1. 1. Implementing Kanban Pull Systems in Non-Manufacturing Environments July 20, 2010 CompanyLOGO
2. 2. Your Instructor Early career as a scientist; migrated to quality & operations design in the mid-80s. Launched Karen Martin & Associates in 1993; applied Total Quality Management. Introduced to Lean in 2000. Specialize in Lean transformations in nonmanufacturing environments. Co-author of The Kaizen Event Planner; co-developer of Metrics-Based Process Mapping: An Excel-Based Solution. Instructor in University of California, San Diegos Lean Enterprise program. 2010 Karen Martin & AssociatesKaren Martin, Principal Karen Martin & Associates2
3. 3. Learning Objectives Participants will learn: What a kanban system is. The difference between kanban and FIFO lanes. How kanban-managed supply systems benefit organizations. The step-by-step process for implementing a simple two-bin kanban systems. The role of 5S in establishing a kanban system. 2010 Karen Martin & Associates3
4. 4. Kanban - Defined Kanban A visual signal of some kind Sign, signboard, card, doorplate, poster, billboard, etc.Kanban system A just-in-time pull system whereby items are replenished at the rate they are consumed. Low tech, highly visual pull system for inventory management 2010 Karen Martin & Associates4
5. 5. Kanban vs. FIFO Lanes NEW SLIDEKanban systems are used when youre replenishing specific items/part numbers (supplies) based on consumption. FIFO lanes are used when youre replenishing work based on consumption. Maximum WIP allowed is established. All upstream work stops once max is reached. Review DrawingsMax = 10FIFO 2010 Karen Martin & AssociatesPrepare Change Order5
6. 6. Building a Lean Enterprise
7. 7. Pull System Mechanics Concept: Consumption by downstream process authorizes replenishment by upstream process Visual signal to replenishReplenisherConsumerReplenishment occurs 2010 Karen Martin & Associates7
8. 8. How are supplies typically managed? Storage issues Multiple locations and secret stash. Not stored next to where theyre consumed. Like items not stored together. Similar items not differentiated.Management issues Labor intensive Re-orders based on forecasts rather than actual use.Ordering issues Unclear accountability. Volume discounts often drive quantity ordered. No criteria for ordering. 2010 Karen Martin & Associates8
9. 9. Kanban Benefits Prevents carrying excessive inventory. Reduced cash flow Excessive space requirementsPrevents stockouts / reduces expediting expenses. Forces stock rotation to reduce risk of obsolete, damaged, or expired inventory. Requires less effort and fewer resources to manage. Improved compliance (healthcare). Drives discipline into the organization. 2010 Karen Martin & Associates9
10. 10. Eight Wastes (Muda)Overproduction Inventory Waiting Over-Processing ErrorsMotion (people) Transportation (material/data)Underutilized peopleA well-designed kanban system eliminates every single one! 2010 Karen Martin & Associates10
11. 11. Types of Kanban Pull Systems One-bin system, divided into two sections Two-bin system Arrangement options Front and back Side-by-side Top and bottomColor or no colorThree-bin system supplier involved Tape Conveyors Shadow boards 2010 Karen Martin & Associates11
12. 12. Single Bin Kanban System Cardboard DividerKanban CardPlace card on top of parts immediately under divider(1) Appropriate Sized Bin (kanban quantity fits into one bin)(2) (3) Draw Line Inside Insert Cardboard Pan at Order Divider to Create Point Level Physical Barrier
13. 13. Two-Bin KanbanKanban card w/ reorder info
14. 14. Two-Bin System / Bar-Coded / No Card Red bin in front = Replenish Blue bin in front = Do not replenishItem # and reorder quantities built into computer system
15. 15. Side-by-side Color Bins: Red Arrows Signal Need to Replenish
16. 16. Top/Bottom Color Bins: Red Arrows Signal Need to Replenish
17. 17. Kanban CardsTypical information on kanban cards: Supplier Item/part # Reorder quantity 2010 Karen Martin & Associates17
18. 18. Two-Bin System FrontBack
19. 19. Tape Kanban Do not replenishReplenish
20. 20. Conveyor KanbanReplenish when first empty bin moves into red area
21. 21. Shadow Boards
22. 22. Typical Two-Bin Calculation Bin Quantity = (ADU x LT) x (1 + SS%) ADU = Average daily use LT = Supplier lead time (in days) SS% = Desired safety stock percentage, expressed as a decimal (e.g. 30% = 0.30) Safety stock can vary by item Typical beginning SS = 50% & reduces over timeNote: You can use different time periods as long as the units of measure for demand and LT are the same. 2010 Karen Martin & Associates
23. 23. Typical Two-Bin Calculation Example Scenario 40 used per day Supplier delivers twice a week Item always in stock 30% safety stock desired.Bin Quantity = (ADU x LT) x (1 + SS%) Bin Qty = (40/day x 2.5 days) x (1 + 0.3) = 100 items x 1.3 items = 130 items per bin 2010 Karen Martin & Associates
24. 24. Setting up Two-Bin/Two-Card Kanban System Considerations for selecting bins: Size of the item Frequency of use (data needed!) Plus safety stock desired (30-50%) may need to resize for seasonal demandSupplier rate of replenishment / frequency of delivery Other bin considerations Space available Budget Methodology for replenishment notification Scanners Laminated cards Stored next to inventory; collected by a water spider 2010 Karen Martin & Associates24
25. 25. AkroBins available through Grainger, 5S Store, etc.
26. 26. KANBAN BIN ORDER FORM - AkroBins - p. 1796 Grainger catalog 398 Dimensions (in inches)RedBlueYellowGreenGrainger # Qty 2W072Grainger # Qty 2W776Grainger # Qty RW869Grainger # Qty 2RV65Depth 5 3/8Width 4 1/8Height 3Akro # 30-2107 3/84 1/8330-2202W0732W7775W8702RV6610 7/84 1/8430-2242RV942RV962RV982RY1010 7/85 1/2530-2302W0742W7785W8712RV6714 3/45 1/2530-2344TJ774TJ764TJ782RV6810 7/816 1/2530-2355W8655W8675W8722RV6910 3/48 1/4730-2395W8665W8685W8732RV7014 3/48 1/4730-2402W0752W7795W8742RV7114 3/416 1/2730-2502W0762W7805W8752RV7210 7/816 1/2530-2552RV862RV902RV882RV92188 1/4930-2655YM925YM915YM932RV731816 1/21130-2705YM955YM945YM962RV74
27. 27. Kanban + 5S Use 5S methodology to establish the kanban system. Sort Set in order Shine Standardize Sustain 2010 Karen Martin & Associates27
28. 28. PDCA CyclePlanAct 2010 Karen Martin & AssociatesDoCheck 28
29. 29. Preparing for Improvement Communicate improvement need and plan to all stakeholders. Use data to sell the need Explain WIIFM (whats in it for me) Include high level plan re: dates, who will be involved, etc. It may be disruptive to the workplace. If so, communicate likely impact and for how long. 2010 Karen Martin & Associates29
30. 30. Preparing for Improvement (continued)Obtain relevant current state data: Items # of different types Quantity on hand Quantity expired/obsolete/damaged items Consumption rate (this is critical will determine bin size!)Replenishment timeframe Annual spend Stock-outs Financial or customer impact Expediting costs Pre-improvement audit Pre-improvement staff survey 2010 Karen Martin & Associates30
31. 31. Pre-Improvement Audit Visual Inventory Management Audit Department: _________________________________ Date: ________________________________________ Auditors: ____________________________________ 1 Desired Attribute Material doesn't exceed kanban 1 bin quantities23450-30% 31-55% 56-75% 76-95% 95-100%Root CauseCorrective Action2 No stockouts (both bins empty) 3 Stock has been rotated 4 No expired items 5 Materials properly identified 6 Each item has a specific place Bin sizes are appropriate for daily 7 demand Standard work for supplies 8 replenishment and use is posted Accountability for supplies 9 management is clearly identified No material in unidentified 10 locations 11 Evidence of root cause analysis 12 Storage areas are clean and tidy Comments:31
32. 32. Gather Baseline Data Supplies Management Survey Staff Name (optional):___________________________________ Date: _____________________ Title/Role(optional):_______________________________ Area/Dept: _________________ Strongly Agree (4)Agree (3)Disagree (2)1.The supplies I need are available at all times.2.If an item is out of stock, I receive it within the necessary timeframe.3.The supplies I use are located close to where I need them.4.Overall, Im pleased with supplies availability, location, and organization.5.How often do you obtain supplies from your depts official stock locations?__________ times per day6.How often is an item you need out of stock?__________ times per week7.What improvements would you like to see related to the supplies/materials you use?Strongly Disagree (1)
33. 33. Pre-Improvement Staff Survey 10.09.08.07.06.01 = Strongly Disagree 4 = Disagree 7 = Agree 10 = Strongly Agree22.7% of the time Items not available5.04.03.02.01.00.0 The supplies I need are If an item is out of stock, I The supplies I need are located Overall, I'm pleased with available at all times? Question receive the item within the cloes to where I need them? supplies availability, location, 1 necessary timeframe? Question Question 3 and organization? Question 4 2 2010 Karen Martin & Associates33
34. 34. Preparing for Improvement (continued)Form cross-functional team Consumers (include frontline reps) Replenishers (Purchasing? Admin? Materials?) Inventory owners Supplier rep?Establish sort area Gather cleaning and organization supplies 2010 Karen Martin & Associates34
35. 35. PDCA CyclePlanAct 2010 Karen Martin & AssociatesDoCheck 35
36. 36. Step 1 - Sort Determine items truly needed. Label items (if categories). Red get rid of Return for credit, if possibleYellow keep, but move location Includes overstock that youll draw from until consumedGreen keep where isGain consensus on dispositioned items. 2010 Karen Martin & Associates36
37. 37. Step 2 Set in Order Determine where each item will be stored. Considerations: Central storage vs. point-of-use stores vs. both. Ergonomics. Store related items together. Error-proof items easily confused by using color, signage, etc. 2010 Karen Martin & Associates37
38. 38. Step 3 Shine Done in conjunction with Step 2. 2010 Karen Martin & Associates38
39. 39. Step 4 - Standardize Install kanban. Label bins Place items in bins, based on quantities calculated Arrange as relevant; add cards as relevant Store excess material away from supply area; consume before additional orders are placed. Labels storage areas, if neededDesign standard work for ordering, receiving, kanban use, etc. Install visuals / standard work aids. Train staff. 2010 Karen Martin & Associates39
40. 40. Color-Coded Two-Bin Kanban System Blue & Red Bins Regular Stock Managed by Central Materials DepartmentYellow Bins Special OrdersManaged by Functional DepartmentStandard Work Kanban Procedures
41. 41. PDCA CyclePlanAct 2010 Karen Martin & AssociatesDoCheck 41
42. 42. Step 5 - Sustain Determine clear ownership. Monitor frequently at first; reduce as stabilization occurs. Adjust as needed. Gather post-improvement data. Re-survey staff a month or two after installation. Communicate results. 2010 Karen Martin & Associates42
43. 43. Pre & Post Audit Results 5 4.5 4 3.5 3 2.5 2 Before 1.5After1 0.5 0 2010 Karen Martin & Associates43
44. 44. Kanban Success Story Before 56% in office supply budget over 2 yrs w/ no additional staffing Printer cartridges = 50% of the budget 128 cartridges on hand; 564 used annually $18,732 inventory; $8,000 of obsolete cartridgesAfter Working to carrying $5,000 max inventory at a time Freed 32 sq. ft of space Happy staff, happy leadership Standardized ordering process Working to reduce printer types; will reduce inventory further44
45. 45. The Sales Aspect If people dont see a problem, they wont be motivated to change. Highlight the problem use data! Put the problem into context Explain why the problems a problemShow them the organizational and personal benefits of a change (WIIFM?) Engage them in the solution Teach about two-bin systems Have them participate in creating and managing it 2010 Karen Martin & Associates45
46. 46. Learning Objectives Participants will learn: What a kanban system is. The difference between kanban and FIFO lanes. How kanban-managed supply systems benefit organizations. The step-by-step process for implementing a simple two-bin kanban systems. The role of 5S in establishing a kanban system. 2010 Karen Martin & Associates46
47. 47. Upcoming Webinars TopicWork Standardization & MetricsBased Process Mapping Error-Proofing Kaizen Events Part I Kaizen Events Part II A3 Problem-Solving Part I A3 Problem-Solving Part IIDateTuesday, August 10 Thursday, August 12Tuesday, August 31 Thursday, September 2 Tuesday, September 28 Thursday, September 30Register at www.ksmartin.com/webinars47
48. 48. For Further QuestionsKaren Martin, Principal 7770 Regents Road #635 San Diego, CA 92122 858.677.6799 ksm@ksmartin.com To register for our newsletter: www.ksmartin.com/subscribe 2010 Karen Martin & Associates48