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Improvement of Value Stream Mapping and Internal Logistics through Digitalization

A study in the context of Industry 4.0

Written by S. Sultan, A. Khodabandehloo

Paper category

Master Thesis


Business Administration>Supply Chain & Logistics




Master Thesis: Value Stream Map (VSM) The production system of a product contains at least one value stream, which organizes and coordinates all activities or processes required to produce the product. The value stream can be defined as the collection of all the specific operations required to make a specific product pass through any enterprise's three key management tasks (ie, problem solving, information management, and physical transformation) (Sundar et al., 2014). Value Stream Mapping (VSM) is a powerful tool for implementing lean manufacturing principles. VSM is the process of mapping all the activities required to produce a product from receiving raw materials to delivering the product to the customer (Rother & Shook, 1999). It visualizes all coordination activities between the main participants of the production system (such as suppliers, manufacturers, and distributors), so that the entire process can be seen in the big picture (Sundar et al., 2014). The visualization of the value stream through the VSM helps to identify value-added (VA) and non-value-added (NVA) activities in the value stream, thereby eliminating NVA activities to improve the value stream​​​ Rother and Shook (1999) suggest drawing the current state of the value stream at the shop floor level to obtain most of the benefits of VSM. If the further plan is to improve the value stream, it is important to map the future of the value stream before actual implementation of the improvement (Rother & Shook, 1999). VSM represents the inventory level, cycle time, process time, lead time, waiting time, etc. in the process, from which the cycle time as the cycle time bottleneck can be found. 3.3 Internal logistics system Logistics is a commonly used term and is considered an important part of the manufacturing supply chain. The main goal of production logistics is to provide materials of sufficient quality and quantity to a given destination at the right time, with the right methods and equipment at the lowest cost (Kovács, 2016). Logistics is mainly associated with the two functions of transportation and warehousing. However, Rushton et al. (2014) emphasized that the core tasks of modern logistics systems are warehousing, inventory, packaging, information flow, transportation, and system planning, while respecting the constraints of appropriate costs (Rushton, et al., 2014). In the manufacturing process, the production system and the logistics system are equally related partners; according to Adamczak et al. (2016) 4.3 Intralogistics system As mentioned above, the overall principles of the case factory are based on lean methods, focusing on sustainability, eliminating wasteful activities, improving resource efficiency, and optimizing production value flow as well as internal logistics systems. This is achieved through the use of continuous improvement strategies to develop competitive advantages and ensure customer quality. Since the production value stream and the internal logistics system are essentially complementary to each other, the two areas need to follow the same procedures to be effectively integrated. The logistics system of interest includes two types of activities: internal logistics activities and external logistics activities. Intralogistics activities include all necessary activities to provide materials for operating processes when needed. In this paper, the focus of internal logistics is to schedule material flow and information flow, which will be explained in 4.3.3 and 4.3.7 respectively. The material flow starts from the feeding area to the consumption location, that is, different assembly lines. It is worth mentioning that in this case, the internal logistics of the factory is based on minimizing the material facade around the production line and storing most of the materials in the warehouse in the logistics area. On the other hand, external logistics activities refer to the storage and transportation of the finished converter to the warehouse (the third party of the case company), which is considered beyond the scope of this article. 4.4 Value Stream Map Value Stream Map (VSM) is one of the important tools of lean methods. It is a powerful method that can visualize and summarize all coordinated activities of the production system into a large map (Sundar et al., 2014). Visualizing the production value stream through VSM helps to identify value-added (VA) and non-value-added (NVA) activities in the value stream. Since the purpose of lean method implementation is to eliminate NVA activities, the analysis of VSM should lead to improvements in the production system. Rother and Shook (1999) suggested that in order to obtain most of the benefits of VSM, the value stream mapping should be performed at the shop floor level in the current state. Therefore, in this case study, the researcher recorded all the necessary data at the shop floor level, which is necessary for the development of the VSM of the production system. As mentioned earlier, the production value stream is composed of various independent and integrated assembly lines. Therefore, the researchers decided to divide the production system into three parts and draw separate value stream diagrams for these three parts. Read Less