Presentation on theme: "Inventory Kanbans Automating the Replenishment Cycle"— Presentation transcript:
1 Inventory Kanbans Automating the Replenishment Cycle Chapter 9Inventory KanbansAutomating the Replenishment Cycle
2 What is a Kanban?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.
3 Kanban A Japanese word that means signboard or signal Are signals developed to automate the inventory replenishment cycle for items used repetitively in a facilityCommunicates to the supplier the need for additional materialIntegral in a “pull” manufacturing systemIntroduced by Taiichi Ohno to the TPS after seeing the American supermarkets in the early 1950’s
4 Typical Kanban SignalAn empty container designed to hold a standard quantity of material or partsThe container is sent back to the supplier from the customer when emptyIf returnable containers are not used, a kanban can be as simple as a laminated cardSupermarket pull
5 Kanban Signal The signal will contain information such as: Part number DescriptionReplenishment quantityReplenishment timeCustomer (drop off location)Routing numberWhere used
6 Kanbansare: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.
7 Kanbans 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
8 Kanbans Are not appropriate for: Single piece or lot production Safety stockSystems which push inventory carrying requirements and the associated carrying costs back to the supplierLong 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.
9 Kanbans Reduce Waste Eliminate Reduce: Over-production* The need for a stockroomThe need to reissue purchase ordersLarge variations in customer demand seen from upstream processesReduce:The data management task for production planningWork ordersInventory*Parts expeditingPart shortagesMaterial handling*Kanbans create a desired level of inventory, which may be a reduced level from the current state
10 Kanban RulesRule #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!
11 Kanban Prerequisites Setup Reduction TPM Level production demand Long lead times reduce the power of kanbans and creates long replenishment cycles, increasing the amount of in-process inventoryTPMMachine downtime reduces the power of kanbans and creates long replenishment cycles, increasing the amount of in-process inventoryLevel production demandReplenishment time is part of the equation, if it varies greatly, then replenishment will be off by that amountCertified suppliers and certified product
12 Kanban RulesRule #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.
13 Kanban Categories Production kanban “One-per-customer” kanban Used when supplying process can produce as little as one containerPart of one piece flowSignal kanban“One-per-batch” kanbanSignals when a reorder point is reached and another batch needs to be producedUsed when supplying process changeovers are requiredWithdrawal kanban“Shopping list” kanbanInstructs the material handler to get and transfer parts
14 Types of Kanban Pull Signals Cards attached to portable containersLight signalExchange of containersSupplier replaceable cards on boxes designed to hold a standard quantityEmpty space - a painted spot or border on the floor around the standardized containerPurchase ordersColor coded striped golf ballss, phone call, fax, carrier pigeonScanned bar code labels – electronic kanbanVariations of the aboveetc., etc,. etc
15 Full bin usage as the trigger Kanban ExamplesTo request a newdeliveryKanban cardKANBANLight signalFull bin usage as the trigger
16 Kanban Examples Container Exchange Kanban space Min/max indicators The empty container signalsa need for replenishmentKanban spaceMin/max indicators
17 Kanban Examples The Supermarket Computer and bar codes The Customer consumesThe Supplier replacesThe SupermarketComputer and barcodes
18 Kanban RulesRule #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.
19 Kanban RulesRule #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.
20 Kanban Development Step #1: Pick the part number(s) Should be frequently produced part numbersShould have fairly level demand ratesGet everyone involved with the “why” of kanbansGet everyone involved with the “how” of kanbans
21 Kanban Development 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 factorKanban equations vary – it is just an estimate
22 Kanban SizingFormula for calculating number of units per kanban container:D x (1 + SF) x KCTCK=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 containersUpdate and simplify to one slide.Put calculations on web.
23 Kanban Sizing Example = 1.83 2 units per Container 2 x (1 + .10) x 10 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 = 122 x ( ) x 10Round Up= 1.832 units perContainer12
24 Kanban DevelopmentStep #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.
25 Kanban Development Step #4: Calculate the number of containers. The container should be sized for quantity and as an aid to visual identification.Generic equation
26 Number of Kanban Containers Formula for calculating number ofkanbans (signal = full container):D x (1 + SF) x KCTKC =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)
27 Number of Kanban Containers Formula for calculating number ofkanbans (signal = empty container):D x (1 + SF) x KCTC =+ 1KD = 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)
28 No. of Kanban Containers Example Consider a part with the following information to determine the number of Kanban containers required: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 containersare required for Part W?
29 No. of Kanban Containers Solution Average daily demand = = piecesSafety factor = 10%Kanban cycle time= 15 hours / 24 hours per day = .625 daysKanban container size= 10 piecesKanban signal = empty containerRound Up100 x ( ) x .6258 KanbanContainers+ 1 = 7.87510
30 ConsiderationsKeep in mind that the suggested container size and quantity are a starting point for setting up kanbansAlways considerMaterial costLead timeFloor space limitationsPackage size/ qty (i.e. order qty from suppliers)Replenishment reliabilityPractical experience
31 One Piece Flow Represents a special case of kanban Lot size/quantity is oneBenefitsMinimizes waste in the processDefects affect only one component thus creating highest possible qualityMinimizes inventory and space requirementsKeeps pace with customer demandEfficiently utilizes labor in a balanced processBest possible throughput in a balanced process
32 SummaryKanbans tie related processes together as if they were connected by an invisible conveyor. Kanbans:Improve communicationMake inventory and its management visibleImprove customer satisfactionReduce inventoriesReduce wasteRule #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.