Tom GrahnLic of TechnologyEritoCap LtdAX 22930 FisköÅland, Finland+358 500 828486tpgrahn@gmail.com

12.7 2013

LEAN IN CERAMIC OPERATIONS

AbstractLean is management. Ceramic manufacturing is production. Lean ceramics is therefore one way of managing ceramic operations. Taking both lean and ceramic production orthodoxally they can be as far from each other as east is from west. However applying simple lean methods can be highly rewarding also in niches, like ceramics. This paper is not about lean and not about ceramic production. It targets only combining lean methods in any ceramic production. As I have spent more than 30 years in claybased ceramics, whitewares, the examples and the results are from such industries. Rule nr one is not surprising:” Lean in ceramic operations starts in the corner board room “

Introduction In this paper I will apply simple lean methods in a new greenfield plant, a plant that is decided and planned based on lean in ceramics. However as new investments in whiteware in the west have been scarce or not existing I will also address lean methods in existing non-lean planned plants. My objective is to show that lean is an efficient or very efficient management technique, wether it is used for tomorrow’s plants or yesterday’s plants

Further, I will concentrate on direct cost matters. I acknowledge that indirect cost matters do influence, but these are more ceramic knowledge and know-how ones, and very much less lean. Therefore I omit these in my presentation, not forgetting them at all.With indirect costing matters I refer to all that are not piecebased and not included directly in the product, like body, glaze, mould, die, etx. Maintenance I include due to its lean attachment. And, I will very much try to avoid schoolbooking manners.

Lean in a New Plant 2013 Let us start fresh with public 2013 news: Vista Alegre Atlantis Group recently announced it will invest €19.5 million (~ $25.3 million) during the first phase of a new production unit in Ílhavo, Portugal, dedicated to the production of stoneware tableware. The new plant supplies

to IKEA Group and will reportedly start with a capacity of 30 million units per year. The plant is expected to begin production during the spring of 2014 and create about 144 jobs in the region. It will produce a variety of different shapes, sizes and colors. For additional information, Visit www.vistaalegreatlantis.com or www.ikea.com.  ( May 2013 ). Let us take these news as they are given us. No âmbito da nova fábrica Ria Stone, em parceria com o Grupo IKEA, foi concretizada a aquisição do terreno, estando em curso os preparativos inerentes à construção da fábrica . ( VAA press release 30.5 2013 ) VAA produces today app 15 Mpieces of hard paste porcelain. 2012 the porcelain part was app half of the 54 MEUR group turnover. Group cash flow negative at – 6 % level of turnover.

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And IKEA, the Swedish consumer goods giant and globally the biggest tableware supplier: “Trends come and go, but combining a low price with good design and function never goes out of style”. 338 stores, 154 000 employed, my guess is that IKEA supplies more than 250 000 000 pieces of tableware annually

VAA produces today 15 MPieces of porcelain mainly for the Iberian peninsula and IKEA might sell 250 Mpieces tableware worldwide. With the unexpected commercial venture with IKEA Vista Alegre will triple its volume to 45 Mpieces. The unexpectancy is revealed through the location of the venture, inside EU. How come?

Stoneware 30 000 000 pieces/year for IKEA and 144 jobs at VAA with a 20 MEUR investment. This is the production we are going to design and construct in this paper, without knowing how Vista Alegre Atlantis will perform it in reality.

Dinera 35 cl, 1.50 EUR,IKEA launched fall 2003

The lean frame of the investmentAfter having introduced the supply chain let us look at the lean frame and the frame of the investment. The VAA new plant will only produce to order. The material is chosen as stoneware which stands for prepared stoneware, a vitreous off-white pitcher. Stoneware can easily be produced in once-firing. For the VAA new plant I chose a combination of softbisquit-firing the flatware, half of the production, and oncefiring for the rest. By adding in-line soft

bisquit firing we achieve two objectives. The first one is allowment of more flexibility in design, both shape and weight ie thickness. The second one is stackability due to increased strength during flow in manufacturing. Traditionally a ceramic production looks like this: shape –inventory – soft-bisquit firing – inventory – glazing – inventory – glost firing - inventory – inspection and polishing – inventory – packing – final inventory. When we to this longitudinal process add the shapes of flatware, cup&mug ware, hollowware, solid cast and open cast ware, one easily sees a factory that seemingly does not have a layout, because one can not visibly see it. What is worse is that such a factory is not possible to manage properly, or it demands unusual management skills. The obstacles inherently included in the traditional tableware plant I described are

goods’ flow is longitudinal responsibility is latitudinal creating a matrix of revirs that are destructive

This is the basis why we introduce a layout where goods and management are longitudinal, where flow of goods is an inherent feature and where it is accepted that every time a human touch of a piece is made, the risk of faults and breakages grows. This flowline management is organised as a flat pyramid: worker – supervisor – productline manager – general manager. As productline managers we have flatware manager, cup&mug manager etc

The lean geographic frame is labour economy Portugal is South-Europe and part of the southern European economic and financial dilemma. Vista Alegre Atlantis is a listed company in this environment in the niche sector of table consumer goods. This is Portugals working hour arrangement: “The normal working period may not exceed eight hours per day or 40 hours per week. However, by means of a collective bargaining agreement the normal working hours can be increased by up to four hours per day, provided the working week does not exceed 60 hours. An individual arrangement may be made between the employee and the employer to increase daily working time by up to two hours, provided the average working week does not exceed 50 hours over a two-month period”. But… reality is this in Portugal: 8 hours 48 minutes is the average working day.Labour economy is the reason why the traditional European ceramic centres of Selb, Stoke-on-Trent, Limoges are more tourist spots than niche-ceramic centres. The situation is alike in the USA. A few year ago I analysed the number of registered Chinese china suppliers to USA. I ended up in app 550 suppliers. Ten years ago I found myself writing a multiclient Outsourcing Manual. The original is still valid as I used the technique of designing a 10 Mpiece plant in the high wage, medium wage and low wage countries. The learning is: In high wage countries the labour cost ( 2/3 of direct costing ) is such that any tableware plant must be highly automated and robotic. Those existing for instance in Germany are such. The work productivity in these is critical. In medium wage countries the critical issues are still the same and a living tableware plant is under constant pressure of improvement. In cheap labour countries it is quality that counts. I define working productivt as piece-

efficiency * quality. Take as example a country near Europe but outside the EU, Egypt. The working hours are the same as north of the Mediterranean, but 7 days a week, 52 weeks The monthly gross wage is 150 EUR +- 30. It is easy to understand that the pressure on the management in such countries is focused on quality, quality and quality. Hourly labour cost, 2012 ( ) EUR/hour

Country Wages / month inaverage ( ) EUR

Total labour cost for employer ( ) EUR/h

Relative total labour cost when RO = 100

Finland 2901 31 620

Sweden 2726 42 840

Germany 2865 31 620

Spain 2009 21 420

Portugal 1164 12 240

Romania 474 5 100

Ending this chapter answering the question: Why Portugal? IKEA is already for long supplying from Romania at labour cost level 100 units. IKEA is also supplying out of Turkey at labor cost level 200 units. Portugal is not a bad labour cost choice at 240 units. The location is good, the labour supply situation must be good. Maybe these were the criteria by which VAA and IKEA

managers found each other this spring. In the end it is not only the location. It is very much how the partners respect each others interest.

Once the location is chosen, Portugal, the partner is chosen, Vista Alegre Atlantis, the shape, design and looks are known ( IKEA of Sweden ) how do we design a 30 Mpiece purposemade stoneware tableware plant?

The Lean 30 Mpieces production plant is a 15 Mpiece flatware plant, a 10 Mpiece cup&mug plant, a 2 Mpiece hollowware plant and 1.5 Mpiece solid cast and a 1.5 Mpiece open cast plant. I allow max 5 % throughput losses ie the gross capacity is 32 Mpieces. The weekly working hour/person in this Portugal plant is 5 * 8.8 hours = 44 hours. The annual working hour for one worker is therefore 46 weeks * 44 hours = 2024 hours. 144 workers * 2024 hours = 291456 hours. The pieceoutput at annual level is 110 pieces / h. This implies that we talk about a highly automated (lean ) manufacturing 30 Mpiece unit.

The 15 Mpieces flatware plantWe have increased the number of plants from 1 to 5. However, we have done it from lean management simplicity point of view. A 15 Mpiece plant is easier to manage than a 30 Mpiece plant, but the real key is in the flatware flow plant efficiency and quality. We therefore design a number of isostatic presses from saucers to 30 cm flatware of any shape. Each press is a one die one. The maximum allowable change of die time ( from stop to go ) is one ( 1 hour) .We hence start with a SHED instead of a SMED, and with experience we improve it into a S30minED. These presses are planned to operate in three shifts at 5/7. The weekend volume of max 28 % we leave es extra capacity. These presses are served by a on-line roller hearth HTUs ( heat treatment unit, the industry names them kilns ) without kiln furniture. The HTUs temperature and time curve is such that the water absorption of flatware at exit is (23 – 25 ) %. Such presintered flatware is stackable on pallets. As we do have a high automation level each shape is placed on its own pallet and stored in a super-market type buffer storage. The plant’s bufferstorage is operated against incoming orderfor colourglazing in one or two colours by dipping and/or spraying machines. These feed a continues HTU ( kiln ) at 1180 C. The losses in this flatware flow plant is so low that each piece is footringground and -polished before inspection and packing. When any alarm of technical problem surfaces the activity at that point is like “Portugeuese maintenance ants”, seeing that the problem is non-existing in shortest possible time.

The 10 Mpiece cup&mug plantIn this high volume cup&mug&handle plant we solve the trivial pursuit question of “ cost of cup is 80 % handle “. In doing this we put high pressure cup&mug casting machines side by side with traditional cup&mug machines. The handles to the specific cups&mug are plastically pressed and the manager in charge have been able to fulfill high requirements in attaching plasticly

pressed handle to jolleyd cup and mug. After the making of each cup and mug these are bufferstored for the oncefireing process ahead. Cups and much are inline dipped or sprayglazed and directlty fed to the general holloware HTUs. All the 15 Mpiece of cups, mug, hollowware and cast ware are fired side by side three 5 Mpieces HTUs at 1180 C.

The 5 Mpiece flowline units of hollowware, pressure and open cast wareThe reader has already adopted the key issue of lean productline operation of flatware and cups&mugs. In similar manners holloware and pressure cast and open cast ware is being arranged to serve the purposes of lean production and short lead times. The key issue of fast throughput timing is “ low level of faults “. In fast throughtputting no fault can be hidden. All faults along the line must be diagnosed and corrected at the same time

Oversized labour demand?When the 5 flowline units as described above where ready on the drawing board, the general manager in charge found himself having 24 workers too many. As these were already recruited and trained and motivated he made a smart lean maintenance decision. These 24 people were given the flow line managers as three shift inline maintainers keeping the five productlines flow units at highest possible running index.

Lean in an existing PlantThis is for me, and many of you reading this paper, a familiar situation. I have walked into dozens of existing plant on all continents except South-America and Australia. The basic layout and operations in these are despite geography and culture the same. I already described what I see in the beginning of “ traditional tableware layouting “. The remedies in existing plants are similar to the ones in a new plant. Of course the existing layout “ bolting “ is a restriction and may even be serious restrictions, but lean improvement is more between the ears, than debolting machines and relayouting them. Here are a few obvious advice and the listing is by far not emptying:

* I always start with a mudawalk. A mudawalk tells me what is missing at each unit process station, and what all must be removed that is un-necessary at that station.

* Inventories, a mudawalk just by looking, and less counting, shows where all the inventories are, and which ones are necessary and un-necessary

* A mudawalk also shows how integrated all the different product flows are ( read how the inventories both necessary and un-necessary are mixed up )

* As in life, also in ceramic operations, rules 80 / 20. This notion has two

meanings. Firstly, it is mostly enough to perform to 80 % of any target

100 % is purely theoretical. Secondly, my experience of whitweare operations and production tells me that almost all ie 80 % of the believed technical and process problems are managerial. Sometimes I say 90 % is managerial

Why not lean?Therefore lean in ceramic operations is too scarce, far too scarce. On the other hand we who think in lean manners do have a lot to give those that still are operating in non-lean manners. It is never too late.

Tom Grahn, “ Dr of Crosscience “ and “ Dr of Crossmanagement “has seen and learned how challenging matters and almost miracles can be performed when looking at these in a leaner way. Tom Grahn is a Finnish citizen and works globally out of Finland. He can be reached at tpgrahn@gmail.com and +358 500 828486

At writing this paper I started by picking from Wikipedia these three different simple lean thinking citations.I hope these together with my article will help

In 1999, Spear and Bowen[8] identified four rules which characterize the "Toyota DNA":

Rule 1: All work shall be highly specified as to content, sequence, timing, and outcome.

Rule 2: Every customer-supplier connection must be direct, and there must be an unambiguous yes or no way to send requests and receive responses.

Rule 3: The pathway for every product and service must be simple and direct.

Rule 4: Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization.

From Wikipedia

The original seven muda are: ( Wikipedia )

Transport (moving products that are not actually required to perform the processing) Inventory (all components, work in process and finished product not being processed) Motion (people or equipment moving or walking more than is required to perform the processing) Waiting (waiting for the next production step) Overproduction (production ahead of demand) Over Processing (resulting from poor tool or product design creating activity) Defects (the effort involved in inspecting for and fixing defects)[18]

The following steps should be implemented to create the ideal lean manufacturing system:[32] ( Wikipedia )

1. Design a simple manufacturing system2. Recognize that there is always room for improvement3. Continuously improve the lean manufacturing system design