1. Project

Application of 5S in the Electricity Market as a Tool for Improving Indicators

• Introduction

Electricidade de Moçambique (EDM) has the vision to operate as a commercial, financially sustainable ‘Smart (digitally integrated) Utility’ in delivering clean, efficient electricity and quality services to its customers across southern Africa, and playing a key role in achieving universal access in Mozambique (EDM STRATEGY 2018-2028, 2018).

However, to materialize this vision, EDM must design or have concrete actions that allow the reduction of costs and other bottleneck factors (which bring waste) thus improving both financial and operational indicators.

The improvement of business performance indicators will, in part, help to capitalize financial resources (through concrete actions) that will help the company to invest in its modernization in all lines of its business, develop initiatives in clean energy, energy efficiency, universal access of electricity, reduction of electrical energy losses, optimization of its assets, reduction of fatigue in workplaces, which will help reduce work accidents, among other indicators.
This approach will, in part, allow the company to become a competitive company, and with the possibility of being a reference (energy hub) in the SADC region, another objective of EDM, according to its strategy (EDM STRATEGY 2018- 2028, 2018).
Associated with this, according to (EDM, Annual Report 2022, 2022), EDM wants to base its business performance on three strategic vectors, namely, reducing losses, massification of new electrical connections and cost reduction. This vision, on the one hand, seeks to maintain the good performance that the company has experienced in recent years, despite the fact that the rates of fatal workplace accidents increased from 21 to 25 from 2021 to 2022.

 Even so, EDM intends, according to (EDM, Annual Report 2022, 2022), to reduce your operating costs, increase your gross margin and increase your annual revenues.
The significant increase in operating costs, as well as the number of occupational accidents with fatalities, as indicated in the previous paragraphs, weaken the company’s good performance and may, at some point, negatively impact the achievement of the company’s objectives in accordance with its strategic plan reflected in the company’s vision, objectives and vision.
On the other hand, the absence of methodologies and tools for continuous improvement and innovation, fundamental instruments for corporate management with a view to implementing a corporate culture that would culminate in concrete actions to reduce work accidents, reduce operational costs, reduce losses electricity and consequently the increase in operational indicators that would increase revenue capture and increase profits, makes EDM a non-competitive company with difficulties in drawing up an action plan that adds value to the company.
This dissertation aims to apply 5S techniques, a business organization tool that is used in many organizations for continuous improvement, in order to reduce operational costs, increase productivity and reduce EDM accidents.
With this approach, the general idea is that with financial recovery, the company can use these resources to invest in new electrical energy connections, development of energy generation and transport projects with a view to achieving the goal of accessing electrical energy by 2030, energy efficiency and digitalization.

• Problems

Problem Formulation:

1. High Operating Costs: EDM’s financial viability is being impacted by the notable rise in operating costs that it is now experiencing.
2. Workplace Safety: Between 2021 and 2022, the number of fatal workplace accidents at the organization increased from 21 to 25.
3. Inefficiency and Waste: Operations are hindered by bottlenecks and inefficiencies, which result in waste that has a detrimental impact on both financial and operational performance.
4. Electrical Energy Losses: To increase productivity and cut waste, there are significant losses in electrical energy that must be handled.
5. Lack of Innovation and Continuous Improvement: EDM lacks the approaches and resources needed to innovate and continuously improve, which is crucial for preserving a competitive edge and reaching operational excellence.
6. The Need for Universal Access to Energy: By 2030, Mozambique should have universal access to energy.
7. Digital Integration and Modernization: EDM needs to spend in updating its infrastructure and processes in order to achieve its goal of being a “Smart Utility” through digital integration.
8. Employee Satisfaction and Productivity: Reducing workplace weariness and accidents requires increasing employee satisfaction and productivity.
9. Financial Sustainability: By raising yearly sales and gross margins while cutting expenses, the business must improve its financial performance.

• Research Objectives

The aims of this study project is to save operating costs, boost productivity, and lower accidents at EDM by implementing the 5S approaches, a business organization tool for continuous improvement. This strategy aims to assist EDM in realizing its goal of providing clean, efficient power to all Mozambicans by 2030 and developing into a financially stable, digitally integrated utility.

Objectives:

1. To determine and examine the main causes of EDM’s high operating expenses and inefficiencies.
2. To put 5S methods into practice in order to improve productivity, cut waste, and streamline operations.
3. To create plans for lowering workplace mishaps and enhancing worker security.
4. To make suggestions for improving asset usage and cutting down on electrical energy losses.
5. To evaluate how the application of 5S will affect the operational and financial metrics of EDM.
6. To establish a structure for EDM innovation and ongoing development.
7. To assist EDM in achieving its 2030 goals of digitalization, energy efficiency, and universal access to electricity.

• Research Questions

Research Questions:

1. What are the main reasons behind EDM’s inefficiencies and high operational costs?
2. How might 5S methodologies be applied at EDM to lower operating expenses and boost output?
3. What steps can EDM take to improve worker safety and lower workplace accidents?
4. How can EDM maximize asset usage and minimize electrical energy losses?
5. How will the application of 5S affect the operational and financial performance metrics of EDM?
6. How might EDM encourage an innovative and always-improving culture?
7. How would monetary recovery via lower expenses and higher output support EDM’s 2030 targets for digitization, energy efficiency, and universal access to power?

• Research Benefits

Because the research will serve as a reference for students’ future assignments and theses, it will be beneficial from an academic standpoint. Additionally, the following advantages for EDM will result from this research:

• Reduction of the Cost: By optimizing processes, getting rid of waste, and raising productivity, putting the 5S methods into practice at EDM will save operational expenses. This action will enhance the company’s financial sustainability by releasing resources that could be used for other key projects.
• Increase of Productivity: EDM’s production will increase with the use of 5S techniques, which optimize work processes and reduce inefficiencies. As a result, workers can complete more tasks in less time, which boosts productivity and performance throughout the entire company.
• Improved Workplace Safety: By putting 5S principles into practice, an office / workplace can become safer and more structured, which can lower the amount of accidents that occur there. This reduces the possibility of operational disruptions and related expenses in addition to safeguarding staff well-being.
• Energy Efficiency and Loss Reduction: Electrical losses can also be addressed by EDM through 5S methodology, as it will allow investment in technologies to control and lose electrical energy such as smart energy meters, through the value saved with 5S. The detection and removal of waste and inefficiencies, will make EDM to invest in energy efficiency programs, where this will help with energy conservation initiatives and further the company’s objectives of giving its clients access to efficient and clean electricity.
• Financial Metrics and Enhanced Operational: The implementation of 5S techniques is expected to yield favorable outcomes for EDM in terms of several operational and financial parameters, such as cost per unit of production, revenue generation, profit margins, and asset utilization. The organization’s competitiveness and overall performance will both benefit from these enhancements.
• Promotion of Continuous Improvement and Innovation: EDM will foster innovation and creativity among its staff by implementing 5S techniques and creating a culture of continual development. As a result, the company will be better equipped to adjust to shifting consumer demands, technology developments, and shifting market conditions.
• Alignment with Strategic Objectives: The strategic goals of EDM, which include achieving financial sustainability, digital integration, energy efficiency, and universal access to electricity by 2030, are in line with the application of 5S techniques. By tackling significant obstacles and enhancing overall efficiency, EDM will be in a better position to accomplish its long-term targets.

• Literature Review

Introduction

The 5S system, originating in Japan, has become a fundamental part of Lean Management and continuous improvement in various industries worldwide. As a set of practices designed to create an organized, efficient, and safe work environment, the 5S system is a powerful tool for driving productivity and reducing waste (Emiliani, 2008)

Understanding the 5S System

The acronym for the five interconnected principles that make up the 5S system is ‘S’. These concepts are:

• Seiri (Sort): The process of sorting through and organizing items within the workspace, retaining only necessary items and removing clutter (Hirano, 1995). Sorting contributes to increased productivity by cutting down on time and effort lost looking for tools or supplies.
• Seiton (Set in Order): The arrangement of tools, materials, and equipment in a logical and easily accessible manner. This principle ensures that the workspace is structured and visually intuitive, which reduces the time spent searching for required items (Galsworth, 2005).
• Seiso (Shine): Regular cleaning and maintenance of the workspace, which not only promotes hygiene but also helps in identifying and preventing equipment issues before they escalate (Osada, 1993). By encouraging staff members to take responsibility for their workspaces, this action improves the efficiency of the workplace.
• Seiketsu (Standardize): The development of consistent procedures and practices across the organization, ensuring that the first three steps are implemented uniformly (Imai, 1997). Standardization reduces variety, makes training easier, and promotes ongoing development.
• Shitsuke (Sustain): The maintenance and reinforcement of the established standards, as well as fostering a culture of continuous improvement (Liker, 2004). This step involves regular audits, employee training, and management support to ensure the long-term success of the 5S system.

 

Implementing the 5S System

All employees, from upper management to frontline staff, must be committed to and actively participate in the 5S system’s implementation for it to be effective.
To guarantee a seamless implementation process, the following actions can be taken:

• Gain a thorough grasp of the 5S concepts and inform every employee of their advantages (Emiliani, 2008).
• Create a 5S implementation team to design, carry out, and oversee the process. This team should include representatives from multiple departments (Galsworth, 2005).
• Perform a comprehensive evaluation of the workspace’s existing condition, highlighting opportunities for improvement and establishing clear objectives (Hirano, 1995).
• Apply the 5S principles in the order listed, beginning with Sort and moving on to Sustain (Imai, 1997).
• Conduct routine reviews and audits of the implementation to find areas for improvement and to strengthen the continuous improvement culture (Liker, 2004).

A crucial component of continuous improvement and lean management is the 5S system. Through the establishment of a well-structured, effective, and secure workplace, the 5S methodology empowers staff members, boosts output, and ultimately advances the general prosperity of the enterprise.

 

Benefits of the 5S System

Organizations that successfully apply the 5S system stand to gain a number of advantages. Among the principal benefits are:

• Enhanced productivity: A neat workspace cuts down on time wasted looking for supplies, equipment, or information, which boosts output and efficiency (Hirano, 1995).
• Increased safety: The 5S approach helps reduce accidents and injuries by keeping an atmosphere free of clutter and tidy, which enhances worker well-being (Osada, 1993).
• Cost reduction: The 5S method can help save money and boost profitability by streamlining operations and cutting waste (Imai, 1997).
• Higher quality: Consistent work routines, supported by a standardized and well-maintained workstation, result in higher-quality goods and services (Liker, 2004).
• Worker engagement: By encouraging workers to take charge of their workspaces and take part in ongoing improvement initiatives, the 5S system promotes a sense of pride and achievement in the workforce (Emiliani, 2008).

5S in the Energy Sector

The energy industry, in particular utilities like Electricidade de Moçambique (EDM), has specific difficulties because of things like high operating expenses, safety issues, and the constant need for innovation and efficiency gains.

Research has indicated that implementing 5S in the energy industry can result in notable enhancements in both operational effectiveness and safety  (Singh & Ahuja, 2015).

For instance, a (Singh & Ahuja, 2015) demonstrates how the application of 5S in an energy utility resulted in a 15% increase in operational efficiency and a 20% decrease in workplace accidents.

Operational Costs and Efficiency

Inefficiencies and excessive operating costs are major problems for EDM. The research states that energy losses, antiquated infrastructure, and ineffective operational procedures are the primary causes of high operating expenses in utilities (Parker, Kirkwood, & Malone, 2000).

By improving resource use, cutting waste, and streamlining procedures, 5S implementation can assist in resolving these problems.  (Bamber, Sharp, J. M., & Hides, M. T., 2000). An instance in a European power firm, for instance, showed that implementing 5S lowered operating expenses by 18% in the first year.  (Garza-Reyes, J. A., Soriano-Meier, & H., Harmantzi, 2018)

Workplace Safety

Another major worry for EDM is workplace safety, as there has been a discernible rise in the number of fatal industrial accidents reported between 2021 and 2022.

The literature on occupational health and safety highlights the idea that a workplace that is well-organized is one that is safer  (Hinze, 2006)

By reducing clutter, keeping work environments clean, and organizing tools and materials, the 5S system immediately improves safety by lowering the chance of accidents (Kobayashi, Fisher, R., & Gapp, R., 2008)

By reducing clutter, keeping work environments clean, and organizing tools and materials, the 5S system immediately improves safety by lowering the chance of accidents. According to studies by (Bayo-Moriones, A., Bello-Pintado, & Merino-Día, 2010), implementing 5S can cut workplace accidents by up to 40%.

Energy Efficiency and Loss Reduction

Enhancing EDM’s financial performance and productivity requires lowering electrical energy losses. According to research, 5S can improve maintenance procedures and lower equipment downtime to increase energy efficiency (Womack, J. P. & Jones, D. T., 2003)

A study by (Neves, M., Costa, A. L., & Sousa, R. M., 2014) discovered that a Brazilian energy company’s application of 5S led to a 10% improvement in energy efficiency and a 12% decrease in energy losses.

Continuous Improvement and Innovation

Innovation and constant improvement are crucial for EDM to stay competitive. The body of research emphasizes the value of a culture of continuous improvement, which 5S can help to cultivate.  (Imai, 1997).

In addition to offering a framework for continuous improvement, 5S motivates staff members to take an active role in process optimization and problem-solving.

(Bhasin & Burcher, P., 2006). This is in line with EDM’s strategic goals, which include becoming an inventive, digitally connected utility.

Financial Performance

One of EDM’s main goals is to increase financial performance through cost savings and efficiency improvements. Research has indicated that 5S can have a favorable effect on financial measures through the reduction of waste, enhancement of asset use, and augmentation of production (Liker, The Toyota Way 14 Management Principles from the World’s Greatest Manufacturer, 2004) .

For instance, a manufacturing company’s study on the application of 5S revealed a 25% improvement in profit margins as a result of improved operational efficiency (Melnyk, Calantone, R. J., & Vickery, S. K., 1998).

Addressing Research Gaps

There is a lot of literature on the advantages of 5S across a range of businesses, but not much of it focuses on how it might be applied in the energy sector, especially when it comes to African utilities like EDM. By presenting actual data on the effects of 5S deployment on operational and financial performance in an African energy provider, this dissertation seeks to close this knowledge gap. Through the investigation of particular research topics concerning energy efficiency, worker safety, operational expenses, and continuous improvement, this study will enhance the overall comprehension of 5S applications in the energy industry.

• Research Process

(a) Research Philosophy, Approach, and Methodology:

The research philosophy for this project will be pragmatic, with the goal of offering workable answers to issues that Electricidade de Moçambique (EDM) is currently facing in their business. The application of pragmatism in EDM enables a versatile strategy that integrates aspects of positivism and interpretivism to tackle the intricate problems related to operational effectiveness and safety.

For the Research approach, the mixed methods research methodology has been selected for this investigation. This strategy aims to obtain a thorough grasp of the challenges faced by EDM and the efficacy of applying 5S strategies in resolving these problems by combining qualitative and quantitative methods.

A sequential explanatory design will be used in the investigation as part of methodology. In order to determine the primary causes of high operating costs, inefficiencies, and worker accidents at EDM, this design will first include gathering quantitative data. The potential effects of applying 5S approaches will next be investigated and these concerns will be further explored using qualitative methodologies.

(b) Population, Sampling and Data Collection Methods:

The Population and Sampling for this dissertation will consist:

• The study’s population will comprise EDM workers from different departments and hierarchical levels. The organization’s various divisions and levels will be represented through the use of a stratified sample technique. The relevant statistical techniques will be applied to calculate the sample size in order to guarantee the validity and generalizability of the results.

For the collection of the primary data, will be applied the following approaches:

• Surveys: To collect quantifiable data on operational costs, workplace safety events, and perceptions of inefficiencies, surveys will be distributed with EDM employees;
• Interviews: In-depth interviews with managers, supervisors, and frontline employees at EDM will be carried out to gather information about the underlying causes of the difficulties that have been found as well as the possible efficacy of 5S techniques;
• Observations: In order to complement survey and interview data and offer a more thorough picture of existing practices and issues, direct observations of EDM’s operations will be carried out. 

Regarding the rationale for the surveys, they will offer quantitative information that can be statistically examined to spot patterns and trends in operational expenses, workplace mishaps, and inefficiencies. Interviews will enable a more thorough investigation of the fundamental problems and viewpoints of important players. Observations, which offer direct knowledge of EDM’s everyday operations, will supplement survey and interview data.

(c) The ethics, the validation of measures and reliability

Participants’ rights and protection will be ensured by rigorous adherence to ethical norms throughout the research process. All participants will be asked for their informed consent, with a focus on maintaining their anonymity and confidentiality throughout the research. Participants will not be penalized if they decide to stop participating in the study at any time.
A methodical methodology will be used to support the validity of the results. To reduce biases and inaccuracies, data gathering tools will undergo rigorous pre-testing and revision as needed. Throughout the study process, established processes will be applied consistently. Strict use of data analysis techniques will be made to guarantee accuracy and consistency.

In addition, steps will be taken to improve the validity of the research findings. There will be a triangulation of data using many sources, such as surveys, interviews, and observations. To ensure alignment with participants’ perspectives, interpretations will be validated by member verification. We shall continue to take a reflexive approach in order to identify and deal with any potential prejudices or preconceptions. Furthermore, research tools will be thoroughly created to measure the relevant constructs with accuracy.

• Resources Access for Primary and Secondary Data

(a) The main source of resources for gathering primary data will be EDM’s internal documentation, including yearly reports, financial reports, and environmental and safety statistics. Key stakeholders in the organization will be interviewed, and surveys will be issued to EDM staff members. To complement primary data collection activities, direct observations of EDM’s operations will also be conducted. The following sources of secondary data will be consulted: industry reports, academic papers, peer-reviewed journals, and pertinent government records.

(b) Getting the required authorization and consent from the organization’s management will be a prerequisite for making plans to access primary and secondary data from EDM. This can entail getting approval from EDM’s management to survey and interview their staff members as well as gaining access to internal records and documents that are pertinent to the study’s goals. To guarantee easy access to data and information required for the study, cooperation with pertinent EDM departments and staff will be sought. Furthermore, online databases, library resources, and institutional subscriptions will make it easier to access secondary data sources including scholarly publications and industry reports.

• Questionnaire

A questionnaire is adata collection technique in which respondents are asked to answer a series ofquestions or written statements. Researcher will issue a list of questions toseveral EDM employees and other stakeholders. This questionnaire uses a scale of 1to 5 to collect data that is interval in nature and is assigned a score orvalue based on the measurement category:·    

• StronglyDisagree (SD), assigned a weight of 1,
• Disagree(D), assigned a weight of 2,
• LessAgree (LA), assigned a weight of 3,
• Agree(A), assigned a weight of 4,
• Strongly Agree (SA), weighted at 5. 

Beyond this, the  surveys will have the open questions thatwill allow the employees to answer accordingly. 

1. Analysis  

The statistical analysis of the data collected will be based on normality tests, according to:

Treatment of data from questionnaires, according to interview forms with scales from 1 to 5 and opened questions. Data processing will be done through Excel spreadsheet that will be created for this purpose.

Some statistical indicators will be calculated such as mean, median, mode and standard deviation and depending on the applicability of each indicator, they will be interpreted in order to make a valuable contribution to the proposed assihnment.

It is also important to check whether the data follows a normal distribution or not, and to this end, a normality test will be carried out, using the Shapiro-Wilk test or Kolmogorov-Smirnov test methods, which are commonly used for this purpose, thus, if the data deviates significantly from a normal distribution.

• Shapiro-Wilk Test: This test yields a W statistic, and a data set is considered normally distributed if the p-value is higher than 0.05.
• Kolmogorov-Smirnov Test: A higher p-value indicates normalcy in this test, which compares the data’s cumulative distribution to a normal distribution.

Regarding interpretation, an approaching normal distribution of the data can be assumed if the p-value is higher than 0.05. In the event that the p-value is lower than 0.05, the data could not follow a normal distribution.

1. References /Bibliography of planned reading

References

EDM. (2021). Modelos de PPA. Maputo: EDM.

EDM. (2022). Annual Report 2022. Maputo: EDM.

(2018). EDM STRATEGY 2018-2028. MAPUTO: EDM.

EDM, & DPSE. (April de 2022). PROJECTOS PRIORITARIOS 2021-2030. Maputo: Direcao de Planeamneto e Sistemas & Engenharia.

Emiliani. (2008). Practical Lean Leadership: A Strategic Leadership Guide For Executives. Wethersfield: he CLBM, LLC.

Galsworth, G. D. (2005). Visual Workplace/Visual Thinking: Creating Enterprise Excellence Through the Technologies of the Visual Workplace. Portland, OR: Visual-Lean Enterprise Press.

Hirano, H. (1995). 5 Pillars of the Visual Workplace: The Sourcebook for 5S Implementation. . New York, NY: Productivity Press.

Imai, M. (1997). A Commonsense, Low-Cost Approach to Management. New York, NY: McGraw-Hill.

(February 2018). Integrated Master Plan. Maputo: Japan International Cooperation Agency (JICA).

Liker, J. K. (2004). The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer. New York, NY: McGraw-Hill.

Osada, T. (1993). The 5S’s: Five Keys to a Total Quality Environment. Tokyo, Japan: Asian Productivity Organization.