Kanban system could be simply defined as continuous supply of products, components, parts or inventory .So that system provides products, material or parts to the process, what it needs? Where it needs? And when it need? Basically Kanban operates on demand. That means Kanban controls the rate of production through the rate demand for product. Therefore precise forecasting of demand is utmost important to success implementation of Kanban. These kanban systems are very common in lean production.
The Kanban is a Japanese term, word Kan means "Visual" and Ban means " Card" Therefore Kanban refers to visualcard.This visual card is an indication to trigger action and useful as a effective tool in running a production process.
The Kanban is a message which signals depletion of item or product and require replenishment. In fact, if demand is more the depletion rate of product or item is high. Then more Kanbans are in system and that trigger action to produce or replenish the product or item. This system will never run out of product and oversupply of spares/items. In production ,this is consumption drives demand and specially in lean manufacturing demand driven system which will lead to faster turnarounds in production with lower inventory levels. Therefore Kanban may help to organization to be more competitive.
Origin of Kanban
In 1940s, Toyota studied the inventory process in supermarkets with the view of applying shelf-stocking techniques to the factory floor. Toyota Observed that customers get what they need, when they need and in the needed quantity also noted that supermarkets are stored only what they can sell and customers will buy only what they need since future supply is assured. Toyota view their process as customer and preceding process as store.
In 1953, applied the above supermarket logic to main machine plant shop. Toyota strictly follows following rules in implementation of Kanban.
Do not send defective products to the subsequent process
The subsequent process comes to withdraw only what is needed
Produce only the exact quantity withdrawn by the subsequent process
Equalize production
Kanban is a means to fine tuning
Stabilize and rationalize the process
Types of Kanban
In modern context basically two types of common Kanban systems can be seen.
Withdrawal (Conveyance) Kan-ban
Production Kan-ban
Withdrawal (Conveyance) Kanban
In withdrawal Kanban system authorization for move the parts pass from one stage to another. Once it gets the parts from the preceding process and moves them to the next process, remaining with the parts until the last part has been consumed by the next process. The withdrawal Kanban then travels back to the preceding process to get parts thus creating the cycle.
A withdrawal Kanban usually carries the following information:
Part number
Part name
Lot size
Routing process
Name of the next process o location of the next process
Name of the preceding process o location of the preceding process o container type
Container capacity
Number of containers released
The withdrawal Kanban layout can be designed many ways in order to display the above information.
Process of Kanban
Idea of "Pull" production is that manufacturers only produce when customer wants it. When customer demand is received through a confirmed order, production process will be started to complete the order. To notify the details of the order to production floor, signal cards or Kanban cards are used. These signal cards will flow in opposite direction where production process will flow. This reverse production process will inform the proceeding process the item/s needed, quantity required and time required for the next operation through a signal card. In the E-Kanban system logic will be same but instead of signal card going through the production flow, messages are auto generated by systems to inform respective processes. Figure 2.1 shows the information flow and production flow in Kanban system. Information will be transferred in terms of Kanban card. Material flow direction indicates the production process.
Figure 2.1 - Information flow and production flow in Kanban system
Kanban boards can be used to indicate the status of the tasks and quickly grasp if anything need urgent attention. Humans are sensitive to visual symbols can convey the message with much ease. Notes will be sticks to the Kanban board with the status under the respective category. These sticky notes can be used in different colours to symbolize employees whether any task are lagging behind and need urgent intervention.
Source: http://leanandkanban.wordpress.com/2009/04/04/the-kanban-board/
Figure 2.2 - Kanban board
As an example to the Kanban system, we can consider how the operations will take place in a supermarket. Supermarket consists of large number of items arranged in to respective isles. Customers will pick the items as per their requirement and proceed to the check out. When the cashier scans the items will generate a message to the stock control department with the description of the items and no of items sold. Based on the information obtained from the system, stock control department can order items and re-stock the items when the next delivery arrives. Since the supermarket has huge number of items and span in wide area, this way is much more convenient for the staff rather than staff going through the shop floor multiple times and checks what items are sold.
Another example for Kanban system would be the "three bin system". In this case, three bins signify the stock on respective location. One will be placed in the production floor, another bin will be placed in factory store and remaining bin will be placed in suppliers premises. Production will consume the stock in the bin located in production floor for daily operations. When the production gets empty, empty bin along with the Kanban card will be taken to factory stores. Then factory store swap the empty bin with a full bin. Full bin will be send back to production floor along with the Kanban card. Then factory stores send the empty bin along with the Kanban card to suppliers' stores. Supplier will send a full bin back to factory stores along with the Kanban card. This will loop continuously to supply the parts to production floor as and when required. In this system, items are pulled when its required by the production. This will help to avoid piling up unnecessary stock in the stores.
Production Kanban
The primary function of the production Kanban is to release an order to the preceding stage to build the lot size indicated on the card.
The production Kanban card should have the following information:
materials required as inputs at the preceding stage
parts required as inputs at the preceding stage
information stated on withdrawals Kan-ban
Advantages of Kanban
Disadvantages of Kanban
Electronic Kanban System
Electronic Kanban system (E-Kanban), which send Kanban signals electronically have become the most widespread software tool in the last few years. It is not infrequent in modern lean manufacturing or production facilities and leads to a reduction in the use of Kanban cards.
E-Kanban is a sophisticated software tool that significantly simplifies the process of implementing and maintaining a lean execution system. This system allows users to feed transactions to automatically receive inventory, black flash, labour and allocations and print a request to transfer inventory. Also it let users to enter transactions, and automatically releases replenish orders or internal transfers when an inventory bin or location is empty. Electronic Kanban has less complexities and easy to implement and it offers an immediate return on investment. When a Kanban event occurs, electronic Kanban can be adapted to automatically send an e-mail to key personnel and vendors. In order to streamline the entire communication process the system can be tailored to send an end-of-day aggregate demand notification.
Most of the manufactures and organizations such as Ford Motor Company have implemented E-Kanban systems as it helps to eliminate common problems such as manual entry errors and misplaced or lost cards. It can be integrated in to Enterprise Resource Planning (ERP) system. With the integration of Electronic Kanban systems into ERP system allows for realistic and actual demand signalling across the supply chain and it improved visibility.
An Electronic Kanban system creates four transactions as follows.
@E (Empty Bin)
Drives a new manufacturing Order, Inter Site Order, Repetitive Schedule, Purchase Order or Blank Release
@F (Full Bin)
Takes the appropriate action of closing the oldest Kanban order open for that item (key). Can be configured to black flush labour and/ or allocations, perform a turn-in transaction and set order status ready for closeout.
@T (Request Transfer)
Prints a bar-coded report that will prompt the transfer of inventory from stores or another location of this Kanban item (key). The purpose of this transaction is similar to the @E (empty Bin), but instead re-supplies item from an internal source.
@X (Inventory Transfer)
When transferring inventory from store area, the @X will perform a TW transaction that will transfer inventory from one location to another.
A better Kanban system always ensures some other activities are supported though it will not support traditional Kanban activities. With the support of the Kanban system these activities become ultimately more efficient. Kanban cards can print with a good E-Kanban system. They are able to reuse over and over. Heijunka board is a material that customers can use with both electronic and manual systems. They can see the status of all material and the production jointly with Electronic Kanban system. However there are no prominent differences with these two systems while there are significant advantages exist with E-Kanban system. An opportunity will given to users of the quality software to measure when cards should be added or either deleted from the system and also the time any card got lost, missing or even the time that it was last seen. This will let the system on the track always.
Most ESP systems will integrated with the good manufacturing software. This integration is allowing across the entire network. In most Kanban system implementations bar code scanning is inherent where most significant advantages comes with. The level of integration and accuracy guaranteed with the barcode scanning and manually it is difficult to attain.
Manual Kanban System vs. Electronic Kanban System
In manual Kanban system what really happens is the information or the signal about the demand at a consumption source is passed on by card, container or any other form through manually from the customer point to the supplier point. Therefore, it leads to lot of operational complexities and avoid transparency in inventory management.
However, in an Electronic Kanban system this signal passed through electronically. Each possible stage of the process gets recorded and accumulated by the E-Kanban system. Therefore, it does not allow users to interrupt manually with the Kanban cards since it is a fully automated system. It releases the gateway to initiate much faster and more efficient Kanban process. Electronic Kanban system leads to avoid some inherent difficulties that manual Kanban system used over the past years.
An Electronic Kanban system fundamentally consists following goals.
Kanban data management
Reduce on information delivery time
Leads to maximize the transparency
Support of existing Kanban system with continuous improvements
The following table shows some advantages of a Manual Kanban vs. Electronic Kanban system.
Manual Kanban
Electronic Kanban
Frequently complicated printing of Kanban cards
Simple and fast printing of several different types of Kanban cards
Very difficult if not impossible handling of a larger number of Kanban loops and cards
Simple and easy handling of thousands of loops and cards
Sending of Kanban signals over the greater distance causes time loss, complications and faults
Automatic sending of up to date information worldwide and avoiding of non value activities
Low transparency of current inventory and Kanban orders
Full transparency of current and actual inventory and Kanban orders
No real time information about open Kanban orders
Realtime information about open Kanban orders and available inventory through the electronic Kanban board
Application of Kanban System -Dankotuwa Porcelain PLC (DPL)
Dankotuwa Porcelain PLC (DPL) was established as a Corporation and is a leading manufacturer of Porcelain Tableware both locally and internationally. It was registered as a Private limited company in year 1984 and converted to a Public company in 1994. It is a listed company in the Colombo Stock Exchange (CSE) and its major share holder is International Ceramics Inc., Japan. The share holding is expected to change in next few months.
At Dankotuwa porcelain the oriental Japanese art of porcelain manufacturing is blended with western technology in order to be one of the best porcelains producers in the world.
It has two business lines, namely Domestic and International. Its domestic operation further categories in to Showroom sales, Dealer segment, Corporate sales and Special sales. Showrooms and Dealer segment is having similar set of designs. Corporate sales is customized sales operation where special sales mainly concerns on clearance of Export excess and factory seconds.
DPL is having a batch processing system. The actual lead time is minimum 45 days from order confirmation and MOQ is 2000 pieces per design. Designs per order have been restricted to maximum of 6 designs per order. These criteria have been imposed as to reduce the change over time, increase productivity, increase operational efficiency and above all to increase customer satisfaction.
Show rooms have considerable number of designs in its design portfolio and there are several SKUs in terms of Dinner sets, Tea sets, Cup and Saucer sets. Hence it was very difficult for Showrooms to maintain separate space as store. It was not advised on cost terms as well. Showrooms were placing orders for several designs and for quantities well below the MOQ. Therefore the production departments were having really hard time in supplying goods to showrooms and meeting their deadlines. Operational efficiencies were very low in this respect. There were several stocks out situations at Showrooms which lead to several customer complaints.
Therefore DPL decided to introduce KANBAN system to its Showroom operation.
Practicing Kanban at DPL
DPL factory is located at Dankotuwa about 50km away from Colombo and the showrooms are located at Factory premises, Colpetty and Kirulapone. At the initial stages of implementing Kanban, a proper sales forecast was done for Showrooms.
Showroom and stores
Showroom initiates the Kanban once a SKU is sold. This Kanban comes to the Stores located at Factory. Once the respective Kanban is received Stores releases the respective SKU with Kanban to requesting Showroom. At DPL one Kanban represented one SKU. It was difficult to replace the SKU at once since showrooms and stores are distantly located. Hence the replacement happens once a week. That is the Kanban cycle, which is one week from stores to showroom. Given the circumstances showrooms had to maintain a stock sufficient for one week's sale which is beneficial than having stock out situations. Up to this stage process is manual.
Stores and production
Once stores release a SKU the respective Kanban is sent to production planning. Ideally it should be sent to production department but being showroom sales is not the only sales operation at DPL, Kanban is routed this way as to minimize the disturbance to other proceeding orders.
Store and Production agreed on monthly Kanban cycle. It is based on the monthly average showroom sales figures and maintains the limitation given above. Therefore stores have to maintain a stock of showroom designs which is sufficient for a month. This is beneficial on operational, marketing and financial terms compared to previous adhoc ordering system.
At the start of each Kanban cycle production planning schedules to produce respective design in required SKUs and delivers it to stores with the Kanban. Kanban process between Stores and Production is automated.
Ideally the Production should produce the respective SKU once the Kanban is received form the stores. Then the SKU should be sent to Stores with the Kanban.
Kanban related operation issues at DPL
Lost or Misplacing of Kanban cards
Priority issues Kanban, Domestic sales, International orders
Delivery issues
Ad-hoc purchases
Communication issues
Recommendations
Significant portion of orders should be processed through Kanban system
To get the maximum benefit the whole process of production should be covered under Kanban system. Unless there can be issues with prioritizing of shared resources which will lead ultimately for idle resources.
E-Kanban implementation should be initiated with a pilot project
Normally when we introduce a system it will take some time to streamline a smooth process. Otherwise introduced system may lead to distort customer satisfaction.
Continues improvements (Kaizen system) is required to sustain the competitive advantage
Just introduced a Kanban system, will not lead to be in sustainable business unless continuous improvements bring in to the system in line with changing business environment.
Manual entries should be avoided
Where E-Kanban systems are in place data entries must be through scanning devices (bar code readers). Otherwise manual entry errors may affect adversely to Kanban system.
