Application of MFCA with LEAN to Improve Pajama Production Process: A Case Study of Confederate International Co., Ltd

This research aims to present an application describing how to integrate the widely accepted productivity improvement technique of LEAN with the environmental accounting management tool of Material Flow Cost Accounting (MFCA). This research followed the steps of LEAN thinking approach by identifying the hidden, non-value added activity and wastes throughout the manufacturing process. This research identified and eliminated the typical seven wastes, by examining the details of each process and operation for greater understanding of the current status of each process. This research used Value Stream Mapping and Material Flow Model to depict the efficiency and effectiveness of the current process stream. This research then converted both physical wastes and hidden system wastes into monetary units and applied the MFCA technique to identify and rank the sources of material, energy, and system inefficiency. Discrete system simulation was used to capture and simulate the uncertainty of the process in terms of varying processing time and random quality level of each manufacturing stage. The MFCA cost was then used to determine both negative and positive costs by accounting for the variances of the process and the quality. Next, the concept of system efficiency and continuous flow was used to improve and re-engineer the interrelationships between manufacturing processes. This resulted in waste minimization programs which can be considered as environmental improvement. Quality imperfection, defectives, and all material, energy, and wastes were analyzed and resolved with a sustainable improvement program. This waste minimization implementation approach helped the team to outline and select improvement alternatives consisting of process design, work design, product, process, quality improvement, etc. The waste minimization programs and the system optimization were justified with respect to the MFCA cost scenarios. The improvement solutions were implemented and evaluated with respect to the MFCA cost structure. The case study of the pajamas production process was used to illustrate the implementation of MFCA with LEAN application. This research study demonstrates how one can integrate MFCA with LEAN. Thus, this application leads to both productivity improvement and a sustainable production system.