REF#28
APPLICATION OF VALUE STREAM MAPPING (VSM) FOR DISTRIBUTION
PROCESS : A CASE STUDY OF SUGAR COMPANY IN INDONESIA
Henry Yuliando1*, Adi Djoko Guritno1* and Mohammad Safdar Baloch2*
Department of Agroindustrial Technology, Universitas Gadjah Mada, Indonesia
2*
Department of Agronomy, Gomal University, Dera Ismail Khan, KPK, Pakistan
1*
Abstract: This study deals with the distribution process taking a case study of a sugar
company. The administrative and physical activities in sugar distribution process were
analyzed in order to manage long waiting queue of trucks for sugar shipment. A tool of Value
Stream Mapping (VSM) was applied to streamline the whole process of distribution. The
analysis was conducted in counting a cycle time (CT) and mapping the distribution activities.
The main problem identified in this study was the sequence of administrative and physical
processes that their interchange was not anticipating the arrival process of trucks and hence
causing congestion in queue. Based on the results obtained, this study proposes a Future State
Map (FSM) by combining VSM, cycle time and process mapping in order to reduce
distribution cycle time by 30 minutes and alter shipment schedule for trucks queuing. With
certain minor adjustments in the proposed system, the industry can make a substantial
improvement in its operational efficiency.
Keywords: sugar, distribution process, VSM, cycle time
1. INTRODUCTION
To sustain in business by meeting the customer expectations with a perfect service is a
great challenge for commodity sector such as sugar company. A good service for distribution
means that a client should have a smooth, clear and short time for completing the
requirement. For the company, a short cycle time is in line with cost reduction, which can be
achieved by removing non added activities by shifting it from a critical chain of the process
or merging it with other activities. All these effort is objectively to keep cost down and stay
ahead in the race.
The advantage of reducing cycle time can be obtained by by figuring a value stream of
the process. According to Nash and Polling, 2008, the value stream covers all provided
product or service started from when it is demanded until it is delivered. (Nash and Poling,
2008).
For sugar companies, such as in Indonesia, the process involves various parties including
sugar cane farmers, sugar factory, distributors, retailers, consumers and governments.
Availability of sugar in market is the responsibility of distributor in various regions. Lee
(2006) emphasized that the distributors need to manage sugar productivity in order to
anticiapate the demand fluctuations, increase market response and decline the distribution
cost.
Because of the involvement of various parties, the chances of disorganization could be
increased many fold in the distribution process. Such inefficiencies cause wastage of time
during physical and administration processes.To have a clear description of the problem, a
mapping of value stream needs to be developed through a combination of flowcharting
process with some icons and unique shapes to visually represent the various tasks and
functions within a map.
As a tool that gives whole description of both manufacturing and the services, VSM is
recently used for lean manufacture (Lee and Snyder, 2007). Here, VSM describes the
streamline of the work processes. This configures the process from the perspective of
suppliers to customers. VSM helps to monitor whole streamline processes and to analyze and
trace the inefficiencies from beginning to the end of production processes. Silva (2012)
emphasized the advantage of VSM to view the linked chain of processes and the future lean
value stream. This provides a good understading among those involve in the process by
having the same vision, speak in a commong language, and integrating the flow of material
and information.
VSM has a significant influence to overcome the problem of inefficiency within a process
of a business. McManus and Millard (2002) proved that VSM played an important role in
accelerating product development. Vinodh et al. (2010) used VSM with various tools in order
to lean manufacturing perspective including 5S, Kanban and Kaizen (Gurumurthy and
Kodali, 2011), and total productive maintenance to reduce processing time that adds to
production costs and product prices in a camshaft industry in India. VSM is also applicable to
remove unnecessary processes, defects, and determine inventory level on each department
(Vanany (2005). It can also be used to reduce the length of patients queue in hospitals
(Endsley et al., 2006) and in medical clinical services (Lummus et al., 2006). In terms of
improvement of the organizational structure, VSM can be used to measure leadership,
behavior, and competencies (Emiliani and Stec, 2004).
VSM can help in improving service levels in logistics service performance. The use of
VSM can identify inefficient logistics processes that have complex supply chain (Serrano et
al., 2008). Another study conducted by Lehtinen and Torkko (2005) showed successful
improvement in the performance of the food service industry towards lean production and
lean supply by integrating suppliers and customers in terms of inventory, transportation,
facilities, and information. The use of value stream mapping can be combined with other
tools such as simulations, 5S and Kaizen. Gurumurthy and Kodali, 2011) applied VSM to
simulate and analyze inefficiency on job shop production system in a furniture manufacture
with some variation of the product i.e. with one dominant product.
The objective of this study was to use a case-based approach to identify a cycle time of
distribution process and help the industry to save time and maintain flow control. Value
sounds in VSM analysis of the distribution process was drawn by mapping each stage of the
process leading to added value.
2. Methods
Stages of values stream analysis of sugar distribution was adopted as described by Lee
(2006) who applied VSM analysis into system observation, model mapping, determination of
value added or non value added, identification of waste, and performing restoration effort.
The study was initiated in a sugar - Industri Gula Nusantara, Kendal, Indonesia (IGN) which
has production volume of 635 tons / day during milling process as carried on from May to
October annually.
2.1.Data collection
Information on actual distribution activities are based on their Operations Manuals
and the Standard Operating Procedure (SOP). The Cycle Time or Processing Time measured
is as per selling point in the last 3months and were compiled as a baseline for data analysis.
Further, observation were recorded to monitor and grasp full understanding on the current
practice at the distribution floor as well as to identify types of wastes in the process.
Changeover time, queuing, handling and operating time data were tabulated during two
months operations of the monitoring period. Method for establishing VSM was through
following measures;
1. Data of Cycle time or processing time
2. Data of Changeover time.
3. Initial data collection on overall cycles times, waste time, in-process queue time.
4. Arranging process activity mapping
5. Establishing VSM
6. Monitoring and improvement proposal
2.2. VSM – The mapping process
The ultimate goal of VSM is to identify all types of waste in the value stream and to
take steps in their elimination (Rother and Shook, 1999). Taking the value stream viewpoint
means working on the big picture and not individual process. The first step is to choose a
particular line as the target for improvement. The next step is to draw a current state map that
is essentially a snapshot capturing how things are currently being done. This is accomplished
while walking along the actual process, and mapping it into process activity provides one
with a basis for analyzing the system and identifying valued added time (VAT). The third is
to design VSM which is a picture of how the current system behaves. The last step is to
propose a future state map (in picture) that how it looks like once the inefficiencies are
removed. Creating a future state map is done by answering a set of questions on issues related
to efficiency. The questions involved during the walk-about on the distribution flow were
based on the following targets;
Question 1: What is the Takt time?
Question 2: What are the bottleneck and constraints found?
Question 3: Where can inventory (or queue time) be reduced?
Question 4: Where can you improve flow?
Question 5: Potential process improvement for future state design
The FSM becomes the basis for making the necessary changes to the system.
3. Case Study
3.1.Company background
This study was undertaken in PT Industri Gula Nusantara (IGN), Kendal, Central Java
Province, Indonesia. It is the largest sugar company in Indonesia owned by the government.
In their distribution activity, IGN cooperates with several distributors that most of them
located in Semarang, Province capital. These distributors also make a supply to their subdistributor. The distribution process at IGN begins when the distributors (buyers) put an order
and make a payment. The lead time to process each order is 5 days and preceeded by a full
payment with minimum order of 1000 tons, and it is charged for holding and handling as
amount of 6 thousands rupiah per ton. The marketing department of IGN then issues a
delivery order (DO) letter. Trucks which come for loading the sugar has to make a
confirmation first while move to logistics area. This confirmation is done on daily basis start
from 15.00 pm. Since there is only one loading depot which serves for loading the sugar
which take about 40 min per loading, and with working hrs from 07.00 – 23.00, it causes a
long waiting queue for the trucks. The complete process is described in Figure 1 and Figure
2, whereas Table 1 shows cycle time of each process activities.
Distributor make
an order to IGN
Sugar sent to
warehouse
Order from
buyer
Sugar loading
process
Preparing truck
Loading
confirmation
( daily at 3 pm)
Making delivery
order (DO)
Lead time = 5 days
Marketing Department of IGN
Production rate
= 635 tons/day
Warehouse
(capacity = 15.651,25 tons)
Delivery
Logistics Department of IGN
Controlled by distributor
Controlled by IGN
Adminsitrative flow
Physical flow
Figure 1. Flow of physical sugar distribution process at IGN
Truck
preparation
Order
to IGN
Sugar
storaging
at IGN
warehouse
LT = 5
days
Order
from
buyer
Sugar
carrying
permit
Permit letter
issued by
Marketing
Dept.
Bringing
permit
letter
LT = 1
day
Truck
weighting
scale and
checking
Shipment
letter issued
by
warehouse
Checking the
letter and
weighting scale
Buyer
Permit
letter
issued by
Logistics
Checking the letter by
warehouse
Delivery
preparation
Sugar
loading
LT = lead time
Distributor activities
Administrative activity
Sugar flow
IGN activities
Information flow
Figure 2. Administrative flow chart of sugar distribution process at IGN
IGN = Industri Gula Nusantara
Table 1. Cycle time of each activity in sugar distribution process at IGN
No
1
2
Activity
Checking of sugar carrying permit
Truck checking
Weighting scale for truck-in
3
Issuing loading order letter (SPM)
4
Taking of SPM
5
Loading preparation
Checking for SPM
6
Issuing loading permit
Loading of sugar
7
Shipment preparation
8
Weighting scale truck-out
Checking for shipment letter
CT = cycle time
IGN = Industri Gula Nusantara
CT (minutes)
3.82
1.62
2.73
30.91
0.91
7.02
1.19
10.00
37.78
11.54
2.81
1.37
3.2.VSM : Current state map
All data for the current state map were collected according to the approach
recommended by Rother and Shook, 1999). Data collection for the material (sugar) flow
started when the distributor placed an order to the company (IGN). Fig. 1 shows the current
state map that was constructed for the distribution process by involving both the physical and
administrative flow. Figure 2 mainly shows the administrative process in detail that contain
kind of letters and necessary requirements. Also, for each process it contains the process
cycle time (CT) that were taken for several time to get the mean time in order to be adjusted
for an allowance on 10% basis. The data were collected whilst walking the shop floor and
talking to the foreman and operators at each workstation.
The timeline at the bottom of the current state map in Figure 3 below has two
components. The first component is the distirbution waiting time (in days), which is obtained
by summing the lead-time numbers from each stage of the process. For example, on average
the lead-time for a truck waiting to receive a permit and loading the sugar is 957,01 min. And
the total observed value for the waiting time is 3 days, with daily uploading close to 368 tons
sugar per day. The element of the timeline also shows the processing (or value-added) time,
which is about 1500 min for administrative process and 1621 min for physical flow process.
A complete detail of both administrative and physical flow activities are provided in
appendix 1 and appendix 2, respectively. This time is calculated by adding the processing
time for each process in the value stream.
Figure 3. VSM of current state map of sugar distribution process at IGN
(VSM = Value Stream Mapping, IGN = Industri Gula Nusantara)
3.3.VSM : Future state map
Looking at the current state map for IGN several things stand out: (a) long queue for
truck does uploading, and (b) the difference between the inventory days and shipment
capacity, and (c) the lead time of order and receiving time that has its own schedule.
Inventory and lead time may be viewed as two related issues since the more the inventory,
the longer any item must wait for its turn and thus, the longer the lead time.
In creating the ideal future state map, by looking at the schedule across the entire
value stream, will help in eliminating or at least reducing different types of waste in the
current distribution process by answering the questions as structured in section 2.2. First,
From the German word, takt is the word for the wand a conductor uses to control his
orchestra’s speed, beat and timing. In manufacturing, it refers to the frequency of a part or
component must be produced to meet customers’ demand. The formula applied in the takt
time calculation is the time available (per shift) divided by the demand (per shift). looking at
the takt time, the formula applied in the calculation is the time available (per shift) divided by
the demand (per shift). This takes into account average productivity and working time of
distribution process. For instance, the service for sugar loading is 960 min (07.00 am, - 11.00
pm), divided by 40 mintes per loading, is equal to 24 trucks @30 tons, or 720 tons.
Prompting that each order is with a minimum amount of 1000 tons, and adding with
administrative activities, the total lead time takes more than 3 days. The service become
longer due to an erratic schedule of the trucks which ordered to loading.
Second, the constraint pertains to the schedule of issuing permit letter or named by
SPM. When the marketing division checks the inventory, it follows by a confirmation to
distributors for loading sugar schedule, take on average 5 days lead time. The distributor then
send trucks for loading the sugar, equipped with a confirmation letter. The problem of
queueing occured when trucks arrive, showing the letter, and waiting to receive permit letter
form 3 pm daily. This point of time is intended by company to ascertain the inventory level of
sugar on related day as known by the plant. While trucks come to loading in erratic schedule
spreaded for the whole day. Here, by 3 pm, the long queue is build up until its following day,
trucks are keeping arrive. The unsynchronize of the inflow of truck and the flow of the
service is where the constraint is encountered.
Third, the service time available for logistics (warehouses) for distributing sugar is 16
hrs or equal to 760 tons sugar. However, the inventory cycle is close to 368 tons daily
shipment or about half of the capacity. For each order with minimum 1000 tons sugar, then
the delivery will be completed in 7 days. In addition the cycle time of acivities path start from
issuing SPM letter to truck preparation for loading sugar makes the queue of trucks bad. But,
this shows a possibility to move off that sequence activities in parallel line in order to reduce
the cycle time and improve the trucks schedule.
Forth, the improvement can be considered in respect of the analysis of activity series.
As seen on the current state VSM, the truck drivers while taking the permit letter, on average
have to wait for 957 min to be served by logistics. Once they get turn, it is preceeded by
checking the letter, weighting scale, and receiving permit letter (SPM) issued by marketing
department as required to issue the shipment permit letter. In this case, the issuing of SPM
letter basically have no mandatory relationship with its precedence activity.
Here, shifting of issuing SPM letter activity out of series will save about 30 min of the
flow time of distribution process. The issuing of SPM letter can be located within the series
of checking permit letter of trucks arriving for loading the sugar. This activity should be done
in parallel while marketing checking the permit letter of the trucks. And in this respect, the
design for the future VSM can be altered as follows.
Figure 4. Future state map of sugar distribution process at IGN
(IGN = Industri Gula Nusantara)
4. Result and Discussion
Most of the published research work on VSM is limited to manufacturing process only. However, in
the present case, efforts were made to study sugar distribution process for export channel using genetic
algorithm to determine inventory position and roouting its delivery. The results show an important
aspect of lowering transportation cost of sugar from mill to the seaport due to shorter delivery cycle
time. Da Silva et al. (2013) used multi-choice goal programming to estimate optimal lot number for
production system of sugar, alcohol, molasses and its derivatives. It was proved that sugarcane loading
and transportation by suppliers influence the storage stages and distribution.
The flow of sugar distribution process at IGN are installed in high quantities. The layout of these
process is determined by the flow of material in accordance with the sequence of the administrative
activities to be performed. Flexibility is needed, if buyer chooses fix schedule for loading the sugar. The
cycle time required to complete a job at a loading process is stochastic due to the arrival of trucks. The
schedule depends on the capability of distributors (buyers) to send their trucks once they receive a
confirmation. The stochastics prevent the warehouse from being perfectly balanced over time. The flow
of material is asynchronous. At a given station of the logistics line, available capacity for capturing the
truck arrival and its transfer to the succeeding station (warehouse) for loading are not perfectly
coordinated in time. This is the typical situation, where queueing effects occur. In this case, the flow
time efficiency is quite low where VAT only carry on 31% and 34% for administrative and physical
activities respectively. On average, eaach truck spend up to 11 hrs for loading the sugar.
Using VSM, in this study, the flow of distribution process is depicted and analyzed to raise an
altenative improvement in the process cycle time. For series flow with exactly one input station (for
logistics), procedures for analyzing the number of truck (arrival) that leave the system per unit of time
have been measured. Based on the figures and analysis in section 3, it can be discussed that
administrative and physical activities of the company - IGN experience is a constraint in an
asynchronous schedule. The service for sugar loading is available for 11 hour working times, while the
administrative service is tight to 8 working hrs per day. The order lead time that takes 5 days on average
is due to the availability of stocks. It means that when there is a shortage in the warehouse, the factory
would be ordered to fulfill the shortage. Otherwise, the order can be processed immediately. In this
situation the distributor has to arrange the payment and trucks for the shipment soon. In general, there
was a long queue since other order could have been waiting to be served. Also, the logistics were able to
continue the job of marketing to serve a new order, but in practice they were tied up to complete the
previous orders.
Here, based on VSM analysis, there is an activity of issuing SPM letter that in series to the
confirmation made by trucks driver to the warehouse supervisor. This letter is issued by the marketing
department as to legalize the trucks to load the order. However, this activity has no mandatory
relationship with it preceeding acivities. This raise an alternative for shifting this activity to be
undertaken in parallel with the trucks arrival. Once a truck confirms his permit letter, the SPM letter
should be valid to be issued by marketing department. This alternative can save the cycle time for 30
min. Even this reducing is quite small compared to the total time needed, but this can increase a
significant improvement for logistics to make an arrangement for trucks queuing and for further
estimation of sugar stock level. This argument can be verified by looking the series in VSM figure
where indicating a critical path that no longer comprises with series of activities that interchange the
controller (marketing and logistics). It means that the series can work into two independent group. The
first comprises of the series start from the truck makes a confirmation and receive SPM letter as
controlled by marketing department, and the rest is controlled by logistics. Here, this valuable finding
emphasizes the need to further research in arranging arrival schedule and a policy in time buffer
management.
Conclusion
In this study, use of VSM has been found to practically important in streamlining the process of
sugar distribution process. The process comprises a series of administrative and physical activities as an
interchange part of job. The inter arrival of trucks and the interchange series of administrative and
physical activities cause a long queue for the shipment in Industri Gula Nusantara (IGN), Kendal, sugar
industry. On average, these processes were taking a week time for completing each order up to the
shipment. Based on VSM application, a 30 min reduction in cycle time is made possible by shifting the
activity of issuing SPM letter to be parallel with the checking of permit letter from distributor. Although
this is relatively small in the total cycle time, but it can induce an improvement in the shipment
schedule. A further reseach on time buffer management is valuable to be proposed.
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Appendix 1. Process activity mapping of administrative service of sugar distribution process at IGN
No
Activity
Flow
S
O
3
Inventory
Confirmation for letter of carrying
permit
Checking truck and driver
I
Computer
and fax
Manual
4
Taking confirmation letter
O
Manual
5
Waiting
Checking letter of carrying sugar
permit
7
Weighting scale for truck in
I
9
Issuing SPM
O
10
D
15
Truck move to warehouse
Checking SPM by warehouse
supervisor
Waiting for loading sugar
Issuing letter of sugar distribution
permit
Waiting for loading process
16
Preparation for leaving out
17
Weighbridge for truck-in
Returning of letter of sugar
distribution permit and weigthing
truck out
Distribution process to buyer
D
1
2
6
11
12
14
18
20
Machine
Distance
Time
(minute)
1800.00
10.00
1
1.62
1
1.37
1
D
957.01
1
O
3.82
1
2.73
1
30.91
1
2.00
1
1.19
1
5.83
1
10.00
1
D
27.78
1
D
11.54
1
2.00
1
2.81
1
1440.00
2
I
Weighbridge
Computer
200 m
Manual
D
O
O
T
Total time
Computer
200 m
Manual and
Weighting
scale
4780.61
Value added time (VAT)
1501.39
% VAT
31.41%
Note :
S = Storage ( )
O = Operation ( )
I = Inspection ( )
D = Delay ( )
T = Transport ( )
Worker
Type of Activity
Appendix 2. Process activity mapping of physical flow of sugar distribution process at IGN
No
Activity
Flow
Inventory
Equipment and administration
checking
S
3
Waiting for loading sugar
D
4
Weighting scale for truck-in
I
5
Waiting to load sugar to truck
D
6
Truck move to warehouse
D
7
8
Loading preparation
Loading sugar into truck
O
9
Distribution preparation
O
10
Truck moves to weighbridge
D
11
Weighting scale for truck out
I
12
Distribution process to buyer
T
1
2
I
O
Machine
Distance
Time
(minute)
1680.00
Manual
Weight bridge
200 m
Forklift
200 m
Weight bridge
120.00
3
1323.82
1
2.73
1
30.91
1
2.00
1
7.02
2
37.78
10
11.54
1
2.00
1
2.81
1
1440.00
2
Total time
4780.61
Value added time (VAT)
1621.88
% VAT
33.92%
S = Storage ( )
O = Operation ( )
I = Inspection ( )
D = Delay ( )
T = Transport ( )
Worker
Type of Activity