Value stream mapping and benefit–cost analysis application for value visibility of a pilot project on RFID investment integrated to a manual production control system—a case study

Abstract

The importance of responding to customer demand to stay competitive in the global market and to increase market share has been increasing for companies lately. Due to demand fluctuations and difficulties to estimate it, gradually it becomes more difficult to sustain profitability and to fulfill demand. The company’s main problem is how to cut costs while producing small numbers of many types of products. For that reason, cost-conscious companies have focused on monitoring and controlling manufacturing and supplier-related activities by means of manual/electronic control devices in order to enhance the efficiency in the supply chain management and logistics process. This paper presents a case study about deployment of radio frequency identification (RFID) technology-based electronic Kanban system in an automotive industry supplier firm. In this project, by deploying RFID technology in a pilot area within the current manual Kanban system of this company, it has been possible to measure the true value added time in the production process. Value stream mapping is used to exhibit the mandatory requirements of RFID technology deployment in the shop floor. As a part of the study, we generate a current value stream map and a future value stream map, which contain the recommended revisions for the automotive supplier company. To evaluate the return of the investment, performance metrics were established and benefit–cost analysis is made. Obviously, future gains will include better inventory management to reduce the inventory levels within the production system.