Minimization of unnecessary inventory by using the application of pulling system in manufacturing industries

Aziz, Nurniqmah (2019) Minimization of unnecessary inventory by using the application of pulling system in manufacturing industries. Project Report. Universiti Teknikal Malaysia Melaka, Melaka, Malaysia. (Submitted)

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Abstract

Inventory is the goods or material that a manufacturer holds until it can be sold to the consumer. It is essential to maintain a strategic amount of inventory in the warehouse to ensure there is enough material to meet customer demand. There are three types of inventory which are raw material, Work-in-Progress (WIP), and also finished goods inventory. It is important to ensure that there is enough inventory amount in the warehouse, but extra amount of inventory will lead to negative impact to the company. This is because excessive unnecessary inventory might lead to the occurrence of other waste such as over-production of finished goods and at the end will causes losses to the company. Based on this statement, the first objective of this study which to determine the critical factor that gives impacts on the company’s inventory efficiency were achieved since it is identified that finished goods inventory is the most critical type of inventory waste that happen in this company. This project is about how to reduce the production of unnecessary finished goods in food and beverages industry by using the application of Pulling System. A Kanban Card-based system approach were used in order to solve this issue. In this study, there are a few methods that were used in order to achieve the objectives. Firstly, the identification of problems occurred need to be clarified and then followed by data collection process. For data collection process, there are three methods used to gain the data which are by observations, interview session with the company’s employee and also the data provided by the company. Based on the data collected, data analysis was generated by using Ishikawa Diagram and Why Why Analysis to identify the root cause of the problems that occur. By using this analysis tool, the second objective of this study which to analyse the efficiency of existing production process by using Ishikawa diagram, and the Why Why Tool is achieved. Based on the root cause analysis, three proposed improvements were suggested to solve the problems occurred that effecting to the unnecessary finished goods inventory. The suggested improvements are by applying Kanban Card-Based Method, redesign the store area layout of the soybeans production line and lastly use Heijunka Levelling Method to make a production planning of the soybeans products. However, a limitations was occurred in the completion process of this study which the data collection of the processes was not fully completed since the operators did not record the data every day. In the other side, this case study is suitable to be as a guidance for the manufacturing manager and company that intended to improve their manufacturing system in order to reduce inventory waste regardless raw materials inventory, Work-in-Progress (WIP) inventory, or also finished goods inventory since all type of inventory can be controlled by using the application of Kanban Card-Based System. This study also describe what is believed to be the first study that explicitly examines the issues faced in achieving low amount of unnecessary finished goods inventory in manufacturing industries. By proposing the three improvement action, the last objective of this study which to propose an action to minimize inventory waste in the production system is achieved.

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