A Strategy Model for Increasing Added Value and Productivity, A Case Study: Leu Bagoe Awee SME

Abstract

Aceh has a great potential of becoming a producer of rattan furniture and handicraft. It has an abundance of material, as well as SMEs that are relying on the rattan. Moreover, in one of Aceh district, there is a rattan furniture and handicrafts SME centre. One of the SME is Leu Bagoe Awee which was selected as a subject to the case study in this research. However, most SMEs in that centre still facing many inefficiencies in production and value which was offered to customers. Due to economic reasons, Aceh needs to improve productivity to secure economic growth by producing products with added value. The production process is the main activity to add value to keep the efficiency and productivity flow by eliminating some waste in the whole process flow while added value is the increase in the value by undertaking the production process. Therefore this research will use Value stream mapping (VSM) to address the inefficiency in Leu Bagoe Awee. Value stream mapping (VSM) is an effort to reduce waste in the production process while applying lean manufacturing, mainly by identifying and eliminating any wastes. Reducing the waste in production will also increase the value of the output of production since it minimises the unnecessary activity that adds cost to it. Hence, the objectives of this research were to map the current value stream, eliminating the wastes, and generate a strategy model. After using the data from interviews and observation, the result shows there were five types of wastes existing in the current value stream. The takt time of the production process per unit of a product was 6.3 hours. The illustration of implementing value stream mapping recommended for improvement reduced the lead time from 58 hours to 14.55 hours. There was an efficiency improvement of the production process from these results, which initially 51%, increased to 59%. In addition, the production productivity has risen from 0.57 to 1.18. These results indicated the elimination of waste in the production process could improve efficiency and productivity production processes. The future mapping is expected to become a strategy model for Leu Bagoe Awee and other SMEs in the area. The principles of Value Stream Mapping implementation is wished to disrupt the work culture in the rattan furniture and handicraft centre in Aceh Besar as a continuous improvement.