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Lean Kanban Systems Training Module

The Lean Kanban Systems Training Module v2.0 includes:

1. MS PowerPoint Presentation including 83 slides covering an Introduction to Lean Management, Benefits of Lean Kanban Systems, Kanban Size Calculations, Three Types of Kanban Systems - Single Card Kanban - Dual or Machine Card Kanban - In-Process Kanban, and a Step-by-Step Kanban Implementation Process.

Lean Kanban Systems Training Module

  1. 1. 1 April 9, 2016 – v2.0 Lean Kanban Scheduling Systems by Operational Excellence Consulting LLC
  2. 2. 2 April 9, 2016 – v2.0 Section 1: Introduction to Lean Management & The 7 Types of Wastes Section 2: Lean Metrics & Performance Indicators Section 3: Create Flow & Establish Pull Section 4: Lean Kanban Systems - Single Card Kanban - Dual Card Kanban - In-Process Kanban Section 5: Step-by-Step Kanban Implementation Process Lean Kanban Systems – Table of Content
  3. 3. 3 April 9, 2016 – v2.0 Lean Management – The Five Lean Principles Define Value - Specify value from the Customer perspective. Map Value Stream - Identify the value stream for each product or service and challenge all of the non-value adding steps (wastes) currently necessary to create and deliver this product or service. Add nothing than value. Create Flow - Make the product or service creation and delivery process flow through the remaining value-adding steps. Establish Pull – Introduce pull between all process steps where continuous flow is possible. Pursuit Perfection – Manage toward perfection so that the number of steps and the amount of time and information needed to create and deliver this product or service is optimized.
  4. 4. 4 April 9, 2016 – v2.0 Benefits of implementing Lean Principles, Methods and Tools are:  Improved Lead Times – Ability to respond quicker, shorter set ups, fewer delays.  Improved Stock Turns – Less work in progress and inventory, so less capital is tied up.  Improved Productivity – Improvements in throughput and value add per person.  Improved Quality – Reductions in defects, rework and customer complaints.  Improved Customer Service – Delivering what Customers wants when they want it.  Improved Ownership – Employees are fully involved and engaged resulting in improved morale and participation. Lean Management – The Benefits of Lean
  5. 5. 5 April 9, 2016 – v2.0 Lean Management – Three Types of Process Activities Non- Value Adding Business- Value Adding Value- Adding Customer is not willing to pay for these activities and they should be eliminated, e.g. rework. Customer are willing to pay the organization for these activities, e.g. assembly. Customers are not willing to pay for these activities, but the organizations deems these activities as necessary, e.g. preventive maintenance. Many process have less than 20% value- adding activities.
  6. 6. 6 April 9, 2016 – v2.0 Value-Adding Work – A Definition Three criteria for Value Adding Work 1. Customer wants you to do it (or will pay for it) 2. The material / information is being processed or transformed into final products or services 3. It is done right the first time Lean Management’s Key Objective: Reduce Process Lead Time → Eliminate or Reduce Non-Value-adding Activities
  7. 7. 7 April 9, 2016 – v2.0 How do you spend your time? • Value-Adding (VA) – increases worth of a product or service • Non-Value-Adding but Necessary (NVABN) – required to keep the organization operating, e.g. compliance • Non-Value-Adding (NVA) and Unnecessary – all other tasks not identified above • Lean Management reduces lead time through – Streamlining VA work – Minimizing NVABN work – Eliminating NVA work
  8. 8. 8 April 9, 2016 – v2.0 Lean Management – The 7 Types of Waste Waste elimination is one of the most effective ways to increase the profitability of any business. Processes either add value or waste to the production of a good or service. The seven wastes originated in Japan, where waste is known as “muda." → T - I - M - W - O - O - D Inventory Over-Processing Waiting Transportation Defects Motion Over-Production The 7 Wastes
  9. 9. 9 April 9, 2016 – v2.0 The 7 Types of Waste – Transportation Transportation Transporting product between processes is a cost incursion which adds no value to the product. Excessive movement and handling cause damage and are an opportunity for quality to deteriorate. Material handlers must be used to transport the materials, resulting in another organizational cost that adds no Customer value. Transportation can be difficult to reduce due to the perceived costs of moving equipment and processes closer together. Furthermore, it is often hard to determine which processes should be next to each other. Mapping product flows can make this easier to visualize.
  10. 10. 10 April 9, 2016 – v2.0 The 7 Types of Waste – Inventory Inventory Work-in-Progress (WIP) is a direct result of over-production and waiting. Excess inventory tends to hide problems on the plant floor, which must be identified and resolved in order to improve operating performance. Excess inventory consumes productive floor space, delays the identification of problems, and inhibits communication. By achieving a seamless flow between work centers, many manufacturers have been able to improve Customer service and slash inventories and their associated costs.
  11. 11. 11 April 9, 2016 – v2.0 The 7 Types of Waste – Motion Motion This waste is related to ergonomics and is seen in all instances of bending, stretching, walking, lifting, and reaching. These are also health and safety issues, which in today’s litigious society are becoming more of a problem for organizations. Jobs with excessive motion should be analyzed and redesigned for improvement with the involvement of plant personnel.
  12. 12. 12 April 9, 2016 – v2.0 The 7 Types of Waste – Waiting Waiting Typically more than 99% of a product's life in traditional batch-and-queue manufacture will be spent waiting to be processed. Much of a product’s lead time is tied up in waiting for the next operation; this is usually because material flow is poor, production runs are too long, and distances between work centers are too great. Goldratt (Theory of Constraints) has stated many times that one hour lost in a bottleneck process is one hour lost to the entire factory’s output, which can never be recovered. Linking processes together so that one feeds directly into the next can dramatically reduce waiting.
  13. 13. 13 April 9, 2016 – v2.0 The 7 Types of Waste – Over-Production Over-Production Simply put, over-production is to manufacture an item before it is actually required. Over-production is highly costly to a manufacturing plant because it prohibits the smooth flow of materials and actually degrades quality and productivity. The Toyota Production System is also referred to as “Just in Time” (JIT) because every item is made just as it is needed. Over-production manufacturing is referred to as “Just in Case.” This results in high storage costs and makes it difficult to detect defects in a timely manner. The simple solution to over-production is turning off the tap; this requires a lot of courage because the problems that over-production is hiding will be revealed. The concept is to schedule and produce only what can be immediately sold/shipped and improve machine changeover/set-up capability.
  14. 14. 14 April 9, 2016 – v2.0 The 7 Types of Waste – Over-Processing Over-Processing Many organizations use expensive high precision equipment where simpler tools would be sufficient. This often results in poor plant layout because preceding or subsequent operations are located far apart. In addition they encourage high asset utilization (over-production with minimal changeovers) in order to recover the high cost of this equipment. Toyota is famous for their use of low-cost automation, combined with immaculately maintained, often older machines. Investing in smaller, more flexible equipment where possible; creating manufacturing cells; and combining steps will greatly reduce the waste of inappropriate processing.
  15. 15. 15 April 9, 2016 – v2.0 The 7 Types of Waste – Defects Defects Having a direct impact to the bottom line, quality defects resulting in rework or scrap are a tremendous cost to organizations. Associated costs include quarantining inventory, re-inspecting, rescheduling, and capacity loss. In many organizations the total cost of defects is often a significant percentage of total manufacturing cost. Through employee involvement and Continuous Process Improvement (CPI), there is a huge opportunity to reduce defects at many facilities.
  16. 16. 16 April 9, 2016 – v2.0 The 7 Types of Waste – Summary In the latest edition of the Lean Manufacturing classic Lean Thinking, Underutilization of Employees has been added as an eighth waste. Organizations employ their staff for their nimble fingers and strong muscles but forget they come to work everyday with a free brain. It is only by capitalizing on employees' creativity that organizations can eliminate the other seven wastes and continuously improve their performance. Many changes over recent years have driven organizations to become world class organizations or Lean Enterprises. The first step in achieving that goal is to identify and attack the seven wastes. As Toyota and other world-class organizations have come to realize, Customers will pay for value adding work, but never for waste.
  17. 17. 17 April 9, 2016 – v2.0 Waste Typical Manufacturing Definitions Translation to Services Examples Defects / Rework Making products that are not suitable for sale, or require reprocessing to bring them up to standard Client billing errors, defective client-server systems, incorrect data entry, incomplete requirements Over Production Producing product that has not been ordered. This is the worst offender of all as it includes some elements of all of the other wastes. Duplicative data entry, making extra copies, producing data or reports that aren’t needed, starting projects that won’t be moved forward. Waiting People or product waiting for processes to finish or materials/tools to arrive. All inventory build up or delay between value adding steps for any product. Employee idle time, waiting on responses, approvals, or service, delays in processing (including client). All time between one value adding step and the next. Non-Value adding Processing Activities carried out on materials/products which do not add value (more commonly referred to as Over processing) Unnecessary extra steps, transactional activities, or approvals. Excessive reporting, unproductive meetings, expediting, firefighting, changing priorities Transport An activity that moves materials or products more than is required. Handoffs or reviews, interoffice movement of materials, offsite storage transport Inventory Product in storage or waiting for further actions to be carried out. All parts not immediately needed. Requirements, Documents, WIP, Assets sitting on the shelf (e.g. laptops, air cards, people), excess emails Movement Unnecessary movement of people, examples being long distances between workstations, double-handling of materials, poor tool placement. Unnecessary travel, hunting for information or people, manual workflow Employee Knowledge Ineffective employee utilization / engagement. No empowerment; people feel they should “check their brains at the door and do what they’re told”. Failing to capture ideas and knowledge, or ignoring input from the real experts. Retention issues. Employees used for repetitive or mundane tasks. The 8 Types of Waste – DOWNTIME
  18. 18. 18 April 9, 2016 – v2.0 The Three Lean Ms or the Lean Triad • Lean is often associated with the elimination of Waste, or Muda in Japanese • However, Lean Thinking also needs to considers two other problems: – Mura: Irregularity or Variation – Muri: Strenuous activity, or Overburden • Together these are sometimes called the “Three Ms” • In some cases, Waste or Muda may be eliminated temporarily but will keep coming back if the other two Ms are not addressed simultaneously • All three Ms must be attacked and substantially reduced to create a sustainable Lean process or value stream flow. M 3
  19. 19. 19 April 9, 2016 – v2.0 Value vs. Non-Value Adding Work Work Time Wait Time Walking Time A Typical Process or Process Step  It is not uncommon, when analyzing a process or process step, to recognize that 60 to 70% of the total work time is actual non-value adding work – waiting, transportation, walking, and unnecessary motions.  Organizations often focus on the value adding activities to further improve productivity and efficiency, ignoring the often huge opportunities if they would focus on eliminating non-value adding activities. Process Start Process End
  20. 20. 20 April 9, 2016 – v2.0 Section 1: Introduction to Lean Management & The 7 Types of Wastes Section 2: Lean Metrics & Performance Indicators Section 3: Create Flow & Establish Pull Section 4: Lean Kanban Systems - Single Card Kanban - Dual Card Kanban - In-Process Kanban Section 5: Step-by-Step Kanban Implementation Process Lean Kanban Systems – Table of Content
  21. 21. 21 April 9, 2016 – v2.0 Lean Management – Metrics Definitions Lead Time (LT) • The average time it takes for one item to go through the entire processing step, including time waiting before, during and after the processing step. Cycle Time (CT) • The average time between two consecutive items coming out of a processing step. Processing (or Touch) Time (PT) • The average time it takes to actually do the work from beginning to end in a processing step, if one is able to work on the item uninterrupted. Value-Add Time (VT) • The portion of the average processing time that actually transforms the item in a way that the Customer is willing to pay for. Takt Time (TT) • Planning drumbeat. How often completed items NEED to come out the end of the entire process - as established by Customer demand.
  22. 22. 22 April 9, 2016 – v2.0 Lean Management – Takt Time Takt Time is the “Production” Rate, in seconds, necessary to satisfy Customer demand. Amount of available “Production” Time per Interval Number of Units needed by the Customer per Interval = Amount of Time available to produce one Unit 7.5 hrs/shift x 60 minutes/hr x 60 seconds/min 450 Units needed by the Customer/Shift 27,000 seconds/shift 450 Units = 60 Seconds = Takt Time
  23. 23. 23 April 9, 2016 – v2.0 Lean Management – Metrics Definitions Changeover Time (CO) • The average time it takes to changeover (e.g. reset or change equipment) a processing step from one item to another (Change Over Matrix). Queue (or Wait) Time (QT) • The average time between processing steps that the item gets shuffled around or sits around waiting for someone to work on it. Up Time (UT) • The ratio of the actual available processing time of a processing step to the available working time. Expressed as a percentage, uptime is calculated by dividing actual available processing time by the available working time. Working Time (WT) • To calculate Working Time - deduct breaks, meetings, beginning of shift set- up, end of shift clean-up, planned maintenance, and other planned non- working time. Do NOT deduct unplanned downtime or changeovers.
  24. 24. 24 April 9, 2016 – v2.0 Lean Management – Metrics Definitions Total Lead Time (critical path only) • The average time it takes for one item to go through the entire process - from start to finish - including time waiting before, during and after the processing step. Total Processing Time (critical path only) • The average time it takes to actually perform the entire process - from start to finish - if one is able to work on an item uninterrupted. Total Value-adding Time (critical path only) • The average time it takes to actually perform the entire process - from start to finish - that actually transforms the item in a way that the Customer is willing to pay for. % Complete & Accurate • Percentage of the time a processing step receives work that is “usable as is”.
  25. 25. 25 April 9, 2016 – v2.0 Lean Management – Performance Indicators Process Efficiency Ratio (PE) Process Activity Ratio (AR) Rolled % Complete & Accurate where n is the number of processing steps. Total Labor Processing Time • The average time it takes to actually perform the entire process - from start to finish - if one is able to work on an item uninterrupted. 𝐴𝑅 = 𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑜𝑐𝑒𝑠𝑠𝑖𝑛𝑔 𝑇𝑖𝑚𝑒 𝑇𝑜𝑡𝑎𝑙 𝐿𝑒𝑎𝑑 𝑇𝑖𝑚𝑒 𝑃𝐸 = 𝑇𝑜𝑡𝑎𝑙 𝑉𝑎𝑙𝑢𝑒 𝐴𝑑𝑑𝑒𝑑 𝑇𝑖𝑚𝑒 𝑇𝑜𝑡𝑎𝑙 𝐿𝑒𝑎𝑑 𝑇𝑖𝑚𝑒 𝑅𝑜𝑙𝑙𝑒𝑑 %𝐶&𝐴 = %𝐶&𝐴1 × %𝐶&𝐴2 × ⋯ × %𝐶&𝐴 𝑛
  26. 26. 26 April 9, 2016 – v2.0 Lean Management – Process Efficiency Benchmarks
  27. 27. 27 April 9, 2016 – v2.0 Section 1: Introduction to Lean Management & The 7 Types of Wastes Section 2: Lean Metrics & Performance Indicators Section 3: Create Flow & Establish Pull Section 4: Lean Kanban Systems - Single Card Kanban - Dual Card Kanban - In-Process Kanban Section 5: Step-by-Step Kanban Implementation Process Lean Kanban Systems – Table of Content
  28. 28. 28 April 9, 2016 – v2.0 Flow where you can, Pull where you can’t.
  29. 29. 29 April 9, 2016 – v2.0 Lean Management – Create Flow • Create Flow - Make the product or service creation and delivery process flow through the remaining value-adding steps. • Ideally, the “work item” passing through the value stream never stops. It moves effortlessly from person to person, work team/station to work team/station, department to department, … without hang-ups, hiccups, or unnecessary delay. • Ask yourself – “What is preventing the lead time from being the same as the processing time for each and every process step or activity?”
  30. 30. 30 April 9, 2016 – v2.0 "If smaller orders are released more often, the factory resources are loaded much more easily. …This is analogous to the python swallowing dozens of little piglets instead of one large pig. …Surprisingly, many factories prefer to 'stretch the python' so it can swallow an even larger hog!" Standard, Charles and Davis, Dale - Running Today's Factory: A Proven Strategy for Lean Manufacturing uses the phrase "pig in a python" to describe large inventory bubbles that move through a factory. Lean Management – “Pig in the Python.” Inventory “Bubble”
  31. 31. 31 April 9, 2016 – v2.0 Lean Management – Establish Pull • The goal is to produce product only as it is “Pulled” by customer demand – Make only the units ordered – Just when they are needed – In the exact amount required – With minimum raw material and WIP • Philosophically opposed to MRP / ERP driven “Push” of scheduled batch quantities based on forecast • Customer pull signals upstream demand and drives all activities • Takt Time sets the pace of every process or sub-process • Kanban Systems connect sub-processes with different Takt Times and signal activities & material replenishment requirements
  32. 32. 32 April 9, 2016 – v2.0 Lean Management – The 8 Basic Questions 1. What is the Takt Time ? 2. Will you build to a finished-goods Kanban or Supermarket System from which the Customer pulls, or directly to shipping ? 3. Where can you use continuous flow between processing steps ? 4. Where will you need to use Kanban or Supermarket Pull Systems ? 5. At what single point in the production chain (the “pacemaker” process) will you schedule production ? 6. How will you level the production mix ? 7. What increments of work will you consistently release ? 8. What process improvements will be necessary ?
  33. 33. 33 April 9, 2016 – v2.0 Section 1: Introduction to Lean Management & The 7 Types of Wastes Section 2: Lean Metrics & Performance Indicators Section 3: Create Flow & Establish Pull Section 4: Lean Kanban Systems - Single Card Kanban - Dual Card Kanban - In-Process Kanban Section 5: Step-by-Step Kanban Implementation Process Lean Kanban Systems – Table of Content
  34. 34. 34 April 9, 2016 – v2.0 Lean Management – Kanban Systems
  35. 35. 35 April 9, 2016 – v2.0  History - In the late 1940s, Toyota studied supermarkets with the idea of applying store and shelf-stocking techniques to the factory floor. In a supermarket, customers obtain the required quantity at the required time. Furthermore, the supermarket stocks only what it believes it will sell, and customers take only what they need because future supply is assured. This observation led Toyota to view a process as being a customer of preceding processes, and the preceding processes as a kind of store. The “customer process" goes to the store to obtain required components which in turn causes the store to restock. Originally, as in supermarkets, signboards were used to guide "shopper processes” to specific restocking locations. Kanban Systems – History of Kanban Systems
  36. 36. 36 April 9, 2016 – v2.0 • Kanban is a scheduling system, not an inventory control system, that helps determine what to produce, when to produce it, and how much to produce. • Kanban scheduling systems are useful when • lot sizes differ between process steps, • processes are unbalanced, or • when distance introduces time lag or variability • Kanban scheduling systems are simple and work best • withdrawal rates are steady and predictable • Replenishment times are predictable • Kanban scheduling systems may result in significant inventory and experience frequent stockouts if not properly managed and adjusted based on withdrawal rate and replenishment times. Kanban Systems – Introduction to Kanban Systems
  37. 37. 37 April 9, 2016 – v2.0 • Kanban is a Japanese word that means, roughly, signboard or signal card. Kan = visual, Ban = card • Most often, a Kanban utilizes physical cards that move back and forth between the different sections of the production process, serving as a signaling to trigger the movement, production, or supply of material in a factory. Kanban Systems – Introduction to Kanban Systems • The most commonly used Kanbans are: • “Withdrawal" Kanban – This Kanban is used to relocate items from one workplace or process to another. • “Production" Kanban – This Kanban is used to replace the material when it is used or sold. • “Signal” Kanban – This Kanban is used to initiate production of a predetermined batch size of a specific part. • In-Process Kanban (IPKs) – These Kanban act as signals to work, move, or respond in some way
  38. 38. 38 April 9, 2016 – v2.0 Kanban Systems – Value Stream Mapping Symbols Kanban systems lead to an improved process flow, reduced scheduling activities and can result in significant inventory reduction. Kanban scheduling systems are useful when • lot sizes differ between process steps, • processes are unbalanced, or • when distance introduces time lag or variability
  39. 39. 39 April 9, 2016 – v2.0 Kanban Systems – Benefits of a Kanban System • Work in process between processes is always maintained and managed • Process materials are readily available and easily counted when necessary • Quicker quality feedback loop • Fewer errors as the feedback is done more efficiently • Work place is better organized, more comfortable, and safer • Over-production (waste) will be at minimum • Less Finished Goods Inventory is required • Makes the vision of Lean Management possible • Many more …
  40. 40. 40 April 9, 2016 – v2.0 Kanban Systems – Some Success Stories  A maker of fine table linens was able to slash its average order turnaround time from 3-weeks to 3-days using a Pull System. The changes eliminated bottlenecks in production and increased responsiveness to customer needs.  A manufacturer of high-quality packaging machinery implemented a multi- faceted Lean transformation. A Pull System was used to smooth the flow of WIP. The changes decreased WIP by 62% and dramatically increased the number of orders completed each day.  Pull Systems/Kanban-and other lean techniques-were implemented by a manufacturer of custom fiberglass and vacuum form products. These changes increased productivity by 20%, reduced inventory by 53%, decreased lead-time by 63%, and far exceeded their targeted goals.  Another example of a successful application of Kanban system in hospitals is a regional medical center in southern North Carolina. It saved $80,000 per year in expired inventory. Kanban system was also applied to its OR scheduling. The hospital was able to operate 6 more surgeries per week with the same staffing levels working the same hours as before.
  41. 41. 41 April 9, 2016 – v2.0 Kanban Systems – The Grocery Store The basic concept of a Kanban system can be easily observed in a grocery store. In a grocery store, every item has a defined inventory location that holds a specific quantity of the item. Customers select the required quantity of a specific item and proceed to the checkout counter. At the checkout counter, the cashier scans each item and a signal will be transmitted to the grocery store’s database, indicating the items part number and quantity that has been “consumed”. Once a certain quantity of a specific item has been consumed, a grocery store employee will take for example a carton of that item from the warehouse and refill the shelf-space in the store. The transfer of the carton will trigger a replenishment request to the supplier. …
  42. 42. 42 April 9, 2016 – v2.0 Kanban Systems – Basic Kanban Rules To ensure a proper setup of Kanban in the workplace, Toyota has provided us with six rules for an effective Kanban system: 1. Customer (downstream) processes withdraw items in the precise amounts specified by the Kanban. 2. Supplier (upstream) produces items in the precise amounts and sequences specified by the Kanban. 3. No items are made or moved without a Kanban card. 4. A Kanban card should accompany each item, every time. 5. Defects and incorrect amounts are never sent to the next downstream process. 6. The number of Kanbans and the size of each Kanban is reduced carefully to lower inventories and to reveal problems.
  43. 43. 43 April 9, 2016 – v2.0 Kanban Systems – Basic Kanban Process Flow
  44. 44. 44 April 9, 2016 – v2.0 Kanban Systems – Basic Sizing Calculation DDK x R DDK: Daily Demand for Kanban (= Capacity ?) R: Replenishment Interval (# of Days) K = This basic formula works well for purchased items or for routine replenishment that happens no more frequently than once per day.
  45. 45. 45 April 9, 2016 – v2.0 Kanban Systems – Basic Sizing Calculation DDK can be the daily quantity required: • At full capacity • Under typical conditions • Under near future expected conditions In any case consider adding a buffer quantity: • Small fixed safety buffer amount • 1 to 2 standard deviations above historical usage (if normal distributed) • Round up K (slightly!) to price break point DDK x RK =
  46. 46. 46 April 9, 2016 – v2.0 Kanban Systems – Basic Sizing Calculation R = number of days required to replenish the Kanban • Lead time from vendor for purchased parts • Time allotted to pull parts from storage location • Time for internal supplier to produce Key considerations: • Supplier reliability (add 1 to 2 SD to lead time if normally distributed) • Trade-off between inventory and shipping cost • Criticality of the part DDK x RK =
  47. 47. 47 April 9, 2016 – v2.0 Kanban Systems – Sizing with Fixed Batch Quantity DDK x R P DDK: Daily Rate for Kanban (= Capacity ?) R: Replenishment Interval (# of Days) P: Package (Batch, Pallet, Container) Quantity K = P is factored in when the vendor has a fixed package quantity or the supplier has a set batch size. This can also be used to account for a pallet or Kanban container quantity. The calculation gives the number of packages.
  48. 48. 48 April 9, 2016 – v2.0 Kanban Systems – Sizing for Use in Multiple Products Sum (DDK x Q) x R P DDK: Daily Rate for each Product Q: Quantity Per Product (from Bill of Materials) R: Replenishment Interval (# of Days) P: Package Quantity (if applicable) K = When the item is used in multiple products at the Kanban location, this factors in different demands per product.
  49. 49. 49 April 9, 2016 – v2.0 PART IDENTIFICATION or NUMBER DESCRIPTION TODemand FROM (Consumption Point) (Supply Point) QTY Kanban Systems – Typical Kanban Card Layout Kanban size, replenishment lead time and other meaningful information may be added if needed or seen necessary.
  50. 50. 50 April 9, 2016 – v2.0 Kanban Systems – “Single” Card Kanban System In a single-card or one-card Kanban scheduling system, a “Signal” Kanban card is taken from the Kanban location once a defined minimum stock quantity has been reached. The card is then for example placed on a Kanban board, signaling the need for a stock replenishment order. The “supplier” process responsible for the replenishment of the Kanban location schedules its production based on the Kanban board and replenishes the Kanban location. The minimum stock quantity that signals or triggers the replenishment request needs to assure that the remaining on hand inventory is sufficient until the replenishment stock arrives and is based on the average consumption, consumption fluctuation, and replenishment lead time.
  51. 51. 51 April 9, 2016 – v2.0 I went to make a cup of tea in the afternoon. I took the last K-cup. so there was an empty box It was now time to use the Kanban system! I went to the cabinet where coffee and tea inventory is stored. When I removed the new box, there was a blue Kanban card sticking out. This represented the re-order point. Example from the Blog of Mark Graban http://www.leanblog.org/2010/04/how-a-simple-office-kanban-system-works Kanban Systems – “Single” Card Kanban System
  52. 52. 52 April 9, 2016 – v2.0 I put the new stock in place … Kanban Systems – “Single” Card Kanban System
  53. 53. 53 April 9, 2016 – v2.0 I then took the Kanban card (pictured here) to the front reception desk, placing the card at a Kanban ordering point (pictured on the next slide). Kanban Systems – “Single” Card Kanban System NOTE: A better approach would be to have the Kanban ordering point near the cabinet, and have the person in charge of reordering check it daily.
  54. 54. 54 April 9, 2016 – v2.0 The top holder is for the supplies that need to be ordered. Down below are the cards for items that have already been ordered (this prevents double ordering). When new stock arrives, the Kanban cards are taken from the bottom holder and are matched with the inventory when it is restocked. Kanban Systems – “Single” Card Kanban System
  55. 55. 55 April 9, 2016 – v2.0 Kanban Systems – “Dual-Card” Kanban System A very effective application for a dual-card Kanban scheduling system is the “decoupling” of two very different sub-processes, for example a machining process from an assembly process or two sub-processes with very different takt times. A machining process is often fairly automated, resulting in high depreciation costs, and requires significant setup time to change over from one product to another, resulting in low utilization when producing small batches of different items. An assembly process is often less capital intense and requires no or very little changeover time.
  56. 56. 56 April 9, 2016 – v2.0 Kanban Systems – “Dual-Card” Kanban System • A dual-card or two-card Kanban scheduling system uses "Withdrawal" and "Production" Kanban cards. • One card is attached to each container holding a pre-defined quantity of items. • To relocate or move a container from the “supplier” process or supermarket to the “customer” process for consumption, the attached “Production” card is removed from the container and placed on the Kanban board. • The “Withdrawal” card is then attached to that container and the container is moved to the “customer” process for consumption. • The “supplier” process schedules production based on the cards on the Kanban board and pre-defined scheduling rules. • Once a container of items has been produced, a “Production” card is removed from the Kanban board and attached to the container.
  57. 57. 57 April 9, 2016 – v2.0 Kanban Systems – “Dual-Card” Kanban System Phase 1 “Supplier” Process “Customer” Process Kanban or Heijunka “Pigeonhole” Board Phase 1: “Customer” process moves an empty container to the “supplier” process. Standard Container (full) Standard Container (empty) “Production” Card “Withdrawal” Card
  58. 58. 58 April 9, 2016 – v2.0 Kanban Systems – “Dual-Card” Kanban System Phase 2 “Supplier” Process “Customer” Process Phase 2: “Customer” process places the “Production” card of a full container on the Kanban board and replaces it with the “Withdrawal” card from the empty container. Standard Container (full) Standard Container (empty) “Production” Card “Withdrawal” Card Kanban or Heijunka “Pigeonhole” Board
  59. 59. 59 April 9, 2016 – v2.0 Kanban Systems – “Dual-Card” Kanban System Phase 3 “Supplier” Process “Customer” Process Kanban or Heijunka “Pigeonhole” Board Phase 3: “Customer” process moves the full container with the “Withdrawal” card to the “Customer” process. Standard Container (full) Standard Container (empty) “Production” Card “Withdrawal” Card
  60. 60. 60 April 9, 2016 – v2.0 Kanban Systems – “Dual-Card” Kanban System Phase 4 “Supplier” Process “Customer” Process Kanban or Heijunka “Pigeonhole” Board Phase 4: “Supplier” process produces new items and attaches the “Production” card from the Kanban board to the full container. Standard Container (full) Standard Container (empty) “Production” Card “Withdrawal” Card
  61. 61. 61 April 9, 2016 – v2.0 Kanban Systems – “Dual-Card” Kanban System Summary Standard Container (full) Standard Container (empty) “Production” Card “Withdrawal” Card
  62. 62. 62 April 9, 2016 – v2.0 Kanban Systems – Kanban or Heijunka Board Empty containers at Supplier Process, but sufficient inventory at Customer Process → Production can wait. Empty containers at Supplier Process and insufficient inventory at Customer Process → Production required immediately.
  63. 63. 63 April 9, 2016 – v2.0 Kanban Systems – Supermarket • Customer Process goes to the Supermarket and withdraws what it needs when it needs it. Supplying Process produces to replenish what was withdrawn. • Purpose: Controls production at supplying process without trying to schedule. Controls production between flows. Supplying Process Customer Process "Production" Kanban "Withdrawal" Kanban SUPERMARKET Product ProductA B
  64. 64. 64 April 9, 2016 – v2.0 Kanban Systems – FIFO Lane • In some cases a FIFO Lane between two decoupled processes can be used to substitute for a Supermarket. A FIFO Lane is like a chute that can hold only a certain amount of inventory, with the supplying process as the chute entrance and the customer process at the exit. • If the FIFO Lane gets full, the supplying process must stop producing until the customer process has used up some of the inventory. Supplying Process Customer Process SUPERMARKET FIFO Lane max. 20 pieces A B FULL ? Kanban
  65. 65. 65 April 9, 2016 – v2.0 Kanban Systems – Pacemaker Process  Try to send the Customer schedule to only one production process, the pacemaker process.  A process is called the pacemaker process, because it is used to control production and sets the pace for all upstream processes.  Note, the material transfer from the pacemaker process downstream to finished goods need to occur as a flow. Supplying Process Supplying Process Customer Process Customer Process Pull max. 20 pieces DFIFO Lane CUSTOMERA max. 50 pieces FIFO LaneB C SCHEDULE = Pacemaker Process FLOW DownstreamUpstream
  66. 66. 66 April 9, 2016 – v2.0 Kanban Systems – Sequenced Pull • Sometimes one can install a “Sequenced Pull” between 2 processes, instead of a complete Supermarket or a FIFO Lane. • Sequenced Pull means that the supplying process produces a predetermined quantity of parts (e.g. one subassembly) directly to the customer process’ order. This works if lead time in the supplying process is short enough for “production- or build-to-order”, and if the customer process follows strict “ordering” rules. • Sequenced Pull is sometimes called the “Golf Ball System” because colored balls or disks (that roll nicely down a chute to the supplying process) are sometimes used to provide production instruction.
  67. 67. 67 April 9, 2016 – v2.0 Kanban Systems – Lean and Human Resources • People are the company’s competitive advantage • Hire character, teach skills • Look for personal responsibility, teamwork orientation, and challenge mentality • Orientation and training for up to 12 months. Much of the training is on Lean Thinking. • Employees are trained in problem-solving – People feel safe exposing a problem – Team is empowered to find a solution • Extensive practical multi-skilled training with Mentors • People are motivated to improve processes • Those who actually run the process are the experts • Leaders are judged on how they develop people
  68. 68. 68 April 9, 2016 – v2.0 FlowOne Up One DownPrimary Station Kanban Systems – Flexible People Utilization Cross-trained multi-skilled flexible employees • Increase productivity • Enable Flow and Pull
  69. 69. 69 April 9, 2016 – v2.0 OP 1 Product Flow Customer OP 2IPK Kanban Systems – In-Process Kanban (IPK) • Authorize inventory • Signal movement or action required if full
  70. 70. 70 April 9, 2016 – v2.0 OP 110 OP 140OP 130OP 120 In-Process Kanban – “Holes” in the Line • Cross-trained employees accommodate variation in product mix, volumes and worker productivity Downstream demand signals upstream work Demand ?
  71. 71. 71 April 9, 2016 – v2.0 In-Process Kanban – At the Operation where I am NOW • Is there a signal to work here ? – Is there a unit complete at my workstation ? • If No - try to work on the next unit • If Yes, then is my downstream IPK full ? – If No - fill IPK with completed unit – When both workstation and downstream IPK full • Flex downstream in the direction of demand – No unit to work on - upstream IPK is empty • Move upstream to satisfy demand • Continue to apply this logic perpetually
  72. 72. 72 April 9, 2016 – v2.0 OP 110 OP 130OP 120 In-Process Kanban – Alternate Work Stations • Accommodate variation in product work content • Balance lengthy or variable operation to takt time OP 140 OP 140
  73. 73. 73 April 9, 2016 – v2.0 OP 110 OP 140OP 130OP 120 In-Process Kanban – Can OP 120 help OP 110 ? ? C B A B has a signal to work at OP 120, but has no unit to work on. Ideally B would flex up to 110 and work - but C is already there. Does it look like there is a quality place to help C at OP 110?
  74. 74. 74 April 9, 2016 – v2.0 In-Process Kanban – In Order to Help • Work station must be designed for help – 2 sets of tools, parts, and work instructions? – Adequate space to effectively perform work • Must have clearly pre-defined help criteria – Job training includes how to give and receive help – Protect integrity of unit when finished • Both associates must agree on where they are in the work sequence at that operation • Flexing, helping and “bumping”, mixed models on a line - must of course not endanger product or service quality
  75. 75. 75 April 9, 2016 – v2.0 In-Process Kanban – Quality Place to Help • Ideally anticipate this need during factory design OR build this requirement into 5S space utilization OP 110 OP 140OP 130OP 120 C B A
  76. 76. 76 April 9, 2016 – v2.0 In-Process Kanban – Requirements for Employee Flexing • The process is designed to allow flexing – With “holes” in the line even at capacity – Physical places to help - tools, kanban, and methods – With simple, visual signals - tell when to work, move – Flex stations at key integration or variation points • Employees are trained for flexibility – Certified a minimum of one-up and one-down – Understand where signals tell them to move – They see benefits in learning new skills • Management emphasizes importance • Team environment and recognition exist
  77. 77. 77 April 9, 2016 – v2.0 In-Process Kanban – Mixed Model Flow
  78. 78. 78 April 9, 2016 – v2.0 Section 1: Introduction to Lean Management & The 7 Types of Wastes Section 2: Lean Metrics & Performance Indicators Section 3: Create Flow & Establish Pull Section 4: Lean Kanban Systems - Single Card Kanban - Dual Card Kanban - In-Process Kanban Section 5: Step-by-Step Kanban Implementation Process Lean Kanban Systems – Table of Content
  79. 79. 79 April 9, 2016 – v2.0 We suggest the following formal eight steps: 1. Analyze your products and processes and decide what parts and products would benefit most from a Kanban scheduling system. While most Kanban systems are developed for raw material and work-in-process inventories, the system also works for finished goods inventory and even office supplies. 2. Study the hourly or daily usage (average and fluctuation) for each Kanban part over the past six to twelve months and determine the appropriate minimum and maximum stock levels for each part. Watch out for seasonality or any other special consumption patterns. More inventory must be kept for frequently used parts, and pull triggers need to be set accordingly. Lean Management – How to design a Kanban System? 3. Study the lead times for each Kanban part. Lead times are how long the product takes to arrive at your plant after your place an order for it with the supplier, or how long it takes your plant to manufacture a part. Reduce long supply lead times if possible, either by negotiating better terms with suppliers or switching to new, faster suppliers.
  80. 80. 80 April 9, 2016 – v2.0 4. Assess the minimum stock level for each part based on part lead time. Err on the side of caution and take possible manufacturing, quality or supplier issues into account. You can always tweak the quantities later, once everything stabilizes. 5. Identify the Kanban locations and containers for each part. Create the Kanban cards and Kanban board for a manual system or set up your Enterprise Resource Planning (ERP) or Production Management System (PMS) according to your Kanban parameters. 6. Develop scheduling rules and/or algorithm for the “supplier” process based on the Kanban board to ensure timely replenishment of all Kanban locations. Lean Management – How to design a Kanban System? 7. Order a full, maximum stock level for each item. Begin the Kanban process for each item as its stocks are filled.
  81. 81. 81 April 9, 2016 – v2.0 8. Observe the efficiency of the Kanban system. Tweak the minimum, maximum, replacement quantities and pull trigger amounts until item usage rates, lead times and inventory levels reach the “perfect” balance, with replacement stock arriving just before existing inventory runs out. Keep a small amount of "safety stock" on hand in case your tweaking results in inventory shortages. Lean Management – How to design a Kanban System?
  82. 82. 82 April 9, 2016 – v2.0 Lean Management – Kanban System Discussion • Can you identify some areas where a pull system production line with flexible employees could help? • Even if this cannot be fully implemented (yet!), where would cross- training and flexibility immediately improve productivity or get you closer to flow? • Any other opportunities to apply the concepts from this section (short term or medium-long term?)
  83. 83. 83 April 9, 2016 – v2.0 The End … “Perfection is not attainable, but if we chase perfection we can catch excellence.” - Vince Lombardi
  84. 84. 84 April 9, 2016 – v2.0 Terms & Conditions After you have downloaded the training material to your own computer, you can change any part of the course material and remove all logos and references to Operational Excellence Consulting. You can share the material with your colleagues and re-use it as you need. The main restriction is that you cannot distribute, sell, rent or license the material as though it is your own. These training course materials are for your — and your organization's — usage only. Thank you.

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