Case Study: Productivity Improvement in Surgical Manufacturing

Company

Bekti Harsono and Mursyid Hasan Basri

School of Business and Management, Institute Technology Bandung, Bandung, Indonesia

Keywords: Productivity, capacity, fishbone diagram, lead time.

Abstract: PT MED Batam (PT-MB) has been chosen by its headquarter office, to receive new transfer product, to be

manufactured in Batam Indonesia. While it is good business opportunity, PT-MB faces productivity issue.

With the benchmark of transfer site, its productivity is still 63% compared with them, during the monitoring

phase of 6 months period (July – Dec 2020). To solve the problem, PT-MB should increase productivity to

match with transfer site. Based on this condition, the main objective from this research is to find business

solutions to increase capacity through productivity raise from 5M (Man, Machine, Material, Method,

Measurement), to gain trust and capture more product transfer from headquarter. The business solutions are

derived using the root cause analysis, utilizing the fishbone diagram and why-why analysis. The findings have

led to identify 8 business solutions, in which covering from Man (training), Method (SOP), Measurement

(SOP), Machine (TPM and Critical Spare Part), and Material (Material Lead Time and Supplier

Communication). Having completed on some business solution implementation, we can achieve 7.94

units/hour by Jul 2021. Overall improvement compared with Dec 2020, productivity has increased from 5.7

units/hour to 7.94 units/hour, improved by 39.3%, in which very significant improvement. By Jul 2021, the

gap is 11.7% compared with target 9 units/hour. We are confident, with 3 months towards October 2021, and

some of business solutions are still in-progress for implementation, we will achieve our target of 9 units/hour.

1 INTRODUCTION

PT MED Batam (PT-MB) is a pharma-medical

devices company. Its main product is contact lenses

and surgical device. Start from mid-2019, PT-MB has

received product transfer of Surgical product from

their headquarter (HQ) in the United States of

America (USA). The products are Fiber Optics, Laser

Probes, Base IOL, and Multi Piece IOL. The long-

term business strategy is to make PT-MB for

secondary Surgical Production site, outside Unites

States. Below figure shows the transfer site location

of surgical product.

Figure 1: Types Surgical Product Transferred to PT-MB.

Figure 1 explains product transfer strategy between

US transfer site with PT-MB site. The business

strategy is to make PT-MB to be the only plant

outside USA, to be able to produce Surgical products.

Therefore, the transfer project is becoming the first

priority for PT-MB to succeed, as the continuation of

upcoming other products of Surgical will be based on

the success of this first transfer project.

The business challenge is, the first Surgical

transfer product, which is Fiber Optic is having low

productivity issue during its 6-month monitoring

mass production process. There is significant gap

between transfer site’s productivity and PT-MB site’s

productivity. Therefore, to be able to close the gap of

productivity performance, will be imperative for the

near future Surgical product to PT-MB.

Fiber Optic is an endo illuminator light guide.

This is a product transfer between the Transferring

Site (TS), in USA to PT-MB Manufacturing as the

Receiving Site (RS).

Fiber Optics is an endoscopic device that

transmits visible light from a light source to the eye

to provide internal illumination for clinical

190

Harsono, B. and Hasan Basri, M.

Case Study: Productivity Improvement in Surgical Manufacturing Company.

DOI: 10.5220/0010861400003255

In Proceedings of the 3rd International Conference on Applied Economics and Social Science (ICAESS 2021), pages 190-196

ISBN: 978-989-758-605-7

procedures. The device specified is intended for use

in vitreoretinal procedures.

Fiber Optic was transferred to PT-MB on mid-

2019 and started mass-production on July 2020. PT-

MB sent few members of team, comprises of line

operators, leaders and engineers to have training in

transfer site, USA for 3 months training. Then, similar

material, machinery, equipment and standard

operation were established in PT-MB Plant. The

process of product transfer, including all steps of

machine and equipment approval and validation, pre-

production qualification and document approval were

completed by June 2020. The phase of mass-

production Fiber Optic was then started on July 2020,

under 6 months monitoring and full support from

Transfer Site.

Figure 2: Chart Productivity Trend Fiber Optic Period Jul

2020 until Dec 2020.

Figure 2 shows that the productivity target from

Transfer Site USA is 9 pieces/hour. Whereas the

average PT-MB productivity is 5.7 pieces/hour.

Therefore, the current productivity is still 63% from

Transfer Site USA. This gap created the monthly

average loss of output 60,000 pieces of product. The

performance during the monitoring 6-month mass-

production was not satisfactory.

Figure 3: Chart Productivity Trend Fiber Optic Period Jul

2020 until Dec 2020.

Figure 3 above shows the productivity trend of Fiber

Optic from July 2020 until Dec 2020. This 6-month

period is under project monitoring and considered as

initial mass production phase. Even though it shows

the improvement trend over the period of 6-months

initial production, it is not fast enough. With the

initial production rate, from July 2020 to December

2020, total loss of production quantity is 211,490

pieces of products, with the opportunity loss amount

of 4,980,557 USD.

2 CONCEPTUAL FRAMEWORK

Based on business issue identified, conceptual

framework is designed to achieve the goal of this

research. A conceptual framework is defined as a

network or a “plane” of linked concepts that together

provide a comprehensive understanding of a

phenomenon or phenomena (Jabareen, 2009).

The conceptual framework related to the

productivity will use the People Process and

Technology introduced in 1964 in Leavitt’s model

(Prodan M, 2015). This framework aim to balance of

people, process and technology, to drive into action:

people to perform a specific work assigned by the

organization, using technology to improve the

processes. In addition, based on Kumaduhal’s

hierarchy of productivity factors’ perspective

(Kumar, Duhan, & Haleem, 2016), Top Management

Perspective becomes the baseline level I in the factor

enhancing the productivity. Therefore, the elements

effecting the productivity are divided into 4 main

categories. They are:

1. Management Factors (Top Management

Perspective)

2. Human Factors (People)

3. Methodology Factors (Process)

4. Technological Factors (Technology)

Figure 4: Chart Conceptual Framework for Productivity.

1. Management Factors (Top Management

Perspective)

In an organization, efficient product has been

produced by management skill (Carneli, 2003).

Therefore, productivity is proportionally related to

Case Study: Productivity Improvement in Surgical Manufacturing Company

191

the management factors. A direct and simple

management type of organization should be adopted.

Total participation of employee in the form of two-

way communication and suggestion scheme to be

initiated. It can enhance the mutual understanding

between workers and management. In addition,

management by objective is recommended to be

adapted. With Management by Objective (MBO), the

workers and their managers can have discussion and

agreement on the activities, targets and goals to be

used as criteria for the performance review and

evaluation. It also will allow the alignment between

the organizational goals and individual target setting,

so that the workers can have the visibility of their

contribution to the goal of the organization. It is

therefore will increase the productiveness of the

organization.

2. Human Factors (People)

In an organization, the people are those who do the

work. Without people, nothing can happen.

Productivity is directly affected by human factors.

The right person must be posted to the suitable

workstation, which is put the right man on the right

place. Adopting the concept of making people before

product, employee must be given proper training and

development. Training need analysis must be

generated to identify the right skill to be given to the

right process. Job enrichment and multi skill are to be

provided for the high potential employee. It offers for

the new and more critical processes to be handled, for

the exposure of the opportunity for greater

recognition, growth and responsibility. This will

create positive challenges for them and motive them

to increase the productiveness of the organization. In

summary, the process improvement model on the

people dimension, look after (Prodan M, 2015):

• People know what and how to perform

activities

• They have the right skills and knowledge for

the job

• They are motivated and engaged to achieve

higher performance

• They are encouraged to improve day by day

and they are involved in improvement projects

3. Methodology Factors (Process)

Productivity relies on the production methodology or

process being adopted. A series of actions need to

happen and be done to achieve certain goal. People

will not be effective if the method or process is not in

place for them to do the work. The method of working

should be simplified, documented and standardized.

Work study must be adopted, to identify inefficient

and unnecessary processes, to cut out idle time so that

only value-added process remains. Proper production

planning and control should be implemented, so that

the right quality and quantity of raw material can be

identify, the change model frequency can be

minimized and the right quantity and model required

by customer can be produced on timely manner.

Operation excellence team establishment will further

be strengthening the organization, by focusing on

how to bring the operation level as efficient as

possible, with the highest productivity as main target.

4. Technological Factors (Technology)

Productivity very much depends on the technology.

The technology provides the tools that the people can

use to implement the process. The utilization and

adaptation of the new technology provides

revolutionary way of the process. Automation,

mechanization and rationalization are the major

contributors to productivity. The key success of

utilizing the new technology lies on the ability to

identify and creatively make the modification, so that

it will be suitable to be used with the current process,

to bring the productivity improve to the next level,

with minimum cost of upgrading.

3 ANALYSIS

Root Cause Analysis (RCA) is a method that is used

to address a problem or non-conformance, in order to

get the “root case” of the problem (Vorley, 2008). It

is a series of common-sense techniques which

provides systematic approach to identify and

understand the underlying problem. Definition of root

cause itself, the cause that, if corrected, would prevent

recurrence of this and similar occurrences (Mahto &

Kumar, 2008). The root cause does not only

applicable to the recent occurrence, but also can be

generalized for common factor. It is something

fundamental and can be logically identified and

rectified.

We use Fishbone diagram or Cause Effect

Diagram to analyze current business issues of low

productivity. Cause and Effect diagram (CED) was

pioneered by Professor Kaoru Ishikawa, a quality

management pioneer, in the 1960s. It was published

in his 1990 book, "Introduction to Quality Control."

It was originally developed as a quality control tool,

however it has become widely used as a technique to

identify root cause in any problem situation. CED

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uses a diagram-based approach for thinking through

all of the possible causes of a problem.

There are four steps to using the tool:

1. Identify the problem, that is Low Productivity

2. Work out the major factors involved, considering

from 5M (Man, Method, Measurement, Machine,

Material) factors

3. Identify possible causes

4. Analyze generated Cause Effect diagram.

Figure 5. Cause Effect Diagram for Low Productivity.

Figure 5 above describes the root cause analysis using

Cause and Effect diagram of Low Productivity for

Fiber Optic product in PT-MB. As explained, we

analyzed using 5M framework (Man, Method,

Machine, Material, Measurement). In every item, we

did further analysis using why-why question method,

until finding the bottom why question-answer. The

possible root causes are then marked with the red

color.

Having analysed from current condition and

collected data, the causes were verified and

summarized into verification matrix table shown on

appendix 2.

From verification matrix table, we can conclude

that the root causes identified are:

a. Production operators were not trained properly,

due to limited number of trainers.

b. Process time study was not measured and

therefore, its standard time was not established.

c. No Standard Operation Procedure, merely based

on experience, as most of the process and issues,

are stored inside the brain of senior associates in

transfer site.

d. Total Preventive Maintenance (TPM) is not

available. The TPM frequency was not complete

and its step-by-step was not well-documented.

e. Long delivery material lead time and supplier

does not receive PO on-time. Purchase order (PO)

is generated manually to supplier. It takes time to

study and re-group the supplier, as well as to

establish the connection with the supplier’s

person of contact. While those are in-progress, PO

generated were often late, causing supplier late in

executing the material supply.

Table 1: Root cause summary.

Table 1 shows 7 item identified root causes related to

low productivity for Fiber Optic product

manufacturing at PT-MB.

4 RESULT AND CONCLUSIONS

Based on the business issue and analysis to the

existing business situation, continue with the root

causes analysis, we come to several conclusions, in

which relates to the improvement of current situation:

1. PT-MB has its competitive advantage of lower

manufacturing cost and flexible manpower

resources to get more product transfer from

transferring site. However, low current

productivity creates some loss opportunity to sell

more product back to transfer site. The business

issue has become critical and priority to be solved,

involving all the stake holders.

2. Based on root cause analysing using Fishbone

diagram, we found 7 root causes that are related

to the business issue. The root causes have been

further analyzed for the business solution, and

further checked using cost and benefit analysis for

its implementation.

3. There are 8 business solutions proposed to

improve the productivity at Fiber Optic area, as

shown on below table 2.

Potential Root

Cause

Verification Conclusion

Insufficient Operator

Training

Reviewed initial training plan for project transfer. Discrepancy is

found. Planned 14 associates for US training and become trainer.

Actual, there was only 2 associates for trainer, due to difficulty to get

US VISA approval to go to US for project transfer training.

Root Cause

Time study not

enough

Proper time study measurement is not done. Bottleneck process(es)

was not yet identified.

Root Cause

No SOP, only based

on experience

Reviewed all SOP which were available. All processes have been

covered, either by SOP and/or Work Instruction. However it was

scattered. Need to put into comprehensive and well-documented SOP.

Root Cause

No SOP on critical

part for TPM

Root Cause

5 Machine TPM is zero

Root Cause

Supplier not receive

PO on-time

Root Cause

Long delivery

mate ri al lea d ti me

Root Cause

Reviewed on TPM schedule, with interviewing transfer site associate.

Replacement only done when the machine is start running intermittent,

and having frequent stop. There is no comprehensive schedule on TPM

and identification on critical spare parts.

Reviewed on purchase order (PO) step-to-step making. Purchase order

(PO) is generate d manual ly to sup pli er. It take s time to study and re-

group the supplier, as well as to establish the connection with the

supplier’s person of contact. While those are in-progress, PO

generated were often late, causing supplier late in executing the

material supply.

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193

Table 2: Root Cause Analysis and Business Solution

4. Having completed on some business solution

implementation, we can achieve 7.94 units/hour

by Jul 2021. Overall improvement compared with

Dec 2020, productivity is increased from 5.7

units/hour to 7.94 units/hour, improved by 39.3%,

in which very significant improvement.

Figure 6: Chart Productivity Trend Fiber Optic Period Jan

2021 until Jul 2021

Based on our target of 9 units/hour, we still have gap 11.7%.

We are confident, with 3 months towards October 2021,

and some of business solutions are still in-progress for

implementation, we will achieve our target of 9 units/hour.

REFERENCES

Carneli, A. (2003). The relationship between emotional

intelligence and work attitudes, behaviour and

outcomes. Journal of Managerial Psychology, 788-813.

Jabareen, Y. (2009). Building a Conceptual Framework:

Philosophy, Definitions, and Procedure. International

Journal of Qualitative Methods, 49.

Kumar, S., Duhan, M., & Haleem, A. (2016). Evaluation of

factors important to enhance productivity. Cogent

Engineering.

Mahto, D., & Kumar, A. (2008). Application of root cause

analysis in improvement of product quality and

productivity. Journal of Industrial Engineering and

Management, 16-53.

Prodan M, P. A. (2015). Three New Dimensions to People,

Process, Technology Improvement Model. Advances in

Intelligent Systems and Computing.

Vorley, G. (2008). Mini Guide to Root Cause Analysis.

Quality Management and Training Publication.

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APPENDIX

Fishbone Diagram (Cause Effect Diagram) for Low Productivity

Case Study: Productivity Improvement in Surgical Manufacturing Company

195

Root Cause Verification Table

Category Potential Root Cause Verification Conclusion

Insufficient Operator

Training

Reviewed initial training plan for project transfer. Discrepancy is found. Planned 14

associates for US training and become trainer. Actual, there was only 2 associates for

trainer, due to difficulty to get US VISA approval to go to US for project transfer training.

Root Cause

No proper planning to match

with production capacity

Reviewed planning horizon and production capacity plan. Monthly production planning

matches with production capacity.

Symptom

Absenteeism due to No work

if unwell policy during

pandemic

New policy for health risk mitigation: if unwell do not come to work. Reviewed

absenteeism, covered by additional work force standby for backfill.

Symptom

Attending unrelated meeting Reviewed all meeting and its duration. It is aligned with anticipated loss time. Symptom

Time study not enough

Proper time study measurement is not done. Bottleneck process(es) was not yet

identified.

Root Cause

No SOP, only based on

experience

Reviewed all SOP which were available. All processes have been covered, either by SOP

and/or Work Instruction. However it was scattered. Need to put into comprehensive and

well-documented SOP.

Root Cause

Limited direct training on

machine due to pandemic

Reviewed training plan on project transfer. Machines training to be done from remote

using video.

Symptom

Insufficient technician skill

Reviewed recruitment process for technicians. It is aligned with the user requirement, and

machine On-Job-Training program covers the requirement.

Symptom

No proper knowledge

transfer

Reviewed training plan on project transfer. Machines training to be done from remote

using video.

Symptom

No SOP on critical part for

TPM

Root Cause

Machine TPM is zero

Root Cause

No measurement SOP

available

Reviewed all SOP which were available. All processes have been covered, either by SOP

and/or Work Instruction. However it was scattered. Need to put into comprehensive and

well-documented SOP.

Symptom

No proper incoming

measurement check

inspection

Reviewed incoming check items. It is aligned with incoming inspection SOP, in which

checking based on supplier data.

Symptom

Supplier material quality

problem

Reviewed on monthly supplier performance. Monthly review on supplier performance is

done, and periodic supplier audit is carried out.

Symptom

Supplier not receive PO on-

time

Root Cause

Long delivery material lead

time

Root Cause

Transportation delay due to

pandemic

Reviewed on logistic supply routing. Due to pandemic, the schedule for material

transportation by sea freight becomes uncertain. Shipment by air freight has been

activated since the beginning of pandemic situation.

Symptom

Reviewed on TPM schedule, with interviewing transfer site associate. Replacement only

done when the machine is start running intermittent, and having frequent stop. There is

no comprehensive schedule on TPM and identification on critical spare parts.

Reviewed on purchase order (PO) step-to-step making. Purchase order (PO) is generated

manually to supplier. It takes time to study and re-group the supplier, as well as to

establish the connection with the supplier’s person of contact. While those are in-

progress, PO generated were often late, causing supplier late in executing the material

supply.

Man

Method

Machine

Measurement

Material

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