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Online Tutoringhttps://www.homeworkping.com/Volume 4 Number 2 July - December 2011MATERIALS HANDLING MANAGEMENT:A CASE STUDYGuilherme Bergmann Borges VieiraUCS - Universidade de Caxias do Sulgbvieira@cpovo.netGiovana Savitri PasaUFRGS - Universidade Federal do Rio Grande do Sulgiovanapasa@producao.ufrgs.brMaria Beatriz Nunes de Oliveira BorsaUFRGS - Universidade Federal do Rio Grande do Sulmaria.beatriz@ufrgs.brGabriel Sperandio MilanUCS - Universidade de Caxias do Sulgsmilan@ucs.brAlberto PandolfoUCS - Universidade de Caxias do Sulalberto.pandolfo@marcopolo.com.brAbSTRACT:The highly competitive environment, linked to the globalization phenomena, demandsfrom companies more agility, better performance and the constant search for cost reduction. The pres-ent study focused on improvements in internal materials handling management, approaching thecase of a large company in the automotive industry. Materials handling is intrinsically associated withproduction flow. Because of this, it has direct influence on transit time, resources usage, and servicelevels. The objective was to evaluate, in a systematic way, the impact of implemented changes in ma-terials handling management on the internal customers perceptions of cost, safety in service, servicereliability, agility and overall satisfaction. A literature review preceded a case study in the companysmanufacturing unit and the questionnaires were completed by 26 employees directly involved in theprocess. Analyzing the answers, it was possible to suggest that internal customers understood that thenew materials handling management system enlarged service agility and reliability and reduced costs,which caused an improvement in overall satisfaction.internal handling, material flow, materials management, material handling management, service level.Key words:1. INTRODUCTIONperformance. The Materials Handling Industry ofAmerica [MHIA] defines materials handling man-There is a strong concern to adjust the supply system in aagement as Material Handling is the movement,company (Machline, 2008) to achieve a higher service lev-storage, control and protection of material, goods,el internally and to the outside customers. This brings toand products throughout the process of manufac-a higher operational level and even a possible differentialturing, distribution, consumption and disposal.when compared with the other competitors (Milan, PaivaThe focus is on the methods, mechanical equip-& Pretto, 2006; Paiva, Carvalho Jr. & Fensterseifer, 2004).ment, systems and related controls used to achievethese functions (mhia.org/learning/glossary).Materials handling management is among manyfactors that contribute to improve a companysThen it is observed that handling is broader than19 Vieira, G. B. B., Pasa, G. S., Borsa, M. B. N. O., Milan, G. S., Pandolfo, A.:Materials Handling Management: a Case StudyJournal of Operations and Supply Chain Management 4 (2), pp 19 - 3020tify the factors that explain overall satisfaction; to dosimple materials movement, although both termsare sometimes used as synonyms.it, open-ended questionnaires were applied. The re-spondents 26 people directly linked to daily mate-The relevance of materials handling stems from therials flow were requested to identify the attributesintrinsic relationship that it has with productionand unfold them into sub-factors which representedflow. When it presents an imbalance, there is forma-the internal process in more details. The identifiedtion of extra stock or rupture in supply. When theattributes were cost, safety in service, service reli-flow does not have enough velocity, transit time isability and agility. After this step, a second question-long and the system is not capable of serving thenaire with close-ended questions was applied to thecustomers when they need it.same respondents in order to evaluate performancesatisfaction at each factor and sub-factor and alsoIt is well understood that material handling im-overall satisfaction. The questions requested the re-provement may have positive effects over produc-spondent perception about the improvement per-tion. However, it is not only production, but the wayceived or not after the interventions.the employees see the new situation. When the per-ception is favorable, the benefits are possible; if not,The collected data were analyzed with multiple re-behavioral issues can emerge. Evaluations are im-gressions. Data analysis indicated that the factorsportant when interventions into the work environ-agility, service reliability and cost are able to explainment are implemented. The present work is specifi-overall satisfaction. In addition to that the satisfac-cally related to materials handling management. Bytion level of most of internal customers with the newmeans of effective materials handling management,materials handling management system is equal orthe companys operational performance may im-even superior when compared to the previous one.prove (Chopra & Meindl, 2001; Rosenbloom, 2003)aiming to satisfy the customers or meet their expec-2. LITERATURE REVIEWtations in terms of their needs, desires and demands(Oliver, 2010; Stock & Lambert, 2001).2.1 Material FlowThe case study related in this work was performedMaterials handling makes production flow possible,in an automotive industry located in the northeast-as it gives dynamism to static elements such as ma-ern part of Rio Grande do Sul State of Brazil. It wasterials, products, equipments, layout and human re-founded more than 50 years ago and is classified assources (Stock & Lambert, 2001; Chopra & Meindl,2001). Groover (2001) highlights that despite its im-a large-sized company since it has more than 2000portance, materials handling is a topic that frequent-employees. This region contains a cluster of indus-ly is treated superficially by the companies. Howev -tries of metal-mechanic, automotive and metallurgi-er, other authors have perceived its relevance. Dur-cal sectors that in its majority belong to productioning the period in which Shingo (1996) contributed tochains which demand a high internal performancethe development of the Toyota Production System,level from their partners.he developed the Production Function MechanismThe company in question, after analyzing produc-that proposes to explain how the production phe-tion flow as a whole, identified that among othernomenon happens.measures it would be necessary to improve mate-Shingo (1996) indicated that, in the West, productionrials handling management in the manufacturingwas treated as a process of a sequence of operations.process. This was motivated by the observed de-In the Production Function Mechanism, the conceptslay in forklifts service and their high maintenanceare directly related to a production analysis focus.cost. Forklifts were used both for parts handlingA process analysis consists of an observation of theand transportation and to assist in tooling changes,production flows that turn raw materials into finalwhich many times resulted in excessive setup timeproducts. From this concept, the author highlightsleading to production delays. Changes were madethat the main analysis is the one associated with thein the materials handling process to address theseprocess, because it follows the production object.concerns.The analysis of the operations comes later becauseThe main objective of this case study was to evalu-it focuses on production subjects (operators and ma-ate internal customers satisfaction levels after thechines). When making this distinction, it is possiblechange. In order to do this, it was necessary to iden-to perceive the relevance of materials handling. Vieira, G. B. B., Pasa, G. S., Borsa, M. B. N. O., Milan, G. S., Pandolfo, A.:Materials Handling Management: a Case Study21Journal of Operations and Supply Chain Management 4 (2), pp 19 - 30Beyond the basic function of movement, it is also rel-ity, layout and routing (Groover, 2001). In order toevant to cite the functions of storage and informationcomplete the analysis, Groover (2001) recommendstransfer, which occurs simultaneously and has bothanalyzing the material itself (or object) to be trans-strategic and operational dimensions. Organizationsported. Therefore, it suggests the classification ofare relying on information systems using tools likeMuther and Hagan (apud Groover, 2001), whichElectronic Data Interchange (EDI), or similar infor-considers: (i) physical state (solid, liquid, gas); (ii)mation technology resources, to gain in precisionsize (volume, length, width, height); (iii) weight; (iv)and reliability, in the interchange, and availability ofcondition (hot, cold, dry, dirty, sticky, adhesive); (v)information (Lambert & Stock, 2001; Laudon & Lau-risk of damage (weak or strong); and (vi) safety haz-don, 2006, Milan, Basso & Pretto, 2007).ards (explosive, flammable, toxic, corrosive, etc.).According to Asef-Vaziri & Laporte (2005) an impor-Additionally, the issue of equipment and devicestant proportion of manufacturing expenses can bemust be examined. Dias (1993) adopts the termattributed to material handling and the most criti-moving to describe what, in this article, is calledcal material handling decisions in this area are themanagement (handling) to adopt the terminology ofarrangement and design of material flow patterns.Groover (2001). When dealing with equipment, DiasThis idea is shared by Ioannou (2002), which argues(1993) presents a broad classification that coversthat an important aspect of any production systemfive categories: (i) transporters (belts, chains, rollers,is the design of a material handling system (MHS)etc.); (ii) cranes, hoists and lifts; (iii) industrial ve-which integrates the production operationshicles (carts, tractors, pallet transporters, forklifts);(iv) positioning equipment, weighing and controlThe relevance also occurs in another context. Ballou(ramps, transfer equipment); and (v) stents and sup-(1993) states that the storage and handling of goodsport structures (pallets, holders, reels).are essential among the set of logistics activities, andtheir costs can absorb 12% to 40% of its costs. In addi-According to Chan, Ip & Lau (1999), a key factor intion, the MHIA estimates that 20% to 25% of manu-material handling system design process is the se-facturing costs are associated to handling (Groover,lection and configuration of equipment for material2001, p. 281). According to Sule (1994) apud Sujonotransportation. This is directly related to this study.& Lashkari (2006), material handling accounts for3075% of the total cost of a product along the pro-According to Gurgel (1996), the equipment shouldduction chain, and efficient material handling can bebe selected based on some preliminary consider-responsible for reducing the manufacturing systemations: take into account the utilization of the factoryoperations cost by 1530%.floor and its load capacity; examine the dimensionsof doors and corridors; pay close attention to ceilingFor Bowersox and Closs (1996), the main logistic re-height, identify the environmental conditions andsponsibility in manufacturing is to formulate a mas-their nature, avoid the use of combustion enginester-program for the timely provision of materials,traction equipments in storage of food products,components and work-in-process. Stevenson (2001)meet all safety standards to protect humans and tounderstands that logistics (including materials andeliminate the possibility of incurring criminal andgoods flowing in and out of a production facility ascivil liabilities arising from accidents, and examinewell as its internal handling) has become very im-all kinds of available energy options and their capac-portant to an organization to acquire competitiveity to supply required movements.advantages, as the companies struggle to deliver theright product at the correct place and time. The mainThe right choice of equipment and location of work-challenge is to promote, with low cost, a flow whosein-process is fundamental for the optimization of avelocity allows the execution of manufacturing pro-companys manufacturing capacity. Bowersox andcess with the expected satisfaction level.Closs (1996) state that a critical factor in positioningstocks in process is a balance between convenienceand consolidation to create efficiencies when the2.2 Elements and Characteristics of a Material Han-dling Systemstock flows along the value chain.The importance of layout, which defines the place-Materials handling study requires that several ele-ments are considered. The first is a handling systemment of equipment and, consequently, restricts pos-project, which covers activities of sequencing, veloc-sible routes and sequencing, can be perceived by the Vieira, G. B. B., Pasa, G. S., Borsa, M. B. N. O., Milan, G. S., Pandolfo, A.:Materials Handling Management: a Case StudyJournal of Operations and Supply Chain Management 4 (2), pp 19 - 3022and the situation after its completion. Besides vari-prominence that the subject is treated in productionmanagement literature. The analysis of the relation-ables and sub-variables, customers overall satisfac-ship between layout studies and material handling,tion regarding the implemented changes was alsohowever, does not receive much attention in theevaluated.same literature. This lack of attention can be seen inworks like Gaither and Frazier (2002), Chase, Jacobs3.1 Situation Prior to the Interventionand Aquilano (2006) and Slack, Chambers, Harland,Harrison and Johnston (1997).This study was conducted in the manufacturing sec-tor of an automotive company. The manufacturingFinally, the systems and information technologysector is responsible for almost all of the supply ofconstitute essential factors for materials handlingassembly lines, including the components that gomanagement. Stair and Reynolds (2006), Laudonthrough a pre-assembly process before proceedingand Laudon (2006) and OBrien and Marakas (2007)to final product assembly. In this sector are concen-support the study of fundamentals and general prin-trated cutting and bending tools and dies requiredciples of information systems.for components manufacturing to assembly lines.The whole process runs with the aid of forklifts. Of-In order to improve the performance of distributionten, the setup time is equal to or higher than the timeoperations and, in this specific case, the internal ma-needed for parts manufacturing. This situation, cou-terial handling process, it is important to considerpled with the cost of downtime, demonstrates theboth human and technical factors (Chakravorty,importance of the tooling exchange process.2008). In this sense, this study assesses the internalcustomers perception of a material handling pro-Besides helping in the execution of setups and carry-cess improvement.ing out internal transport managed by an electronicscoreboard installed in the factory roof, forklifts alsoWith regard to the attributes to be considered in aperformed activities for transporting materials be-material handling system, according to Kulak (2005),tween pavilions. When executing this last activity,effective use of labor, providing system flexibility,the forklifts often travelled on uneven roads, whichincreasing productivity, decreasing lead times andcaused great bouncing, burdening maintenance costcosts are some of the most important factors influ-for equipment wear or premature breakage.encing selection of material handling equipment.These factors are directly related to some attributesOften, when a forklift leaves its workplace to transportfound in the present study.a container between pavilions, delays in machinessetups are generated, causing unnecessary costs andThe determination of a material handling systemstress on the forklift operator. The operator could doinvolves both the selection of suitable material han-little besides feel forced to increase the speed duringdling equipment and the assignment of material han-the route, creating risks of accidents with personal in-dling operations to each individual piece of equip-jury and / or materials damage. This activity as wellment (Sujono & Lashkari, 2006). Hence, according toas the studied process relate to Goldratts Theory ofSujono & Lashkari (2006) material handling systemConstraints (TOC) to seek bottlenecks and reduce orselection can be defined as the selection of materialeliminate them (Goldratt; Cox, 2004).handling equipment to perform material handlingoperations within a working area considering all as-Although there were enough forklifts to meet thepects of the products to be handled. In this context itdemand from the manufacturing sector, many timesis important to mention that, in this study, only theit was not possible to meet immediately the manu-selection of the material handling equipment wasfacturing needs due to reasons like long distancesconsidered.to travel and frequent maintenance due to excessiveuse of the equipment. This directly affected internalcustomers satisfaction.3. PROBLEM AND INTERVENTION DESCRIP-TIONThe presented problem was: how to increase inter-nal customer satisfaction, while stabilizing or de-The first sub-section describes the situation prior tocreasing forklifts maintenance cost?the intervention, identifying the problems that werefound. The second describes the factors that moti-vated the change. The third describes the changes3.2 Change Motivators Vieira, G. B. B., Pasa, G. S., Borsa, M. B. N. O., Milan, G. S., Pandolfo, A.:Materials Handling Management: a Case Study23Journal of Operations and Supply Chain Management 4 (2), pp 19 - 30Due to development of new markets, manufacturingThe next step was to create spaces (pit stops) fordemands for a large variety of components and finalpallets with their mobile parts on each workstation.In order to the truck driver to know when he couldproduct assemblies increased. This demand growthtransport material, it was necessary to create an iden-led to speed increases and changes in how materialstification system. It was decided that every time thatand tools were being handled and transported in or-the operator finished the process in his station, heder to monitor manufacturing requirements.would put on the packaging a green sign indicatingWith these changes and demands for manufacturingthat the container would be ready to be transportedto attain the companys goals, there was also pres-to the next production step. The truck driver, whensure for growth and lack of tolerance with forkliftremoving a filled container, should replace it withoperators, since the work did not always run quicklyan empty one in the vacant post.and with quality. Additionally, forklift maintenanceTests were conducted with a timetable for the traincosts were increasing, demanding sometimes exces-passage, but this alternative did not meet the needsive spending that jeopardized the budget. The dis-for flexibility in case of emergencies (pieces to tech-satisfaction and demotivation of forklift operatorsnical assistance and replacement of damaged mate-was notorious, and an increase was also noticed inrials in the assembly process).the number of collisions between the equipments.Finally, boxes and containers were unsatisfactorilyIt was then decided to set a path that would followstored in the hallways together with the machines tothe manufacturing process sequence. To inform theattempt to reduce production interruptions.train operator of some urgency, a mobile phone wasgiven to him. Thus, the supervisor could commu-nicate with the operator instantly when there were3.3 The Changes and the Situation after the Imple-critical parts and / or components to be collected.mentationAfter the changes were completed, it was necessaryOne suggested solution was to rent two forklifts asto evaluate their impacts. This study evaluated inter-a way to solve the problem. But this only served tonal customers satisfaction level with the new mate-soften it, and brought a larger cost to the company.rials handling and transporting configuration.It was realized then that it was not the quantity ofequipments that was going to solve the problem but4. RESEARCH METHODOLOGYthe way material handling was being executed in re-lation to the necessity of the presented changes.4.1 Company CharacterizationFrom this observation, processes and material flowsThe studied company, Marcopolo S/A., is one of thewere mapped and separated in two ways: (i) verti-main bus body producers in the world. Founded incal movements which make greater efforts and little1949, in Caxias do Sul, the company is divided intoground movement; and (ii) horizontal movementsfour business units: (i) bus, with bodies of Marcopo-that rely on traction to travel longer distances, in-lo and Ciferal brands; (ii) LCV, with complete mini-cluding transport out of the work units.bus under the Volare brand; (iii) plastic products,with MVC brand; and (iv) parts and components,Another proposed solution was to use a tractor tow-with service parts for the company brands and partsing small wagons, forming a kind of train. Balloufor other segments of the Syncroparts brand.(1993) states that this approach is more economicalfor larger volumes that must be moved over longThe company maintains a technology transfer con-distances along the same route.tract with the Iveco SPA. The transferred technologyfrom the lines Midi bus, Low Entry and High DeckerSeveral cargo (pallets) units were constructed withwas made in the factory of CBC-Iveco in China. Cur-special wheels, fitted with suspension coupled torently, Marcopolo has a representative office calledsupport the material weight and traverse the gapsMarcopolo Changzhou Office at Changzhou and hasbetween the pavilions. Afterwards, several cagesalso been developing a joint venture agreement withwere made to be used for holding the parts that goTata Motors in India. This study took place only atthrough the processes of bath and painting. Morethe Brazilian facility.robust containers for heavier and less delicate partsstorage were also constructed.4.2 Objectives Vieira, G. B. B., Pasa, G. S., Borsa, M. B. N. O., Milan, G. S., Pandolfo, A.:Materials Handling Management: a Case StudyJournal of Operations and Supply Chain Management 4 (2), pp 19 - 3024The present study had as its objective to evaluate, in arespondents held positions as leaders, supervisors,systematic way, the impact of the implemented changesforklift drivers and warehouse operators, enabling ain materials handling management on the internal cus-comprehensive view of the problem. Data collectiontomers perceptions at the manufacturing department infor the satisfaction survey was divided into two stages.Marcopolo S/A. unit located in Caxias do Sul RS.The first step was an open-ended question survey (Ap-pendix 1). Respondents were asked about their per-To reach this objective, the following specific objectivesceptions regarding the changes in materials handlingwere established: (i) describe the changes in materialemphasizing evidence of the improvements, problemshandling processes at the company; (ii) evaluate inter-still identified after change implementation and sug-nal material handling flow in manufacturing, verifyinggestions for the relevant attributes in question. Twothe improvements; and (iii) analyze internal custom-criteria were used to define factors and sub-factorsers satisfaction levels relative to the new system.from the obtained answers: i) the factor must be citedby respondents of all positions (leaders, supervisors,4.3 Data Collectionforklift drivers and warehouse operators); ii) the num-ber of times that the criterion has been cited by the 26The sample was the people directly involved withrespondents. Table 1 shows the evaluated factors, theirthe daily flow of materials, selected intentionally. Thedefinitions and the associated sub-factors.Table 1 Factors and sub-factors of satisfaction surveyN. Factors Factors Description Sub-factorsMechanical shutdownsMonetary value available to maintain the1 Costoperation: expenditures with periodicElectrical shutdownsmaintenance linked to forklifts useCorrective paintingSafety in handlingIdentifies forklifts operator s conduct on new2 Safety inServicehandling and internal transport wayTooling storageEfficient routingIdentifies manufacturing satisfaction level inOperator s autonomy3 ServiceReliabilityterms of reliabilityOperator s performanceand availabilitySetup agilityIdentifies the time spent with tool exchangeMaterial handlingcoupled handling (discounting the times4 Agilityquicknessassociated with the machine, such as loose and/Tooling handlingor fix arrays or tools)quicknessPerformance improvements (current state vs. statusthey had knowledge enough (even empirical) be-quo) were measured using the following scale: 1 =cause they are directly involved in the process.much worse, 2 = worse, 3 = same, 4 = better and 5 =much better. For instance, the employee was asked:5. DATA ANALYSIS AND RESULTSComparing previous and current procedures forhandling and internal transport, how do you assessOnce the new situation was established, data collec-the costs related to mechanical downtime? To an-tion started followed by analysis and presentation ofswer the question, the options of the scale mentionedthe results. The data were tabulated in order to obtainabove were offered. At this point it is important toan average percentage and standard deviation of over-highlight that the study was evaluating the respon-all satisfaction in relation to the factors and sub factorsdents perception, starting from the assumption thatpresented during sampling. Table 2 shows the results. Vieira, G. B. B., Pasa, G. S., Borsa, M. B. N. O., Milan, G. S., Pandolfo, A.:Materials Handling Management: a Case Study25Journal of Operations and Supply Chain Management 4 (2), pp 19 - 30Table 2 Internal satisfaction surveyATTRIBUTE Average S Sat.>=4 S at.=3 Sat.