If the KANBAN system is already in place, the queue physiology will be quite different because production is not pushed to the consuming work center, rather, it is pulled by the latter. The existing queue may provide you with a fair idea of the reaction time. Ask the operator. Or, if you want to try a calculated approach, you might try the following one for fit.

Take the square root of the average lot size and multiply this by the number of competitive parts. If the average lot yields 1320 items, the square root is 36. Multiplied by 19 (the other parts in competition with the one being evaluated), the product is 684, or 3.11 KANBANs (684/220 = 3.11). We will use this number instead of the queue-based one in this example.

Note that this buffer, which is related to reaction time, is not a function of the nature of the part itself. Rather, it is a function of the overall nature of the activities, mix and characteristics of the work center, but it has an impact on each of the parts routed through that work center. As the operator works with the KANBANs, she or he will discover intuitively and with experience what the reaction time buffers really are, and she or he will adjust them accordingly.

Customer lot size requirements are another aspect to consider in establishing the KANBAN loop. If the customer lot size (the minimum quantity they con­sume in one delivery) exceeds one KANBAN, that number of KANBANs must always be maintained in stock in order to avoid stock-outs. The customer may be an internal work center that produces in large lots, or it may be an external one where economics require large lot shipments. In our example, let's assume 2 KANBANs are required to address this issue.

In summary, the following numbers of KANBANs are required as buffer stock in our example:
• KANBANs for the setup time: 0.15
• plus KANBANs for the reaction time: 3.11
• plus KANBANs for the customer lot size: 2.00

In our example, therefore, we would have 6 KANBANs (rounded up) in the loop for setups, to buffer inter-part competition for the same resource and to absorb the way the customer chooses to consume the parts produced.

8c) The third general factor in calculating the number of KANBANs is safety stock requirements against sur­prises such as breakdowns, defects and other unplanned shop floor realities. Although such occurrences are at the antithesis of Just-In-Time and Total Quality, they do happen and must be taken in stride by the KANBAN loops. When we established the net capacity of the work center in point 1 above, we specifically excluded down time. The loops already assume a 25% down time so we do not want to compensate for again by building more inventory for this aspect. There remains the issue of logistical and process defects. The loop must provide adequate protection until such defects are eliminated via the continuous improvement process.
One approach can be to take the square root of the total number of KANBANs determined to date and multiply that by a safety factor between 0 and 3, according to the level of risk. A factor of 0 will add no protection; 3 will usually provide a comprehensive safety net. (The use of the square root approximates a standard deviation in a normal distribution; a factor of 3 generates the equivalent of 3 standard deviations, or a 99.87% cover­age. This remains a hypothesis as nothing guarantees that the defects you are encountering follow a normal distribution, but it is a good initial approach.)

In our example, we allocated 6 KANBANs for the lot size, 6 more as reaction time buffer, for a total of 12. The square root of 12 is 3.46. Assuming that the environment is under good control, we will use a safety factor of 0.3. Therefore, 3.46 multiplied by 0.3 yields about 1 KANBAN as safety stock, bringing the total number of KANBANs in the loop to 13.

It is important to realize that these 13 KANBANs do not represent 13 KANBAN containers full of inventory. In a normal cycle of alternating consumption and supply, only half that number of KANBANs will actu­ally be in inventory. Otherwise, an overstocked loop needs adjustment by modifying some of the factors we have used in our calculation. The necessity for this will become evident with use, and is as simple as adding or removing a KANBAN or two.

When implementing KANBANs, when in doubt, add a KANBAN. It is easy to eliminate unnecessary KANBANs later on; starting with too few could cause logistical dysfunctions which then be associated with the KANBAN tool in itself. No-one likes excessive risk nor being associated with failure, especially in the beginning.

Realize, however, that this calculation has factored all the reasons for which one would need stock to maintain efficient production. It has forced us to consider all the aspects of this stock management by analyzing the causes of that inventory. This is the first real step to intelligent and responsible stock management. The
responsible manager will eventually address these causes and then adjust the number of KANBANs accordingly.

To Be Continued

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Lean Manufacturing Articles and go to Series 01