Nov
18
Introduction to Kanban and Pull systems
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Common in manufacturing plants, pull systems are a carefully regulated way of making sure materials are replenished efficiently. These resources become replaced at point and time of consumption endeavoring to eliminate practices that rely on holding excess levels of inventory such as stockpiling items for later use, and buying significant volumes of parts at a reduced price only to use them when needed over an extended time period.
Pull systems (or Kanbans as they are often referred to) are often associated with lean methodology. The pull process focuses on eliminating wasteful activity during the production process, placing materials at point of use (rather than all in the warehouse) and establishing a regular drumbeat replenishment process.
Looking upstream in the production process, parts are manufactured to meet the demand (either customer or stock orders). A typical pull system will see the utilization of a three-bin system. The manufacturing process consumes materials on the manufacturing/assembly line (bin one) this then acts as a signal to replenish from the stores (bin 2), which in turn acts as a signal to replenish from the supplier (bin 3). When effective a pull system is effective at controlling stock and maintaining replenishment to keep the production line going.
Origins of Kanban
Kaban is a Japanese term and is commonly associated with the Toyota manufacturing system before its use became widespread. Utilizing a visual aid, usually a card, which shows when goods need replenishing the system works backwards, goods are only replaced when used rather than simply being procured and placed in stock waiting for consumption.
It is termed a pull system because the ‘pull’ is what happens when an item or part is used and then replaced. A good example is that of a supermarket or grocery store, which generally have employees restocking shelves to the same amount as before the items were sold; they do not establish new levels of stock. Consider how your local grocery store uses baskets or containers to quantify its “inventory units” in order to simplify replenishment.
A simple card system showing when items need replenishing can be very effective. Kanban systems can utilize various signals to show ‘stock low’ or ‘replenishment due’ which can help simplify restocking ensuring the process remains efficient. Through the cards acting as a visual aide, operators are easily made aware of stock that needs to be replaced. Since little staff time is used for this type of communication, and restocking is typically replacing a trolley or container it is an extremely cost effective and simple process with components and stock being kept easily under control.
Kanban systems can be adjusted to suit a company’s specific needs. Kanban cards may be positioned at various stages of a production line according to what has been consumed. The cards can also be fixed to containers to communicate which need stock and which are filled.
Limitations associated with pull systems
Even though pull systems have many benefits, they may not be practical in every situation. Key components in this decision making is continuity of supply coupled with demand stability. Planning teams must keep an eye on production schedules to ensure that kanban levels are maintained appropriately for fear of bin sizes either not being sufficient or in turn being overly optimistic. Many businesses will find a happy medium where some fast moving goods are maintained via a Kanban system whilst other stocks are managed using alternative means. Kanbans can work very effectively when considered as part of kits where products are grouped together to support key tasks within the aseembly line. In conclusion businesses should choose the appropriate replenishment method for the appropriate product/issue.
Summary
Pull systems can be a very efficient and cost-effective stock control tool.
They are not without issues and require close management (and a willing and able supplier partner). However, when used effectively they can make a real difference in simplifying inventory management.
Nov
18
Basics of smoothing the manufacturing plan
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One of the key problems for supply chain teams in many organizations but particularly for those in manufacturing environments are stable demand profiles. In scenarios where there are vast peaks and troughs keeping up with requirements (both forecast and real) can be complex and be easily derailed with either a sudden surge or slump in demand.
Production smoothing is an often used process which targets mitigating the uncertainty in demand (the peaks and troughs) whilst minimizing waste and driving manufacturing efficiencies. With its origins in the Toyota Production System and a tool often utilized in lean production leveling is now a widely utilized and important tool.
Smoothing production – that sounds difficult!
Modeling requirements to produce a smooth production plan is a fairly straightforward theory. When demand is consistent it is simple to level or smooth production to a regular drum beat. This is because it is easier to manufacture what is needed if you can easily estimate customer requirement. In reality though, for many organizations it is extremely difficult to accurately predict demand, because of constraints and variation.
The scenario of developing a production plan that gets it wrong is simple to understand. A production plan that realizes an output lower than what is actually demanded results in stock outs and unhappy customers. Conversely a production plan that outputs greater than requirement results in excess stock and ties up more cash in materials than is actually required.
Smoothing production aims to remove the peaks and troughs from production (and the corresponding signal that cascades to the supply chain). When smoothed, groups of the given products are produced in regular economic batch sizes at routine intervals. This is quite different from a manufacturing plan that just makes to order demanding materials and factory capacity as it goes.
With a smoothed profile batch sizes can be modeled to target reduced changeover times. This can dramatically reduce machine downtime and improve factory efficiency.
However, production plans don’t just take into account materials they also take into account other resources such as the factory workers and equipment – commonly referred to as capacity. Developing a manufacturing plan that requires more resources than you have physically available is obviously doomed to failure! What is required is to ensure that capacity and materials all work together to meet the production schedule.
Smoothing the production and developing a manufacturing plan is carried out by analyzing the products and then establishing an output volume based on actual and predicted demand coupled with targeted service levels. The particular advantages of this kind of system includes more than simply taking out waste. Flexibility within the company is one specific advantage that allows the customer to receive what they want when they need it thus ensuring a high level of satisfied customers whilst enabling the organization has improved visibility over costs.
Manufacturing plans do require a level of forecasting (which is typically mixed with firm future demand). So while over and under production cannot be completely eradicated – close attention to the performance of the plan coupled with regular “tuning” can help mitigate in the longer term. Organizations must be committed to processes that improve forecast accuracy – which may often involve closer collaboration with their market.
The key benefit to the supply chain is a settled demand pattern with suppliers being clear of priorities and requirements.. When the company flows its plan out to its supplier base ‘smoothing’ the order profile can be a key catalyst in removing bottlenecks and blips in the material flow.
For the plant, production smoothing also cuts out busy times that in turn reduce the need to bring in temporary employees whilst helping to reduce ‘dry’ periods that require layoffs. All this results a more stable workforce, employee loyalty, and commitment to the company than experienced if there were threats of job loss.
Whilst there are many advantages to “smoothing” production, it does require commitment from the operating company. It does need a degree of successful forecasting and it can take time to deploy and stabilize (as forecasting improves) it is a cultural shift away from making to order and requires adequate controls and leadership to ensure it is a success.