Application of lean theory to optimize the procurement process and raw material inventory
Thapa, Ashish (2024)
2024
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2024112129173
https://urn.fi/URN:NBN:fi:amk-2024112129173
Tiivistelmä
This thesis aims to apply the Lean theory to the procurement process at the case company in order to optimize the process and gain efficiency in terms of minimizing raw materials inventory size, automating the procurement process to save the time used in day-to-day operations, and minimize the lead times and delays. Procurement in the case company was introduced in 2020 as an independent department. Since then, the process follows the conventional way of handling procurements.
The thesis utilized the action research methodology. The data collection methods included interviews, discussions, and internal document analysis. The theoretical framework was built around the Lean theory suitable for procurement-based operations to diagnose and optimize the processes. The current state analysis identified that, as per the principles of lean, procurement process in the case company is divided into sub-processes, and each process was examined to see if they created value. The analysis identified those process elements which failed to create value. The development part recommended to minimize, improve or eliminate such process elements, and to reboot the system to check its functionality.
The thesis produced a total of three different outcomes. For this end, the thesis analysed three different sets of data to further elaborate the idea and range of analysis. First, it has compared the total warehouse inventory value and depletion time of the previous six months to the next six months after the application of lean approach. The inventory size and depletion time was minimized significantly. Second, two similar comparisons were also made for the lead time and delays of the orders. Lead times were improved slightly, and delays were significantly reduced. The efficiency in terms of operator hours was visibly improved in the results obtained.
Focusing on the initial scope was a challenge and it was narrowed down. In the future, the next project can cover the remaining material inventory and purchases and hopefully the case company can make it happen soon. In this thesis, the lessons learnt are recorded and room for improvement is recognized to continue to the development of a sustainable procurement system. In this thesis, the initial stages of applying the lean procurement system are discussed and the results quantified as a starting point for the case company to continue.
The thesis utilized the action research methodology. The data collection methods included interviews, discussions, and internal document analysis. The theoretical framework was built around the Lean theory suitable for procurement-based operations to diagnose and optimize the processes. The current state analysis identified that, as per the principles of lean, procurement process in the case company is divided into sub-processes, and each process was examined to see if they created value. The analysis identified those process elements which failed to create value. The development part recommended to minimize, improve or eliminate such process elements, and to reboot the system to check its functionality.
The thesis produced a total of three different outcomes. For this end, the thesis analysed three different sets of data to further elaborate the idea and range of analysis. First, it has compared the total warehouse inventory value and depletion time of the previous six months to the next six months after the application of lean approach. The inventory size and depletion time was minimized significantly. Second, two similar comparisons were also made for the lead time and delays of the orders. Lead times were improved slightly, and delays were significantly reduced. The efficiency in terms of operator hours was visibly improved in the results obtained.
Focusing on the initial scope was a challenge and it was narrowed down. In the future, the next project can cover the remaining material inventory and purchases and hopefully the case company can make it happen soon. In this thesis, the lessons learnt are recorded and room for improvement is recognized to continue to the development of a sustainable procurement system. In this thesis, the initial stages of applying the lean procurement system are discussed and the results quantified as a starting point for the case company to continue.