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THE OPTIMIZATION OF WAREHOUSE MANAGEMENT SYSTEM (WMS) TO
INCREASE THE EFFICIENCY & EFFECTIVENESS OF PRODUCTION
PROCESS IN AN AUTOMOTIVE COMPANY
NUR FATEHAH BINTI HARUN
UNIVERSITI TEKNIKAL MALAYSIA MELAKA
“I hereby declare that have read this report
and in my opinion this report is sufficient
in terms of scope and quality for the award of the
Bachelor of Technology Management (Innovation Technology)”
Signature : ………………………………….
Name : MADAM L. GANAGAMBEGAI
Date : 25th
JUNE 2013
THE OPTIMIZATION OF WAREHOUSE MANAGEMENT SYSTEM (WMS) TO
INCREASE THE EFFICIENCY & EFFECTIVENESS OF PRODUCTION PROCESS
IN AN AUTOMOTIVE COMPANY
NUR FATEHAH BINTI HARUN
Report submitted in fulfillment of
the requirement for the award of
The Bachelor of Technology Management (Innovation Technology)
Faculty of Technology Management and Technopreneurship
Universiti Teknikal Malaysia Melaka
JUNE 2013
ii
“I declare that report entitle
‘The Optimization of Warehouse Management System (WMS)
to Increase the Efficiency and Effectiveness of Production
Process in Automotive Company’
is the result of my own research except as cited in the references”
Signature : …................................
Name : NUR FATEHAH BINTI HARUN
Date : 25th JUNE 2013
iii
For the very special……...
My Family;
Harun bin Ibrahim,
Arif, Adibah, Amira & Zarina
Thank you for everything.
The support and the help…
I will always love you all and really appreciate it…
Special thanks;
Madam L. Ganagambegai & Dr. Chew Boon Cheong
Ever patient and always encouraging.
Your guidance has made me through....
Thanks for everything..
iv
ABSTRACT
In manufacturing industry, supply chain management (SCM) is one of the
sections which are equally important in ensuring the smooth of production process. It
also must be integrated together with warehousing management system (WMS) as a
distribution centre which is will consist of materials and inventory control before
being distributed to assign workstation to be assembled which is focusing on
automotive industry. There are few ways that has been recently practiced by the
organisation in lead to well- managed of WMS which results in effective and
efficient production operation process such as just-in-time (JIT) concept. This
research has been conducted to discover the impact of well-managed warehouse
system on production operation process and examine the process integration that
involves in handling the parts distribution to production line in assessing the
effectiveness of the system. In gaining the data, questionnaire is distributed as a
technique to obtain the primary data that is full description of running process of
WMS in automotive company to seek for understanding based on the current process
flow of the WMS in the company and it has been analysed by using mono method
that is quantitatively. The data is supported by the secondary data from the journal
and previous research paper that based on performance in attaining the lean
production process. Therefore, it can be concluded that the effectiveness of the good
WMS in automotive company totally will improve the efficiency of production
process in producing their products instead of reducing the lead time and bottleneck
that comes together with the application of an appropriate technology in their system
to ensure the process can become lean. This will assure that the process in an orderly
organize manner and has good flow of information between parties involves.
Keywords: automotive industry, WMS, effectiveness, lean production process.
v
ABSTRAK
Dalam industri pembuatan, Pengurusan Rantaian Bekalan (SCM) merupakan
salah satu bahagian yang penting dalam memastikan kelancaran proses
pengeluaran. Integrasi perlu antara pengurusan tersebut dengan sistem pengurusan
gudang (WMS) yang bertindak sebagai pusat pengagihan di mana terdapat bahan
dan kawalan inventori sebelum diagihkan kepada bahagian kerja yang telah
ditetapkan untuk dipasang yang berfokus kepada industri automotif. Kebelakangan
ini, terdapat pelbagai cara telah dipraktikkan oleh organisasi untuk ke arah
pengurusan gudang yang baik di mana akan menyumbang ke arah operasi
pengeluaran yang berkesan dan efisyen seperti konsep Just-In-Time (JIT). Kajian ini
dijalankan bertujuan mengenalpasti impak sistem gudang yang baik terhadap proses
pengeluaran serta bagi mencari tahu integrasi proses yang terlibat dalam
pengurusan pengagihan barang ke bahagian pengeluaran di samping menilai
keberkesanan sistem tersebut. Dalam perolehan data primer, set soalan telah
digunakan sebagai teknik pengumpulan data dan diagihkan oleh kerana teknik
tersebut berpotensi memperoleh penerangan terperinci mengenai perjalanan proses
WMS dalam syarikat automotif serta mendalami pemahaman terhadap aliran proses
WMS. Data yang diperoleh dianalisis dengan menggunakan teknik mono iaitu secara
kuantitatif. Data tersebut disokong oleh data sekunder daripada jurnal dan kertas
kajian lepas berdasarkan prestasi dalam mencapai proses pengeluaran yang
sempurna (lean). Oleh hal demikian, dapat disimpulkan bahawa keberkesanan WMS
dalam syarikat automotif akan meningkatkan sistem pengeluaran yang efisyen di
samping mengurangkan gangguan dan masa diturut serta dengan penggunaan
teknologi yang bersesuaian bagi memastikan proses berjalan lancar. Hal ini akan
memastikan proses berada dalam keadaan tersusun dan mempunyai sistem
penyaluran maklumat yang baik.
Kata kunci: industri automotif, WMS, keberkesanan, proses pengeluaran ‘lean’.
vi
TABLE OF CONTENTS
CHAPTER ITEMS PAGES
TITLE i
DECLARATION ii
DEDICATION iii
ABSTRACT iv
ABSTRAK v
TABLE OF CONTENTS vi
LIST OF TABLE xi
LIST OF FIGURE xiii
LIST OF ABBREVIATION xv
LIST OF APPENDICES xvi
CHAPTER 1 INTRODUCTION 1
1.1 Background 1
1.2 Research question 2
1.3 Objectives 3
vii
CHAPTER ITEMS PAGES
1.4 Scope 3
1.5 Importance of the Project 4
1.6 Summary 5
CHAPTER 2 LITERATURE REVIEW 6
2.1 Introduction 6
2.2 Theories & Analysis 8
2.2.1 Flow of Goods in Warehousing System 8
2.2.2 Process Integration 9
2.3 Theories & Application of Theories 10
2.3.1 Implementation of WMS System 10
2.3.2 JIT Concept 10
2.3.3 Poka-yoke Concept 11
2.4 Variables of the Study 11
2.4.1 Performance of Warehouse Order 11
Fulfillment (IV)
2.4.2 Improving the Effectiveness of WMS 12
and Production Process (DV)
2.5 Summary 13
viii
CHAPTER ITEMS PAGES
CHAPTER 3 RESEARCH METHOD 14
3.1 Introduction 14
3.2 Research Design 15
3.3 Methodological choice 16
3.3.1 Quantitative 16
3.4 Primary & Secondary Data Sources 17
3.5 Location of Research 17
3.6 Method of Primary Data Collection 18
3.6.1 Quantitative 18
3.7 Validity, Generalisability & Reliability 19
3.7.1 Validity 19
3.7.1.1 Construct Validity 19
3.7.1.2 Internal Validity 20
3.7.1.3 External Validity 20
3.7.2 Reliability 20
3.8 Summary 21
ix
CHAPTER ITEMS PAGES
CHAPTER 4 DATA ANALYSIS & DISCUSSION 22
4.1 Introduction 22
4.2 Demographic Analysis 23
4.3 Results 27
4.3.1 The Impact of Well-managed 27
Warehouse System on Production Process
4.3.2 The Process Integration between 31
Warehouse and Production
4.3.2.1 Factors Affecting the Integration 38
of the WMS
4.3.3 The Sequence of Parts Distribution Process 47
4.4 Discussion 49
4.4.1 The Impact of Well-managed Warehouse 49
(RO1)
4.4.2 The Process Integration of WMS and 50
Production (RO2)
x
CHAPTER ITEMS PAGES
CHAPTER 5 CONCLUSION & RECOMMENDATIONS 53
5.1 Conclusion 53
5.2 Recommendations 54
REFERENCES 55
APPENDIX 58
xi
LIST OF TABLES
TABLE NO. TITLE PAGES
4.1 Gender 23
4.2 Education Level 24
4.3 Department 25
4.4 Distribution Process 27
4.5 Inspection 28
4.6 Optimization 28
4.7 Effective & Efficient 29
4.8 Process Integration 31
4.9 Centralization of WMS 32
4.10 Synchronization of Distribution 33
4.11 Information as a Driver 34
4.12 IT Systems 35
4.13 Information Accuracy 36
4.14 Decision Making Process 36
4.15 Implementing IT Systems 37
4.16 Delivery Time 39
4.17 Information 40
xii
4.18 Parts Availability 41
4.19 Responsiveness 42
4.20 Location Proximity 43
4.21 Inventories 44
4.22 Less Important Factors 45
xiii
LIST OF FIGURES
FIGURE NO. TITLE PAGES
2.1 Framework Design 7
2.2 Measurement Focus 9
4.1 Gender 23
4.2 Education Level 24
4.3 Department 25
4.4 Distribution Process 27
4.5 Inspection 28
4.6 Optimization 29
4.7 Effective & Efficient 30
4.8 Process Integration 31
4.9 Centralization of WMS 32
4.10 Synchronization of Distribution 33
4.11 Information as the Driver 34
4.12 IT Systems 35
4.13 Information Accuracy 36
4.14 Decision Making 37
4.15 Implementing IT System 38
4.16 Delivery Time 39
xiv
4.17 Information 40
4.18 Parts Availability 41
4.19 Responsiveness 42
4.20 Location Proximity 43
4.21 Inventories 44
4.22 Least Important Factors (cost, availability 46
of Manpower, Returnability)
xv
LIST OF ABBREVIATIONS
ABBREVIATION
ABC Activity Based Costing
BOM Bill of Material
CKD complete-knock-down
DSS decision support system
DV dependent variable
DW data warehouse
ERP Enterprise Resource Planning
IV independent variable
JIT just-in-time
OPPS order picking planning system
PPC production planning and control
RFID Radio Frequency Identification Device
SCM Supply Chain Management
SKU stock keeping unit
WIP work-in-process/work-in-progress
WMS Warehouse Management System
1
CHAPTER 1
INTRODUCTION
1.1 Background
It is known that the effective system applies in the manufacturing industry
will contribute to the high efficiency of operation process and reduce other pitfalls
too. It also being applied in automotive industry especially company that has their
own manufacturing plant and having an integrated process between the production
line and their stock keeping unit (SKU) also known as warehouse system. It is
significant to have an effective link between these two sections to ensure the
information flow through the supply chain channel can reach to the right person at
the right time. Therefore, warehouse management system (WMS) is one of the
systems which are crucial in internal process in a manufacturing plant to ensure that
the operation process going on smoothly and integrate the data gained from multiple
sources. A certain optimization techniques for WMS system is applicable due to
common problems that arise in logistic or WMS system such as (Solstroff, P. &
Rosenbaum, R., 2012):
a) High traceability levels have to be reached.
b) Optimization of warehouse fills rates.
2
c) Reduction of order leads time
WMS is a process which involves in handling the inventory, work-in-
progress (WIP) goods or might be finished products before being distributed to
production line to produce a finish product. It also acts as an intermediary between
the manufacturer and customers. It plays the roles as a distribution centre and move
to the assign workstation to distribute the parts for assembling process to produce a
unit of finished product. Hence, this research is conducted to study the impact of
optimization of well-managed WMS in production operation process on how it
affects the operation process in terms of lead time and reducing the bottleneck.
The delivery process of parts in line section is vital to ensure there is enough
quantity of parts is sent to the assign workstation to avoid processing delay or
interrupted due to unavailability of parts for assembling process. Consequently, it
shall affect the process in achieving the production target which results in reducing
the volume of products. The WMS is important in the distribution process whereby
to assure the right information is conveyed and the right part is being distributed to
the right place at the right time in the right quantity. Thus, time waste and parts
shortage can be avoided.
As the conclusion, the effectiveness of the integration process can be seen
through the efficiency of the production process and the application of the current
technology such as scanner and barcoding system to enhance the productivity.
1.2 Research Question
The common problem faced by the manufacturing plant is mixed parts such
as complete-knock-down (CKD) parts that have been placed in a container once they
receive them at the loading dock. As a result it requires them to segregate the parts
accordingly based on the model of the vehicles that they would like to produce
before it being distributed to a body shop, paint shop and general assembly line
section. Hence, here is where the WMS requires practicing an operative distribution
process to ensure there is no disruption arises during the delivery process. Thus, a
3
few questions are emerging as below to figure out the problem of the relationship
between the well control of inventory in the warehouse and the effectiveness of
production process regards the distributed parts:
a) Why it is vital to implement the WMS system in the production operation
process?
b) How to implement the WMS system in the production operation process?
1.3 Objectives
The objectives of this research is to determine the answer for the problems
based on the scenario that happened in the automotive manufacturing plant and
clarify the infirmity of the current WMS system. Those are:
a) To examine the impact of the well managed warehouse system on the
production process.
b) To discover the process integration of parts handling between warehouse and
production.
c) To find out the sequence of the distribution process of parts.
1.4 Scope
The research project is focusing primarily on the process conducted in
warehouse starting from parts received, the segregation of parts to be distributed to
line section until the delivery process, only involve the internal process. The
packaging process and ordering process which is related to outbound logistics
activities is not being covered in this research project. It is only being conducted in
warehouse and production line that involves the distribution process those are body
shop and a general assembly section which consists of three sub-sections; engine and
axle, chassis line, and trim line. The paint shop is not included as it only focuses on
the painting process of the body frame/cab. Besides, the researcher also has to face
the delay in the process that happen due to order parts from vendor cannot be
delivered as scheduled and it causes downtime in the process. In short, the researcher
face problem to study the process flow in one proper flow and cause the researcher to
miss out certain process to proceed study another process that involves while waiting
4
everything back to normal. The limitation that faced by researcher is the accessibility
to distribute the questionnaire in certain automotive company which seems difficult
to get their ample time to answering the questionnaire.
1.5 Importance of the project
The significance of the research is conducted regarding on warehouse system
is to carry out in-deep study about the current process flow that has been practiced in
the manufacturing plant and determine the improvement that can be made to upgrade
the process. Furthermore, the research also shall lead to identification of new
technology that can be implemented in the warehouse system to intensify the
distribution process so that the parts can be delivered on time to the assign
workstation. Those technologies that probably can be applied are such as barcoding
system, scanner or data integrated software like Enterprise Resource Planning (ERP)
system along with Radio Frequency Identification Device (RFID). All of these
technologies may contribute to increase the production volume and more efficient
operation process which will lead to lean manufacturing process.
In fact, the current warehouse system can be turned into more flexible and
agile which consequently will improvise the communication between the line section
in ensuring the information and other data can be conveyed in proper manner and
received by the right person at the right time and place. Moreover, the expenses
incurred for any rejected parts or reorder the new parts due to unavailability also may
be reduced.
5
1.6 Summary
On the whole, WMS system is equally important in supply chain
management (SCM) and it needs to be optimized in the operating system to become
more effective as it practices together with current advanced technology to increase
its productivity and performance. Besides, in providing a successful WMS system,
distribution and operation process must be practical and has its flexibility so that it
can adapt to any changes of technology or management process and yet the
distribution process still can be conducted in any obstruction that exists. This will
lead to better communication propagation among the workers in each section that
involves in distributing and receiving parts.
6
CHAPTER 2
LITERATURE REVIEW
2.1 Introduction
A review of the literature or the source of the reference used in research is
important to develop an understanding regarding the research topic that is being
studied. Through the literature review the researcher is able to get a helicopter view
on the topic that has been studied and insight of it that relates to the iron triangle; the
topic itself, the research questions and the objectives. The outline and framework of
the study are drawn out and the key of the research is identified to give a full of
attention on the problems that become the questions about the research. Besides,
from the reading made regards the research topic; the optimization of warehouse
management system (WMS), it has been specified and narrowing down to the main
problems arise that researcher have an in-deep study of the topic for a better
understanding and clarify about it that is to study how the effectiveness of the system
applied gives impact to the production.
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