Kanban Signaling: Company Confidential

Kanban Signaling
Copyright NN, Inc. 2004
Company Confidential
Kanban Signaling : Two Pillars of TPS The Toyota Production System Cost reduction through relentless elimination of waste MUDA or non-value-added work
The two pillars of Toyotas Global Production System

Just in Time
Autonomation (Jidoka)
Leveled Production
(Production Smoothing)
Copyright NN, Inc. 2004 Company Confidential
Kanban Signaling: Toyotas Production System

Cost Reduction Increase of Capital Turnover Ratio Elimination of Waste
Continuous Flow of Production
Just-In-Time Production
Production Methods
Small lots Short set-up Multi-skilled worker Jobs finish within cycle time
Self-Stop Automation
Control by Teamwork Automatic Stop
Information System
Kanban
Kanban Signaling
What is a Kanban ?? Kanban (Japanese) : Card or Visual Record. In The Modern Lean Terminology A Kanban is a Visual Information System established to maintain the DISCIPLINE of a JIT System on the shop floor.
A SIGNAL THAT AUTHORIZES PRODUCTION
Kanban Signaling
Pillars of Just In Time

The Three Main Principles of JIT :
Takt Pull Flow :
Material People Information : Kanban Signaling
Kanban Signaling
What is a Supermarket ? Does a Supermarket fit any production environment ? Ideal Production Environments for Supermarkets :
High Commonality of parts Relatively Flat (Smooth) Demand Pattern Part Number (SKU) has many customers Component has many usages Inadequate Process Capabilities : not able to produce the desired mix due to capacity issues.
Kanban Signaling: Waste in Replenishment Systems
Replenishment System
* All the activity associated with any replenishment system is non-value added (Waste Muda). * The target for improvement should be to eliminate or streamline each activity associated with the replenishment system.
Whats Wrong with a Little Inventory?
Over-Production Inventory
Transport & Handling
Hidden Problems
Production Imbalance
Delay & Long Lead Time

Long Setups
Wasted Space
People
Equipment
Late Supplier Deliveries
Downtime
Storage Costs
Energy
Defects
Resources Tied Up Deterioration or Damage in Storage and Handling
Costs and Delays that Reduce Profitability
Kanban Signaling: Waste in Replenishment Systems Before Manufacturing Process Improvement

VA NVA Response Time
After Manufacturing Process Improvement

Response Time
After Replenishment System Improvement

Response Time
Kanban Signaling: MRP vs. Kanban
Push vs. Pull
manufacturing
customer
I N V E N T O R Y customer manufacturing
Kanban Signaling:
Push vs. Pull

Push System : Work releases are scheduled based on anticipated demand with no consideration of the status of the plant (MRP). Pull System : Work releases are authorized based upon the status of the plant, that is the status of downstream operations dictate the production requirements for upstream operations.
MRP Upstream inventory Kanban Upstream inventory Kanban signals
Assembly
Assembly
Full containers
Kanban Signaling
Prerequisites of a Kanban Pull System

For a Pull System to perform effectively, Level 3 Building Blocks should be in place :
Quick Changeovers : Set-Up Kaizen Cellular Manufacturing : Flow Kaizen One Piece Flow : Flow Kaizen Low Variability :Variability Reduction Kaizen (6 Sigma tools) Reliable Process : TPM Kaizen Stable, Flat Demand : JIT Principles
If these are not done first, implementing Kanban Pull will force these to take place.
Kanban Signaling
How Does a Kanban System Work ?
Single Card Kanban :

In a Single Card Kanban System, the operator of a down stream operations requires a Production Card and the necessary Material to be authorized to begin processing. He/she simply removes the Card and sends it back to the upstream process, signaling production to replenish the material used by his/her station prior to processing the job.
Kanban Signaling
Single Card Kanban

Outbound Stock Point Outbound Stock Point Outbound Stock Point
When stock is removed place production card in hold box. Production card authorizes start of work.
When stock is removed place production card in hold box. Production card authorizes start of work.
Workstation Kanban card Production Box
Full Container Container being filled Container being emptied
Kanban Signaling
Two Card Kanban

A Two Card Kanban is used when WIP cannot be effectively handed from one process to the next, thus necessitating an Inbound Stock Point and an Outbound Stock Point for processing stations. Mainly this system is utilized in heavy transaction, high complexity parts (huge number of parts)
In this System Two Cards are used :
Move (Conveyance) Card : To authorize the Movement of material

Production Card : To authorize the Production.
Two Card Kanban System

A
Dispatch Box Production kanban detached, placed in dispatch box
Move kanban attached to new stock
INBOUND STOCK AREA
OUTBOUND STOCK AREA
New stock moved into Process 2
C B
Production kanbans direct the production sequence
Production kanban attached to finished quantity Move kanban detached
PROCESS 1
PROCESS 2
MOVE KANBAN (1-2-3) Each process has an inbound and an outbound stock area. The inbound area contains raw materials used in the process. The outbound area holds completed output from the process. When Process 2 begins to consume the contents of a container, the Move Kanban is taken off the container and brought to the outbound stock area of Process 1. There the Move Kanban is attached to a new, full container, which is taken back to the inbound stock area of Process 2, ready for use.
Two Card Kanban System

A
Dispatch Box Production kanban detached, placed in dispatch box
Move kanban attached to new stock
INBOUND STOCK AREA
OUTBOUND STOCK AREA
New stock moved into Process 2
C B
Production kanbans direct the production sequence
Production kanban attached to finished quantity Move kanban detached
PROCESS 1
PROCESS 2
PRODUCTION KANBAN (A-B-C) A Production Kanban is attached to every container in the outbound stock area at Process 1. When Process 2 comes to remove a container of parts, the Production Kanban is taken off and put in a dispatch box for Process 1. Process 1 may make parts for several other processes, therefore, it builds the new parts in the order in which the kanban are placed in the dispatch box. When a container is full, the Production Kanban is attached to it and it is placed in the outbound stock area ready for withdrawal by Process 2.
Kanban Signaling : Kanban Cards
Two Card System / Move Card
Downstream work center: K123 Part number : 33311-3501 Stock location no.: A-12
Container capacity : 50
No. of kanban released : 7 of 12 Stock location no.: A-07 Upstream work center: Y321
Shop Supplies Kanban system at NN in Veenendaal
W.I.P. Kanban system at NN in Mountain City
Kanban Signaling : Kanban Cards
Two Card System / Production Card

Work Center no.: Y321 Part number to be produced: 33311-3501 Container capacity: 50 units Stock capacity at which to store: A-07 Materials Required: Material no. 33311-3504 Stock location: A-05 Part no. 33825-2474 Stock location: B-03
Kanban Signaling
Calculations
Kanban Size
Kanban Signaling : Calculations / Kanban Size
METHOD
Basic kanban size calculation PLUS demand variation factor
Kanban Size
Dd x R x MAD
Dd = Daily demand:
- Last years customers shipments / number of production days. - Next X week forecast / production days.
R = Replenishment time:
- Total time from the signal until product is back in the Kanban.
MAD = Mean average deviation to the daily rate.

- Any distinct order patterns?
Kanban Signaling: Calculations / Kanban Size Example 1 Dd x R x MAD

Item A B C D E F Daily Replenishment Demand, Dd Time, R (days) 500 900 750 500 500 1200 3 2 3 4 2 4 MAD 1.40 1.25 1.80 2.01 1.50 2.00 Kanban Replenishment Point 2100 2250 4050 4020 1500 9600
Kanban Signaling: Calculations / Kanban Size Another Example Our customer shipments last year were 100,000 of part A, 250,000 of part B, and 400,000 of part C. There are 240 production days in this year. Calculate the parts per day of each item. A = 417 parts/day B = 1042 parts/day C = 1667 parts/day The time to replenish part A is 2 days, part B is 4 days, and part C is 1 Day. Analysis of last years demand patterns shows that part A had a MAD of 1.50, part B 1.25, and part C 1.20. Calculate the replenishment level. Dd x R x MAD
Part A: 417 x 2 x 1.50 =

A = 1251 parts B = 5210 parts C = 2000 parts
Kanban Signaling: Calculations / Kanban Size Process Capability

- Establish daily rate for all items in the process.
METHOD
Alternative kanban size calculation based on process capability
- Total run time required.
- Hours available for the process. ( Breaks, Lunches, Historical Downtime )
Formulas
Hours Available - Run Time = Hours Available for Set-Up Hours Available for Set-Up / Time per Set-Up = Set-Ups per Day Number of items / Set-Ups per day = Days of Demand (min lot size)
Kanban Signaling: Calculations / Kanban Size

EXAMPLE 1
Item
Daily Demand
Run Time/Pc
Total RT
A
B C
500
900 750
5 sec
4 sec 7 sec
2500 sec
3600 sec 5250 sec
D
E F
500
500 1200
6 sec
5 sec 4 sec
3000 sec
2500 sec 4800 sec
Total Sec 21,650

1 machine x 7.2 available hours x 3600 sec/hr = 25,920 sec available

EXAMPLE 1 : (continued)
25,920 sec available -21,650 sec run time 4,270 sec available for Set-Ups Each Set-Up takes 1/2 hour (1800 sec.) 4270 sec available for set-up / 1800 sec per set-up = 2.4 SetUps/day Round 2.4 down to 2 set-ups / day 6 Items / 2 set-up per day = 3 Days of Demand (min lot size)

EXAMPLE 1 : (continued)
Item
Daily Demand
x3
Kanban Size
A
B C
500 * 3= 1500 piece Kanban = size 1500 pcs

900 750 2700 pcs 2250 pcs
D
E F
500
500 1200
1500 pcs
1500 pcs 3600 pcs
Kanban Signaling
Calculations
Number of Cards
Kanban Signaling
Number of Cards
The number of authorized Cards / Containers in a JIT system controls the amount of inventory in the system at any given time. The number of Cards / Containers in the system directly impacts the the WIP inventory and safety stock. Material spends some time in actual processing, waiting in queue, waiting in a storage location or in transit. So at any given time in the system, containers carrying material are in one of the above stages. The Key to determining the number of Cards/ Containers is estimating the average Lead Time needed to produce a container of parts :
Lead Time = L
Kanban Signaling
Number of Cards
# of Cards = Average Demand during Lead Time plus Safety Stock Size of the Container (Kanban Size)
Where Lead Time is a function of the processing time per container at the upstream supplier station and the waiting time at the down stream production process and for material handling.
Kanban Signaling: Kanban Bins and Cards

EXAMPLE
Item A B C D E F
Kanban Size 1500 2700 2250 1500 1500 3600
Kanban Bin Bins/Cards Capacity Required 500 900 750 750 300 600 3 3 3 2 5 6
Kanban Signaling
Demand Patterns
Demand pattern is the actual pattern which finished goods are consumed by the customer. This can be magnified by the way that we transmit replenishment signal back to manufacturing. (Weekly buckets) Average
Actual Demand
Predictable Demand.
Kanban Signaling
Demand Patterns
One or Two Customer Seasonal
(Demand)
(Time)
Kanban Signaling
Demand Patterns
Unpredictable
(Demand)
(Time)
Kanban Signaling
Demand Patterns
Components Push
Replenishment time to Customer
Form
Mach
Finish
Pack
Pull
Replenishment time to Kanban
Replenishment time to Kanban
Replenishment time to Customer
Highest level of commonality, closest to the customer.

Kanban Signaling
Sequencing / Mixed Modeling

What is Mixed Modeling: The ability to produce the desired daily mix of products as specified by the customer. Therefore,sequencing is a method of refining the daily build schedule by determining the order in which the product will be produced. The objective of Sequencing:
To create a linear cyclical demand pattern during the course of each day.
Kanban Signaling Example Daily Build Quantity Takt Time / 240 = 2 Min. / 120 = 4 Min. / 80 = 6 Min. 12 Minute Period
Product A B C
Minutes in a Work Day 480 Minutes 480 Minutes 480 Minutes
The takt time results indicate that in a 12-minute period: 12/2 = 6As, 12/4 = 3Bs, and 12/6 = 2Cs need to be made. 2. Lay in the 12 Minute product sequence in the most rhythmical fashion while not exceeding (6) As, (3) Bs, and (2) Cs
=ABACABACABA
Kanban Signaling: Signals, Options, and Presentation Two Bin Replenishment No Work
Full
Full
Work till bin is full
Empty
Full
Something is wrong in the system
Empty Empty
Kanban Signaling: Signals, Options, and Presentation Multiple Container Kanban

Full Full Full 3of 3 Full 1 of 3 Full 2 of 3 Full 3 of 3
1 of 3 2 of 3
Do not work
Empty 1 of 3 Full 2 of 3
Full 3 of 3
Full 1 of 3
Full 2 of 3
Full 3 of 3
Do not work
Empty Empty 1 of 3 2 of 3 Full 3 of 3 Full 1 of 3 Full 2 of 3 Full 3 of 3
Do not work
Empty Empty Empty 1 of 3 2 of 3 3 of 3 Full 1 of 3 Full 2 of 3 Full 3 of 3
Work to fill 3 bins

Empty Empty Empty Empty 1 of 3 2 of 3 3 of 3 1 of 3 Full 2 of 3 Full 3 of 3
Work to fill 3 bins

Empty Empty Empty Empty Empty 1 of 3 2 of 3 3 of 3 1 of 3 2 of 3 Full 3 of 3
Work to fill 6 bins

Empty Empty Empty Empty Empty Empty 1 of 3 2 of 3 3 of 3 1 of 3 2 of 3 3 of 3
Kanban Signaling: Signals, Options, and Presentation
Basic Information for Kanban Card

Quantity Per Container Number of Cards (1 of 3)
Part Number
Description Consuming Process (Location)
Supplying Process
Optional Information for Kanban Card

Bill of Materials Drawing Numbers Labor Information What do you need? Etc... Remember: Changes, require card maintenance. Bill of Material, Process changes, etc...
Visual Signals
There have been many different ways that signaling has been performed in many different situations. The Main Objective is Visual, Easy to Understand, Practical way to send a clear signal that authorizes the production or movement of material : Traditional Cards Containers Painted areas on floor Carrying bags Bins Andon Lights Golf Balls
Card Examples
Card Examples
Kanban Signaling: Signals, Options, and Presentation Signal Kanban = Single card or lot size greater than replenishment quantity Replenish Point 2 Bins Lot Size 10 Bins
Part Number
Description
Non- Replenishable Cards

A way to increase Kanban size for a short period of time. Normally, to handle short term increased demand. (Promotions) Card must be distinguishable as a one time use only card. Color, Size, Shape, etc...
Quantity Per Container Number of Cards (1 of 3)
Part Number
Description
Supplying Process Consuming Process (Location)
KANBAN CARDS = $$ MONEY $$$
DO YOU LEAVE YOUR MONEY LAYING AROUND, UNATTENDED??
Wait Work Board
Schedule Board 1 2 3
PART#44367
PART # 58221
PART # 28873
PART #78651
PART # 34529
PART 38994
6
WHEN THE NUMBER OF CARDS EQUALS THE STARTING POINT( EX. 3 CARDS) THEY MOVE TO SCHEDULE SIDE.
Visual Kanban Board

Part Number
123456
126574
123244 123209
Visual Kanban Board

Time Slot Board 7-8 8-9 Time of Day 9-10
Part Number Description
10-11
11-12 12-1
1-2
2-3
Jobs to be completed
Visual Presentation
Visual metal cards bend and put on rail.
Consuming Process
Supplying Process
Replenish Point 2 Bins
Lot Size 10 Bins
Part Number
Description
How to Cards get Back to the Previous Process ?

Drop off at process Central card collection Collection point for vendor cards Use visual signals vs. cards Kanban Collection Post Whatever works for you !!
MINIMIZE NON-VALUE ADDED !!

THINGS TO BE CAUTIOUS OF!!
Kanban Signaling: Kanban Rules
According to Taiichi Ohno

The Pull System as defines by Taiichi Ohno can not sustain its effectiveness unless the following rules are strictly adhered to: Upstream Processes are authorized to produce by Downstream Processes not the other way around Upstream Processes adhere to the Kanban information regarding Quantity of Production No Items are to be transported (moved) without a Card Always attach a Card to the Goods Do not send Defective Goods Downstream Reducing the number of Kanban Cards increases their sensitivity Strive to reduce.
Kanban Signaling: Kanban Function
According to Taiichi Ohno

A Kanban Pull System : Promotes Visual Management Provides Pick-Up or Transport Information Prevents Overproduction and Excessive Transportation Controls the amount of WIP in the system Serves as a visual work order Prevents defective items by identifying the process producing the defects Exposes waste and forces a root cause solution

Kanban Signaling: Company Confidential

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Kanban Signaling

Copyright NN, Inc. 2004

The two pillars of Toyotas Global Production System

Kanban Signaling: Toyotas Production System

Copyright NN, Inc. 2004

Copyright NN, Inc. 2004

Pillars of Just In Time

Takt Pull Flow :

Material People Information : Kanban Signaling

Copyright NN, Inc. 2004

Copyright NN, Inc. 2004

Kanban Signaling: Waste in Replenishment Systems

Copyright NN, Inc. 2004

Whats Wrong with a Little Inventory?

Delay & Long Lead Time

Late Supplier Deliveries

Resources Tied Up Deterioration or Damage in Storage and Handling

Costs and Delays that Reduce Profitability

Copyright NN, Inc. 2004

Kanban Signaling: Waste in Replenishment Systems Before Manufacturing Process Improvement

After Manufacturing Process Improvement

After Replenishment System Improvement

Copyright NN, Inc. 2004

Kanban Signaling: MRP vs. Kanban

Push vs. Pull

Copyright NN, Inc. 2004

Push vs. Pull

Prerequisites of a Kanban Pull System

How Does a Kanban System Work ?

Single Card Kanban :

Copyright NN, Inc. 2004

Single Card Kanban

Workstation Kanban card Production Box

Full Container Container being filled Container being emptied

Copyright NN, Inc. 2004

Two Card Kanban

Move (Conveyance) Card : To authorize the Movement of material

Two Card Kanban System

Move kanban attached to new stock

INBOUND STOCK AREA

OUTBOUND STOCK AREA

New stock moved into Process 2

Copyright NN, Inc. 2004

Two Card Kanban System

Move kanban attached to new stock

INBOUND STOCK AREA

OUTBOUND STOCK AREA

New stock moved into Process 2

Copyright NN, Inc. 2004

Kanban Signaling : Kanban Cards

Two Card System / Move Card

Copyright NN, Inc. 2004

Shop Supplies Kanban system at NN in Veenendaal

W.I.P. Kanban system at NN in Mountain City

Copyright NN, Inc. 2004

Kanban Signaling : Kanban Cards

Two Card System / Production Card

Copyright NN, Inc. 2004

Copyright NN, Inc. 2004

Kanban Signaling : Calculations / Kanban Size

MAD = Mean average deviation to the daily rate.

Copyright NN, Inc. 2004