Application of Value Stream Mapping to Logistic Operations

The Transportation Value Stream Mapping (TVSM)

1. Introduction

Value Stream Mapping (VSM) is a lean process that allows to create a detailed visualization of all steps in the work processes. It is a representation of the flow of goods from supplier to customer through your organization.

The primary purpose of VSM is creating a value stream map to the places that can be improved by visualizing both its-value-adding and wasteful steps. This tool had origin in the material and information flow diagrams developed originally by Taiichi Ohno at Toyota to identify sources of waste and eliminate those wastes. VSM is extensively in the manufacturing area to improve operations performance and in the last years, it has been adapted to other areas such as; supply chain and the healthcare.

In this paper VSM is adapted to Logistic area and it is called Transport Value Stream Map (TVSM). Value added activities are classified as two part; value added and non-value added activities. Value added activities is what the end customers pays for. However, it should also be emphasized that customer has to perceive a benefit of what customer is paying for, especially in a difficult economic environment. A value adding activity is considered as to be any activity that contributes to deliver that benefit appreciated by the customer. In the supply chain, the series of value-adding steps from the raw material source to the end consumer is called the value stream. It could be argued from the activity definitions by Monden (1993) that all freight transport should be classed as waste or as a non-value-adding activity. For example, the most effective scenario would be for the manufacturing plant to be located next to the retail outlet or customer thus, minimizing the transport distance covered.However, in the real world this is rarely the case; so the function of transport in moving goods closer to the end consumer can be said to be a value-adding activity.

2. Overall Vehicle Efficiency

The tool proposed includes the definition of several types of waste specific to transportation with the goal of improving efficiency as the relevant performance measure in transport operations. In particular, it is defined for enterprises that own a fleet of vehicles to distribute its products. Simmons (2004) suggest the use of the OVE measure for improving transport efficiency. This measure was attained by translating the principles of Overall Equipment Effectiveness (OEE) to measure the effective utilization of the road haulage vehicle in the freight transport industry. The components of the measure are basically the same. The availability, performance and quality efficiency factors were calculated and multiplied together to produce a total OVE percentage rate and the method converted the OEE losses (breakdowns, changeovers, speed, minor stoppages, defects, yield loss) from manufacturing to transport. The result was the definition of five transport losses or wastes, which were:

Wastes that impact availability:

Driver breaks: Statutory breaks taken during a journey are considered a loss. If the statutory break is taken at the end of a journey or when somebody else is loading/unloading then it is not a loss.

Excess load time: A standard time is allowed to load and unload a vehicle. When loading/unloading exceeds the standard time, for reasons outside the control of the vehicle driver, then excess load time occurs.

Wastes that impact performance:

Fill loss: Ideally the vehicle will be full; either by weight or volume, whichever is the lower constraint. Fill loss occurs when the vehicle is not fully loaded.
Speed loss: The difference between maximum attainable speed and the average speed is the speed loss

Wastes that impact quality:

Quality delays: Goods damaged in transit or poor/invalid paperwork would both be examples of quality issues that impact adversely on the OVE measure.

Figure 1

In this paper Simmons (2004) model is improved and added additional transport process wastes.

Figure 2

2.1. Additional Transport Process Wastes

All vehicles in the fleet should be in transit (but the ones in preventive maintenance)
100% of the time (24 hours)
Fully loaded both ways; to the client and back, satisfying weight and volume restrictions
Travelling the minimum distance.
Non-scheduled time. It relates to partially using the time of the day for the job, i.e., only one eight-hour shift per day.
Vehicle scheduled maintenance time. Time required for preventive maintenance.
Excess customer service time
Vehicle breakdowns and non-scheduled or corrective maintenance
Vehicle waiting time at DC.
Quality wastes considered relevant are:
Product defects originated by handling and routing
Percentage of clients not served by the route
Percentage of demand not satisfied in a route.

2.2. TVSM

Transportation is an inherent element of a distribution strategy. The structure of a strategy differs depending upon the supply chain network design. The most common basic strategy is the direct shipment between an origin and destination. The activities involved in this strategy are: shipment preparation,transporting goods to a destination,serving the customer,transportation back to origin,closing the transportation service.

Activities can be defined as in-transit (IT) and non-in-transit (NIT). IT activities can be classified as transportation service is in the process. NIT activities can be classified as loading or unloading products at a distribution center (DC). To understanding the concept of Internal and External activities, transportation journey (TJ) must be defined. TJ is time specified for the transportation activity for the team of operators and the vehicle. It can be a fixed period such as shift which is generally 8 hour or can be variable depending on the distance between DC and the customer.

In this paper TJ considered as 24 hours which means operators and vehicles can be available for the service. Internal activities can be defines as if the operation carries out during the TJ by the team of operators with the vehicle. In order to classified an activity as a External, operation carries out off TJ or an other organisational entity it is called External activity. Process mapping is showed in the below.

Figure 3

3. Implementation

This method is applied to bottled beverage company located in the Mexico. The distribution network of this firm consists of two echelon; the first echelon is takes products from bottling plant to DC.Other echelon that distributes product from DC to retailers such as convenience store chains,independent retailers and supermarket chains. In this paper these method is applied to second echelon of the firm and selected to one of its regional DC.

The first step in the implementation is waste identification. Waste identification is divided into two parts; waste during IT and waste during NIT activities.

In this regional DC has a fleet which 124 trucks serving 95 daily routes. In addition DC has 6000 customers which 80% are selling points (convenience stores and etc.) and 20% are consumption points (bars,restaurants and etc.) The daily distribution operation consists of 14 routes carried our at night and the rest during day hours. Distribution process starts with daily orders from every selling and consumption point. Some are electronic transactions and others are gathered by a seller agent who visits clients daily. These orders are consolidated and used to plan daily distribution routes by the route planner. The process consists of four main sub-processes; route preparation,transporting goods,route closing and reloading. Sub-processes are carried out in the shift. There are night routes to satisfy the requirements of convenience stores open 24 hours and day routes for the rest of the customers.

Waste identification;

Waste during transportation
Vehicle capacity loss
Distance waste and speed loss
Waste during serving customer

Waste during serving customers

The actions are taken;

Internal NIT activities were scheduled for the night shift for warehouse personnel insuring that the vehicle was completely loaded when the operators enter their shift.
The previous activities were also improved decreasing their total time 62% allowing the possibility that a vehicle could be assigned to two routes.
Vehicle performance was improved significantly implementing a variable routing scheme according to daily demand and using UPS Road-net software.
The journey time was shortened to a shift of eight hours and the average clients per route increased 11%.
Negotiation with customers to change service time windows from day to night hours.
Vehicles could now be assigned to night and day routes.

4. Conclusion

VSM has proven to be a very useful tool to identify wastes in manufacturing and service processes including logistics operations. However, when dealing with transportation waste, current mapping considers only the relocation of facilities and/or transportation mode change as the alternatives to reduce or eliminate it. The work described in this document makes a contribution to this field by proposing the option of transport efficiency improvement. A modified efficiency measure that considers total calendar time is suggested as well as a new version of the VSM for analyzing transport operations efficiency. The application of the tool to identify transport waste in the distribution of bottled beverage from DC to retailers is described to illustrate its usefulness. The application of the actions described briefly is in process.

5. References

Villerreal, (2012) The transportation value stream map (TSVM). Article in European J of Industrial Engineering February 2012.

Monden, Y. (1993) Toyota Production System: An Integrated Approach to Just-in-Time, 2nd
Edition, Engineering and Management Press.

Guan, T.S., Mason, R. and Disney, S. (2003) ‘MOVE: modified overall vehicle effectiveness’,8th International Symposium on Logistics, Seville, Spain, July.

Chopra, S. (2003) ‘Designing the distribution network in a supply chain’, Transportation Research
Part E, Vol. 39, No. 2, pp.123–140.

Rother, M. and Shook, J. (1999) Learning to See, Lean Enterprise Institute.

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