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An Internship Project Report on WIP reduction at FCPL (An ITC CMU)

Abstract - Reduction in Sp Cream Ex Oven WIP from 140 trays to Nil trays without reducing the current output level of 48 T /day (Start up/Changeover day).

-- Kumar Anshul VLM/04/11

INTRODUCTION
ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited. As the Company's ownership progressively Indianized, the name of the Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio encompassing a wide range of businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers, Agri-business, Foods, Lifestyle Retailing, Education & Stationery and Personal Care - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened ITC Limited. ITC's foray into the Foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth. It began in August 2001 with the introduction of' Kitchens of India' ready-to-eat Indian gourmet dishes. In 2002, ITC entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery and Aashirvaadatta (wheat flour). 2003 witnessed the introduction of Sunfeast as the Company entered the biscuits segment. ITC's entered the fast growing branded snacks category with Bingo! in 2007. In eight years, the Foods business has grown to a significant size with over 200 differentiated products under six distinctive brands, with an enviable distribution reach, a rapidly growing market share and a solid market standing. The Foods business carries forward this proud tradition to deliver quality food products to the consumer. All products of ITC's Foods business available in the market today have been crafted based on consumer insights developed through extensive market research. Apart from the current portfolio of products, several new and innovative products are under development in ITC's state-of-the-art Product Development facility located at Bengaluru. Leadership in the Foods business requires a keen understanding of the supply chain for agricultural produce. ITC has over the last 100 years established a very close business relationship with the farming community in India and is currently in the process of enhancing the Indian farmer's ability to link to global markets, through the echoupal initiative, and produce the quality demanded by its customers. This long-standing relationship is being leveraged in sourcing best quality agricultural produce for ITC's Foods business. The Foods business is today represented in 5 categories in the market. These are:

Ready To Eat Foods Staples Confectionery

Snack Foods Biscuits

In order to assure consumers of the highest standards of food safety and hygiene, ITC is engaged in assisting outsourced manufacturers in implementing world-class hygiene standards through HACCP certification. The unwavering commitment to internationally benchmarked quality standards enabled ITC to rapidly gain market standing in all its 6 brands: Kitchens Of INDIA AASHIRVAAD Sunfeast mint-O CANDYMAN Bingo!

ITC FOODS DIVISION, BISCUITS BUSINESS - SUNFEAST

In July 2003, ITC forayed into the Biscuits market with the Sunfeast range of Glucose, Marie and Cream Biscuits. Sunfeasts brand essence, "Spread the Smile" connotes happiness, contentment, satisfaction and pleasure. The mascot Sunny reinforces the emotional aspects of the brand. In a span of 6 years Sunfeast has launched many new varieties and has its presence in almost all types of biscuit categories - a) Sunfeast Milky Magic; b) Sunfeast Marie Light; c) Sunfeast Golden Bakery (Cookies) ; d) Sunfeast Dark Fantasy (chocolate vanilla biscuits); e) Sunfeast Dark Fantasy Choco Fills; f) Sunfeast Glucose; g) Sunfeast Dream Cream; h) Sunfeast Snacky; i) Sunfeast sweet 'n salt ; j) Sunfeast Nice; k) Sunfeast Benne Vita Flaxseed Biscuits; l) Sunfeast Special cookies ; and counting ITC Biscuits has 13 contract manufacturing units (CMU) & 1 their own factory to manufacture these biscuits. The CMUs are been given the raw material & required machinery & they have to arrange for manpower, land, & other utilities. The costing done, in the contract, is on that basis & per ton rate has been given to them.

FOOD CREATIONS PVT LIMITED BISCUIT FACTORY

It is the biggest CMU of ITC biscuit business by volume. It is located near Kadugodi, Bangalore. At FCPL there produce basically five different biscuits Cream biscuit, Cookies, Marie, Sweet n salt & Snacky. There are three manufacturing lines line 1 for cream biscuits, line 2 for Marie, Sweet n salty & Snacky and the 3rd line are for cookies (Butter, Cashew etc.). Raw materials used for these biscuits are Maida, sugar, Palm oil as fat, color, flavor, & some chemicals. For cream making basic raw material is sugar, hydrogenated vegetable oil, color, flavor etc...

PROJECT TITLE
Reduction in Sp Cream Ex Oven WIP from 140 trays to Nil trays without reducing the current output level of 48 T /day (Start up/Changeover day).

PROJECT DELIVERABLES
Reduction of WIP of sandwiches & shells Nil trays. Reduction in wastages from current level of 4.1% (usable + unusable). Reduction in manpower deployed from current level of 152 ppl/shift. Visible improvement in the packing/sandwiching section upkeep.

BACKGROUND OF PROJECTS
Current cream operations make use of inventory pile of shells in DH room & on shop floor as well as sandwiches in packing section. This is leading to reduced hygiene, increased wastages & utilizes additional manpower.

Understanding of the Project

Inventory is generally divided into four "buckets" called raw materials, consumables, work in progress (WIP) and finished goods. Raw materials are the substances used to create a product like metal, wood and screws that can still be identified in the finished product. Consumables are items that are needed to create a product, but are unidentifiable in the finished goods, such as gasoline, oil and parts for production machinery. Work in progress inventory consists of items that have started the production process but are not finished, saleable goods. Finished goods or products have completed the production process and are ready for sale to a consumer. With higher inventory, capital will be tied up. In simple words you get little cash by selling goods after investing large amounts of money in manufacturing it. Cost will be high since there are related costs like interests. So either product will be sold with higher price tag or the organization will loose money from its bottom line. Higher inventory and work in progress hides the problems. Problems are hidden in higher work in progress and will be not possible to remove from the system. In lean manufacturing context it is not possible simply to reduce or remove inventory and work in progress from your system. Root cause to higher work in progress is one of the other seven wastes we are discussing. So identifying the correct root cause and treating them will reduce the WIP and higher levels of inventory. The usual causes of Work in process generation are either unbalanced line or uneven batch sizes between the activities in a process. Unbalanced line is meant by different cycle time of the operations in discrete manufacturing system & different throughput for continuous manufacturing system. In dynamic situation as FCPL is in, the estimation of WIP is also critical. WIP across the line keeps on varying from time to time, even within the shift. So a measurement technique has to be decided before jumping of the project. The measurement technique could be taking stock of WIP at different time in the day & by taking average. The number of data points should be as large that it would cover all variations. But before everything the process has to be understood with micro details.

PROCESS FLOW DIAGRAM

100.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

0.00%

Tonnes -------------10 20 30 40 50 60 0

Day wise Production of Cream Line in Jan11

Day wise OEE Fluctuation of Cream Line in Jan11

Efficiency

48 T

3/Jan Total 4/Jan Total 5/Jan Total 6/Jan Total 7/Jan Total 8/Jan Total 10/Jan Total 11/Jan Total 12/Jan Total 13/Jan Total 14/Jan Total 15/Jan Total 17/Jan Total 18/Jan Total 19/Jan Total 20/Jan Total 21/Jan Total 22/Jan Total 24/Jan Total 25/Jan Total 27/Jan Total 28/Jan Total 29/Jan Total 31/Jan Total

Average 41.44 T

Average 70%

Production(in tons)

Average Production reqd

Efficiency

8 Day wise Productivity Fluctuation of Cream Line in Jan11

Productivity (Kg/Man-Hour)
10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Productivity (Kg/Man-Hour)

Average 6.84 kg/Man-hour

The production quantity, efficiency & productivity, all three measures of production, are fluctuating heavily inter-day basis. It is no trend also, which means that there are random variations. While analyzing the graphs we will come to know that there are three low points in terms of production on 8th Jan, 15Th Jan & 24th Jan 2011. The possible explanation can be found from the graphs itself. There can be three reasons of low production a) Raw material ShortageWhen the all the graphs is at low; b) Machine Breakdown,- When the production is at low & efficiency graph at lowest but productivity may not dip much; c) Manpower issue When the production is down & productivity is not much down. In this way we can tell that 15th Jan is the case of Equipment down, 24th is the manpower issue or may be they have fewer requirements.

9 Measurement of WIP Dynamic situation as at FCPL the measurement of WIP is very difficult. Following graph shows the variation of the WIP of trays with respect to the number of packing machine running :-

Trend of WIP
Number of Trays
400 350 300 250 200 150 100 50 0 4,1 0,2 3,2 5,0 6,0 5,1 5,1 Number of Trays

Combination of Packing Machine running

WIP Varies with the no. of packing machine running.

It shows that as the number of packing machines is increasing the number of trays in WIP is getting reduced.

DETAILS OF EFFICIENCY There are basically three areas namely oven (pre sandwiching), sandwiching, & packing areas. Since the capacity installed in all the three areas are different so maintain the flow the areas should be working at different efficiencies otherwise there will be WIP or shortage.

10 Areas like packing & sandwiching has more capacity but because of several reasons resulting in poor efficiencies & eventually lesser throughput from the line. In this analysis of efficiency data more than or equal to 90% has been taken acceptable. Here availability gives the measure of planned downtime in that area, productivity will give the measure of unplanned downtime & quality will give the measure of good quality. So the two main reasons for poor balancing of line are :a) Productivity of Sandwiching machine b) Availability of Packing machine Here the availability varies with the manpower availability.

IMPORTANT POINTS FOR WIP REDUCTION

11 DOWNTIME OF SANDWICHING MACHINES

Source FCPL Team, ITC

Causes of Downtime at Sandwiching m/c

Source FCPL Team, ITC

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Further Tear Down of Technical Issues In Sandwiching area


Issues
Packing table geare box not working MULTIPLIER PLATTEN DAMAGE PUMP 2 DRIVE FAULT

Time (min.) for whole month


650 75 55

Frequency
1

M/C
PT4 PT4 PT4

2
1 3 1 2 1 1

Multiplier and platen replaced


MULTIPLIER DRIVE BELT CUT Misc Power cut and pump no-1 drive fault

85
30 60 35

PT4
MP4 MP4 PT4

top 3rd and 4th broken setting


OHT pusher pin opened PUMP 1 DRIVE FAULT CREAM CUTTER WIRE CUT 3rd line Broken setting

10
7 14 20 5

MP4
MP4 PT4 PT4 PT4

1
4 1

Issues are more or less sporadic in nature. So any maintenance plan is not coming out of this. Source FCPL Team, ITC

Issues Related to Downtime of upstream activities

Source FCPL Team, ITC

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Steps Can be taken


For the technical issues, major problem is Machine Damage, we can introduce the preventive maintenance of machines at the time of the cleaning of Sandwiching Machine.
Points related to frequent issues will be added to check sheet & to be followed at the time of Machine Cleaning. Machine Cleaning time will be more.

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Availability of Packing machine


Since the capacity installed for packing is much higher than the requirement, so the availability is directly related to manpower present for production.

Oven Area

Sandwiching and Packing Area

Oven area works on fixed plan & in sandwiching area things are dynamic which results to inefficiencies like WIP.
Solution would be either making oven area dynamic or sandwiching area fixed.

Oven Area Dynamic - Slowing down the Other process


By slowing down the sandwiching & shell molding process, flows can be matched.
Manpower availability is constant within a shift, so any possible change can be done on shift basis.

Since total production is dependent upon the number of packing machine running, so slowing other process wont affect the throughput of the line.

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Oven Area Dynamic - Possible ways for slowing the line


Slowdown the Molder speed without affecting baking conveyor There will be burning of biscuits in the oven because of increased distance between them.
Experiment done by increasing the distance between the biscuits.

Difference in color

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Oven Area Dynamic - Possible ways for slowing the line


Slowdown of Molder speed along with respective change in baking conveyor speed & baking time. The flows across the line will be balanced, incase of any shortage of manpower resulting in non availability of Packing Machine. Manpower through out the shift (12hrs) is fixed, so a plan can be made to have different speeds for different levels of manpower available. There may be some wastages at the start, but lower speed hence would certainly reduce the further wastages.

S.No.

No of No of Speed of Packaging Packaging Packaging M/C working M/C working (Sandwiches/min) ( 60g) (129g) 5390 4620 5370 3850 4600 5350 3080 3830 4580 5330 2310 3060

No of Sandwiching M/C working

Speed of sandwiching (/min)

No of Shells Required (/min)

Required Speed of Molder

1 2 3 4 5 6 7

7 6 6 5 5 5 4

0 0 1 0 1 2 0

2 2 2 2 2 2 2

3196 2740 3185 2283 2728 3173 1827

11194 9594 11152 7995 9553 11110 6396

27.6 23.7 27.5 19.7 23.6 27.4 15.8

8
9 10 11 12

4
4 4 3 3

1
2 3 0 1

2
2 2 1 2

2271
2716 3161 2740 1815

7954
9511 11069 4797 6355

19.6
23.5 27.3 11.8 15.7

13
14 15

3
3 0

2
3 2

3810
4560 1500

2
2 1

2259
2704 1779

7912
9470 3115

19.5
23.4 7.7

Subsequent change in baking time & speed of baking conveyor to be done.

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Justification
Wastages because of setting 35 X 2 = 70 kg Cost Of Biscuits (say) 0.03p/g So Loss Rs. 2100 Average WIP , when usual 6 machines are running 650 Kg Manpower Saving 2 Casuals 7000 / month Money stuck in the system Rs. 84500 Loss is only 2.5% of the money stuck Poor quality because of moisture capture while being idle can also be minimized And throughput will be same even if we dont change the speed of Oven. Even if we loose 1.5 hr/ setting we still can reach the target of 48 T.

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Sandwiching Area Fixed - Another way


The variation in production is mainly attributed to fluctuation in Manpower availability, correlation between the production & manpower is 0.79. The standard deviation of manpower availability is 19/ day & almost 10/shift. Two types of workers are there Permanent Employees & Contract Labors. Almost 75% of feeders are permanent & rest others. Almost 90% of the casuals are contract workers. Have more manpower to counter the variation.

Manpower Availability
Frequency
6

No. of Days

Frequency

0 100 210 215 225 240 265 270 275 280 285

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Monetary Justification
Variation In production 8 T (st. deviation) i.e. equivalent to production from 1 packing machine. Variation in Manpower 10 nos. (st. deviation) Average Manpower 127 nos. (excluding operators & supervisors) Additional Salary Rs. 4000 X 15 (additional) = Rs. 60000 Loss of production 150000 pkts (approx) Assuming margin be 5 p/pkt, so total loss is around Rs. 7500/day. Money retrieval , 60000/7500 = 8 days

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Conclusion
There are two sources of WIP generation a) Downtime of Machines b) Manpower Shortage
Since there are no chronic issue found in the analysis, so any maintenance plan couldnt be formed. There are two possible ways of reducing WIP :a) Slowing the baking speed b) Having more employees

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Acknowledgement
Mr. Dominic Jose Mr. Amit Pal Singh Mr. Sangwan Mr. Bala & FCPL team