Lean manufacturing in a mass customization plant : inventory correction and shortage measurement

Abstract

This thesis documents the application of the principles of lean manufacturing and supply chain planning at Varian Semiconductor Equipment Associates. The company's products are highly customizable, and the production schedules change daily to comply with customer requests. In situations where variability - whether in product features or logistics - is high, lean implementation is difficult. Nonetheless, use of lean manufacturing techniques like Value Stream Mapping helps to highlight problems. Value Stream Maps of Varian's processes were drawn which revealed that the main problem was chronic raw material shortages. Further investigation revealed improper supply chain and inventory management. Moreover, existing metrics for parts shortage measurement were found to be lacking in accuracy. Based on the principles of postponement, it is recommended that the work-in-process inventory be reduced. The demand can be met by holding the inventory in raw material form instead, and by improving stocking policies. Also, a better system for shortage measurement was recommended, and a framework for its data collection and analysis was presented. We project that these recommendations will lead to an efficient and lean system of manufacture.