Assessing the Impact of Lean Implementation ...

Ghana Technology University College Graduate School Coventry University, UK Faculty of Engineering and Computing

MSc in Supply Chain Management

Title of Project:

Assessing the Impact of Lean Implementation Strategies on Warehousing Performance. A case study of Nestlé Ghana Ltd. Submitted by: Gilbert M.K.D NYAVIE Student ID: COVSCM0513004 Project Supervisor: Ing. Yaw YAWSON May, 2014

INDIVIDUAL THESIS DECLARATION This dissertation is submitted in partial fulfilment of the requirements of the Coventry University for the award of MSc. degree in Supply Chain Management. The work is the result of my own investigations.

All sections of the text and results which have been obtained from other

workers/sources are fully referenced. I understand that cheating and plagiarism constitute a breach of Ghana Telecom University College and Coventry University regulations and will be dealt with accordingly.

Signed: …………………………… {Gilbert M. K. D. Nyavie – Student} Date: ……………………………

i

APPROVAL This is to certify that this research project was carried out under our strict supervision and has been approved for submission to the department in partial fulfilment of the requirements for the award of Master of Science Degree in Supply Chain Management of Coventry University.

SIGNATURE AND NAME

DATE

……………………………………………………………

…………………………..

GILBERT MENSAH KWADZO DJIGBORDI NYAVIE (STUDENT)

…………………………………….. ING. YAW YAWSON (SUPERVISOR)

ii

…………………………

DEDICATION I dedicate and devote this work to my resourceful and supportive wife, Mrs. Berenice Akosua Tawia Nyavie whose words of encouragement, support and motivation enabled me to complete this course.

iii

ACKNOWLEDGEMENT I owe a lot of appreciation to a number of people whose collaboration, support and encouragement made the research possible. First and foremost, grateful acknowledgement is made to my supervisor, Ing. Yaw Yawson who dedicated his ample time to guide and direct me to successfully complete this work. Ing. Yawson’s ability to discern good ideas from bad and to balance theoretical soundness with practical applicability has been vital, not to mention his enthusiasm for the research topic. Secondly my appreciation goes to Dr Wayland Secrest of the Capella University, Minneapolis, USA who went through the entire work and offered his assistance in spell and grammar checking the work. Also, I wish to register my deepest gratitude to Mr Samuel Awotwi-Nelson, Paul Agato, Ernest Asiedu and Nicholas all of Nestlé Ghana for making available to me relevant data which made this research a great success. Finally, I say thanks to all and sundry who contributed in diverse ways to make this project a reality; God richly bless you all.

iv

ABSTRACT The study was designed to assess the impact of lean strategies on warehousing performance in Nestlé Ghana Limited. It was thus planned to achieve two major objectives - assess the impact of lean implementation strategies on warehouse performance and investigate the operational challenges in implementing lean warehousing. Its conceptual model therefore covered how lean tools map unto the benefits of lean, with eventual effect on warehouse key performance indicators. The study was designed as a quantitative survey with questionnaire as the main tool of data gathering. The data was gathered from Nestlé staff comprising of management staff, warehouse staff and key distributors. The study found that lean implementation in Nestlé indeed positively affect warehousing performance, indicating that the alternate hypothesis (Ha) which states that lean implementation positively affect warehouse performance was supported in this study. It was also found that Nestlé faces challenges with respect to sufficient technology for warehousing automation and visibility, poor warehouse layouts prohibiting higher throughputs, lack of IT resources in supporting warehouse technology initiatives and poor practice sharing across locations and between businesses. However, the organization does not face challenges on transporters underutilization due to the inability of key distributors to cash purchase huge quantum of products some of the times. In the light of the above finding, the study recommends that Nestlé should work at mitigating the identified challenges in the implementation of lean management in its warehousing. The study also recommends a further study that would assess the significant relationship between lean implementation and its impact on warehousing performance in the food and beverage industry.

v

TABLE OF CONTENTS+ INDIVIDUAL THESIS DECLARATION .................................................................................. i APPROVAL .................................................................................................................................. ii DEDICATION.............................................................................................................................. iii ACKNOWLEDGEMENT ........................................................................................................... iv ABSTRACT ................................................................................................................................... v LIST OF TABLES ........................................................................................................................ x LIST OF FIGURES ..................................................................................................................... xi

1.

CHAPTER ONE: INTRODUCTION .................................................................................. 1

1.1. Background of the Problem ..................................................................................................... 1 1.2. Problem Definition .................................................................................................................. 4 1.3. Research Questions.................................................................................................................. 5 1.4. Objectives of the Study............................................................................................................ 5 1.5. Hypothesis ............................................................................................................................... 5 1.6. Significance of the study ......................................................................................................... 5 1.7. Delimitations of the Study ....................................................................................................... 7 1.8. Limitations ............................................................................................................................... 7 1.9. Organisation of the Study ........................................................................................................ 8

2.

CHAPTER TWO: LITERATURE REVIEW .................................................................... 9

2.1. Introduction ............................................................................................................................. 9 2.2. Conceptual Definition and Overview of Lean ......................................................................... 9 2.3. Global History and Benefits of Lean ..................................................................................... 11 2.3.1.Lean in Nestlé Industry: An Overview ................................................................................ 13 2.4. Conceptual Definition and Types of Warehouses ................................................................. 14 2.5. Roles of Warehouses ............................................................................................................. 16 2.6. House of Lean Warehousing ................................................................................................. 18 2.7. Wastes in Traditional Warehousing Operations .................................................................... 20 2.7.1. Inventory ............................................................................................................................. 21 vi

2.7.2. Over-processing .................................................................................................................. 22 2.7.3. Defects ................................................................................................................................ 22 2.7.4. Overproduction ................................................................................................................... 22 2.7.5. Transportation ..................................................................................................................... 23 2.7.6. Waiting................................................................................................................................ 23 2.7.7. Motion ................................................................................................................................. 24 2.8. Lean Tools ............................................................................................................................. 24 2.8.1. Kanban ................................................................................................................................ 24 2.8.2. Work Cells .......................................................................................................................... 25 2.8.3. Total Productive Maintenance ............................................................................................ 25 2.8.4. Total Quality Management ................................................................................................. 25 2.9. Summary of Lean Tools ........................................................................................................ 25 2.10. Indicators for Warehousing Performance ............................................................................ 26 2.11. Lean Implementation in Manufacturing Industries.............................................................. 30 2.12. Inbound and Outbound Logistics in Lean Implementation ................................................. 33 2.13. Lean Elements/Constructs/Strategies................................................................................... 36 2.13.1. Value Stream Mapping in a Warehouse ........................................................................... 37 2.13.2. Kanban .............................................................................................................................. 38 2.13.2.1. Start with what you do now ........................................................................................... 38 2.13.2.2. Agree to pursue incremental, evolutionary change........................................................ 38 2.13.2.3. Respect the current process, roles and responsibilities .................................................. 39 2.13.2.4. Leadership at all levels................................................................................................... 39 2.13.2.5. Emergency or Rush Kanban .......................................................................................... 39 2.13.3. Just-In-Time ...................................................................................................................... 40 2.13.3.1. Benefits of Using JIT in the Manufacturing Industries ................................................. 41 2.13.4. Flowchart .......................................................................................................................... 42 2.13.5. Hybrid 5S .......................................................................................................................... 43 2.13.5.1. Phases 1 and 2: ............................................................................................................... 44 2.13.5.2. Phase 3: .......................................................................................................................... 44 2.13.5.3. Phase 4: .......................................................................................................................... 44 2.13.5.4. Explanations from the above chart: ............................................................................... 45 vii

2.14. Warehousing Performance in Pre-Lean Operations/Post-Lean Implementation ................. 47 2.15. Operational Challenges Facing the Implementation of Lean Warehousing ........................ 49 2.16. Current State Mapping and Future State Mapping .............................................................. 51 2.16.1. Current State Mapping ...................................................................................................... 51 2.16.2. Future State Mapping ........................................................................................................ 52 2.17. Improvement in Lean Warehousing Performance ............................................................... 53 2.18. Conclusion ........................................................................................................................... 54

3.

CHAPTER THREE: METHODOLOGY ......................................................................... 55

3.1. Introduction ........................................................................................................................... 55 3.2. Research Model ..................................................................................................................... 55 3.3. Research Design .................................................................................................................... 56 3.4. Research Setting .................................................................................................................... 56 3.5. Research Population .............................................................................................................. 57 3.6. Sampling Technique and Sample Size .................................................................................. 57 3.7. Sources of Data ...................................................................................................................... 60 3.8. Methods of Data Collection ................................................................................................... 61 3.9. Procedure of the Study .......................................................................................................... 62 3.10. Validity and Reliability of Data ........................................................................................... 62 3.11. Analysis of data and presentation of results ........................................................................ 63 3.12. Ethical Considerations ......................................................................................................... 64 3.13. Conclusion ........................................................................................................................... 65

4.

CHAPTER FOUR: DATA ANALYSIS AND DISCUSSION OF FINDINGS .............. 66

4.1. Introduction ........................................................................................................................... 66 4.2. Demographic Characteristics of Respondents ....................................................................... 67 4.2.1. Gender of respondents ........................................................................................................ 67 4.2.2. Age group of respondents ................................................................................................... 67 4.2.3. Educational Background of Respondents ........................................................................... 68 4.2.4. Years of service at Nestlé Ghana Limited .......................................................................... 69 viii

4.3. Assessing Lean Implementation In Nestlé Ghana Limited ................................................... 70 4.4. Benefits of Lean on Nestlé's Warehousing ............................................................................ 73 4.5. Key Performance Indicators of Warehousing Performance in the Nestlé Ghana Limited .... 78 4.5.1. Hypothesis - Overall Impact of Lean Implementation on Warehousing Performance ....... 82 4.6. Operational Challenges Facing the Implementation of Lean Warehousing .......................... 82

5.

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION ......... 86

5.1. Introduction ........................................................................................................................... 86 5.2. Summary of Findings ............................................................................................................ 86 5.3. Hypothesis ............................................................................................................................. 88 5.4. Research Question ................................................................................................................. 88 5.5. Conclusion ............................................................................................................................. 89 5.6. Recommendations ................................................................................................................. 90 5.6.1. Recommendation for Implementation ................................................................................ 90 5.6.2. Recommendation for Further Studies ................................................................................. 91

REFERENCES ............................................................................................................................ 92 APPENDIX ONE – QUESTIONNAIRE ................................................................................ 101 APPENDIX TWO ..................................................................................................................... 106 APPENDIX THREE – VALUE STREAM MAPPING ......................................................... 107 APPENDIX FOUR – SUMMARY OF CONCEPTUAL MODEL....................................... 108

ix

LIST OF TABLES

Table 3.1: Conceptual Model of the Study ................................................................................... 55 Table 4.1: Recovery from Various Respondent Groups ............................................................... 66 Table 4.2: Lean Tools ................................................................................................................... 71 Table 4.3: Benefits of Lean Implementation ................................................................................ 77 Table 4.4: Key Performance Indicators of Warehousing Performance ........................................ 81 Table 4.5: Challenges of lean implementation……………………………………….…………..85

x

LIST OF FIGURES

Figure 2.1: The benefits of Lean implementation ......................................................................... 12 Figure 2.2: House of Lean in Warehousing .................................................................................. 19 Figure 2.3: The seven types of waste ............................................................................................ 21 Figure 2.4: How to lean ................................................................................................................ 30 Figure 2.5: Principles of Lean Implementation ............................................................................ 32 Figure. 2.6: Process for Inbound Logistics in Lean Implementation ............................................ 34 Figure 2.7: Outbound Logistics in Lean Implementation ............................................................. 35 Figure 2.8: Conceptual diagram of the Kanban System. Source: Tarner et al. (2007). ................ 40 Figure 2.9: Warehouse flowchart indicating the sequence of operations and document transfer at the warehouse. Source: Schonberger and Ebrahimpour (2004).................................................... 43 Figure 2.10 Lean’s 5S. Source: Logistics Helps (2013) .............................................................. 45 Figure 2.11: Forces supporting and resisting lean implementation. Source: Larson et al. (2007). ....................................................................................................................................................... 50 Figure 2.12: The Current State Mapping ...................................................................................... 52 Figure 2.13: High Level Future State VSM .................................................................................. 53 Figure 3.1.: Sample Size Categorization....................................................................................... 60 Figure 4.1: Gender of Respondents .............................................................................................. 67 Figure 4.2: Age Group of Respondents ........................................................................................ 68 Figure 4.3: Educational Background of Respondent .................................................................... 69 Figure 4.4: Years of Service at Nestlé Ghana Limited ................................................................. 70 Figure 4.5: Are there operational challenges facing lean implementation ................................... 83

xi

LIST OF ACRONYMS/ABBREVIATIONS CEPS

-

Customs, Excise and Preventive Service (CEPS)

FIFO

-

First In First Out

GTUC

-

Ghana Technology University College

GM

-

General Manager

JIT

-

Just In Time

ISO

-

International Standardization Organisation

LIFO

-

Last In First Out

NGL

-

Nestlé Ghana Limited

SPSS

-

Statistical Package for Social Scientist

TQM

-

Total Quality Management

TPM

-

Total Productive Maintenance

TPS

-

Toyota Production System (TPS)

US

-

United States

VSM

-

Value Stream Mapping

xii

1. CHAPTER ONE: INTRODUCTION 1.1. Background of the Problem Warehouses serve the important purpose of helping organizations store away products towards improving lead time and cost reductions. Essentially, achieving proper harmonization of the supply chain process and ensuring that the cycle of production and delivery to satisfy customers’ needs remains unbroken is best achieved through efficient warehousing. Globally, warehouses have had the unenviable reputation of being referred to as cost centers and rarely adding value to the supply chain process. However, the increasing need to transfer products across cities, countries and continents have forced industry players to consider the indispensable role of warehouses and hence a rethink of this perception. Sobanski (2009) underscored their incontrovertible role when he discoursed that warehouses ensure that manufacturing is coordinated with distribution center or warehousing performance to facilitate the eventual satisfaction of customer’s needs. Warehouses come in all shapes and sizes - from facilities of a few hundred square meters handling modest throughputs, to large capital-intensive installations with storage capacities in the 50,000 plus metric tons range. It is estimated to take up between 2% to 5% of the cost of sales of companies (Rushton et al., 2000). Rushton et al. (2000) further identified three main factors that should be considered in establishing a warehouse to include market and product base stability, type of goods to be handled, and type of facility, size and location. This historic role of warehousing, just like any business activity, must be improved to deliver better value and satisfy greater scope of demands. Atkinson (2008) put this aptly when he opined that the scope and core responsibilities of warehouse operations are drastically transformed to enable it to deliver a good level of inventory management, quick receiving and shipping, management of stock, precise and elastic customized pick and pack services, and state of the art safekeeping and storage solutions for all the goods. 1

As indicated earlier, this widening scope of operations calls for a more efficient mode of operations in order to ensure value for money and customer satisfaction. This pursuit of efficiency in warehousing operation leads to the subject of lean warehousing. Historically, the initial work relating to lean logistics and lean warehousing was detailed in the work of Jones, Hines, and Rich (1997). According to Bozer (2012) lean operations were derived from the “just-in-time” system, which also has its roots in Deming’s Total Quality Management (TQM). According to Bozer (2012) one of the best definitions/descriptions of lean warehousing is a system that “ensures continual operational improvements, waste elimination and high ongoing operating efficiencies” p 2. Lean warehousing is a relatively new concept derived by progressive managers to cut waste, improve delivery, improve quality and improve efficiency of warehousing performance. The concept was derived from lean manufacturing, a production process used by Toyota and popularized in the writings of Ohno (1986), Shingo (1989), Womack, Jones, and Roos (1990), Womack and Jones (1996), and Liker (2004). Particularly, lean and its various derivatives came into the academic limelight through the book “The Machine that changed the world” by Womack, Jones, and Roos (1990). Since this seminal write-up, the concept has found its way into every sector of the economy, including the service sector (Filligham, 2007, Demeter and Maytusz, 2010). In organizational circles, Bacalu (n.d.) has defined lean as a systematic means of reducing waste. Rahman, Laosirihongthong and Sohal (2010) have noted that the principal purpose of a lean strategy is to eliminate wastes, produce higher levels of quality, increase productivity and improve customer responsiveness. The elimination of waste (which is defined as any activity that does not add value) in warehousing operations is a recurrent theme in lean warehousing literature (Bozer, 2012, Ohno, 1986). In fact, so prevalent is the theme that one is bound to think that is the prime 2

motivation for implementing lean warehousing. Indeed, Bozer (2012) thinks of waste as the principal reason for the adoption of lean in warehousing operations when he reiterated that one of the key premises of Lean is to expose and eliminate waste. Ohno (1986) agreed with Bozer and went ahead to identify as much as eight varieties of waste that are common in lean manufacturing (See Appendix 2). According to Weber Systems (2012), the eight varieties of waste identified by Ohno are equally application in lean warehousing operations (See Appendix 2). As an extension of the manufacturing process, it was natural for managers of warehouses to note what production principles are working in that sector and implement same in their own work for the purpose of aligning the storage and distribution function to manufacturing. On that note, Sobanski (2009) opined that most warehouse managers are moving out of the awareness stage and into the implementation stage of lean in their operations. Gustavo (2012) and Pettersson et al. (2010) observed that challenges relating to delivery time, wrong codification, inventory valuation (First In First Out [FIFO] or Last In First Out [LIFO]), demurrage are notably issues that affect quality in warehousing operations. Similar to the observation of Knut et al. (2008), however, other authors, especially Rexhepi and Shrestha (2011), Peterson et al. (2010) and Hannah (2007) are convinced lean warehousing is the answer to these challenges. Peterson et al. (2010), particularly, noted that the advantages of lean warehousing, that is, faster work completion, reduced frustration, improved customer satisfaction, faster delivery time, delivery reliability, employee empowerment, financial benefits as well as organizational competitive advantage represent the sure remedy to improving quality in warehousing

3

performance. This study was therefore designed to investigate the implementation of lean strategies in warehousing performance in Nestlé Ghana Limited.

1.2. Problem Definition The roles of warehouses are rapidly changing. Rather as a big space to store inventory, warehousing is getting increasingly complicated, fast-paced, technologically driven and somewhat decentralized (Sobanski, 2009). In its pre-lean operations, Knut et al. (2008) have observed that warehouses account for between 30% and 50% of most companies’ supply chain costs. Similarly, Rushton et al. (2000) have noted that warehouse operations take up an estimated 2% to 5% of the cost of sales (Rushton et al., 2000). In addition, analysis undertaken by Gaunt (2006) revealed that the overall order processing cycle times of most warehouses were extremely inefficient. In fact, they found that out of the total order cycle time, only 37.9% is used for working while 6% is wasted while people dealt with issues ranging from

waiting for lift equipment, computer issues,

interruptions, and blocked aisles.

The remaining 56.1% is wasted while orders sit idle. Though it is humanly unrealistic to expect 100% efficiency in warehousing operations, this observation paints a picture of low productivity in any definition. In an attempt to proffer solution to these challenges relating to the receiving, stocking and retrieval of stock, Knut et al. (2008) noted that warehousing performance could be improved significantly if lean techniques are used.

The author added that this will succeed in eliminating waste, inflexibility and variability of warehousing as well as reduce cost by a whopping 50%. The question however remains: can lean strategies be used to effectively run warehouses? In order to be competitive, food and beverage firms need to be cost effective. The best way to be cost effective is to reduce waste. It is against 4

this backdrop that this study has been designed to assess how lean techniques have been implemented in warehousing performance of the food industry and what has been the outcome.

1.3. Research Questions The study was designed to answer the following research questions: 

What is the impact of lean implementation strategies on warehouse performance?



What are the operational challenges in implementing lean warehousing?

1.4. Objectives of the Study The main goal of this study is to assess lean strategies employed in Nestlé Ghana Limited (NGL) and its impact on their warehousing performance. The specific objectives were as follows: 

To assess the impact of lean implementation strategies on warehousing performance



To evaluate the operational challenges facing the implementation of lean warehousing

1.5. Hypothesis The study was designed to test the following hypothesis Ha: Lean implementation strategies impact on warehouse performance. Ho: Lean implementation strategies do not impact on warehouse performance.

1.6. Significance of the study The research focuses on lean warehousing and how it is being implemented in warehousing performance in Ghana. Preliminary study of various lean warehouse literature (see Sobanski, 2009; Filligham, 2007; Demeter and Maytusz, 2010) reveals that few research has been done in this area; fewer still have been based on the Ghana-specific situation and none has focused on lean 5

warehousing in the food and beverage industry. According to Conti et al. (2006) and Nicholas and Soni, (2006), lean has been around since 1980s but lean warehousing is a recent phenomenon as gathered from Sobanski (2009), Fillingham (2007), Demeter and Maytusz (2010). This makes the study very unique in the sense that lean warehousing is a new practice as far as general warehousing is concerned, especially in Ghana. In fact, not many institutions even know about, let alone practice lean warehousing in their operations. Therefore, the study, besides being beneficial to the study institution, will also benefit warehouse managers, owners and indeed, practitioners in the sector. In essence, the findings will benefit the industry, government, academia and the general populace. With industry-practitioners, the findings in the study will help them reduce their operational cost, offer them a competitive edge as well as improve on their quality offering. It will enable its customers get value at a cheaper cost, which will ultimately go to increase productivity and profitability. The findings will also inform the government on the benefits of lean strategies which might inform legislation on the application of those techniques in government warehouses as well as the regulation of warehouses in the country in general. It will also enable Customs, Excise and Preventive Service (CEPS) structure a more efficient tax system and have legislations to back this. In sum, the findings will be relevant to warehouse operators, owners, the government and its allied tax institutions. Also, the findings will add to the general stock of knowledge on the subject matter of warehousing and lean warehousing in particular. Student researchers interested in the field should find this study especially interesting. In fact, the findings will serve as secondary data on further studies on the subject matter by student researchers.

6

1.7. Delimitations of the Study The study was delimited to lean warehousing, meaning that all primary and secondary data used in the study reflect this scope. Though the researcher recognized that a subject as broad as warehousing could be approached from several angles, this study sought to unearth the implementation of its strategies to a specific company’s operations, which effectively defines the scope of this study. Also, using Nestlé, an international food manufacturing company, also defines the scope of the study. A similar study using a Ghanaian company might highlight processes and activities that might not be observed in a company operating with international best practices such as Nestlé. Moreover, the study used middle and senior managers as the study respondents. It should be noted that using another group of respondents, for instance, warehouse operators solely in Nestlé might lead to different findings than dealing with the practitioners on the field. This further defines the scope of the study, meaning that the findings of the study should be interpreted in the light of the research respondents.

1.8. Limitations The major limitation of this study is the dearth of research in the area of lean warehousing, particularly in the Ghanaian context. This has implication for the review of various empirical studies that describe the practice in Ghana. Most of the literature will therefore be gleaned from European and American writers, whose environment for implementing lean warehousing might not be the same as that of Ghana. The research was carried out in a limited time period with a limited budget and so may not have the time to cover all the nuances concerning the subject matter. In addition, though a comparative 7

study might have been more appropriate, the researcher could not find any organisation that implements lean warehousing to compare Nestlé with. This might result in a narrower perspective of the findings. Nevertheless, the researcher mitigated this limitation by ensuring that an in-depth literature review is done and the identified issues highlighted in the questionnaires so as to cover the details of the operational strategies that might apply to the institution. Also, though the researcher expected the employees to be knowledgeable about the subject matter of the study, it might happen that they might not be as knowledgeable as expected after all. These instances were mitigated through explanations of the concepts in the study and further in-depth explanation of the questions.

1.9. Organisation of the Study This study was in Five Chapters. The first chapter included the introduction to the study, problem statement, objectives and research questions as well as the significance, limitations and scope of the study. The next chapter (two) was made up of the literature review on the subject of lean warehousing. The literature review basically involved the assessment of relevant materials others have written about the topic in journals, books, newspapers and on the internet. Chapter three dealt with the methodology employed in the study. It involved the outlining of the research design chosen, the population and the sample for the study. It also entailed explaining the research technique employed as well as the tool for data analysis. Chapter four covered the data analysis and discussion of findings while Chapter five outlined the summary, conclusions and recommendations of this study. 8

2. CHAPTER TWO: LITERATURE REVIEW 2.1. Introduction This chapter reviews relevant literature on lean implementation strategies in warehousing performance, using Nestlé Ghana Limited as the case study. The chapter starts with lean implementation strategies and its benefits before delving into the subject matter of warehousing, where the definition of warehouses, types and roles were outlined. In addition, empirical and theoretical review of literature relating to lean tools, lean construct, warehousing performance in pre-lean operations relative to post-lean implementation as well as warehouse performance indicators, operational challenges facing the implementation of lean warehousing and improvement in lean warehousing performance were covered.

2.2. Conceptual Definition and Overview of Lean According to Kim et al. (2008), Lean embodies a set of design principles that guide an organization to effectively deliver its purpose, improve its service delivery continuously, reduce wastes systematically and ultimately contribute positively to society. In Deming’s transformational system of management, Lean is defined as the systematic reduction of wastes in a given organization that directly contribute to high productivity and performance (Kumar et al., 2006). Another school of thought defines lean as a systematic approach of identifying and eliminating wastes in customer relations, production flow, maintenance, quality and management (Bacalu, n.d.). Karson and Åhlström (2008) argue that there is no precise definition of lean and therefore, determination of changes in an organization and evaluation of the effectiveness of lean concept becomes more challenging.

9

In recent times, lean implementation in the manufacturing industries has been on a rapid increase due to the application of systematic approaches in improving quality, safety and efficiency in such firms (Koning et al., 2006). Since the early 1980s that lean manufacturing was initiated in the United States (US) among manufacturing professionals under the term “just-in-time” systems, there has been a momentous advancement in lean strategies in terms of education and training as well as developing an increasing number of successful applications in industry (Kumar et al., 2006). Nicholson et al. (2010) also posited that, the swift globalization and outsourcing experienced in the manufacturing industries have added on to the significant expansion of lean implementation in the supply chain. However, lean implementation has always been challenging, particularly in addressing customers’ needs and providing a safer production environment (Ramanathan, 2006). Womack et al. (2005) emphasized that, wastes in the form of output (i.e. wrong process, overproduction, delay, large variation in output rate and demand) and flow (i.e. waiting, duplication of process, rework, work interruptions, and non- standardized work) are the two main categories of constraints influencing lean implementation. Proper implementation and strategic management of inventory is a major activity that supports high quality levels of products delivery (Koning et al., 2006). Although, uncertainties are impossible to be completely dealt with in the supply chain system, appropriate lean implementation strategies could be developed to equate supply and demand without accumulating unnecessary levels of inventory (Wilson, 2000). Even though warehouses and distribution centers are vital facilities in a supply chain, application of lean in warehousing has comparable advantages that are yet to be fully explored in both the academic and industrial arena. Womack and Jones (2003) posited that a lean implementation should enable a given business to deliver customer needs and strategic business objectives. However, in cases where strongly defined performance 10

management programme already exists, achievement of successful lean implementation may involve the incorporation of an appropriate lean tool, such as Value Stream Mapping (Liker, 1998).

2.3. Global History and Benefits of Lean Although there are many quoted origins for many of the founding concepts behind lean production, it is recognized that the Toyota Production System (TPS) was the first to invent the approach of lean manufacturing (Nicholas and Soni, 2006). The ‘essential ingredients’ that informed the TPS to undertake lean production included 

balancing of flow through the process of production



pulling throughput to precisely match customer demand



reducing inventory and waste throughout the production process



Producing increased variety and complexity to that previously possible (Smalley, 2004).

According to Naylora et al. (1999), automotive production models such as those developed originally by Henry Ford in 1914 for the Model T line, were based on mass-production system. The term ‘lean’ therefore, originated following an MIT automotive study and the book ‘The Machine that Changed the World’ that followed that study written by Womack and Jones in 1988 (Conti et al., 2006). Prior to this, Richard Schonberger, in his excellent text ‘Japanese Manufacturing Techniques’, equally captured much of the “lean” concept and at that time, the more popular term for pull-based waste-less processes was the “Just In Time” or JIT (Lewis, 2000). Naylora at al (1999) have observed that adopting Lean principles by manufacturing industries results in cost savings, reduced inventories, better product quality and increased customer satisfaction. Experts believe that proper application of lean can dramatically improve a company's competitiveness and their financial position (Nicholas and Soni, 2006). Smalley (2004) also stated

11

that the main aim of Lean implementation is the elimination of wastes which affects the ability to produce competitively in the world markets. According to Kim et al. (2006), lean implementation has several benefits such as the creation of efficient methods for producing goods, eliminating waste, minimizing discrepancies and taking a reasonable approach to producing products and managing facilities. Chen and Irani (1993) added that, hours of time spent waiting in manufacturing facilities are eliminated through proper lean implementation. Gu et al. (2007) also affirmed that lean implementation helps in reducing lot sizes and applying better production control methods. Larson et al. (2007), however, posited that lean implementation decreases lead times for customers, reduces inventories for manufacturers, increases process understanding, financial savings, and improves knowledge management. These benefits have been illustrated in Figure 2.1 below. It can therefore be gleaned from the above authors that the implementation of lean strategies in manufacturing and warehousing attract more benefits that go beyond the elimination of wastes in a firms. The benefits of lean have been summarized in Table 2.1 below as well as Appendix

Figure 2.1: The benefits of Lean implementation. Source: Larson et al. (2007).

12

Table 2.1: Benefits of Lean Lean Benefits - Kim et al. (2006); Larson et al. (2007)  Reduced lead time  Less rework  Financial savings  Increased process understanding  Minimizing discrepancies  Efficient method of production Source: Author’s Summary

2.3.1. Lean in Nestlé Industry: An Overview Lean production refers to the range of measures that are put in place in a workplace to help reduce waste (Kumar et al., 2006). Although traditionally used in manufacturing, lean principles have equally been used in service industries (Chen et al., 2005). Generally, several Lean production concepts are applied in the service industry, and the Nestlé Company employs cell production; Just-in-time stock control; Kaizen (continuous improvement); total quality management (TQM); time based management; Value Stream Mapping; and team working (Caron et al., 2000). In the Nestlé Company, production is split into self-contained units or cells with each responsible for a complete product or production process and workers in each unit are multi-skilled which allows for greater flexibility (Gademann et al., 2001). A decision making technique that looks at the most efficient way of carrying out a project or process and ensuring value addition at every stage of production (i.e. Value Stream Mapping) is employed in Nestlé Company (Zylstra, 2005). This technique aids the Company in proper planning and monitoring of a project or process, allows resources to be allocated only when they are needed, eliminates time and waste during design and production. In addition, the Nestlé industry employs 13

Just-in-time (JIT) as a stock control method which aids in the control of the production trend of the Company and where time is wasted, proper implementations such as equipment set-up times are made to reduce time wastage. The JIT helps the industry to look for opportunities to carry out processes simultaneously, reduces new product development and launch times, and makes the Company more responsive to market changes (Caron et al., 2000).

2.4. Conceptual Definition and Types of Warehouses Warehousing is generally defined as the storage of goods (Womack and Jones, 2003). However, the broad interpretation of warehouses encompasses a wide spectrum of facilities and locations such as the storage of finished goods in the production facility, the storage of raw materials, industrial goods, and finished goods (Conti et al., 2006). Lewis (2000), however, defined warehousing as the activities involving storage of goods on a large-scale in a systematic and orderly manner and making them available or conveniently when needed. Liker (2004) on the other hand argued that, warehousing implies the holding of goods in huge quantities from the time of purchase or production till the actual use or sale. This suggests that warehousing is one of the important auxiliaries to trade and creates time utility by bridging the time gap between production and consumption of goods. According to Irani and Ramakrishnan (1995) and Rushton et al. (2010) there are various classifications/categorization of warehouses. In their respective studies, they categorized warehouses into seven types which are described below with slight modifications. 

Raw-material and component warehouses: These warehouses are used in holding raw materials at or near the point of induction into a manufacturing process.

14



Work-in-process warehouses: These are used in holding partially completed parts while going through the manufacturing operations.



Finished goods warehouses: These are warehouses used for holding inventory to safeguard against variations in customer demand.



Distribution warehouses: These warehouses accumulate and consolidate products from various sources for transit to various customers or consumers.



Fulfillment warehouses: According to Rushton et al. (2010), these warehouses receive, pick, and serve as sources of small orders for individual customers that mostly transact with the firm.



Local (or regional) warehouses: These kind of warehouses are evenly distributed in the field in order to shorten transportation distances to permit rapid response to customer demand; normally, single items are picked and multiple transits/shipments sometimes occur in a day (Sobanski, 2009).



Value-added service warehouses: According to Irani and Ramakrishnan (1995), these type of warehouses perform services such as labeling, sorting and assembling.

On the other hand, Srinivasan (2004) classified warehouses into eight groups based on various considerations. These have been explained briefly as follows: 

Their stage in the supply chain (i.e. raw materials, work-in-process, or finished goods).



The geographic area they serve (i.e. national, local, regional, or international level).



The type of products they store (for example, small parts, large assemblies, frozen food, perishable items, hazardous goods, and so on).



Ownership (i.e. user-owned, third-party, public warehouse, and so on).

15



Usage (for example, a warehouse devoted to one company versus a warehouse shared by multiple companies).



Their dimensions and area (i.e. classification based on the storage dimensions/area).



Their storage height (such as low-bay or high-bay warehouses).



The type of equipment they use (i.e. manual operations to highly automated equipment).

Alternatively, a study conducted by Rouwenhorst et al. (2010) on lean implementation strategies in hospitality industry, classified warehouses into Production warehouses (where raw and finished goods in a production facility are stored), Distribution warehouses (where products are collected or assembled from different suppliers and subsequently redirected or sorted to individual customers) and Contract warehouses (these are type of warehouses providing warehouse services to one or more customers). The above classifications shows that warehouses come in various forms as defined by purpose for being ownership, in the supply chain, finished goods and distribution.

2.5. Roles of Warehouses In a macro-economic sense, warehouses performs a very necessary function, including creating time utility for raw materials, industrial goods, and finished products (Rushton et al., 2010). More importantly, warehouses increase the utility of goods by broadening their time availability to prospective customers (Ramanathan, 2006). This suggests that, by using warehouses, firms can make goods available according to when and where customer demands them. Warehouses’ function continues to be increasingly important as companies and industries use customer service as a dynamic, value-adding competitive tool (Conti et al., 2006). In cases where there is proximity of market-oriented warehouses to customers, the organization is able to serve large number of its

16

customers with shorter lead times that in turn improves productivity and/or performances (Kim et al., 2006). Moreover, Melton (2004) stated that warehouses serve to protect customers against contingencies such as transportation delays, vendor stock outs or strikes, and aid smooth operations or decouple successive stages in the manufacturing process. Thus, seasonal demands and the need for a production run long enough to ensure reasonable cost and quality thereby restrict operations under overtime conditions at low production levels (Jones et al. 2007). Bozer (2012) opined that continuous production of goods in factories requires adequate supply of raw materials which call for the storage or keeping of sufficient quantity of stock of raw materials in the warehouse to ensure continuous production. In order to for a given firm to maintain a reasonable level of the price of manufactured goods at the open market, Melton (2004) suggested that sufficient stock must always be kept in the organization’s warehouse(s). However, excess production and supply may lead to fall in prices of the product whilst scarcity in supply of goods may increase their price in the market that may reduce the level of patronage by customers. Therefore, maintaining a balance of supply of goods leads to price stabilization. However, not all warehouses serve the role for which they were set up. According to Liker (2004), a warehouse is said be ideal when it possesses the following characteristics: 

It should be located at a convenient place such as closeness to highways, railway stations, airports and seaports where goods can be loaded and unloaded easily.



Availability of mechanical appliances for loading and unloading of goods. This reduces the wastages in handling and also minimizes handling costs. 17



Availability of adequate space inside the building to keep the goods in proper order.



Warehouses meant for preservation of perishable items such as fruits, soft drinks, vegetables, eggs and butter should have cold storage facilities.



Proper arrangement should be there to protect the goods from sunlight, rain, wind, dust, moisture and pests.



Should have sufficient parking space to facilitate easy and quick loading and unloading of goods.



Should have security guard to avoid theft of goods.



The building should be fitted with latest fire-fighting equipment to avoid loss of goods due to fire.

2.6. House of Lean Warehousing Otherwise known as the Toyota House, the House of Lean concept involves various components that are geared towards integrating lean concepts in the manufacturing and the warehousing activities. The name of this concept is derived from the conception of the application of lean to warehousing in a house format. According to Bozer (2012), the House of Lean is composed of a foundation (operational stability), left sided and right sided walls (Lean Flow and High Quality respectively) and finally the roof of the house is represented by the desired outcomes. These comprise lowered cost, higher quality as well as shortened delivery time. The left wall or pillar, which is otherwise known as Just In Time (JIT) involves activities such as continuous improvement, pull systems and level flow, while the built in quality system (the right pillar or wall) consists of ensuring quality at the source, visual controls and error proofing. Also, Business Engineering (n.d.) summed that the Jidoka pillar involve in the TPS manufacturing system consist of Kanban, Andon and Poka-Yoke. With respect to JIT, Business Engineering (n.d.) noted that 18

wide ranging Lean business systems have to be employed to manage work flow on a pull basis. Hence, many of the lean tools such as Kanban, product design, factory layout and quality control practices are very critical for this purpose. Finally, the foundation or operational stability is made possible through robust processes, standardized work, preventive maintenance and supplier integration. The House of Lean is depicted in Figure 2.2 below:

Figure 2.2: House of Lean in Warehousing. Source: Business Engineering (n.d.) Corroborating the explanations offered by Bozer (2012), Business Engineering (n.d.), explained that the House of Lean has two pillars that support the roof. These represent JIT and Jidoka respectively. According to the author, these pillars are critical for keeping the roof in place. In other words, without JIT and Jidoka, the desired outcome is not likely to be realised. However, these superstructures should have a foundation in operational stability which itself hinges on the people in the firm and the clearly defined purpose of the organisation (See Figure 2.2)

19

Meanwhile, Bozer (2012) recognise that occupants of the “House of Lean” are the operators, group and team leaders and managers of the warehouse. These occupants should have the major preoccupation of eliminating waste and delivering value to customers through continuous improvement of the house. These occupants have to be flexible, capable and highly motivated people who are committed to the success of lean in their operations (Bozer, 2012)

2.7. Wastes in Traditional Warehousing Operations In studying warehousing, it is imperative to understand the sources of waste since one of the key principles of Lean implementation is to expose and eliminate waste, which is defined by King et al. (2006) as “any task or activity that does not add value”. Melton (2004) opined that products that customers are willing to pay for are defined as value-added beyond which are all are wastes. Similarly, Jones et al. (2007) posited that any activity in a manufacturing process that does not add value to the customer is known as ‘waste’ and went ahead to list eight potential wastes that could occur in the operational process (see Appendix 2). Bozer (2012) also identified eight sources of waste in Lean manufacturing, similar to the classification outlined by Jones et al. (2007). Tosser and Karlsson (2008) were however convinced these wastes could be reduced to seven and went ahead to conceptually define these wastes. Their explanations of these wastes have been expatiated on below. Koning, et al. (2006) have argued that in some instances, the waste forms part of the process and adds value to the company, for instance financial controls, and can hence not be eliminated. Melton (2004) classifies waste as either pure wastes or necessary wastes. Accordingly, the author defined necessary waste as tasks that do not add value but are needed to enable or sustain value-

20

added activities. However, whether waste is “necessary” or “pure,” Lean is aimed at reducing and ultimately removing all forms of waste (Ramanathan, 2006).

Figure 2.3: The seven types of waste. Source: Tosser and Karlsson (2008) As stated earlier, Bozer (2012) identified eight sources of waste in Lean manufacturing, similar to the classification outlined by Jones et al. (2007). Tosser and Karlsson (2008), on the other hand, identified seven kinds in warehousing operations. Notably, his seven classifications were not any different from those identified by the earlier authors. These have been expatiated on as follows:

2.7.1. Inventory According to Tosser and Karlsson (2008), inventory wastes occur when there is an excess or shortage of inventories in the warehouse. Storage of wrong items is equally regarded as waste. For instance, Company A may have excess inventories (waste) because they frequently purchase large amounts of inventory whilst Company B may have inventory waste because of the uncertainty of the market and long lead times from their suppliers. This implies that the respective Companies have either not enough or too many items. However, Company C may experience inventory waste

21

because of the excess internal flow of the material in the warehouse and the lack of their ability to track items.

2.7.2. Over-processing Over-processing waste occurs when there are multiple re-entries of information or data into a system or using equipment that offer more capacity than what is needed. This suggests that, all the three Companies (A, B and C), cited above, have over-processing waste in terms of how information was entered into the system, or how the information was used by different parties in the system to make decisions. The case in Company A above involves returned items which presents a greater threat to many warehouses especially in the developing countries like Ghana (Rushton et al., 2010).

2.7.3. Defects Defects refer to the types of waste that occurs when an item is damaged within the warehouse, when the wrong items are picked, and when the wrong quantities of an item is picked (Womack et al., 2005). For instance, Company A may have returns caused by picking errors or damaged items; Company B might hire temporary workers during the high season to cope with the high demand. However, due to lack of experience, the temporary workers might sometimes pick the wrong items. Company C might have a defect waste if the items in its warehouse do not pass the certification test, hence forcing the reprocessing of the items.

2.7.4. Overproduction Overproduction waste is incurred when a company makes more than what the market demands and stores the excess inventory until demand occurs (Ramanathan, 2006). In other words, the

22

production process is not tailored to the needs of the market and might lead to glut. Lean ensures that such overproduction is curtailed through its insistence on producing just-in-time.

2.7.5. Transportation Transportation wastes involve unnecessary travel, for example, during the picking process. In the picking area, transport waste may occur in Company A due to excess inventories and nonorganized items in a manner that could minimize the travel distances and not minimizing the motion waste alone. Company B may place similar items together but may create transport waste if the items are not placed to reduce travel distances. In the same manner, Company C may incur transport waste when the work performed by two workers, going in the opposite direction and back, could have been performed by one worker. However, in all instances, batching of orders could greatly reduce the transport wastes (Melton, 2004).

2.7.6. Waiting Waiting occurs when the items required for an order are not in the picking area and the picker has to wait until the picking area is replenished from the bulk area. Similarly, waiting occurs when there is shortage of equipment which delays the workers until such resources become available. Company A may have waiting waste at receiving, waiting for the unpacking/sorting station to be able to process incoming items whereas Company B may experience waiting waste at the packing station when placing item on the conveyor and waiting for the packing staff to be able to start on the next order (Tosser and Karlsson, 2008). Company C on the other hand, may incur waiting waste for the boxes for packaging have to be thoroughly washed before each process and also waiting for the humidity test of the boxes and certification by an outside party.

23

2.7.7. Motion This type of waste occurs in the warehouse, for example, when items are not placed within the picking height such that the picker has to reach or bend to pick the items (Bozer, 2012). For instance, Company A may reduce this waste by placing hand-picked items in the picking height and larger items further up. Although, it is not too clear of how this could reduce the motion waste, it is perceived that placing large items farther up may increase motion waste. Company B may, however, have significant motion waste in the bulk area simply because when retrieving an item, a worker has to move other items, or stretch/bend when searching for it. In the same manner, Company C may experience the motion waste when retrieving a box for a process and not knowing the exact location such that other surrounding boxes have to be moved before obtaining the correct one.

2.8. Lean Tools In order to reduce or eliminate the above wastes, Lean practitioners employ many tools in their industries, although most of them are implemented as a stand-alone program (Trent, 2008). The more common lean tools mostly applicable to all service industries are listed below according to Kilpatrick (2010).

2.8.1. Kanban Kanban cards aid in the indication of material order points, how much material is needed and to where it should be delivered. This method helps in maintaining an orderly flow of material.

24

2.8.2. Work Cells The technique of arranging operations and/or people in a cell (U-shaped) rather than in traditional straight assembly line. This cellular concept allows for better utilization of people and improves communication.

2.8.3. Total Productive Maintenance According to Kilpatrick (2010), TPM capitalizes on proactive and progressive maintenance methodologies and calls upon the knowledge and cooperation of operators, equipment vendors, engineering, and support personnel to optimize machine performance. Application of TPM in the manufacturing firms eliminates breakdowns, reduces unscheduled and scheduled downtime, and improves utilization, higher throughput and better product quality as well as lowering operating costs.

2.8.4. Total Quality Management Total Quality Management is a management system used to continuously improve all areas of a company's operation. TQM is applicable to every operation in a given company and recognizes the potency of employee involvement.

2.9. Summary of Lean Tools In the table found in the next page (Table 2.2), is a summary of lean tools as deduced from the literature given above.

25

Table 2.2: Summary of Lean Tools Lean Tools - Fawaz (2003); Bicheno (2009)  Value Stream Mapping  Kanban (Pull System)  Just-In-Time  Flowchart  Hybrid 5S  Total Productive Maintenance  predictive or preventive maintenance  Mistake Proofing  Visual Management  One Piece flow  Standardised Procedures/work  Source: Author’s Summary

2.10.

Indicators for Warehousing Performance

Performance measurement is defined by De Koster and Warffemius (2005) as the process of quantifying the efficiency and effectiveness of an action or activity. According to Collins et al. (2006), the purpose of performance measurement in warehousing is to find out whether things are going the right way and, if not, to find what the causes that generated a poor performance were and adopt solutions for improving it. Performance assessments in warehousing actually confer many benefits such as ‘speeding up’ the supply chain and minimizing order picking costs (Johnson et al., 2010). According to De Koster and Balk (2008) there are two main approaches by which warehousing performance could be measured: 1). Economic (i.e. revenue related to cost), and 2). Technical (i.e. outputs related to inputs). However, De Koster and Balk (2008) acknowledged that the economic assessment of warehousing performance is very difficult since warehouses typically do not generate revenues but rather support the supply-chain. Emrouznejad et al. (2008) also confirmed that the economic assessment of warehousing performance is very challenging. According to them this is so because 26

warehouses are generally located in different settings such as in the urban, rural, or international locales and impact differently on the costs of the resources used such as labor and building space. Further, the acquisition costs of capital equipment specific to warehouses vary depending on general economic conditions and the buying power of the specific warehouse owner (Collins et al., 2006). Due to these reasons, technical assessment of warehousing performance based on generated output and resources consumed tend to give a clearer picture of operational performance (Johnson et al., 2010). According to Johnson et al. (2010), this measure circumvents the uncertainty or variation associated with direct financial measurement. The technical assessment involves internal issues (e.g. space utilization, inventory accuracy, safety and housekeeping), external issues (e.g. order accuracy, stock-outs, complaints) and performance issues (e.g. goals, feedback, competence) (Emrouznejad et al. 2008). According to De Koster (2008), the areas of interest to measure performance in manufacturing firms are productivity, inventory and order fulfillment. However, some organizations tend to measure their progress against financial measures such as return on investment, cash flow, sales growth although those measures are irrelevant and do not truly refer to the issues of quality, service, and continuous improvement (Johnson and Kuosmanen, 2009). There are several reasons for measuring performance: for avoiding inconveniences in the firm, for monitoring customer relations, for process and cost control and for maintaining quality (Ackerman, 2003). According to De Koster and Warffemius (2005), setting an indicator system for warehousing activity is the key for performance improvements. The key indicators generally used in measuring warehouse performance include: the storage surface and volume; dangerous items; possibility for temperature control; separation of storage areas; geographical distance to 27

highway connection, train, waterways; certification; opening hours; assistance with customs; use of technology; handling equipment; number and characteristics of docks (Colson and Dorigo, 2004). A study conducted by Drury (2001) on measurement of warehousing performance also made use of similar indicators such as dangerous items, possibility for temperature control, storage surface and volume, separation of storage areas, control for temperature humidity, ventilation, offices on site, geographical distance to highway connection, train, waterways, certification (ISO 9001/9002, SQAS, HACCP), opening hours, assistance with customs, use of technology such as RFID/Barcoding, modem connection, handling equipment (electric, gas and diesel/petrol forklifts) number (Colson and Dorigo, 2004). Collins et al. (2006) classified the indicators used for assessing warehouse performance as: storage surface, storage volume, storage racks, number and characteristics of docks, pallets per hour, pallets per square meter, opening hours, and assistance with customs. Johnson et al. (2010) also made use of three types of indicators in measuring warehousing performance. These are: order fulfillment, inventory management and warehouse performance. The key warehouse performance indicators have been summarized in Table 2.3 in the following page.

28

Table 2.3: Summary of Warehouse KPIs Warehouse KPIs - Colson and Dorigo (2004); Drury (2001); Collins et al. (2006) De Koster and Balk (2008); Emrouznejad et al. (2008); Johnson and Kuosmanen, (2009)  Storage surface and volume  Dangerous items  Possibility for temperature control  Separation of storage areas  Geographical distance to highway connection, train, waterways  Certification  Opening hours  Assistance with customs  Use of technology  Handling equipment  Number and characteristics of docks  Productivity  Inventory  Order fulfillment  Economic/Financial  return on investment  cash flow  sales growth  Technical a. internal issues  space utilization  inventory accuracy  safety  housekeeping b. External  order accuracy  stock-outs  complaints c. Performance  goals  feedback  competence Source: Author’s Summary

29

2.11.

Lean Implementation in Manufacturing Industries

Van Den Berg and Zijm (1999) posited that lean implementation process in the manufacturing industries is simple and straightforward but it is very crucial that lean is implemented in a logical manner. A study conducted by Trent (2008) on lean implementation in the manufacturing industry in the United Kingdom revealed that data-rational and structured approaches are needed if the key principles of value, waste and flow are to be rigorously applied along the supply chain. The study clearly defined the steps for lean implementation in the manufacturing firms as: 1) collection of data, 2) analyses of data, 3) designing the change, 4) making the change and 5) measuring the benefits. These steps have been elaborated in Figure 2.3 below:

Figure 2.4: How to lean. Source: Trent (2008).

30

In addition, Tossser and Karlsson (2008) gave five concise steps (See Figure 2.4) for lean implementation which have been expatiated on as follows: Step 1: Specify Value According to Tosser and Karlsson (2008), this step defines value from the perspective of the final customer and expresses value in terms of a specific product which meets the customer's needs at a specific price and time. Step 2: Map At this stage, the value stream is identified. For instance, the set of all exact actions required to bring a specific product through the three critical management tasks of the firm such as: problem-solving task; information management task, and physical transformation task are identified. In addition, Vitasek et al. (2005) stated that a map of the current and future states of the value stream have to be created at this stage and wastes in the current stage should be identified and categorized in order to eliminate them. Step 3: Flow At this phase, appropriate decisions towards the value stream flow are made to eliminate functional barriers and develop a product-focused organization that dramatically improves lead-time (Tossser and Karlsson, 2008). Step 4: Pull At this stage, the customer is permitted to pull products as needed thereby abolishing the need for sales forecast (Wincel, 2003).

31

Step 5: Perfection Zylstra (2005) report that the process of reducing effort, time, space, cost and mistakes in lean implementation has no end; therefore, at this stage re-visitation of the first step is of paramounce in order to initiate the subsequent lean transformation. This ensures the offering of products that customers’ desire. The process is continued until a state of perfection is reached in which perfect value is created with no waste.

Figure 2.5: Principles of Lean Implementation. Source: Womack and Jones (2012). Sobanski (2009) examined, compared and discussed potential Lean applications in warehouses of three companies and presented a fairly comprehensive assessment of three warehouses and discussed the application of Lean implementation in those three facilities. Although the study was primarily a qualitative one, it provided helpful insights into Lean warehousing. Additionally, subjects such as picker routing were addressed in a traditional fashion based on distance minimization using the Traveling Salesman Problem. The author, however, emphasized the

32

importance of leveling the workload in the picking process through the use of the Lean principle as well as ABC analysis and slotting. In conclusion, the author stated that tools for leveraging Lean in warehousing should be tools that primarily improve the flow and increase visibility of the warehouse. However, considering that the study was a qualitative one, with few number of respondents who were interviewed in-depth, the finding, though noteworthy might not apply to all situations, especially warehousing operations in the food and beverage industry.

2.12.

Inbound and Outbound Logistics in Lean Implementation

According to Stewart (1998), logistics is the management of the flow of goods, information and other resources, including energy and people between the point of origin and consumption. Staccini et al. (2005) also defined logistics as the integration of information, transportation, inventory, warehousing, material-handling and packaging of goods in an organization. According to Taleghani (2010), there are two types of logistics; namely the inbound and outbound logistics. Inbound logistics refers to the fundamental business operations in manufacturing firms involving the processes of receiving, storing and distributing raw materials for use in production (Worley and Doolen, 2006). Inbound logistics is the first stage in any value chain, although small firms may not manage as much inventory as large firms. In large manufacturing Companies, receiving and storing of raw materials are immensely undertaken which basically form part of their inbound logistics (Stewart, 1998). These Companies often have separate facilities for storing raw materials and warehouse staff receive materials, confirm accuracy and organize them for easy access. Conversely, smaller firms usually maintain receiving areas within the same plant in which manufacturing and production takes place (Taner et al., 2007).

33

According to Gayen (2010), the process for inbound logistics involves sourcing, order placement and expediting, vendor supplier, transportation and receiving of goods (see Fig. 2.5). Organization of the material-receiving process is therefore highly significant as it greatly affects the efficiency with which staff distributes raw materials for manufacturing (Worley and Doolen, 2006). Hence, delays in this process as a result of poor organization or response by staff retard company’s productivity. Technology has progressively become an essential component in optimizing the efficiency of material inventory replenishment, monitoring and organizing (Staccini et al., 2005).

Sourcing

Order Placement & Expediting

Vendor Supplier

Receiving

Transportation

Figure. 2.6: Process for Inbound Logistics in Lean Implementation. Source: Gayen (2010).

Outbound logistics, on the other hand, is defined as the movement of materials, storing, transporting, and distribution of a firm's goods to its customers (Shukla et al., 2008). The activities associated with the outbound logistics of manufacturing firms includes order selection, order transportation, customer delivery, customer order, order transmission and order processing (Gayen, 2010) as indicated in Figure 2.7 found in the next page.

34

Activities in distribution performance cycle

Order Processing

Order Selection

Order Transmission

Order Transportation

Customer Order

Customer Delivery

Figure 2.7: Outbound Logistics in Lean Implementation. Source: Gayen (2010).

According to Taleghani (2010), there are several benefits derived from proper implementation of inbound and outbound logistics in manufacturing industries of which the most paramount ones have been highlighted below: 

It ensures that material received as well as related information are processed and swiftly made available to the production, store and other departments.



It helps in complete and accurate documentation of goods received in and returned.



It ensures that items that were properly ordered and meet purchase order specification alone are accepted by the firm.



It safeguards goods received.



It ensures that vendor, inventory and purchase order information are accurately updated to reflect receipts and ensures that rejected items are promptly returned.



It ensures complete and accurate documentation of all transfers to and from the storage. 35



It aids in proper transfer of all materials requested and maintains safe working conditions and storage of hazardous materials.

2.13.

Lean Elements/Constructs/Strategies

There are several lean elements or strategies developed towards the implementation of lean in the manufacturing sector and somewhat adapted in the in warehousing operations. Before an analysis is done on these strategies, it is important to note that several companies have reported some benefits when they have moved toward becoming lean by adapting different lean tools, such as Just-in-Time (JIT), setup reduction, 5S, Total Productive Maintenance (Fawaz, 2003). Also, results of the survey carried out by Strozniak demonstrate that 32% of manufacturers use predictive or preventive maintenance; 23% use continuous-flow production; 19% have adopted cellular manufacturing, while less than 20% use other lean tools such as lot-size reductions, bottleneck/constraint removal, and quick-changeover techniques (Strozniak, 2001). Similarly, there is literature evidence to the fact that practitioners and researchers use lean tools to reduce inventories, lead times, rapid product development processes and improve workplace management (Bicheno, 2009). These are done with tools such as set-up time reduction (SMED), Pull system (Kanban),TPM, Mistake Proofing (Poka Yoke), 5S, Value Stream Mapping, JIT, Visual Management, One Piece flow (Takt time), Standardised Procedures/work, Kaizen (Bicheno, 2009). The lean strategies that will be discussed here are value stream mapping, Kanban, Hybrid 5S. JustIn-Time and Flowchart, since these are considered very useful tools in applying lean to warehousing

36

2.13.1. Value Stream Mapping in a Warehouse Value Stream Mapping (VSM) represents a critical means of attaining better flow of organization’s products in its warehouse. VSM is a flowchart/diagram which gives employees an overall view of all warehouse activities as well as allows suggestions for improvement in warehousing operations (Merten, 2005). In addition, it is considered a critical lean tool which helps practitioners understand how a facility works (in this case a warehouse) and to come up with ideas for improvement. According to Pitcher (2009), VSM uses a flow diagram to document and illustrate every stage of the company’s operations (See Appendix 3). Pitcher (2009) further argued that a greater percentage of lean practitioners consider value stream mapping as the fundamental tool in waste identification, process cycle times reduction as well as implementing process improvement. In fact, several warehouses have been noted to treat the value stream map as the hallmark of their lean efforts (Pitcher, 2009), meaning that it remains a fundamental requirement in their lean operations. According to Earley (n.d.), there are three types of VSM. These are the current state, the ideal state and the future state. While the current state represent where the organization stands in its current application of VSM, the other states represents its projection into how it wants to adopts its VSM to operations (See Appendix 3). Again, the author adds that it is crucial for warehouses to display the current and future state maps in the warehouse so that employees are able to see previous improvements and take part in the ongoing effort. In essence, showing where the organization has been and the future it wants to attain give workers the opportunity to contribute ideas and work towards the attainment of the ideal state.

37

Merten (2005) is convinced that for organizations to assess its operation in VSM, though all workers should be involved in the process, the operators and supervisors should form an important part of the team. These, usually experienced staff, are able to identify Lean improvements and kaizens, question every activity, treat the warehouse like a large staging area, develop justification, implement the Lean improvements using the VSM plan, and then start the cycle again.

2.13.2. Kanban Kanban is a Japanese word meaning signal and is usually a card or tag accompanying products throughout the manufacturing firm (Kumar, 2010). Indicated on the kanbans is the name or serial number for product identification, the quantity, the required operation and the destination of where the part will travel to. The use of kanban assists in trying or linking the different production processes together. The Kanban method is an approach to incremental, evolutionary process and system change for organizations (Merten, 2005). It uses a work-in-progress limited pull system as the core mechanism to expose system operation (or process) problems and stimulate collaboration to continuously improve the system. The Kanban method is rooted in four basic principles as described by Taner et al. (2007) with slight modification:

2.13.2.1.

Start with what you do now

The Kanban method does not prescribe a specific set of roles or process steps but rather starts with the roles and processes of a firm and stimulates continuous, incremental and evolutionary changes to the firm’s system.

2.13.2.2.

Agree to pursue incremental, evolutionary change

The organization (or team) must agree that continuous, incremental and evolutionary change is the way to make system improvements and make them stick. Sweeping changes may seem more 38

effective but have a higher failure rate due to resistance and fear in the organization. The Kanban method encourages continuous small incremental and evolutionary changes to the current system.

2.13.2.3.

Respect the current process, roles and responsibilities

It is likely that the organization currently has some elements that work acceptably and are worth preserving.. Perhaps presenting Kanban against an alternatively more sweeping approach that leads to changes in titles, roles, responsibilities and perhaps the wholesale removal of certain positions aid organizations to realize the potential benefits. Tarner et al. (2007) developed a conceptual diagram of the Kanban System for manufacturing firms (as shown in figure 2.7) and stated that it aids in swiftness of their operations.

2.13.2.4.

Leadership at all levels

Acts of leadership at all levels in the organization from individual contributors to senior management should be encouraged.

2.13.2.5.

Emergency or Rush Kanban

An emergency Kanban provides a way for rush work to be done. If a specific request/service or document/item is to be rushed through the process, then it has to be given and shown priority in some way. This could, for example, be routinely achieved with differently colored Kanban cards – Red is a common one. If a worker has a stack of “cards”/work to deal with, then the red “card” work would be done first, thus allowing it to be done more quickly and without requiring the unnecessary intervention of supervisors, etc. to make it a priority (Collins et al., 2006).

39

Figure 2.8: Conceptual diagram of the Kanban System. Source: Tarner et al. (2007). 2.13.3. Just-In-Time Just-In-Time (JIT) manufacturing is a Japanese management philosophy applied in manufacturing which involves having the right items of the right quality and quantity in the right place and the right time (Fiedler et al., 2009). It has been widely reported that the proper use of JIT manufacturing has resulted in increases in quality, productivity and efficiency, improved communication and decreases in costs and wastes (Cheng and Podolsky, 1996; Padukone and Subba, 2003). Just-In-Time management involves the application of old management ideas; however, its adaptation to the modern manufacturing firm is a relatively new practice. Presently, many firms are applying the JIT approach in response to an ever more competitive environment 40

(Don et al., 2006). In order to remain competitive and experience economic success, most manufacturing firms focus on increasing productivity, improving the quality of their products and raising the standards of efficiency within their firms. Over the long run, application of JIT in manufacturing assists Companies in achieving the goal of manufacturing excellence (Cheng and Podolsky, 1996).

2.13.3.1.

Benefits of Using JIT in the Manufacturing Industries

Successful implementation of JIT in the manufacturing firm reduces the fluctuations which many firms experience upon changing economic condition (Don and Maryanne, 2006). Goddard (1986) suggested that JIT allows companies to filter out the wastes in the production process, improve upon quality, and satisfy consumer demands in an efficient and reliable manner. Since purchasing under JIT requires a significantly shorter delivery lead time, lead-time reliability is greatly improved. Reduced lead times and setup times increase scheduling flexibility, thus, the firm schedule within the production planning horizon is reduced. This results in a longer “look-ahead” time that can be used to meet shifts in market demand. In cases where the order quantity is small, sources of quality problems are quickly identifiable, and can be corrected immediately (Cheng and Podolsky, 1996). The costs of purchased materials may be reduced through more extensive value analysis and cooperative supplier development activities. According to Fiedler et al. (2009) financial benefits of JIT include: 1). Lower investments in factory space for inventories and production; 2). Less obsolescence risk in inventories; 3). Reduction in scrap and rework; 4). Decline in paperwork; and 5). Reduction in direct material costs through quantity purchases.

41

2.13.4. Flowchart A flowchart or workflow in the manufacturing industry consists of a sequence of connected steps where each step follows without delay or gap and ends just before the subsequent step begins as indicated in figure 2.8 (Schonberger and Ebrahimpour, 2004). Padukone and Subba (2003) asserted that a flowchart is a depiction of a sequence of operations, declared as work of a person or group, an organization of staff, or one or more simple or complex mechanisms. Workflow may be seen as any abstraction of real work (Hall, 1993). However, for control purposes, workflow may be a view of real work in a chosen aspect, thus serving as a virtual representation of actual work. The flow being described may refer to a document or product that is being transferred from one step to another. According to Fiedler et al. (2009), workflows may be viewed as one primitive building block to be combined with other parts of an organization's structure such as information silos, teams, projects, policies and hierarchies.

42

Figure 2.9: Warehouse flowchart indicating the sequence of operations and document transfer at the warehouse. Source: Schonberger and Ebrahimpour (2004). 2.13.5. Hybrid 5S Trebilcock (2004) developed the conceptual model known as the “Hybrid 5S” that integrates process improvement tools along with inventory management techniques towards lean implementation. The model was formulated in four phases, following the Kaizen event structure

43

which is based on the adoption of Deming’s cycle of continuous improvement (Jacobson et al., 2009).

2.13.5.1.

Phases 1 and 2:

According to Wilson (2000), the pre-work which is the fore-stages of the model begins with observations and preparations to formulate a plan. Mapping the process and specifying value from the customer’s perspective are paramount in the processes’ lean implementation (Womack et al., 2005). At this phase, planning of Lean initiatives takes into consideration inventory management techniques such as ABC classification, estimating ordering and carrying cost, and layout re-design.

2.13.5.2.

Phase 3:

The implementation phase is the establishment of 5S, which involves the first three stages of 5S: Sort, Set to Order, and Shine (Dulhai, 2008). These have been illustrated in Figure 2.9 below

2.13.5.3.

Phase 4:

The fourth phase of the model adopts standardization and sustenance of the model which oversees variations in the overall process flow and constantly looks for solutions to counter any issues (See Figure 2.5 below). The final phase of the model, therefore, seeks to measure the improved process by evaluating effectiveness, efficiency, relevance and impact (Wilson, 2000).

44

Figure 2.10 Lean’s 5S. Source: Logistics Helps (2013) 2.13.5.4.

Explanations from the above chart:

1. Sort – This stage involves the planning of Lean initiatives by taking into consideration inventory management techniques such as ABC classification, estimating ordering and carrying cost, and layout re-design (Dulhai, 2008). 2. Set in Order – According to Wilson (2000), all the materials has to be well organized at this stage and an efficient and effective storage method should be established. Again, strategies for effective storage of the items such as painting of the floors, outlining working areas and locations and shadow boards have to be implemented. 3. Shine– After the clutter has been removed and the work environment organized, the working area has to be thoroughly cleaned and kept clean. 4. Standardize – Having achieved the previous 3S’s, it is required of the manufacturing firm to standardize the best practices in order to sustain the processes. 5. Sustain – According to Gergova (2010), it is hard to change the existing process; therefore, sustaining the changes is considered to be the most difficult “S’’ to implement and maintain.

45

Usually, resistance accompanies the changes made, and personnel easily turn back to the status quo. Hence, understanding and promoting the changing processes is essential. A case study conducted by Venkateswaran et al. (2010) made use of the Hybrid 5S model. The research was concentrated on the warehouses of three hospitals holding similar supplies and operations and explored the effectiveness of a Hybrid 5S compared to two traditional 5S’s in reducing overall inventory and streamlining supplies. Again, the study assessed the impact of a new strategy, the Hybrid 5S in healthcare’s warehouse operations starting with identifying critical items, reducing overall inventory, redesigning warehouse layout, optimizing space, and reducing distances travelled. The Hybrid 5S model made use of the Kaizen event structure to establish the relationship between process improvement tools and inventory management techniques. The study made use of 200 departments across eight hospitals and 35 clinics in Louisiana. The results of the study clearly revealed that Hybrid 5S had the greatest impact compared to traditional 5S. Even though, one traditional 5S witnessed an increase in inventory turnover (15%), space in the warehouse was not reduced. Hybrid 5S showed a positive influence on the warehouse after the implementation with an increase in inventory turnover of 59.5% and nearly 15.7% space saved. This may be due to the incorporation of Kaizen, which provided insight to identify the root causes and provided a systematic procedure. In contrast, traditional 5S neglected the actual problem, and the procedures were suited for monetary benefits rather than sustaining for the long term. Moreover, the traditional 5S ignored the use of inventory techniques and other Lean process improvement tools best suited for the facility.

Gergova (2010) studied how shipbuilding companies in Norway could use lean warehousing in their operations. The study investigated the implementation of Lean’s 5S (sort, set in order, shine, 46

standardize, and sustain – See Figure 1.2) in warehousing. At the time the study was concluded, the implementation of 5S in the warehouse was still in process so the author could not provide a complete description of the process or a follow-up. However it was found that implementation of lean warehousing concerns such as cultural transformation, resistance to change, and personnel involvement were adequately addressed by the organisation. However, value streams, flow, pull, and takt times, which are equally relevant lean concerns, were not addressed.

Although the Hybrid 5S gave promising results, several other factors could have influenced its results such as more efficient team-work and employee and management’s commitment. Employee training and top-management involvement therefore, need to be exercised constantly in order to sustain the improvements for long term (Venkateswaran et al., 2010).

2.14.

Warehousing Performance in Pre-Lean Operations/Post-Lean

Implementation Generally, warehouse performance is highly improved after proper lean implementation than prelean implementation in any given firm, especially in the manufacturing industries (Myerson, 2012). In most cases, post-lean implementation results in improved customer-filled rates, decreased inventory levels, decreased inventory carrying costs, improved inventory accuracy, increased assets and team-member utilization in the warehouse (Naylora et al., 1999; Roodbergena et al., 2009). According to Taylor and Brunt (2010), a company is able to provide better quality products and services and be much more responsive in its supply when appropriate lean implementation measures are instituted. Stratton and Warburton (2008) also added that a firm’s swiftness in satisfying its loyal customers becomes possible because it is more able to trace changes in the 47

marketplace and quickly align itself with such changes due to the proper lean implementation strategies. In reality, this does not only benefit loyal customers, but also ensures that the organization is able to reap the full benefits of the market changes. In this regard, Rouwenhorst et al. (2010) argued that proper post-lean implementation of lean strategies in manufacturing industries results in quick responsiveness to clients especially, when there is a change in their levels of order been made. A study conducted by Myerson (2012) on lean supply chain and logistics management found that in a post-lean environment, companies are able to manage their in and out-flows and synchronize their operations so as to minimize the level of wastes incurred. By this, firms stand a high chance of allocating resources much more precisely. This finding was also corroborated by Roodbergena et al. (2009), whose empirical study found that manufacturing firms are able to allocate two-anda-half people to a process that used to have five or more people allocated to it in its pre-lean periods. Stratton and Warburton (2008) summed this observation when they noted that post-lean activities actually aid in driving continuous improvement activities in the operational area in warehouses. In a study undertaken by Graban (2008), entitled “Lean Hospitals: Improving quality, patient safety and employee satisfaction” it was found that in post-lean implementation, organizations are able to properly segregate their materials and perform suitable alignment of inventories at storage. By so doing, firms save space and build a safer environment for those work in the various warehouses. Endsley et al. (2006) corroborated the findings of Graban (2008) when he also observed that employees are prevented from exposure to a lot of ergonomic injuries in warehouses when there are purposeful storage plans as occasioned by lean implementation strategies.

48

An empirical study conducted by Jones and Mitchell (2011) revealed that storage is a key enabler of a standard work cycle which deteriorate with time. However, in a lean distribution environment, deterioration at storage is highly minimized since there is a plan for every activity at the storage environment. Another study undertaken by Jocobson et al. (2009) confirmed the above findings by noting that lean distribution environment directly facilitates stable standards and cycles that enable just-in-time delivery with quality and a safe working environment.

2.15.

Operational Challenges Facing the Implementation of Lean Warehousing

Creating a lean warehouse or distribution center is a continuous process that takes longer period of time. According to Rother and Shook (1999), lean implementation involves careful vision statement, planning, strategy, tools and tactics. Although, problem identification and solving may seem basic, it mostly proves elusive in application (Melton, 2004). In a study conducted by Womack and Jones (2012), several factors that hinder the implementation of lean warehousing were identified of which the top cited barriers included: 

the lack of sufficient technology for warehouse automation and visibility;



visibility in and out of the warehouse (e.g. upstream visibility) is marginal;



poor warehouse layouts prohibiting higher throughputs in existing footprint without a major overhaul;



poor practice sharing across locations and between business units and lack of IT resources to support warehouse technology initiative (Womack and Jones, 2012).

Gustavo (2012) and Pettersson et al. (2010) also stated that challenges relating to delivery time, wrong codification, inventory valuation (i.e. First In First Out [FIFO] or Last In First Out [LIFO]) and demurrage are notable issues that affect quality in warehousing operations. 49

Larson et al. (2007), however, categorized operational challenges to the implementation of lean warehousing into natural resistance to change, production culture and functional culture (Figure. 2.5). These forces act in tandem to recline the level of implementation and effectiveness of lean in the manufacturing industries. However, aside these threats, Larson et al. (2007) stated that getting closer to customers in an increasingly competitive environment and the desire to be compliant in an increasingly regulated environment cushions lean implementation in the many organizations including the manufacturing firms (see Figure. 2.10).

Figure 2.11: Forces supporting and resisting lean implementation. Source: Larson et al. (2007). 50

Thus the operational challenges facing the implementation of lean could be summarized as lack of sufficient technology for warehouse automation and visibility; visibility in and out of the warehouse (e.g. upstream visibility) is marginal; poor warehouse layouts prohibiting higher throughputs in existing footprint without a major overhaul; poor practice sharing across locations and between business units and lack of IT resources to support warehouse technology initiative (Womack and Jones, 2012). The others could be summarized as wrong codification, inventory valuation, natural resistance to change, production culture and functional culture.

2.16.

Current State Mapping and Future State Mapping

Generally, majority of companies outsource to countries where wages are low and production costs are lower (Wolfgang et al., 2007). To reduce cost and remain competitive with other manufacturing Companies, variety of different methods such as lean manufacturing are employed to reduce waste in an operation, such as long lead times, defects and material waste. However, in order to visually display where waste occurs in the manufacturing process, a current and future state mappings are drawn to assess the current manufacturing processes as well as creating ideal future state processes (Ehie and Sawhney, 2007).

2.16.1. Current State Mapping The current state mapping is a totality of all actions on the projection, order composition and production: starting from creating of a product project to launching the product, order to delivery, extraction of raw materials to ready product manufacturing (Strong, 2009). The current state mapping visualizes these actions and aids in developing a detailed and graphical map as shown in figure 2.11 (Ehie and Sawhney, 2007). From the diagram, the waiting time is far greater than the value added time and thus, increases the lead time and operating costs due to higher levels of

51

inventory. The differences in operating time and speeds create difficulty in developing a smooth process flow.

Figure 2.12: The Current State Mapping. Source: Ehie and Sawhney (2007).

2.16.2. Future State Mapping A study conducted by Mekong (2004) on “Introduction to Lean Manufacturing for Vietnam” came out with the future state mapping seen in figure 2.12. According Mekong (2004), the total cycle times could be reduced in F4 and F6 and the largest part of the lead time is caused by the plating operation which can be reduced by eliminating the safety inventory of un-plated parts. This was represented by the dotted box in the picture. In addition, the safety inventory of the plated parts can be reduced to 2-3 shifts and the delivery times can also be optimized.

52

Figure 2.13: High Level Future State VSM. Source: Mekong (2004).

2.17.

Improvement in Lean Warehousing Performance

A study conducted by Kumar et al. (2006) revealed that enhancing visibility in warehouse activities, inventory and order status are the best decisions or actions for improving warehouse performance. According to Warehouse Productivity Benchmark Report (2006), there are six major ways by which lean warehousing operations could be improved. It could be enhanced by: 

Creating more agile warehouse environment to support customer-specific demands.



Revising throughput strategies.



Improving visibility to warehouse activities and inventory and order status.



Improving warehouse employee productivity. 53



Building a new or expanded distribution center



Implementing more value-add services capabilities.

More often, gaining better visibility and executing the planned actions out-lined above requires warehouse managers to implement additional technology, including: Labor optimization software; materials handling automation; light-directed, or voice-directed technology; key warehousing analytics; slotting and layout tools; and increased cross docking or value-added services support (Nicholson et al., 2010).

2.18.

Conclusion

Lean warehousing has been aptly illustrated as the most efficient approach in reducing waste in warehousing operations. Waste in warehousing comes in eight principal forms. Importantly, applying lean strategies and tools have been empirically proven as an effective means to tackling these wastes. This review has also covered the main concepts under warehousing, especially its conceptual definition and roles. In addition, the review covered value stream mapping as well as the application of lean and pre and post-warehousing operations, with empirical finding proving that indeed, the application of lean positively affects the operations of warehouses. Finally, the chapter covered the operational challenges of implementing lean in warehouse operations.

54

3. CHAPTER THREE: METHODOLOGY 3.1. Introduction This chapter focused on the methodology of the study. It explored the methods that were used to make the research purpose, that is, to assess lean strategies employed in Nestlé Ghana Limited (NGL) and its impact on their warehousing performance, if possible. Specifically, it covered the research design, sampling procedure, population and sample size among others. Besides detailing the method of data analysis, it also covered the ethical considerations employed in the study. It is hoped that the pursuit of these will make the answer of the research objectives on the impact of lean implementation strategies on warehousing performance and the operational challenges facing the implementation of lean warehousing realizable.

3.2. Research Model From the literature review done, lean tools were identified which could translate into lean benefits and ultimately affecting warehouse performance (See Appendix Four for details). This model, which underlies the study has been conceptualized below:

Lean Tools

Benefits of Lean

Warehouse Key Performance Indicators (KPIs)

Figure 3.1: Conceptual Model of the Study

As indicated above, the researcher investigated the impact of lean tools on the performance of warehousing through an intermediating factor, which is the benefit of lean. The benefit of lean, in this study, is therefore the dependent variable while the KPIs of warehouse performance becomes the independent variable. This model is premised on the understanding that the benefits of lean must map unto its unique general benefit before the same benefit could map unto the warehousing 55

KPIs. In other words, how many of the lean benefits could be realized in warehousing in Nestlé Ghana limited.

3.3. Research Design Creswell (2006) defines a research design as procedures for collecting, analyzing, interpreting, and reporting data in research studies. A study could either adopt the quantitative, qualitative or the mixed research design approach. The quantitative survey design was used in the study. Quantitative survey is a data collection method which requires asking people, referred to as respondents for information using either verbal or written questionnaire. This research design was considered appropriate because it is the best method to describe the variables under study - as gleaned from the experiences, knowledge and perceptions of the respondents in this study (Creswell, 2006). In addition, quantitative survey provides a quick, inexpensive, efficient and accurate means of assessing information about the population (Creswell, 2006). It requires that questions to be asked, whether verbal or written are well thought of and structured by the researcher. The structured method of survey therefore involves the development and administration of a questionnaire with a fixed list of questions in a standard sequence which has mainly fixed or pre-categorized answers. In the present study, the pre-categorized responses will cover the area of lean warehousing practices in Nestlé Ghana Limited.

3.4. Research Setting The research setting is Nestlé Ghana Limited. Nestlé operates their warehouse and their factory in the Tema Industrial Area. The researcher visited the warehouse which is located close to the factory in order to administer the questionnaires to the respondents. 56

3.5. Research Population The population of a study refers to all the available respondents from whom the researcher will potentially gather data from, in order to meet the objectives of the study. Conceptually, it is regarded as a large collection of individuals or objects which constitute the main focus of a scientific query (Neuman, 2007). All individuals or objects within a certain population usually have a common, binding characteristic or trait which defines the population a researcher might be interested in. In this study, the population were employees of Nestlé Ghana Limited – management staff as well as key distributors of the institution. Thus, the general population or population size in this study comprises 850 which is the general staff strength of Nestle Ghana and key distributors nationwide. These therefore define the general population of the study The population sample or working population in this study was 135, which consist of NGL heads of department, warehousing managers, warehousing supervisors and distributors in Accra and Tema. Nestlé Ghana Accra and Tema offices have 90 middle and upper level managers and 15 warehousing managers and 10 coordinators. In addition, Nestlé has 20 key distributions in Accra and Tema. The Warehousing workers defined here are workers who are directly working in the warehouse or whose job descriptions directly and indirectly impacts the Nestlé warehousing operation but do not work within the warehouse itself.

3.6. Sampling Technique and Sample Size According to Neuman (2007) sampling involves the selection of people to participate in a research project, usually with the goal of being able to use these people to make inferences about a larger group of individuals. Any sampling process therefore presupposes the existence of a population from which the sample will be drawn.

57

There are two methods normally used for sampling. These are probability and non-probability sampling (Stangor, 2007; Opoku, 2007). The choice as to probability or non-probability sampling is usually determined by the nature and composition of the working universe or population from which the sample will be drawn and the nature of the study or research being carried out. Probability sampling is the sampling technique which ensures that every member element or unit of the population has an equal chance of being included in the sample. A similar understanding is postulated by Stangor (2007) who wrote that the probability sampling procedures are “used to ensure that each person in the population has a known chance of being part of the sample”. Techniques of probability sampling includes simple random sampling which employs the lottery method or table of random numbers, systematic sampling which involves the choice of an element of the population from a complete list of all the elements of the population at regular intervals, stratified random sampling which involves sub-dividing the population into two or more mutually exclusive segments or strata and applying the simple random sampling techniques to draw samples from each of these segments and the cluster sampling method which involves breaking the sample into small bits or small samples and randomly choosing some of small bits or cluster to include in the research (Opoku, 2005). Non-probability sampling, on the other hand, refers to the processes of selection which are not random. Stangor (2007) is of the view that when dealing with populations that are difficult to get a sampling frame or we cannot guarantee the accuracy of the sampling frame, then the nonprobability sampling is more ideal. The various techniques under non-probability sampling method include, among others, convenience sampling which involves the selection of a sample based on proximity, purposeful or judgmental sampling where choice of a sample is prejudged based on available information. Snowball sampling involves the initial identification of a small number of 58

sampling units which are subsequently used as information for identification and inclusion of additional sampling units of similar characteristics (Opoku, 2005). Broadly, sampling is usually undertaken to lower the cost of a study, make data collection faster, ensure homogeneity of the sample selected and finally improve the accuracy and quality of the data. In this study the purposive sampling method was used in the selection of respondents. The usage of the purposive sampling method was informed by the fact that the study targets to collect data from a specialized group of workers in the company. In other words, the study will not sample the views of all the employees of the company but only those who directly work on warehousing issues as well as managers. The purposive sampling method entails selecting respondents whose views are relevant to the subject matter of the study and not just due to their availability. Since the subject matter is on lean warehousing, the personnel who work directly in the company warehouse as well the management staff of the organization were considered more knowledgeable, as far as correctly responding to the issues in the questionnaire is concerned. The sample size for the study was 100. Table 3.1.: Excerpt from ‘Table for Determining Sample Size from a Given Population’ Population (N)

Sample (S)

130

97

140 Source: Krejcie and Morgan (1970).

103

Therefore with the population sample or working population of 135, the study sample or study population was 100 being the scientific mid-point between a population sample of 130 and 140. Below is a chart displaying the categorization of the respondents (sample size).

59

Figure 3.2.: Sample Size Categorization SAMPLE SIZE CATEGORIZATION Key Distributors 18%

Managers 30%

Employees 52%

Source: Fieldwork (2014)

CATEGORIES Managers Employees Key Distributors Totals

SAMPLE SIZE CATEGORIZATION POPULATION SAMPLE/ STUDY SAMPLE/ WORKING POPULATION STUDY POPULATION 45 30 70 52 20 18 135 100

Using the purposive sampling method, the researcher selected respondents who were knowledgeable on the subject matter. This means any respondent who indicates that he/she is ignorant on the subject matter was exempted while those whose work are very far removed from the subject matter were also exempted.

3.7. Sources of Data The study made use of both primary and secondary data. Principally, a structured questionnaire was the main tool used in the solicitation of the primary data. These were solicited from the

60

managers of the warehouse as well as other managers in the company. A copy of this questionnaire is annexed to this study as Appendix One. The secondary data were sourced from published and unpublished materials, journals, magazines and any other material that yielded information that can be classified as scholarly. Journal sites such as ebsco, sage, jstor, emerald, google scholar among others were used in this regard. Due to the diversity of the secondary data, coupled with the fact that few scholarly research have been done on the subject area, the research had to do extensive online search with diverse combination of key words to glean relevant literature on the subject matter.

3.8. Methods of Data Collection As indicated above, a structured questionnaire was the main tool for data gathering. It was designed to satisfy the objectives of the study as well as address the issues raised in the problem statement. Principally, it addressed the issue pertaining to the thematic issues of lean and warehousing – emphasizing especially on how the former impacts the latter. The questionnaires sourced the views and perceptions of respondents using the Likert scale. This means that respondents were required to indicate to what extent they agree, disagree or are neutral on the issues under study (Likert, 1932). These views were then scored with the Likert scale – with 1 to 5 standing for Strongly Disagree to Strongly Agree respectively. The findings were reported and recommendations made. The questionnaire was divided into four main sections. Section one featured questions pertaining to demographic data on respondents. Questions such as respondents’ age, gender and educational level are examples of the questions that were asked here. The second section focused on lean tools applied while the third section traced the benefits of lean. The final section mapped the lean tools

61

to warehouse performance as well as the challenges involved in implementing lean in warehousing situations.

3.9. Procedure of the Study Permission for data gathering was sought with a letter from GTUC to the Management of Nestlé Ghana Limited. This letter was addressed to the Managing Director (MD) and craved his indulgence to assist the researcher with his data gathering process. Upon receipt of the letter, the MD introduced the researcher to the Human Resources and the Warehouse Operations Manager who, in turn, upon deliberation, found an appropriate time the researcher could undertake the data gathering exercise. Before then, the researcher was introduced to other managers. This presentation and introductions took one week. Thereafter, the platform was set for the researcher to commence the data gathering process.

Questionnaires were administered to respondents at the company premises. The researcher adhered to ethical issues such as privacy, confidentiality and respect for subjects as much as practicable (See Section 3.10). Towards this end, consent were sought from respondents before questionnaires are administered to them. The data gathering exercise took five working days, thus Mondays to Friday.

3.10.

Validity and Reliability of Data

Data in the study were collected with a questionnaire designed by the researcher. Since this questionnaire is not standardized, the researcher did a pilot study to test the potential challenges that might arise during the main data collection. Before the pilot study was done, the questionnaires were vetted by my supervisor Ing Yaw Yawson to ensure the questions posed conform to standard situations and were designed to really satisfy the objectives of the study. His contributions in 62

shaping the questionnaires were invaluable and contributed immensely towards improving the internal validity and reliability of the questions. Coming back to the issue of pretesting, it must be emphasized that questionnaires were administered to five respondents of the institution. Besides few phrasing that were suggested and corrected, most of the pretest respondents did not have any issue with the questionnaire. Moreover, the researcher used the same questionnaire for all the respondents to ensure uniformity in the data gathering process. This ensured that similar responses were given from one respondent to the other. After the questionnaire administration, all the responses were recorded and reviewed before the analysis were done. In essence, the researcher ensured everything from data gathering to analysis was standardized for all respondents.

3.11.

Analysis of data and presentation of results

The data was analyzed with the aid of the Statistical Package for Social Scientist (SPSS) software. The software was deployed to save time since a manual analysis takes a lot of time. Importantly, the data was illustrated with tabular and graphical depictions meant to illustrate the findings. However in certain instances, a prose-like presentation was used to depict the views of respondents, particularly where an observation is reported. The Relative Importance Index (RII) and descriptive statistical tools such as standard deviation and mean were used in the analysis of questionnaire. The RII was used to establish the relative importance of the various factors identified as responsible for warehouse improvement, in the light of lean tools. The score for each factor is calculated by summing up the score given to it by the respondents. It was calculated using the following formula 63

RII = ∑ PiUi ……………………………………………………… (1) N (n) Where, RII = relative importance index Pi = respondent’s rating on the usage of lean tools and challenges in implementing lean warehousing Ui = number of respondents placing identical weighting/rating on the usage of lean tools and challenges in implementing lean warehousing N = sample size n = the highest attainable score on the usage of lean tools and challenges in implementing lean warehousing The relative importance index of all the factors was calculated using equation (1) above. The indexes were ranked for the each variable group. On the other hand, the descriptive analysis was used to establish how the sample mean deviate from the population mean.

3.12.

Ethical Considerations

As indicated in the methodology section, ethical considerations were adhered to in this study. Ethical issues such as confidentiality, personal data protection, consent and respect of research respondents or subjects were rigorously observed. Conscious efforts were made not to coerce or cajole any respondent into accepting to be part of the study. This means respondents’ individuality and right not to assist in the study were respected. Their consent was sought before questionnaires were administered to them. Those who expressed any reservations, either in the beginning or the course of the data gathering process were exempted from the study. Moreover, the names of respondents were not be taken in order to preserve their privacy. However, every respondent was identified with a code name. In addition, the questionnaire contained a confidentiality clause, where respondents were assured that every information supplied will be for academic purpose only and will not be used in any publication to victimize them. 64

3.13.

Conclusion

This study employs the quantitative survey as the research approach. The sample consist of employees of NGL, with the sample selected from management, the warehouse staff and key distributors. The census approach was used it the selection of these respondents. The study was situated within Nestlé factory and warehousing complex in Tema Industrial Area. Questionnaires were the tool for data analysis. Finally, the data was analyzed with the SPSS software and the analysis will be employed in the presentation of data. The RII was also used in the analysis. The questionnaire in the study was presented to ensure reliability. Finally, ethical considerations were observed during the data gathering process.

65

4. CHAPTER FOUR: DATA ANALYSIS AND DISCUSSION OF FINDINGS 4.1. Introduction This chapter presents the results of the study based on the data collected using the methodology espoused in the previous chapter. It is organized into five main sections. The first section delves into the background of respondents. The second section accesses the lean implementation at Nestlé Ghana. The third section investigates the benefits of lean on Nestlé’s warehousing. The fourth section assesses the key performance indicators of warehousing. The final section evaluates the operational challenges facing the implementation of lean warehousing at Nestle Ghana. Table 4.1 below presents the sample targeted and the sample recovered in the study. The study recovered approximately 97%, 94% and 94% of the questionnaire distributed to the managers, warehouse staff and key distributions respectively. Thus, the analysis is based on 95 respondents from these three categories. The questionnaires which were not retrieved from the respondents were either not returned or deemed invalid because too many values were missing or incomplete. Table 4.1: Recovery from Various Respondent Groups Respondent Group Sample Recovery

Response rate (%)

Managers

30

29

96.67

Staff

52

49

94.23

Key Distributors

18

17

94.44

Total

100

95

95

Source: Fieldwork (2014)

66

4.2. Demographic Characteristics of Respondents The demographic characteristics of respondents for the study include gender, age, educational background and number of years at Nestlé Ghana Limited. This is to give a brief idea of the kind of respondents that were available for the research.

4.2.1. Gender of respondents The figure presented below shows the gender distribution in the study. From the figure below 82.1 percent of the respondents were male while 17.9 percent of the respondents were female. This result clearly shows that there were more male than female in the study conducted. This could be attributed the purposive sampling since the researcher was interested in respondents who had knowledge about the study. Figure 4.1: Gender of Respondents

Source: Fieldwork (2014)

4.2.2. Age group of respondents From the figure below, 9.5 percent of the respondents were between the ages of 20-25 years, 42.1 percent were between the ages of 26-30 years, 46.3 percent were between the ages of 31-35 years 67

and 2.1 percent were between the ages of 36-40. The result clearly shows that all the respondents are in their youthful stages. This means that Nestlé Ghana Limited recruitment mainly centers on the youth. Figure 4.2: Age Group of Respondents

Source: Fieldwork (2014) 4.2.3. Educational Background of Respondents The figure below depicts the educational level respondents. From the figure 4.3 majority of the respondents representing 60 percent had the bachelor’s degree. Also 30.5 percent had their postgraduate degree and 9.5 percent had their secondary education certificate. The result clearly shows that the least educated respondents had up to secondary education. The level of education means that respondents were able to contribute to the study meaningfully since they are knowledgeable in their respective field.

68

Figure 4.3: Educational Background of Respondent

Source: Fieldwork (2014)

4.2.4. Years of service at Nestlé Ghana Limited When respondents were asked to indicate the number of years they have worked with Nestlé Ghana Limited, 73.7 percent (forming the majority) mentioned period ranging between 1 to 5 years, 24.2 percent mentioned periods ranging between 6 to 10 years and 2.1 percent mentioned period ranging between 11-15 years. The result suggests that all the respondents have considerable years of experience at Nestlé Ghana Limited.

69

Figure 4.4: Years of Service at Nestlé Ghana Limited

Source: Fieldwork (2014)

4.3. Assessing Lean Implementation In Nestlé Ghana Limited Based on the ranking (R) of the weighted average of the relative importance indices (RII) in the table below, it was observed that the most frequently used lean tool is the 5S model (RII=0.613) that is Nestlé systematically attempts to achieve total discipline, orderliness, tidiness, cleanliness and standardization in the workplace, bringing about safer, more efficient, and more productive warehouse. This is followed by Work cells (RII=0. 607), which meant that Nestlé efficiently produced small batches of parts by using specialized grouping of people, machines, and materials. Respondents also agreed that Nestlé often implement the Kanban Pull system (RII=0. 605). Thus eliminating of

70

waste from inventory and regulation of flow of goods both with the factory and with outside suppliers and customers by using signal cards to indicate when more goods need to be ordered. The fourth lean tool often used by Nestlé is Poka-Yoka (RII =0.576). From this output, it can be fairly believed that Nestlé detected and prevented errors at design stages before it gets to production. The fifth lean tool identified was the Value stream (RII= 0.558) and Just in time (RII= 0.558). From the table it was also observed that least lean tool implemented by Nestlé is the One Piece Flow (RII=0.418) thus moving one work piece at a time between operations within a work cell in the warehouse. With regard to the findings on the lean tools, it found that Nestlé company frequently use the 5s model and work cell. This finding on work cell is consistent with the finding of Caron et al. (2000) who indicated that Nestlé Company employs cell production. However the finding on the 5s model is in contrast with the findings of Caron et al. (2000). Table 4.2: Lean Tools RII

Rank

Nestlé systematically achieved total discipline, orderliness, tidiness, cleanliness and standardization in the workplace, bringing about safer, more efficient, and more productive warehouse. (The 5S model)

0.613

1

In implementing lean, Nestlé efficiently produced small batches of parts by using specialized grouping of people, machines, and materials (Work cells)

0.607

2

There is elimination of waste from inventory and regulation of flow of goods both with the factory and with outside suppliers and customers by using signal cards to indicate when more goods need to be ordered. (Kanban [Pull system])

0.605

3

71

Error/Mistake proofing (Poka-Yoka) is one of the important lean tools used in Nestlé. Nestlé detected and prevented errors at design stages before it gets to production.

0.576

4

Nestlé adopted and optimized series of activities in the warehouse that added value from the perception of the customer (Value stream)

0.558

5

Nestlé uses Just-in-Time (JIT) as a lean strategy by reducing inventory and space requirements levels and improving cash flow.

0.558

5

Visual signals instead of texts or other written instructions are used to improve smooth flow of information at the warehouse. (Visual management/Visual factory)

0.542

7

A graphical representation is made of some part of the warehousing information system to show where information originates, who handles the information, and how it is summarized for decision making. (Flowchart)

0.542

7

Nestlé visualize processes and tracked which steps of a process at the warehouse added value and which do not, by the use of symbols, metrics and arrows

0.539

9

At Nestlé we move one work piece at a time between operations within a work cell in the warehouse (One Piece Flow)

0.418

10

Source: Fieldwork (2014) In sum, it can be concluded that the lean tools used in NGL’s warehousing are 5S model, Work Cells, Kanbn, Poka-Yoka, Value Stream, JIT, Visual Management, Flow Chart and One Piece flow in an ascending order. This finding indicates that waste is reduced to a large extent in NGLs warehousing (Bozer, 2012, Melton, 2004, Tosser and Karlsson, 2008).

72

4.4. Benefits of Lean on Nestlé's Warehousing Respondents indicated in Table 4.3 that reducing over-stocking at the warehouse by optimizing the location of products at the warehouse hence helping employees pick and pack quicker with more accuracy is rarely realized, 18.9 percent of the respondents indicated it sometimes realized, 16.8 percent of the respondents were not realized, 28.4 percent of the respondents indicated it is mostly realized and 23.2 percent of the respondents indicated that it is always realized. Using majority view, it can be seen that reducing over-stocking at the warehouse by optimizing the location of products at the warehouse hence helping employees pick and pack quicker with more accuracy is one of the benefits of lean implementation. A mean score of 3.31 (which is higher than the scale midpoint of 3.0), hence it implies that Nestlé’s lean reduces over-stocking at the warehouse by optimizing the location of products at the warehouse hence helping employees pick and pack quicker with more accuracy. Ten (10.5 percent) of the respondents indicated that reduction of waiting time associated with the loading and unloading of transport at the warehouse and employees that wait for orders, or orders that wait for warehouse employees is rarely realized, eighteen (18.9 percent) of the respondents indicated that it is sometimes realized, thirty (31.6 percent) of the respondents were neutral, seventeen (17.9 percent) indicated that it is mostly realized and twenty (21.1 percent) of the respondents indicated that it is always realized. With a mean of 3.20 (which is higher than the scale midpoint of 3.0) it can be said that lean implementation in Nestlé lean reduces waiting time associated with the loading and unloading of transport at the warehouse and employees that wait for orders, or orders that wait for warehouse employees. Also Thirteen (13.7 percent) of the respondents indicated that enabled proper planning so that trucks and other transports are optimally loaded and most value derived out of transport costs is 73

rarely realized, twenty-four (25.3 percent) of the respondents indicated that it is sometimes realized, sixteen (16.8 percent) of the respondents were neutral, fourteen (14.7 percent) indicated that it is mostly realized and twenty-two (23.2 percent) of the respondents indicated that it is always realized. Since the mean recorded was 3.20 (which is higher than the scale midpoint of 3.0), it implies that lean implementation at Nestlé enabled proper planning so that trucks and other transports are optimally loaded and most value derived out of transport costs. Thirteen (13.7 percent) of the respondents indicated that lean implementation resulting in minimum inventory so space and capital are not tied up is rarely realized, twenty-five (26.3 percent) of the respondents indicated that it is sometimes realized, nineteen (20 percent) of the respondents were neutral, sixteen (16.8 percent) indicated that it is mostly realized and twenty-two (23.2 percent) of the respondents indicated that it is always realized. With a mean of 3.20 (which is higher than the scale midpoint of 3.0), it can be inferred that implementation of lean at Nestlé’s warehouse result into minimum inventory so space and capital are not tied up. Again 8.4 percent of the respondents indicated that effective warehousing processing, processing as many products as possible in the shortest time possible is rarely realized at Nestlé, 13.7 percent of the respondents indicated it sometimes realized, 21.1 percent of the respondents were neutral, 23.2 percent of the respondents indicated it is mostly realized and 33.2 percent of the respondents indicated that it is always realized. Using majority view, it can be seen that effective warehousing processing, processing as many products as possible in the shortest time possible is one of the benefits of lean implementation at Nestlé. With a mean score of 3.60 (which is higher than the scale midpoint of 3.0), it implies that Nestlé’s lean implementation leads to effective warehousing processing thus processing as many products as possible in the shortest time possible.

74

Nine (9.5 percent) of the respondents indicated that less defects where picking and other manual errors are eradicated, dealing with unnecessary returns and waste of time is rarely realized during lean implementation at Nestlé, sixteen (16.8 percent) indicated that it is sometimes realized, nineteen (20 percent) were neutral, twenty-seven (28.4 percent) indicated that it is mostly realized and twenty-four (25.3 percent) indicated that it is always realized. With a mean score of 3.43 (which is higher than the scale midpoint of 3.0), it can be inferred that lean implementation in Nestlé leads to less defects where picking and other manual errors are eradicated, dealing with unnecessary returns and waste of time. Further 6.3 percent of the respondents indicated that reduction wasted motion at the warehouse is rarely realized at Nestlé, 13.7 percent of the respondents indicated it sometimes realized, 29.5 percent of the respondents were neutral, 25.3 percent of the respondents indicated it is mostly realized and 25.3 percent of the respondents indicated that it is always realized. From the table mean score recorded was 3.49 (which is higher than the scale midpoint of 3.0), hence it implies that Nestlé’s lean implementation reduces wasted motion at the warehouse. Finally, 10.5 percent of the respondents indicated that the implementation of lean leading to less rework at Nestlé’s warehouse is rarely realized, 15.8 percent of the respondents indicated it sometimes realized, 17.9 percent of the respondents were neutral, 26.3 percent of the respondents indicated it is mostly realized and 29.5 percent of the respondents indicated that it is always realized. From the table mean score recorded was 3.48 (which is higher than the scale midpoint of 3.0), hence it implies that implementation of lean leads to less rework at Nestlé. The finding on the benefits of lean strategies confirms copious literature evidence which have confirmed that lean is benefit in most organizational process, hence its popularity and wider 75

applicability. specifically, the findings concurs with the findings of Kim et al. (2006) and Larson et al. (2007) who reported that implementing lean leads to less rework. Several literature points to the direction that companies reap some benefit after implementing lean tools and this assertion supports the findings. For example Fawaz, (2003) revealed that several companies have reported some benefits when they have moved toward becoming lean by adapting different lean tools, such as 5S. Also Bicheno, (2009) remarked that there is literature evidence to the fact that practitioners and researchers use lean tools to reduce inventories, lead times, rapid product development processes and improve workface management.

76

Table 4.3: Benefits of Lean Implementation Benefits of Lean Elements or Strategies Nestlé’s lean reduced over-stocking at the warehouse by optimizing the location of products at the warehouse hence helping employees pick and pack quicker with more accuracy. Lean implementation in Nestlé reduced waiting time associated with the loading and unloading of transport at the warehouse and employees that wait for orders, or orders that wait for warehouse employees. Lean implementation in Nestlé enabled proper planning so that trucks and other transports are optimally loaded and most value derived out of transport costs Implementation of lean at Nestlé’s warehouse resulted into minimum inventory so space and capital are not tied up. Nestlé has effective warehousing processing, processing as many products as possible in the shortest time possible Lean implementation in Nestlé led to less defects where picking and other manual errors are eradicated, dealing with unnecessary returns and waste of time. Wasted Motion at the warehouse is reduced when Nestlé implemented lean so employees now require less motion to complete a task. Lean implementation at Nestlé’s warehouse has led to Less rework Source: Fieldwork (2014)

Rarely realized 12 (12.6%)

Degree of Benefit Sometimes Neutral Mostly realized realized 18 16 27 (18.9%) (16.8%) (28.4%)

Always realized 22 (23.2%)

Mean 3.31

10 (10.5%)

18 (18.9%)

30 (31.6%)

17 (17.9%)

20 (21.1%)

3.20

13 (13.7%)

24 (25.3%)

16 (16.8%)

14 (14.7%)

22 (23.2%)

3.17

13 (13.7%)

25 (26.3%)

19 (20%)

16 (16.8%)

22 (23.2%)

3.09

8 (8.4%)

13 (13.7%)

20 (21.1%)

22 (23.2%)

32 (33.7%

3.60

9 (9.5%)

16 (16.8%)

19 (20%)

27 (28.4%)

24 (25.3%)

3.43

6 (6.3%)

13 (13.7%)

28 (29.5%)

24 (25.3%)

24 (25.3%)

3.49

10 (10.5%)

15 (15.8%)

17 (17.9%)

25 (26.3%)

28 (29.5%)

3.48

77

4.5. Key Performance Indicators of Warehousing Performance in the Nestlé Ghana Limited From the table below 8.4 percent of the respondents strongly disagreed that lean implementation in Nestlé leads to safe handling of dangerous items at the warehouse, 12.6 percent of the respondents disagreed, 31.6 percent of the respondents were neutral, 26.3 percent of the respondents agreed and 21.1 percent of the respondents strongly agreed. With a mean score of 3.39 (which is higher than the scale midpoint of 3.0), it can be fairly concluded that lean implementation in Nestlé is believed to lead to safe handling of dangerous Items at the warehouse. Ten (10.5 percent) of the respondents strongly disagree that Nestlé’s lean implementation does not lead to the separation of storage areas at the warehouse, 12.6 percent of the respondents disagreed, twenty-seven (28.4 percent) of the respondents were neutral, ten (10.5 percent) of the respondents agreed and 21.1 percent of the respondents strongly agreed. With a mean score of 3.393.48 (which is higher than the scale midpoint of 3.0), it can be settled that lean implementation at Nestlé have a positive effect on safe handling of dangerous Items at the warehouse. Also 6.3 percent of the respondents strongly disagree that lean implementation is positively correlated with efficient handling of equipment at the warehouse, 12.6 percent of the respondents disagreed, 30.5 percent of the respondents were neutral, 29.5 percent of the respondents agreed and 21.1 percent of the respondents strongly agreed. Since the mean score recorded 3.46 (which is higher than the scale midpoint of 3.0), it implies that lean implementation is positively correlated with efficient handling of equipment at the warehouse. When respondents were asked if Nestlé’s lean implementation leads to increased sales growth, 12.6 percent of them strongly disagreed, 22.1 percent of the respondents disagreed, 30.5 percent 78

of the respondents were neutral, 21.1 percent of the respondents agreed and 25.3 percent of the respondents agreed. With a mean score of 3.13 (which is higher than the scale midpoint of 3.0), it can be inferred that Nestlé’s lean implementation leads to increased sales growth. Again when respondents were asked if there is high effective space utilization at the warehouse due to Nestlé’s lean implementation, 9.5 percent of them strongly disagreed, 13.7 percent of the respondents disagreed, 21.1 percent of the respondents were neutral, 26.3 percent of the respondents agreed and 29.5 percent of the respondents strongly agreed. From the table below mean score recorded was 3.53 (which is higher than the scale midpoint of 3.0), hence it can be resolved that Nestlé’s lean implementation maps unto high effective Space utilization at the warehouse. Twelve (12.6 percent) of the respondents each disagree and strongly disagree respectively that lean implementation leads to inventory accuracy at the warehouse, twenty-four (25.3 percent) of the respondents were neutral, twenty-eight (29.5 percent) of the respondents agreed and nineteen (20 percent) of the respondents strongly agreed. The mean score recorded was 3.32 (which is higher than the scale midpoint of 3.0), hence it can be said that lean implementation is believed to have to have a beneficial effect on inventory accuracy at the warehouse. The above benefits confirm Naylora et al., (1999) and Roodbergena et al., (2009) Taylor and Brunt (2010), Stratton and Warburton (2008) and Myerson (2012) finding that implementing lean leads to positive warehousing performance indicators. Naylora et al., (1999) and Roodbergena et al. (2009), in particular, observed that post-lean implementation results in improved customer-filled rates, decreased inventory levels, decreased inventory carrying costs, improved inventory accuracy, increased assets and team-member utilization in the warehouse. However, the findings 79

contradict the views of Emrouznejad et al. (2008) and De Koster and Balk (2008), especially when one considers sales growth, which the economic benefits of warehouses are difficult to measure, which invariably led them to conclude that the effect of lean on warehousing is difficult to measure. Further when respondents were asked if lean implementation at Nestlé leads to improved safety at the warehouse, 8.4 percent of them each disagreed and strongly disagreed respectively, 23.2 percent of the respondents were neutral, 31.6 percent of the respondents agreed and 28.4 percent of the respondents strongly agreed. With a mean of 2.32 (which is lower than the scale midpoint of 3.0), it can be concluded that lean implementation at Nestlé does not lead to improved safety at the warehouse. Finally 8.4 percent of the respondents strongly disagreed that Nestlé’s lean implementation leads to improved Order accuracy at the warehouse. Here, 6.3 percent of the respondents disagreed, 20 percent of the respondents were neutral, 17.9 percent of the respondents agreed and 47.4 percent of the respondents strongly agreed. With a mean of 2.10 (which is lower than the scale midpoint of 3.0), it can be concluded that Nestlé’s lean implementation does not leads improved Order accuracy at the warehouse.

80

Table 4.4: Key Performance Indicators of Warehousing Performance Level of Satisfaction 2 3 4

Key Performance Indicators for Measuring Warehouse Performance Lean implementation in Nestlé led to safe handling of dangerous Items at the warehouse

8 (8.4%)

12 (12.6%)

Nestlé’s lean implementation leads to the Separation of Storage Areas at the warehouse

10 (10.5%)

10 (10.5%)

Lean implementation is positively correlated with efficient Handling of Equipment at the warehouse

6

12 (12.6%)

1

(6.3%)

Nestlé’s lean implementation leads to increased sales growth

12 (12.6%)

21 (22.1%)

There is high effective Space utilization at the warehouse due to Nestlé’s lean implementation

9 (9.5%)

13 (13.7%)

Lean implementation leads to Inventory accuracy at the warehouse

12 (12.6%)

12 (12.6%)

Lean implementation in Nestlé leads to improved safety at the warehouse

8 (8.4%)

8 (8.4%)

Nestlé’s lean implementation leads to improved Order accuracy at the warehouse

8 (8.4%)

6 (6.3%)

Source: Fieldwork (2014)

81

30 (31.6 %) 27 (28.4 %) 29 (30.5 %) 29 (30.5 %) 20 (21.1 %) 24 (25.3 %) 22 (23.2 %) 19 (20%)

25 (26.3 %) 28 (29.5 %) 28 (29.5 %) 9 (9.5% ) 25 (26.3 %) 28 (29.5 %) 30 (31.6 %) 17 (17.9 %

5

Mean

20 (21.1%)

3.39

20 (21.1%)

3.40

20 (21.1%)

3.46

24 (25.3%)

3.13

28 (29.5%)

3.53

19 (20%)

3.32

27 (28.4%)

2.30

45 (47.4%)

2.10

4.5.1. Hypothesis - Overall Impact of Lean Implementation on Warehousing Performance The study hypothesized that lean implementation would lead to increased warehouse performance. This was stated as follows:

Ha: Lean implementation strategies impact on warehouse performance. Ho: Lean implementation strategies do not impact on warehouse performance.

From the findings made, the Lean tools had 3.23 as its mean value of mean; while the mean of its benefit was computed as 3.35. Similarly the mean of means for the key performance indicators recorded was 3.08. These mean computations are summarized in the study model adopted below:

Lean Tools

Benefits of Lean

Mean = 3.23

Mean = 3.35

Warehouse Key Performance Indicators Mean = 3.08

This shows that the implementation of the lean tools maps positively unto warehousing performance. Therefore, the study concludes from the analysis and the five point Likert scale that there is a correlation and positive impact of lean implementation strategies on warehousing performance.

4.6. Operational Challenges Facing the Implementation of Lean Warehousing When respondents were asked if there are operational challenges facing the implementation of lean warehousing at Nestlé, majority of the respondents (representing 70.5 percent) responded in the affirmative that there are operational challenges, 16.8 percent of the respondents said no and

82

12.6 percent of the respondents did not know if there operational challenges facing the implementation of lean warehousing at Nestlé.

Figure 4.5: Are there operational challenges facing lean implementation

Source: Fieldwork (2014)

In an attempt to identify some of the operational challenges facing lean implementation at Nestlé, the relative importance index method was employed. The table below shows the RII and the ranks of operational challenges by respondents. Based on the ranking (R) of the weighted average of the relative importance indices (RII) in the table below, it was observed that the most important challenge is lack of sufficient technology for warehouse automation and visibility primarily impedes the implementation of Lean warehousing in NGL (RII=0.421) followed by Poor warehouse layouts prohibiting higher throughputs in existing footprint without a major overhaul highly obstructs the implementation of Lean warehousing (RII=0.389). The lack of IT resources in supporting warehouse technology initiatives in the NGL really hampers its Lean warehousing

83

implementation (RII=0.389) and poor practice sharing across locations and between business units greatly hinders the implementation of Lean warehousing in NGL (RII=0.384). From the table below it was also observed that the least challenge was underutilization of transporters due to the inability of key distributors to cash purchase huge quantum of products some of the times. (RII=0.334). The study found that the main operational challenges were the lack of sufficient technology for warehouse automation and visibility and poor warehouse layouts prohibiting higher throughputs in existing footprint without a major overhaul. This finding is in congruence with the finding of Womack and Jones (2012) whose study revealed several factors that hinder the implementation of lean warehousing, among them are the lack of sufficient technology for warehouse automation and visibility and visibility and poor warehouse layouts prohibiting higher throughputs in existing footprint without a major overhaul. However it was found that poor practice sharing across locations and between business units was not really an operational challenge as found in Womack and Jones (2012).

84

Table 4.5: Challenges of lean implementation The lack of sufficient technology for warehouse automation and visibility primarily impedes the implementation of Lean warehousing in NGL. Poor warehouse layouts prohibiting higher throughputs in existing footprint without a major overhaul highly obstructs the implementation of Lean warehousing. The lack of IT resources in supporting warehouse technology initiatives in the NGL really hampers its Lean warehousing implementation. Poor practice sharing across locations and between business units greatly hinders the implementation of Lean warehousing in NGL. Transporters are underutilized due to the inability of key distributors to cash purchase huge quantum of products some of the times. Source: Fieldwork (2014)

RII 0.421

Rank 1

0.389

2

0.389

2

0.384

4

0.334

5

In an ascending order, it can be concluded that the operational challenges were lack of sufficient technology for warehouse automation and visibility, poor warehousing layout, lack of ICT resources, poor practice sharing across locations and between business units and transporters underutilization by key distributors. As argued earlier, these are supported by copious literature evidence.

85

5. CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION 5.1. Introduction This section focuses on the summary, conclusion and recommendations of the study.

5.2. Summary of Findings The study used the RII to assess lean implementation in Nestlé Ghana Limited. The three top lean strategies used in the organization were the 5S model, work cells and the Kanban Pull System. With an RII score of 0.613, the study found the 5S model as the highest used lean strategy in the organization, followed by Work Cells with an RII score of 0.607. It was also found that the Kanban Pull system was used. This also had an RII of 0. 605. One Piece Flow, Value Stream, Visual Management/Visual Factory and Flowchart represent the least popular strategies used in Nestlé. These had 0.418, 0.558, 0.542 and 0.542 respectively. The rest, being Poka, Yoka, Just-in-Time, and Value Stream fell in the middle. This means they could be used but not very much, relative to the 5S model, work cells and the Kanban Pull System. The study also traced the benefits of lean in Nestlé’s warehousing. It was found that reducing overstocking at the warehouse by optimizing the location of products at the warehouse hence helping employees pick and pack quicker with more accuracy is one of the benefits of lean implementation. However with a mean score of 3.31, it implies that Nestlé’s lean reduced over-stocking at the warehouse by optimizing the location of products at the warehouse hence helping employees pick and pack quicker with more accuracy. Similarly, with a mean of 3.20, it can be said that lean implementation in Nestlé reduced waiting time associated with the loading and unloading of transport at the warehouse and employees that wait for orders, or orders that wait for warehouse employees. In addition, with a mean of 3.20, it can be said that lean implementation in Nestlé 86

enabled proper planning so that trucks and other transports are optimally loaded and most value derived out of transport costs. Similar findings were made with respect to inventory and capital tied up, effective warehousing processing thus processing as many products as possible in the shortest time possible, less defects where picking and other manual errors are eradicated, dealing with unnecessary returns and waste of time. In addition, the benefit regarding reduced wasted motion at the warehouse and less rework were realized in Nestlé. Concerning the key performance indicators of warehousing performance, it was observed that only the benefit of improved safety at the warehouse and improved Order accuracy at the warehouse were the only performance indicators not observed in the organization. These were justified with of 2.32 and 2.10 which effectively demonstrate that lean implementation at Nestlé neither improve safety nor Order accuracy at the warehouse. On the other hand, lean implementation led to safe handling of dangerous items at the warehouse, efficient handling of equipment at the warehouse, increased sales growth, space utilization and inventory accuracy. These variables had a sample mean which was greater than the population mean in their respective cases. Since operational challenges are to be expected with lean warehousing, it can be concluded that similar challenges were expected in Nestlé. This was further confirmed by more than 70% agreeing that indeed Nestlé faces challenges in its lean warehousing. Similarly, the weighted average of the RII showed that the most important challenge is lack of sufficient technology for warehouse automation and visibility, followed by Poor warehouse layouts prohibiting higher throughputs in existing footprint without a major overhaul highly obstructs the implementation of Lean warehousing, the lack of IT resources in supporting warehouse technology initiatives in the NGL and poor practice sharing across locations and

87

between business. The RII scores on these variables show that they indeed facilitate the implementation of Lean warehousing in NGL. The least challenge in lean warehousing implementation was transporters underutilization due to the inability of key distributors to cash purchase huge quantum of products some of the times which had an RII score of 0.334.

5.3. Hypothesis The study hypothesised that lean implementation do impact warehouse performance. Again, the hypothesis was stated as follows:

Ha: Lean implementation strategies impact on warehouse performance. Ho: Lean implementation strategies does not impact on warehouse performance.

With a mean of 3.23 for lean strategies, 3.35 for the benefits and 3.08 for warehousing key performance indicators, it could be concluded that there is a positive correlation between lean implementation strategies and key performance indicators of warehouses. Therefore from the above deductions, we accept the alternate hypothesis (Ha) and reject the null hypothesis (Ho).

5.4. Research Question The study was designed to answer the following research questions: 

What is the impact of lean implementation strategies on warehouse performance?



What are the operational challenges in implementing lean warehousing?

On the first research question, the study observed an impact of lean on warehousing performance, in conformance with several literature that made similar conclusions. This further affirms that 88

implementing lean in warehousing is very beneficial, similar to its implementation in manufacturing enterprises (Kim et al. 2006; Larson et al., 2007; Fawaz, 2003; Bicheno, 2009). The study also unearthed several operational challenges that affect warehousing performance at Nestlé. Though these challenges have been itemized in the concluding section below, suffice to mention that these challenges could be summed up as the limited involvement of ICT in Nestlé’s warehousing and layout/visibility issues (Womack & Jones 2012). These are crucial challenges that require urgent attention to enable Nestlé get the best out of its warehouses.

5.5. Conclusion Based on the findings of the study, the following conclusions were drawn: On the first objective “To assess the impact of lean implementation strategies on warehousing performance”, the study concludes that lean implementation in Nestlé positively affect warehousing performance. Therefore the hypothesis that lean implementation affect warehouse performance was supported in this study (Kim et al. 2006; Larson et al., 2007; Fawaz, 2003; Bicheno, 2009). On the second objective, “To evaluate the operational challenges facing the implementation of lean warehousing”, the study concludes that Nestlé faces challenges with respect to sufficient technology for warehouse automation and visibility, Poor warehouse layouts prohibiting higher throughputs in existing footprint without a major overhaul highly obstructs the implementation of Lean warehousing, lack of IT resources in supporting warehouse technology initiatives and poor practice sharing across locations and between business (Womack & Jones 2012). However, the organization does not face challenges on transporters underutilization due to the inability of key distributors to cash purchase huge quantum of products some of the times. 89

As noted earlier in Chapter One, the study faced challenges. The critical ones were resource constraints that challenges with access to Nestlé for data gathering. Regarding the latter, the researcher had to spend rather long time collecting data, contrary to the initial time allotted for this activity under the Gantt chart. This explains why the researcher was unable to get 100% recovery rate during data gathering.

5.6. Recommendations 5.6.1. Recommendation for Implementation Based on the findings of the study, the following recommendations will be made for implementation by Nestlé Ghana Limited. 

Nestlé should track its implementation of lean management to warehousing performance. This ensures that the organization derive its best from the implementation of warehouse more than it currently exist in the organization. When the two are delinked, then the organization can implement lean but will be limited in tracking whether it is yielding the best results or not.



Nestle should ardently ensure that its warehousing benefits from the lean tools which admittedly are utilized, its benefits are not reflecting as much as it should.



Nestlé should work at mitigating the challenges faced in implementing lean management in its warehouses. Once these challenges are not minimized, they will work to erode the very benefits lean is expected to yield in the management of warehouses in Nestlé. The challenges could be reduced through management tracking of which lean tools to use in their warehousing. This could be done through a bouquet of these tools as a standalone tool.

90

5.6.2. Recommendation for Further Studies The study will make the following recommendations for further studies: 

Assessing the significant relationship between lean implementation and its impact of warehousing.



Assessing the application of lean tools in custom bonded warehouses in Ghana.

91

REFERENCES Atkinson, P 2008 ‘Creating and Implementing Lean Strategies’. Journal Management Services, 48, 2, 18-33. Bacalu

V (n.d) Lean Techniques for Warehousing. (Online) Available http://www.werc.org/assets/1/workflow_staging/Publications/738.PDF [28/01/2013]

at

Baudin, M. (2004), Lean Logistics: The Nuts and Bolts of Delivering Materials and Goods. Chicago - Productivity Press. Bicheno, J. (2009). The Lean Toolbox - The Essential Guide to Lean Transformation. Buckingham, UK - PICSIE Books. Bozer, Y A (2012). Developing and Adapting Lean Tools/Techniques to Build New Curriculum/Training Program in Warehousing and Logistics. Available at http://www.sagepub.com [26/02/2014] Business Engineering (n.d.) Common Tools, Terms & Acronyms used in Lean Management, Six Sigma, Total Quality Management & Continuous Improvement Processes. (Online) Available at http://www.businessengineering.co.nz/terms.html [28/01/2013] Caldorone, C., (2008). Creating a Lean HME Warehouse Operation. Lean Homecare Consulting Group, LLC. (Online) Available at www.leanhomecare.com [28/01/2014]. Caron, F. Marchet, G. and Perego, A 2000. Optimal layout in low-level picker-to-part systems. International Journal of Production Research, 38, 1, 101-117. Chen, M.C., Huang, C.L., Chen, K.Y., and Wu, H.P (2005). ‘Aggregation of orders in distribution centers using data mining’. Expert Systems with Applications, 28, 3, 453-460. Chen, C.Y. and Irani, S.A. (1993). ‘Cluster first-sequence last heuristics for generating block diagonal forms for a machine-part matrix’. International Journal of Production Research, 31, 11, 2623-2647. Cheng, T.C.E. and Podolsky, S. 1996. Just-in-Time manufacturing, An introduction. 2nd Edition, pp: 2-18 Conti, R., Angelis, J., Cooper, C., Faragher, B. and Gill, C. 2006 ‘The effects of lean production on worker job stress’, International Journal of Operations & Production Management, 26, 9, 1013-38.

92

Collins, T.R., M.D. Rossetti, H.L. Nachtmann, and J.R. Oldham 2006 ‘The use of multi-attribute utility theory to determine the overall best-in-class performer in a benchmarking study’. Benchmarking 13, 4, 431-446. Colson and Dorigo, 2004. Sequencing of JIT Mixed Model Assembly Lines. Management Science, 37, 3, 901-904. Creswell, D. (2006). Designing- Choosing a mixed methods design. (Online). Available at http://www.sagepub.com/upm-data/10982_Chapter_4.pdf. [26/02/2014] De Koster, M.B.M. and P.M.J. Warffemius (2005). American, Asian and third-party international warehouse operations in Europe: A comparison, International Journal of Operations and Production Management 25(8), 762-780. De Koster, M.B.M. 2008 Warehouse assessment in a single tour. In M. Lahmar (Ed.), Facility Logistics. Approaches and Solutions to Next Generation Challenges (pp. 39-60). New York: Auerbach - Taylor & Francis Group. De Koster, M.B.M., Balk, B.M 2008 ‘Benchmarking and monitoring international warehouse operations in Europe’, Production and Operations Management 17, 2, 1-10. Demeter, K., and Maytusz, Z 2010 ‘The Impact of Lean Practice on Inventory Management’. International J. Production Economics, 133 (2011), 154-163. Don, R. H. and Maryanne, M. M. 2006 ‘Cost Management, Accounting and Control’, 5th Edition”, pp: 510. Drury, C. 2001, ‘Management Accounting for Business Decisions’. 2nd Edition”, pp: 473 Dulhai, G 2008 ‘The 5S strategy for continuous improvement of the manufacturing processes in autocar exhaust’. Management & Marketing, 3, 4, 115-120. Endsley, S., Magill, K. M, Godfrey, M. M (2006). Creating a Lean. Family Practice Management, Production and Operations Management, 13, 4, 34-38. Earley

T n.d ‘Creating the Ideal Value Stream Map’. (Online) Available at http://leanmanufacturingtools.org/598/creating-your-ideal-and-future-state-value-streammap/ [28/01/2014].

Ehie, I. C. and Sawhney, R 2007. Integrating Six Sigma and Lean Manufacturing for Process Improvement: A Case Study. (Online). Available at www.sixsigma.com/pdf [12/03/2014] Emrouznejad, A., Parker B. R. and Tavares G. 2008 Evaluation of research in efficiency and productivity: A survey and analysis of the first 30 years of scholarly literature in DEA. Socio-Economic Planning Sciences 42, 3, 151-157. 93

Fawaz, A., (2003). Lean Manufacturing tools and Techniques in the process industry with a focus on steel. Pittsburgh, USA - University of Pittsburgh Press. Fiedler K., Galletly J.E. and Bicheno J., 2009. “Expert Advice for JIT Implementation.” International Journal of Operations and Production Management, 13, 1, 23-30. Fillingham,D., (2007). Can Lean Save Lives? Leadership in Health Services, 20, 4, 231–241. Gaunt. K., (2006). Are your Operational Warehouse Lean. (Online) Available at http://www.plantemoran.com/perspectives/articles/2009/pages/are-your-warehouseoperations-lean.aspx (28/01/2014). Gademann, A.J.R.N., Van den Berg, J.P. and Van der Hoff, H.H. 2001. An order batching algorithm for wave picking in a parallel-aisle warehouse. IIE Transactions, 33, 385-398. Gayen, R. K. 2010. ‘Insight view of inbound and outbound logistics of supply chain management’. Chicago, USA - Chicago University Press. Gergova, I 2010 ‘Warehouse Improvement with Lean 5S - A Case Study of Ulstein Verft AS’, M.S. Thesis, Master’s Program in Logistics, Molde University College, Molde, Norway, 2010. Graban, M. (2008). Lean Hospitals: Improving Quality, Patient Safety, and Employee Satisfaction, Chicago, USA - Productivity Press Gu, J. Goetschalckx, M. and McGinnis, L. F. (2007). “Research on Warehouse Operation: A Comprehensive Review,” European Journal of Operational Research, 177, 1, 1-21. Gustavo, B. G. A., (2012). Implementing lean principles to improve warehouse operations at XYZ Company. Thesis – Masters in MS Operations and Supply Management, University of Wisconsin-Stout, Graduate School. Hall, R.W., (1993), Zero Inventories (Homewood, IL: Dow Jones-Irwin), 2nd Edition. Chicago, USA – Chicago University Press. Hanna, J. (2007). Bringing 'Lean' Principles to Service Industries. HBS Working Knowledge, (Online) Available at http://hbswk.hbs.edu/item/5741.html [28/01/2014] Jacobson, H. G., McCoin, S. N, Lescallette, R., Russ, S., and Slovis, M. C (2009). Kaizen: A Method of Process Improvement in Emergency Department. Academic Emergency Medicine, 16, 4, 1341-1349. Johnson, A., W. C. Chen and L. F. McGinnis (2010) “Large-scale Internet benchmarking: Technology and application in warehousing operations.” Computers in Industry 61,3, 280286.

94

Johnson, A.L. and T. Kuosmanen (2009). How Do Operational Conditions and Practices Effect Productive Performance? Efficient Nonparametric One-Stage Estimators, Working paper. (Online) Available at http://ssrn.com/abstract=1485733 [28/02/2014] Jones, D., Womack, J., (1996). Lean Thinking: Banish Waste and Create Wealth in Your Corporation, United States - Simon & Schuster. Jones, D. T., Hines, P. and Rich, N 2007 ‘Lean Logistics’ International Journal of Physical Distribution and Logistics Management, 27:3/4, pp. 153-173. Jones, D., and Mitchell, A. (2011). Lean thinking for the NHS. NHS confederation London. Irani, S.A. and Ramakrishnan, R. (1995). Production Flow Analysis using STORM. In Planning, Design and Analysis of Cellular Manufacturing Systems. Editors: A.K. Kamrani, H.R. Parsaei and D.H. Liles, Elsevier Science BV: New York, NY. Kilpatrick, J. (2010). Lean Principles. Utah Manufacturing Extension Partnership, 1-5. In: Tandon, P., Tiwari, A. and Tamrakar, S. (2014). Implementation of Lean Manufacturing Principles in Founderies. International Journal of Modern Engineering Research, 4, 2, 50. Kim, S. C., Spahlinger, A. D, Kin, M. J, Billi, E. J (2006). Lean Health care: What Can Hospitals Learn from a World Class Automaker. Journal of Hospital Medicine, 1,3, 191-199. King, L. D., Tovim, B. D, Bassham, J 2006 ‘Redesigning emergency department patient flows: application of Lean thinking to health care’. Emergency Medicine Australasia, 18, 391397. Knut

A., and Mishra, D 2008 ‘Lean and mean’. (Online) Available at http://www.supplychainstandard.com/Articles/1364/Lean+and+mean.html [29/01/2014].

Koning, H., V. J., Heuvel. J., Bisgaard. S., Does. R 2006 ‘Lean Six Sigma in Healthcare’. Journal for Healthcare Quality, 28, 2, 4-11. Krafcik, J.F 1998 ‘Triumph of the lean production system’, Sloan Management Review, 30, 1, 4152. Krejcie, R.V., and Morgan, D.W 1970 ‘Determining Sample Size for Research Activities’. Educational and Psychological Measurement, 30, 607-610. Kumar, M., Antony, J., Singh, K. R, Tiwari, K. M, and Perry, D 2006 ‘Implementing the Lean Sigma framework in an Indian SME: a case study’. Production Planning & Control, 17, 4, 407-423. Kumar, V 2010 ‘JIT Based Quality Management: Concepts and Implications in Indian Context’ International Journal of Engineering Science and Technology, 2, 1, 40-50 95

Larson, P. D. ,oist, R. F. and Halldórsson, A 2007. ‘Perspectives on Logistics vs SCM: A Survey of SCM Professionals’ Journal of Business Logistics, 28:1, 1-25. Lewis, M.A. (2000). “Lean production and sustainable competitive advantage”, International Journal of Operations & Production Management, 20, 8, 959-78. Liker, J.K. (1998). Becoming Lean: Inside Stories of US Manufacturers. New York, NY Productivity Press, Liker, J.K. (2004), The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer, New York, NY - McGraw-Hill, Likert, R 1932 ‘A Technique for the Measurement of Attitudes’. Archives of Psychology 140, 1, 1–55. Logistic Helps (2013). Continuous improvement through Lean supply chain. (Online) Available at http://www.logisticshelp.com/About/Tools-&-Technology/Lean-supply-chain.html [28/01/2013] Mekong C 2004 ‘Introduction to Lean Manufacturing for Vietnam’. Published Article by Mekong Capital Ltd. In: El-Namrouty, K. A. and AbuShaaban, M. S. (2013). Seven Wastes Elimination Targeted by Lean Manufacturing Case Study of Gaza Strip Manufacturing Firms. International Journal of Economics, Finance and Management Sciences. 1, 2, 6880. Melton, P.M. (2004). To lean or not to lean? (that is the question), The Chemical Engineer, (759): 34–37. Myerson, P. (2012). Lean Supply Chain and Logistics Management, London - McGraw-Hill. Naylora, J. B., Naima, M. M. and Berry, D 1999) ‘Leagility: Integrating the Lean and Agile Manufacturing Paradigms in the Total Supply Chain’, International Journal of Production Economics, 62,1/2, 107-118. Neuman, W. L., (2010). Basics of Social Research, Qualitative and Quantitative Approaches, 3rd Edition, Pearson Educational Inc. Nicholas, J. and Soni, A. (2006), The Portal to Lean Production: Principles and Practices for Doing More with Less, Boca Raton, FL - CRC Press, Nicholson, L., Vakharia, A. J., and Erenguc, S. S 2010, ‘Outsourcing inventory management decisions in healthcare: Models and application’. European Journal of Operational Research, 154, 271-290.

96

Ohno, T. (1986). Toyota Production System: Beyond Large-Scale Production (English version 1988 ed.). Cambridge, Mass. - Productivity Press. Padukone H. and Subba R.H., 2003, “Global status of JIT- Implication for developing countries”, Journal of Manufacturing Technology Management, 34, 3, 419-429. Peterson, P., Johansson, O., Broman, M., Blucher, D. & Alsterman, H. (2010). Lean- Turn deviations into success! Bromma, Sweden: Part Media, Gronviksvagen. Pitcher, M (2009). Profitable Applications of Value Stream Mapping Tutorial. (Online) Available at http://asq.org/learn-about-quality/lean/overview/value-stream-mapping.html [15/02/2014] Rahman, S., Laosirihongthong, T., and Sohal, A.S., (2010). Impact of lean strategy on operational performance: a study of Thai manufacturing companies. Journal of Manufacturing Technology Management, 21. 7, 839-852. Ramanathan, R. (2006) ABC inventory classification with multiple criteria using weighted linear optimization. Computers & Operations Research, 33. Rexhepi, L., and Shrestha, P., (2011). Lean Service Implementation in Hospital: A Case study conducted in “University Clinical Centre of Kosovo, Rheumatology department”. A Published Master’s Thesis in Strategic Project Management from the Umeå School of Business - Autumn semester. Roodbergena, K. J. and Vis, I. F. A 2009 ‘A Survey of Literature on Automated Storage and Retrieval Systems’ European Journal of Operational Research, 194, 2, 343-362. Rother, M. and Shook, J. (1999). Learning to See: Value Stream Mapping to Create Value and Eliminate Muda, The Lean Enterprise Institute, Version 1.2. Rouwenhorst, B., Reuter, B., Stockrahm, V., van Houtum, G.J., Mantel, R.J. and Zijm, W.H.M 2010 ‘Warehouse Design and Control: Framework and Literature Review’, European Journal of Operational Research, 122, 3, 1, 515-533. Rushton, A., Croucher, P. and Baker, P. (2010). The Handbook of Logistics and Distribution Management, 4th Edition, Kogan Page Ltd., 2010. Rushton, A., Alan, E., Scholten, J., (2000) Logistics and Distribution Management, 2nd ed. London: Kogan Page Ltd. Schonberger R. J. and Ebrahimpour, M., 2004 ‘The Japanese Just-in-Time/Total Quality control production system: potential for developing countries’, International Journal of Production Research, 22,4, 421-430.

97

Shingo, S. (1989). A Study of the Toyota Production System: From an Industrial Engineering Viewpoint (A. P. Dillon, Trans. Revised ed.). Portland - Productivity Press. Smalley, A. (2004). Creating Level Pull, Lean Enterprise Institute, Brookline, MA. Sobanski, E. B. (2009). Assessing Lean Warehousing: Development and Validation of a Lean Assessment Tool, Ph.D. Dissertation, Oklahoma State University, OK. Srinivasan, M. M. (2004). Streamlined: 14 Principles for Building & Managing the Lean Supply Shukla, A. 2006. Proactive People Management one key issue to Lean Success, Plant Engineering [Online], vol. 60, no. 7. (Online) Available: http://search.ebscohost.com/login.aspx? [14th February, 2014]. Staccini, P., Joubert, M., Quaranta, J. & Fieschi, M. 2005. Mapping care processes within a hospital: from theory to a web-based proposal merging enterprise modelling and ISO normative principles, International Journal of Medical Informatics, 74(2-4), 335-344. Stewart, P. 1998. Out of chaos comes order: from Japanization to Lean production: A critical commentary. Employee Relations, 20(3), 213-223. Stratton, R. and Warburton, R.D.H 2008 ‘The Strategic Integration of Agile and Lean Supply’ International Journal of Production Economics, 85:2, pp. 183-198. Sobanski, E.B., (2009). Assessing Lean Warehousing: Development and Validation of a Lean Assessment Tool, Ph.D. Dissertation, Oklahoma State University, OK. Strong, M. (2009). Leaning Toward Lean. (Online) Available at http://www.labmanager.com/labdesign-and-furnishings/2010/07/leaning-toward-lean. Strozniak, P., (2001). Rising to the challenge. Industry Week/IW, 250, 14, (November, 2001), PP.30-34. Taleghani, M. 2010. Success and Failure Issues to Lead Lean Manufacturing Implementation. World Academy of Science, Engineering and Technology, 62, 2, 231-35. Taner, T. M. Sezen, B., & Antony, J. 2007. An overview of six sigma applications in healthcare industry. International Journal of Health Care Quality Assurance, 20(4), 329-340. Taylor, D. L. and Brunt, D. (2010). Manufacturing Operations and Supply Chain Management: The LEAN Approach, Cengage Learning EMEA. Tosser. M. and Karlsson, P. (2008). Lean Warehousing - Gaining from Lean Thinking in Warehousing, M.S. Thesis, Lund University/Linköping University.

98

Trebilcock, B. (2004). Warehousing Gets Lean [Electronic version]. Modern Materials Handling, Dec. 1, p. 61. Trent, R. J. (2008). End-to-End Lean Management: A Guide to Complete Supply Chain Improvement, London - J. Ross Publishing. Van den Berg, J.P. and Zijm, W.H.M 1999 ‘Models for Warehouse Management: Classification and Examples’ International Journal of Production Economics, 59:1-3, pp. 519-528. Venkateswaran, S., Nahmens, I. and Ikuma, L. (2010). Implementing lean in healthcare’s warehouse operations –evaluation of 5s’s best practice. Vitasek, K. L., Manrodt, K. B. and Abbott, J. (2005). “What Makes a Lean Supply Chain?” Supply Chain Management Review, 9, 7, 39-45. Warehouse Productivity Benchmark Report (2006): A Guide to Improved Warehouse and Distribution Center Performance. Weber Systems (2012). How to increase inventory turns. (Online) Available at http://www.webersystems.com/how-to-increase-your-inventory-turns [28/01/2013] Wilson, C. L. (2000) Implementation and Evaluation of Church-Based Health Fairs. Journal of Community Health Nursing, 17, 1, 39-48. Wincel, J. P. (2003). Lean Supply Chain Management: A Handbook for Strategic Procurement, Chicago, US - Productivity Press. Wolfgang, A., Yong, L. J. and Walton, V. (2007). Value Stream Mapping for Lean Manufacturing Implementation. Cambridge University Press. Womack, J. P. and Jones, D.T. (2012). Lean Thinking: Banish Waste and Create Wealth in Your Corporation. New York, USA - Simon & Schuster, Womack, J.P. and Jones, D.T. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation, Free Press, New York, NY. Womack, P. J., Byme, P.A, Fiume, J. O, Kaplan, S., Toussaint, G., (2005). Going Lean in Health Care Institute for health care improvement. In Institute for Healthcare Improvement Calls to Action Series. Cambridge, Massachusetts. Womack, J. P., Jones, D. T., & Roos, D. (1990). The Machine That Changed the World. New York - Rawson Associates. Worley, M. J. & Doolen, L. T. 2006. The role of communication and management support in a Lean manufacturing implementation. Management Decision, 44(2), 228-245. 99

Zylstra, K. D. (2005). Lean Distribution: Applying Lean Manufacturing to Distribution, Logistics, and Supply Chain, Wiley.

100

APPENDIX ONE – QUESTIONNAIRE Assessing the Impact of Lean Implementation Strategies on Warehousing Performance: A case study of Nestlé Ghana Limited Dear Respondent, Please, the above topic is a thesis study work. I would be very grateful if you could respond to the questions developed below in order to help expand academic and industry knowledge in this field of study. You are assured anonymity at all times, as your identity would by no means be revealed in any for at any time. Please be at liberty to complete the questionnaire with independent and objective mind. Information provided shall be treated strictly confidential and be used solely for academic purpose. Thank you.

Instructions: Please tick [ appropriate.

] the box that best represents your view or state where

SECTION A: Demographical Data of Respondents This section of the questionnaire refers to the background or demographic information. 1. Gender:

a. [ ] Male

b. [ ] Female

2. Age group: a. [ ] 20– 25

b. [ ] 26– 30

c. [ ] 31– 35

f. [ ] 46– 50

g. [ ] 51– 55

h. [ ] 56 years and above

a. [ ] Basic

b. [

3. Educational background

d. [ ] 36– 40

] Secondary

c. [

e. [ ] 41– 45

] Degree

d. [ ] Post-Degree e. Others specify).............................................................. 4. Career Grade Category a. [ d. [

] Management b. [

] Senior Staff

c. [ ] Supervisor

] Key Distributor

5. Years of service at Nestlé Ghana Limited a. [ ] 1-5 years

b. [

] 6-10 years

d. [ ] 16years and above 101

c. [

] 11-15 years

SECTION B: This section assesses Lean Implementation in Nestlé Ghana Limited Instructions to Tab le 1: Please indicate your agreement with the level of usage of the under listed Lean tools in Nestlé Ghana Warehousing Performance. Scale: 1 = Rarely used; 2 = Sometimes used; 3 = Neutral; 4= Mostly used; 5 = Always used. Table 1. Level of Frequency of Usage Lean Tools

1

At Nestlé we move one work piece at a time between operations within a work cell in the warehouse (One Piece Flow) Nestlé visualized processes and tracked which steps of a process at the warehouse add value and which do not, by the use of symbols, metrics, and arrows (Value Stream Mapping) Nestlé adopted and Optimized series of activities in the warehouse that added value from the perception of the customer (Value Stream). There is elimination of waste from inventory and regulation of flow of goods both within the factory and with outside suppliers and customers by using signal cards to indicate when more goods need to be ordered. (Kanban [Pull System]) Nestlé uses Just-In-Time (JIT) as a lean strategy by reducing inventory and space requirements levels and Improving cash flow. Visual signals instead of texts or other written instructions are used to improve smooth flow of information at the Warehouse. (Visual Management/ Visual factory) A graphical representation is made of some part of the warehousing information system to show where information originates, who handles the information, and how it is summarized for decision making. (Flowchart) Nestlé systematically achieved total discipline, orderliness, tidiness, cleanliness and standardization in the workplace, bringing about safer, more efficient, and more productive warehouse. (The 5S Model) Error/Mistake proofing (Poka-Yoke) is one of the important lean tools used in Nestlé. Nestlé detected and prevented errors at design stages before it gets to production. In implementing lean, Nestlé efficiently produced small batches of parts by using specialized grouping of people, machines, and materials (Work cells). 102

2

3

4

5

SECTION C: Benefits Of Lean on Nestlé’s Warehousing 7. Instruction to Table 2: Please indicate your agreement to the degree of benefit Nestlé has gained with respect to Lean implementation. Scale: 1 = Rarely realized; 2 = Sometimes realized; 3 = Neutral; 4= Mostly realized; 5 =Always realized. Table 2 Degree of Benefit Benefits of Lean Elements or Strategies Nestlé’s lean reduced over-stocking at the warehouse by optimizing the location of products at the warehouse hence helping employees pick and pack quicker with more accuracy. Lean implementation in Nestlé reduced waiting time associated with the loading and unloading of transport at the warehouse and employees that wait for orders, or orders that wait for warehouse employees. Lean implementation in Nestlé enabled proper planning so that trucks and other transports are optimally loaded and most value derived out of transport costs Implementation of lean at Nestlé’s warehouse resulted into minimum inventory so space and capital are not tied up. Nestlé has effective warehousing processing, processing as many products as possible in the shortest time possible Lean implementation in Nestlé led to less defects where picking and other manual errors are eradicated, dealing with unnecessary returns and waste of time. Wasted Motion at the warehouse is reduced when Nestlé implemented lean so employees now require less motion to complete a task. Lean implementation at Nestlé’s warehouse has led to Less rework

103

1

2

3

4

5

SECTION D: This section assesses the Key Performance Indicators of Warehousing Performance in the Nestlé Ghana Limited 9. Instruction to Table 3: Please indicate the extent of your agreement with the unlisted KPIs of warehousing performance in Nestlé Ghana Limited. Scale: 1 = Strongly disagree; 2 = Disagree; 3 = Neutral; 4= Agree; 5 = Strongly Agree Table 3 Level of Satisfaction Key Performance Indicators for Measuring Warehouse Performance Lean implementation in Nestlé led to safe handling of dangerous Items at the warehouse Nestlé’s lean implementation leads to the Separation of Storage Areas at the warehouse Lean implementation is positively correlated with efficient Handling of Equipment at the warehouse Nestlé’s lean implementation leads to increased sales growth There is high effective Space utilization at the warehouse due to Nestlé’s lean implementation Lean implementation leads to Inventory accuracy at the warehouse Lean implementation in Nestlé leads to improved safety at the warehouse Nestlé’s lean implementation leads to improved Order accuracy at the warehouse

104

1

2

3

4

5

SECTION E: This section evaluates the operational challenges facing the implementation of lean warehousing 10. Are there operational challenges facing the implementation of lean warehousing in NGL? a. Yes

[

]

b. No

[

]

c. Do not know [

]

11. Instruction to Table 4: Please indicate the extent of your agreement with the challenges facing the implementation of lean warehousing in Nestlé Ghana Limited. Scale: 1 = Strongly disagree; 2 = Disagree; 3 = Neutral; 4= Agree; 5 = Strongly Agree Table 4 Challenges

1

The lack of sufficient technology for warehouse automation and visibility primarily impedes the implementation of Lean warehousing in NGL. Poor warehouse layouts prohibiting higher throughputs in existing footprint without a major overhaul highly obstructs the implementation of Lean warehousing. Poor practice sharing across locations and between business units greatly hinders the implementation of Lean warehousing in NGL. The lack of IT resources in supporting warehouse technology initiatives in the NGL really hampers its Lean warehousing implementation. Transporters are underutilized due to the inability of key distributors to cash purchase huge quantum of products some of the times.

Thank you for completing this questionnaire.

105

2

3

4

5

APPENDIX TWO Figure 1.1: Elimination of Waste in Lean Warehousing

Source: Weber Systems (2012)

106

APPENDIX THREE – VALUE STREAM MAPPING

Source: Earley (n.d.)

107

APPENDIX FOUR – SUMMARY OF CONCEPTUAL MODEL

Lean Tools - Fawaz (2003); Bicheno (2009)  Value Stream Mapping  Kanban (Pull System)  Just-In-Time  Flowchart  Hybrid 5S  Total Productive Maintenance  predictive or preventive maintenance  Mistake Proofing  Visual Management  One Piece flow  Standardised Procedures/work,

Reduction in Waste - Bozer (2012); Tosser and Karlsson ss(20  Overproduction  Waiting  Transport  Inventory  Over-processing  Defects  Motion   mo Warehouse KPIs - Colson and

Other benefits - Kim et al. (2006); Larson et al. (2007)  Reduced lead time  Less rework  Financial savings  Increased process understanding  Minimizing discrepancies  Efficient method of production

Warehouse KPIs - De Koster and Balk (2008); Emrouznejad et al. (2008); Johnson and Kuosmanen, (2009) 1. Economic/Financial  return on investment  cash flow  sales growth 2. Technical a. internal issues  space utilization  inventory accuracy  safety  housekeeping b. External  order accuracy  stock-outs  complaints c. Performance  goals  feedback  competence

Dorigo (2004); Drury (2001); Collins et al. (2006)  Storage surface and volume  Dangerous items  Possibility for temperature control  Separation of storage areas  Geographical distance to highway connection, train, waterways  Certification  Opening hours  Assistance with customs  Use of technology  Handling equipment  Number and characteristics of docks  Productivity  Inventory  Order fulfillment

108