Kanban A New Approach (Tool for Information Flow)

Kanban A New Approach (Tool for Information Flow)
Good morning and welcome to today’s training program. A few years ago we introduced Kanban as a supporting tool for the ArvinMeritor Performance System. AMPS was designed to provide structure to our operations and provide a method or framework for continuous improvement. This strategic move to implement AMPS in ArvinMeritor was done in order to improve our competitive position and secure our existence in the future. To support this strategy, Kanban was developed to serve as a tool for information flow. In addition, Kanban would serve as a tool for identifying opportunities for improvement. Unfortunately, Kanban has not developed in our operations at the same pace as the other tools of AMPS. However, we all know that the two primary keys to success in any operation are communication, or the flow of information, and the ability to identify areas for improvement. To support the philosophy of continuous improvement, the material in this training class has been revised to provide us with “A New Approach” to understanding the role of Kanban, the method for implementation and the benefits to be gained by using and maintaining the system. Copyright©2000 ArvinMeritor Industries, Inc.

Agenda Time Topic/Activity 8:00 AM 8:05 AM 8:20 AM 9:05 AM 9:20 AM
12:15 PM 1:00 PM 2:00 PM 2:45 PM 3:00 PM 4:00 PM 4:45 PM 5:00 PM 5:30 PM 5:45 PM Opening Introduction Information Flow Break Kanban Simulation1 The Customer Leveling Exercise Lunch Kanban Simulation 2 Internal Pull System Lot Box Production Lot Size Calculation Material Movement Supplier Card Calculation Closing

Introductions Name Years of Service Current Position
Before we get started with our discussion on Kanban, lets take a minute to introduce ourselves. This is also a good time to complete the training document.

Kanban System Based on Toyota Production System
Driven by External Customers Addresses Constraints & Bottlenecks 1. Understanding our Capabilities 2. Lot Size Production During the course of the day, we will discuss how Kanban supports the overall improvement strategy in ArvinMeritor. This all begins with a clear understanding of our customers needs and how we communicate those needs throughout the organization. Because the needs of the customer change on a daily basis, we need a system that will support those changes without causing major disruptions throughout the entire value stream. After we develop an understanding of how to meet the needs of the customer, we will focus on developing a system of information that pulls product through the value stream replenishing only what the customer has withdrawn. By utilizing this approach, we do not waste our resources (people and material) building product that the customer does not want. At the same time, we will begin to see opportunities for improvement that support the needs of the customer. Since these improvement opportunities do not take place overnight, the system allows us to continue to operate at a pace equal to our improvement potential. At the same time, the system does not allow us to forget the direction of our improvement. This type of information is not only critical to our internal needs, but extends throughout our supply base. Signaling our internal needs to our suppliers is also a part of the information flow and is supported by the use of Kanban. Better information given to our suppliers will help determine their ability to meet our needs without adding waste or cost to the final product. After successfully implementing this type of system, maintaining the system allows us to repeat the process over and over again.

Overview Supporting Company Strategy Understanding Customer Needs
Internal Kanban System Signaling the Supplier

The Objective Lower Inventory / Reduced Lead-Time
Pull of Product Based on Usage The overall objective is very simple, yet difficult to achieve. The foundation of the objective begins with creating an information system that supports the development of a lean company. In other words, we are making communication the foundation for everything we do. The tool for this communication system is Kanban. Once the information system is developed, we build on this foundation by pulling product through the system based on actual usage. This becomes an automatic process that provides consistent repeatability. The end result is lower inventory throughout the entire value stream that provides an overall reduction in lead-time. Lower inventories and reduced lead-times lead to greater flexibility in the manufacturing process. Create Information System that Supports Lean Principles

Company Strategy Grow our Business Improve our Competitive Position
Internal and external Strengthen our resources Improve our Competitive Position Continually strive for perfection Reduce cost Eliminate waste in operations We should take a few minutes to understand the strategy of ArvinMeritor and how Kanban as an information tool supports the strategy. First of all, the primary strategy is focused on a growth objective. At the same time, we want to grow and develop our resources to achieve this strategy. The bottom line means that we want to improve our competitive position in the marketplace. This type of improvement is generated by continually striving for perfection. The pursuit of perfection will help lead us to reduce our cost by 380 Million annually, a necessary reduction to offset customer price reductions, labor inflation and improving our overall rate of return. These reductions can be realized through the elimination of waste in our operations. In order to reduce that waste, we have to be able to understand where it comes from and take steps to remove it.

Supporting Company Strategy
Elimination of Waste Overproduction Material movement Inventory Transition to Just-in-Time Kanban system Kanban signals To support this strategy, this training class focuses on (3) types of waste. Overproduction simply means producing product in excess of what the customer wants. When overproduction occurs, it requires us to move material to other locations instead of directly to the customer. The final result leads to excess inventory. As we develop systems that allow us to produce only what the customer wants, we move closer to Just-In-Time. This means that our inventories are at the lowest possible levels, since we are pulling product through the system that the customer has taken. Kanban provides us with this type of system. Since production occurs only when product is withdrawn, inventory levels do not have the capability to exceed a predetermined level, as production occurs only when a Kanban has been generated in the system.

Key Assumptions Production schedules will always change
Production will never go according to schedule It is human nature to overproduce In our business it is safe to say that these assumptions generally stand true. First of all, production schedules will always change. For a variety of reasons, the product requirements from our customer will change. This might be because of changes in market demand, or simply because of daily production problems that occur at the customer. We also have these same type of problems, downtime for example, that prevent production from meeting the plan. And generally because these problems exist, we have a tendency to overproduce. This leads us to manufacture product based on “Just-In-Case” rather than “Just-In-Time”.

Offsetting the Assumptions
Kanban System Withdraw only what you need Replenish what is taken Overall Benefits Flexibility in production Prevents overproduction Reduces inventory To offset these assumptions, it becomes necessary to establish a pull system based on withdrawing only what is needed and replenishing that same quantity. This results in more flexible operations without the opportunity for overproduction, thereby reducing inventory levels.

Information Flow Now that we have spent some time understanding how Kanban should fit into our improvement picture and briefly discussed the direction that ArvinMeritor is moving into the future…let’s get into the course content. We will begin today talking about our method of communication in our facilities, or Information Flow.

The Kanban signal tells us:
When to make it! When to move it! Information simply put, signals us to perform some type of task. Kanban signals tell us when it is time to move or make our product. Without the signal, no action takes place.

Kanban System Customer Process Supplying Process Finished Goods Store
“Production” Card “Withdrawal” Card Supplying Process Customer Process product product This example supports what we have just stated. The customer process, whether it is an internal or external customer, requires us to provide them with our product. This signal to move product to the customer is accomplished through a Withdrawal Kanban. Withdrawal simply means that we are transferring our product to the customer based on their request. There are different types of Withdrawal Kanbans, however, they serve the same basic function. That function is to move product. This product is pulled by the customer from a store of finished goods. The function of the Withdrawal Kanban is to move product to the customer from the store. The Withdrawal Kanban serves no other function than to move material. When product is removed from the store by the use of Withdrawal Kanban, the Production Kanban already in the container at the store, is sent back to the supplying process to tell them it is time to replace what has been moved to the customer. Without a Production Kanban, the supplying process can not make material, which prevents the overproduction of parts. Finished Goods Store

Withdrawal Kanban Signal
When to move What to move Where to move How much Tells us: When to move What to move Where to move How much to move Let’s spend some time discussing the withdrawal kanban in more depth. The Withdrawal Kanban tells us when, what, where and how much to move.

Three Types of Withdrawal Kanban Signals
Customer Kanban Signal Transfers material from plant to customer Move Kanban Signal Transfers material between work units Supplier Kanban Signal Pulls material from supplier to plant There are actually (3) different types of Withdrawal Kanban, however they all serve the same purpose and that is to move material. The Customer Kanban flows between our external customer and our plant. This Kanban moves material from our finished goods inventory to the customer location. Some customers use preprinted labels that serve the same purpose. The Move Kanban is used internally in our plants and moves material between work units. Finally, the Supplier Kanban moves material from our external suppliers to our raw material or component inventory.

Customer Kanban Signal Information
Supplier Quantity Supplier Number Card Number Kanban Signal Number Container Type Part Number Description Storage Location Storage Address The Customer Kanban, when in use by our customers, contains the information on this slide. Supplier - Our facility name. Quantity - The number of pieces per container. Supplier Number - The number assigned by the customer for our facility. Card Number - The number of the card. Kanban Number - Short name of the part number. Container - The type of container used for the finished goods. Part Number - The number of the part assigned by the customer. Description - Description or name of the part. Storage Location - The location where the parts are stored in our facility. Storage Address - The area in the storage location where the parts are stored.

Customer Kanban Signal
Supplier Kanban Signal No. Part No. Storage Location Quantity Supplier No. Card No. Container Type Description Storage Address This is an example of a Customer Kanban Card.

Flow of Customer Kanban Signal
Plant Finished Goods Store External Customer The flow of the Customer Kanban can be seen in this example. When the External Customer needs product, the Customer sends their Kanban to our facilities to withdraw product to be transferred to their facility. This Kanban is attached to the finished goods container and shipped to the External Customer with the needed product. If the Customer Kanban Card is found outside of this loop, a handling error has occurred. It is important to identify the problem as soon as possible to prevent a missed shipment to the Customer. Perhaps this Kanban was returned in an empty container. If this occurs, the Customer may increase their order the next time because the Kanban was not properly ordered in their system. If this happens, notify the Customer immediately for corrective action to be taken. needed product

Move Kanban Signal Information
Part Number Supplier Name Storage Address (Point of Storage) Card Number Kanban Signal Number Work Unit Name (Customer) Quantity per Container Line Address (Point of Use) The Move Kanban is used to transfer material between work units in the facility. It is a Withdrawal Kanban used to move material internally. The information on the Move Kanban might include the following information: 1. Part Number as a reference to the type of part. 2. Supplier Name or the internal supply source. 3. Storage Address or where the product can be found. 4. Card Number indicating the number of Kanbans in the system. 5. Line Name or Customer Name for where the product will be moved. 6. Quantity per container. 7. Line Address for where the product will be moved to.

Move Kanban Signal STORE ADDRESS WORK UNIT ADDRESS SUPPLIER NAME
WORK UNIT NAME Kanban Signal No. This is an example of a move card. All standard move cards are colored. Most are blue, but the color does not matter as long as it doesn’t conflict with other card colors in the system. The color is a visual control for understanding the use or purpose of the card. PART No. QUANTITY CARD #

Flow of Move Kanban Signal
Internal Raw Material Store Production Work Unit This example illustrates the flow of the Move Kanban. Notice that the internal production work unit sends the Move Kanban back to the raw material storage to withdraw product to be sent back to the work unit. This is the method for moving parts to the production work unit. The only purpose of this card is to transfer material. If the Move Kanban is found outside this loop, an error in handling has occurred. Investigation and corrective action should take place. needed product

Supplier Kanban Signal Information
Supplier Name Part Number Part Name Customer Storage Address Work Unit Address Quantity per Container Card Number Kanban Signal Number The Supplier Kanban is also used to withdraw product. The purpose of the Supplier Kanban is to bring product into our plants from the external supplier. Information on this Kanban includes: 1. The name of the Supplier. 2. The part number to be shipped. 3. The name of the part for easy reference. 4. The customer, in this case, our facility. 5. The storage address in our facility where the product will be stored. 6. The work unit address for where the next point of use will take place. 7. The quantity per container. 8. The card number to know how many cards are in the system. 9. The Kanban number.

Supplier Kanban Signal
Kanban Signal Number Supplier Name Part Number Quantity Card No. Customer Store Address Work Unit Address Part Name This is an example of the Supplier Kanban Card. Remember, its only purpose is to pull product from our suppliers into our facility.

Flow of Supplier Kanban Signal
External Supplier Finished Goods Store Internal Raw Material Store This example shows the flow of the Supplier Kanban. When parts are used from the internal raw material store, the Kanban is sent to the supplier to replace what has been used. If this Kanban is found outside this loop, an error has occurred in handling. This could cause a shortage of parts to the internal work unit. Proper handling and use of this Kanban will keep the work unit in parts. needed product

Flow of Withdrawal Kanban Signals
Supplier Signal Move Signal Customer Signal External Supplier Internal Raw Materials Store Internal Production Work Unit Plant Finished Goods Store External Customer This example puts the flow of all (3) types of Withdrawal Kanban into perspective. When the external customer needs product from us, the Customer Kanban is sent to our facility and product is shipped from finished goods. In the same method, when the internal production work unit needs product from the internal raw material store, the Move Kanban withdraws the product and moves it to the internal production work unit. Finally, to replace the parts in raw material store, the Supplier Kanban is sent to the supplier to withdraw and transfer product to our raw material store. needed product needed product needed product needed product

Production Kanban Signal
Tells Us: When to make What to make How much to make Now that the movement of material by the use of the (3) types of Withdrawal Kanban is clear, let’s discuss the information that tells us to produce or the Production Kanban. The Production Kanban serves the purpose of letting us know when to make something, what we need to make, and how much we should make at one time.

Two Types of Production Kanban Signals
Instructs us to make One Container Signal (Triangle) Instructs us to produce One Lot Used when a work unit does not have the changeover capability to produce one container for one production card There are (2) types of normal Production Kanban. The first type is the Production Kanban that instructs us to make one container. This Kanban is a card. The second type is a Signal or Triangle Kanban. This Kanban tells us to produce one lot of a certain part. This type of Kanban is used when a work unit does not have the changeover capability to produce one container for one production card. A good example might be a press that produces several part numbers.

Production Card Information
Store Address Kanban Signal Number Work Unit Name Part Number Quantity Card Number The Production Kanban Card information contains the following information: Store Address - The designated area where this finished container is stored Kanban Number - The abbreviated name or nickname of this particular part Work Unit Name - The work unit that produces this part Part No. - The finished part #, it could be the ArvinMeritor part #, the Customer part #, or both Quantity - The number of finished pieces in a container Card # - The cards are numbered so that the system can be audited

Production Card STORE ADDRESS Kanban Signal No. WORK UNIT NAME
This is an example of a Production Kanban Card. The production cards are always white to keep them identified separately from the move card. PART No. QUANTITY CARD #

Signal (Triangle) Information
Work Unit Name Part Number Container Type Quantity Process Time Lot Size Order Point Kanban Signal Number Signal Kanban is used to signal the need to produce. This is a basic signal with all of the required information. Additional information may be included such as Material, Die No., Strokes/Minute, etc.. The Order Point & Lot Size should be listed in terms of # of containers. Lot size in containers is how many containers are to be produced when the signal goes to the line.

# of containers to produce
Signal (Triangle) WORK UNIT NAME PART No. CONTAINER TYPE QUANTITY PROCESSING TIME FOR 1 LOT LOT SIZE ORDER POINT # of containers to produce This is an example of the Signal Kanban. Notice that it has a designated location for the number of containers to produce and the signal or reorder point number. Where the signal is placed in inventory Kanban Signal #

Flow of Production Kanban Signals
Production Signal Move Signal Triangle Signal Internal Sub Assembly Work Unit Internal Sub Assembly Work Unit Store Internal Final Assembly Work Unit Finished Goods Store This is an illustration of the signal to produce using both the Production and Signal Kanban. In this example, as product is withdrawn from the finished goods store, the Signal Kanban goes back to the line to be produced. In the same method, when the internal sub-assembly store has product withdrawn, the Production Kanban is returned to the Work Unit for product to be produced. In this example, what is the link between the internal final assembly cell and the sub-assembly store? The answer is the Move Kanban. needed product needed product needed product

Kanban Signal Flow Sub Assembly Work Unit Sub Stores Finished Goods
Production Kanban Signal Finished Goods Store A C B D Move This example puts it together. Finished goods are where the final assemblies are stored. When containers are pulled from the finished goods area the cards are sent to the finished assembly work unit. When the Signal or Triangle Kanban is reached in the inventory, the Signal Kanban moves back to the work unit for one lot to be produced. The final assembly work unit receives component parts from the sub assembly work unit’s store. The dashed loop represents the flow of move cards between the finished work unit and the sub assembly inventory. The sub assembly work unit produces Kanban for Kanban. When product is moved from the sub assembly store, by the use of the Move Kanban, the Production Kanban returns to the sub assembly work unit to be replaced. Finished Assembly Work Unit Triangle Kanban Signal

How Do You Handle Non-Standard Situations
Temporary Kanban Signals Need scheduled down time to PM equipment Sample parts Service parts Temporary cards are used for any situation that is not a normal requirement by the customer. This might include scheduling time to perform preventative maintenance on equipment, the production of sample parts, or for service part production.

Temporary Kanban Signal Card
STORE ADDRESS Kanban Signal No. WORK UNIT NAME A Temporary Kanban Card may be placed into the system if a part number is going to be produced temporarily. The Temporary Kanban Card can then be placed into the system for a short period of time and then removed once it has cycled through the system only once. Once the part number has been processed the card must come out of the system permanently. PART No. QUANTITY CARD #

Summary of Kanban Types
Production - Production Kanban Signal - Signal (Triangle) - Temporary Kanban Signal Withdrawal - Customer Kanban Signal - Move Kanban Signal - Supplier Kanban Signal We have discussed a card system that initiates two types of actions: withdrawal of product or the production of product. Customer Kanban, Move Kanban, and Supplier Kanban are all withdrawal cards, meaning they initiate the movement of product. Production Kanban, Signal (Triangle) Kanban, and Temporary Kanban are all cards that initiate the production of product within our facilities.

Additional Benefits of Kanban
Support Visual Control Are we behind? What do I produce first? What is my inventory situation? Continuous Improvement Large inventories hide problems Facilitate continuous improvement by removing Kanban Signals There are additional benefits to Kanban. Kanban is a good visual control tool for understanding the production situation. The Kanban is also one of the best information tools to understand opportunities for improvement.

Kanban System Simulation
Exercise 1 (Without Leveling) This exercise is designed for hands-on understanding of how the cards transfer within the Kanban system. It does not include leveling to demonstrate the effects of fluctuation during production.

Kanban System Simulation - Exercise 1
Objective To gain an understanding of Kanban System card transfer, exchange, and loop location The objective of this simulation is to gain an understanding of Kanban card transfer, exchange of the Kanban cards, and the area or loop where each Kanban card can be found.

Details Activity will be run in time segments Each time segment consists of one day One truck from customer per day Simulation will run for “5” days This slide explains the details of the game. The four bullet points summarize the activity.

Kanban System Simulation - Exercise 1 Activity Pieces
35 Plastic bowls 73 White Lego Blocks 35 Yellow Lego Blocks 5 Customer Cards 18 Place Mats 13 Production Cards 8 Move Cards 4 Supplier Cards 5 Signal Posts 5 Order Cards When facilities want to train their members on Kanban by using the simulation exercise, the items on this slide are required.

Activity Layout - Exercise 1
W Y Customer Empty Containers Signal Post 4 Final Assembly 3 Sub 1 Raw Material Processing Supplier A B C D E F G H I J A - Customer B - Truck Driver-1 (Customer to Plant) C - Final Assembly Operator D - Material Handler-1 (Final Assembly to Sub-Assembly) E - Sub-Assembly Operator F - Material Handler-2 (Sub-Assembly to Raw Material Storage) G - Raw Material Processing (Parts Ordering / Parts Receiving) H - Truck Driver-2 (Plant to Supplier) I - Supplier J - Manager 4 = 3 = 2 = 1 = This is the overall layout of the exercise and the number of people required to run the simulation. It can be done with less people, they will just have more roles to play. Notice on the bottom right hand side of the slide, the parts (lego blocks) used in each inventory location.

Activity Layout - Exercise 1 Card Types
W Y Empty Containers Customer 4 Signal Post Final Assembly 3 Sub 1 Raw Material Storage Supplier Customer Card Production Card Move Card Supplier Card This slide is designed to show the location of each type of Kanban card in the system.

Kanban System Simulation - Exercise 1 Roles
Customer Receive order from facilitator Move raw materials to customer processing area Remove Customer Cards from container Place Customer Cards in Signal post Disassemble lego blocks and place in designated containers Move empty containers to customer empty container storage Repeat above steps for each order This is the role of the customer. These items are performed by the customer during the simulation.

Truck Driver 1 Pick up Cards from Signal post Pick up empty containers from customer empty container storage Move empty containers to finished goods empty container storage Remove Production Cards from finished goods container and replace with Customer Cards Place Production Cards in final assembly Signal post Move finished goods to customer raw material storage Repeat above steps for each daily order This is the role of the truck driver. The truck driver performs these activities in the simulation. In this simulation, the truck driver actually performs some of the items that the fork truck operator performs in our facility.

Final Assembly Operator Check final assembly Signal post for production requirements Move raw material container to final assembly processing area Remove sub-assembly and place on final assembly processing area Remove Move Card and place in empty container Move empty container back to final assembly raw materials storage Pick up empty container from finished goods empty container storage and move to final assembly processing area Pick up white processing lego and assemble to sub-assembly and place in finished goods container Pick up Production Card from Signal post and place on finished goods container Move finished goods container to final assembly finished goods storage Repeat above steps for each Kanban Signal This is the role of the final assembly operator. The person in this role performs these activities during the simulation.

Material Handler 1 Pick up Move Cards and empty containers from final assembly raw material storage Place empty containers in sub-assembly empty container storage Remove Production Cards from sub-assembly finished goods and replace with Move Cards Place Production Cards in the sub-assembly Signal post Move finished goods containers to final assembly raw material storage Repeat above steps for each Kanban Signal The first material handler transfers parts between the final assembly operator and the sub-assembly operator in this exercise.

Sub-Assembly Operator Check sub-assembly Signal post for production requirements Move raw material container to sub-assembly processing area Remove raw material and place on sub-assembly processing area Remove Move Card and place in empty container Move empty container back to sub-assembly raw material storage Pick up empty container from sub-assembly empty container storage and move to sub-assembly processing area Pick up yellow processing lego and assemble to raw material and place in finished goods container Pick up Production Card from Signal post and place on finished goods container Move finished goods container to sub-assembly finished goods storage Repeat above steps for each Kanban Signal These activities are performed by the sub-assembly operator.

Material Handler 2 Pick up Move Cards and empty containers from sub-assembly raw material storage Place empty containers in raw material empty container storage Remove Supplier Cards from raw material storage and replace with Move Cards Place Supplier Cards in the raw material Signal post Move raw material containers to sub-assembly raw material storage Repeat above steps for each Kanban Signal The second material handler transfers parts between the raw material storage area and the sub-assembly operator in these steps.

Raw Material Store (Parts Ordering) Move empty container from raw material empty container storage to raw material processing Remove Supplier Card from supplier Signal post Place Supplier Card on empty container Repeat above steps for each Kanban Signal Prepare order for shipment Raw Material Store (Parts Receiving) Move raw material container from raw material receiving to raw material storage area These roles or steps are performed by the person acting as the parts ordering specialist and receiving person.

Truck Driver 2 Pick up empty containers with Supplier Cards from raw material processing area Place empty containers in Suppliers empty container storage Remove Supplier Production Cards from suppliers raw material container and replace with Supplier Cards Place Supplier Production Cards in supplier Signal post Move raw materials from supplier to raw material receiving Repeat above steps for each daily order The second truck driver serves as the transfer agent between the facility and the external supplier.

Supplier Check Supplier Signal post for production requirements Move empty container from supplier empty container storage to supplier processing area Pick up white processing lego and place in raw material container Pick up Production Card from supplier Signal post and place on raw material container Move raw material container to supplier finished goods storage Repeat above steps for each Kanban Signal The supplier performs these activities in the simulation.

Manager Review the daily production requirements Instruct cells to produce to customer demand or capacity Monitor the production of parts in the value stream Evaluate daily production results The manager in this activity monitors production. Without the use of Kanban, this person in the facility spends a great deal of time scheduling production.

Kanban System Simulation - Exercise 1 Customer Orders vs Capacity
This is the final outcome in the simulation. The key is to discuss the amount of time finishing early due to low volumes or working overtime due to high volumes. Without leveling the production, this happens on a daily basis.

(Starting Point for a Kanban System)
The Customer (Starting Point for a Kanban System) We have just spent some time discussing Kanban as an informational tool. The next part of this training program will focus on putting the Kanban System to work. In the previous section we learned that Kanban was a necessary tool for implementing a Kanban system. Since the customer initiates the pull for the whole system, this section begins by establishing the use of Kanban at the shipping point to the customer. Later in this training program, we will focus on the pull, by the use of Kanban, within the plant and extending to the ordering of parts from outside suppliers.

Understanding Customer Needs
Customer Demand Anticipated Requirements (Forecast) Takt Time (time required to produce a single part based upon customer usage) Actual Requirements (Daily Pull) Leveling If we want to establish the pull system, we need to know some information about the customers requirements. The starting point begins with an understanding of what the customer intends to withdraw from our facility. This is accomplished by reviewing the anticipated requirements or forecast supplied by the customer. From this information, we can also establish takt time or the time required to produce a single part based on customer usage. This should not be confused with the time it takes us to produce a part or the cycle time. In today’s world, the customer’s demand may vary depending on a number of reasons. Due to the fluctuations in customer demand, it becomes necessary to establish a method to level the actual demand of the customer. In order to accomplish this task, the actual daily requirements need to be known.

Anticipated Requirements
What information do we need? Customer demand for the month Number of days in demand period Let’s talk a minute about anticipated requirements or what we expect the customer to pull from us on a daily basis. What information do we need? First of all, we need to understand the monthly demand of the customer from the (13) week forecast provided by the customer. We also need to understand the number of days in the demand period. This information will help us to break down the monthly demand into daily usage. In this example, the monthly demand for Part A is 18,000 units. The number of working days for the demand period is (20). By dividing the monthly demand by the number of working days, the daily requirements for Part A is 900 units. If the cell is working (2) shifts, we can divide the daily demand by (2) shifts and the requirements for each shift will be 450 units. This is important as we determine the takt time for the cell. Note: 900 units / 2 shifts = 450 units per shift

Available Operating Time
Takt Time Available Operating Time Pieces Takt Time = 57,600” - 2,400” 900 pcs = 61.33” per piece = To calculate the takt time, or the frequency in which the customer requires a part to be produced, we need to know the available operating time per shift. In this example, the available time is determined by the total time per shift minus the scheduled breaks for the same period. The available time in this example is an (8) hour shift, (8 hours * 60 minutes per hour * 60 seconds per minute = 28,800 seconds), minus (2) ten minute breaks, (2 breaks * 10 minutes each * 60 seconds per minute = 1200 seconds). If we divide this by the shift demand of 450 pieces, we get a takt time of seconds. This means that the customer will require us to produce one part every seconds. This is based on the assumption that the cell works two shifts of equal time. This time will be very valuable as we develop: 1. The leveling system. 2. The frequency in which we provide the information to the cell for production. 3. And, the target cycle time and manning requirements. Just as important though, this information also allows us to set up the initial pull of product by the customer. Sets pace of production to match customer demand

Producing to Customer Demand
Production Card Customer Card Production Work Unit Customer If we use the same type of system we discussed earlier in the presentation, we would use the customer Kanban to withdraw parts from our finished goods inventory and replace it when the Production Kanban returns back to the work unit. In this method of pull, we would be producing exactly what the customer used.

This example illustrates some potential problems in the pull of product based exactly on the pull from the customer. If we produce exactly what the customer orders on a daily basis, we would be required to work overtime on several days and finish early on other days. This is when leveling can be used to neutralize the fluctuations in demand. Our objective in leveling is to produce at a level demand and use buffer stock to curb the fluctuation.

Analyze Actual Requirements
Anticipated Demand vs. Actual Demand Therefore, it is important to gain some knowledge of the actual ordering history of the customer. We can get this information from previous anticipated requirements and compare it to the actual shipping requirements. If we gather this information, we can prepare to neutralize the fluctuation in the customers demand. It is important to do this because the fluctuation in orders by the customer has a tendency to make us want to schedule production so we can prevent missing shipments, large amounts of overtime on some days, and finishing early on other days. However, we need to spend a great deal of time and resources to schedule production on a daily basis. Our goal is to develop a system that becomes automatic and our resources only need to spend a little time monitoring the system. In this example, we determined that the customer ordered 1,000 units more than the forecast. Instead of ordering 18,000 units in the demand period, the customer ordered 19,000 units.

Opportunities in Customer Fluctuation
Buffer Stock Used when demand is in excess of customer forecast Replenished when demand is less than customer forecast Note: Buffers are an indicator of waste in the system! This provides us with some opportunities to level customer fluctuation. This is accomplished by using buffer stock. Buffer stock is inventory used to level the demand of the customer. When demand is higher than the customer forecast, we would pull product from the buffer stock and ship it to the customer. When the demand was below the customer forecast, we would produce and replace the buffer inventory. This would allow us to continue to produce to the forecast. It is important to realize that buffer stock is actually a waste and placed into the system to offset customer fluctuation. However, it is a temporary solution until we work with the customer to eliminate the real problem, that of fluctuation in demand.

This graph visually displays what we have just discussed
This graph visually displays what we have just discussed. The objective of leveling is to use the buffer stock in periods of high demand and replace the buffer stock during periods of lower demand. The target is to produce at a level, or forecast, demand for the entire period. In this example, we established a buffer stock of 500 units. Notice the amount required to produce on a daily basis is more level as we utilize buffer stock. However, since we produce by Kanban, if the demand was below the forecast and the buffer stock was full, we would not be required to produce. In this case, it would be necessary to adjust manpower to produce at the lower level.

Opportunities in Truck Pitch
Even Truck Pitch Drives constant Takt Time Reduces fluctuation Overall Benefit Reduction in inventory In addition to leveling the demand due to fluctuations in customer orders, sometimes it is necessary to level the demand for each truck based on the time of delivery for each truck. When the delivery time between each truck is constant, our requirements to produce also remain constant. This reduces the amount of fluctuation between each truck based on our ability to produce. The overall benefit is a reduction in inventory.

Truck Pitch Truck 2 Truck 3 Truck 4 Truck 1 Truck Times
6: : : : : :30 In addition to leveling the demand due to fluctuations in customer orders, sometimes it is necessary to level the demand for each truck based on the time of delivery for each truck. When the delivery time between each truck is constant, our requirements to produce also remain constant. This reduces the amount of fluctuation between each truck based on our ability to produce. The overall benefit is a reduction in inventory. = Break = Lunch = Between Shifts Truck Times :00 3 – 16:00 2 - 10:00 4 – 21:00

Replenishment Capability
Truck Pick-up Times 1. 6: : : :00 Replenishment Capability Based on Takt Time 21: :30 = 3.5 hours = 12,600 seconds 12,600 seconds seconds (break) = 12,000 seconds 12,000 seconds / seconds (takt time) = pcs pcs / 50 pcs in container = 3.91 containers Truck 1 = 3 containers (45.66 remaining for Truck 2) Let’s examine this information in more detail to understand the true replenishment capability. We have (4) trucks that pick up product from our facility on a daily basis. The trucks, as shown in the previous example, arrive at 6:00am, 10:00am, 4:00pm, and 9:00pm. We are trying to establish the replenishment time between each truck so that we can determine how many containers each truck should withdraw based on takt time. In this example, we have from 9:00pm until 6:00am to make product for the first truck that picks up at 6:00am. (Do the calculations for all trucks. Don’t forget to carry over parts from previous trucks.)

Leveling Post 1 2 3 4 Buffer Stock
With the information just calculated, we can make the leveling post. This example illustrates the layout of the leveling post from that information. If you remember in the earlier discussion on buffer stock, we used 500 pieces to neutralize the fluctuations in customer orders. Since there are 50 pieces per container, we would need (10) slots in the leveling post for buffer stock. 500 pcs. used to buffer Customer Orders 50 pcs. per container 10 slots required in Leveling Post for Buffer

Leveling Customer Demand
Forecast Leveling Post P Production Work Unit Customer This slide illustrates the flow of the Kanban from the customer to the leveling post. When the kanban is received from the customer, it is placed in the leveling post under the truck number where it will be shipped. When the truck arrives, the kanban is taken to the production storage area and placed in the finished goods container. The production kanban found in the container at the finished goods store would then be issued back to the production work unit. If the customer has over ordered, the parts will be pulled from the buffer stock location. The Customer Kanban will be placed on the finished goods container and the Production Kanban will be taken back to the leveling post and placed in the slots under the buffer stock. The card will remain there until the customer’s orders are below forecast. At that time, the buffer stock Kanban will be placed in the open slot under the truck with less than forecast order. When the truck arrives, that Kanban will be sent to the production line. There is one thing missing in this illustration. Since the system is set up based on takt time, we need a method to issue the Kanban back to the production line. We call this a takt time post. B

Takt Time Post 1st Shift 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7 8 1 1 2 3 3 4 4 5 1 1 2 3 3 4 4 5 6 2 8 4 6 2 8 4 6 2 8 4 6 2 8 4 Line 100 This is an example of a takt time post. It is constructed very similar to a leveling post, but instead of trucks listed at the top of the post there are time slots. The times are divided into increments of (6) minutes. As the Kanbans are placed into the takt time post from the leveling post, they will be issued to the line based on time.

Information Required for Takt Time Post
Takt Time = seconds Number of pieces per container = 50 Time per container = (Takt Time * Container Quantity) / 60 = (61.33 * 50) / 60 = 51 minutes (Must deliver a Kanban from the Takt Time Post to the Production Work Unit every 51 minutes) To establish the time of delivery to the production cell on the takt time post, two items of information are required. They are takt time and number of pieces per container. The next step is to multiply the takt time by the quantity of parts in a container and then divide the number by 60 to convert the time into minutes. In the example, the takt time is seconds and we would multiply this number by the container quantity of 50 pieces. The next step would be to divide this number by 60 seconds to determine the length of time a Kanban should be delivered to the line. In this example, we would deliver a Kanban from the takt time post to the work unit every 51 minutes.

Takt Time Post 1st Shift 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7 8 1 1 2 3 3 4 4 5 1 1 2 3 3 4 4 5 6 2 8 4 6 2 8 4 6 2 8 4 6 2 8 4 Line 100 This is a partial example of a takt time post using the same example. The first Kanban would be delivered to the line at 6:00am. The next Kanban would be delivered at 6:51am. However, since the times on the takt time post are divided into increments of 6 minutes, the next Kanban will be delivered at 6:48am. This will prevent the line from waiting on Kanban when they should actually be producing. The next Kanban should be delivered 51 minutes later than the actual time of 6:51am. Therefore, we would deliver the next kanban at 7:42am. This would continue through both shifts. It is important to remember that break times and lunch should be taken into account in the delivery. The number of slots on the leveling post will equal the slots on the normal shift hours on the takt time post. This is a good checking method to make sure the information is correct.

Leveling Customer Demand
Forecast Takt Time Post Leveling Post P Production Work Unit Customer This example adds the takt time post into the flow of Kanban from our previous example. (Explain the total flow of the Kanban again.) B

Separating Safety Stock
Distinguish between customer fluctuation and internal problems Safety Stock inventory amount is based on downtime history There is another item that should be added to the customer flow of Kanban. This would be the use of safety stock. Safety stock is separated to distinguish between problems due to customer fluctuation and internal problems due to downtime. The amount of safety stock inventory is based on the history of downtime on the cell.

Utilizing Safety Stock
Forecast Takt Time Post Leveling Post P Production Work Unit Customer The use of safety stock is added to the flow of Kanban in this example. When it is time to pull product from the production finished goods, based on the leveling post, if product is not available in the production store it is pulled from the safety stock. The Customer Kanban is placed in the finished goods container and the safety stock Kanban already in the container will be sent directly back to the production work unit through the takt time post. B S

Leveling Benefits: Neutralizes fluctuation from:
Customer’s orders Truck pitch Pulls product based on: Customer usage Takt Time In summary, utilizing Kanban to establish pull plus the addition of a leveling system will help to neutralize fluctuations due to customers ordering and truck pitch. Since the system pulls product based on the withdrawal of the customer, there is no need to schedule production. This allows us to better utilize the resources in our facility to focus on improving the operations.

Visual Aid 1 (Neutralizing Customer Fluctuation)
Leveling System Visual Aid 1 (Neutralizing Customer Fluctuation) The visual aid is used to show the actual movement of Kanban in leveling.

Objective To establish a pull system of production that levels the demand of the customer to meet production capabilities The objective of leveling is noted on this slide.

Visual Aid Requirements
Leveling Post Takt Time Post Signal Post (20) Customer Cards (7) Production Cards (10) Buffer Stock Cards (5) Safety Stock Cards These are the items needed to perform this visual aid.

Card Number To determine the number of Production Cards in the system, take the highest available Cards to be shipped on one truck and add one Card. EXAMPLE: Truck 4 = 6 Cards 6 Cards + 1 Card = 7 Cards (7) Production Cards Required Note: Additional Cards may be required for longer lead-times This is a key slide. Timing is everything in Kanban. Without an understanding of the normal production Kanban cards needed, excess inventory or miss-shipments will occur. The calculation is shown above.

Card Placement Truck 4 - Truck 1 = Cards Generated for 1st
To determine the location of the Production Card on the takt time post, take the available Cards for the last truck and subtract the quantity for the first truck and count backwards from the last truck EXAMPLE: Truck 4 - Truck 1 = Cards Generated for 1st (6) (3) = 3 Cards for 1st Shift Note: If the number is zero or a negative number, only the last Card of the last truck is generated for 1st shift This slide is also very important. This calculation determines the timing in which the Kanban will be generated. In this case, (3) Kanbans from the last truck will generate production for the first three Kanbans produced on first shift.

Visual Aid Layout - Day 1 (End of 2nd Shift)
Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 6 16 1 2 8 4 3 17 5 7 18 B / T 9 At the end of the shift on day one, the three Kanbans from truck (4) will be found in the Takt Time Post for the start of the shift for day 2. The shipments for the following day will be loaded into the leveling post based on what the customer actually orders for the next day.

Visual Aid Layout - Day 2 (6:00 am)
Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 6 16 1 2 8 4 3 17 5 7 18 B / T 9 At the start of the shift on day 2, the Kanban are removed from the leveling post for truck 1 (6:00am) and these parts are pulled from inventory. Only 3 of the containers are pulled from normal production stock. The other container is pulled from buffer stock, since the customer ordered more than our replenishment capability. The customer Kanban will be placed in each container and shipped to the customer. The production Kanban cards will move to the takt time post and the buffer stock Kanban will be returned to the leveling post in the designated area.

Visual Aid Layout - Day 2 (6:00 am - continued)
Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 9 3 2 6 4 8 5 1 L / T This slide is an extension of the movement of Kanban from the first truck. Since the Takt Time post does not show the total shift times, this slide is a continuation of the times to show the placement of the second and third production Kanban card.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 9 3 2 6 4 8 5 1 L / T B This slide shows the arrival of the 10:00am truck and the movement of Kanban cards during this time. Since the truck ordered the correct number of containers for this period, all finished goods are removed from normal production stock. This slide shows the placement of the production Kanban cards (4 and 5) in the takt time post after the product is withdrawn from inventory.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 1 6 2 8 4 3 5 B / T This slide is an extension of the takt time post showing the placement of production Kanban card number 6. Again, the takt time post is broken down into segment of time.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 4 3 7 6 2 8 5 1 9 10 B / T This slide is also a continuation of the 10:00am truck showing the placement in time of the production Kanban cards (7,8) after being withdrawn from inventory.

Visual Aid Layout - Day 2 (4:00 pm)
Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 4 3 7 6 2 8 5 1 9 10 B / T Truck 3 arrives at 4:00pm. This truck also ordered the correct number of parts and all product is withdrawn from normal production stock. The slide shows the placement of production Kanban cards (9,10) in the takt time post after withdrawal from inventory.

Visual Aid Layout - Day 2 (4:00 pm - continued)
Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 8 11 6 1 2 4 3 5 12 9 13 14 L / T B This slide is an extension of the takt time post showing the placement of production Kanban cards (11,12) from the 4:00pm truck.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 8 11 6 1 2 4 3 5 12 9 13 14 L / T B When the last truck of the day arrives at 10:00pm, you noticed that the customer ordered one container more than the required amount. Therefore, one container of finished goods was withdrawn from the buffer stock and shipped to the customer. Production Kanban cards (13,14) are placed in the takt time post as shown in this slide.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 1 3 6 4 2 8 5 15 B / T This slide is a continuation of the 10:00pm truck and shows the placement of production Kanban card (15) in the takt time post.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 6 16 1 2 8 4 3 17 5 7 18 B / T 9 Again, this slide is a continuation of the 10:00pm showing the placement of production Kanban cards (16,17,18) in the takt time post. Notice that these are the last three Kanbans of the 4th truck and are the first three cards to be produced on first shift.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 6 16 1 2 8 4 3 17 5 7 18 B / T 9 At the end of the shift on the 2nd day, the leveling post is loaded for the following day. Note that on the 2nd and 4th truck, the customer has ordered less parts than the forecast.

Visual Aid Layout - Day 2 (End of 2nd Shift - cont.d)
Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 6 16 1 2 8 4 3 17 5 7 18 B / T 9 Since the customer orders were down on day 3, the buffer stock can be replaced into stock during the course of the day. The first step is to put the buffer stock Kanbans in the leveling post in the openings on truck 2 and truck 4. This will be the times that the line will have capability to replace the buffer stock.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 6 16 1 2 8 4 3 17 5 7 18 B / T 9 Starting out on day 3 with the 6:00am truck, we pull all (3) containers from normal production stock, pulling the production Kanban card from the container, replacing the card with the customer Kanban card and ship the product to the customer. The slide shows the placement of the number one production Kanban card in the takt time post.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 9 3 2 6 4 8 5 1 L / T This slide is a continuation of the 6:00am time frame and shows the placement of the production Kanban cards (2,3) in the takt time post.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 9 3 2 6 4 8 5 1 L / T B On the second truck of the day at 10:00am, the customer has only ordered (4) containers and these parts are pulled from normal production stock. The (4) production Kanban cards and the buffer stock Kanban cards will move to the takt time post. This slide shows the placement of two of the production Kanban cards (4,5).

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 1 6 2 8 4 3 5 B / T This slide shows the placement of production Kanban card (6) in the takt time post.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 4 3 7 6 2 8 5 1 9 10 B / T Finally, from the 10:00am truck, the number 7 Kanban card and the buffer stock Kanban card are placed in the takt time post. At 5:18pm, according to the takt time post, we will begin to replace the first buffer stock Kanban from the previous day.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 4 3 7 6 2 8 5 1 9 10 B / T On the 4:00pm truck the customer has ordered the correct amount and all production Kanban cards are pulled from normal production stock. This slide shows the placement of production Kanban cards number (9,10) in the takt time post.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 8 11 6 1 2 4 3 5 12 9 13 14 L / T B Continuing from the 4:00pm truck production Kanban cards (11,12) are placed in the takt time post.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 8 11 6 1 2 4 3 5 12 9 13 14 L / T B Finally, at the last truck of the day (truck 4) at 10:00pm, the customer has ordered one less Kanban and we will be able to replace the second buffer stock Kanban. This means that the (5) containers that were ordered will be pulled from normal production stock. The production Kanban cards (5) and the (1) buffer stock Kanban will move to the takt time post. This slide shows the placement of the number (13,14) Production Kanban cards.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 1 3 1 3 6 1 4 2 1 4 8 1 5 4 1 2 1 2 6 15 1 2 1 2 8 1 2 4 1 2 3 1 2 3 6 1 2 4 1 2 4 8 1 2 5 4 1 1 6 1 2 1 8 1 2 4 1 3 1 3 6 1 4 2 1 4 8 1 5 4 2 2 6 2 1 2 1 8 2 4 2 3 2 3 6 2 4 2 4 8 2 5 4 Continuing from truck 4, this slide shows the placement of the number 15 production Kanban card in the takt time post. This will be the last Kanban produced on 2nd shift. B / T B / T

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 6 16 1 2 8 4 3 17 5 7 18 B / T 9 Since the timing indicates that the last three Kanban from Truck 4 are produced on first shift, production Kanban cards (16,17) are placed in the takt time post along with the buffer stock Kanban.

Leveling Post 1 2 3 4 Buffer Stock Takt Time Post 6 16 1 2 8 4 3 17 5 7 18 B / T 9 At the end of the shift, the orders for the next day are loaded into the leveling post and the cycle continues. Notice that the buffer stock Kanban will be replaced starting at 7:42am the next day.

Kanban System Simulation
Exercise 2 (With Leveling) The second Kanban simulation exercise is designed to show the benefits of leveling.

Objective To gain an understanding of the method and benefits of leveling The objective changes from the previous simulation to gain an understanding of not just the card movement, but also the method of leveling.

Details Activity will be run in time segments Each time segment consists of one day One truck from customer per day Simulation will run for “5” days Leveling of production occurs at the Point of Pull The simulation is the same as the one performed earlier, with the exception of adding leveling at the point of pull closest to the customer.

Kanban System Simulation - Exercise 2 Activity Pieces
36 Plastic bowls 75 White Lego Blocks 36 Yellow Lego Blocks 5 Customer Cards 11 Production Cards 18 Place Mats 3 Buffer Stock Cards 8 Move Cards 4 Supplier Cards 5 Signal Posts 1 Leveling Post 5 Order Cards Instead of using 13 Production Kanban Cards, we use only 10. Then we add 3 Buffer Stock Kanban. In addition, we need to add the leveling post to perform this simulation.

Activity Layout - Exercise 2
W Y Customer 4 Empty Containers Signal Post Final Assembly 3 Sub 1 Raw Material Storage Supplier A B C D E F G H I J A - Customer B - Truck Driver-1 (Customer to Plant) C - Final Assembly Operator D - Material Handler-1 (Final Assembly to Sub-Assembly) E - Sub-Assembly Operator F - Material Handler-2 (Sub-Assembly to Raw Material Storage) G - Raw Material Processing (Parts Ordering / Parts Receiving) H - Truck Driver-2 (Plant to Supplier) I - Supplier J - Manager 4 = 3 = 2 = 1 = Leveling The layout remains the same as the first simulation, with the exception of adding the leveling post. However, we have also moved the manager down under the other members to represent the change in roles. Instead of doing all the work to schedule production, the manager is now available to focus on improving the operations.

Activity Layout - Exercise 2 Card Types
W Y Empty Containers Customer 4 Signal Post Final Assembly 3 Sub 1 Raw Material Storage Supplier Leveling This slide illustrates the addition of Buffer Stock Kanban. (3) Production Cards (3) Buffer Stock Cards Production Cards Supplier Cards Production Cards Customer Cards Move Cards Move Cards

Following Roles Same As Exercise 1 Customer Final Assembly Operator Material Handler 1 Sub-Assembly Operator Material Handler 2 Raw Material Store Truck Driver 2 Supplier These roles remain the same as the first activity.

Truck Driver 1 Pick up Customer Cards from Customer Signal post Pick up empty containers from customer empty container storage Move empty containers to finished goods empty container storage Place Customer Cards in leveling post Remove Cards from leveling post after leveling Remove Production Cards from finished goods container and replace with Customer Cards Place Production Cards, and/or Buffer Stock Cards if required, in final assembly Signal post Move finished goods to customer raw material storage Repeat above steps for each daily order The truck drivers role changes with the addition of leveling.

Manager Focus on improving operations The manager now focuses on improving operations, or the real added value work.

Kanban System Simulation - Exercise 2 Customer Orders vs Capacity
These are the results of the simulation exercise using leveling. Notice that the production hours remain constant.

Internal Kanban System
(Operating The Internal System) Now that we have spent time gaining an understanding of the customers pull of our product, we will focus on the operating systems of Kanban within the facility.

Internal Kanban System
Production Instruction Production Card Signal (Triangle) Material Movement Move Card Delivery system The Internal Kanban System establishes a method for us to understand when we need to produce parts to meet the needs of the internal customer, as well as, when to move product to the internal customer based on their usage. Instruction to produce is decided by the use of a Production Kanban Card or a Signal Kanban. Each of these Kanban tools serve the same function, to instruct us when to produce, but are used depending on the capabilities of the cell. Material movement within the facility is accomplished by the use of a Move Kanban and a standardized delivery route. The Move Kanban serves as a tool to instruct us when to move material and the standardized route ensures the delivery of the parts in a timely manner seeking to minimize the total inventory in the system. When used properly, both of these tools reduce lead time.

Kanban Signal “Tool To Trigger Production”
Production Card High level of capability in the work unit Production of parts in any order The Production Kanban Card is used when the work unit has a high level of capability. This means that the changeover time on the line is very quick and the work unit can produce parts in any sequence withdrawn by the customer.

Producing Card for Card
If a work unit can produce parts in the same order that they are pulled from stores, then they produce Card for Card The Production Card (typically a white card) is attached to the container after production When a container is pulled from the work unit store, the card is removed and sent back to the work unit to trigger production We can produce Kanban for Kanban when a work unit can produce parts in the same order that they are pulled from stores. The Production Kanban card initiates production and is typically white and attached to the container after production. As soon as a container is pulled from the work unit store, the card is sent back to the work unit to trigger production.

Points to Remember The Production Card is the signal to produce a container of a particular part number The work unit produces in the order that the Production Cards are received Changeover time must be equal to or less than the consumers changeover time There are some key points to keep in mind when producing Kanban for Kanban with Production Kanban Cards. The Production Kanban Card is the signal to produce a container of a particular part number. The work unit must produce in the order that the cards were received, and the supplying cell’s changeover time must be equal to or less than the customer’s changeover time. Production must not take place unless a production Kanban card is received. Without strict adherence to this rule, overproduction will occur. In addition, if the cell produces parts that are not in the order that they were received, shortage of parts in the system will cause unnecessary downtime and missed shipments to the customer. If the work unit does not have changeover times equal to or less than the consumer changeover time, the work unit should work to reduce the time required to changeover. This will allow the work unit to become more flexible and reduce inventory cost.

Flow of the Production Card
Supplying Process This illustration shows the flow of the Production Kanban. When the internal customer withdraws product from the production store, the Production Kanban Card is removed from the container and sent to the production or supplying work unit to be produced. The work unit then produces one Kanban or finished goods container. product

Kanban Signal “Tool to Trigger Production”
Signal (Triangle) Long changeover times Production in lot size Although ideally we would always like to produce Kanban for Kanban, in some cases we must use Signal (Triangle) Kanban when we are forced to produce in lot sizes due to long changeover times.

Production by Lot Size Withdrawal Period 1st 2nd 3rd 4th A A A A B B B
In this example, the work unit does not have the capability to produce each part within the required withdrawal period. Therefore, the work unit produces in lots of four Kanban of each part number over the entire withdrawal period. In this case, the work unit will only changeover (3) times within the entire withdrawal period. As the work unit reduces the time required to changeover, the inventory required to operate the system will reduce. For example, if the time required to changeover is reduced by 50%, the lot size can be cut in half. This means that each part could be produced two times per day. The inventory in the system would also be reduced by 50%. If the changeover time is reduced again by 50%, the work unit would have the capability to produce Kanban for Kanban in each withdrawal period. The inventory would again be reduced by 50%. This is the goal we are trying to achieve. Reducing inventory and increasing our flexibility will improve our competitive position and the ability to meet the customers expectation. Direct Relationship between Changeover times and Inventory Levels

# of containers to produce
Signal (Triangle) WORK UNIT NAME PART No. CONTAINER TYPE QUANTITY PROCESSING TIME FOR 1 LOT LOT SIZE ORDER POINT # of containers to produce This is an example of the Signal Kanban. Notice that the signal has a designated location for the number of containers to produce (lot size) and the signal or reorder point number. The signal placement in the finished goods inventory is very important when using the signal Kanban. If the signal is placed in the wrong location, additional changeovers without the capability or parts shortage to the customer will occur. Where the signal is placed in inventory Signal #

Signal Triangle When using the Signal Triangle, every part number on the work unit has it’s own signal The signal instructs the work unit to produce and is dependent on how inventory is pulled from the work unit If parts are not withdrawn from the work unit, the work unit will not receive a signal to produce When a work unit uses the Signal Kanban for an instruction to produce, each part number on the work unit will have it’s own Signal Kanban. As inventory from the work unit is withdrawn by the internal customer, the signal to produce the part will eventually come up to be produced. If the parts are not withdrawn by the customer, the work unit will not receive a signal to produce.

Lot Size Production Signal Instructs the Work Unit:
When to produce the part How many to produce at one time The Signal Kanban instructs the work unit to produce a part. More importantly, the signal instructs the work unit how many parts to produce at one time. Since the work unit does not have the capability to produce part for part, the timing and quantity of parts produced is very critical in meeting the customer demands.

Elements Required to Determine the Lot Size
Available Time Monthly Demand for Each Part Number Production Time for Each Part Number Average Changeover Time There are (4) key items required to determine the lot size for each part number on the work unit. 1. Available Time - Available time per day. 2. Monthly Demand - Requirements for the parts. 3. Cycle Time - Time required for each part to be produced. 4. Changeover Time - Time required to change from one part to the next.

Available Time Available Time =
(Number of Hours per Shift) – (Break Time) Number of Shifts: 2 Hours per Shift: 8 Number of Breaks per Shift: 2 Minutes per Break: 10 The first element needed to determine the lot size is the available time per shift. This is accomplished by taking the number of hours per day and subtracting the time set aside for breaks. In this example, there are two shifts that work (8) hours each shift. There are two breaks per shift and each break is (10) minutes. ( Write the available time down on the flip chart for later calculations) 57,600 seconds - 2,400 seconds = 55,200 seconds

Demand Calculation Daily Demand = Monthly Demand
# of Days in Demand Period Days in Month = 20 Part Monthly Demand Daily Demand A pcs pcs B pcs pcs C pcs pcs D pcs pcs Total pcs ???? pcs The second element used to determine the lot size is the demand for each part number. In this example, we can calculate the daily demand by dividing the monthly demand of each part number by the number of working days in the month. (Read the slide and explain the demand for each part) (Write down the demand on the flip chart for later calculations)

# of Days in Demand Period Days in Month = 20 Part Monthly Demand Daily Demand A pcs pcs B pcs pcs C pcs pcs D pcs pcs Total pcs pcs The second element used to determine the lot size is the demand for each part number. In this example, we can calculate the daily demand by dividing the monthly demand of each part number by the number of working days in the month. (Read the slide and explain the demand for each part) (Write down the demand on the flip chart for later calculations)

Calculating Production Time
Production Time = Cycle Time x Daily Demand Part Daily Demand Cycle Time Production Time A ” 5700” B ” 8400” C ” ” D ” ” Total ” ??????” The third item necessary to determine the lot size of each part number is the production time required to produce each part. The production time is determined by multiplying the cycle time of each part by the daily demand of each part. Notice that the average cycle time for the work unit can be determined by dividing the total production time on the work unit by the total daily demand. (Write down the production time on the flip chart for later calculations)

Production Time = Cycle Time x Daily Demand Part Daily Demand Cycle Time Production Time A ” 5700” B ” 8400” C ” ” D ” ” Total ” ” The third item necessary to determine the lot size of each part number is the production time required to produce each part. The production time is determined by multiplying the cycle time of each part by the daily demand of each part. Notice that the average cycle time for the work unit can be determined by dividing the total production time on the work unit by the total daily demand. (Write down the production time on the flip chart for later calculations)

Calculating Average Changeover Time
Part Daily Demand Changeover Time A seconds B seconds C seconds D seconds Total ???? ???? seconds The last element used to determine the lot size is the changeover time required on the work unit. In this example, the total changeover time for the work unit is 2,820 seconds. Even though there are various changeover times for each part, we can assign a total amount of changeover time for the entire line. (Write down the average changeover time on the flip chart for later calculations) Average C/O Time = Changeover Time = ???? = ??? # of Parts Numbers ? Total

Part Daily Demand Changeover Time A seconds B seconds C seconds D seconds Total seconds The last element used to determine the lot size is the changeover time required on the work unit. In this example, the total changeover time for the cell is 2,820 seconds. Even though there are various changeover times for each part, we can assign a total amount of changeover time for the entire line. (Write down the average changeover time on the flip chart for later calculations) Average C/O Time = Changeover Time = = 705 # of Parts Numbers 4 Total

Lot Size Calculation (?) (???)
Step 1: Determine the Number of Changeovers per Day # of C/O per Day = Available Time - Production Time Average Changeover Time # of C/O per Day = ????? - ????? = ??? C/O’s ??? (Read the slide and use the numbers written down on the flip chart to show the results of the calculations) These results show that each time the parts are produced, there should be (.29) days produced. (# of Parts) / (# of Available C/O’s) = (LOT SIZE) (?) (???) = ??? Days /

Lot Size Calculation (4) (13.7)
Step 1: Determine the Number of Changeovers per Day # of C/O per Day = Available Time - Production Time Average Changeover Time # of C/O per Day = 55, , = C/O’s 705 (Read the slide and use the numbers written down on the flip chart to show the results of the calculations) These results show that each time the parts are produced, there should be (.29) days produced. (# of Parts) / (# of Available C/O’s) = (LOT SIZE) (4) (13.7) = .29 Days /

Lot Size per Part Number
Part Daily Demand Lot Size # in Lot A days pcs B days pcs C days pcs D days pcs This chart illustrates the lot size for each of the part numbers based on (.29) days. (Read the slide)

# of Containers in a Lot = Lot Size
Container Lot Size # of Containers in a Lot = Lot Size Qty per Cont. Example: Lot Size for Part A = 58 pcs Container Size = 30 pcs Part A = pcs per lot size = containers 30 pcs per container Part A Lot Size = 2 Containers Based on the information calculated on the previous slide, the lot size for Part A is (2) containers. Since we do not leave partial containers, the number is rounded up in the calculations to the nearest full container. Round Up to Next Full Container

Order Point The order point determines how much inventory is needed in the stores to cover customer requirements during the work unit’s peak period of downtime For instance, the order point = 2 The signal is placed on the 2nd to the last container. When the container above the signal on is pulled, exposing the Signal Triangle, the signal goes back to the line to trigger production with the corresponding amount of Production Cards The order is actually the same as the lot size and when the entire lot has been withdrawn, the order point will instruct us to produce another lot. The remaining inventory will be the safety stock established by the work unit’s peak period of downtime.

Signal (Triangle) Pull from Top Remove Signal Triangle when this container is pulled!! This is a visual example of the previous slide. The order point is 2. The key point to remember is when to remove the signal. In this example, after two more containers are removed, the Signal Kanban is removed and sent to the work unit for production. This means that the work unit has used up the entire lot size and only the safety stock of (2) containers remain.

Order Point Calculation
(Daily Demand x Downtime Percentage) = Order Point Quantity per Container Daily Demand: 200pcs (200 x .20) = 1.33 Peak Downtime Percentage: 20% Quantity per Container: 30pcs Order Point: 2 The order point calculation is the following: (Daily Demand x Downtime Percentage) = Order Point Quantity per Container Remember, when calculating the order point, we must always round up to the next full container. For example in the calculation on this slide the order point was found to be 1.33, however we must round up to a whole container size. In this case that is 2. Round Up to Next Full Container

Order Points Part Daily Demand D/T #PCS Pcs/Cont O.P.
B ? C ? D ? This slide exhibits a quick summary of all of our example part number’s order points and the data that was used in calculating the order points. The above data was simply plugged in to the equation we reviewed on the previous slide.

Order Points Part Daily Demand D/T #PCS Pcs/Cont O.P.
B C D This slide exhibits a quick summary of all of our example part number’s order points and the data that was used in calculating the order points. The above data was simply plugged in to the equation we reviewed on the previous slide.

How are the Containers Identified?
A Production Card is placed on a container after it is produced When the container is pulled from the store the Production Card is removed and is put into a collection box, while a Move Card is put on the container in it’s place When the signal is sent to the work unit for production, the number of Production Cards that are needed to I.D. the containers are also taken The containers we used to move our product are also identified by Kanban cards. A Kanban card is placed on a container immediately after it is produced. As soon as the container is pulled from the store the Kanban card is removed and is put into a collection box, while a Move Card is put on the container in it’s place. When the signal is sent to the work unit for production, the number of Kanban cards that are needed to identify the containers are also taken. Stress that losing a Production Kanban Card is the same as losing a container.

1. 2. 3. Inventory Stores Move Card signals that
The Production Card is put into a collection box to be sent back to the work unit. Move Card signals that the Customer Work Unit needs parts. The container is picked and the Kanban Card is replaced with the Move Card. Parts are taken to the Customer Work Unit. This slide shows the movement of the Kanban Card used with the Signal Kanban. A Move Card arrives to the store area allowing the material delivery person to move product to the work unit. The Move Card replaces the Production Kanban Card. The Production Kanban Card is then placed into a collection box to be sent back to the work unit when the signal is reached. (Read the slide)

# of Production Cards in the System
# of Production Cards = Lot Size + Order Point = 2 + 2 = 4 Tags The number of cards is the maximum amount of material that will be in the stores When using a Kanban Card system in our facilities we must know exactly the number of cards required to run our system. Knowing the exact number will be essential in our continuous improvement and auditing processes.

Flow Of The Signal ( Triangle)
Customer Pulling A C Now Next D Order Point A B C D Signal Board B The Triangles are Signal Kanbans that signal the production of a batch of roll cut parts. They are hung on the inventory (reorder) Order Point. The inventory left under the triangle should be enough to satisfy the customer if downtime occurs on the work unit. A container of Roll Cut parts has been pulled from the stores. The order point was hit so the signal triangle (A triangle) and the white production cards in the collection box are going back to the Roll Cut Work Unit to signal the production of that particular part number. The signal for part “C” is already being produced. The D triangle Move Card has been placed on the container so it can be taken back to the customer work unit. Collection Box A B C D Roll Cut Stores Roll Cut Work Unit

An Alternative Approach for Increased Visual Management
Lot Box Production An Alternative Approach for Increased Visual Management Although we have traditionally used the Signal (or Triangle) Kanban to facilitate lot size production, we would now like to discuss an alternative system that enhances visual management on the production floor. This alternative uses only Production Kanban Cards; however, these cards are still able to initiate lot size production by being filtered through a lot box before they are delivered to the work unit.

Lot Box Production Flow
“Production” Card Lot Box Supplying Process This is a visual representation of lot production flow through the use of the alternative system as a Production Kanban Card moves from the store, it is taken to a Lot Box until the clearly labeled order point is reached on the box. Once the order point is triggered, the batch of Production Kanban Cards are then delivered to the Cell Kanban Post for production. product

The Lot Box Zero Inventory Production Cards Order Point Container #
Part 1 2 3 4 5 6 7 8 9 10 A B C D Here is an example of what a Lot Box might look like. In our example the lot sizes have been calculated as: 2 containers = A 3 containers = B 4 containers = C 6 containers = D In this example the order point has been reached for part A and the cell is currently producing part D. These Kanban cards will now be delivered to the cell for production. Production Cards Order Point Zero Inventory

Work Unit Kanban Post Part D C/O Card Part A C/O Card 1st Shift 6 6 6
7 7 7 7 7 7 7 7 7 7 8 1 1 2 3 3 4 4 5 1 1 2 3 3 4 4 5 6 2 8 4 6 2 8 4 6 2 8 4 6 2 8 4 Line 100 This is the Work Unit Kanban Post. The Production Kanban Cards for Part A were placed in the Work Unit Kanban Post after the order point was reached. Notice a C/O card had to be inserted in the post also. One container of part D takes 16 minutes to make. The C/O card signified 15 minutes, and each container of Part A takes 14 minutes and 25 seconds to make. These times were used in the placement of the cards into the Work Unit Kanban Post. Part D C/O Card Part A C/O Card

This slide is a summary slide for the calculations and information needed to calculate the order points for the different part numbers the supplying work unit must produce. Furthermore, by understanding the production time per container, the number of containers that must be produced, and the changeover times for each part; we can begin to establish a pattern of production for the Work Unit Kanban Post.

A: I - I - - B: I - I - - I - - C: I - I - - I - I - -
Example for Part # C C/O TOTAL X X 1st Shift 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7 8 1 1 2 3 3 4 4 5 1 1 2 3 3 4 4 5 6 2 8 4 6 2 8 4 6 2 8 4 6 2 8 4 Line 100 A: I I B: I I I C: I I I I D: I I I I I I This is the Work Unit Kanban Post. This represents the pattern for each part number. It also shows an example for how part number C would be placed in the Kanban post.

Visual Aid 2 (An Alternative Approach)
Lot Box Production Visual Aid 2 (An Alternative Approach) Using the lot box as an alternative approach provides better visual management, especially when it comes to understanding whether the line is on schedule and when the line is finished for the day.

Objective To visually demonstrate the flow of Cards based on lot size production using the Lot Box as a tool for instruction to produce. This visual aid is designed to illustrate the flow of Kanban when using the lot box for production in place of the signal Kanban.

Visual Aid Requirements
1 Lot Box 1 Kanban Post 1 Parts Withdrawal Timing Sheet 4 (Part A) Production Cards 5 (Part B) Production Cards 7 (Part C) Production Cards 10 (Part D) Production Cards 17 Changeover Cards The items listed on this slide are required for performing this visual aid as part of the Kanban training program.

Visual Aid Layout Lot Box Kanban Post Container # Part 1 2 3 4 5 6 7 8
9 10 A B C D 1st Shift Line 100 6 7 2 4 1 8 3 5 Kanban Post This layout tells us that Part A has a total of 4 Kanban in the system. Two of these Kanbans are ready to be produced in the Kanban post and two would be in inventory. Part B has a total of 5 Kanban in the system, with 1 Kanban in the lot box and 4 Kanban in inventory. Part C has 2 Kanban in the lot box, which means 5 Kanbans are in inventory since there are a total of 7 Kanban in the system. Part D has 5 Kanban in the lot box, 5 Kanban in inventory and a total of 10 Kanban in the system.

Visual Aid Layout Inventory Status
Part A Part B Part C Part D 1 Container These blocks represent the inventory we discussed on the previous slide.

Part Withdrawal Timing
Part A 8:10 am 10:38 am 1:36 pm 5:54 pm 8:22 pm 11:10 pm Part B 7:32 am 9:14 am 10:46 am 12:48 pm 2:30 pm 6:02 pm 7:44 pm 9:16 pm 11:18 pm 1:00 am Part C 7:09 am 8:18 am 9:37 am 10:46 am 12:25 pm 1:44 pm 4:53 pm 6:02 pm 7:21 pm 8:30 pm 10:09 pm 11:18 pm 12:37 am Part D 6:28 am 7:14 am 8:00 am 8:56 am 9:42 am 10:28 am 11:44 am 12:30 pm 1:26 pm 2:12 pm 4:58 pm 5:44 pm 6:30 pm 7:26 pm 8:12 pm 8:58 pm 10:14 pm 11:00 pm 11:56 am 12:42 am Based on the demand of each part number, the times listed under each of these parts represents when a container will be withdrawn from inventory based on takt time.

Board Status - 6:00 am Lot Box Kanban Post Container # Part 1 2 3 4 5
7 8 9 10 A B C D 1st Shift Line 100 6 7 2 4 1 8 3 5 Kanban Post Lets begin the process or simulation of the lot box using the starting point we have just discussed. This is what the Lot Box will look like before loading the cards onto the Kanban Post.

Board Status – 6:00 am Lot Box Kanban Post Container # Part 1 2 3 4 5
7 8 9 10 A B C D Kanban Post 1st Shift This layout tells us that Part A has a total of 4 Kanban in the system. Two of these Kanbans are ready to be produced in the Kanban post and two would be in inventory. Part B has a total of 5 Kanban in the system, with 1 Kanban in the lot box and 4 Kanban in inventory. Part C has 2 Kanban in the lot box, which means 5 Kanbans are in inventory since there are a total of 7 Kanban in the system. Part D has 5 Kanban in the lot box, 5 Kanban in inventory and a total of 10 Kanban in the system. 6 6 6 1 2 6 1 8 6 2 4 6 3 6 3 6 4 2 6 4 8 6 5 4 7 7 6 7 1 2 7 1 8 7 2 4 7 3 7 3 6 7 4 2 7 4 8 7 5 4 8 Line 100

Inventory Status - 6:00 am Part A Part B Part C Part D 1 Container
This is the inventory at the start of the simulation.

7 8 9 10 A B C D Kanban Post Line 100 B / T 1st Shift 7 5 4 3 6 8 2 1 At 6:42 am, the production of Part A is complete, as well as, the changeover. By this time, according to the withdrawal during that same period, Part D will have reached its production point. No other parts have been withdrawn from the system.

7 8 9 10 A B C D Kanban Post 1st Shift 7 5 4 3 6 8 2 1 After Part D reaches the order point, the cards are loaded onto the Kanban Post. B / T B / T Line 100

Inventory Status - 6:42 am Part A Part B Part C Part D 1 Container
Since 6 Kanbans are in the Kanban Post for Part D, there are only 4 containers left in inventory. The rest of the parts inventory remain unchanged.

6 7 8 9 10 A B C D Line 100 Kanban Post 1st Shift 9 5 4 3 6 8 2 1 At 8:42 am, based on the cycle time of Part D, the lot size has been completed. During this time, 2 Kanban of Part C has been withdrawn from the inventory and has reached the production point. In addition, 1 Kanban of Part A, 1 Kanban of Part B and 2 Kanban of Part D has been withdrawn from the inventory and those Kanban are now in the lot box.

6 7 8 9 10 A B C D Kanban Post 1st Shift 9 5 4 3 6 8 2 1 After Part C reaches the order point, the cards are loaded onto the Kanban Post. Line 100

Inventory Status - 8:42 am Part B 1 Container Part C Part A Part D
This is the inventory status at 8:42 am.

6 7 8 9 10 A B C D Line 100 Kanban Post L / T 1st Shift 1 6 2 4 3 8 5 9 At 9:54 am, Part C production is complete. During this period, another Kanban of Part B has been withdrawn and reached the trigger point for production. In addition, 1 Kanban of Part C and 2 Kanban of Part D have been withdrawn from inventory.

6 7 8 9 10 A B C D Kanban Post 1 1 6 1 2 1 8 1 2 4 1 3 1 3 6 1 4 2 1 4 8 1 5 4 1 1 6 1 2 1 8 1 2 4 1 1 6 1 2 1 8 1 2 4 1st Shift 9 5 4 After Part B reaches the order point, the cards are loaded onto the Kanban Post. L / T L / T L / T Line 100 L / T L / T

Inventory Status – 9:54 am Part B 1 Container Part C Part A Part D
This is the inventory status at 9:54 am.

6 7 8 9 10 A B C D 1st Shift Line 100 Kanban Post 1 2 4 3 6 8 5 At 10:48 am, Part B is now complete and Part A has reached the production point. Also, 1 Kanban of Part B, 1 Kanban of Part C, and 1 Kanban of Part D has been withdrawn from the system based on takt time. Part A has been loaded in the Kanban Post to be produced. L / T L / T L / T L / T L / T

6 7 8 9 10 A B C D Kanban Post 1 4 8 1 5 4 1 1 6 1 2 1 8 1 2 4 1 3 1 3 6 1 4 2 1 4 8 1 5 4 1 2 1 2 6 1 2 1 2 8 1 2 4 1 2 3 1 2 3 6 1 2 4 1 2 4 8 1st Shift After the Part A reaches the order point, the cards are loaded onto the Kanban Post. Line 100 L / T L / T L / T L / T L / T

Inventory Status – 10:48 am Part A Part B Part C Part D 1 Container
This is the inventory status at 10:48 am. 1 Container 1 Container

Board Status - 12:02 pm Lot Box Kanban Post Container # Part 1 2 3 4 5
6 7 8 9 10 A B C D 1st Shift Line 100 Kanban Post B / T 1 2 6 8 4 3 5 At 12:02 pm, when Part A was complete, the order point for Part D was met. A trend in the production of parts is know becoming evident. No other product was withdrawn from inventory during this period.

6 7 8 9 10 A B C D Kanban Post 1 2 1 2 6 1 2 1 2 8 1 2 4 1 2 3 1 2 3 6 1 2 4 1 2 4 8 1 2 5 4 1 1 6 1 2 1 8 1 2 4 1 3 1 3 6 1 4 2 1 5 4 2 2 6 1st Shift After Part D reaches the order point, the cards are loaded onto the Kanban Post. B / T B / T Line 100

Inventory Status - 12:02 pm Part B 1 Container Part C Part A Part D
This is the inventory status at 12:02 pm.

Board Status – 1:58 pm Lot Box Kanban Post Container # Part 1 2 3 4 5
6 7 8 9 10 A B C D Kanban Post 1 5 4 2 2 6 2 1 2 1 8 2 4 2 3 2 3 6 2 4 2 4 8 2 5 4 3 3 6 3 1 2 3 1 8 3 2 4 3 1st Shift 3 6 3 4 2 3 4 8 3 5 4 At 1:58 pm, Part C has reached the order point. Only one of the Kanban can be produced on 1st Shift. The rest of the Kanban (3), based on the lot size, will be produced on second shift. In addition, 1 Kanban of Part A, 1 Kanban of Part B, and 2 Kanban of Part D have been withdrawn from inventory. It is easy for us to understand when the shift should end using lot box approach. E O S B / S B / S B / S B / S B / S B / S B / S B / S B / S B / S B / S B / S B / S B / S Line 100

6 7 8 9 10 A B C D Kanban Post 1 5 4 2 2 6 2 1 2 1 8 2 4 2 3 2 3 6 2 4 2 4 8 2 5 4 3 3 6 3 1 2 3 1 8 3 2 4 3 1st Shift 3 6 3 4 2 3 4 8 3 5 4 The slide shows the status of the Kanban Post at the end of the 1st shift. E O S B / S B / S B / S B / S B / S B / S B / S B / S B / S B / S B / S B / S B / S B / S Line 100

Inventory Status – 1:58 pm Part A Part B Part C Part D 1 Container
This is the inventory amount as of 1:58 pm. 1 Container 1 Container

6 7 8 9 10 A B C D Kanban Post 4 3 4 3 6 4 2 4 8 4 5 5 5 6 5 1 2 5 1 8 5 2 4 5 3 5 3 6 5 4 2 5 4 8 5 4 6 6 6 1 2 6 1 8 6 2 4 6 3 2nd Shift At the start of 2nd shift, the work unit will complete the production of Part C. Line 100

Inventory Status - 4:30 pm Part A Part B Part C Part D 1 Container
This is the inventory status as of 4:30 pm. 1 Container 1 Container 1 Container

7 8 9 10 A B C D Kanban Post 5 6 5 1 2 5 1 8 5 2 4 5 3 5 3 6 5 4 2 5 4 8 5 4 6 6 6 1 2 6 1 8 6 2 4 6 3 6 3 6 4 2 6 4 8 6 5 4 7 7 6 2nd Shift By 5:06 pm, when Part C is complete, Part B has been loaded into the Kanban post. During the same time period, 1 Kanban of Part C and 1 Kanban of Part D has been withdrawn from inventory. B / T Line 100 B / T

Inventory Status - 5:06 pm Part B 1 Container Part D Part A Part C

7 8 9 10 A B C D Kanban Post 6 6 6 1 2 6 1 8 6 2 4 6 3 6 3 6 4 2 6 4 8 6 5 4 7 7 6 7 1 2 7 1 8 7 2 4 7 3 7 3 6 7 4 2 7 4 8 7 5 4 8 2nd Shift At 6:06 pm, Part A has reached the order point and Part B’s production is finished. During the same time period, 1 Kanban of Part B, 1 Kanban of Part C and 1 Kanban of Part D has been withdrawn from inventory. B / T Line 100 B / T

7 8 9 10 A B C D Kanban Post 6 6 6 1 2 6 1 8 6 2 4 6 3 6 3 6 4 2 6 4 8 6 5 4 7 7 6 7 1 2 7 1 8 7 2 4 7 3 7 3 6 7 4 2 7 4 8 7 5 4 8 2nd Shift After Part A reaches the order point, the cards are loaded onto the Kanban Post. B / T Line 100 B / T

Inventory Status - 6:06 pm Part B 1 Container Part D Part A Part C

7 8 9 10 A B C D Kanban Post 6 4 2 6 4 8 6 5 4 7 7 6 7 1 2 7 1 8 7 2 4 7 3 7 3 6 7 4 2 7 4 8 7 5 4 8 8 6 8 1 2 8 1 8 2 4 8 3 8 3 6 8 4 2 2nd Shift At 6:42 pm, Part D has reached the order point for production. During the same period, Part C has had 1 Kanban withdrawn from inventory. B / T Line 100 B / T

7 8 9 10 A B C D Kanban Post 6 4 2 6 4 8 6 5 4 7 7 6 7 1 2 7 1 8 7 2 4 7 3 7 3 6 7 4 2 7 4 8 7 5 4 8 8 6 8 1 2 8 1 8 2 4 8 3 8 3 6 8 4 2 2nd Shift After Part D reaches the order point, the cards are loaded onto the Kanban Post. B / T Line 100 B / T

This is the inventory status at 6:42 pm. 1 Container 1 Container 1 Container 1 Container 1 Container

6 7 8 9 10 A B C D Kanban Post 1 1 6 1 2 1 8 1 2 4 1 3 2nd Shift 8 3 8 3 6 8 4 2 8 4 At 8:30 pm, Part C has reached the order point and is now ready to be produced. The following parts have had inventory withdrawn during the same time period: 1. 1 Kanban of Part A 2. 1 Kanban of Part B 3. 2 Kanban of Part D 8 5 4 9 9 6 9 1 2 9 1 8 9 2 4 9 3 9 3 6 9 4 2 9 4 8 9 5 4 L / T L / T L / T L / T L / T Line 100

6 7 8 9 10 A B C D 2nd Shift Line 100 Kanban Post 1 2 4 3 8 6 9 5 L / T After Part C reaches the order point, the cards are loaded onto the Kanban Post.

This is the inventory status at 8:30 pm. 1 Container To be filled At 8:32.5

6 7 8 9 10 A B C D 2nd Shift Line 100 Kanban Post 1 2 6 5 4 8 3 B / T At 10:12 pm, Part C production is complete and Part B is ready for production. During the same time period, 1 Kanban of Part C and 1 Kanban of Part D were withdrawn from inventory.

This is the inventory status at 10:12 pm 1 Container 1 Container 1 Container 1 Container 1 Container

7 8 9 10 A B C D Kanban Post 1 6 1 2 1 8 1 2 4 1 3 1 3 6 1 4 2 1 4 8 1 5 4 1 2 1 2 6 1 2 1 2 8 1 2 4 1 2 3 1 2 3 6 1 2 4 1 2 4 8 1 2 5 4 1 1 6 2nd Shift At 11:06 pm, Part C production is complete and Part B is ready for production. During the same time period, 1 Kanban of Part C and 1 Kanban of Part D were withdrawn from inventory. Line 100 B / T B / T E O S B / S

This is the inventory status at 11:06 pm 1 Container 1 Container 1 Container 1 Container

7 8 9 10 A B C D Kanban Post 1 5 4 1 2 1 2 6 1 2 1 2 8 1 2 4 1 2 3 1 2 3 6 1 2 4 1 2 4 8 1 2 5 4 1 1 6 1 2 1 8 1 2 4 1 3 1 3 6 1 4 2 1 4 8 1 5 4 2nd Shift At 11:56 pm, Part A production is complete and Part D is ready for production. During the same time period, 1 Kanban of Part C and 1 Kanban of Part C were withdrawn from inventory. E O S B / S B / S B / S B / S B / S B / S B / S B / S B / S Line 100

7 8 9 10 A B C D Kanban Post 1 5 4 1 2 1 2 6 1 2 1 2 8 1 2 4 1 2 3 1 2 3 6 1 2 4 1 2 4 8 1 2 5 4 1 1 6 1 2 1 8 1 2 4 1 3 1 3 6 1 4 2 1 4 8 1 5 4 2nd Shift At 11:56 pm, after changeover is complete, Part D is loaded into the kanban post. E O S B / S B / S B / S B / S B / S B / S B / S B / S B / S Line 100

This is the inventory status at 11:56 pm 1 Container

Board Status - 6:00 am Day 2 Lot Box Kanban Post Container # Part 1 2
3 4 5 6 7 8 9 10 A B C D Kanban Post 1st Shift By the end of 2nd shift, Part D production is in progress. Two kanbans for Part D remain to be completed the next morning. 6 6 6 1 2 6 1 8 6 2 4 6 3 6 3 6 4 2 6 4 8 6 5 4 7 7 6 7 1 2 7 1 8 7 2 4 7 3 7 3 6 7 4 2 7 4 8 7 5 4 8 Line 100

Inventory Status - 6:00 am Day 2
Part A Part B Part C Part D 1 Container 1 Container 1 Container 1 Container 1 Container 1 Container 1 Container 1 Container 1 Container 1 Container 1 Container 1 Container 1 Container 1 Container 1 Container This is the inventory status at the start of first shift on Day 2. 1 Container 1 Container

Exercise 3 (An Alternative Approach)
Lot Size Calculation Exercise 3 (An Alternative Approach)

Calculation Exercise Data

Available Time = Number of hours per Shift - Break Time
Number of Shifts: 2 Hours Per Shift: 8 Number of Breaks Per Shift: 2 Minutes Per Break: 10 If you have paid lunches, the time is also deducted. Available Time=

Available Time = Number of hours per Shift - Break Time
Number of Shifts: 2 Hours Per Shift: 8 Number of Breaks Per Shift: 2 Minutes Per Break: 10 If you have paid lunches, the time is also deducted. Available Time = 55,200 ”

# of Days in Demand Period Days In Month = 20 Part Monthly Demand Daily Demand A ,000 B ,000 C ,000 D ,000 Total

# of Days in Demand Period Days In Month = 20 Part Monthly Demand Daily Demand A , B , C , D , Total

Production Time = Cycle Time x Daily Demand Part Daily Demand Cycle Time Production Time A 22” B 23” C 21” D ” Total

Production Time = Cycle Time x Daily Demand Part Daily Demand Cycle Time Production Time A ” 11,000” B ” 9,200” C ” 9,450” D ” 12,100” Total , ,750”

Part Daily Demand Changeover Time A ” B ” C ” D ” Total Average C/O Time = Total Changeover Time = # of Parts Numbers

Part Daily Demand Changeover Time A ” B ” C ” D ” Total , ,640” Average C/O Time = Changeover Time = 2,640” = 660” # of Parts Numbers 4 Total

Lot Size Calculation Step 1: Determine The Number of Changeovers per Day # of C/O per day = Available Time - Production Time Average Changeover Time # Of C/O Per Day = (# of Parts) / (# of Available C/O’s) = (LOT SIZE) = 4 /

Lot Size Calculation Step 1: Determine The Number of Changeovers per Day # of C/O per day = Available Time - Production Time Average Changeover Time # Of C/O Per Day = 55,200” – 41,750” = 660” (# of Parts) / (# of Available C/O’s) = (LOT SIZE) = 4 / 20.38 .19

Lot Size Per Part Number
Part Daily Demand Lot Size # in Lot A B C D

# of Containers in a Lot = Lot size
Container Lot Size # of Containers in a Lot = Lot size Qty per Cont. Example: Lot Size for Part A = Container Size = 30 Part A = Part A Lot Size =

Questions

Answers

Example A: B: C: D: 1st Shift 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7
8 1 1 2 3 3 4 4 5 1 1 2 3 3 4 4 5 6 2 8 4 6 2 8 4 6 2 8 4 6 2 8 4 Line 100 A: B: C: D:

Example A: I I - I - I - B: I I - I - C: I I - I - D: I I - I - I -
1st Shift 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7 8 1 1 2 3 3 4 4 5 1 1 2 3 3 4 4 5 6 2 8 4 6 2 8 4 6 2 8 4 6 2 8 4 Line 100 A: I I I I - B: I I I - C: I I I - D: I I I I -

(Focus of On-Time Delivery)
Material Movement (Focus of On-Time Delivery) We have spent a great deal of time discussing Kanban as a tool for production instruction. Let’s shift our emphasis at this point to discuss Kanban as a means for material movement to guarantee the timely delivery of parts. There are (2) key elements in material movement within our facilities. The instruction to move material is achieved through the use of the Move Kanban Card and the method for delivering the material is accomplished through the use of Standard Delivery Routes. In addition, the external movement of material from our supply base requires us to understand the Kanban Cycle to ensure the on-time delivery of raw material and components.

Internal Material Movement
Move Card Standard Delivery Route Standard work within our work units is essential to production within a Kanban System. The timing and consistency that standardized work brings to our cellular operations must also be achievable outside of our production work units. In order to achieve operational excellence we must begin to standardize the delivery of required components and raw materials to our work units. This system can be established in the form of standardized delivery routes. This type of system will once again emphasize timing and consistency in our operations.

Move Card The move card tells us: What to move
Where to find and take material Standard material quantity When to move The move card should be used for material movement between areas. The move cards tell the material delivery person what to move, where to find and take the material, the standard material quantity, and finally when to move the required material.

Move Card STORE ADDRESS WORK UNIT ADDRESS SUPPLIER NAME WORK UNIT NAME
Kanban Signal No. This is an example of a Move Kanban Card. All standard move cards are colored. Most are blue, the color does not matter as long as it doesn’t conflict within a facility. PART No. QUANTITY CARD #

Flow of Move Card Internal Production Raw Work Unit Material Store
This example illustrates the flow of the Move Kanban. Notice that the internal production cell sends the Move Kanban back to the raw material storage to withdraw product to be sent back to the work unit. This is the method for moving parts to the production work unit. The only purpose of this card is to transfer material. If the Move Kanban is found outside this loop, an error in handling has occurred. Investigation and corrective action should take place. Needed product

When Do I Remove the Move Card?
Kanban, A new Approach When Do I Remove the Move Card? When the first piece is taken, the Move card is removed Move Card When is the move card removed by the customer? Solicit input. The Move Card is removed When the first part is taken out and used, It is then used to signal the material handler to move more material to the cell. This is the ArvinMeritor standard. *NOTE Each component part number on a cell could have a partial card made for it to identify partial containers. There would only be one partial card per part number. The card would have to be a color that is easily identifiable so as not to get mixed in with the Move cards.

Partial Card A partial card can be any color that attracts attention.
There is only one partial card for each component part on a line. STORE ADDRESS WORK UNIT ADDRESS This is what a Partial card may look like, there is not a standard for partial cards design or color. Partial cards are only needed on lines where containers are removed from the point of use. i.e( tote of parts is removed from the rack during a changeover to make room for the next part number.) The Partial card should look similar to a Move card. It should be a different color than all Move cards within the facility It should state that it is a partial card It does not need a container quantity on it It should have similar information on it as a move card WORK UNIT NAME SUPPLIER NAME Kanban Signal # PART No. Partial

Standard Route of Delivery
Why do we need a standard route of delivery? To eliminate waste To reduce inventory To guarantee on time delivery Establishing standard routes will allow us to eliminate waste, reduce inventory, and guarantee delivery within our production operations. Standardizing our material delivery procedures will aid us in finding hidden waste in the system.

Pick Area Line 3 Line 1 A standard route of delivery implies that material will be delivered in exactly the same way for each delivery cycle. The standard route takes the guess work out of material delivery. Instead of managing our work unit’s material consumption, we can begin to manage and facilitate improvement within our facilities. Line 2

Pick Area Line 3 Line 1 This may be what a standard route would look like. One cycle of the packmule operator may look like this: At line 1, deliver full containers, pick up move cards and empty containers, repeat for lines 2 and 3 Go to pick area, unload empty containers, pick up full containers for the corresponding move cards Remove outside Supplier Kanban Cards and place in collection box Put the internal Move cards in/on the containers Go through cycle again Line 2

Orbital Welder Linear Weld Cone Weld
Part No. CC3330 STANDARDIZED WORK CHART MATERIAL HANDLER Date 08/30/99 Shifts 2 Part Name Converter Ass’y Stops Manual Time Line # of Members Cell Takt Time Delivery Cycle Standard In-Process Stock Daily Customer Demand Bottleneck 4440 60” 920 1 15’ Raw Material Store 90” 20” Orbital Welder 2 30” 90” 7 1 30” 240” Manual Weld Bracket 30” Linear Weld Finished Goods Cone Weld 1 30” 3 30” Marking Machine Rolling Machine Secure Wrap 3 Tig Tack Tourniquet Machine Sizer Press 2” 2” This is an example of a standardized work chart for material handling. You’ll notice that it has a very similar format to that of a cell’s standard work chart. The material delivery handler will consistently follow this delivery route. This type of system identifies opportunities in material movement within our facilities, bringing us closer to pure takt time production. 6 90” 30” 4 5 90” 30” 30” Manual Time Walk Time Total Time Member 15” 25” 1 420” 480” 900”

How Many Withdrawal Cards Are There?
The Number of Withdrawal Cards is Based on: Time of the standard route of material deliveries Usage rate of material by the work unit Quantity per container of material Establishing a standardized work chart for material delivery will simplify the work required in calculating how many Withdrawal Kanban Cards are required to run our Kanban System. The number of cards required to run the system will depend on the time of the standard route for material deliveries, the usage rate of material by the work unit, and the quantity per container of material.

Calculating Number of Move Cards
Delivery Cycle = Time to make standard delivery cycle in hours Quantity per Hour = # of parts produced by the work unit in 1hour based on target cycle time # of Move Cards = Delivery Cycle x Qty per Hr x 2 Quantity per Container This slide shows us the equation to calculate the number of move cards we need to run a Kanban system. One set of cards in Process One set of cards in Que

Number of Move Cards in the System
# of Move Cards = Delivery Cycle x Qty per Hr x 2 Qty per Container # of Move Cards = hour x 100 parts/hour x 2 25 Parts per Container # of Move Cards = 4 By using the above equation and the proper data, we are able to calculate that we need 4 Move Cards to run the system.

How Many Withdrawal Cards are in the System for an Outside Supplier ?
Need to know : Agreed upon delivery cycle Daily demand Quantity per container Safety Stock Now that we know how to determine the number of Move Cards needed, let’s spend a little bit of time understanding what we need to know to calculate the number of Supplier Kanban cards required to use this system with our external suppliers. To calculate this we need to know the following: Agreed Upon Delivery Cycle Daily Demand Quantity per Container Safety Stock

Kanban Cycle Agreed upon delivery cycle
This is usually stated as 3 numbers A:B:C In A days There are B trucks Parts are returned C shipments after Cards are sent back to the supplier The agreed upon delivery cycle is usually stated as 3 numbers: A:B:C; meaning in A days there are B trucks and parts are returned C shipments after Kanbans are sent back to the supplier.

Delivery Cycle Delivery Cycle 1:2:3
in 1 day : there are 2 deliveries : and parts arrive 3 shipments after cards are sent to supplier Monday Tuesday Wednesday Thursday Friday Truck 1 2 This slide exhibits an example of the Kanban Delivery Cycle. The cycle listed above is 1:2:3, meaning; in 1 day there are 2 deliveries and parts arrive 3 shipments after Kanbans are sent to the supplier. The Kanban Cycle is a good way to easily and universally explain the current delivery cycle situation. Truck 2 1 3 SUPPLIER

How Many Withdrawal Cards are in the System for an Outside Supplier?
# of Supplier = Daily Demand x A x (C+1) + D x Daily Demand Qty per Cont. B Qty per Cont. A: # of days B: # of trucks C: when the Cards return D: Safety Stock Safety Stock covers problems with delivery due to supplier Once the Kanban Cycle can be explained in the “A:B:C” format, we can easily use the equation presented on this page. The only other information we need is the daily demand, quantity per container, and the amount of safety stock required to cover supplier delivery problems.

Daily Demand = 1500pcs A: # of days Qty/Cont. = 30pcs per container B: # of trucks Delivery Cycle = 1:2:3 C: when the Cards return D = .5 Days D: Safety Stock # of Supplier = Daily Demand x A x (C+1) + D x Daily Demand Qty per Cont B Qty per Cont. = 1500pcs x 1 x (3+1) x 1500 30pcs per Cont = 50 Containers x = 125 Cards This is an example applying numbers to the equation just discussed.

Supplier Card Flow Truck 25 cards Supplier processing 25 cards By
using 25 cards We calculated that 125 supplier cards would be needed to run the system. The Supplier Kanban Cards might be found on a departing or returning truck, within our own facility, at the supplier’s facility, or in our Safety Stock storage area. Safety Stock 25 cards Truck 25 cards

Supplier Card Calculation
Exercise 4 (Card Requirements)

Daily Demand = 2000 pieces Qty/Cont. = 50 pieces / container Delivery Cycle =A:B:C 1:6:3 D = .25 days # of Supplier = Daily Demand x A x (C+1) + D x Daily Demand Qty/Cont B Qty/Cont # of Supplier =

Daily Demand = 2000 pieces Qty/Cont. = 50 pieces / container Delivery Cycle =A:B:C 1:6:3 D = .25 days # of Supplier = Daily Demand x A x (C+1) + D x Daily Demand Qty/Cont B Qty/Cont # of Supplier = 2000 * 1 * (3+1) * 2000 # of Supplier = (40 containers * .67) + 10 # of Supplier = 36.8 cards = 37 cards (Round up)

Kanban System Summary Key to Successful Information Flow
Customer Internal Supplier Opportunities for Improvement Inventory reduction Lead-time reduction Greater flexibility Better visual management In summary, we have discussed the importance of information flow in the total value chain. It is also evident that Kanban provides us with a tool to standardize the flow of information. When Kanban is used properly, the improved flow of information allows us to reduce our overall inventory, providing us with shorter lead-times and greater flexibility.

No Pain, No Gain The truth about a Kanban System
Easy to use and follow Difficult to implement Keys to success in the Kanban System Training Trial and error Team problem solving Perseverance A good Kanban system is easy to follow. Trying to short cut the system will reduce the benefits and eventually erode the system. In addition, the implementation of Kanban is not an easy task to undertake. It requires a team effort and a commitment by everyone in the organization. The success of Kanban will come from continuous training everyday, trial and error to gain an understanding, a team problem solving approach with frequent meetings and discussions, and finally the will to win. Never giving up means getting what you want. Developing an effective Kanban system is not just as simple as copying other systems. It requires the development of the system from the members within the facility. A true understanding of the Kanban system will ensure its existence.

Initial Start-Up Start at the beginning of the chain and work your way downstream Customer loop Internal pull Transition to the supplier Anticipate problems, they will happen!!! When Kanban is introduced in the facility, always start with the customer loop. If the leveling does not occur, the fluctuations in the internal system and the supply base will lead to problems and the eventual withdrawal of Kanban. Work your way down the supply chain as you achieve success. Always anticipate problems, they will happen.

Think Long-Term Learn the basics first Initial inventory goes up
Understand the root cause of problems Take action after the root cause is clear Initial inventory goes up Plan out your strategy Communicate your plans to upper management Kanban is not short-term. Kanban is actually the long-term development of an effective communication system. Start out by learning the basics and how to apply them. When problems do happen, make sure you understand the root cause of the problem. Don’t jump from modification to modification. Take action to problems after the root cause is clearly understood. In the initial implementation, your inventory will potentially increase. You need to make sure you have planned out your implementation strategy and communicate your plans to upper management.

Be Prepared to Deliver When you develop your plans, set timelines and stick to them. If problems occur, take corrective action to stay on schedule. In the end, you will be expected to deliver. After all, the plan is yours.

Get Serious !!! Improving our information system, like all other improvements being made in our organization today, does not come easy. To successfully establish a true Kanban system that will provide the desired results requires a great deal of dedication. Developing the system and training all members in the organization on the proper operating method requires a commitment by everyone. However, the benefits will provide us with new opportunities and constantly point us in the right direction. This is an important part of improving our competitive position. We must not let these opportunities pass us by. We need to start getting serious about Kanban starting today!

Kanban A New Approach (Tool for Information Flow)

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