Control of WIP and reduction of lead time in a food packaging company

Abstract

High inventory holding costs, strain on warehouse capacity and the competition of lead time are concerns of a food packaging manufacturer. In this work, causes of high WIP were identified and three approaches were developed to reduce and control better the WIP. We propose to split the production line into dedicated lines, to change the push production system to a pull production system, and to align the process times to the takt time. A simulation model of the proposed production line was analyzed and was verified by a simulation model of the current production line. Three configurations were tested for production line A and production line B. We found that the proposed production line reduced the WIP by 70% and saved $990,000 annually in inventory holding costs. In addition, the lead time was reduced from 6.4 days to 1.9 days and the strain on the warehouse capacity was eliminated.