14 Kanban Process

Lean Six Sigma Operational - Delegate Workbook
SSG06101ENUKMS Kanban//Issue 1.1/April 2008 1 The British Standards Institution 2008

Define
Pull Systems and the Use of
Kanbans
2
SSG06101ENUKMS Delegate Slides/Issue 1.1/ April 2008
Learning Objectives
At the end of the course delegates will be able to:
Remember the key Principles of Lean and some of the key
terms used
Understand the concept of Flow in a lean system, its
importance and how a Pull system facilitates flow
Understand the concept of Kanban and how it can be
applied to a process
Understand the advantages a Kanban gives and how a
simple Kanban system can be initiated
3
Agenda
The Lean Principles
Maintaining Flow and the Use of Pull Systems
The Concept of a Kanban System
Implementation and using Kanban
Other Kanban related techniques
4
The Five Principles of Lean
Value is always defined from the customers perspective
The Value Stream (and component activities) needed to
take a product (or service) from customer request to
completed delivery needs to be identified
Production or service activity should Flow through the
value stream without any delays
Pull scheduling so that product is made or a service is
provided only when the customer wants it is optimum
All forms of Waste should be continuously eliminated from
any process
5
Review of Definitions
Value & The Value Stream value is quite simply the worth placed
on something by the customer, usually in terms of money, ie would they
pay if they knew we were doing this?..., whilst the value stream is the
sequence of steps (process) required to produce the product or service (or
in other words value) being provided
Flow & Pull Systems flow describes the (hopefully ) continuous
movement of products, services or knowledge through a process thereby
creating customer value., with a pull system it is the end customer who
dictates the process speed, pulling their requirements through the value
stream as and when required.
Waste anything that does not add value in the process when viewed
from the customers perspective (typically broken in to 7 categories;
transport, inventory, motion, waiting, overproduction, overprocessing and
defects)
6
Maintaining Flow
When you turn on a tap at home what do you expect?
A clean consistent flow of water that is safe to drink, is not limited in quantity
and is available when needed
Thats Flow!
If the water suppliers water filter or a pump breaks, thereby interrupting
supply, as a consumer we are not happy and very much treat it as someone
elses problem (our suppliers!). Also what would happen if we couldnt turn
the tap off?!?
7
Flow in the World of Lean
In Lean the idea of flow is applied to everything we do, including the design,
production and delivery of discrete products and services
Ideally from customer request to product or service delivery the item moves
continually through a series of value added steps unhindered and uninterrupted
But is the above possible and if so what would it entail?
Answer:
One item at a time processing or single piece flow
No excess inventory or batch sizes greater than one item
No defects or rework loops
No equipment breakdowns or stoppages
Is the above possible in its entirety? Maybe not, but the closer we get the leaner we
are
8
Pull Systems and Kanban
Operation 2
Operation 1
Pull Units Demand Signal
PUSH
Pulling enables control of processes to be better with a reduction in inventory
PULL
When you to try to pull a length of rope what happens?
Uneven
pockets of
inventory
Operation 2
Operation 1
Operation 2
Operation 1
PUSH
Pulling enables control of processes to be better with a reduction in inventory
PULL
When you to try to pull a length of rope what happens?
Uneven
pockets of
inventory
9
The Push System Mentality
I dont know how many he
will order, so I make and I
keep a stock. Just in case
(Waste for the Supplier)
I dont take any risk of running
out, as you never know.....!! Do
you? (Waste for the Customer)
I dont know how many he
will order, so I make and I
keep a stock. Just in case
(Waste for the Supplier)
I dont take any risk of running
out, as you never know.....!! Do
you? (Waste for the Customer)
10
and its Attributes
Traditional Batch System Production or Service Delivery might be
likened to a meandering stream with a number of stagnant pools of
differing sizes). Recognise any of the following:
Remote production scheduling with constant rescheduling
A functional layout to the process, where the flow of activity if ever
mapped (production or service) takes on a boiled spaghetti like
appearance
Outputs of the process are pushed on to customer (or next activity)
to maximise equipment or labour usage
High levels of inventory, large batch sizes and many perceived
bottlenecks
Waste and non-value add within the process not recognised
(utilisation figures tend to dominate)
11
and some more
Control culture where the manager is king
Inflexible and reactive quality control and inspection ethos
Low performance (often hidden) in cost, quality and delivery
performance as a result of inconsistent and unpredictable
processes
Poor (if any) housekeeping and little skills and employee
development in place
Firefighting or sticking plaster mentality where people are
working hard (just to stand still)
Often secretive filtered communication in place
12
The Pull System Mentality
I know what he wants and when he
wants it and thats what I supply
(Minimised waste for the Supplier)
If I can rely on my supplier, why do
I need a safety net and excess
stock? (Minimised waste for the
Customer)
Kanban a simple way to circulate information between
customer and supplier (internal or external) and to
synchronise production to consumption
Order 2
Order 2
The Customer/Supplier Contract - the customer expresses his need to the
supplier according to his consumption., whilst the supplier does not produce or
deliver to the customer until a signal is received for a specified need
Customer)
Order 2
Order 2
Customer)
Order 2
Order 2
Customer)
Order 2 Order 2
Order 2 Order 2
The Customer/Supplier Contract - the customer expresses his need to the
supplier according to his consumption., whilst the supplier does not produce or
deliver to the customer until a signal is received for a specified need
13
and its Attributes
Continuous Flow or Lean Production or Service Delivery might
be thought of as a pipeline with rapid flowing water running
through it
Demand & consumption driven process with pull occurring from
the point of use
Transparent and visible (easily understood) processes with
unidirectional flow
Closely linked process stages, wherein an activities requirements
are delivered Just in Time (JIT) to point of use
Utilisation of equipment is based on process time, not
maximisation
Single piece flow potentially achievable
14
and some more
Self managed team and empowered workers manage the process
Elimination of waste and non value add driven culture
Appropriate cell design for process undertaken
Proactive quality assurance culture, demanding robust processes,
standardised practices and good housekeeping
Team development and skill mapping thought to be key
Real time, simultaneous information leading to transparency for all
Which system would you prefer?
15
Do the Pull Systems only apply in
Manufacturing?
Lets (in pairs) think about some of the processes that occur in
your business and try and identify where you can recognise push
systems in operation.
Inventory, waiting and queues (usually associated with a
bottleneck) are obvious pointers.
You can include paperwork and electronic processes (think pile of
paperwork, e-mail inbox!), processes that transfer knowledge and
information, as well as delivery processes can suffer.
Its not therefore all about processes that produce a tangible good.
16
So a Kanban - What is it? - A
Definition
The purpose of a Kanban is to act as an indicator for stock control and
replenishment based on preset, fixed re-order quantities and levels (for
anything you care to use the system for)
The physical manifestation of a Kanban (meaning signal) could be many
things a bin, pallet or container. In some cases a token, fax or some sort of
electronic signal is used
As a short-term demand driven procurement execution tool the strength of
Kanban lies in its simplicity and so it should not be onerous to implement
The kanban card placed in
the stack indicates
replenishment is needed at
that point
Re-order
Quantity
The kanban card placed in
the stack indicates
replenishment is needed at
that point
Re-order
Quantity
17
What a Kanban isnt!
A Kanban is not a complex and highly intelligent solution as its
very strength lies in its simplicity
A Kanban system should not prove difficult to implement and
demand huge additional resource (if any)
Implementing a Kanban system will not solve all of the
problems associated with a process, but it should help flow and
reduce waste
A Kanban is not a forecasting tool (as used in Push systems),
but a demand driven execution tool
Although heavily implemented in the East it is not a Japanese
or Oriental creation, nor should it be viewed as novel, new or
flavour of the month (Supermarkets have used it for years!)
18
The Kanban System and One Piece
Flow
In a perfect world, one-piece flow (or having a batch size of one) is
optimum as it reduces inventory to the absolute minimum
It is demand driven and is facilitated by the introduction of a pull
system, which can in the longer term elevate the responsiveness,
flexibility and built-in quality of the process
Where one-piece flow is not possible Kanbans can be used to pull
the correct amount of units at the right time
Continuous improvement (and removal of waste) suggests that
there should be a continual goal to reduce inventory and therefore
batch/Kanban size towards the point that one-piece flow is
achieved
19
Advantages of using a Kanban
System
Greater customer satisfaction as they receive from their
supplier exactly what is needed according to their
consumption
Acts as an of inventory threshold (max/min) and helps
develop a fail safe supply chain with less stock outs that is
tuned to Takt Time
Frees up space for value add activities (stock levels are in
the current minimum required quantities)
Simplifies stocktaking, reducing the amount of labour
needed
20
and some more
Simplifies logistics as a fixed lot size tied to the re-
order quantity allows for an order diary
Aids production predictability and allows for better
usage of SMED techniques and reliability (of
machines) planning and improvement
Reduces administration and can facilitate a move
to paperless commerce eg a 2 bin system with
the empty box as the order, taken direct from
point of use
21
Using a simple Kanban System (1)
Step 1 Operator takes from the
nearest (pick side) container
until it is empty (two-bin
method where the empty bin
acts as a signal)
Pick
side
Load
side
Step 2 The empty container is moved to the
empty container returns area
Empty bin
returns area
Step 3 The operator
pulls the full (load
side) container into
the nearest location
and continues to pick
from that
Pick side Load
side
Empty Full
Empty Full
Empty
Full Full
Step 4 A full container, taken from the
pick side of the feeder store is placed
on the load side at the point of use
lllll lllll
Pick side Load side
Full
Step 1 Operator takes from the
nearest (pick side) container
until it is empty (two-bin
method where the empty bin
acts as a signal)
Pick
side
Load
side
Step 2 The empty container is moved to the
empty container returns area
Empty bin
returns area
Step 3 The operator
pulls the full (load
side) container into
the nearest location
and continues to pick
from that
Pick side Load
side
Empty Empty Full Full
Empty Empty Full Full
Empty Empty
Full Full Full Full
Step 4 A full container, taken from the
pick side of the feeder store is placed
on the load side at the point of use
lllll lllll
Pick side Load side
Full Full
22
Using a simple Kanban System (2)
Pick side Load side
Step 5 When the pick side of the
feeder store is empty the load side is
pulled across
lllll lllll
Step 6 A new order, sent
electronically to the supplier or
agent, is then triggered by swiping
the bar code (a Kanban-card
method that uses an e -card)
lllll lllll
Pick side Load side
Big Parts Ltd.
Step 7 The replacement Kanban is
delivered and placed in the feeder
store on the load side
lllll lllll
Pick side Load side
Big Parts Ltd.
Big Parts Ltd.
Pick side Load side
Step 5 When the pick side of the
feeder store is empty the load side is
pulled across
lllll lllll
Step 6 A new order, sent
electronically to the supplier or
agent, is then triggered by swiping
the bar code (a Kanban-card
method that uses an e -card)
lllll lllll
Pick side Load side
Big Parts Ltd. Big Parts Ltd.
delivered and placed in the feeder
store on the load side
lllll lllll
Pick side Load side
23
Developing a Kanban System
Identify as product
unit/ service type
numbers
Identify as product
unit/ service type
numbers
START
START
A. Identify the
supplier or location
for each unit
number / service
step
A. Identify the
for each unit
number / service
step
B. Carry out the
RRS/usage profile
analysis and select
the key unit /
service step
numbers for the
Kanban pilot
B. Carry out the
RRS/usage profile
analysis and select
the key unit /
service step
numbers for the
Kanban pilot
C. Ascertain the
delivery lead time
and the suppliers /
providers and EOQ
/EPQ for each
selected unit /
service type number
C. Ascertain the
delivery lead time
and the suppliers /
providers and EOQ
/EPQ for each
selected unit /
service type number
D. Determine the
ROP and ROQ for
each unit number /
service step and
weeks / days of
cover
D. Determine the
ROP and ROQ for
each unit number /
service step and
weeks / days of
cover
E. Develop the future
process and
procedure, layout
and flow and carry
out risk analysis
process and
procedure, layout
and flow and carry
out risk analysis
F. Train internal
personnel and
consult/train the
relevant suppliers
F. Train internal
personnel and
consult/train the
relevant suppliers
G. Implement and
monitor
performance
G. Implement and
monitor
performance
First some Definitions: RRS Runners (frequent demand), Repeaters (regular demand) and
Strangers (rare demand), EOQ - Economic Order quantity, EPQ Economic Processing
Quantity (for a service), ROP/ROQ - Re-Order Point and Quantities
Identify as product
unit/ service type
numbers
Identify as product
unit/ service type
numbers
START
START
A. Identify the
for each unit
number / service
step
A. Identify the
for each unit
number / service
step
B. Carry out the
RRS/usage profile
analysis and select
the key unit /
service step
numbers for the
Kanban pilot
B. Carry out the
RRS/usage profile
analysis and select
the key unit /
service step
numbers for the
Kanban pilot
C. Ascertain the
delivery lead time
and the suppliers /
providers and EOQ
/EPQ for each
selected unit /
service type number
C. Ascertain the
delivery lead time
and the suppliers /
providers and EOQ
/EPQ for each
selected unit /
service type number
D. Determine the
ROP and ROQ for
each unit number /
service step and
weeks / days of
cover
D. Determine the
ROP and ROQ for
each unit number /
service step and
weeks / days of
cover
process and
procedure, layout
and flow and carry
out risk analysis
process and
procedure, layout
and flow and carry
out risk analysis
F. Train internal
personnel and
consult/train the
relevant suppliers
F. Train internal
personnel and
consult/train the
relevant suppliers
G. Implement and
monitor
performance
G. Implement and
monitor
performance
First some Definitions: RRS Runners (frequent demand), Repeaters (regular demand) and
Strangers (rare demand), EOQ - Economic Order quantity, EPQ Economic Processing
Quantity (for a service), ROP/ROQ - Re-Order Point and Quantities
24
Kanban Rule 1
The downstream
process pulls the
required units
from the upstream
Process in the
agreed quantities
at the appropriate
point in time.
Part: a
1 box
Part: a
1 box
Part: a
1 box
The card says 1 box,
so the others stay here.
Part: a
1 box
receiving
25
Kanban Rule 2
The upstream
process produces
or delivers items
only in the
quantities
withdrawn by the
downstream
process. This
is indicated by the
number of Kanban
cards in their
receiving tray).
There is one more kanban card here, so
I need to make one box more
receiving
Part: a
1 box
Part: a
1 box
There is one more kanban card here, so
receiving
Part: a
1 box
Part: a
1 box
There is one more Kanban card here, so
receiving
Part: a
1 box
Part: a
1 box
26
Kanban Rule 3
Nothing is transported or
produced without a Kanban
demand signal. This helps
in preventing
overproduction and
excessive stocks and / or
movement of goods. Note
Kanban can be used to
regulate delivery & flow or
whether an actual VA
operation takes place.
receiving
Part: a
1 box
Part: a
1 box
There are no more cards, so I
need to stop producing.
27
Kanban Rule 4
Kanban cards
always
accompany the
items
themselves as
they also serve
as an
identification
tag authorising
the need for the
items.
Part: a
1 box
Part: a
1 box
Part: a
1 box
Part: a
1 box
receiving
This is the correct
box of parts according
to the information on
the withdraw Kanban
card
28
Kanban Rule 5
This units defective.
It needs to be fixed
before
it moves on.
Part: a
1 box
Part: a
1 box
P
a
rt: A
1
b
o
x
Defectives are
never passed on
to the
downstream
process and
every item must
be of an
acceptable
quality.
29
Kanban Rule 6
The Kanban
batch size and
number of
Kanbans should
be minimised
where possible,
thereby reducing
total throughput
time and the cost
of inventory.
Part: a
1 box
Part: a
1 box
Part: a
1 box
Part: a
1 box
Reduced Kanban size
means less inventory
and quicker throughput times!
Part: a
1 box
receiving
Part: a
1 box
Part: a
1 box
Part: a
1 box
Part: a
1 box
Part: a
1 box
Part: a
1 box
Reduced Kanban size
Part: a
1 box
receiving
Part: a
1 box
Part: a
1 box
Part: a
1 box Part: a
1 box
Part: a
1 box
Part: a
1 box
Part: a
1 box
Reduced Kanban size
Part: a
1 box
receiving
Part: a
1 box
Part: a
1 box
Part: a
1 box
Part: a
1 box
Part: a
1 box
Reduced Kanban size
Part: a
1 box
receiving
Part: a
1 box Part: a
1 box
Part: a
1 box Part: a
1 box
30
Typical Information on a Kanban
Card
A Kanban card, which acts as a signal, is a
communication device and therefore holds
some key information about the item involved
and supplier & customer.
The number of items in the
container
Item Reference Number
The Supplier & Customer
The number of the card
(alphanumeric & barcode)
The number of items in the
container
Item Reference Number
The Supplier & Customer
The number of the card
(alphanumeric & barcode)
31
How will Kanban Batch Size be
Calculated?
The demand profile for each unit or service element is investigated taking
account of historical needs and/or future forecasts of requirements
A weekly or monthly demand profile is created, which must include any fall
out due to poor quality (as a contingency)
In the case of a product each container will hold a certain period of stock.
Multiple containers, or a number of Kanbans (each with a card), will
potentially hold days or weeks of stock when full
In a service environment we may think of number of items that can or are
handled economically and in good time in a process step as stock for that
step to process
In a product driven environment an interim target for a stock level of
between 6-7 weeks is not unusual, giving a stock turn of Kanban items of 7
to 8 weeks typically
Note: You will never get Kanban sizing exactly right.Its a balancing act between keeping your
stocks low and never letting your customers down. But you can tackle and refine it gradually - Peter
Varnsverry
32
Calculating the Number of
Kanbans Needed
Kanban size typically refers to the number of items associated with each
Kanban (affected by process type, EOQ and logistics).
The number of Kanbans (or cards) needed has to be calculated.
Although over time this number should be reduced leading to a reduction in
inventory. The calculation is:
Number Required is equal to:
(Average Demand per Unit Time) x Total Supply Time (Order to Delivery) x 1-Buffer Time (always
<10%)
Container Capacity (not more than 10 % of average demand)
Note the demand can be given as hourly, daily, weekly or monthly depending on needs
33
How is a Kanbans Performance
Measured?
Some examples are given below:
Number of stock outs over a given period.
Number Kanban demands triggered over a particular time
period: This will give a measure of a Kanbans logistical
accuracy ie ROP, ROQ and Safety Stock and any changing
market demand in terms of RRS.
Supplier Response Time or Total Supply Time: The total
time from when the demand was sent until the receipt of the
total quantity of the requirement. Agreed prior to system
launch in order to calculate the number of Kanban cards.
The level of quality typically achieved, eg, ppm, yield, sigma
level.
34
Use of a Kanban Schedule Board
When Kanban cards are received from
customers they are put in the slots
from top to bottom
Each column & number represents a
different item that will be required (in
multi-item scenarios, level scheduling
or Heijunka (a little of everything every
day) is applied
The Green & Red Zones give the
number of Kanbans that are held,
whilst the Red Zone signifies when an
item is almost out of stock (safety
zone) and should be prioritised
The board allows the real consumption
of the customer to become clearly
evident as it does the amount of Work
in Progress (WIP)
2 1 3 4
35
Use of a Supermarket to
Control Inventory
The board can be replaced by a
supermarket where process
constraints prohibit continuous flow
(eg where one supplier services
many value streams)
The supermarket is owned by the
supplier and acts like a corner shop
grocery in that every item has a
fixed location and amount.
The Kanban signal is effectively
when the customer makes a
purchase suggesting upstream
replenishment should be started
Supermarkets should be carefully
located to minimise transport waste
Strict policing of locations and
quantities of stock held are
maintained
36
Summary
One piece flow is demand driven (pull system), and uses batch
sizes of one versus a forecast and plan oriented production system
(push system) that uses larger batch sizes
From a Lean viewpoint one-piece flow is optimal as inventory is
reduced as is cycle time
One piece flow is not always possible, in which case a Kanban
system should be considered
Differing types of Kanbans exist, for example some trigger an
operation (production) and others trigger the movement of stock
(flow)
In Lean the goal is always to reduce inventory by reducing number
of Kanbans

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SSG06101ENUKMS Kanban//Issue 1.1/April 2008 1 The British Standards Institution 2008

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