Kanban Replenishment for All Types of Industries (Manufacturing & Non-Manufacturing) Tom Brown Colibri Limited Roswell, Georgia 12/4/2018

Why consider kanban control? Lower inventory investment Better “customer” service Reduced administrative costs

What is kanban control ? A method of Just-in-Time inventory replenishment that originated in Japan. Kanban techniques can be used by both “manufacturing”and “non-manufacturing” org’s Kanban systems can be: 100% manual 100% Oracle A hybrid of Oracle and manual techniques Non-manufacturing organizations will likely want to use a hybrid approach

What makes kanban control different ? Kanban is “pull” based – driven by actual usage not forecasts Kanban replenishment is simple ?

Kanban Systems Can use different methods to trigger replenishment activity kanban cards are the most common kanban containers are frequently bar coding of cards / containers helps when automating kanban systems

Kanban Systems Not suited for all inventory items – look for items with frequent usage items with short lead times items with “willing” suppliers

Replenishment Flow for Kanban Cards When container is empty, signal sent to source to replenish kanban Wait until minimum order quantity is reached Empty New Planner determines when to add / remove cards Wait Full When received, kanban status is updated and container is moved to usage area In-Process When order minimum is reached, a Job, PO, or Move Order is created

Oracle Kanban Flow for Manufacturing Kanban replenishment auto- creates Purchase Requisition Supplier Kanbans AutoCreate PO or Blanket Release Blanks Sub-Inv Supplier Press Op Paint Op Assembly Sub-Inv Assembly Line Press / Paint Job Production Kanbans Finished Goods Kanban replenishment autocreates WIP Job Material Flow Kanban Flow

Oracle Kanban Flow: Non-Manufacturing Kanban replenish auto-creates Purchase Requisition Supplier Kanbans Purchasing Creates PO or Blanket PO Release Receiving Stock Room Supplier Customers or Consuming Departments Material Flow Kanban Flow

Pull Sequence #1. Setup a pull sequence to define Source, Replenishment, and Planning Parameters

Kanban Cards #2. Add kanban cards associated to the pull sequence

#3. Set supply status of each card – automatically updated by transactions

Determining the number of kanban cards / containers needed for each item An item has a 2 day lead time (when a kanban is emptied it will take 2 days to refill it) An item has a 2 day lead time (when a kanban is emptied it will take 2 days to refill it) Average daily usage of the item is 50 per day You will need 100 within the replenishment lead time (average daily demand times lead time) Thus, you need to activate 5 kanban cards (demand during lead time divided by kanban size)

Kanban Plans

Oracle Kanban Planning Assumptions Constant rate of demand While average daily demand is 50 per day, what is the maximum daily demand? Constant lead time While average lead time is 2 days, what is the maximum lead time? How can you account for these variances in demand and supply when planning kanban inventory?

Kanban Planning Using MS Excel Determine which items are good candidates for kanban control:

Kanban Planning Using MS Excel Determine number of kanbans to activate: