Example Of Lean Manufacturing: Kanban System Essay
Kanban is a technique used to determine production quantities in the work process thus facilitating Just-In-Time (JIT) production and ordering systems in lean manufacturing. Kanban was originally developed in the 1950s by the Toyota Motor Company - Japan to help manage the flow of materials in the assembly line. The main aim at the time was to secure active operator involvement and participation in order to improve system productivity through the provision of a highly visible means to observe product flow through the production system and inventory buildup within the system. Later, the method was further improved to help control production activities to achieve JIT goals and manage just in time production operations. In a secondary role, Kanban also functions as an information system that monitors and helps control production quantities in all stages of manufacturing and assembly processes.
Kanban is Japanese for Kan- card, and Ban- signal. Initially, Kanban was implemented using Kanban cards but in recent times, Kanban can refer to a labeled container, a computer order, or any other device that can be used to signal that more parts or products are needed from the previous work process stage. The core element of the Kanban concept is that the manufacturer, the warehouse or a supplier should only deliver components when they are required such that there is no excess inventory. In this system, production line work stations only produce/deliver the required components upon reception of a card (Kanban card) or an empty container indicating that more parts are required for the production process. In the event of line interruptions, each workstation produces just enough components to fill the container after which production is halted. Additionally, Kanban also limits the amount of inventory in the production process since it acts as a form of authorization to produce more inventory.
Kanban involves a chain process where orders flow from one process to another and production or delivery of parts involves pulling them into the production line compared to the traditional forecasting methods which involved pushing parts into the line.
JIT production, PUSH and PULL systems, and Kanban:
In JIT production systems, the subassemblies and components needed for the final assembly are pulled from the supplying work centers whenever they are desired. In this case, Kanban is one of the best methods for JIT implementation. In this regard, the concepts of Just-In-Time production, PUSH and PULL systems, and how they relate to Kanban are described briefly below.
Just-In-Time Production (JIT) is a production strategy that strives to reduce inventory and work-in-process (WIP) significantly thus enabling a company to produce the products customers want, when they want them, and in the required amount. Under traditional mass production approaches, companies produce large quantities of identical products and put them in storage until customers demand the products. However, JIT techniques are oriented towards production leveling and even spreading of production over time (production sequencing) to ensure a smooth flow between different processes. In this case, JIT facilitates varying the mix of products made on a single line and consequently provides an effective means of achieving the desired production mix in a smooth manner without any waste.
JIT relies heavily on the use of physical inventory control techniques (Kanban) to signal the need for moving raw materials, or to produce new components from the previous work process. Most companies that implement lean manufacturing techniques usually require that suppliers deliver components using JIT. The company signals its suppliers through manual and computer orders or the delivery of empty reusable containers, to supply more parts/components when they are needed. The result of JIT is significant elimination of waste usually associated with WIP, overproduction, and excess inventory.
Kanban is regarded as a “pull” system since it focuses on the production of only what is needed. Kanban thus creates greater flexibility on the production line compared to the traditional “push” techniques of mass production that relied on the estimation of expected sales. However, it is important to note that both pull and push systems use the master production schedule (MPS) which defines individual product requirements i.e. items in the top level of the bill of materials. The MPS is further broken down into a more detailed plan for items to be purchased, manufactured and assembled.
PUSH systems work by attempting to determine when processing must be completed for all work orders in order to meet master production schedule (MPS) demands. In this case, inventory builds up when operations are not line balanced or synchronized. In order to ensure PUSH systems function as desired, PUSH scheduling is conducted and involves planning for all processes.
On the other hand, PULL systems look at the production process from end i.e. from a finished product perspective. In this case, the production operator works on the premise that his orders represent explicit customer requirements. The timeline in understandably short and orders are broken down from the highest level to the lowest. The production operator then checks whether there are sufficient materials/parts available to produce the final product. If the materials are available, production begins. If the parts are unavailable or not enough, components are pulled from the previous work center. The same process is followed backward through each production stage and may extend all the way back to include the outside vendors (material suppliers). The pull system thus places great demands on the production line and suppliers. Suppliers can meet these demands either by having all required materials in their inventory or, alternatively, having the ability to respond quickly and make the parts available within a very short time i.e. short lead time.
There are three types of PULL systems: A-type, B-type and C-type. A-type/flip-up pull uses parts specific Kanbans, B-type/sequential production uses route specific Kanbans while C-type is a mixture of both A and B types. The general advantages of implementing PULL systems include: elimination of waste caused by overproduction, reduction of WIP quantity and fluctuations, direct response to customers, shortening of lead time to customers, improvement in product quality, and increased visibility of production problems and waste.
However, each PULL system has some specific conditions where it is best applied and the resulting benefits of implementation. The Table 1 below shows PULL types utilization and the advantages and disadvantages in each case.
It should however be noted that JIT and Kanban control system mechanisms are only applicable to plants involved in repetitive manufacturing. Repetitive manufacturing refers to the creation, machining, assembling and testing of separate, standard units produced in volume, or of products that are assembled in volume based on standard options. Repetitive manufacturing is characterized by long production runs or flows of components with the ideal scenario being the direct transfer of components from one work center to the next.
In this sense, it could be argued that the use of JIT approach and JIT manufacturing techniques results in the transition of a manufacturing system from a batch production or job shop to repetitive manufacturing.
How Kanban is used to control production activities in whole production line:
When using Kanban technique, only the final assembly line that combines individual parts into the finished product knows the requirements for finishing the end product and, with this knowledge, the final assembly line has control over what is produced in the total manufacturing system.
In order for the final assembly line to control all preceding production activities they must first have received a schedule for all work processes. The operators on the final assembly line then proceed to acquire all the necessary components, at the times they are needed, and in the required quantities from the subassembly lines or feeder work centers. The work centers produce the parts in lots that are just sufficient enough to replace the lots that have been removed. However, in order for the operators at the subassembly lines to do this, they also have to acquire parts in the quantities necessary from their respective feeder stations. A chain reaction is thus initiated upstream with each work center only acquiring the parts that are required at the right time and in the right quantities.
The backward chain reaction synchronizes the flow of all material in the production line to the rate at which the material is used up in the final assembly line. Synchronization ensures that only what is needed is produced which leaves very small amounts of inventory especially if a regular pattern is established and part deliveries are made in small amounts. In this case, Kanban is used to acquire the parts at each stage, and JIT production is achieved without the need to use controlling work orders for components at each work center.
Types on Kanban Cards:
Kanban cards are rectangular paper cards that are usually laminated. Kanban cards provide authorization to move or build material, and also provide visual control to check for over production. The cards usually have two types of information i.e. necessary and support information. The necessary information is what allows the team member to perform his job quickly and easily and includes information such as what to take from where, the route to take, and where to deliver. Support information is usually used when double checking is required and may include details such as part number, part description, quantity, barcode, etc.
There are two types of Kanban cards that are the Production Kanban and the Withdrawal Kanban. Withdrawal Kanbans define the quantity of a specific part that the subsequent process should withdraw from the work center preceding it. Each card should circulate between two work centers only i.e. the user part center where the part in question is being used and the preceding work center that fabricates the part. Production Kanbans define the quantity of a specific part to be manufactured at the producing work center in order to replace those that have already been withdrawn.
Usage Guideline for Kanban card usage in JIT:
Effective operation of a Kanban system requires very strict discipline in relation to the card’s usage. The need for discipline is also illustrative of the need to have well-documented standard manufacturing procedures and a well-trained team of operators with complete awareness of the procedures. It is also essential that the operators are well motivated to follow the procedures rigorously which is a confidence founded on the experience of good operator practice. There are five general guidelines on the usage of Kanban to achieve JIT production and these are:
Each work center should withdraw from the preceding work center only the items which it requires, at the correct time and required quantities. This guideline is well supported by several operation principles. The first principle states that no material should be withdrawn without the presentation of a valid withdrawal Kanban card and an accompanying available empty container. The second operating principle prohibits the withdrawal of more parts than is indicated by the withdrawal Kanban.
A work center should only produce the parts that have been withdrawn from the succeeding work center or process. In this case, the freed production Kanban act as a schedule for the fabricating work center to produce the missing parts. The center is not allowed to proceed parts in quantities more than those stipulated on the production Kanban and the operation sequence at the center, or work process should follow the same sequence in which production Kanban were freed. Since the production is initiated by the schedule released to the final assembly line, the schedule is passed back through the production line by the release of production Kanbans. If this guideline is strictly adhered to, the result is an effective virtual conveyor line that is constructed and controlled by the flow of Kanban cards through the production line.
Substandard or defective parts should never be passed on to the succeeding work center. This implies that quality control should be paramount at each work center or step in production. If defective parts are allowed to stay in the production line, there will be a great upset inflow of parts in later stages when the defective part is discovered.
The inventory levels in the production line are determined by the number of Kanbans since each Kanban is representative of the contents of the standard container. The number of Kanbans should be reduced and by the reducing the number of Kanbans and container sizes. Then the level of inventories is also reduced progressively.
The Kanban system is only suitable when dealing with small fluctuations in the demand pattern at the final assembly line. The system is only relevant in a situation where repetitive manufacturing is the used since it cannot accommodate large fluctuations in demand within it. If it is not possible to create a stable master schedule for the final level items in the bill of materials, then the Kanban system is unusable in that scenario. Small demand fluctuations can easily be handled by increasing Kanban circulation frequency, increasing overtimes, or hiring temporary operators.
Kanban as a Productivity Improvement Technique:
If Kanban procedures are followed rigorously, the level of inventory due to work in process (WIP) can be controlled by the number of Kanban cards issued for each component into the production system. This is because each Kanban card represents one container, and if the container size and the number of cards on the floor are known, then the inventory level can be determined by simple calculation.
When the number of Kanban cards issued for a particular component is reduced, then the process inventory for the component also falls. Eventually, when the levels are reduced low enough, the work center runs out of material and processing is halted. Halting processing at one work center stops the whole production line, and efforts have to be made to get it running again at the lower level of the inventory. This can be done by either reducing the set-up times, increasing the number of operators or through process redesign. The reasoning behind this is that a high inventory hides some underlying production problems and other sources of inefficiency in the production process. By gradually reducing the inventory levels, it becomes possible to highlight production problems and eliminate then afterward.
Kanban and its relationship to vendors:
If the flow of Kanban cards in the production process is tracked back logically, it ultimately leads to the point where the inbound parts and raw materials are purchased. This raises the question of how Kanban can be extended to include external suppliers/vendors. On the other hand, it is possible to have large inventories for each component, and they can be replenished by vendors weekly, or even for longer intervals. However, having large inventories defeats the original purpose of Kanban and JIT, which is to minimize inventory. On the other hand, Kanban can be carried right out and into the suppliers’ production systems. The procedure involves regular and frequent material deliveries from the suppliers and is achieved by establishing close cooperation with suppliers, and through sharing as much information as possible to help the suppliers achieve a stable JIT system. In effect, a true partnership is established between the manufacturer and his trusted suppliers.
Assumptions made for Kanban to Work:
As earlier indicated, there are some strict guidelines that must be adhered to for the Kanban system to be effective and efficient. Corresponding to these guidelines are some fundamental assumptions that are made in regard to the nature of the manufacturing system upon which Kanban operates. These assumptions are described in the next paragraph.
Since each daily production schedule must be similar to the other daily schedules, it is important if it was possible to suspend the master production schedule (MPS) for a fixed period of at least a month. The final assembly schedule should also be well leveled and stable. This is because any major deviations might cause a ripple effect throughout the assembly line thus causing upstream work centers to accumulate large inventories. The ultimate requirement is that the manufacturing system conforms as closely as possible to the repetitive manufacturing model earlier described.
In order to run a successful mixed model system effectively, mixed model capability is required in all production stages. Mixed model manufacturing and assembly systems involve implementing frequent changes and set-ups at the individual work centers. It also follows that the set-up times be as minimal as possible in all work centers and that there is continuous reviewing of the set-up procedure up till the end. The most logical conclusion from this is that there is a need to balance between all operations so as to synchronize the start and end of work routines. Synchronization of start and end times ensures that components are fed into the assembly line at the same rate as they are consumed.
Kanban System Implementation Case Studies:
In this case, a Kanban system that schedules production for six people working on assembling industrial air cleaner using purchased parts and sheet metal is explained. The operators are supposed to build 15basic air cleaner units with many variations. There are ten assembly cells (work centers) which have fixtures, equipment and tools, and parts at all times. Each cell can only produce one or two basic models and between one to three persons can man any cell. There is an adjacent warehouse holding a small completed stock of each basic model.
The daily operations at the assembly plant begin with the team leader scanning all incoming orders and he then prepares one-time Kanban cards for customized items and large orders. The team leader also sorts through all cards coming into the warehouse and then they are all attached to a board in an assembly cell. The cells that have cards in the red zone (urgent) have a high priority, and if necessary, additional operators are assigned to work on the overloaded cell to provide relief and hasten the work process.
The warehouse is responsible for picking standard orders from stock and then it send production Kanbans to the production line. They then combine the standard items with any customized items that arrive from the production line and ship the products to their destinations.
Inbound Kanban System:
In the second phase of the project, the sheet metal and welding operations were moved directly adjacent to the assembly cells. The welding team has dedicated operators and equipment. The team leader in the welding team checks for welded cabinet stocks in each assembly cell and also checks the board. The daily checking by the welding team constitutes a Kanban signal for replacement i.e. the welding operators only weld the necessary replacement cabinets which are then placed on a paint line. The replenishment process usually takes 24 hours but can also take as little as four hours.
The welding team also stocks metal sheet components in large wire containers. Each of these containers has a series of special shelves and brackets. The containers also hold fixed quantity of each item on a particular cabinet. When the minimum quantity is reached the operators or team leader is signaled to send the container to the Sheet Metal line for replenishing. The team at sheet metal then sets up shop and fabricates the components required to replenish the container that is then returned to welding. This process normally takes 24 hours. Cabinets with high volumes may have an inventory of several identical baskets so as to sustain welding operations during replenishment.
The complete production system uses Kanban, Re-Order points, and Direct Links. There is also a broadcast system in place that overlays other systems since all team leaders can access the final assembly line board/schedule. Overall, the Kanban system implemented helped eliminate about 96 percent of the finished good inventory, simplified process scheduling and eliminated losses incurred from overproduction.
This case explains how a plastic manufacturer was able to implement replenishment pull Kanban between and injection-molding operation and two assembly work centers. The company possesses 12 plastic injection-molding machines, and each machine produced a number of parts that were later assembled into the final product in the assembly cells. Before implementing Kanban, the company had accumulated about ten days of injection-molded inventory. There were also some significant material shortages which productivity at the assembly cells.
A kaizen (change) team consisting of a materials specialist, an industrial engineer, an area supervisor, injection molding and assembly operators, and a few other employees from outside the production line was formed. The team spent one day training and mapping out the current state of the production. In the process, they discovered some significant waste which included increased reprioritization and overtime costs caused by daily material shortages and inefficient changeover planning in the injection-molding sector due to shifting priorities/schedules. There was also excessive work in progress (WIP) of up to 10 days and lack of work synchronization i.e. operators were doing their material preparation and handling instead of collecting from precedent work centers.
After analysis of the usage of materials and variations in usage, had been conducted, the team formulated a plan and a properly sized a collection of plastic materials. The system would work as follows:
Material handlers would pull the plastic from the collection and into the assembly cells. They would then use a two-bin system to replenish point-of-use inventory i.e. as the bins of plastic components from the collection were emptied, the empty bin would be used as a signal to replenish parts to the assembly cells.
As the materials in the collection were consumed (withdrawn to assembly), a trigger point (which was indicated visually by the number of remaining bins) would be reached. When this trigger point was reached, a Kanban card would be drawn and delivered to the injection-molding department to add to the parts collection.
The injection-molding machines team leader would then place the card in sequence on the scheduling board upon which the injection machines would then run part production according to the specifications of the Kanban on the board thus replenishing the parts collection.
The result of implementing the new Kanban new system was a 90 percent reduction in material shortages and a 70 percent reduction in work-in-progress (WIP) from ten to three days.
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