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Case study benefits of transitioning from manual kanban to e kanban_major medical device mfg_jul11
 

Case study benefits of transitioning from manual kanban to e kanban_major medical device mfg_jul11

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    Case study benefits of transitioning from manual kanban to e kanban_major medical device mfg_jul11 Case study benefits of transitioning from manual kanban to e kanban_major medical device mfg_jul11 Presentation Transcript

    • Case StudyBenefits of Transitioning from Manual Kanban to eKanban Major Medical Device Manufacturer July 2011
    • Building the Business Case for Change – How They Did It Manual Kanban vs. eKanban Process Assessment 1. Created a flowchart (process map) of current state manual kanban processes. 2. Conducted interviews with process subject 1. Draw matter experts (SME’s) and staff to validate the Flowchart current-state process map and gather estimates of current performance characteristics. 6. Build Business Case, 2. Interview SMEs & Obtain Buy-in, Transition Capture Metrics 3. Analyzed the quantitative process performance metrics (i.e. Time, Cost, Resource Utilization, Service Level, etc.) required to support the manual kanban process Rapid 5. Design Process 3. Analyze 4. Identified, categorized and prioritized Future-state Performance & Compare Assessment process/systems improvement opportunities enabled by transition to eKanban. 5. Designed the future-state eKanban process and performed comparative analysis to current state. 4. Capture 6. Established business case, presented findings Improvement and recommendations to management, gained Opportunities buy-in and support, implemented eKanban, audited new current-state and adjusted to achieve optimal performance.
    • Summarization of Benefits –Directly attributable to transition from manual kanban to eKanban People Process SystemResource time reduced by 92% Process time reduced by 92% Implementation of closed-loop, electronic pull-based replenishment systemResource cost reduced by 93% Queue Time Eliminated Extensive use of barcode technologyHeadcount reduced by 50% - Service level increased by 57% Business rules and automatedreassigned to other areas alerts linked to specific workflowsSignificant improvement in buyer Process simplified and automated. Real-time updates on all materialand supplier collaboration Went from 24 steps to 13 steps. replenishment transactionsTransition from reactive to Transition from open to closed- Complete audit trails on allproactive management loop material replenishment material replenishment processes transactionsSingle version of the truth on all Stock-outs eliminated Rapid deployment (90 days w/ERPmaterial replenishment Integration) and sub one year ROItransactions100% adoption by end-users & Inventory trending down - $1M+ Low TCOsuppliers reduction in first six months 3
    • Manual KanbanProcess Analysis 4
    • Manual Kanban Process Observations• Staffing Assumptions – 12 FTE Buyers, Burden Rate $28.00/Hr. – 6 FTE Material Handlers, Burden Rate $15.00/Hr.• Process Observations – Average Manual Kanban Releases = ~400/Week – Kanban releases are 100% manual – Email, fax & phone are the primary means of communication with suppliers – Kanban card prep./management is labor intensive – Manual kanban process is open-loop – Limited capability to collaborate with suppliers – Multiple failure modes throughout process – Limited to no capability to track, measure and report on supplier performance – Reactive vs. proactive management system 5
    • Manual Kanban Process Flow – Complex and Error Prone! Complex Process Steps 1. Process Trigger: KRS Set-up & Management 2. Buyer establishes part classification „K‟, „R‟, „D‟ 3. Buyer calculates bin size 4. Buyer creates Kanban Release Sheet „KRS‟ 5. Buyer forwards „KRS‟ to WH Material Handler 6. Material Handler sets up bin “consumption and signal” 7. Material Handler pull parts from consumption bin 8. Decision: Bin Empty 9. Material Handler Switches Consumption and Signal bin 10. Decision: 2 Bin or ROP 11. Material Handler Faxes to Buyer 12. Material Handler Places original „KRS‟ in Pending Confirmation Bin 13. Material Handler checks for received confirmation fax 14. Supplier Reply in 24 Hrs.? 15. Check due date & qty. 16. Material Handler attaches copy to „KRS‟ and places in Buyer alert bin 17. Material Handler files faxed copy in date slot of date sorter and „KRS‟ in consumption bin 18. Material Handler monitors date sorter 19. Decision: Part arrives on due date? 20. Decision: Parts critical for line? 21. Decision: Parts Qty. and Dock date correct? 22. Material Handler transfers actual qty. and dock date to „KRS‟ 23. Material Handler sends all completed fax copies to Purchasing Support for entry into Supplier performance database 6 24. Process End
    • Manual Kanban Process KPIs –Per Manual Kanban Transaction Key Performance Metrics Process Time per Execution 18.39 Duration 49.36 Service Level 43% Takt 5.63 Arrival Rate Per Minute 0.2 Arrival Rate per Wk - Releases / Week 400.00 Resource Cost $ 7.25 Hours Per Work Period 7.5 Work Periods Per Day 1 Days Per Week 5 Time Units Minutes Time / Cost Per Manual Kanban Execution 7
    • Manual Kanban Resource Time & Cost Analysis –Per Manual Kanban Transaction Resources Probability-Weighted Statistics Process Resource Resource Resource Time Time Cost Buyer 12.25 12.25 $ 5.72 Material Handler 6.14 6.14 $ 1.53 Total 18.39 $ 7.25 Resource Time & Cost Per Manual Kanban Transaction Time Units are in Minutes 8
    • Manual Kanban Resource Time & Cost Analysis –Annualized (250 Production Days / 20,000 Manual Kanban Releases KRS Process - Pre Ultriva Annual Resource Time & Cost Analysis Planning Period 250.00 Days Time in Planning Period 112,500.00 Mins Demand Node Number of Items KRS Set-up & Management 20,000.00 Resource Productivity Factor Available FTEs Available Time Required Time Cost Buyer 0.75 12.00 1,350,000.00 Mins 237,777.78 Mins $ 110,962.96 Material Handler 0.75 6.00 675,000.00 Mins 163,651.11 Mins $ 40,912.78 Total 2,025,000.00 Mins 401,428.89 Mins $ 151,875.74 Annual Resource Time & Cost Analysis to Support Manual Kanban 9
    • Manual Kanban VA/NVA Analysis Process Key: White = VA Tasks Red = NVA Tasks Yellow = Failure Modes & Proposed Solutions 10
    • Manual Kanban Failure Modes & eKanban Solutions KRS Failure Modes eKanban Solutions ~1 – 3% of the time the Material Handler Ultriva’s Collaborative Electronic Kanban (CEK) would forget to fax kanban release to Supplier. solution supports a closed-loop, pull-based This routinely resulted in stock-outs situations. material replenishment process. Electronic material replenishment signals are automatically sent to supplier on scan of empty bin. ~3% of the time the Material Handler would CEK handles both blanket and discrete POs. For forget to fax ROP sheet to Buyer. Routinely blanket POs, electronic material replenishment resulted in stock-outs. signals are automatically sent to suppliers on scan of empty bin. For discrete POs, Buyers are automatically notified to release a manual PO on scan of empty bin. • Material Handler did not check to ensure due Supplier specific ‘Business Rules’ w/ automated date and qty. were correct on kanban card. Buyer & Supplier alerts established for each • Material Handler did not update supplier material replenishment loop. Order qty./due confirmation info to on kanban release sheet. date/receive qty./etc. confirmed on scan of barcode label. Supplier performance metrics updated with each scan. Material Handler did not notify Buyer of need Automated notification to Buyer whenever an to create new PO for discrete orders. Item reaches its ROP to release discrete PO. 11
    • Manual Kanban Failure Modes & eKanban Solutions KRS Failure Modes eKanban Solution Suppliers claimed they did not receive the Automatic alerting to both Buyer & Supplier kanban release fax. when Supplier does not acknowledge and satisfy each electronic replenishment signal within pre-determined time frames. Material Handler did not update kanban Automated updates to CEK when receiving release sheet with actual qty./dock date scans barcode label. Associated supplier impacting KPI tracking/reporting on supplier KPIs automatically updated. performance. Unable to determine if part qty./dock date Order qty., due date, actual received qty. correct. and receive date automatically validated upon scan of barcode label. Associated supplier KPIs automatically updated. 12
    • Collaborative Electronic KanbanProcess Analysis 13
    • Collaborative Electronic Kanban Process Highlights• Staffing Assumptions – 12 FTE Buyers, Burden Rate $28.00/Hr. – 6 FTE Material Handlers, Burden Rate $15.00/Hr.• Process Observations – Average Manual Kanban Releases = ~400/Week – Kanban releases are 100% electronic – Electronic signals are the primary means of communicating demand to suppliers – One-time set-up of electronic kanban loops. System monitors and suggests resizing based on actual consumption patterns – All material replenishment processes are closed-loop – Real-time updates on material status based on barcode scans – Significant reduction in overhead support requirements – Actionable business intelligence on supplier performance 14
    • Collaborative Electronic Kanban Process Flow –Simplified & Automated Simplified & Automated Process 1. Process Trigger: Release Electronic Kanban Signal 2. Material Handler Scans Kanban Card 3. Email automatically sent to Supplier/Buyer 4. Decision: P.O. Needed? 5. Decision: Supplier accepts within 24 hrs? 6. Order in Process at Supplier 7. Supplier Prints Kanban Label(s) & Ships Part(s) 8. Decision: Goods Ship On-Time? 9. Decision: Goods In-Transit? 10. Receiving Scans Barcode Label to Receive Goods 11. Decision: Are Goods Dock to Stock? 12. PointMan Automatically Updated to Show Goods On-Hand 13. Process End 15
    • Collaborative Electronic Kanban Process KPIs –Per Manual Kanban Transaction Key Performance Metrics Process Time per Execution 1.50 Duration 1.75 Highest Utilization 2% Service Level 100% Takt 6.92 Arrival Rate 0.1 Arrival Rate per Wk 325.00 Resource Cost Per Execution $ 0.53 Yield 100% Hours Per Work Period 7.5 Work Periods Per Day 1 Days Per Week 5 Time Units Minutes Time / Cost Per KRS Execution 16
    • Collaborative Electronic Kanban –Process & Resource Time & Cost Analysis Per eKanban Transaction Resources Probability-Weighted Statistics Process Resource Resource Resource Time Time Cost Material Handler 0.25 0.25 $ 0.06 Material Handler Scans Kanban Card0.25 0.25 $ 0.06 Buyer 1.00 1.00 $ 0.47 Buyer Adds P.O. 1.00 1.00 $ 0.47 Receiving Clerk 0.25 0.25 $ - Receiving Scans Barcode Label to Receive Goods 0.25 0.25 $ - Total 1.50 $ 0.53 Resource Time & Cost Time Units are in Minutes Per eKanban Transaction 17
    • Collaborative Electronic Kanban –Annualized (250 Production Days / 20,000 eKanban Releases) Electronic Kanban - Post Ultriva Annual Resource Time & Cost Analysis Planning Period 250.00 Days Time in Planning Period 112,500.00 Mins Demand Node Number of Items Release Electronic Kanban Singal 16,250.00 Resource Productivity Factor Available FTEs Available Time Required Time Cost Material Handler 0.75 6.00 675,000.00 Mins 5,416.67 Mins $ 1,354.17 Buyer 0.75 12.00 1,350,000.00 Mins 21,666.67 Mins $ 10,111.11 Receiving Clerk 1.00 1.00 112,500.00 Mins 4,021.88 Mins $ - Total 2,137,500.00 Mins 31,105.21 Mins $ 11,465.28 Annual Resource Time & Cost Analysis to Support eKanban 18
    • Manual Kanban vs. Collaboratively Electronic Kanban –Process KPI Comparison Report KRS Pre Ultriva vs. Electronic Kanban Post Ultriva Process KPI Comparison Report Profile Current State Future State Map Type Transactional Transactional Buyer creates Kanban Release Buyer Adds Bottleneck Sheet ‘KRS’ P.O. Arrival Rates Differ 0.18 0.14 Hours Per Work Period 7.5 7.5 Work Periods Per Day 1 1 Days Per Week 5 5 Activity Nodes 34.00 13.00 Start Nodes 1.00 1.00 End Nodes 4.00 2.00 Paths 34.00 4.00 Performance Current State Future State Difference % Difference Process Time 18.39 1.50 (16.89) -92% I Required Resource Time 18.39 1.50 (16.89) -92% m Total Queue Time 24.81 0.00 (24.81) -100% p Cycle Time 43.19 1.50 (41.70) -97% r Duration 49.36 1.75 (47.61) -96% Utilization 89% 2% -87% -87% o Service Level 43% 100% 57% 57% v Minimum WIP 7.68 0.22 (7.46) -97% e Cost $ - $ - $ - - m Resource Costs $ 7.25 $ 0.53 $ (6.72) -93% User Property Costs $ - $ - $ - - e Total of All Costs $ 7.25 $ 0.53 $ (6.72) -93% n Rolled Throughput Yield 100% 100% 0% 0% t Time Units are in Minutes 19
    • Manual Kanban vs. Collaborative Electronic Kanban –Annualized Time & Cost Comparison Report KRS Process - Pre Ultriva Annual Resource Time & Cost Analysis Planning Period 250.00 Days Time in Planning Period 112,500.00 Mins Demand Node Number of Items KRS Set-up & Management 20,000.00 Resource Productivity Factor Available FTEs Available Time Required Time Cost Buyer 0.75 12.00 1,350,000.00 Mins 237,777.78 Mins $ 110,962.96 Material Handler 0.75 6.00 675,000.00 Mins 163,651.11 Mins $ 40,912.78 Total 2,025,000.00 Mins 401,428.89 Mins $ 151,875.74 Electronic Kanban - Post Ultriva Annual Resource Time & Cost Analysis • $140K in labor savings Planning Period 250.00 Days • Three FTE resources freed-up Time in Planning Period 112,500.00 Mins • Eliminated stock-outs Demand Node Number of Items Release Electronic Kanban Singal 16,250.00 • Improved OTD • Reduced inventory Resource Productivity Factor Available FTEs Available Time Required Time Cost Material Handler 0.75 6.00 675,000.00 Mins 5,416.67 Mins $ 1,354.17 Buyer 0.75 12.00 1,350,000.00 Mins 21,666.67 Mins $ 10,111.11 Receiving Clerk 1.00 1.00 112,500.00 Mins 4,021.88 Mins $ - Total 20 2,137,500.00 Mins 31,105.21 Mins $ 11,465.28
    • Key Contact Information Frank Kapper Director of Sales Ultriva Inc. 1601 South De Anza Blvd, Ste. 260 Cupertino, CA 95014 Ph: (408) 828-8454 Email: frankk@ultriva.com Web: www.ultriva.com 21