Niraj Varia Dr. Kellar MS 794 Individual Assignment 2 Consolidating I.S. and Implementing Kan-Ban: Jayna, Inc.

, is a tier one supplier to leading Fortune 100 Original Equipment Manufacturers (OEMs) in the automotive and climate technology industries. The company specializes in high-volume production of computer numerical control (CNC) machining and component assembly. Jayna has been a contract manufacturer of precision machined parts and assemblies since 1988, and has yet to reach its full potential. The company machines cast iron, steel, and aluminum materials. Currently, there are two plants, both in Troy, Ohio, manufacturing cast iron and aluminum products for Emerson Climate Technology. The parts are bought as castings and machined as per print specification provided by Emerson for the air conditioning compressors. Custom parts are also developed in the company for special orders. The Troy plants carry a high inventory level based on forecasted sales. The primary problem facing Jayna is that the company is losing too much money on current material cost because the current system orders parts on monthly basis instead of a need for the parts. It also seems that some of the parts can easily be lost because inventory is done in a separate manner instead of using a system that integrates all functions into one process. Therefore, we decided to implement a system of Kan Ban to reduce our raw materials and finished goods inventory costs. Kan-Ban delivery is a lean manufacturing technique that will benefit both, the end customer and us. The decision to keep a large amount of lower dollars parts would not raise the cost of stored inventory as much as high dollar parts. So it is the higher dollar parts that need the most attention.

Kan Ban uses two main methods of management. Kan Ban cards and bins are the main management tools. The Kan Ban card contains the part information and is color-coded to alert persons of the priority of the inventory level. The color-coding is representing the following: red is high order priority, yellow is medium order priority, and green is low order priority. Bins are contains that hold the material in storage. For example, it is common to have two bins for a particular part. One bin is red and the other is green. When production needs a part they go to the bins and pull the material from the green bin first. Then you have a one-bin empty, and one-bin full. When you pull material then you must pull the card from that bin. It goes to purchasing, and they place the order for the parts. If production pull the material from both bins then both card are pulled. Since one of the cards is red this will be a flag informing purchasing that there is a priority order. An alternate system is consignment, which can still be managed in a similar way as the Kan Ban system. Consignment is when a supplier agrees to allow the company to warehouse their parts without billing the company until the parts are used. Consignment is a very efficient and cost saving method, which allows a plentiful amount of part without costing the company any money except for the warehouse space. Most suppliers are often not willing to agree on consignment due to the fact that they have to commit their part to one customer, and the supplier often waits to be paid. This is a one sided deal, and the supplier often ties up their inventory.

Supply chain process. The supply chain process involves bin sizes, parts orders from supplier, receiving parts from supplier, moving parts to production, and then accounting for the part either when used in production or scrapping. The materials planning department will produce an order forecast to estimate the amount of parts that will be needed to build the amount of product needed. Parts are kept on racks or bins designated to store the parts, and the bin sizes need to be set according to the forecast. Then the material planning department will order parts using a blanket P.O. from their supplier to fill the rack or bins. When the parts arrive at Jayna, they will need to be received and accounted for, and then moved to the production machines when needed. Lastly, for accounting and other reasons the parts need to be accounted for if they were used in production or scrapped due damaged material. With implementation of Kan-Ban, Jayna has a need to implement a MRP system that integrates part orders, order forecasts, received parts, part traceability, bins, bin sizes, scrapped parts, and finished goods. We already have a network infrastructure that is currently been used for our other supplier (Honda). In order to support this customer we need hardware, software and database solution, integrated with custom input devices that can be implemented quickly to gain control of parts management and streamline the entire manufacturing process. Additionally, the Sales, Procurement, Logistics, and Production departments require complete integration of their information in order to support the business more efficiently. Once it is configured the system can accommodate any peripheral hardware to support the manufacturing process. At the operational level, efficiencies gained in ordering parts, supplying the production line, and accounting for manufacturing activities will contribute to immediate gains in profitability for Jayna, Inc. Complete integration of business data will help managers make accurate decisions in a timely manner. Tactically, the effectiveness of better decision-making will lead to better cost-control of the entire manufacturing process, allowing leaders to see the speed, quality, and accuracy of the line in near realtime conditions. Strategically the company will be balanced to provide 21st century services to its customers, control its manufacturing processes and costs with great effectiveness, while increasing its profit margins in a competitive market. The MRP application will contain several packages relating to the departments of the company form the logical design of the database and will be constructed: Sales, Purchasing, Production, Logistics, and Accounting. The package files will be integrated to provide input forms and output reports that cross reference user-defined fields and files. Different levels of access will be created and assigned depending upon the needs of the user. A hierarchical model will be used to define this access. In this manner all departments will be aware of the overall process and can plan activities effectively, while still providing for necessary security control. For example, the Purchasing department will have an automated form for ordering parts, and the Logistics department will have a report that shows items purchased, costs, and delivery time. The Accounting department will then be able to produce reports on overall activity costs, and then input their economic data on automated forms for producing financing, payroll, and tax data for the company. Production will to tap into the purchasing and logistics data to track part locations and availability to better manage the production flow. At any point only those employees with a need-to-know basis will be able to access the data accordingly. Managers at upper levels can be assigned access correspondingly.

Part orders, order forecasts, received parts, part traceability, bins, bin sizes, scrapped parts, and finished goods are the main areas of concern of Jayna. The program will feature six modules to start: bin planning, purchasing, inventory, planning, location, and build of material. Bin planning module will allow you to view, create, and change bin sizes. Purchasing modules coordinates the ordering of parts, parts cost, estimated arrival, and part quantities. Location module allows the parts to be received, moved, scrapped, or used in a finished good. Build of material module sets the standard of part needs to build a particular product. Inventory is the module that runs reports of assorted information from the amount of parts in the warehouse to the amount of parts used on the production line or scrapped. These modules in the program will provide a strategic advantage to manage the inventory flow. Jayna, Inc. will be depending on the new information system that will be implemented to improve the process flow of the company. The flow chart will map out visual of the process. The manufacturing process starts with the client. Client communicates their product orders for the month with the sales department, and will create the forecast of the month in advance. The sales department then will need to communicate the information that they produced by sending out the necessary emails, and entering the information into the new information system called Jayna Information System (JIS). Step two involves purchase department initializing the order from the supplier. Before this can be done, purchasing will need to insure the build of material (BOM) has been entered correctly into the system. Once the parts arrive at the warehouse the shipping personnel will need to confirm the order by physically counting the parts they are receiving. The parts are then entered into the system, and then labeled with identifier number, barcode, and parts information. Production. Production then moves the part from the warehouse to the production line. In order to do this the barcode is scanned into the system to indicate the movement of material. When the product has been produced, and is being boxed to be shipped to the client the number product is then entered into the system. The system will calculate the amount of parts used in production. The amount of parts not used in the production will need to be calculated and entered into the system. Testing. Jayna decided on three testing methods. Simulated testing, initial, and Training. Training will consist of Support. The support process and methods. Conclusion Jayna, Inc. is hopeful and confident that a comprehensive, integrated, and user-friendly information system will lead to improved parts management and cost control for the company which is the primary motivator for implementing this system. While initial costs will be significant the system is projected to pay for itself within two years. In the short run immediate improvements are expected to increased efficiency and improve the parts forecasting and supply activities. The integration of supply and order data with accounting and management reports will provide spillover benefits to the administrative areas of the company and improve their functions as well. In the long run these measures will lead to improved profitability, better management, and help to secure a strong strategic market position for the company in a very competitive market.