Maintaining the Loops

11. Loop sizes must be dynamically synchronized with the opportunities and constraints of the daily operating environment.

One of the problems with KANBAN loops is that the way they are implemented at most sites has to do with the adjustment of their sizes (that is, the number of KANBANs in the loop). More often than not, they are not adjusted at all. Or if so, for all the wrong reasons (people want to depress inventories to impress the boss without having addressed the constraints with make inventory an operational necessity).

KANBAN loops react slowly to mix and volume changes; the system is basically reactive. That is why we want to calculate the size of new loops based on forecasted volumes to force adjustments before the new mix wreaks havoc. There are other reasons why the operator would want to refine the loops. These include unplanned volumes; the addition of new products on the same work center; changes in the distance between work centers, or changes in the transportation lead time; changes in the defect rate (either beneficial or otherwise); changes in the setup times; changes in the consumption rate or pattern of the client organization; changes in the dependability of operators, equipment or suppliers; changes in the replenishment lead times, etc.

Each of these changes has an impact on the buffer stock requirements and/or on the optimal lot size. Because of specific shop floor complexity, we need a simple means to enable the operator be to identify when KANBANs must be added or removed from his loops. In the following explanations, we will assume the generic KANBAN form is being used, that is, a KANBAN card on each standard skid. Other environments may use lights, squares on the floor, shelves, racks; the con­cepts will need to be adapted with understanding of the following principles. These suggestions will need to be adapted depending on what form the KANBAN signal is to take in your shop.
The operator has three objectives: the supplying work center is accountable for providing his customer(s) a 100% service level, therefore, no stock outs. The supplier must also maintain an adequate productivity. Finally, the operator must do this while minimizing in process stocks (or the size of the Kanban loop).

The measure of productivity cannot be the number of hours worked nor the number of units produced. The work center's availability is the result of a long gone planning activity which was based on forecasted re­quirements. It is too late, in the here and now, to attempt to modify this capacity plan. It is too late. It is usually too costly to change capacity in the very short term, both on employees and on the bank balance. Moreover, we should refuse to have our employees bear the price of bad planning. Let us assume then that short term capacity is fixed. Since production only occurs when the customer has pulled it, we have no right to measure the productivity of the supplying work center based on the number of units produced or the number of hours worked. He has no control on this anymore.

What we want to control quantitatively from now on, besides total customer satisfaction, is the amount of inventory the operator must maintain to protect the customer from his inability to exactly produce what is needed when needed. The supplying work center's productivity objective is thus to minimize the number of KANBANs required in the loop. In the context of a continuous improvement process, the reduction in the number of KANBANs will occur through an analysis of the causes (factors) making stock an operational ne­cessity, and their progressive elimination. It must be understood that so long as these causes remain, the number of KANBANs in the loop may not be reduced. There is no such thing as free lunch; loop reduction must be earned.

To Be Continued

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