When Mr. Nasser Gharama was hired as a General Manager at Lamina, his main goal was to bring the company to the next level of growth. He needed to structure Lamina as a scalable business able to operate in challenging market conditions comprised of fierce competition and declining sales in the Saudi Arabia Food and Beverage sector.
Lamina was initially founded as a supplier for alRomansiah restaurants under the same holding company. The business then expanded and started growing its own customer base thus becoming independent. As business grew, the company expanded its product portfolio to eventually produce and sell aluminum foil, aluminum containers, household utensils (mainly cooking pots) and paper bags.
The wide product portfolio and a business model based on mini-factories presented the opportunity to manage them in an integrated way. Lamina Management identified the Lean Principles as the strategic way to achieve this goal.
Due to its growth model, Lamina production ended up being split in different locations, therefore a new plant was purchased to consolidate operations and drive up efficiency: the management decided that the new plant had to be designed to be compatible with Lean principles.
While in the process of designing the new layout, additional issues were identified as potential areas of improvement, for example, due to its fast growth, Lamina had built a product portfolio that was always too wide with most of its products contributing marginally to its sales. A similar comment could be made with its customer base which was too widespread thus presenting the opportunity to strengthen the business with fewer customers. Last but not least, driven by previous production scheduling practices and by the wide product portfolio, Lamina inventory was high, with 65% of both raw materials and finished goods having at least 30 days of stock coverage.
The Lean initiative started in the Aluminum foil production area, which included also the fabrication of the carton core rolls.
In the initial situation the project team found excess of work in progress and finished goods inventory, the distance between the first process step (core cutting) and the second process step (rewinding) was excessive and the 2 processes were disconnected. Additionally, the amount of space utilized for storage was very high, no visual management was implemented and the layout distribution was sub-optimal thus driving up material transportation and operator’s movement.
The first step to define future state processes and detailed layout was to map current product sequence and pathways, this confirmed the need of a supermarket for the cores in order to pull their supply from their rewinding station.
One of the main challenges was due to the business growing at a fast pace: just on the following year forecasted Aluminum foil production capacity had to increase by 46.5%! In order to plan for this, 4 phases were derived through a ‘capacity simulation tool’ to enable future growth, even including new machines in the process.
The new proposed layout was finally approved by Lamina management, and several smart ideas were developed while implementing the physical layout.
One of the main issues was how to visually control the stock of carton cores to enable the implementation of a Pull system and, at the same time, ease the transportation of cores from the supermarket to the point of use as the cores are quite big. To solve this the team designed and implemented in house a trolley going through several stages of prototyping until when the final trolley was judged perfectly fit for purpose.
An additional important area was to ensure that items are easily identifiable and that material from neighboring production lines (not Leaned up yet) did not overflow to the Aluminum foil production area. This was done implementing Visual Management Standards: the process was particularly enjoyed by the project team as the activity was useful and fun to implement.
One of the main challenges was to evaluate the benefit vs. cost and feasibility of different solutions for the new plant. While the benefits were easily quantifiable in a qualitative way the management requested them to be estimated in a quantitative way as well. This was achieved by testing solutions in mock ups, measuring the improvements and then scaling them up to simulate the overall benefit achievable through the full implementation.
A second important challenge was represented by the operators themselves: many of them speak different languages and often struggle communicating. Furthermore, operators were used to operate in ‘their own way’ so there was no standard way to execute a process. This was solved by modeling the process as it was performed by the most effective and efficient operators. The process was then translated in a visual Standard Operating Procedure made up using many pictures and limiting the text content which was also translated to the 3 languages widely understood at the shop floor.
The new lean layout reduced space utilization and stock in production while enabling flow: one third of the space in the new plant could be freed up as the total area used was reduced from 690 m2 to 480 m2 (-30%) and kept as reserved capacity for future growth without the need to expand current building.
An important result achieved was to reduce the stock thanks to the introduction of a Pull System, for example the stock for Carton Cores reduced from 45,000 pcs to 10,000 pcs (-78%) thus freeing up capital.
The new layout also enabled clear paths in production which were later tracked through visual management aids:crossing paths reduced from 17 to 9 (-47%) therefore reducing the confusion and the risk of accidents.
Technological solutions were tested as well and one was implemented as it was at zero cost: an old oven existing at the warehouse was repaired and adapted to be connected to the Carton Core production line: this reduced the drying time of carton core from 2 days to less than 5 min with no investment.
Following the achieved results Mr. Nasser can successfully grow the business without inefficiencies thanks to Lean Management. He now plans to extend the pilot results to the whole company and cover the full product portfolio.
The Perfect Store
‘Today, the entire Zohoor Alreef team has understood through Lean that the “Perfect Store” is a shared aspiration that can only be achieved through Kaizen or continuous improvement.’
Sustainable cost reduction
‘We achieved product cost reductions of up to 7% and have also reduced our inventory over 60%’
‘We were able to achieve something that we thought is beyond our abilities’
The real success
‘We can now produce for customers based on demand, and this ability and flexibility allows us to save time and money. That’s the real success here’
Reduced customer waiting times
‘We reduced the time the customer spent waiting in our reception area by 55%’
‘Take-out customer wait times dropped from over 20 min to below 2 min’
FAST AND SUSTAINABLE IMPROVEMENTS
Average daily output increased by 119% and productivity increased by 109%
SALES AND PRODUCTIVITY INCREASE
‘Sales were increased by 4% in comparison with other branches and logistics staff productivity was increased by 56%’
Improved manpower utilization
‘We have managed to avoid losses of over 300 productive manpower hours per month’
Better Space Utilization
‘We managed to reduce our inventory which resulted in a 28% space reduction in the distribution center and the branches’
IMPROVED CUSTOMER HAPPINESS
‘Great results for our customers such as 72% decrease in customer wait times, 20% decrease in customer service times, 59% improvement in the number of customers served on time’
‘The overall new vehicle delivery lead time was reduced by 43%. The positive results led to an increase of 65% of the average conversion ratio per salesman for new guests’
‘Final result was that our sales net promoter score increased by 25% and the service net promoter score increased by 5%’
‘We have increased our output from that machine by 20% and the availability of the machine by 32%’
Significant Lead Time Improvements
‘Transfer of vehicles from and to branches dropped from 15 days to 1 day and the insurance approval lead time from 7 days to half a day’
A Clear Structured Approach
‘With Lean we are now structured and work systemically and that ensures quality, besides efficiency and productivity’
‘We were able to achieve a 47% space reduction in our production areas and warehouses’
‘Reduced turnaround time of our sales and delivery trucks by 70%’
Short delivery times
‘We improved the preparation time for home delivery orders and dropped it from 31 minutes to 16 minutes’
EXPONENTIAL PRODUCTIVITY GROWTH
‘After implementing Lean improvements and keeping the same resources, we achieved an increase in sewing productivity by 292% and an increase in embroidery productivity by over 1500%’
QUICK AND MEASURABLE IMPROVEMENTS
‘The rate of daily consumption of supplies per patient was reduced by up to 20% and reduced the waste of unutilized time of the nurses by up to 30%’
Retail Sector Sustainable Improvements
‘The in-store inventory was reduced by over 30% while maintaining an availability of core items of over 99%’
Improved on-time delivery
‘We improved on-time delivery to the guests by 113%’
Reduced lead times
‘We were able to reduce our lead times by 43%, which means we were able to produce almost the same amount of products in half the time’
‘We have completed implementation of the Lean principles on more than 50% of our machines. Our indicators are very positive with machine output varying between 17% and almost 90% improvement’