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A model for Assessing Cost Effectiveness of Applying Lean Tools - A case study
Växjö University, Faculty of Mathematics/Science/Technology, School of Technology and Design.
Växjö University, Faculty of Mathematics/Science/Technology, School of Technology and Design.
2007 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

The purpose of this thesis is to develop a model for assessing cost effectiveness of applying lean tools. The model consists of eight phases: it starts by understanding customers' requirements using Voice of Customer (VOC) and Quality Function Deployment (QFD) tools. In phase 2, the current state of plant is assessed using lean profile charts based on Balanced Scorecard (BSC) measures. In phase 3 and phase 4, identification of critical problem(s) and generating of improvement suggestion(s) are performed. Phase 5 provide evaluation of the cost effectiveness of implementing the suggested lean methods based on life cycle cost analysis (LCCA) and phase 6 prefers the right alternative based on multiple criteria decision making (MCDM). In phase 7 the selected alternative is supposed to be implemented and finally the user should monitor and control the process to make sure that the improvement is going as planned. The model was verified successfully using a case study methodology at one Swedish sawmill called Södra Timber in Ramkvilla, one part of Södra group. Results obtained from the study showed that the production and human resources perspectives are the most critical problem areas that need to be improved. They got the lowest scores in the lean profile, 63% and 68%, respectively. Using value stream mapping (VSM) it was found that the non value added (NVA) ratios for the core and side products are 87.4% and 90.4%, respectively. Using the model, three improvement alternatives were suggested and evaluated using LCCA and MCDM. Consequently, implementing 5S got the highest score, second came redesigning the facility layout. However, it was estimated that 4.7 % of NVA for the side product would be reduced by redesigning the facility layout. The recommendations were suggested for the company to improve their performance. The novelty of the thesis is based on the fact that it addresses two main issues related to lean manufacturing: firstly, suggesting lean techniques based on assessment of lean profile that is based on BSC and QFD, and secondly assessing the cost effectiveness of the suggested lean methods based on LCCA and MCDM. This thesis provides a generalized model that enables the decision-maker to know and measure, holistically, the company performance with respect to customer requirements. This will enable the company to analyze the critical problems, suggest solutions, evaluate them and make a cost effective decision. Thus, the company can improve its competitiveness.

Place, publisher, year, edition, pages
2007. , p. 46 (73)
Keywords [en]
Lean manufacturing, Lean tools, Cost effectiveness, Life cycle cost analysis, Balanced scorecard, Multiple criteria decision making, Value stream mapping, sawmill, model.
Identifiers
URN: urn:nbn:se:vxu:diva-1590OAI: oai:DiVA.org:vxu-1590DiVA, id: diva2:205422
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Available from: 2007-09-14 Created: 2007-09-14 Last updated: 2010-03-10Bibliographically approved

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CiteExportLink to record
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Citation style
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