European Journal of Scientific Research

ISSN 1450-216X Vol.55 No.3 (2011), pp.355-365

© EuroJournals Publishing, Inc. 2011
http://www.eurojournals.com/ejsr.htm

Executing Lean Sigma Outline in an Indian MSME

Ravikumar Marudhamuthu
Research Scholar, Anna University, Faculty of Automation and Robotics
Department of Mechanical Engineering, Pallavan College of Engineering
Thimasamudram, Kanchipuram-631502, India
E-mail: [email protected]
Tel: 09194446 91455

Marimuthu Krishnaswamy
Associate Professor, Coimbatore Institute of Technology
Coimbatore, India
E-mail: [email protected]

Abstract

Today we face mounting pressures to innovate; yet finding ways to actually

innovate remains a challenge for many. Top companies with successful track records of
innovation, however, have discovered one possible solution. Lean and Six Sigma, a
relatively well-known approach for achieving operational excellence, as it turns out, does
more than simply improve processes. This paper proposes a Lean - Sigma project, for a
company producing automotive parts, deals with identification and reduction of production
cost in the deburring process for gravity die-castings and improvement of quality level of
produced parts. The plan of action integrates lean within six sigma. The objectives are
achieved by the application of Lean - Sigma approach to quality improvement project in
automotive industry. The applied Lean Sigma approach includes team works through
several phases: Define Measure, Analyze, Improve, and Control (DMAIC). Systematic
application of Lean Sigma DMAIC tools and methodology within automotive parts
Production Company results in several achievements such as reduction of tool expenses,
cost of poor quality and labour expenses. It is shown that Lean - sigma is an effective way
to find out the greatest process needs and the important critical points of the process. Also,
Lean sigma provides measurable indicators and adequate data for analytical analysis.

Keywords: Six Sigma, Lean Sigma, MSME’s, TPM, Mistake Proofing, Defect per Unit,
First Time Yield

1. Introduction
Lean manufacturing concepts were developed over the last five to six decades, primarily in Japan,
particularly for the Toyota production system. These concepts met various tests for many years and
passed the test of time very easily. Sometimes it is very hard to believe that a system like lean
manufacturing was born with a simple set of concepts. But it is true. Principle on which lean
manufacturing operates is very simple. For an example it identifies the fact that “customer will not pay
for the mistakes, but only for the value of the product or the service they receive”. The impact on this
thinking is huge on the manufacturing process. It changed the way people looked at the manufacturing
Executing Lean Sigma Outline in an Indian MSME 356

process. It made people to define value of the product from the customer’s point of view, not from the
internal manufacturing point of view.
As the Indian Micro and medium size manufacturing enterprises (MSMEs) are an integral part
of Indian economy. Their contribution to the economic development of the country is indeed
significant. The new competition is in terms of reduced cost, improved quality products with higher
performance, a wider range of products and better services all delivered simultaneously to enhance
value to customers Dangayach and Deshmukh, (2000).The growth in MSMEs sector will promote:
• More employment opportunities in rural areas.
• Development of entrepreneurship.
• Production of Bio and agro products.
• Reduced regional imbalances.
• Stronger supply chains
• Availability of competitive products at faster pace.
To get these benefits for the society from MSMEs it is necessary to improve their operational
system. The manufacturing system in MSMEs are generally consists of obsolete technology, low
reliability, high changeover times, low flexibility, high employee turnover, less skilled and
demotivated workforce. These organization also lack in managerial skills for Quality Management,
Inventory Management and Production planning and control. These factors result in high cost, inferior
quality, high rejection and rework, and poor delivery performance. For sustainable growth the
organization must adopt introduction of innovative products/processes, quality & productivity
improvement techniques, and effective technology management and establish a performance
measurements system to assess the improvements achieved. Sardana, G. (2009) presented a frame work
for MSMEs network - level performance measurements system. The MSMEs network assessed based
on network culture, resources and competences, models of actions, internal processes, customer
perspectives, and financial indicators. Varamaki, E., Kothamakim, M., and et al. (2008) presented the
essential of performance measurements and its importance for MSEMs. Most companies using the
integrated approach apply basic Lean tools and techniques. Some wastes are eliminated from the
system. Now, the tools and techniques of Six sigma are used to offer powerful solutions to chronic
problems.
Honeywell, and many others, have achieved dramatic results by implementing either Lean or
Six Sigma methodologies in their organization. Arnheiter, E.D. and Maleyeff, J., (2005), Basu, R.,
(2001), Harry, M.J., (1998), Murman, E., Allen, T., Bozdogan, K. and Cutc, J., (2002), Sharma, (2003)
and Shah, R. and Ward, P.T., (2003). Womack, J.P., Jones, D.T. and Roos, D., (1990) Discussed the
importance of plant size, plant age, and union status on the likelihood of implementing 22
manufacturing practices that are key facets of the Lean production system. The statistically based
problem solving methodology of Six Sigma delivers data to drive solutions, delivering dramatic
bottom-line results. Arnheiter, E.D. and Maleyeff, J., (2005) Explained the importance of social and
psychological considerations in understanding Six Sigma phenomena and how effective use of goals
helps alter the behavior of organized members and their perceptions about how much change is
possible.
This paper presents a case study undertaken by implementing a Lean Sigma framework into an
Indian micro and small- to medium-sized enterprise (MSME) in order to reduce the defects which
occur in the final product manufactured by the company and thus satisfy their customers. The company
was regularly receiving complaints from its customers on crack propagation in the automobile
accessories manufactured by the company. This was the major cause of customer dissatisfaction and
was putting customer loyalty at risk. To retain its customers, the management realized the importance
of removing operational inefficiencies and wastes from the organization. The goal of the organization
was to reduce the defects in the product, work-in-process inventory, scrap and rework cost.
357 Ravikumar Marudhamuthu and Marimuthu Krishnaswamy

2. Company Background
The case study considered in this research is one of the leading dies and moulds company in India. The
face of the industry was not publicized; but, we shall after refer to the industry as MUC dies and
moulds. MUC is a fully staffed and well equipped modern tool room with all the necessary facilities
and are an ISO 9001-2008 Certified Company. MUC builds everything from complex progressive dies
to pressure Die casting Dies, Injection Moulds, Rubber Moulds and Prototype/Special purpose
developments. With its skilled work force, MUC dies and moulds have the human and technical
resources to take your design concepts upstream to supply a single component or a full sub-assembly.
The company's never ending quest for perfection along with significant investment in people,
technology and innovation allows us to offer superior services in:
• Engineering - Design - Tooling
• Metal Stamping In-Die Process Innovation
• Assembly - Quality Assurance
• Pressure Die Casting and Moulding
MUC was established in 1995 with 102 employees, which is engaged in designing and
manufacturing various types of precision machined components using pressure and gravity die-casting
processes. The main customers of the company are the automobile industry and other machine
manufacturers. The company manufactures around 175,000 units of die casting products per year to
cater for the needs of its customers. The employees work in three shifts per day, each shift of 8 hours,
and six days a week to meet the market demand.

Figure 1: The tools and techniques of Lean and Six Sigma.

3. Outline for Lean Sigma Execution

An outline is proposed to implement Lean Sigma in the organisation as shown in figure 2. The
framework is developed, after a number of meetings with top and middle level management and the
facilitators are carefully considered in the whole die-casting process.
Executing Lean Sigma Outline in an Indian MSME 358
Figure 2: Projected structure for Lean Sigma performance

This helped to develop the Lean Sigma outline for implementation on the shop floor. In the
proposed framework, Lean tools are used within the Six Sigma (DMAIC) problem-solving
methodology to reduce the defects occurring in the ending product.

4. Define
4.1. Administration Initiatives
Crisis conference was called by top level management with operators, engineers and superior managers
of special departments to discuss the streamlining required in the current practices for enhancing the
market share and customer fulfillment. An efficient required team was formed consisting of the
operators, engineers from production, quality, and marketing department, and higher managers. This
team spent many hours on the shop floor observing, in order to collect data and understand the
different processes associated with the die-casting unit.

4.2. Problem Description

The team members were conducted to identify vital to worth characteristics based on the voice of
customer contribution. The size and crash of the problem, etc., were discussed among the team
members and it was clear that most of the customer complaints related to crack propagation in the
automobile accessories manufactured by the company. The purpose of the team members was to
identify the root cause of problem and reduce the defects occur in die casting process.

4.3. Contemporary State Map

The contemporary state map gives a faster look at the course of action, so that opportunities for
progress can be identified and the movement of materials through different processes/services during
manufacturing is shown in the current state map (figure 3).
359 Ravikumar Marudhamuthu and Marimuthu Krishnaswamy
Figure 3: Contemporary state map

Lead time = 5.99days, Value added time = 126 sec.

The data’s are collected based on interactions with the workers at different work stations.
During the progress of these state maps it was found that the defect rate was high and was intolerable.

4.4. Measure Phase

To examine the defects occurring in each process of die-casting product, the team was separated into
tiny groups and had identified the vital processes. The data’s of defective product are collected for 7
days of production from their respective work stations and was analysed. It shows that the maximum
numbers of defects were coming from the die-casting machine, de-burring operation and chamfering
and threading operation. The subsequent step was conducted to categorize the sources of variation in
the measurement system and to conclude whether it was accurate or not. The Gauge Repeatability &
Reprodcutivity study performed on the system showed a variation of 7.99%, which implied that the
measurement system was acceptable.

4.5. Analyse Phase

Initially, FMEA for the deburring process was made. The perilous operations in this phase are Control
operation and Press operation. This analyse phase shows the data before Press operation were normal
distributed while, after operation data were non-normal distributed, Figure 4. With three Operator and
four trials per Operator was conducted for controlling the dimension of compressor housing (5, 8 min).
The outcome revealed that Operator #1 needs some training, while Operator #2 has good measuring
results. The Pareto chart shown in figure 4 illuminates the percentage impact of internal and external
defects in the process. It can be concluded from table 1 and figure 4 that internal defects are the result
of poor casting density and amounts to 70% of total defects in the process. Other defects occur in the
de-burring, chamfering and threading operations due to tooling and clamping problems.
Executing Lean Sigma Outline in an Indian MSME 360
Figure 4: Pareto chart for the internal and external casting defects.

Table 1: Classification of defects and their contribution to total defect.

Defects due to poor casting-446 (out of 530)

Internal defect External defect
Air inclusion 54 Cold shut 14
Shrink holes 85 Foliations 25
Gas holes 136 Soldering 18
Porosity 97 Other defect 17
Total 372 74
Percentage of internal defect-71.12% of overall defect

Figure 5: Cause and effect diagram.

361 Ravikumar Marudhamuthu and Marimuthu Krishnaswamy

The cause and effect diagram (figure.5) was constructed and it shows that the most important
process parameters that affect the casting density are: piston velocity at first stage, piston velocity at
second stage, metal temperature, filling time and hydraulic pressure.

4.2. Improve Phase

4.2.1. Design of Experiment
The team decided to carry out a designed test by using orthogonal array to detect the important process
parameters which would affect the casting density by using orthogonal array.

Table 2: Process parameters with their ranges and values at three levels.

Parameter destination Process parameters Range Level 1 Level 2 Level 3

A Metal temperature (0C) 610–730 614 675 729
B Piston velocity 1st stage (m/s) 0.02–0.34 0.04 0.22 0.33
C Piston velocity 2nd stage (m/s) 1.2–3.8 1.4 2.9 3.7
D Filling time (ms) 40–130 44 89 129
E Hydraulic pressure (bar) 120–280 124 204 279

Table 3: Results of L12 OA

Trial
A B C D E AXB AXC BXC R1 R2 R3 Average S/N
no.
1 1 1 1 1 1 1 1 1 2.338 2.340 2.344 2.340 7.510
2 1 1 2 2 2 1 2 2 2.341 2.444 2.510 2.431 7.641
3 1 1 3 3 3 1 3 3 2.446 2.507 2.501 2.484 7.842
4 1 2 1 2 2 2 1 2 2.429 2.445 2.418 2.430 7.715
5 1 2 2 3 3 2 2 3 2.547 2.579 2.598 2.572 8.213
6 1 2 3 1 1 2 3 1 2.437 2.338 2.377 2.370 7.540
7 1 3 1 3 3 3 1 3 2.718 2.730 2.704 2.717 7.762
8 1 3 2 1 1 3 2 1 2.348 2.431 2.395 2.391 8.683
9 1 3 3 2 2 3 3 2 2.441 2.445 2.448 2.444 7.569
10 2 1 1 2 3 2 2 1 2.448 2.504 2.489 2.480 7.887
11 2 1 2 3 1 2 3 2 2.441 2.443 2.401 2.428 7.704
12 2 1 3 1 2 2 1 3 2.420 2.384 2.447 2.417 7.660

The experimental layout is depicted in table 3. The company was initially operating with the
following settings:
A1, B1, C1, D2, E3.
The casting density is a ‘larger the better’ type of quality characteristic. Thus, the S/N ratio
used is given by:
S 1⎛ 1 ⎞
ratio = −10 log[ ⎜⎜ 2 ⎟⎟]
N n ⎝ yi ⎠
where yi is the casting density for a trial condition. Each trail condition was repeated three times (i.e.
n¼3). The S/N ratios are computed for each of the 12 trial conditions. The average values of the S/N
ratios for each parameter at different levels for all the trials are listed in table 4 and plotted in figure 6.
The influence of interactions on the casting density was negligible based on the analysis and was thus
omitted from the table and figure.
From figure 6, it is clear that casting density is at maximum when the process parameters A, B,
D and E are kept at level 3 and parameter C at level 1. Once the optimum settings of process
parameters were identified, the implementation of 5S system and total productive maintenance reduce
the idle time of machine and employees on the shop floor.
Executing Lean Sigma Outline in an Indian MSME 362
Table 4: The average values of S/N ratios for each process parameter at different levels.

Factor A B C D E
Level 1 7.84 7.81 8.10 7.95 7.93
Level 2 7.96 8.14 8.10 8.03 7.97
Level 3 8.43 8.32 8.04 8.24 8.32

Figure 6: Average value of S/N ratio for the five parameters at three levels.

8.5 A B
8.4
S/N Ratio

8.3
8.2
8.1 C D

8
7.9
7.8
E
7.7
7.6
7.5
Level 1 Level 2 Level 3
Levels

4.2.2. Confirmatory Test

To validate the results obtained from the improve phase, a confirmatory experiment was performed
using the optimal setting of process parameters A, B, D and E at level 3 and C at level 1. The average
value of casting density was computed as 2.79 g/cc. This resulted in an increase of casting density by
over 13.1%. In order to check that the results were valid and sound, it was decided to observe the value
of casting density for the next four days of production.

4.2.3. 5S System
5S is a process of workplace organization and housekeeping which is carried out gradually and
systematically. The 5s method is a structured program to implement workplace organization and
standardization. A well-organized workplace motivates people both on the shop floors as well as
others.5s improves safety, work efficiency, productivity.

4.2.4. Total Productive Maintenance (TPM)

It can be considered as the medical science of machines. Total Productive Maintenance (TPM) is a
maintenance program which involves a newly defined concept for maintaining plants and equipment.
The goal of the TPM program is to markedly increase production while, at the same time, increasing
employee morale and job satisfaction.TPM brings maintenance into focus as a necessary and vitally
important part of the business. It is no longer regarded as a non-profit activity. Down time for
maintenance is scheduled as a part of the manufacturing day and, in some cases, as an integral part of
the manufacturing process. The goal is to hold emergency and unscheduled maintenance to a
minimum.
363 Ravikumar Marudhamuthu and Marimuthu Krishnaswamy

4.3. Control Phase

4.3.1. Sustainability
The control charts are plotted, as shown in figure 7, to check that the product is meeting the desired
specification. The die-casting process has been improved by optimizing the critical process parameters
A, B, C, D and E to around 7330c, 0.36 m/sec, 1.23 m/sec, 131 ms, and 282 bar respectively.

4.3.2. Mistake Proofing Exercise

A mistake proofing exercise was performed to reduce the number of defects occurring in the process.
Management decided to accentuate the following points in order to prevent the occurrence of other
defects at different stages of production:
• Testing defects in initial design phase itself.
• Analysis of customer complaints were used to pinpoint potential problems that could be
resolved by mistake proofing.
• Teams were formed to discuss the manufacturing and design problems that are likely to
cause mistakes/defects/failures.
• Using control charts and graphs at each processing stage to keep the employees aware of
the real time performance at the respective stages of production.

Figure 7: Control chart for casting density after implementing Lean Sigma strategy.

X bar Chart for castign density after L ean sigma implementation

2.765
UC L=2.76409

2.760

2.755
Sample mean

_
2.750 X =2.7505

2.745

2.740

LC L=2.73691

1 2 3 4 5 6 7 8 9 10
Sample

5. Success of the Projected Lean Sigma Outline

The team evaluated the cost incurred by the company in manufacturing die-cast products was divided
into four categories: labour cost, raw material cost, operating expenses, and other overhead costs. All
these costs were incurred in the manufacture of the product and it passing through various processing
stages. A break up of all these costs in manufacturing a single unit that passes through six sections is
listed in table 5 and table 6 gives the details of savings generated by the organisation when the defect is
detected at a particular stage.
Table 5: Total cost incurred in manufacturing a unit product.

Labour cost Raw material Operating cost Overhead cost

Rs/unit cost Rs/unit Rs/unit Rs/unit
Die casting 38 28.5 53.5 18
Trimming 42.5 - 45.5 11.5
Drilling 37 - 43 13.5
De-burring 28.5 - 40.5 11
Chamfering 31 - 42.5 12.5
Cleaning and polishing 35 - 45 21
Total cost 212 28.5 270 87.5 598/unit
Executing Lean Sigma Outline in an Indian MSME 364

The savings generated by the organisation by achieving improvements in aforementioned areas

are as follows:
• The decrease in machine downtime from 1.5% to 7.6% helped in increasing the OPE and
OEE.
• Work in process inventory reduced by over 29%.
• Standard housekeeping procedures helped to reduce the number of accidents at work
place significantly.
Table 7 presents the significant improvements in the key performance metrics after
implementation of Lean Sigma methodology. The key metrics used for comparing the results after
implementing the Lean Sigma framework included: Defect per unit (DPU), process capability index
(Cp), mean and standard deviation of casting density, first time yield (FTY), and OEE. The following
equations are used to calculate the defect per unit (DPU), FTY, and OEE:
No. of Defects found
DPU =
No. of units Processed

FDU = e − DPU

OEE = A* E * Q
Where A stands for availability of machine; E connotes performance rate; and Q symbolizes the
quality rate or yield of die-casting product.

6. Difficulties Encountered in Executing the Lean Sigma Outline

The difficulties faced while implementing the programme provides valued lessons from previous
projects that should be taken care of while starting the new project. In this case, the top management
people felt that investing in quality means increasing the cost of production, which they cannot afford
to do when faced with stiff challenges from its competitors. The management teams were convinced by
citing examples of some Indian companies that have reduced their production cost significantly and
enhanced their bottom-line results using the application of Lean and Six Sigma principles.
The management teams were convinced by showing them the savings that can be generated if
accidents are avoided ‘right first time’ (RFT) and how proper housekeeping can reduce the idle time of
the operator and machine. These were some of the difficulties encountered by the Lean Sigma team
while implementing the proposed framework.

Table 6: Split up of outlay saving at every phase of production.

Savings
Annual Annual
after
% defect % defect impact impact
Labour Operati Overhea Total Lean
before after before after
cost ng cost d cost cost Sigma
Lean Lean Lean Lean
Rs/unit Rs/unit Rs/unit Rs/unit impleme
Sigma Sigma Sigma Sigma
ntation
(Rs) (Rs)
(Rs)
Die casting 38 53.5 18 109.5 6 0.023 12565.2 5778.5 6786.7
Trimming 42.5 45.5 11.5 99.5 1.4 0.01 30225.4 23255.6 6969.8
Drilling 37 43 13.5 93.5 2.2 0.017 44000 7403.8 36596.2
De-burring 28.5 40.5 11 80 0.6 0.003 91875.2 9521.2 82354
Chamfering 31 42.5 12.5 86 1.1 0.0016 19875 13183.5 6691.5
Cleaning &
35 45 21 101 0.25 0.008 47500 42900.6 4599.4
polishing
Total cost 212 270 87.5 - - - 246040.8 102043.2 143997.6
365 Ravikumar Marudhamuthu and Marimuthu Krishnaswamy
Table 7: Assessment before and after development based on key metrics.

Key metrics used Before improvement After improvement

Defect rate 0.20 DPU 0.0071 DPU
FTY 84.1% 99.29%
Process capability 0.14 1.43
Process mean 2.48 2.77
Process standard deviation 0.071 0.0061
OEE 0.49 0.829

7. Results and Discussion

After implementing of lean sigma strategy, the optimal settings of the process parameters have
improved the casting density of the die casting process by over 13.1%.In total this strategy has resulted
in savings of around 41.41% per year.

8. Conclusion
The implementation of Lean Sigma framework led to the adoption of best practice within the company.
Moreover, it also provided the company with a performance benchmark on which they could base
future performance enhancement programmes. In addition a significant improvement was observed in
the key performance metrics, after implementation of the Lean Sigma strategy. The implementation of
the Lean Sigma strategy has resulted in good cost savings ,which indicates better cultural changes
throughout the organsiation. As there is no standard framework, this can be applied in specific
scenarios for establishing its validity. This is perhaps an area of future research for the authors.

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