ABSTRACT
Theaim of this study is to investigate why the implementation of Unity and Efficiency in Production(UEP)is not yielding the expected results in PAN. The overall operations, production and sales are still on the low trend.This survey examined how the adaptation of UEP tools and the level of functions integration relate to the overall implementation success.A well-structured questionnaire distributed andcollected from fourty respondents (at supervisory level) were analyzed to determine the level of understanding of the philosophy, the usage of UEP tools and the scope of the UEP implementation in relation to the success of the implementation.The chi-square test statistics was used to test the research hypotheses generated at 0.05 level of significance. This is to find out if there exists relation between the adaptation of this method and the overall success of the UEP implementation. The result of the hypotheses tested revealed that all critical aspects were more or less considered (i.e. 4 out of 15 were not taken into account by at least 50% of the respondents). The lowest score (critical value) of 40% is an indication that all aspects considered are relevant/important for this research work. This is also an indication that the findings flow in line with established theories and literatures. The hypotheses also show that majority of the tools have remarkable relationship with UEP implementation success. The overall responses from questionnaireanalyzedclearly show that the UEP concept was not fully integrated into all company operations/functions. This made the overall expectations of using the principles notentirely fulfilled. The general inferencefrom this survey is that activities in PAN could be enhanced for high level of productivity and efficiency if all findings and recommendationsmade are critically considered by management in the entire value chain.
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TABLE OF CONTENTS
TITLE PAGE………………………………………………………………………………..i DECLARATION……………………………………………………………………………ii CERTIFICATION…………………………………………………………………………iii ACKNOWLEDGMENT……………………………………………………………………iv ABSTRACT…………………………………………………………………………………v LIST OF FIGURES…………………………………………………………………………ix LIST OF TABLES………………………………………………………………………….x CHAPTER ONE:INTRODUCTION……….………………………………………1
1.1 BACKGROUND OF THE PROJECT………………………………………………1
1.1.1 Peugeot Automobile Nigeria (PAN)………………………………………………..3
1.1.2 Concept of Unity and Efficiency in Production (UEP)……………………………..5
1.1.3 Peugeot Quality System Indicators…………………………………………………7
1.2 STATEMENT OF PROBLEM……………………………………………………10
1.3 AIM AND OBJECTIVES OF STUDY……………………………………………11
1.4 RESEARCH SIGNIFICANCE AND JUSTIFICATION………………………….11
1.5 SCOPE OF STUDY……………………………………………………………….12 CHAPTER TWO:LITERATURE REVIEW…………………………………………………13 2.1 REVIEW OF PAST WORK………………………………………………………13 2.2 TOOLS OF UEP MANUFACTURING…………………………………………..13 2.2.1 5-S Quality Concept……………………………………………………………….13 2.2.2 The seven wastes and lead time reduction…………………………………………15 2.2.3 Walk the floor………………………………………………………………………17 2.2.4 Operational meetings………………………………………………………………18 2.2.5 Total Productive Maintenance (TPM)……………………………………………..20
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2.2.6 Continuous Improvement (KAIZEN)……………………………………… 21 2.2.7 Just – In – Time (JIT)……………………………………………………… 21 2.2.8 Standardized Work………………………………………………………… 22 2.2.9 Kanban…………………………………………………………………….. 23 2.2.10 Theory of Constraints (ToC)……………………………………………… 24 2.2.11 Six Sigma (6σ)…………………………………………………………….. 25 2.3 IMPLEMENTATION OF THE UEP PHILOSOPHY AND THE UEP TRANSFORMATION PROCESS………………………………………… 26 2.3.1 Mobilize for UEP change…………………………………………………. 27 2.3.2 Translate strategy into objectives and UEP initiatives…………………… 30 2.3.3 Design the UEP change process…………………………………………… 33 2.3.4 Align the organization…………………………………………………….. 35 2.3.5 Organizational learning………………………….………………………… 38 2.4 RELEVANT THEORIES AND EQUATIONS FOR ANALYSIS………… 40 2.4.1 Sample statistics…………………………………………………………… 40 2.4.2 Test of Hypotheses and Significance……………………………………… 42 2.4.3 Quality Control Chart……………………………………………………… 45 2.4.4 Measurement of Performance…………………………………………….. 45 CHAPTER THREE:RESEARCH METHODOLOGY…….……………… 46
3.1 RESEARCH DESIGN……………………………………………………… 46
3.2 SAMPLING TECHNIQUE AND SOURCE……………………………….. 46
3.3 QUESTIONNAIRE DESIGN………………………………………………. 47
3.4 EMPIRICAL FIELDWORK (DATA COLLECTION)…………………….. 47
3.5 PROCEDURE FOR ADMINISTRATION OF INSTRUMENT AND DATA COLLECTION………………………………………………. 48
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3.6 PROCEDURE FOR SCORING…………………………………………….. 49 3.7 DATA ANALYSIS AND HYPOTHESIS………………………………… 50 3.8 VALIDITY AND RELIABILITY…………………………………………. 50 CHAPTER FOUR:RESULTS…………………………………………….. 52
4.1 QUESTIONNARE DATA ANALYSIS…………………………………… 52
4.1.1 Questions testing the basic understanding of the UEP philosophy……… 52
4.1.2 Questions to analyze the usage of UEP tools and techniques…………… 56
4.1.3 Questions analyzing the scope of UEP implementation…………………. 60
4.1.4 Questions testing the importance of critical management factors………. 62
4.2 DEFECT ANALYSIS FOR PRODUCED/TESTED CARS………………. 72 4.3 PRODUCTION VOLUME………………………………………………… 77 4.4 SUMMARY OF FINDINGS………………………………………………. 77 CHAPTER FIVE: DISCUSSION………………………………………….. 78 5.1 DISCUSSION OF RESULTS……………………………………………… 78 CHAPTER SIX: CONCLUSIONS AND RECOMMENDATIONS………. 82 6.1 CONCLUSIONS…………………………………………………………… 82 6.1.1 Limitations of findings……………………………………………………. 83 6.1.2 Implication of findings……………………………………………………. 84 6.2 RECOMMENDATIONS…………………………………………………… 84 6.2.1 Implementation recommendations……………………………………….. 84 6.2.2 Recommendation for further research…………………………………… 86 REFERENCES…………………………………………………………….. 88 APPENDIX 1 STANDARD NORMAL DISTRIBUTION TABLE……… 93 APPENDIX 2 CHI-SQUARE DISTRIBUTION TABLE………………… 95
APPENDIX 3 QUESTIONNAIRE…………………………………………96
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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE PROJECT
Customers have numerous choices when it comes to buying any product. Combined with choices available to the consumer and expectation of shorter order fulfillment lead times, customers have become more fickle in their purchasing decisions and less loyal to their old long-standing business relationships. In recent years, companies have become increasingly focused on market demand and customers responsiveness. This has led to the implementation and adoption of manufacturing improvement and optimization techniques in the automotive industry. Optimization is necessary for the control of any business process to achieve better product quality, high productivity with low cost. Optimization is defined as minimization or maximization of cost function with variable input parameters. The word optimization commonly refers to the mathematical handling of parameters in order to maximize or minimize a mathematical function. The global optimization is about finding the best possible solutions for given problems. This makes optimization of various systems an increasingly important activity. Apart from this, manufacturing systems are also optimized using any of the process improvement methods. Improvement methods such as lean, just in time, six sigma and the likes, have contributed immensely to system success and profitability. In order to optimize the manufacturing process, a company has to have the ability to identify its main bottlenecks in manufacturing process. It needs to be able to set the proper goals, i.e. grouping company‟s activities into modules and set the control points. Optimization criteria include: cost of production, quality of final products, lead time, production risk and the likes.
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Recently, manufactures are critically evaluating their processes to determine their effectiveness in bringing maximum value to customers with reduced cost. Production management techniques yesterday are being replaced by the most efficient methods that greatly reduce the late delivery of products to customer, reduce production and operating costs which enhances the process quality (Krishnan et al.,2011). The following are the inventions for reducing the work in process inventory:
i. In 1890 Sakichi Toyoda invented the philosophy of kaizen.
ii. In 1908 Henry Ford created the moving assembly line.
iii. In 1937 Kiichiro Toyoda built a plant and hanged a sign at the shop floor that read JIT (Just In Time). This was to improve the imbalance he found in his production line.
iv. In 1940 and the early 1950s Taichii Ohno the assembly manager for Toyota developed many improvements that eventually became the Toyota Production System (TPS).
v. In 1995 James Vonock and Jones published “lean thinking”. Lean manufacturing started becoming popular in factories around the world.
Competitive pressures forced manufacturers to continuously improve the provision of products and associated services desired by customers. Manufacturers have adopted lean practices such as just-in-time (JIT) and Total Quality Management (TQM) to reduce costs and improve quality.Intense global competition, uncertainties in energy cost and supply, and exponential growth in information technology are shifting industries toward agile, just-in-time processing, high-performance manufacturing, and accelerated introduction of new products. Business performance is increasingly linked to sustainability and environmental, health and safety (EHS) issues. Companies can use smart manufacturing (SM) to help meet objectives associated with these issues and
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improve overall economy, safety, and competitiveness. In short, many manufacturing firms are becoming relatively more agile (agile manufacturing).Agile manufacturing differs from lean manufacturing in the sense that lean manufacturing is oriented toward a repetitive manufacturing environment with order characteristics of high-volume/low-mix, and agile manufacturing applies to low-volume/high-mix. Agile manufacturing is seen as the next step after lean in the evolution of production methodology. The principles of the Unity and Efficiency in Production (UEP) adopted by Peugeot Automobile Nigeria PAN are closely related to the lean process. Despite the huge plant installations and great human capacity, the production and sales trend of Peugeot products has declined considerably after the full implementation of UEP in PAN. It is of great interest, investigating this negative trend and proposing best possible solutions. 1.1.1 Peugeot Automobile Nigeria (PAN) PAN was incorporated on December 15, 1972 as a limited liability company with an authorized share capital of three million naira (PAN, 1975). The total surface area is 330,000 square meter (82.5 acres). Twenty-seven months after incorporation, the then head of State, General Yakubu Gowon, commissioned the assembly plant on March 14, 1975, though full operations commenced on March 2, 1975. The company layout is as shown in figure 1.2. Production process start with completely knocked down CKD elements in body shop through to paint shop, assembly shop and then to the commercial unit as indicated in the layout.
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Figure 1.1 Peugeot Automobile Nigeria Layout (PAN, 1975) The objectives here are to produce and sell passenger cars, provide a platform for the development of middle and lower industries and provide employment, training and development.Between 1975 and 1985 PAN engaged in the production of Peugeot 404 (SAL), 504 (GR, GRAC, GL, SR, SW) 505 (GR, SR, ST, EVO). Production of the 504 progressed till 1995 when the 306 (SAL,XN/XR/T) was introduced. Production of Peugeot 406 started in 1999 with SR, then ST, DYNAMIC, COMFORT and PRESTIGE. In 2009 the Peugeot 406 line was replaced by the Peugeot 307 sedan/saloon, called the T6 project.
From record, the annual production/sales volume has drastically reduced from 37,000 in the 1980s to less than 5,000 in 2012. This trend needs to be turned around with the effective use of instituted management tools and resources. Considering global
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reorganization of the automobile industry and the direction of the global strategy that took place in the 1990s and the fast growing information and communication industries, automobile production has concurred with similar change. Peugeot Automobile Nigeria Limited is also faced with the challenge of flowing with the tide. 1.1.2 Concept of Unity and Efficiency in Production (UEP) Unity and Efficiency in Production (UEP) is a dynamic and continuous improvement system that ensures effective, timely, sustainable production and work organization. UEP is the work management philosophy used in Automobile Peugeot (AP) France for system optimization. Peugeot Automobile Nigeria PAN started its implementation in the year 2003. The aim is to standardize company operational methods in line with the Peugeot- Citroën group worldwide so that vehicles produced in Nigeria will attain the same quality level as those produced in France and other European countries. Peugeot-Citroën(the second largest car maker in Europe) sold 2.8 million vehicles worldwide in 2013, of which 42% outside Europe. The group also made sales and revenue record of €54 billion in 2013 (PSA, 2014). The success story hinges on the application of UEP concept of work organization. UEP is uniquely a Peugeot work organization system. Hence, some factories within the Peugeot Société Automobile (PSA) group are able to produce 2,000 vehicles a day. Today, UEP is the only recognized management improvement tool available within the PSA group. PAN without exception has to embrace the new concept of management work organization if it must continue to survive and play the leading role in the auto market throughout Africa and Nigeria in particular.
Management‟s obligation is to use efficiently, the available resources at its disposal to achieve efficient result. Before the year 2003, the production process in PAN did not
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have a specified tool to motivate staff towards achieving defect free cars on the production line.The need for change in functional organization became paramount in the prevailing circumstances. The industrial management structure that has a long chain of command, viz: Management – Superintendent – Supervisor – Foreman, Team head, and Workers was re-structured to meet UEP requirements that allowed PAN to conform to the standard of the other Peugeot Société Automobile PSA group. The UEP team shown in figure 1.3 now forms the new structure. The chain of command is now reduced drastically.
UEP is based on three principles: product quality, continuous improvement and social cohesion. The UEP tools include: walk the floor, operational meeting, monthly communication briefing, five progressive cleaning actions “5S”, idea schemes, regular analysis of the UEP problems (its performance indicators and the list of actions), continuous improvement (quality training, recognition, health and safety, ergonomic assessment and risk assessment).
Operators
RU – Team leader
Department Head
RG – Group Leader
Monitor
THE UEP
Figure 1.2 Unity and Efficiency in Production-UEP TEAM
(Peugeot Automobile Nigeria, 2003).
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The UEP is a dynamic organization which continuously develops. The process of continuous improvement is marked by 5 stages which measure its development and ensure its sustainability. These steps are indicated in figure 1.4.
Figure 1.3 Stages of development of the UEP
(Peugeot Automobile Nigeria, 2003). Figure 1.4 shows that UEP process has five developmental stages. The reference guide explains that the attainment of each stage is highly celebrated and rewarded. 1.1.3 Peugeot Quality System Indicators
Indicators are available to have a global view of the entire system if whatever is established is working as defined. They include Aspect Quality Indicator (IQA)/Functional Quality Indicator (IQF), Procedures application, 5M‟s (Man, Method, Machine, Material, and Environment), Reactivity, Destructive test, Supplier‟s
Develop effective working with the associates
Stage 3
Continuous improvement involving everyone
Stage 5
Animate the team in a structured way
Stage 2
Optimise performance
Stage 4
Create the team
Stage 1
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efficiency, and Warranty claims. Frequent assessment of these indicators allows for improvements to be made in the process and product. Reactivity: These are defined procedures and processes of solving process or product related problems using quality tools, such as non-conformity serial checks, progress agreement, action plan form etc. Quality level targets for finished cars are set yearly by PAN management in consonance with PSA referential. This is done through an audit carried out by the quality department using the defects grading system. Defects left on the finished cars at the point of delivery for commercialization are used as reference for measure of quality level. Table 1.1 Finished vehicles quality level targets for year 2006 (PAN, 2006)
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Description
Aspect Quality Indicator IQA
Function Quality Indicator IQF
Global (disapproval points)
120
30
SPAB (Av def/car)
0.8
0.2
Table 1.2 Finished vehicles quality level targets for year 2007 (PAN, 2007)
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Description
Aspect Quality Indicator IQA
Function Quality Indicator IQF
Global (disapproval points)
110
25
SPAB (Av def/car)
0.68
0.10
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SPAB = Group of major defects (see note below). Average defect per car (Av def/car) These quality indicators measure the functionality and appearance levels of the cars produced. Defect grading is of two categories:
1. Major defects (SPAB): Defects under this group attract weighted points ranging from 10 to 120 disapproval points.
2. Minor defects (CD): Defect under this group attracts weighted points ranging from 3 to 6 disapproval points.
The less the number of major defects the better the quality level of the car. SPAB = Group of major defects. S = Safety related defect, P = Potential break down defect, A = Unacceptable defect, B = could worry the average customer. Customer Protection through progressive commercialization in the process: Finished vehicles from each production shop are evaluated to ensure that set quality targets are respected and that no product passes to the next process with a major defect before final delivery to Commercial. This is to protect the internal and external customer. Assurance of incoming materials from Suppliers: On reception of direct and indirect materials in PAN, the Quality inspection team carries out mandatory conformance checks and accepts only good parts/materials and chemical products into the stores for production use. There is a written inspection/acceptation process for each part/material and chemical. Testing jigs, templates, and laboratory equipment are also used. Three inspection/acceptation methods are employed.
i. 100% unitary inspection or re-enforced inspection.
ii. Audit based on selected sampling plan.
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iii. Monitoring of the quality performance of fitted parts in PAN and After Sales
(Warranty). There is regular communication with suppliers on the quality level of supplied items via technical reports, quality alarms, and claims. Rejects are isolated and sent back to suppliers through a defined process. In conformity with quality system, individual supplier‟s performance indicator is available to measure the quality level of incoming materials. 1.2 STATEMENT OF PROBLEM Organizations of all sizes are trying to stay competitive and profitable for long periods. Most companies have a major opportunity to improve quality, reduce; cost, customer lead-time and cycle time through the application of one improvement method or the other.Despite the full implementation of new work management tool; Unity and Efficiency in Production UEP, the Peugeot Automobile Nigeria:
1. Still runs below full capacity. A system with multiple production lines that produced over two hundred and fourty (240) cars per day in 1970s now produces less than twenty (20) cars per day.
2. Could not strategically integrate all tools and functions of UEP to all work categories. This neglect subsequently encouraged increased production lead time and low customer patronage.
3. Requires managerial consideration of all critical factors that promote organizational transformation and business optimization.
4. Needs to identify approaches to redirect each non-value added activity into a value added activity in order to reduce waste and improve efficiency of production.
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1.3 AIM AND OBJECTIVES OF STUDY
The aim of this study is to investigate why the implementation of the work management philosophy, “UEP” is not yielding the expected results in PAN. The specific objectives of the study are:
1. To analyze participants‟ understanding of UEP philosophy.
2. To analyze employee and function involvement in UEP transformation.
3. To identify the critical success factors for sustainable implementation of UEP.
4. To examine how important the UEP philosophy and management behaviour are related implementation issues (for effective system optimization).
5. Analyze quality data before and after UEP implementation.
1.4 RESEARCH SIGNIFICANCE AND JUSTIFICATION This study seeks to review the UEP implementation process by identifying problems and associated bottlenecks and making recommendation based on analyzed data for the decision making process in order to enhance productivity and customer satisfaction. Various production/manufacturing process improvement methods have been applied successfully. Most of these have also been distinctly documented and exposed to various criticisms and further research. Unity and Efficiency in Production UEP, is a unique process that is peculiar to Peugeot Automobile worldwide. Embarking on this research study is considered to be useful and relevant because of the following:
1. Use of statistical tools and hypothesis for process analysis, management and control instead of using only the conventional process charts and other documentations/animation (encouragement of long term cost reduction efforts).
2. Proper documentation and further researches for the benefit of continuous improvement and globalization of the application of the process.
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3. Use of Peugeot Automobile Nigeria as a case study to clearly understand the concept of implementation that led to eventual success of the process.
A common mistake made by companies when implementing process improvement is to allow the chosen model to dictate the process design. A model that needs to be interpreted base on the business environment and technical needs of the project is not a standard that must be implemented exactly as documented. The correct approach is to balance the recommendations of the model against the business value that the new processes will add. 1.5 SCOPE OF STUDY The reflections in the fieldwork and the discussion sections have already shown the limitations of the research. The conclusions drawn in this survey are more based on indications than on statistically significant results. The opinions of the respondents could not always be supported by statistics. Even where it was possible, the results should be looked at more closely and considered to be more of a general indication rather than a statistical proof, that certain aspects are critical to successful UEP implementation. However, as most of the findings of the literature review were reflected by opinions in the survey, it can still be said that the applicability of the theory to the samples could be confirmed. The research was limited to the resources available, the body of knowledge on the topic of UEP manufacturing technology and the time available to complete the study.
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