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Kanban  Techniques
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The traditional way to obtain materials to support the materials plan is to release purchase orders for items that are purchased and to release shop orders for items that are manufactured. The job of the planner has been to make sure that the orders are released with sufficient lead time and for the correct quantity—then the planning job became one of monitoring performance to ensure that the current schedule supported the actual needs both for timing and for quantities.

A conservative estimate is that 65 percent of a planner's work has been spent in the releasing and in the subsequent rescheduling of these orders.

Today many companies are working to uncomplicated and to simplify the process of replenishing materials using a technique called kanban replenishment. Correctly implemented, this technique will result in a responsive manufacturing environment in which material replenishment of both purchased and manufactured items is driven, not by a schedule, but by the actual consumption of these items. In addition, it will also drive continuous improvement activities throughout the company.

THREE OBJECTIVES OF THIS PAPER

1.    To show how the various kanban replenishment techniques actually work and what the proper kanban is for use in a high-volume/low-mix environment or in a low-volume/high-mix environment.

2.   To explain how the kanban replenishment process is also used to drive continuous improvement initiatives.

3.     To provide a 10-step proven methodology for safely, quickly, and inexpensively implementing the kanban replenishment process in 120 days.

RESULTS EXPECTED BY IMPLEMENTING THE TECHNIQUES

 

1.        The elimination of purchase orders and shop orders for material replenishment

2.   A reduction in raw materials and in work-in-process inventories ranging from 30 to 70 percent

3.        A reduction in material replenishment lead times of 40 to 90 percent.

INTRODUCTION

The traditional replenishment of materials, both purchased and manu­factured, is an information-based methodology—driven by schedules, purchase orders, shop orders, and pick lists. Traditional process im­provement programs are also information based—often driven by man­agement decree—supported by variance reports, rework reports, etc.

In a Just-in-Time environment, kanban is the methodology used to not only replenish purchased and manufactured materials but also to drive continuous improvement initiatives throughout the plant

This paper will address, based on my actual implementation and operational experiences as director of materials for Nortel's Digital Switching Division at the Research Triangle Park in Raleigh, North Carolina, and subsequently with client companies in Canada, the United States, the United Kingdom, and in Western Europe:

      the mechanics of kanban—how they work

      the proper kanban to use in a high-volume, low-mix environment and in a low-volume, high-mix environment

      kanban replenishment techniques for purchased items

      kanban replenishment techniques for manufactured items

      how the kanban replenishment process is also used to drive continuous improvement initiatives

• how to safely, quickly, and inexpensively implement a 10-step process of system changes and physical changes that must take place on the shop floor and in the procurement function to move from an informa­tion-based operation to a visually managed operation—a process that for a pilot area will show significant results in only 120 days.

WHAT ARE KANBANS—HOW DO THEY WORK?

The Japanese word "kanban" (pronounced to rhyme with bonbon) lit­erally translated means "card" or "signal." Just-in-Time uses the kan­ban as a visual replenishment technique for authorizing both the pro­duction, movement, or shipment of material by signaling to the pro­ducing operation that the using operation is ready to receive material, kanban materializes "demand pull" production in which a customer, either internal or external, pulls material from a supplier who may also be internal or external. It contrasts with "order push" production in which a purchase order or a shop order authorizes the supplier to de­liver to the customer at a predetermined date.

To Be Continued


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