KANBAN SYSTEM

The Japanese refer to Kanban as a simple parts-movement system that depends on cards and boxes/containers to take parts from one work station to another on a production line. Kanban is Japanese for sign or designated place. It is used in manufacturing to mean a visual signal that tells when it is time to get or make more of something. Kanban stands for Kan- card, Ban- signal. The essence of the Kanban concept is that a supplier or the warehouse should only deliver components to the production line as and when they are needed, so that there is no storage in the production area. Within this system, workstations located along production lines only produce/deliver desired components when they receive a card and an empty container, indicating that more parts will be needed in production. In case of line interruptions, each work-station will only produce enough components to fill the container and then stop. In addition, Kanban limits the amount of inventory in the process by acting as an authorization to produce more inventories. Since Kanban is a chain process in which orders flow from one process to another, the production or delivery of components is pulled to the production line. In contrast to the traditional forecast oriented method where parts are pushed to the line. What Kanbans Do: Controls the amounts of raw material amounts and of material in Work In Process Smoothes out flow, if sized properly Tells when and where there is a problem in the process Assures there is always just enough material on hand to make what is needed The Kanban process utilizes two different kinds of cards - transport Kanban and production Kanban. Both of the cards do not have to be used simultaneously in a production process. The transport Kanban contains information from where the part/component originated and its destination. When only this card is used, it is known as a simple Kanban process. In this system components are ordered and produced according to a daily schedule. Roos describes this system as ordering a box when it is the only one left on line .

The production Kanban, on the other hand, outlines to what extent and when work has to be accomplished by a specific station on the production line. Together with the transport Kanban, it is known as an integrated Kanban process. This system is often used between the corporation and its suppliers. Here, the corporation s transport Kanban is the card which regulates the supplier s production Kanban. The same amount of components is produced as used in production and the maximum stock level is determined by the number of cards that are in circulation. The number of cards in circulation can be determined by an algebraic formula. ADVANTAGES 1. A simple and understandable process 2. Provides quick and precise information 3. Low costs associated with the transfer of information 4. Provides quick response to changes 5. Limit of over-capacity in processes 6. Avoids overproduction 7. Is minimizing waste 8. Control can be maintained 9. Delegates responsibility to line workers Types Of Kanbans: Raw Material Kanban tells suppliers when to send how much of a particular item to a particular place. In-Process Kanban determines the amount of WIP (Work In Process) that can be kept between any two operations in a process Finished Goods Kanban determines the amount of a product to be kept on hand at any given time. Removal of material from the Finished Goods Kanban acts as a signal for more of that product to be manufactured.

Types Of Kanban Signals: A calculated amount of material kept in a designated space, such as a bin or between lines on a workbench or on the floor A card that is used to tell the amount of material to be made or ordered The markings on a bin that determine when more material needs to be ordered or made Any other clear visual signal that indicates it is time to get more material

How Kanbans Work: Material Resupply Kanban: y All of the parts used to manufacture a particular product are identified as well as the number used in each product. y Lead time is calculated, that is the amount of time it takes for the parts to be ordered and delivered. y The demand for the product over a specific length of time is then determined. y The number of parts used in the product is multiplied by the number of the products demanded over the length of time that it takes to order and receive the parts. y The goal is to order parts at the point when the number of parts on hand reach the amount that will be used up during the time it takes to order and get the needed parts delivered. Usually, because of variability in lead time, the amount of reordered parts occurs is usually a bit more than the amount of parts needed to cover order lead time. Common signals used as kanbans include two bin resupply systems and card systems

Work In Process Kanban y A one piece flow, when products move one at a time from one process step to another, and where there are no kanbans at all is the ideal production. However, one piece flow demands a very well balanced manufacturing line, meaning that each process station uses approximately the same amount of time to do the necessary work.. Since that is often not possible, kanbans are used to help manage the flow.

y First, the process times at each station are calculated. y Then, when one station has to take significantly more time to do its work than previous stations, kanbans are put in to keep material batching to a minimum. Usually, if a station takes twice as long as the station before, a kanban half again the size is put in place. This allows the person previous to the station where work has bunched up to help the person at the more work intensive station.

Finished Goods Kanban y The demand for a particular product is tracked over time. y Based upon the demand, the safety stock is calculated, that is an amount of product to have on hand to satisfy most orders within a specific window of time (e.g. a day or a week). y Based upon the demand, it is then calculated how many of the product needs to be made per day. This is known as TAKT time (TAKT is German for rhythm). y Finished Goods Kanbans are set up in the shipping area with the amount of product that has been determined as required safety stock. y When orders are filled by pulling product from the Finished Goods Kanban, a signal, such as a bin or a card, is sent to the manufacturing floor. That signal tells production to complete the number of products needed to replenish the Finished Goods Kanban.. The amount of product needed is calculated using the TAKT time. y The assumption is that production has the capacity to make the necessary amount of the product in the required time to keep the Finished Goods Kanbans filled.

CALCULATION Raw Material Kanban Methods Is: A calculation that determines the optimal amount of raw material goods to be placed in a buffer (Kanban) Does: Allows for inventory control of raw parts while assuring the raw material is available on demand How: General Rules: y Determine actual production lead time to produce parts. y Analyze average demand over lead time of supplier for parts. y Identify peak demand and frequency of demand spikes beyond average. y Present data to supplier and get agreement from the customer to utilize Kanbans. y Determine quantities of raw parts needed to be in Kanbans. y Negotiate safety stock amounts with supplier. Make an agreement with the supplier as to who owns any raw material in kanbans. Make sure that any finished goods in kanbans are properly costed and that margins reflect absorption of those costs burdened by your company. y Determine container to be used as for material. Determine if container should be used as signal for making parts ( empty container arrives and needs to be filled) or some other kanban signal should be used, such as: kanban cards, faxban, etc. y Supplier agrees to kanban rules. First option: the supplier ships raw parts using established lead time + shipping time window for delivery and parts with front end loading of parts into kanbans. Kanbans are filled when arrived in established time window. Second option: set up a two bin resupply process, where one kanban is full at the supplier waiting for you to order and that kanban is shipped immediately. The second kanban is filled during lead time and is ready when you order the next shipment.

Raw Material with Stable Pull: Method : Determine time frequency (e.g. every week) and agreed upon amount of raw parts to be shipped Determine Takt time for period between agreed upon shipments. (number of parts to be shipped / time between shipments) Kanban size then equals standard order size. Tt = Takt Time nP = Average number of Parts shipped tS = Average time between Shipments K=Tt=tS/nP In Process Kanban Method Is: A calculation that determines the optimal size of a production process queue(Kanban). Does: Allow for production process control using Kanbans. How: General Rules: y Select the process or sub-process to implement Kanban process control. y Determine Kanban locations. Kanban locations are determined by evaluating the rhythm of the process or sub-processes and determining where controlled queues are needed. Rhythm can be calculated by determining the longest cycle time (in minutes) of all operations in the process or sub-process. The overall rhythm should be balanced against that longest operation. Kanbans can be used to achieve balance in a process. y Determine the Kanban size. This is done using by using an average customer demand (usually monthly) divided by the number of operation minutes during that same period times the process rhythm (time).

Formula: K = p/u * T Where K = Kanban size (in units) p = Units shipped per month u = Number of monthly production minutes available T = Process rhythm (time)

Finished Goods Kanban Method Is: A calculation that determines the optimal amount of finished goods to be placed in a buffer (Kanban) Does: Allows for inventory control of finished goods while assuring the customer receives material on demand How: General Rules: y Determine actual production lead time to produce parts y Analyze average demand over lead time of customer for parts y Identify peak demand and frequency of demand spikes beyond average y Present data to customer and get agreement from the customer to utilize Kanbans. y Negotiate safety stock amounts with customer. Get agreement from customer to purchase any material in finished goods kanbans. If not make sure that any finished goods in kanbans are properly costed and that margins reflect absorption of those costs. y Determine container to be used as for material. Determine if container should be used as signal for making parts ( empty container arrives and needs to be filled) or some other kanban signal should be used, such as: kanban cards, faxban, etc. y Customer agrees to kanban rules. First, Customer orders shipment using established lead time + shipping time for delivery and parts are built and shipped to customer when filled. Or, alternately, set up a two bin resupply process, where one kanban is full waiting for customer order to ship and that kanban is shipped immediately. Second kanban is filled during lead time and have ready for when customer orders a shipment.

Product With Stable Pull: Method : Determine time frequency (e.g. every week) and agreed upon size of order to be shipped: Determine Takt time for period between agreed upon shipments. ( number of parts to be shipped / time between shipments ) Kanban size then equals standard order size. Tt = Takt Time nP = Average number of Parts shipped tS = Average time between Shipments K=Tt=tS/Np PROJECT The project will be done on basis of secondary information.

INFORMATION NEEDED
Different Products RAW MATERIALS Raw material required for each product. Critical raw material required. Average raw material used daily. Raw material storage capacity. Order patternOrder quantity for each raw material. Frequency of order placement (time between orders). IN PROCESS Average time taken in processes for each product to be converted from raw material to finished good. Monthly demand for each product(average). Monthly time available for production. FINISHED GOODS Average finished goods produced daily. Average daily demand for finished goods. Order patternOrdered quantity. Time between order and delivery. Frequency of receiving orders.