Justintime and Kanban Push or Pull ch5 JIT

Just-in-time and Kanban Push or Pull? ch-5 JIT & Kanban 1

Just-in-time Philosophy JIT manufacturing is defined as the elimination of all waste and continuous improvement of productivity. Waste means anything other than the minimum amount of equipment, parts, space, material, and workers’ time absolutely necessary to add value to the product. This means there should be no surplus, there should be no safety stocks, and lead times should be minimal. The concept of JIT: To have the right parts and quantities at the right time and place. ch-5 JIT & Kanban 2

JIT Environment Many elements are characteristic of a JIT environment: • Flow manufacturing • Process flexibility • Total quality management • Total productive maintenance • Uninterrupted flow • Continuous process improvement • Supplier partnerships • Total employee involvement ch-5 JIT & Kanban 3

The Pull System The pull system was developed as an alternative to classical “push” MRP. The underlying concept is not to preplan and generate schedules, but instead to react to the final customer order and produce only what is needed to satisfy demand then only when it is needed. Push system: Production oriented Pull system: Customer oriented ch-5 JIT & Kanban 4

Kanban System With shortened lead times a constant goal in JIT, a system is needed to generate the reorder point signal without having to rely on a formal, structured system that could take time to react. A simple card system called Kanban, which roughly translated from Japanese means card or ticket. The system works very simply. The Kanban signal (often a piece of cardboard) identifies the material to which it is attached. ch-5 JIT & Kanban 5

The Kanban System The information on the Kanban will often include: • • Component part number and identification. Storage location. Container size (if the material is stored in a container). Work center (or supplier) of origin. ch-5 JIT & Kanban 6

The Kanban System Withdrawal Kanban (WK) A move signal that calls for refilling the raw material. Circulated from the customer process (or down station or succeeding station) to the supplying process (or previous station or preceding station). At customer process: Operator: w Processes the parts when the PK has been shown. w Removes WK and places it in a collection box once he/she begins to use the first part in that container (or you also can set the rule that once he/she used up the raw materials). ch-5 JIT & Kanban 7

The Kanban System Material Handler (at an established interval): w Collects WK. w Gets the finished parts at preceding station indicated by WK of the down station. When finished part container of the preceding station is empty, post this station’s production kanban. w Delivers the finished parts to down station (customer process) and attach the WK to the container. ch-5 JIT & Kanban 8

The Kanban System Production Kanban A make signal It calls operator to start production. What part to process, how many quantity, and using which raw materials, etc are shown in the PK. The operator's work is to refill the empty finished product container). Circulated inside the station. ch-5 JIT & Kanban 9

The Kanban promotes the small batch size production ch-5 JIT & Kanban 10

The Kanban System How does it work? WITHDRAWAL CARD Two-card Kanban system. Production kanban (authorizing production) Withdrawal kanban (authorizing the movement of the identified material). At the start of the process there is no movement, since all the cards are attached to full containers or bins. ch-5 JIT & Kanban 11

The Kanban System WITHDRAWAL CARD At some point, a down station needs some of the parts produced by work center 2 (in its “finished product” bin at the right side of this center). The material handler will take a bin of the part from work center 2, at the same time, post the production kanban (PK) in the card post of this center. (moment ago, the PK is attached to the full finished product bin). ch-5 JIT & Kanban 12

The Kanban System WITHDRAWAL CARD The posted PK is the signal to start production at the work center 2 to replace the empty finished product bin. To do that work the operator needs raw material, which is in the raw materials bin at the left side of the work center with the withdrawal kanban (WK) attached. When that material is used up, the WK will be posted by the operator. ch-5 JIT & Kanban 13

The Kanban System WITHDRAWAL CARD The posted WK authorized movement of material that usually is found in the “finished product” bin of work center 1. The material handler will now collect the WK and deliver the material to down station (work center 2). Before the materials handler sends the materials back to the center 2, however, he must remove the PK of the finished product bin of center 1 and post it, which will authorizes center 1’s production. Also, after materials handler delivered the materials to center 2, he also has to attach the WK to the full raw materials bin of center 2. ch-5 JIT & Kanban 14

The Kanban System WITHDRAWAL CARD Now, there is an PK posted at work center 1 which calls the operator to start production, using its raw material at the left side bins. Of course, the operator will refill his/her finished product bin and post the WK when his raw material bin is empty. ch-5 JIT & Kanban 15

The Kanban System WITHDRAWAL CARD This process continues upstream even to the suppliers. There are no schedules with this system. Production is pulled by down station’s demand. The movement of material is only authorized purely to the amount of down station’s production. ch-5 JIT & Kanban 16

Kanban Rules Six kanban rules: 1. Downstream process should get right parts at right time from upstream. 2. Upstream process should produce parts or products in quantity of downstream process. 3. Defective products should never be passed on to downstream process 4. Number of kanbans should be minimized. 5. Kanban can be utilized to adapt to very small variations in production volume. 10%. 6. The actual number of parts in box must equal to number on kanban. ch-5 JIT & Kanban 17

Kanban and WIP ch-5 JIT & Kanban 18

The One Kanban System The requirement for supplying process: n must be reliable. n must be proficient at having the correct parts available In this situation, the production Kanban is circulated within the supply operation. When the supply operation receives the production Kanban, it produces that part and supplies it promptly to the customer. A minimum amount of emergency stock should be kept on hand in case of catastrophic failure. ch-5 JIT & Kanban 19

Expected Benefits An effective kanban system will result in material being delivered only in small quantities as it is needed. The Kanban is a communication device telling the supplier or supplying operation what to deliver and when to deliver it. It smoothes the material flow. w w Improved Material Flow Reduced Inventory (or WIP) Reduced Freight Costs No Waiting ch-5 JIT & Kanban 20

Pull System Considerations The failure of a pull system: Lack of planning and proper management Understanding the actual customer is the key to program’s success. Pull system considerations: w Use the time allotted The manager should allocate the time for supplying process to properly replenish the market. ch-5 JIT & Kanban 21

Pull System Considerations w Determine number of lots and lot size There will be a shift in the workload with which material handlers must adjust. Carrying less parts, more often to deliver, vice versa. w Maintain Delivery Cycles Operators must realize the importance of completing each delivery cycle as designed. Failure to do so results in fluctuations in the material process, and the customer process does not have sufficient parts at the operation to continue production. ch-5 JIT & Kanban 22

Pull System Considerations w Proper Training It is important to spend the time to properly train material handlers on their role in the process. They are the ones who make the program a success or failure. w Parts must be perfect The program will not be successful if supply operations do not ensure 100% quality parts to the down stations. w Use triggers In a pull system, operators must take charge of requesting the material. The easiest way to make the pull system fail is to not initiate the trigger mechanism. ch-5 JIT & Kanban 23

Which to Choose—MRP (ERP), Kanban? MRP (ERP) Where it works best. MRP is by its very nature a forward-looking system. MRP can be very effective in an environment with a great deal of variability and uncertainty. For example, it can handle variability of demand as well, or better than most other systems, and tends to be quite effective in dealing with product design changes and process changes. Where it is not as effective. It is highly data dependent. It is not only critical to have a lot of data, but the data needs to be both accurate and timely on an on-going basis. The burden on the infrastructure can be high and costly. ch-5 JIT & Kanban 24

Which to Choose—MRP (ERP), Kanban? JIT (Kanban) Where it works best. Kanban is a very reactive system. Very little is planned ahead. Instead, Kanban causes replacement of material used in a totally reactive mode. Product design cause a real problem in a Kanban system. For these reasons Kanban works best in a highly stable and predictable environment. Where it is not as effective. Kanban can quickly fail in a highly volatile environment because of the reactive nature of the system. Volatility in customer demand, processing problems, and extensive changes in product designs make it very difficult for a Kanban system to work effectively. ch-5 JIT & Kanban 25

Which to Choose—MRP (ERP), Kanban? Kanban and MRP The combination of these two systems is becoming quite common. An MRP system is used for advanced planning, including long lead-time purchased materials, adding resources, and implementing product design changes. Once the MRP has the materials and resources “lined up, ” however, Kanban is used as an execution system, bringing with it the characteristics of rapid response to customer order and reduced inventory levels throughout the process. Hybrid Systems ch-5 JIT & Kanban 26

The Kanban System Selection of the Container Size Minimize: Subject to: Where i is a notation for part. j is for material-handling technology. c 1 ij and c 2 ij represent fixed cost per time and variable cost per move for part type I using technology j. Nj is he maximum load size for that material-handling technology. ni: number of units authorized by a kanban for part i. Ki: number of kanban for part i. Di: demand rate for part i. Nj: maximum load size using that technology. ch-5 JIT & Kanban 27

The Kanban System By briefly ignoring the constraints, we can differentiate objective equation with respect to nj to obtain: By setting this equation to 0, we get: ch-5 JIT & Kanban 28

The Kanban System Example 1: The bottom of a printer body goes through three steps: molding, trimming, and detailing. The table below provides the annual fixed cost, cost per load, and maximum transport size for three handling options. Choose the container size and technology. The system will produce 200, 000 printers per year. Annual inventory holding cost is $2 per unit of WIP. Option Annual cost Cost / trip Max. Lot size Manual Carry $27, 000 $0. 15 2 Push Cart $28, 000 $0. 16 20 Forklift $50, 000 $0. 90 500 ch-5 JIT & Kanban 29

The Kanban System Solution: The best container size for each technology: Plugging c 2 ij, we have: Option The best container size nij Manual Carry 300 Push Cart 310 Forklift 735 ch-5 JIT & Kanban 30

The Kanban System In all 3 cases, we are constrained by the maximum lot size. Thus, we compare the cost using these feasible load size as follows: Manual: Push cart: Forklift: The obvious choice is to use a push cart with containers of size 20 pieces. ch-5 JIT & Kanban 31

The Kanban System Selecting the number of kanbans Where i is a notation for part. ni: number of units authorized by a kanban for part i. ki: number of kanban for part i. Di: demand rate for part i. i: expected lead time to replenish a container for part i. l: safety factor ch-5 JIT & Kanban 32

The Kanban System Selecting the number of kanbans Example 2: A punch press forms a variety of sheet metal parts. A recent setup reduction team has succeeded in reducing setups to two minutes. It is now feasible to reduce as few as six items at a time when the machine is set up. The six items can be stacked and removed as a single load. Demand for one item is set at 75 units per day. With the small lot sizes, replenishment lead time is expected to be constant at two hours (0. 2 days). Find the minimum number of kanbans needed to avoid shortages. ch-5 JIT & Kanban 33

The Kanban System Solution: To find a lower bound, we can assume that the variabilities of lead time and of demand are minimal and set l = 0. We then have Suppose that kanbans were collected and each part scheduled once per day. Lead time demand now becomes equal to daily demand k = (D/n)=(75/6) = 13. Clearly, the maximum possible inventory will be much larger in the second case. However, these extra kanbans would usually be on the schedule board waiting to be produced. ch-5 JIT & Kanban 34

The Kanban System Selection of production Quantity Minimize: 5. 1 Subject to: 5. 2 Where i is a notation for part. j is for material-handling technology. s 2 i represent the extra setup time. ti is the unit process time for part i. ni: container size for part i. Di: Demand rate for part i. Qi: is the lot size. : the smallest set of values that satisfies the constraints equation ch-5 JIT & Kanban 35

The Kanban System Example 3: Review example 1, suppose that The bottom of a printer body goes through three steps: molding, trimming, and detailing. The table below provides the annual fixed cost, cost per load, and maximum several printer models are produced yielding a total of $200, 000 per year. Internal setup time is 0. 0001 year. For scheduling simplicity, the company would like to make the batch size the same as the container size and have it the same for all printer models. External setup and unit processing times for the 3 stages are given in table below. Find an appropriate container size. Work station External setup (years) Unit processing time (years) Molding 0. 0002 0. 000003 Trimming 0. 0003 0. 000003 Detailing 0. 0001 0. 000003 ch-5 JIT & Kanban 36

The Kanban System Solutions: We must find the LB imposed by each of 3 workstations based on material-handling technology, internal setup, and external setup. We recall from example 1 that ni*=20, and that is true for any model. The external setup induced batch minimums are: Work station Qi Molding 66. 7 Trimming 100 Detailing 33. 3 ch-5 JIT & Kanban 37

The Kanban System Finally, if all batch sizes are the same, the internal setups require The smallest feasible batch size is thus Q=50 for setup time feasibility. The largest of 3 LBs is 100 as determined by the trimming operation. Thus, we set Q=100. With a container size is 20, this means that whenever we set up to run a printer model, we must make 100 units—we wait until 5 containers or kanbans are available. Producing 100 at a time, we have 200, 000/100 = 2, 000 setups per year, which will consume (2, 000)(0. 0001) = 0. 2 years. Unit processing time will consume (200, 000)(0. 000003) = 0. 6 years. This yields a total utilization factor of 80% for the workstations. ch-5 JIT & Kanban 38

Dynamic management of WIP levels Example 4: A company offers a constantly changing portfolio of customer elections. Audio equipment represents one line of products. A key circuit card that is used in speakers is produced in a work cell. Because of changing technology and various product price levels, 3 versions of the card are currently produced. Considering capacity and demand, the aggregate production plan for the 3 models over the next 10 weeks is shown in table below. Containers hold 5 card of the same type. Normal replenishment lead time is 3 days (1/2 week), and the company has found that 20% safety factor is sufficient for its kanban operations. Determine a dynamic control strategy for the number of kanbans required of each type. Mod el 1 Week 2 3 4 5 6 7 8 9 10 A 10 20 30 40 50 50 50 60 70 80 B 40 40 40 50 50 50 C 100 90 80 70 60 50 50 40 30 20 ch-5 JIT & Kanban 39

Dynamic management of WIP levels Solution: First note that total production stays constant over the horizon. Thus, it seems reasonable to assume that lead times will be constant. Using Equation 5. 2 and letting the subscript i represent the model and t denote the week: For model A in week 1, this translates to k. A 1 = 0. 12 (10) = 1. 2 = 2 similarly k. B 1 = 1. 2 (40) = 5 and k. A 2 = 1. 2 (20) = 3 ch-5 JIT & Kanban 40

Dynamic management of WIP levels Completing the entire table in this manner, the schedule for the number of active kanbans per week becomes: Mod el 1 Week 2 3 4 5 6 7 8 9 10 A 2 3 4 5 6 6 6 7 8 9 B 5 5 5 6 6 6 C 11 10 9 8 7 6 6 5 4 3 ch-5 JIT & Kanban 41

Kanban Priority ch-5 JIT & Kanban 42

References w w Design and Analysis of Lean Production Systems, R. Askin and J. Goldberg, John wiley and Sons, Inc. 2002. Introduction to materials management, By J. R. Tony Arnold and Stephen N. Chapman, 5 th Edition, Prentice-Hall, Inc. 2004. ch-5 JIT & Kanban 43