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Inventory Kanbans
Automating the Replenishment Cycle
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A consumption based trigger to start a
specific amount of product. The
consumption point is always down-stream
from the producing point.
An inventory strategy used to insure that
production keeps a consistent amount of
parts available for use in production.
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A Japanese word that means signboard or
signal
Are signals developed to automate the
inventory replenishment cycle for items used
repetitively in a facility
Communicates to the supplier the need for
additional material
Integral in a “pull” manufacturing system
Introduced by Taiichi Ohno to the TPS after
seeing the American supermarkets in the
early 1950’s
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An empty container designed to hold a standard quantity of
material or parts
The container is sent back to the supplier from the customer
when empty
If returnable containers are not used, a kanban can be as
simple as a
laminated card
Supermarket pull
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The signal will contain information such as:
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Part number
Description
Replenishment quantity
Replenishment time
Customer (drop off location)
Routing number
Where used
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are:
◦ communication devices from the point of use to the
previous operation.
◦ signals to either internal or external suppliers to
supply the next operation.
 purchase orders to your suppliers.
 work orders for your manufacturing area.
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Used to control the flow of all products.
Visual communication tools.
Paperwork eliminators.
Inventory management reducers.
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Create inventory management as part of the
process
Reinforce the need for “quality at the source”
Empower the work cell to manage its
suppliers and inventory networks
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Are not appropriate for:
◦ Single piece or lot production
◦ Safety stock
◦ Systems which push inventory carrying
requirements and the associated carrying costs
back to the supplier
◦ Long range planning tools when changes in part
number or quantity are expected.
For non-repetitive or when new products are
expected, traditional production planners are
needed.
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Eliminate
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Over-production*
The need for a stockroom
The need to reissue purchase orders
Large variations in customer demand seen from
upstream processes
Reduce:
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The data management task for production planning
Work orders
Inventory*
Parts expediting
Part shortages
Material handling
*Kanbans create a desired
level of inventory, which may
be a reduced level from the
current state
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Rule #1: Do not attempt to kanban a part
number without the complete involvement
of all the members of the value adding
chain, including your suppliers.
Rule #2: Quality at the source. Do not send
defective parts to your customers. Defects
must be corrected immediately! Defective
parts will cause your customer’s line to shut
down!
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Setup Reduction
◦ Long lead times reduce the power of kanbans and
creates long replenishment cycles, increasing the
amount of in-process inventory
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TPM
◦ Machine downtime reduces the power of kanbans and
creates long replenishment cycles, increasing the
amount of in-process inventory
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Level production demand
◦ Replenishment time is part of the equation, if it varies
greatly, then replenishment will be off by that amount
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Certified suppliers and certified product
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Rule #3: Kanbans require reliable
equipment for support. Implement kanbans
internally in areas where TPM is in place.
Rule #4: Focus kanbans on products and
part numbers with stable delivery
requirements and short setup and lead
times. Concentrate setup reduction and raw
material lead time reduction efforts on the
parts which have wide variations in
customer requirements.
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Production kanban
 “One-per-customer” kanban
 Used when supplying process can
produce as little as one container
 Part of one piece flow
Signal kanban
 “One-per-batch” kanban
 Signals when a reorder point is reached
and another batch needs to be produced
 Used when supplying process
changeovers are required
Withdrawal kanban
 “Shopping list” kanban
 Instructs the material handler to get and
transfer parts
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Cards attached to portable containers
Light signal
Exchange of containers
Supplier replaceable cards on boxes designed to
hold a standard quantity
Empty space - a painted spot or border on the
floor around the standardized container
Purchase orders
Color coded striped golf balls
E-mails, phone call, fax, carrier pigeon
Scanned bar code labels – electronic kanban
Variations of the above
etc., etc,. etc
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Kanban card
To request a new
delivery
KANBAN
Light signal
Full bin usage as the trigger
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Container Exchange
Kanban space
Min/max indicators
The empty container signals
a need for replenishment
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The Supermarket
The Customer consumes
The Supplier replaces
Computer and bar
codes
2731 8540122
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Rule #5: Suppliers should deliver all material
directly to their customer (point of use). For
suppliers who are not certified, and therefore
require incoming material inspection, the point of
use area should eventually be taught to perform
this inspection or the supplier should be replaced
with a certified supplier.
Rule #6: Use the parts only as required, and return
the kanban to your supplier immediately. Deliver
the empty container directly if your supplier is
within your facility. If your supplier is external, an
area in the plant should be designated for empty
kanban container pickup by your supplier. A
system must be developed so that all external
suppliers pick up their containers promptly.
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Rule #7: Do not produce more parts than
you have kanbans for, and produce the
parts in the order the kanbans were
received.
Rule #8: All internal and external suppliers
must have, or should be helped to develop,
setup reduction programs. The true power
of kanbans can be unleashed only when
setup times do not influence manufacturing
capacity and, therefore, lead time.
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Step #1: Pick the part number(s)
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Should be frequently produced part numbers
Should have fairly level demand rates
Get everyone involved with the “why” of kanbans
Get everyone involved with the “how” of kanbans
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Step #2: Calculate the quantity to be
kanbaned
Generic equation
Kanban quantity = (A) * (B) * (C) * (D)
Where (A) is weekly park usage
Where (B) is supplier lead time in weeks
Where (C) number of locations
Where (D) is smoothing factor
Kanban equations vary – it is just an estimate
http://www.resourcesystemsconsulting.com/blog/kanban-calculation/
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Formula for calculating number of
units per kanban container:
D x (1 + SF) x KCT
K=
C
D
SF
KCT
C
= Average daily demand of the product
= Safety factor (typically 10%)
= Kanban Cycle Time* (replenishment time once a signal has
been received)
*KCT should be in expressed in days
= Number of Kanban containers
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Consider a part with the following to determine
the number of units per Kanban container:
Average daily demand = 2 units
Safety factor = 10 %
Kanban cycle time= 10 days
Kanban containers = 12
2 x (1 + .10) x 10
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Round Up
= 1.83
2 units per
Container
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Step #3: Pick the type of signal and container
which holds a standard quantity.
◦ The container should be sized for quantity as an aid
to visual identification.
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Step #4: Calculate the number of containers.
◦ The container should be sized for quantity and as
an aid to visual identification.
◦ Generic equation
# of containers:
K anban Q uanitity
# of pieces held per containers
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Formula for calculating number of
kanbans (signal = full container):
D x (1 + SF) x KCT
C=
K
D
SF
KCT
K
= Average daily demand of the product
= Safety factor (typically 10%)
= Kanban Cycle Time* (replenishment time once signal has
been received) *KCT should be expressed in days,
consider hours per shift, assume 24 hrs/day unless
otherwise stated
= Kanban size (number of units per container)
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Formula for calculating number of
kanbans (signal = empty container):
D x (1 + SF) x KCT
+1
C=
K
D
SF
KCT
K
= Average daily demand of the product
= Safety factor (typically 10%)
= Kanban Cycle Time* (replenishment time once signal has
been received) *KCT should be expressed in days,
consider hours per shift, assume 24 hrs/day unless
otherwise stated
= Kanban size (number of units per container)
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Consider a part with the following information to
determine the number of Kanban containers required:
Three products are built on a mixed model flow line. Product X
has a total demand of 50 per day. Product Y has a total demand
of 40 per day. Product Z has a demand of 10 per day. Each product
uses one component part W at the same supermarket location. When
Part W reaches its reorder point (empty container), the Kanban cycle
time is 15 hours. The supply process runs 24 hours per day. Part W
is replenished in a container of 10 pieces. Safety factor equals 10%.
How many kanban containers
are required for Part W?
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Average daily demand = 50 + 40 + 10 = 100
pieces
Safety factor = 10%
Kanban cycle time= 15 hours / 24 hours per
day = .625 days
Kanban container size= 10 pieces
Kanban signal = empty container
100 x (1 + .10) x .625
+ 1 = 7.875
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Round Up
8 Kanban
Containers
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Keep in mind that the suggested container
size and quantity are a starting point for
setting up kanbans
Always consider
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Material cost
Lead time
Floor space limitations
Package size/ qty (i.e. order qty from suppliers)
Replenishment reliability
Practical experience
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Represents a special case of kanban
Lot size/quantity is one
Benefits
 Minimizes waste in the process
 Defects affect only one component thus creating
highest possible quality
 Minimizes inventory and space requirements
 Keeps pace with customer demand
 Efficiently utilizes labor in a balanced process
 Best possible throughput in a balanced process
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Kanbans tie related processes together as if
they were connected by an invisible conveyor.
Kanbans:
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Improve communication
Make inventory and its management visible
Improve customer satisfaction
Reduce inventories
Rule #9: Kanbans are not cast in
Reduce waste
cement – some experimentation is
required. Be prepared to make
adjustments initially as sales levels
change, or as other improvement
activities reduce the required number of
containers or kanban cards.
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