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Chapter 9Inventory Kanbans
Automating the Replenishment Cycle
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A consumption based trigger to start a specific amount of product. The consumption point is always down-stream from the producing point.
An inventory strategy used to insure that production keeps a consistent amount of parts available for use in production.
What is a Kanban?
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A Japanese word that means signboard or signal
Are signals developed to automate the inventory replenishment cycle for items used repetitively in a facility
Communicates to the supplier the need for additional material
Integral in a “pull” manufacturing system Introduced by Taiichi Ohno to the TPS after
seeing the American supermarkets in the early 1950’s
Kanban
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An empty container designed to hold a standard quantity of material or parts
The container is sent back to the supplier from the customer when empty
If returnable containers are not used, a kanban can be as simple as a laminated card
Typical Kanban Signal
Supermarket pull
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The signal will contain information such as:◦ Part number◦ Description◦ Replenishment quantity◦ Replenishment time◦ Customer (drop off location)◦ Routing number◦ Where used
Kanban Signal
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are:◦ communication devices from the point of use to
the previous operation.◦ signals to either internal or external suppliers to
supply the next operation. purchase orders to your suppliers. work orders for your manufacturing area.
◦ Used to control the flow of all products.◦ Visual communication tools.◦ Paperwork eliminators.◦ Inventory management reducers.
Kanbans
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Create inventory management as part of the process
Reinforce the need for “quality at the source”
Empower the work cell to manage its suppliers and inventory networks
Kanbans
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Are not appropriate for:◦ Single piece or lot production◦ Safety stock◦ Systems which push inventory carrying
requirements and the associated carrying costs back to the supplier
◦ Long range planning tools when changes in part number or quantity are expected.
For non-repetitive or when new products are expected, traditional production planners are needed.
Kanbans
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Eliminate◦ Over-production*◦ The need for a stockroom◦ The need to reissue purchase orders◦ Large variations in customer demand seen from
upstream processes Reduce:
◦ The data management task for production planning◦ Work orders◦ Inventory*◦ Parts expediting◦ Part shortages◦ Material handling
Kanbans Reduce Waste
*Kanbans create a desired level of inventory, which may be a reduced level from the current state
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Rule #1: Do not attempt to kanban a part number without the complete involvement of all the members of the value adding chain, including your suppliers.
Rule #2: Quality at the source. Do not send defective parts to your customers. Defects must be corrected immediately! Defective parts will cause your customer’s line to shut down!
Kanban Rules
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Setup Reduction◦ Long lead times reduce the power of kanbans and
creates long replenishment cycles, increasing the amount of in-process inventory
TPM◦ Machine downtime reduces the power of kanbans and
creates long replenishment cycles, increasing the amount of in-process inventory
Level production demand◦ Replenishment time is part of the equation, if it varies
greatly, then replenishment will be off by that amount Certified suppliers and certified product
Kanban Prerequisites
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Rule #3: Kanbans require reliable equipment for support. Implement kanbans internally in areas where TPM is in place.
Rule #4: Focus kanbans on products and part numbers with stable delivery requirements and short setup and lead times. Concentrate setup reduction and raw material lead time reduction efforts on the parts which have wide variations in customer requirements.
Kanban Rules
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Kanban CategoriesProduction kanban “One-per-customer” kanban Used when supplying process can
produce as little as one container Part of one piece flow
Signal kanban “One-per-batch” kanban Signals when a reorder point is reached
and another batch needs to be produced Used when supplying process
changeovers are required
Withdrawal kanban “Shopping list” kanban Instructs the material handler to get and
transfer parts
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Cards attached to portable containers Light signal Exchange of containers Supplier replaceable cards on boxes designed to
hold a standard quantity Empty space - a painted spot or border on the floor
around the standardized container Purchase orders Color coded striped golf balls E-mails, phone call, fax, carrier pigeon Scanned bar code labels – electronic kanban Variations of the above
etc., etc,. etc
Types of Kanban Pull Signals
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Kanban Examples
Light signal
To request a new delivery
Kanban card
KANBAN
Full bin usage as the trigger
Kanban spaceMin/max indicators
Container Exchange
The empty container signals a need for replenishment
Kanban Examples
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2731 8540122
Computer and bar codes
The Customer consumes
The Supplier replaces
The Supermarket
Kanban Examples
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Rule #5: Suppliers should deliver all material directly to their customer (point of use). For suppliers who are not certified, and therefore require incoming material inspection, the point of use area should eventually be taught to perform this inspection or the supplier should be replaced with a certified supplier.
Rule #6: Use the parts only as required, and return the kanban to your supplier immediately. Deliver the empty container directly if your supplier is within your facility. If your supplier is external, an area in the plant should be designated for empty kanban container pickup by your supplier. A system must be developed so that all external suppliers pick up their containers promptly.
Kanban Rules
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Rule #7: Do not produce more parts than you have kanbans for, and produce the parts in the order the kanbans were received.
Rule #8: All internal and external suppliers must have, or should be helped to develop, setup reduction programs. The true power of kanbans can be unleashed only when setup times do not influence manufacturing capacity and, therefore, lead time.
Kanban Rules
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Step #1: Pick the part number(s)◦ Should be frequently produced part numbers◦ Should have fairly level demand rates◦ Get everyone involved with the “why” of kanbans◦ Get everyone involved with the “how” of kanbans
Kanban Development
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Step #2: Calculate the quantity to be kanbaned
Generic equationKanban quantity = (A) * (B) * (C) * (D)Where (A) is weekly park usageWhere (B) is supplier lead time in weeksWhere (C) number of locationsWhere (D) is smoothing factor
Kanban Development
Kanban equations vary – it is just an estimate http://www.resourcesystemsconsulting.com/blog/kanban-calculation/
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Formula for calculating number of units per kanban container:
D = Average daily demand of the productSF = Safety factor (typically 10%)KCT = Kanban Cycle Time* (replenishment time once a signal has been received)
*KCT should be in expressed in daysC = Number of Kanban containers
D x (1 + SF) x KCTC
K=
Kanban Sizing
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Consider a part with the following to determinethe number of units per Kanban container:
Average daily demand = 2 unitsSafety factor = 10 %Kanban cycle time= 10 daysKanban containers = 12
2 x (1 + .10) x 10
12= 1.83 2 units per
Container
Round Up
Kanban Sizing Example
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Step #3: Pick the type of signal and container which holds a standard quantity.◦ The container should be sized for quantity as an
aid to visual identification.
Kanban Development
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Step #4: Calculate the number of containers.◦ The container should be sized for quantity and as
an aid to visual identification.
◦ Generic equation
Kanban Development
Kanban Quanitity# of containers:
# of pieces held per containers
Formula for calculating number ofkanbans (signal = full container):
D = Average daily demand of the productSF = Safety factor (typically 10%)KCT = Kanban Cycle Time* (replenishment time once signal has
been received) *KCT should be expressed in days, consider hours per shift, assume 24 hrs/day unless otherwise statedK = Kanban size (number of units per container)
D x (1 + SF) x KCTK
C =
Number of Kanban Containers
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Formula for calculating number ofkanbans (signal = empty container):
D = Average daily demand of the productSF = Safety factor (typically 10%)KCT = Kanban Cycle Time* (replenishment time once signal has
been received) *KCT should be expressed in days, consider hours per shift, assume 24 hrs/day unless otherwise statedK = Kanban size (number of units per container)
D x (1 + SF) x KCTK
C = + 1
Number of Kanban Containers
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Three products are built on a mixed model flow line. Product Xhas a total demand of 50 per day. Product Y has a total demandof 40 per day. Product Z has a demand of 10 per day. Each product uses one component part W at the same supermarket location. When Part W reaches its reorder point (empty container), the Kanban cycle time is 15 hours. The supply process runs 24 hours per day. Part W is replenished in a container of 10 pieces. Safety factor equals 10%.
How many kanban containers are required for Part W?
Consider a part with the following information to determine the number of Kanban containers required:
No. of Kanban Containers Example
Average daily demand = 50 + 40 + 10 = 100 pieces
Safety factor = 10% Kanban cycle time= 15 hours / 24 hours per
day = .625 days Kanban container size= 10 pieces Kanban signal = empty container
100 x (1 + .10) x .625
10+ 1 = 7.875 8 Kanban
Containers
Round Up
No. of Kanban Containers Solution
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Keep in mind that the suggested container size and quantity are a starting point for setting up kanbans
Always consider◦ Material cost◦ Lead time◦ Floor space limitations◦ Package size/ qty (i.e. order qty from suppliers)◦ Replenishment reliability◦ Practical experience
Considerations
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Represents a special case of kanban Lot size/quantity is one
Benefits Minimizes waste in the process Defects affect only one component thus creating
highest possible quality Minimizes inventory and space requirements Keeps pace with customer demand Efficiently utilizes labor in a balanced process Best possible throughput in a balanced process
One Piece Flow
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Kanbans tie related processes together as if they were connected by an invisible conveyor. Kanbans:◦ Improve communication◦ Make inventory and its management visible◦ Improve customer satisfaction◦ Reduce inventories◦ Reduce waste
Summary
Rule #9: Kanbans are not cast in cement – some experimentation is required. Be prepared to make adjustments initially as sales levels change, or as other improvement activities reduce the required number of containers or kanban cards.