Case 1: LTO Vehicle Registration Renewal

A Case Study

Submitted to :
Ms. Joy Mari Bautista

Department of Industrial Engineering

Brother Andrew Gonzales, Gokongwei College of Engineering

In partial fulfillment of the requirements for the course

Methods Engineering Laboratory

Submitted by:
Alegre, Mary Christiene Courtney B.
Cu, Jeffrey T.
Francisco, Kyle Louie K.
Mallari, Cristina Beatrice C.
Ong, Elizabeth Jill L.
Sy, Aaron William P.
Group 1

LBYIE3A - EC3
November 4, 2021
 I. Case/Company Background

The Land Transportation Office (LTO) is a Philippine government agency under the
Department of Transportation (DOT) concerned with the registration and inspection of motor
vehicles, enforcement of traffic and transportation laws, adjudication of apprehension cases
related to the agency, issuance of driver’s permits and licenses, and other services related to the
land transport sector of the Philippines. For accessibility, the LTO has several offices set up
nationwide to cater to Filipino citizens requiring their service. One of the most crucial functions
of the agency is to administer the vehicle registration renewal process. As a general order, all
vehicle owners in the Philippines are mandated to renew their registration every year after the
first three years of registration validity on brand-new cars. With this process being a core
component of the implementation of the law, a regional director urges one of his branch
managers to improve the process in their branch office by boosting its efficiency, reducing costs,
and accommodating the growing demand for renewals.

II. Present System

A. Process Scope

As shown in Table 1, the vehicle registration renewal process under the scope of the
study is composed of six operations, which begins from the review of the renewal application
and ends in the processing of the payment and releasing. The review of the renewal application is
constrained to precede all operations, while the approval and signature and the processing of the
payment are required to be the last two steps respectively. Furthermore, only the branch manager
is authorized to complete the approval procedure, while the cashier is strictly in-charge of the
payment processing. A summary of the six operations, including their corresponding average
times for completion, the number of operators assigned to each, and hourly labor rates is
displayed in Table 1. As can be derived, the entire process takes a total of 90 minutes to
complete, assuming there are no delays.
Table 1. Operations of the Vehicle Registration Renewal Process

Must be Number of Hourly Rate

Operation Time (min)
preceded by Operators (Php)
1. Review renewal application -- 30
10 1
for corrections
2. Inspect the vehicle 1 30 2 35
3. Check file for violations and 1 35
20 1
restrictions
4. Prepare registration form 1 10 1 30

5. Approval and signature 2,3,4 10 1 50

6. Processing of payment and 5 35
10 1
releasing

Figure 1. Precedence Diagram of the Vehicle Registration Renewal Process

B. Process Objectives

The primary purpose of the LTO vehicle registration renewal process is to continuously
ensure that all vehicles in the Philippines are roadworthy and safe for use in day-to-day land
transport. To fulfill this, the process must be able to accommodate the increasing number of
applications every year in a timely and resource-efficient manner. This entails taking into
consideration the capacity, productivity, and efficiency of the vehicle registration renewal
process in the LTO branch office being studied. More specifically, the capacity of the process
must at least equal the projected demand of registration renewals; excess capacity, however, must
be avoided if considered wasteful or unjustifiable. The efficiency of the production line must also
be maximized by ensuring minimal idle time in the branch office. Overall, a balance between
additional expenses, such as the increase in the number of operators, and the additional output
must be attained when pursuing an improvement of the process.

C. Partitioning & Linkages

Currently, all six operations of the vehicle registration renewal process involve some
form of manpower, requiring a staff of 7 people in total (1 branch manager, 1 cashier, 5
operators). The current layout of the LTO branch office where the renewal process is conducted
is shown in Figure 2. It consists of six workstations for the six operations, with each requiring a
table and one rotating chair. The first three workstations, as listed in Table 1, are grouped
relatively together, while the other three are farther apart. As can be observed, this arrangement
allows the applicant to undergo the first four processes in a convenient manner; however, the last
two processes require them to travel a longer distance with the two stations being located at
opposite corners. It must also be noted that some operations entail movement to the records
room, especially for the checking of files and data, as well as having to physically go outside the
building for the inspection of the actual vehicle. In terms of supplies, because all operations,
except for inspection, only involve the verification or preparation of certain documents, the only
notable materials needed are office supplies, including pens, printing paper, required forms,
inspection checklists, and archived files, if any. As for machines, there is no given information
on the use of automation for any operation with the probable exception of a cash register for the
processing of payments. It is also assumed due to the presence of a records room that analog
records are used. The whole procedure, especially the process of checking for previous violations
and restrictions, is highly dependent on archived information.
 Figure 2. Current Layout of the LTO Branch Office

III. Problem Statement

Two main problems emerge from the appraisal of the present system: (1) the uneven distribution
of work among operators and (2) a mismatch between the current capacity and growing demand.

1. Uneven distribution of work among operators

As shown in the task times in Table 1, the amount of work across the operations of the present
system largely differs; some tasks require only 10 minutes, while others can take up to 30
minutes. Notwithstanding, only one person is assigned for all operations with the exception of
the inspection process where two operators are available. Due to this lack of synchronization, the
production line is considered to be inefficient, where idle times and the build-up of long queues
are expected to occur throughout the process. There is also a tendency for the clerk responsible
for checking violations to shortcut the task to keep pace with the others. The first objective of
this study, therefore, is to adjust the configuration of the production line such that the work is
balanced among the work stations, thus maximizing efficiency and minimizing idle times.

2. Mismatch between current capacity and growing demand

According to the given data, there has been a consistently increasing trend in the demand for
renewals over the past five years with an expected hourly demand of 4 renewals in the coming
year. Despite this, the capacity of the present system remains to be below the forecast. It can be
noted from Table 1 that the current bottleneck time of the process is 20 minutes, which gives a
 capacity of only 3 renewals per hour. In line with this, the second objective of the study is to
ensure that the capacity of the modified process accommodates the increasing demand.

IV. Problem and System Analysis

To analyze and address the identified problems on layout and capacity, the present system
is first assessed in terms of related metrics, specifically its hourly capacity, labor productivity,
and the line efficiency of the branch office. The hourly capacity determines the degree to which
the system fails to meet the expected demand, while the percent efficiency describes the
imbalances among personnel in the production flow causing idle times. Since possible solutions
may involve changes in the manpower per workstation, labor productivity is also measured.

Table 2 summarizes relevant details of the present operations, including their individual
cycle and idle times, for use in the said calculations. The cycle times were determined by
dividing the task time by the number of operators, while the idle times were obtained by
subtracting the cycle times from the longest cycle time or the cycle time of the bottleneck station,
which in the present case, is operation 3. As can be noted, there are variations in the individual
cycle times of the six workstations, already indicating an unsynchronized production line and the
presence of non-value-adding idle times within the process.

Table 2. Cycle and Idle Times of the Present Production Line

Time Number of Capacity Cycle Time Idle Time
Operation
(min) Operators (units/min) (min/unit) (mins)
1. Review renewal application for
10 1 0.1 10 10
corrections
2. Inspect the vehicle 30 2 0.067 15 5
3. Check file for violations and
20 1 0.05 20 0
restrictions
4. Prepare registration form 10 1 0.1 10 10
5. Approval and signature 10 1 0.1 10 10
6. Processing of payment and
10 1 0.1 10 10
releasing
 The hourly capacity was calculated by taking the reciprocal of the bottleneck time. Based
on a bottleneck time of 20 minutes, the hourly capacity of the office is 3 renewals. Clearly, this
cannot accommodate the hourly demand for renewal for the last year of 3.5 and more so, the next
year, assuming demand will only continue to increase. It can be determined from here that the
capacity issue of the office can be attributed to the bottleneck process of checking the file for
violations and restrictions, which has an insufficient capacity of only one unit per 20 minutes. In
order to meet the expected demand of 4 renewals per hour, no workstation should have a cycle
time of greater than 15 minutes.

The calculations for labor productivity in terms of both man-hours and pesos are shown
as follows. An hourly time frame was used in both cases. From Eq. 1.3, the output per hour is 3
renewals; and this hourly output was produced with 7 operators each working for an entire hour
(for a total of 7 labor-hours), giving a labor productivity measure of 0.429 units per labor-hour.
Using the given hourly rates in Table 1, the peso value of the input labor was calculated as 250
pesos; this gives a labor productivity measure in terms of units per peso of 0.012.
 Assessing the efficiency of the production line, it was determined that only 62.5% of the
total process time can be considered productive, with the operators being idle for a total of 45
minutes. Again, this problem can be associated with the discrepancy among the workstations’
speeds. The first, fourth, fifth, and last operations can generate 1 renewal for 10 minutes, while
the second operation for 15 minutes. However, because the third operation has a longer cycle
time of 20 minutes, idle times occur within the other five operations in the series. To maximize
the efficiency of the line, all workstations must be at the same pace; and their inherent task times
must be considered in the distribution of manpower.

In the following section, alternatives that propose solutions to the two problems identified
are evaluated according to the same metrics (See the appendices for the full calculations).
Selections are made based on the quantities previously calculated for the present system.

A. Matching Capacity and Demand

The first alternative that addresses the capacity problem involves an increase in the
number of inspectors by 100%, while the second entails an increase in the number of operators at
Operation 3 by the same percentage. Based on the data provided, the hourly demand for renewals
for the past five years respectively was: 1.5, 2, 2.5, 3, and 3.5. Based on the results of the
regression analysis (Eq. 5), the expected demand for the next year is 4 renewals per hour.

Under the first alternative, the number of inspectors is doubled, reducing the cycle time in
this station by half. As expected, the bottleneck time remains the same at 20 minutes since no
changes were made in the original bottleneck operation. Consequently, the hourly capacity
remains at 3 renewals. Adopting the first alternative, therefore, does not accommodate for the
increasing hourly demand in the next year. The only effect of increasing the speed at this
non-bottleneck operation is an increase in waiting time from 5 minutes to 12.5 before proceeding
to the next. Moreover, since there is no added value in increasing this station’s manpower, this
alternative results in a further decrease in labor productivity.
The second alternative suggests that two operators be assigned to checking files for
violations and restrictions instead of one. Because of this increase, the cycle time is reduced from
20 minutes to 10. Respectively, an increase in capacity also occurs. The new bottleneck time is
15 minutes instead of the initial 20 minutes. With this alternative, the hourly capacity increases
from 3 to 4, allowing for the accommodation of next year’s hourly demand. Manpower is also
utilized more effectively as evident in the increase in labor productivity shown in Table 3. For
these reasons, the manager should select the second alternative over the first.

B. Synchronizing the Production Line

Although increasing the capacity of the third station by 100% satisfies the demand
requirements, there are still points of improvement in terms of maximizing the line’s efficiency
and minimizing the total idle time. The goal of the improved alternative, therefore, focuses on
balancing the individual cycle times of the operations, while meeting the expected demand.
Since the demand forecast for the next year is 4 renewals per hour or 32 per day and
assuming an 8-hour working shift (for a total of 480 minutes available production time), the
longest cycle time should not exceed 15 minutes (480 minutes per day/32 renewals per day). The
cycle time of operations 2 and 3 should, therefore, be decreased through the addition of
operators. The most efficient way to do this is by increasing the number of inspectors by 50%
and the number of operators that check the file for violations and restrictions by 100%. Through
this action, the cycle times of all operations are kept constant at 10 minutes per unit, thus
increasing the hourly capacity to 6 renewals, maximizing efficiency, and yielding zero idle time.
Operations 2 and 3 can also be done simultaneously since checking for violations and restrictions
does not typically require the presence of the registrant; this reduces the throughput time of the
renewal process from 90 to 70 minutes, which can improve customer satisfaction. The downside
of this alternative is excess capacity and the possibility of short-term lower labor productivity. If
the hourly output is limited to 4 renewals only the next year, labor productivity will only be
 0.444 units per labor hour. Nonetheless, because demand increases over time based on historical
data, capacity may be maximized in the long run, rendering this alternative superior to the rest.

Figure 3. Process Sequence of the Proposed Production Line

Table 3. Summary Assessment of the Alternative Production Lines

Hourly Productivity
Idle Time
Capacity renewals per renewals Efficiency
(mins)
(renewals) man-hour per peso

Present System 3 0.429 0.012 62.5% 45

Alternative 1 3 0.333 0.009 56.25% 52.5

Alternative 2 4 0.500 0.014 72.22% 25

Proposed Alternative 6 0.667 0.019 100% 0

V. System Design and Recommendations

A. Office Layout

To account for financial limitations, only minimal changes, with nonetheless significant
impacts, are proposed to improve the layout of the branch based on the recommendations. The
new layout is set up in a way where the adjacency of the workstations is in correspondence with
the sequence of the process. To further minimize travel time and distance, the inspection process
was situated closer to the exit since this requires going to the parking space for vehicles. The
workstation for the checking of files for violations and restrictions was also placed as close to the
record room so files can easily be accessed from this area. The same goes with the payment
operation, which was kept near the exit door so customers who are finished with the process can
exit right away and prevent congestion. Perhaps, the only significant modification is switching
the manager’s office and records room for the purpose of eliminating the need for a lengthy
transfer from the fifth to sixth operations (previously entailed traveling to an opposite corner).

Figure 4. Proposed Layout of the LTO Branch Office

B. Seasonality of Renewals

Alternative 1: Hiring Part-Time Workers

Table 5. Assessment of Alternative 1

Average Productivity
Hourly Idle
Day Hourly Efficiency
Capacity per man-hour per peso Time
Demand

Monday - Thursday 3 3 0.429 0.012 62.50% 45

Friday 10 10 0.588 0.017 86.11% 5

It was observed that 50% of the renewals are done on a Friday, and that the projected
hourly demand for the coming year is 4 license renewals. Under the assumption of 5 working
days a week with 8 working hours per day, this would entail a daily demand during Fridays of 80
license renewals, and an average daily demand of 20 renewals for the rest of the days. A way to
approach this seasonality factor is to hire part-time workers who will work only on Fridays. For
Monday to Thursday, an average daily demand of 20 renewals translates to 2.5 renewals per hour
and a bottleneck time of 24 minutes. As such, the only operation that should require more than
one person is the inspection. For Friday, a daily demand of 80 renewals requires an hourly
capacity of 10 renewals and a bottleneck time of 6 minutes. The necessary adjustments in the
workforce to accommodate this demand are shown in Table 5. With this more flexible
assignment, the branch office will be able to account for the variations in demand, while
maximizing the utilization of resources. This demonstrates the importance of accurate
forecasting in the process of capacity planning.

Alternative 2: Raising renewal fees on Fridays

An alternative to modifying capacity is manipulating the demand such that it is

distributed more evenly throughout the week. To do this, the office may charge additional fees
for processing license renewals on Fridays. By the law of demand, customers will be encouraged
to renew their licenses on a different day other than Friday. This option of keeping a constant
workforce may be more viable if it is difficult and costly to hire and train part-time workers. On
the downside, there is greater uncertainty associated with it since the behavior of outside
customers is more difficult to assess and control. Short-term experimentation may be needed to
determine how people will actually respond to the addition of fees.

Table 6. Comparison of the Alternatives for the Seasonality of Renewals

Alternative 1: Hiring Alternative 2: Raising renewal fees

Part-Time Workers on Fridays

Advantages ● Economical in terms of ● Additional fees can be utilized

labor cost to improve the office
● Greater flexibility ● Higher guarantee of quality
output with all employees
working full-time

Disadvantages ● May incur additional ● Uncertainty with regards to the

hiring and training costs elasticity of demand
● Less commitment from ● Not a long-term approach
part-time employees ● Can discourage some people to
renew their registration totally
(or encourage delays of
renewals)
 C. Specific System Elements

Table 7. Summary of System Improvements

Inputs Outputs

1. Upgrade workstations to accommodate 1. Conduct monthly reports with

simultaneous operations. employees to monitor output.
2. Install up-to-date computers. 2. Do daily routine employee checkups.
3. Maintain software and information 3. Encourage employees who meet their
system/s regularly (Ab-Samat et al., goals with incentives (Ganta, 2014).
2013). 4. Conduct a quick feedback survey
4. Hire adept and versatile workers. before customers exit the facility.
5. Conduct training and seminars for 5. Hire a social media manager that
employees (Gupta et al., 2001). handles online queries and addresses
6. Ensure applicants are well-informed complaints.
through effective public 6. Generate digital forms instead of
announcements and clear instructions. paper documents (Sprague, 1995).
7. Create an emailing system that 7. Digitize archived documents as soon
contacts the applicants for renewal. as possible to improve accessibility
8. Enforce poka-yoke features on the (Bešić, 2021).
application form. 8. Use cloud data to compile new
9. Set up writing stations in the waiting information.
area where applicants lacking 9. Incorporate raffles in customer
information/ need correction in their surveys to encourage feedback.
renewal application forms can use. 10. Provide customers a specific checklist
10. Set up information booths in the for inspection results.
waiting area to help applicants with
their renewal application forms
concerns.

Process Work Environment

1. Eliminate processes that can be done 1. Dedicate larger workstations for

online or without the presence of the operations that require more workers
applicant. to avoid unproductive chatter.
2. Employ a web-based appointment 2. Provide reasonable and distributed
system in place of queues (Wenjun et break times for employees.
al., 2011). 3. Ensure workstations, including chairs
3. Implement a cut-off period for the and tables, are ergonomically fit.
allowable number of customers. 4. Provide a break room with vending
 4. Provide customers a checklist upon machines and water stations.
entrance to help monitor their progress. 5. Provide drinking fountains around the
5. Post a step-by-step diagram of the area.
entire renewal procedure around the 6. Provide separate washrooms for
area to avoid unnecessary inquiries customer and employee use.
between the processes. 7. Add an entertainment system in the
6. Provide multiple copies of the waiting room.
customer tracking number (printed and 8. Sanitize the areas regularly.
digital) to avoid losing it. 9. Provide proper ventilation.
7. Assign tracking numbers in the parking 10. Provide sufficient lighting.
area to easily access the vehicles 11. Arrange physical layout to match
during inspection. process flow.
8. Place a screen near the waiting area of
the customers to flash the next
customers to be accommodated.
9. Merge the fourth and fifth operations
with both having similar resources (i.e.
pen and paper).
10. Allot backup analog-based procedures
in cases of software failure.

a. Inputs
The main inputs of the vehicle registration renewal process include manpower, incoming
data, archived records, information systems, and office equipment. One way to improve on these
is to redesign the workstations such that they can cater to multiple operations simultaneously. For
faster document processing, it is advisable to install up-to-date computers that can decrease task
times and eliminate the need for manual processes. Regular software maintenance will also avoid
system failures during operation hours that increase downtime (Ab-Samat et al., 2013).
The branch must employ workers who are flexible and fast learners. Adaptability is
especially important in this process because reassignments are highly probable when demand is
seasonal. To further maximize efficiency, regular employee training should be conducted (Gupta
et al., 2001). Part of the training modules should be basic troubleshooting techniques for
software issues (Walker et al., 2001).
The level of knowledge of applicants regarding the process can also be considered an
input. Thus, it should be ensured that all instructions for the renewal application are clear to
avoid delays. An emailing system may also be implemented to inform vehicle owners when their
registration is almost due for a renewal. Other methods that minimize delay due to customers
include information booths that assist troubled applicants and poka-yoke techniques.

b. Outputs
To utilize outputs in process improvement, monthly reports must be conducted to update
employees on the progress of their objectives. There should also be routine employee checkups
to monitor their productivity. To encourage employees who meet their goals, incentives may be
given to boost employee performance (Ganta, 2014).
With regard to documentation, cloud-based online databases accessible to authorized
workers may be used to eliminate the need of going to the records room (Sprague, 1995). After
each day of operations where a large amount of documents is accumulated, it is also highly
advisable to digitize stored documents as soon as possible for ease of access and waste
minimization (Bešić, 2021).
In terms of customer feedback, conducting quick and incentivized surveys may be helpful
to determine unknown areas of concern related to their services.

c. Process
To streamline the vehicle registration renewal process, operations that can be done online
or without the presence of the applicant should be eliminated. The use of a web-based
appointment system instead of a queueing method should also be considered to prevent the
build-up of customers in the facility (Wenjun et al., 2011). Under this system, they are to be
provided multiple copies of the tracking number (printed and digital) to avoid lost numbers. This
also entails placing a screen near the waiting area of the customers for easy monitoring.
To further reduce delays, the process may involve providing customers a checklist upon
entrance, which shall be stamped after they have gone through each station. Posting a clear
step-by-step diagram of the entire renewal procedure around the area may also avoid
unnecessary and time-consuming inquiries between the process. In cases of software failure,
backup analog-based procedures must be prepared.

d. Work environment
To achieve a productive environment, it is imperative to dedicate larger workstations for
operations that require more workers to avoid unproductive chatter. The well-being of employees
must be considered by providing reasonable and distributed break times. Workstations, including
chairs and tables, must be ergonomically fit to avoid musculoskeletal discomforts (University of
Pittsburgh, n.d.; Helander, 2006; Realyvásquez-Vargas et al., 2020).
The waiting process should calm the customers and alleviate their mood. Hence, a break
room with vending machines, drinking fountains, and washrooms may be beneficial. Improving
the appeal of the waiting room and adding entertainment functions may also have a positive
impact on the perceived waiting time of customers—and therefore, increase customer
satisfaction (Pruyn & Smidts, 1998). Light sources should also have sufficient illumination levels
to avoid glare or poor lighting that may contribute to eye fatigue of operators (DOLE, 1989). It is
also suggested that sanitizing the waiting area may avoid unpleasant odor build-up and provide
proper ventilation like ceiling air ventilation fans or air conditioners to increase the comfort of
applicants in the waiting area. Lastly, as mentioned in the layout recommendation, the branch
must ensure that the physical layout matches the process flow of the operations.
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VII. Appendices

A. Calculations for Alternative 1

Table 4. Cycle and Idle Times of the Alternative 1 Production Line

Cycle
Time Number of Capacity Idle Time
Operation Time
(min) Operators (units/min) (mins)
(min/unit)
1. Review renewal application for
10 1 0.1 10 10
corrections
2. Inspect the vehicle 30 4 0.133 7.5 12.5
3. Check file for violations and
20 1 0.05 20 0
restrictions
4. Prepare registration form 10 1 0.1 10 10
5. Approval and signature 10 1 0.1 10 10
6. Processing of payment and
10 1 0.1 10 10
releasing
 B. Calculations for Alternative 2

Table 5. Cycle and Idle Times of the Alternative 2 Production Line

Time Number of Capacity Cycle Time Idle Time
Operation
(min) Operators (units/min) (min/unit) (mins)
1. Review renewal application for
10 1 0.1 10 5
corrections
2. Inspect the vehicle 30 2 0.067 15 0
3. Check file for violations and
20 2 0.1 10 5
restrictions
4. Prepare registration form 10 1 0.1 10 5
5. Approval and signature 10 1 0.1 10 5
6. Processing of payment and
10 1 0.1 10 5
releasing
 C. Calculations for Proposed Alternative

Table 6. Cycle and Idle Times of the Proposed Alternative Production Line
Time Number of Capacity Cycle Time Idle Time
Operation
(min) Operators (units/min) (min/unit) (mins)
1. Review renewal application for
10 1 0.1 10 0
corrections
2. Inspect the vehicle 30 3 0.1 10 0
3. Check file for violations and
20 2 0.1 10 0
restrictions
4. Prepare registration form 10 1 0.1 10 0
5. Approval and signature 10 1 0.1 10 0
6. Processing of payment and
10 1 0.1 10 0
releasing