automotive industry supplier firm. D.B. Harris and F.L. Vernon followed this work. These articles 49
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29 In this project, by deploying RFID technology in a pilot area pointed out that using radio signals, one can obtain definable, 50
30 measurable, and differentiable return signals [1, 2]. 51
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within the current manual Kanban system of this company,

31 it has been possible to measure the true value added time in The term “RFID” is used to define the system that uses 52
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32 the production process. Value stream mapping is used to radio waves to convey the identification information of an 53
33 exhibit the mandatory requirements of RFID technology object or personal ID (in a singular serial number), wire- 54
34 deployment in the shop floor. As a part of the study, we lessly. It is classified within the major automatic identifica- 55
35 generate a current value stream map and a future value tion technologies. 56
36 stream map, which contain the recommended revisions for RFID system consists of three basic components, tag, 57
37 the automotive supplier company. To evaluate the return of reader, and relevant infrastructure. Tags bear identification 58
38 the investment, performance metrics were established and information specific to the product that it is attached to; 59
39 benefit–cost analysis is made. Obviously, future gains will reader transmits and receives radio waves to read the infor- 60
mation stored in the tag. The infrastructure processes the 61
data obtained from the system. 62
R. M. Tabanli (*)
RFID technology is a system, in which data interchange 63
Manufacturing Engineering Department,
Faculty of Mechanical Engineering, Istanbul Technical University, between tag and reader happens by means of radio waves. 64
Istanbul, Turkey Based on cost reductions and developments in semiconductor 65
e-mail: tabanlir@itu.edu.tr technology, the importance of RFID systems within the auto- 66
mated identification systems has increased for firms lately. 67
T. Ertay
Faculty of Management, Istanbul Technical University, RFID systems require high initial investment and it is not 68
Istanbul, Turkey clear what percentage of the investment will return as a 69
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70 value in the beginning. Additionally, RFID investments bear operational efficiency in the area of RFID systems develop- 123
71 high economic and technical uncertainty. Considering all ment. Lee and Lee [7] presented a supply chain RFID 124
72 these characteristics of RFID systems, it is important to investment evaluation model to understand RFID value 125
73 consider a suitable benefit–cost model in evaluating of creation, measurement, and ways to maximize the value of 126
74 RFID investment project. RFID technology. In order to fill a gap in the current 127
75 RFID has been successfully used in transportation and descriptive studies, their study provides a normative invest- 128
76 manufacturing industries, and its use is growing rapidly as ment evaluation model for supply chain RFID technologies, 129
77 costs come down and benefits begin to be recognized. captures intangible benefits and integrate them into the 130
78 Investigations on this subject indicate that, to obtain accu- objective function, and investigates the relationship between 131
79 rate inventory information in real time, it is necessary for model input parameters (e.g., demand, RFID cost function), 132
80 RFID systems to be applied together with Kanban system. decision variables (e.g., RFID investment level), and result 133
81 This way time losses due to manual handling of the Kanbans variables (e.g., total cost savings and benefits). Zhou et al. 134
82 can be prevented. [8] presented a suggestion to construct an RFID system for 135
83 In spite of decreasing initial investment costs for RFID internal production management. Saygin [9] developed a 136

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84 lately, investment value for this technology is still high. model to evaluate the cost reductions that can be achieved 137
85 Comprehensive evaluation analysis and the required process using RFID systems in inventory management. 138

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86 changes should be considered before making a decision to Though some of these papers include case studies, most 139

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87 implement RFID technology. Although there are short cases research on this subject is still on theoretical basis, hence 140
88 in trade magazines and white papers from RFID software providing a real-life case study is important to visualize the 141

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89 and hardware vendors’ websites, which are especially in benefits of RFID implementations in manufacturing field. In 142
90 promotional manner, there are only few studies on success- this study, a pilot project management study has been real- 143
91 ful real-life implementation of an RFID system in the liter- ized to apply RFID technology in a production system with
D 144
92 ature. Such applications aim to surmount the encountered manual control-based Kanban information system. After 145Q1
93 146
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drawbacks in manual control system. However, before pass- that, the requirements for the implementation of RFID sys-
94 ing the complete system establishment, in first phase, hybrid tem are determined. The advantages obtained in the system 147
95 system applications as a pilot project are important for real- become visible by using value stream mapping (VSM) tool. 148
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96 life implementation. Time savings in value adding processes and inventory 149
97 Although most of the early RFID research discusses reductions are possible expected improvements by means 150
98 technical issues or descriptive framework, more recent re- of RFID technology’s accurate measurements. The realized 151
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99 search considers RFID adoption and benefits using analyt- project management stages are defined and benefit–cost 152
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100 ical modeling or data analysis. For example, Ngai et al. [3] model is considered for RFID investment in an automotive 153
101 considered development of an RFID-based traceability sys- supplier firm. Hence, a real customer-facing RFID diffusion/ 154
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102 tem in an aircraft supplier company in Hong Kong. Delen et deployment project has been considered. Since RFID tech- 155
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103 al. [4] demonstrated that RFID data can provide information nology will be used as a mechanism by which inventory 156
104 visibility and they identified several performance metrics and/or materials management can be monitored and con- 157
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105 that can be computed from the RFID observations and trolled more efficiently, this structure will be an important 158
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106 discussed how these measures can assist in improving lo- component for managing logistics through improved inven- 159
107 gistical performance at micro supply chain level of opera- tory visibility, as well as through more extensive and lower 160
108 tions between distribution centers and retail stores and cost data collection. By means of this pilot project applica- 161
109 presented how such information can be valuable to both tion, the firm can access to information such as which items 162
110 retailer and supplier. Kim and Sohn [5] proposed a cost of and how many of them are on the pallet or the box. Estab- 163
111 ownership model for RFID logistic system applicable to u- lishment of such information system’s benefits include an 164
112 city in order to support the decision making process of increase in the quantity of data produced at the time of a 165
113 infrastructure construction. They applied the proposed mod- transaction, as well as higher quality of information, since 166
114 el to a case of RFID logistic system by establishing potential the information is more precise at the time of gathering and 167
115 scenarios. They evaluated the expected profit from the con- can be validated and transmitted to other operational sys- 168
116 struction of RFID logistics system for each scenario and tems without delay. In addition, it is possible to monitor and 169
117 conducted a sensitivity analysis to consider the effect of control inventory more efficiently. It can be said that the 170
118 various parameter settings. The aim of that study was to RFID system is to be used in a variety of different ways to 171
119 help companies in selecting the most beneficial and most accomplish the re-engineering of delivery activities. For 172
120 profitable RFID logistics system. Ngai et al. [6] described example, the system can be implemented to accommodate 173
121 the design and development of RFID-based sushi manage- routine activities on account of the fact that human capital 174
122 ment system in a conveyor belt sushi restaurant to enhance can be set free to perform ordinary tasks (in other words, 175
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176 non-value added tasks) realized to service a customer. This added but necessary, and value added activities. First, non- 225
177 establishment is equivalent to more flexible capacity usage value added activities should be removed from the system. 226
178 since employees are assigned to value added tasks, and Removing the wastes of non-value added but necessary 227
179 better forecasts of both the amount and type of customer activities requires radical changes in the process system. 228
180 demand is established. Project applications similar to that of Lasa et al. [14] consider the value stream mapping in five 229
181 this study indicate the potential of RFID to enable supply steps: selection of product family, the current state mapping, 230
182 chain transformation. Because of the growing interests in the future state mapping, the definition the working plan, 231
183 RFID investments by managers, researchers need to develop and putting this plan into practice. In the current state 232
184 theories and measurement tools that will help managers apply mapping, for selected product family, the data of the infor- 233
185 knowledge gained from the research to make a judicious mation and physical flows are determined. Information flow 234
186 RFID investment decision and to enhance the RFID value. includes how the selling forecast information comes to the 235
organization unit and how the selling forecast is delivered to 236
the suppliers. Physical flows are related to changes made in 237
187 2 Value stream mapping the raw materials for procurement of the finished product. 238

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Information about delivery times, amount of raw materials, 239
188 packaging time, operation time, machine failure time, stor- 240

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VSM is a tool used to create a material and information flow
189 map of a product or process [10]. This powerful tool allows age points, set up times, cycle times for operators, number 241

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190 companies to map the flow of products in the back door as raw of operators, working time in a day, etc. are collected from 242
191 material, through all manufacturing process steps and off the the current system. In order to establish the relationship 243

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192 loading dock as finished product. This is the value stream which between information flow and physical flow, it should be 244
193 is a collection of all actions (value added as well as non-value known how the orders pass through the process. After the 245
194 added) made on a product or a group of products (product current state map is drawn, the future state map will be
D 246
195 family) using the same resources through the main flows, drawn. In order to draw the future state map, the questions 247
248
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196 starting with raw material and ending with the customer [11]. indicated in Table 1 are answered.
197 At first, current state map is made, which shows the In order to realize the future state mapping, a working 249
198 present condition of value stream. Then, a future state map plan should be done on the different subjects from the 250
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199 is drawn, which shows us where we are going and how we improvements of the current facility layout arrangement to 251
200 are going to get there. Based on the value stream map, we the improvements in the process. 252
201 can visualize the streamline of the work processes and
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202 reevaluate it to cut lead times and reduce operating costs.

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203 Hence, VSM creates a common basis for the production 3 RFID project management stages 253
204
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process, thus facilitating more decisions that will improve

205 the value stream. By means of this tool, the obtained bene- 3.1 Strategic evaluation 254
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206 fits are summarized as follows: [12]

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207 & Seeing the flow of our value stream and wastes in the flow In strategic evaluating stage, first, it is important to know the 255
208 & procured benefits of the RFID-based Kanban system to be 256
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Viewing all products from a system perspective

209 & Drawing both material and information flows of our
210 value stream
Table 1 Questions for the future state map t1:1
211 & Prioritizing activities needed to achieve the future state.
Future state questions t1:2
212 So far, it can be said that the industrial machinery and
213 equipment manufacturing companies can reduce operating Basic 1. What will be the tact time? t1:3
214 overhead costs by 25 %, increase throughput by 50 %, and 2. Will the production of the goods be made for the finished t1:4
215 save a projected $32.000 in paperwork each year. The goods supermarket or for the direct shipping point?
216 activities adding to the value are the sum of whole processes 3. Which points within the production flow will be able t1:5
217 made for the finished product. Painting, assembly, and pro- to perform continuous flow production?
218 duction processes can be considered as examples for the 4. Will additional supermarkets be required to establish t1:6
219 value added processes [13]. The aim of using a VSM tool is pull system in the value stream?
220 to determine and remove all of the wastes in production 5. Which is the most critical point to schedule in the t1:7
value stream?
221 processes as overproduction, waiting, transporting, unnec-
Heijunka 6. How will the product mix in the production stage t1:8
222 essary moving times, unnecessary stock, and defective prod- be determined?
223 ucts. In general, the activities in production processes can be Kaizen 7. Which processes require improvement? t1:9
224 categorized into three groups as non-value added, non-value
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257 established. Kouri et al. [15] presented this production con- 3.2 Process analysis and evaluation 310
258 trol system’s benefits and the required components. The first
259 condition of electronic Kanban system establishment is to In this stage, the product group is determined for pilot 311
260 use manual operating Kanban system in the current system. project related to being established RFID system. First, 312
261 It is not recommended for operating system to establish the VSM that related the current state for this product group 313
262 electronic Kanban system directly. is prepared to determine wastes in production area. 314
263 The intensity in card circulation occurs in system According to the related types of waste determined in 315
264 depending on the fact that the number of Kanban is the current state mapping, it should be decided what 316
265 increased when production speed is increased and order sort of preventive measures and changes in process line 317
266 quantity is decreased. This situation causes the loss of are to be made. Hence, mapping of the value stream in 318
267 Kanban cards in the system. One of the most important future is possible due to the fact that the changes 319
268 benefits of electronic Kanban system is that it prevents determined in system are made. As an example, Ertay 320
269 such loss and unnecessary Kanban moving times. In addi- et al. [19] presented a case study to achieve the lean 321
270 tion, supplier chain visibility increases owing to the fact that value stream implementation in one of the product fam- 322

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271 real-time information is obtained from the system. Junior and ilies constituted according to the cellular manufacturing 323
272 Filho [16] indicated that electronic Kanban is to be the most system in a manufacturing company, which produces 324

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273 productive one because of the fact that Kanban system’s various kinds of boring tools. Workflow analysis per- 325

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274 changing process will gain speed when the new products are formed by simulation study for converting to the cellu- 326
275 introduced to the system. lar system in a manufacturing system in order to eliminate the 327

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276 Especially, when there are a lot of Kanbans in the negative effects of functional layout on the system perfor- 328
277 system and product variety is very high, it is more mance is examined in Barla and Ertay [20]. As another case 329
278 appropriate using electronic Kanban in order to procure study, it can be given with the realized pilot project application
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279 just in time in high customer demand rate. For that in a sub-contractor of the automotive industry for converting 331
280 332
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reason, the manager should select the location that they to the cellular manufacturing system from conventional man-
281 can benefit from RFID technology in the best manner, ufacturing system in Ertay [21]. 333
282 examining the work processes [17]. In addition to applications in case studies above, in 334
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283 There are a lot of methods in calculating the revenue of the process analysis and evaluation, in order to surmount the 335
284 investment for the decision to establish a Kanban system- operation constraints like process area and capacity, the 336
285 based RFID. The important point in this subject is to use the environmental constraints like heat, humidity, and the elec- 337
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286 same methods for comparing this investment with the one tromagnetic area and network substructure should be con- 338
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287 made in past [18]. sidered. Especially, constraints related to the RFID reading 339
288 In order to estimate such a project’s investment val- regions are very important. Interrogation zones of readers 340
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289 ue, it is required to know the costs and benefits of the may interfere with one another due to overlapping. Interfer- 341
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290 investments. The benefits obtained by the investments- ence detected by one reader and caused by another reader is 342
291 based RFID can be split into two parts. The first one is referred to as a reader collision. For that reason, selecting the 343
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292 related to the production such as the decrease in labor right parameters to construct a suitable and robust RFID 344
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293 force and in stock costs. The second one is also related establishment and surmount the reading collision is a key 345
294 to the creating of value such as the increase in customer point to make an effective deployment project [22]. 346
295 loyalty, satisfaction, and income. In addition, the costs After the realized investigation, the appropriate hardware 347
296 are possible to be split into two parts. The first part is and software substructure should be determined. Consider- 348
297 related to the fixed costs. These costs include hardware, ing the processes for this reason, the questions below should 349
298 software, and maintenance costs. Hardware cost is relat- be answered related to the application of the project. 350
299 ed to tags, reader, antenna, mainframe, and components
& How should be the dimensions and shapes of tags? 351
300 required for network system. The general software costs
& Is a special protection required toward the environmen- 352
301 constitute the interface program cost of the established
tal conditions? 353
302 system and the other program cost to provide the inte-
303 gration with ERP system. These software programs are & Will there be a comprehensive reading in the process? 354
304 to be provided by the firms, which are RFID system & What should be the reading interval? 355
305 founder. Maintenance costs include also the training of & What will be the speed of product movement during the 356
reading? 357
306 the related personnel and system support activities.
307 When costs and benefits indicated above are considered, & Which frequency interval must be used in the system? 358
308 the back return of the project investment can be & Where on palettes will the tags be placed? 359
309 estimated. & Are the tags to be passive, active, or semiactive? 360
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361 & Will stationary reading terminals be used or portable investment are collected in two groups: the decrease of 407
362 manual terminals? cost and the customer satisfaction. In this situation, the 408
363 & Will the reading antenna be placed in a stationary place sum procured benefit, SPB, can be obtained in Eq. (1) 409
364 or on the forklifts or the other vehicles? below. 410

365 According to the answers of questions above, the alter- SPB ¼ ΔCL þ ΔCS þ ΔG ð1Þ Q7
366 natives on the substructures of the hardware and software
412
411
367 can be determined. Hence, required data for benefit–cost
368 analysis can be gathered. ΔCL Earning in labor force 414
415
ΔCS Decrease in the stock costs 416
417
369 3.3 Determination of performance metrics ΔG Increase in incomes 418
419
ΔCL 0T′×CL ×Ri 421
420
370 After the determination of the application place of RFID, ΔCs 0T′×Cs ×Rs 423
422
371 process diagrams are constituted. According to these pro- T′ Increase in demand 424
425
372 cess diagrams, the critical performance metrics are deter- CL Unit labor cost 426
427

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373 mined. At the same time, the current state values of these RL Rate of decrease in cost of labor force 428
429

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374 critical performances are calculated. Such metrics are deter- Cs Unit stock cost 430
431
375 Rs Rate of decrease in cost of stock 432
433

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mined as: Kanban loss rate, planning technician’s time loss,
376 time to print new Kanban, and time spent for stock enumer- Ce Cost of tag 434
435

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377 ation. Thus, benefits with respect to these metrics can be 436
Net present value (NPV) of RFID project can be evalu- 437
378 estimated based on the time savings between the current ated as follows: 438
379 state and the state after the improvements.

NPV ¼  Cd þ Cy þ Ch þ Σ ½ðF  ðCe  T0 ÞÞ=ð1 þ iÞn 
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380 3.4 Risk analysis and appraising
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439Q2
440
381 In order to establish the RFID technology successfully, the Increase of demand and rate of i are determined based on 441
442
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382 fact that the firms need to be aware of the risk factors related results of own studies of firms. The procured benefits by
383 to this technology is important. The highest ranked risk firms have been considered in different manners in literature 443
384 factors are the deficiency of information, the technical com- reviews. These benefits show the differences from one firm 444
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385 plexity, the technical indefiniteness, and data reliability. to the other or from a considered application to the other. 445
Basic principle is to measure the benefits in the direction of 446
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386 Research shows that the risk factors related to RFID tech-
387 nology can be gathered in two main groups as managerial initially aimed project goals. 447
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388 and technical ones [23].

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389 In order to raise the investment value of RFID technolo- 3.6 System integration 448
390 gy, organizational suitability of this technology to the firm
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391 should be considered. Critical elements related to the orga- According to the determined aims, the performance indica- 449
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392 nizational suitability can be considered in three main tors, and benefit–cost analysis, the system integration 450
393 groups. These are process, system, and data appropriateness. should be realized and the whole software, hardware, and 451
394 The less the organizational suitability, the bigger the mana- network system foundations be established to complete the 452
395 gerial risk. The organizational suitability is rather dependant required configuration. Later, personnel to use this system 453
396 on the process and data appropriateness. In this situation, in should be trained. 454
397 order to decrease the managerial risk, the firms should be
398 aware of the technological risks and determine correct needs 3.7 Test and pilot application 455
399 of the firm.
The most important factor in real-time operating of an RFID 456
400 3.5 Benefit–cost analysis system is high rate of accurate data reading. For that reason, 457
in realizing the correct design, the test stage bears big 458
401 Quantitative and qualitative factors need to be used to de- importance. Due to the fact that the reception and transmis- 459
402 termine the real savings in evaluating RFID investments. sion of data in RFID systems might be affected by param- 460
403 Since there are many such factors, the evaluation of RFID eters such as materials and construction, due to the 461
404 investments is traditionally difficult. possibility for RFID waves to be absorbed by these, it is 462
405 The fixed costs are considered as hardware (Cd), software rather difficult to simulate different possibilities for a spe- 463
406 (Cy), and service (Ch) costs. The benefits of RFID technology cific application. Hence, the general tendency is to select 464
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465 proper RFID elements and test it on the application area. Recently, in order to respond to the challenges from the global 493
466 Amendments will be made in the system, if problems are market, the firm has started to carry out their production 494
467 encountered after commissioning of the equipment. system (PS) in production processes. 495
By means of this system, the firm has been the leader 496
among suppliers of automotive sector throughout the world. 497
468 3.8 Monitoring and control
This production system’s general view is shown in Fig. 1. 498
As shown in PS, the foundation of the house consists of 499
469 Continuous monitoring of the system is required to respond
five elements. These elements are related to team work, 5S, 500
470 quickly in situations where a problem is confronted. A
application of standards, total productive management and 501
471 proper IT substructure is required to enable this. The fact
prevention of wastes. 502
472 that personnel who put RFID project into practice is trained
The house consists of three columns, which are just-in- 503
473 and participated is very important for the system protection
time production, participation of the workers, and quality 504
474 and to carry on the improvements.
concept. Each column includes sub-components as shown in 505
Fig. 1. The roof of house is related to the aimed profitable 506
475

F
4 An application in automotive industry level, competing with rivals and the customer satisfaction. 507
The factory of the firm in Turkey is currently supplying 508

O
476 4.1 Current state of system to major domestic automobile factories in Turkey, as well as 509

O
to European producers. A couple of years ago, the company 510
477 The subject company is an international automobile supplier was also awarded additional contracts by Renault and Ford 511

PR
478 firm which, after a merger with a similar company in 1997, for new vehicles, which triggered the investment in the new 512
479 reached to $3 billion sales in 1997. In order to sustain the production facility. The factory started in Turkey in 1993 by 513
480 growth of the company, the firm purchased various other firms forming a 50/50 joint venture. 514
481 and transformed into a firm as the producer of integrated
D
482 automotive safety system with the selling income of $6.8
TE
483 billion. The firm aims to be the leader of the technology with 4.2 Evaluation of production control system in firm 515
484 13 units of technical service and 21 areas of collision tests.
EC

485 Within the automobile passenger safety market, the firm The firm uses Kanban system in production lines by means 516
486 has a market share of 28 % in front airbag, 27 % in side airbag, of application of PS. Kanban system is used between pro- 517
487 27 % in safety belt, and 18 % in electronic parts. Seventy-five duction cells and production planning department, in addi- 518
R

488 percent of the firm’s production is exported to the European tion, between the inner store and logistics firm. 519
R

489 Market. In the European Market, the firm has 17 % share in When Kanban rotation between logistics firm and the 520
490 the safety belt, 6 % share in the air bag, and 10 % share in the inner store is considered, the supplier products, on which 521
O

491 steering wheel market. The share of firm related to these Kanban cards are attached, being gathered in logistics firm, 522
C

492 product groups in Turkish market attains to the rate of 52 %. are transported to the firm. The products coming with 523
N

Profit
U

Competition
Customer Satisfaction
Firm Employees

Customer Society

EMPLOYEE
JUST IN TIME QUALITY FIRST
PARTICIPATION

Balancing & Capacity Safety & Ergonomy Quality Guarantee

Continuous Flow
Flexibility & Motivtion Quality Methods
Pull System
Appropriateness for
Standard
Tact Time
Continuous Improvement
Delivering Frequently Six Sigma

Line Arrangement Process & Conclusion

WASTE TOTAL PRODUCTIVE

TEAM WORK 5S STANDARDS
PREVENTION MAINTANANCE

Fig. 1 Production system of the firm (PS)

AUTHOR'S PROOF! JrnlID 170_ArtID 4383_Proof# 1 - 19/07/2012

Int J Adv Manuf Technol

524 Kanban to the firm are delivered at the storage area. Kan- production planning department and the production cells. 575
525 bans belonging to the products being pulled from the store The fact that this pilot project can procure real data strength- 576
526 according to periodic demand are accumulated in empty ens the possibility for expanded investment projects in the 577
527 boxes. Sequence of Kanbans accumulated in empty boxes future. For that reason, in pilot project study, it is thought to 578
528 indicates the kind of products to be brought by logistics be more suitable to select one product family or a group 579
529 firm. The data obtained by Kanban card are sent to the among the current product families. In order to establish 580
530 logistics firm by means of email. RFID-based electronic Kanban system, the new established 581
531 When the rotation between production cells and production belt grabber production line has been selected to constitute 582
532 planning department is considered, the first setup Kanban is value stream mapping related to the current state. Based on 583
533 sent to production cells to prepare the product pre-procedure customer demand information and production transfer lot 584
534 according to the production plan. After the pre-procedure’s size, the box size has been determined as 100 units to reduce 585
535 completion, the product order Kanbans related to the product RFID tag cost for each product unit. 586
536 lot size are put into use. Each production cell realizes the Another reason to select this product line is the fact that 587
537 production according to the coming order Kanbans. The com- this product line satisfies the physical conditions related to 588

F
538 pleted products are put in empty boxes and the product order the RFID application. As will be seen in factory layout, this 589
539 Kanbans are attached to the relevant filled boxes. Then, the line is somewhat at the outer periphery compared to the 590

O
540 filled boxes with the product order Kanbans are sent to the other lines, and it will have the least reading problems due 591

O
541 storage every 45 min by means of transportation vehicles. This to reflection of the RFID waves. 592
542 cycle time with 45 min is classified as milk-run system. When

PR
543 the filled boxes accumulating in the store are attained to the
4.3 Process analysis and evaluation 593
544 dispatching numbers of goods, the outside logistic activities are
545 allowed to begin. At this stage, the production ordering Kan-
In a Belt-in-Seat (BIS) system, the shoulder belt is attached
D 594
546 bans depart from the filled boxes and these Kanbans are placed
to the backrest of the seat instead of the B-pillar between the 595
547
TE
in Heijunka Box. Especially, in inner logistics activities, some
doors. This position allows the shoulder belt to better wrap 596
548 Kanban card losses are encountered due to the nature of the
around the occupant’s body, thereby increasing the efficien- 597
549 manual operating system. In addition, records of both work-in
598
EC

cy of the belt system. In rollover accidents, it also contrib-

550 process and the finished products in the store are not properly
utes to keep the distance between the head and the roof. 599
551 kept and monthly rate of loss in Kanban cards is approximately
Moreover, the BIS system is very convenient in the case of 600
552 5 %. During this process, at least one process engineer, one
R

removable seats or flexible arrangements. Cellular produc- 601

553 planning technician, and one operator are busy searching for the
tion related to the belt grabber production line in BIS system 602
R

554 lost cards, hence labor force and time losses come into exis-
consists of five successive operations as shown in Fig. 2. 603
555 tence. In order to surmount these problems in the system, RFID-
O

The belt grabber production starts by sewing of cloths in 604

556 based electronic Kanban system is projected. The advantages of
two equal lengths between the lock mechanism and the 605
C

557 this electronic system are as follows:

automotive floor in ground. Then, the required plastic main 606
N

part for the mechanism assembly is joined by sewing with 607

558 & To eliminate monthly average 5 % loss, hence provide
U

559 advantage of time and labor force

560 & To save the capacity of the planning technician’s work-
561 ing time
562 & To save labor force and working time required to print
563 new card
564 & To save labor force and working time losses caused by
565 stock enumeration
566 & To answer speedy and efficiently to the demand fluctua-
567 tions thanks to the fact that real-time data can be
568 recorded
569 & To provide reliable data required for the improvement of
570 stock levels
571 & To prevent the problems arising from human factors
572 handling the manual Kanban system

573 When the above indicated matters are considered, RFID

574 system has been decided to be established between the Fig. 2 The belt grabber production cell
AUTHOR'S PROOF!
JrnlID 170_ArtID 4383_Proof# 1 - 19/07/2012

Int J Adv Manuf Technol

608 the rounded cloth. In the next step, the lock mechanism is However, in the future state foresight, this quality control 645
609 placed to the plastic main part; the other plastic cover is unit is not considered. The inspected products are sent to 646
610 welded on the lock mechanism. In the last step, this mech- packaging area and then dispatching area. In the future state, 647
611 anism is sent to the next station for riveting. In this step, in the transportation between packaging area and dispatching 648
612 order to screw this mechanism to the automotive floor, sheet area is eliminated by combining these two areas. In Figs. 4 649
613 metal is riveted on the mechanism. The finished product is and 5, the facility layout and value stream mapping are 650
614 shown in Fig. 3. shown according to the current state arrangement. As shown 651
615 Process times related to work stations within the cell are in the figures, the flow way of the product family is very 652
616 given below. long which makes the lead time of the product family very 653
high. 654
617 & Straight Sewing, 12 s
618 & E sewing, 28 s (two stations)
4.5 The belt grabber future state 655
619 & Mechanism assembly, 25 s (two stations)
620 & Turning table, 9 s
In order to be able to deduce value stream map for future 656
621 & Riveting, 12 s

F
state, we first aimed to determine and reduce the wastes in 657
622 For each product, packaging time is 1.2 s and the total the current state. In the current state, the determined daily 658

O
623 production time is 60.7 s. production lot size as 800 units is recalculated. It is deter- 659

O
mined that the monthly average demand is to be 37,800 660
units. Considering three shifts in 1 day and 27 working days 661

PR
624 4.4 The belt grabber current state
in 1 month are present, it can be said that the daily produc- 662
625 In general, the outbound logistic activities, in other words, tion quantity is to be 1,400 units. In addition, the storage 663
626 the product components procured by suppliers indicate two time for the outside logistic activity is reduced to two daily
D 664
627 weekly orders and the daily production is nearly 800 units. demands. This indicates 2,800 units. Another study is relat- 665
666
TE
628 The storage capacity is 3,000 units. For that reason, the ed to the stock holding in production area. First of the stock
629 inventory days of supply is 3.75 days. However, the daily holding point is the starting point of production area in the 667
630 800-unit production is not enough to meet the daily demand. outside of the main store. This stock holding point is elim- 668
EC

631 The products coming from the suppliers are delivered four inated and instead of that, a supermarket is established to 669
632 times in a day. Logistics company of the firm provides the prevent the demand fluctuations. The supermarket capacity 670
633 is 700 units. At the beginning and the end of the production 671
R

product delivery. The coming products are stored in shelves.

634 The following delivery process of the logistics firm is to be cell, there are two filled boxes, in other words, 200 units. 672
R

635 realized according to the empty boxes with the ordering When one box is pulled, the other box is held in reserve. The 673
second supermarket is established after the production line. 674
O

636 Kanban in store. The empty boxes appear in the main store
637 when products in boxes are pulled by the production cell. The capacity of this supermarket is also 700 units. Quality 675
C

638 The pulled products are stored in the inner stock area in the control unit established after the production line is removed 676
because 5,000 units of production have been reached. The 677
N

639 production cell. The storage capacity is 800 units. In up-

640 stream and downstream of the production cell, there is 800- packaging unit and the dispatching unit are combined to 678
U

641 unit stock in order to meet the demand fluctuations. After prevent the unnecessary material transportation activities. In 679
642 conclusion of the five process steps, the finished products addition, some changes are made in the current facility 680
643 are sent to the quality control unit. For the new product, this layout plan. In order to shorten the transportation ways of 681
644 control process is realized once for every 5,000 units. vehicles, product families and relevant production cells 682
were rearranged. Hence, the congestion occurring between 683
the main store and the production cell is prevented. 684
The facility layout plan for future state and the ways of 685
the transportation vehicle in this plan are shown in Fig. 6. 686
Kanban system is established between the production cell 687
and the supermarket located in front of the production cell. 688
According to the coming demand information, the products 689
are pulled by the production cell from the supermarket. 690
RFID technology is to be established between the produc- 691
tion cell and the supermarket, in addition, between the 692
production cell and the production–planning department. 693
Siemens RF 600 system was selected considering the read- 694
Fig. 3 The belt grabber product ing distance, the speed of data transfer, tag price, other 695
 AUTHOR'S PROOF! JrnlID 170_ArtID 4383_Proof# 1 - 19/07/2012

Int J Adv Manuf Technol

Q3 Fig. 4 The current state plan of

facility layout

F
O
O
PR
D
TE
EC
R
R
O
C
N

696 environmental factors (heat, humidity,…etc.), the radio fre- be read by antennas at the shipping and this information will 714
U

697 quency, the data amount in the tag, and the reading and be sent to the production–planning department as well. We 715
698 writing quantities. call this as “manufacturing loop” (Fig. 7, left). 716
699 The new Kanban system is studied as follows: first, one Similarly, Kanban rotation between the supermarket and 717
700 computer and one printer that can print RFID tags are added the production cell is established by means of RFID tech- 718
701 to the production cell. According to the production Kanban nology. To enable this, printed RFID tags are attached to the 719
702 information sent to this computer by the production–plan- existing Kanban cards. This way, same cards, hence tags, 720
703 ning department, RFID tag related to the product is printed can be used continuously within the loop. When a box with 721
704 here. Then, this tag is adhered to the filled box in the end of Kanban is pulled from the supermarket and brought to the 722
705 the production line and the filled box with RFID tag is production cell, the Kanban on the box is placed in the 723
706 dispatched to the main storage by the transportation vehicle. temporary gathering box and this information is sent to both 724
707 By means of the antennas placed on each side of the store the production–planning department and the supermarket by 725
708 door, boxes with finished goods arriving from production a computer. By means of the coming information, part flow 726
709 cell are read. The information on this tag will be read by can be monitored precisely. The pulled products from the 727
710 antenna and this information will immediately be available supermarket indicate their components to be required in the 728
711 at the computer in the production–planning department. following operation. We call this loop “supplier loop” 729
712 While the products depart from the storage for dispatching, (Fig. 7, right). The architecture of this system showing the 730
713 the relevant departure information on the tag in the box will part and information flow are shown in Fig. 7. 731
AUTHOR'S PROOF!
JrnlID 170_ArtID 4383_Proof# 1 - 19/07/2012

Int J Adv Manuf Technol

F
O
O
PR
D
TE
EC
R

Fig. 5 The current state value stream mapping

R

732 In this project, 96-bit EPG Gen 2 type tag and UHF Transportation time of the finished product (TTFP), 15 s 752
O

733 frequency has been selected, which is widely used in Europe Production time (PT) (including the work-in-process 753
734 and Turkey. This selection gives an opportunity for easy waiting time), 60 s 754
C

735 integration when RFID-based store system is established. Set up time (ST), 280 s 755
N

736 Considering the firm’s labor safety and the environmental Standard deviation of product, 835 units 756
737 instructions, adequacy of the data transferring speed has Breakdown time, 315 min 757
U

738 been provided by 6 km/h speed of the vehicles inside the Stoppage time originating from procuring of the materials 758
739 factory. In this new situation, the future state of value stream (STPM), 120 min 759
740 map is shown in Fig. 8.
While the number of Kanban is estimated, the rota- 760
tion (cycle) stock and safety stock are considered. The 761
741 4.6 Determining Kanban quantities rotation (cycle) stock indicates transfer lot sizes based 762
on the holding time of the material processing through- 763
742 The number of Kanbans to be used in the future state value out cycle time. 764Q4
743 stream map between production–planning department and
744 production cell for the belt grabber production can be esti- Number of Kanbans based on cycle time stock ¼
745 mated as follows: ððKanban cycle time  average demandÞ
746 Planned daily production, 37,800/2701,400 units =ðnumber of parts in the box  planned working timeÞÞ
747 Monthly average demand, 37,800 units Kanban cycle time ¼ WTK þ ST þ ðPT  TLSÞ
748 Transfer lot size (TLS; box size), 100 units þTTFP280þ280þð60  100Þ 767
766
765
749 Monthly working days, 27 days þ 15 ¼ 6; 575 s ¼ 109358 min 769
768
750 Number of shifts, three
751 Waiting time of Kanban card (WTK), 280 s
AUTHOR'S PROOF! JrnlID 170_ArtID 4383_Proof# 1 - 19/07/2012

Int J Adv Manuf Technol

Fig. 6 The future state plan of

facility layout

F
O
O
PR
D
TE
EC
R
R
O
C
N

Fig. 7 Structure of the RFID

U

system consisting of
manufacturing (left) and
Production Suppliers
supplier loop (right) Planning
Goods
shipped

Electronic
Kanban

Shipping
RFID Tag Shipped
Printer Supplier
Parts

Finished goods Manufacturing

arrive Info

Kanban with
RFID Tag Supplier Parts
Kanban with
RFID Tag

Storage Manufacturing
Supermarket

Physical movement of objects Data flow through network

RFID Reading Information available

AUTHOR'S PROOF!
JrnlID 170_ArtID 4383_Proof# 1 - 19/07/2012

Int J Adv Manuf Technol

F
O
O
PR
D
TE
EC
R

Fig. 8 The future state value stream mapping

R

770
O

Average demand ¼ monthly demand The planned working time points out 7.6 h when the meal 773
=ðworking day in a month  24 hÞ 774
C

and break time are decreased from eight hourly shift. One hour
771
772 ¼ 37; 800=ð27  24Þ ¼ 58:3 part=h working time corresponds to 57 min planned working time. 775
N

776
778
U

777

Number of Kanbans based on cycle time stock ¼ ðð109:58 min 58:3 part=hÞÞ=ð100 parts  57 min =h ¼ 1:12 ffi 2 KanbansÞ
779
780
781
783
782

Number of Kanbans based on safety stock ¼ the stoppage time originating from procuring of the materials ðSTPMÞ
þ the stoppage time originating from the outside logistic activities

786
784
785 As known, the safety stock is used to constitute buffer for service factor indicates the risk of customer loss originating 791
787 indefiniteness of production appearing owing to the fluctua- from the late delivery of the product to the customer. For 792
788 tions of demand. The number of Kanbans based on safety example, when the rate of service factor is 99 %, the value 793
789 stock is determined through the fact that the standard devi- indicating the inverse of the standard normal cumulative 794
790 ation of product is multiplied by the service factor. The distribution is calculated as 2.33 in Excel Normsinv. 795
 AUTHOR'S PROOF! JrnlID 170_ArtID 4383_Proof# 1 - 19/07/2012

Int J Adv Manuf Technol

800
797
796 Number of Kanbans based on safety stock ¼ ð835  2:33Þ=100 ffi 19:45
798
799 Number of Kanbans based on breakdown time originating from the failureof machine
¼ breakdown time=ðdaily working time  transfer lot sizeÞ ¼ 325=ð24  100Þ ¼ 0:13 unit

802
801
Number of Kanbans based on stoppage time originating from the outside logisticactivities
¼ the stopping time based logistic activities=ðthe daily working time  transfer lot sizeÞ ¼ 120=ð24  100Þ ¼ 0:05

805
803
804 In this situation, the number of Kanban based the safety 4.8 Benefit–cost analysis 831
806 stock can be calculated as 19.63 (19.45+0.13+0.05). This
807 value is rounded to 20. The required number of Kanbans is In this stage, establishment costs of RFID system for future 832

F
808 22 as the number of Kanbans based on the safety stock and state of the belt grabber production line are analyzed. The 833
809 834

O
the rotation (cycle) stock. number of RFID tags and Kanban card as the variable costs
810 In Kanban system to be established between the super- can be determined based on the yearly production amount’s 835

O
811 market and the production cell, the number of Kanbans rate to transfer batch size. Also Kanban system to be estab- 836
812 based both on the cycle time and the safety stock is consid- lished between the production cell and the supermarket can 837

PR
813 ered. Especially, safety Kanban stock is the same with that be determined similarly. 838
814 of the calculated one above. The rotation (cycle) stock can
Monthly demand, 37,800 units 839
815 be also calculated taking into consideration two times of D Transfer batch size, 100 units 840
816 periodical between arriving time of the transportation
Number of Kanbans between the supermarket and the 841
817
TE
vehicles. According to the fact that transportation vehicles
production cell. 21 units 842
818 come into cell in the period of 45 min, the cycle time can be
Number of monthly RFID tags 0 monthly demand/ 843
819 accepted as 90 min.
transfer batch size037,800/1000378 units 844
EC

The number of Kanbans based on cycle time stock Number of RFID tags0378×1204,536 units 845
¼ ðð90 min 58:3 part=hÞ Annual sum of RFID tags 0 annual number of RFID 846
R

=ð100 parts  57 min =hÞÞ ¼ 0:82 ffi 1 tags + number of Kanbans between the supermarket 847
and the production cell04,536+2104,557 units 848
R

822
820
821 In this situation, the number of Kanbans based on the
823 Establishment costs of RFID system for RF 600 with 849
O

cycle time stock and the safety stock can be calculated as 21.
chosen alternatives below are given in Table 3. 850
C

According to the determined performance metrics, the 851

824 monthly benefits can be calculated as follows. Due to the 852
N

4.7 Implication on the performance metrics

fact that the lost cards are searched in the process for the 853
U

825 In order to determine the benefits of RFID-based electronic current state, at least one process engineer, one planning 854
826 Kanban system for the firm, to understand whether the technician, and one operator are busy with this subject. The 855
827 project is successful, and to calculate the return of RFID hourly cost of these labor forces are respectively 19.5, 11.5, 856
828 project investments, some performance metrics were con- and 6.5 €. The average spent time for each labor force type 857
829 sidered. The considered performance metrics and expected
830 project outcomes are shown in Table 2 Table 3 RFID establishment costs t3:1

Product Unit Unit cost Cost t3:2

t2:1 Table 2 Performance metrics and expected outcomes Tag RF 630L 4,557 0.48 € 2,187.36 € t3:3
Reader RF 630R 3 2,320 € 6,960 € t3:4
t2:2 Performance metric Expected outcome Antenna RF 660A 5 367 € 1,835 € t3:5
RF Manager Software 1 2,900 € 2,900 € t3:6
t2:3 Rate of Kanban loss Reduction from 5 % to nill
Barkod Printer (Toshiba) 1 2,000 € 2,000 € t3:7
t2:4 Kanban carrying and monitoring 100 % saving
time realized by planning technician Computer 2 500 € 1,000 € t3:8
t2:5 Time to print the new Kanban Reduction from 30 to 2 min Manuel Terminal 1 1,000 € 1,000 € t3:9
t2:6 Time spent for stock enumeration 100 % saving Total 17,882.36 € t3:10
 AUTHOR'S PROOF!
JrnlID 170_ArtID 4383_Proof# 1 - 19/07/2012

Int J Adv Manuf Technol

858 is nearly 10 min. Considering that the rate of lost Kanbans is Monthly cost of planning technician
859 5 % in the current state, the monthly cost of this is as ¼ hourly cost  daily working time  monthly working time
860 follows: ¼ 11:5 €8 h  20 days ¼ 1; 840 €

The total number of Kanbans ¼ 22 þ 21 In this situation, 0.50×1,8400920 € are the monthly 871
869
870
¼ 43 units; the lost number based the lost rate of Kanban savings. 872
¼ 43  0:05 ffi 2 New Kanban printing is required owing to the fact that 873
863 new products enter into the system and specifications of the 874
862
861
The total cost ¼ ð19:5 þ 11:5 þ 6:5 €Þ  2  ð10 min =60Þh current product are changed. The planning technician prints 875
this card. The average card printing has been determined as 876
¼ 12:5 €=month
two times for each 3 days. Monthly number of printed 877
866
864
865 Especially, 50 % of the planning technician’s daily work- cards030 days×number of daily printed Kanbans/the real- 878
867 ing time was spent to monitor the Kanban cards, locate and ized frequency030 days×2/3020 units. When the required 879
868 carry them. time to print the new Kanban is reduced from 30 to 2 min, 880
the monthly realized savings are as follows: 881

F
882
884

O
883
Monthly benefit ¼ saved hours  monthly working time ðin daysÞ  hourly cost ¼ ðð30  2Þ=60Þ

O
h  ð20 days  11:5 €Þ ffi 107:3 €

PR
887
885
886 Total monthly savings are 1039.5 € (12.5+107+920).
888 Total monthly savings according to the performance in- Number of yearly RFID tags ¼ ð37; 800=100Þ  12
889 dices at the future state is summarized in Table 4. D ¼ 4; 536 units
890 The time period to calculate the return of investments is
891 903
902
901
TE
selected as a month.
Cost of yearly RFID tags ¼ 4; 536  0:48 ¼ 2; 177 €
Net present value
906
EC

The return amounts of the investment according to the 904

905
¼ the future time value=ð1 þ discount rateÞn monthly period are given in Table 5. 907
As shown in Table 5, the firm obtains the return of 908
894
892
893 The discount rate is based on risk perceiving in investments
R

investment in the 21th month. The exact time can be calcu- 909
895 of the firm, the capital cost of the firm, and the average rate of
lated as follows: 910
R

896 profit. According to this, the monthly discount rate for the firm
897 is 0.5 %. In the last month of the implementation year, the Daily obtained benefit ¼ obtained benefit in 21th month=30 days
O

898 required RFID tag cost is added to the calculations. While this ¼ 747:1 €=30 days ¼ 24:9 €
C

899 cost is calculated, it is accepted that the consumption of the

900 yearly RFID tags will be the same. Investment balance in the 20th month is −189.3 €
N

912
911
913
915
U

914
Number of required days ¼ Investment balance in 20th month=daily obtained benefit
¼ 189:3 €=24:9 € ffi 7:6 days

916
917
918 When the first investment cost is to be 17,882. 4 € and the 5 Conclusions and remarks 921
919 monthly benefit is to be 1,039.8 €, the return time of invest-
920 ment will be 20 months and 8 days. RFID-based electronic Kanban system eliminates the nega- 922
tive influences that the traditional Kanban system has con- 923
stituted in production control system. The negative effects 924
t4:1 Table 4 Total monthly savings
related to the fact that the Kanban cards are lost were 925
t4:2 Performance indices Benefits surmounted and efficient solutions are reached by printing 926
new Kanban cards with RFID tags. In addition, the real-time 927
t4:3 Searching for the lost Kanbans 12.5 €
visibility of the inventory creates high value to the inventory 928
t4:4 The new Kanban printing 107.3 €
management and renders the possibility to obtain true data 929
t4:5 The saving based on the expended time by planning 920 €
for inventory management improvements. As shown in the 930
technician
case study realized for the subject firm, such investment 931
AUTHOR'S PROOF! JrnlID 170_ArtID 4383_Proof# 1 - 19/07/2012

Int J Adv Manuf Technol

−6,780.4

1,039.8
950
967
966
965
964
963
962
961
960
959
958
957
956
955
954
953
952
951

1,039.8
decisions procure to create value in various areas of the production

936.4

747.1
984.3
968

21
11 system. In case the pilot project application of RFID system is
expanded to the whole system, the relative initial investment cost 969
1,039.8 of RFID system will not be as high as the initial development stage 970

7,764.7
989.2
of RFID project. In this situation, the obtained benefits of the 971
10

972

1,039.8

−189.3
production system will increase gradually depending on the devel-

941.1
opment rate which will shorten the return time of the RFID 973

20
−8,753.9

974
1,039.8

investment.
994.2

In order to determine the upcoming benefits of decreased 975

9

stock costs and increase in the firm endorsement, the in- 976
crease in the customer satisfaction in the future state caused 977

−1,130.4
−9,748.1

1,039.8
1,039.8

by RFID implementation must be observed. However, by 978

945.8
999.1

979
19

means of constituting RFID-based electronic Kanban sys-

8

tem, it is possible to evaluate the created value and the 980

F
981
−10,747.2

relevant benefits within the process of the firm correctly.

1,039.8
1,004.1

O
−2,076.2
1,039.8
7

O
950.5

982
18

References 983
−11,751.3

PR
1,039.8
1,009.1

1. Roberts CM (2006) Radio frequency identification (RFID). Com- 984

6

put Secur 25:18–26 985

D2. Shepard S (2005) RFID: radio frequency identification. McGraw- 986
−3,026.7
1,039.8
−12,760.4

Hill, New York 987

955.3
1,039.8
1,014.2

988
TE
3. Ngai EWT, Cheng TCE, Lai K, Chai PYF, Choi YS, Sin RKY
17

(2007) Development of RFID-based traceability system: experien- 989

5

ces and lessons learned from an aircraft engineering company. 990

991
EC

Prod Oper Manag 16(5):554–568

−13,774.6

4. Delen D, Hardgrave BC, Sharda R (2007) RFID for better supply- 992
1,039.8
1,019.3

chain management through enhanced information visibility. Prod 993

−3,982.0
1,039.8

Oper Manag 16(5):613–624 994

960.1

R
4

5. Kim HS, Sohn SY (2009) Cost of ownership model for the RFID 995
16

logistic system applicable to u-city. Eur J Oper Res 194:406–417 996

R

997
−14,793.9

6. Ngai EWT, Suk FFC, Lo SYY (2008) Development of RFID-

1,039.8
1,024.4

998
O

based sushi management system: the case of a conveyor-belt sushi

restaurant. Int J Prod Econ 112:630–645 999
1000
3

7. Lee I, Lee B-C (2010) An investment evaluation of supply chain

−4,942.1

1001
1,039.8

RFID technologies: normative modeling approach. Int J Prod Econ

964.8
N

1002
−15,818.3

125:313–323
15
1,039.8
1,029.5

8. Zhou SQ, Ling W, Peng ZX (2007) An RFID-based remote mon- 1003

U

itoring system for enterprise internal production management. Int J 1004

1005
2

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9. Saygin C (2007) Adaptive inventory management using RFID 1006
1007
−16,847.8

data. Int J Adv Manuf Technol 32:1045–1051

−5,906.9

1008
1,039.8
1,034.6

1,039.8

10. Tapping D, Luyster T, Shuker T (2002) Value stream management.

Table 5 The return of RFID project investment

969.7

Productivity, New York 1009

14

1010
1

11. Rother M, Shook J (1999) Learning to see: value stream mapping

to add value and eliminate MUDA. The Lean Enterprise Institute, 1011
1012
−17,882.4

Inc., Brookline
12. Wee HM, Wu S (2009) Lean supply chain and its effect on product 1013
cost and quality: a case study on Ford Motor Company. Supply 1014
−6,876.6

1015
0

Chain Management: Int J 14(5):335–341

1,039.8
974.5

13. Hines P, Rich N (1997) The seven value stream mapping tools. Int 1016
1017
13
Investment balance (€)

Investment balance (€)

J Oper Prod Manag 17(1):46–64

14. Lasa IS, Laburu CO, de Castro Vila R (2008) An evaluation of the 1018
Present benefit (€)

1019
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value stream mapping tool. Bus Process Manag J 14(1):39–52

Present cost (€)
Future cost (€)

15. Kouri IA, Salmimaa TJ, Vilpola IH (2007) The principles and 1020
planning process of an electronic Kanban system, 19. International 1021
−2,050.5
−7,851.1

Conference on Production Research. Chile 1022

1,039.8

−2,177
Month

1023
979.4

16. Junior ML, Filho MG (2010) Variations of the Kanban system:

1024
12

literature review and classification. Int J Prod Econ 125(1):13–21

Q5 t5:1

t5:2

t5:3
t5:4
t5:5
t5:6
t5:7
t5:8
AUTHOR'S PROOF!
JrnlID 170_ArtID 4383_Proof# 1 - 19/07/2012

Int J Adv Manuf Technol

1025 17. Reyes PM, Jaska P (2007) Is RFID right for your organization or Quantitative Management, Sydney, December 17–20, Australia, 1040
1026 application? Manag Res News 30(8):570–580 (Ed. O.K. Gupta and R. Seethamraju), McGraw-Hill, pp. 1561– 1041
1027 18. Levine HA (2005) Project portfolio management: a practical guide 1568 1042
1028 to selecting projects, managing portfolios and maximizing bene- 21. Ertay T (1998) Simulation approach in comparison of a pull 1043
1029 fits. Wiley, San Francisco system in a cell production system with a push system in a 1044
1030 19. Ertay T, Barla S, Kulak O (2001) The studies for lean implemen- conventional production system according to flexible cost. Int J 1045
1031 tation in a manufacturing environment: a case study. International Prod Econ 56–57:145–155 1046
1032 Conference on Industry, Engineering and Management Systems 22. Huang HP, Chang YT (2011) Optimal layout and deployment for 1047
1033 and 28th International Conference on Computers and Industrial RFID systems. Adv Eng Inform 25:4–10 1048
1034 Engineering, Proceedings of the ICC&IE/IEMS, March 5–7, 890– 23. Lim HS, Koh CE (2009) RFID implementation strategy: perceived 1049
1035 895 risks and organizational fits. Ind Manag Data Syst 109(8):1017– 1050
1036 20. Barla S, Ertay T (2001) A pull system analysis in a drills manu- 1036 1051
1037 facturing organization. ICOQM-III, Information Technology and 24. Lee LS, Fiedler KD, Smith JS (2008) Radio frequency identifica- 1052 Q6
1038 Operations Management Relationships and Synergies, Proceedings tion (RFID) implementation in the service sector: a customer- 1053
1039 of the Third International Conference on Operations and facing diffusion model. Int J Prod Econ 112:587–600 1054
1055

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AUTHOR'S PROOF!
AUTHOR QUERIES

AUTHOR PLEASE ANSWER ALL QUERIES.

Q1. For consistency, all occurrences of the term “KANBAN” were changed to “Kanban.” Please
check if appropriate.
Q2. A bracket was inserted here. Please check if the intended meaning of the formula was retained.
Q3. Figures 4, 5, 6, and 8 contain poor quality text. Please provide replacement; otherwise, please
advise if we can proceed with the figures as is.
Q4. For clarity, please check if the changes made in formulas are appropriate.
Q5. Please check the changes made in Table 5 details.
Q6. Ref. 24 was not cited anywhere in the text. Please provide a citation. Alternatively, delete the
item from the list.

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Q7. Please check Displayed Equations if captured and presented correctly.

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