Why Kanban Systems Fail and What You Can Do About it Saifallah Benjaafar Center for Manufacturing Logistics Department of Mechanical Engineering University of Minnesota Minneapolis, MN 55455

Kanban A “kanban” is a sign-board or card in Japanese and is the name of the flow control system developed by Toyota.

Outline 1. The JIT context 2. Basic mechanics 3. Advantages 4. Limitations 5. Alternatives to Kanban 6. CONWIP systems 7. PFB systems 8. MTO/MYS systems 9. Conclusions

Role Kanban is a tool for realizing just-in-time. For this tool to work fairly well, the production process must be managed to flow as much as possible. This is really the basic condition. Other important conditions are leveling production as much as possible and always working in accordance with standard work methods. --- Ohno 1988

Just-in -Time (JIT) A collection of principles aimed at reducing inventory, increasing throughput, and minimizing manufacturing lead times.

Origins of JIT Japan’s attempt to become competitive with US and European manufacturers after WW II The Toyota Production System

JIT principles Reduce setup times reduce batch sizes Reduce variability Reduce material handling Reduce defects and rework Reduce breakdowns Increase capacity Smooth production schedules

JIT principles (cont.) Maintain constant WIP (limit WIP buffer sizes) Limit finished goods inventory and raw materials Synchronize operations within the factory Synchronize material delivery with suppliers and customers Improve worker flexibility and empower worker to make improvements Simplify workflow

The Seven Zeros Zero (excess) lot sizes Zero setups Zero breakdowns Zero lead times Zero surging Zero material handling Zero defects

Kanban Systems A shop floor control strategy aimed at (1) reducing inventory, (2) simplifying workflow, (3) increasing throughput, (4) reducing cycle time, (5) improving customer lead times, and (5) improving quality.

Mechanics of Kanban Push vs. Pull: Kanban is a “pull system” Push systems schedule releases Pull systems authorize releases Synchronous manufacturing: Pull signals ensure tight coupling between operations throughout the system

Mechanics of Kanban (cont.) One card systems Two card systems

Mechanics of Kanban (cont.) Work Center Buffer Card Flow

One-Card Kanban Outbound stockpoint Production cards Completed parts with cards enter outbound stockpoint. When stock is removed, place production card in hold box. Production card authorizes start of work.

Two-Card Kanban Outbound stockpoint Inbound stockpoint Production cards Move stock to inbound stock point. When stock is removed, place production card in hold box. Production card authorizes start of work. Move card authorizes pickup of parts. Remove move card and place in hold box. Move cards

MRP versus Kanban MRP … Kanban … … Kanban Signals Full Containers Lover Level Inven-tory … Assem-bly Kanban Lover Level Inven-tory … Assem-bly … Kanban Signals Full Containers

Signaling Cards Lights & sounds Electronic messages Automation

The Key Issue How many Kanbans should we have at each stage of the process and for each product?

Tradeoffs Too many Kanbans Too much WIP and long cycle times Too few Kanbans Lower throughput and vulnerability to demand and process variability

Little’s Law Cycle time = WIP/Throughput WIP = (Cycle time)(Throughput)

Example Four identical tools in series. Each takes 2 hours per piece. No variability. Constant WIP.

The Penny Fab

Throughput and Cycle Time vs. WIP Throughput (Jobs/hr) 0 2 4 6 8 10 12 14 .2 .4 .3 .5 .1 WIP (Jobs)

Throughput and Cycle Time vs. WIP (cont.) 20 16 Cycle time (Hours) 12 8 4 0 2 4 6 8 10 12 14 WIP (Jobs)

The Case of an Unbalanced Line The maximum feasible throughput rate is the processing rate of the bottleneck Critical WIP = (Bottleneck rate)(Total processing time)

The Impact of Variability Processing times are subject to variability, material handling is not instantaneous, processes are subject to breakdowns, demand is subject to fluctuation Longer cycle times and lower throughput

Number of Kanbans at Toyota Number of cards = WIP Number of cards = D/QL(1 + a) D: Demand Q: Container L: Raw processing time a: safety (variability) factor

Guidelines for allocating Kanbans Allocate Kanbans evenly in a balanced system Allocate more Kanbans to slower processes or processes with higher workloads Always protect the bottleneck

Guidelines for allocating Kanbans (cont.) Start with current averages Gradually reduce Kanbans at stations that are always full Increase Kanbans at stations that are always empty

Advantages of Kanban Simplifies workflow Synchronizes manufacturing Reduces WIP accumulation at all processes stages Improves performance predictability and consistency Fosters communication between neighboring processes Reduces defects and enables 100% inspection

Advantages of Kanban (cont.) Encourages line balancing and process variability reduction Encourages focused and cellular manufacturing Y2K robust

Limitations of Kanban Systems Ideal for high volume and low variety manufacturing Vulnerable to fluctuations in demand volume and product mix Vulnerable to process variability and machine breakdowns Inefficient in handling infrequent orders or expediting special orders Vulnerability to raw material shortages and variability in supplier lead times

Alternatives to Kanban Constant Work-in-Process (CONWIP) Pull from the Bottleneck (PFB) Hybrid Make-to-stock/Make-to-order system

CONWIP CONWIP Cards Production Line Inbound Stock Outbound Stock

Basic Configurations Constant work-in-process Input/output control Asynchronous operation Dispatching list Example: Flow lines

CONWIP Control . . . LAN PC Work Centers Dispatching list DD PN Quant –— –— ––––– Dispatching list LAN . . . Work Centers

CONWIP Configurations Basic CONWIP Multi-Loop CONWIP Kanban Work Center Buffer Card Flow

CONWIP Mechanics A new job is introduced whenever one completes The next job is selected from a dispatching list based on current demand The mix of jobs is not fixed Priorities can be assigned to jobs in the dispatching list WIP level can be dynamically reduced

Advantages of CONWIP-based Control Accommodates multiple products and low production volumes Allows expediting and infrequent orders Less vulnerable to demand and process variability Less vulnerable to breakdowns Protects throughput and prevents bottleneck starvation Simpler to implement and manage

Coupled and Uncoupled CONWIP Loops Bottleneck CONWIP Loop Buffer Job CONWIP Card Material Flow Card Flow

Splitting Loops at Shared Resource Routing A Routing A Routing B Routing B CONWIP Loop Card Flow Material Flow Buffer

Modifications of Basic CONWIP Multiple Product Families: Capacity-adjusted WIP CONWIP Controller Running a card deficit Assembly Systems: CONWIP achieves synchronization naturally WIP levels must be sensitive to “length” of fabrication lines

Card Deficits Jobs without Cards Jobs with Cards B Bottleneck Process Failed Machine

CONWIP Assembly Processing Times for Line A 2 1 4 1 Processing Times for Line B 3 3 2 3 Assembly Buffer Card Flow Material Flow

Pull From the Bottleneck Problems with CONWIP/Kanban: Bottleneck starvation due to downstream failures Premature releases due to CONWIP requirements PFB Remedies: PFB ignores WIP downstream of bottleneck PFB launches orders when bottleneck can accommodate them PFB Problem: Floating bottlenecks

Simple Pull From the Bottleneck Material Flow Card Flow

Make-to-order/Make-to-stock Configurations Build components and subassemblies to stock Build final assemblies to order Pull system for MTS Push System for MTO

Conclusion There are Pros and Cons to everything Pull systems are one piece of the puzzle Change throughout the organization is essential An integrated supply chain strategy is critical

References and Additional Reading Factory Physics, W. J. Hopp and M. Spearman, Irwin, 1996 (and teaching notes) The Race, E. M. Goldratt and R. E. Fox, North-River Press, 1986 QRM Revisited: Don't Push or Pull - POLCA, APICS Magazine, Vol. 8, No. 11, 1998.

Additional Resources at U of M Industrial Engineering Graduate Program Master of Science in Manufacturing Systems Graduate Student Internships Center for Manufacturing Logistics