Kanban Pull Systems

1
Kanban Pull Systems

• An Intermediate Lean Solution

2
Workshop Objectives

• Introduce the concept of Pull
• Learn how to calculate inventory requirements
• Show several types of Pull systems
• Identify how to further reduce inventory within
  the Pull system

3
Agenda

• Review of Lean Principles
• Creating a Supermarket Pull System
• Supermarket Pull Systems
• Daily Supermarket Operation
• Workshop Summary

4
Review of Lean Principles

• Review of Lean Principles
• Creating a Pull System
• Supermarket Pull Systems
• Daily Supermarket Operation
• Workshop Summary

5
Lean DefinitionsPush vs Pull
Review of Lean Principles

• Push Production Production is triggered by a
  forecasted schedule. Each process attempts to
  build to this schedule and push their finished
  products onto the next process whether that
  process is ready for them or not.
• Pull Production The schedule is delivered to a
  single process (called the pacemaker).
  Production is triggered at upstream processes by
  consumption of a constrained amount of inventory
  which is used to buffer against problems.

6
Lean PrinciplesFrom Lean Thinking - Womack
Jones
Review of Lean Principles

• Specify value
• Map the flow of value
• Make value flow
• Pull from the customer
• Seek perfection

James Womack
Daniel Jones
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Guiding Questions
Review of Lean Principles

• What is the takt time?
• What is the interval at each process?
• Where can we implement single piece flow?
• Where will FIFO enable us to flow?
• Where must we use a supermarket pull system to
  connect processes?
• What single point in the value stream will we
  schedule?
• What is our finished goods strategy?
• At what pitch will we monitor value stream
  performance?
• What process improvements will be necessary?

8
Guiding Question 2What is the Interval at each
process?
Review of Lean Principles
Current State

• Interval the amount of time required to cycle
  through all products demanded in a period.

What is the Interval in the above example?
Important What happens to changeovers as we mix
production at the pacemaker?
9
Sample Interval Analysis
Review of Lean Principles
430 min.
Time Available for Changeover 430 min 411
min 19 min/shift Changeover 45 minutes CO
19 min / 45 min 0.42 CO / shift Interval
of models / CO/shift 2 models / 0.42
CO/shift 5 shifts (2 days)
411 min.
First Pass 99
407 min.
Uptime 95
387 min.
Run Time 215 units x 1.8 min
10
Hierarchy of Process Connections
Review of Lean Principles

• Single Piece Flow
• No inventory is allowed to accumulate between
  processing steps.
• FIFO Flow
• A controlled amount of inventory is allowed to
  accumulate between processes. Inventory is
  consumed in the same order it is produced (i.e.
  First In First Out).
• Supermarket Pull Systems
• A controlled amount of inventory is maintained
  between processes. As the customer process
  consumes a product, a signal is delivered to the
  supplier process to replace it. The supplier is
  not authorized to produce without this signal.

11
Summary Review of Lean Principles
Review of Lean Principles

• Pull Production is favorable to Push Production
• Inventory is controlled between processes
• No production can occur without a signal
• Flow is preferable to Pull
• Single Piece Flow
• FIFO Flow
• Supermarket Pull

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Creating a Pull System

• Review of Lean Principles
• Creating a Pull System
• Supermarket Pull Systems
• Daily Supermarket Operation
• Workshop Summary

13
Why not use Single Piece Flow Everywhere?
Creating a Pull System
If Single Piece Flow is the best solution, why
would we ever implement FIFO or Supermarkets?

• When one process stops producing, ALL processes
  must stop, so Single Piece Flow will not work in
  the following conditions
• Different changeover times between processes
• Excessive machine downtime
• Cycle times vary between processes for each
  product within the family
• High scrap or rework rates
• One of the processes is shared by two or more
  value streams

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Creating a Pull System
Creating a Pull System

• Identify the reasons that a Pull system is
  necessary
• Calculate the maximum inventory
• Create a signal system (if required)
• Implement and improve the processes to reduce the
  maximum required inventory

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3 Types of Inventory
Creating a Pull System

• Cycle Stock
• Inventory required for the normal state
• Buffer Stock
• Inventory required to accommodate variation in
  volume and mix
• Safety Stock
• Inventory required to protect against things that
  could go wrong (within reason)

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3 Types of InventoryExample 1 Changeover
Creating a Pull System

• The stamping press has a lengthy die change (4
  hrs on average), but the plating process cannot
  afford to stop producing during this time (at a
  rate of 1 unit every 20 minutes). Because the die
  change is not standardized, it can take 3-5 hours
  to complete. Sometimes the wrong die will be
  installed, which takes another hour to correct.
• Cycle Stock 12 units (240 min. / 20 min.)
• Buffer Stock 3 units (60 min. / 20 min.)
• Safety Stock 3 units (60 min. / 20 min.)
• Total Inventory 18 units (6 hrs)

17
3 Types of InventoryExample 2 Machine Downtime
Creating a Pull System

• Parts are etched before going to final assembly,
  but the etching machine has uptime issues, and
  final assembly cannot afford not to produce at a
  takt of 2 min. Typical breakdowns are corrected
  in 30 minutes, but depending on the problem, it
  can take up to 2 hours, and this does not include
  the time it takes for maintenance to arrive,
  which could be anywhere from 5 to 30 minutes.
• Cycle Stock 15 units (30 min. avg. / 2 min.
  takt)
• Buffer Stock 45 units (90 min. / 2 min. takt)
• Safety Stock 15 units (30 min. delay / 2 min
  takt)
• Total Inventory 75 units (2.5 hrs)

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3 Types of InventoryExample 3 Interval
Creating a Pull System

• The CNC Lathe has an interval of 5 days (i.e. it
  takes 5 days to cycle through all products within
  the family). For Product A, the average 5-day
  demand is 100 units. However, the peak 5-day
  demand is 300 units. The CNC Lathe has a scrap
  rate of 2.
• Cycle Stock 100 units (avg. interval demand)
• Buffer Stock 200 units (peak average)
• Safety Stock 6 units (2 is the avg scrap
  rate!)
• Total Inventory 206 units (2.06 days)

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Classroom Exercise 1 Calculating Cycle, Buffer
Safety Stock
Creating a Pull System

• A machining process produces 2 parts part A (2
  min. CT) and part B (3 min. CT). The average
  daily demand is 100 units of A and 50 units of B.
  Although the total daily demand will always be
  150 units, the mix can change by /- 25 units.
  The machining process takes 30 minutes to
  changeover between products and has a 95 uptime
  and 98 first pass yield. In humid weather, an
  additional 5 of units need to be scrapped at
  final assemby. The process works 1 shift of 430
  min.
• What is the Interval of the machining process?
• How much Cycle, Buffer and Safety Stock is
  required?
• Time 30 minutes

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Summary Creating a Pull System
Creating a Pull System

• Cycle Stock
• Inventory required for the normal state
• Buffer Stock
• Inventory required to accommodate variation in
  volume and mix
• Safety Stock
• Inventory required to protect against things that
  could go wrong (within reason)

21
Supermarket Pull Systems

• Review of Lean Principles
• Creating a Pull System
• Supermarket Pull Systems
• Daily Supermarket Operation
• Workshop Summary

22
Supermarket Pull Systems
Guiding Question 5Where must we use
supermarket pull systems?
Purpose Provide production instruction to
upstream processes that cannot be linked in flow.
supermarket
23
Supermarket Pull Systems
Guiding Question 5Where must we use
supermarket pull systems?

• The difference between FIFO Supermarkets
• FIFO responds to a known demand
• Supermarkets hold inventory for an unknown demand
• Example
• The Supplier Process has a 30 minute changeover
• The takt time is 5 minutes and the value stream
  has 3 products
• What maximum inventory must the FIFO lane
  accommodate?
• What maximum inventory must the supermarket
  accommodate?

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Types of Supermarket Pull Systems
Supermarket Pull Systems

• Top-Up System
• Signal Kanban
• 2-Bin Kanban
• 3-Bin Kanban
• Multi-Card Kanban

• Simple but poor inventory control

• Complex but excellent inventory control

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Top-Up Pull System
Supermarket Pull Systems

• Material is delivered at a set period, and any
  material that was consumed during this period is
  replenished
• Cycle Stock avg. consumption during the period
• Buffer Stock peak avg. consumption
• Safety Stock late delivery peak defect rate
• Ideal for small, low-cost parts where high
  inventory control is not essential
• E.g. Nuts, bolts, washers, etc.

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Top-Up Pull SystemExample
Supermarket Pull Systems

• Every month, the hardware supplier comes into the
  facility and fills up all of the hardware
  containers (nuts, bolts, screws, etc.). Each
  container is marked with a line to indicate how
  much to fill it. The inventory is equal to the
  average monthly consumption (cycle stock), plus a
  buffer to handle peak production periods (buffer
  stock), and an allowance for up to 2 days incase
  the supplier is late delivering.

27
Top-Up Pull System
Supermarket Pull Systems

• Advantages
• Very easy to use (no signals required)
• Disadvantages
• Inventory hovers at the high end because it gets
  replenished regardless of consumption
• Very inefficient for the material handler
• Must visit this location every period
• Must bring enough material to completely
  replenish the inventory (no way to know how much
  has been consumed)

28
2-Bin Kanban Pull System
Supermarket Pull Systems

• Material is stored in 2 containers of a set
  quantity. Every period, a material handler takes
  away empty containers and returns them the next
  period.
• Cycle Stock 2 x avg. period consumption
• Buffer Stock 2 x (peak avg. consumption)
• Safety Stock late delivery peak defect rate
• Ideal for processes that consume many parts,
  especially if each part has a different rate of
  consumption
• E.g. Assembly processes

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2-Bin Kanban Pull SystemExample
Supermarket Pull Systems

• The material handler checks the assembly process
  every hour. As each container is emptied, it is
  placed in a specific location. The material
  handler retrieves these empty containers and
  spends the rest of the hour replenishing them.
  They then return the replenished containers to
  the assembly process and collect any containers
  that are now empty.

30
2-Bin Kanban Pull System
Supermarket Pull Systems

• Advantages
• Easy to understand and use
• Parts are only delivered if they have been
  consumed
• Disadvantages
• Each bin requires twice the period demand for
  cycle stock
• This makes inventory levels rather high. For
  example, if the material handler delivers product
  every hour, then there will be 4 hours of
  inventory (2 hours per bin).

31
Multi-Card Kanban Pull System
Supermarket Pull Systems

• Cards are used to signify a set amount of
  material. When that material is consumed, the
  card is returned to the supplier to indicate that
  more inventory is required.
• The supplier places returned cards on a board and
  uses them to determine which product to build
  next.
• Cycle Stock Avg. consumption for supplier
  interval
• Buffer Stock Peak Avg. consumption for
  interval
• Safety Stock late delivery peak defect rate
• Ideal for processes that have an interval
• E.g. Machining processes or Suppliers (where the
  interval delivery frequency)

32
Multi-Card Kanban Pull SystemExample
Supermarket Pull Systems

• At the end of each day, the Team leader collects
  the kanban sheets from the boxes of material that
  the assembly process opened. They fax these
  sheets to the supplier and shreds them. The
  supplier receives the faxed sheets and places
  them on a board. When this product is the highest
  on the board, the supplier will changeover. As
  each box is completed, the sheet is placed on it,
  and it is sent to shipping for delivery.

33
2-Bin Kanban Pull System
Supermarket Pull Systems

• Advantages
• Excellent control of inventory
• Minimizes the amount of inventory required
• Disadvantages
• Requires signals to be sent repeatedly
• Is more sensitive to changes in data than the
  other systems (needs to be kept up to date)
• Requires delivery of material almost every period

34
Summary Supermarket Pull Systems
Supermarket Pull Systems
Purpose Provide production instruction to
upstream processes that cannot be linked in flow.
supermarket
35
Daily Supermarket Operation

• Review of Lean Principles
• Creating a Pull System
• Supermarket Pull Systems
• Daily Supermarket Operation
• Workshop Summary

36
Inventory Hides Waste
Daily Supermarket Operation
37
Reducing Inventory
Daily Supermarket Operation

• Cycle Stock
• Increase the frequency / reduce the interval
• Reduce cycle time - Improve machine uptime
• Reduce defect rate - Increase available run time
• Reduce changeover time
• Buffer Stock
• Reduce the causes of variation
• Reduce downstream batch sizes (including customer
  orders)
• Level load production schedules
• Safety Stock
• Improve process reliability

38
Reducing Inventory
Daily Supermarket Operation

• Inventory requirement calculations are a great
  place to start, but theoretical calculations can
  either miss factors, and they can also be overly
  cautious
• Monitor inventory levels for a three months, and
  record the maximum range of inventory for each
  product (the highest amount the lowest)
• Remove half of the difference between this amount
  and the maximum and keep monitoring

39
Reducing InventoryExample
Daily Supermarket Operation

• After 3 months of operating the new multi-card
  kanban system, the company has identified that
  the following

Since product A fluctuated between 4 and 28 units
of inventory for 3 months, this is a strong
indication that only 24 units of inventory is
actually required. To be safe, the company
removes only half of the difference (3 units) and
keeps monitoring.
40
Summary Daily Supermarket Operation
Daily Supermarket Operation

• Cycle Stock
• Increase the frequency / reduce the interval
• Reduce cycle time - Improve machine uptime
• Reduce defect rate - Increase available run time
• Reduce changeover time
• Buffer Stock
• Reduce the causes of variation
• Reduce downstream batch sizes (including customer
  orders)
• Level load production schedules
• Safety Stock
• Improve process reliability

41
Workshop Summary

• Review of Lean Principles
• Creating a Pull System
• Supermarket Pull Systems
• Daily Supermarket Operation
• Workshop Summary

42
Lean DefinitionsPush vs Pull
Workshop Summary

• Push Production Production is triggered by a
  forecasted schedule. Each process attempts to
  build to this schedule and push their finished
  products onto the next process whether that
  process is ready for them or not.
• Pull Production The schedule is delivered to a
  single process (called the pacemaker).
  Production is triggered at upstream processes by
  consumption of a constrained amount of inventory
  which is used to buffer against problems.

43
Hierarchy of Process Connections
Workshop Summary

• Single Piece Flow
• No inventory is allowed to accumulate between
  processing steps.
• FIFO Flow
• A controlled amount of inventory is allowed to
  accumulate between processes. Inventory is
  consumed in the same order it is produced (i.e.
  First In First Out).
• Supermarket Pull Systems
• A controlled amount of inventory is maintained
  between processes. As the customer process
  consumes a product, a signal is delivered to the
  supplier process to replace it. The supplier is
  not authorized to produce without this signal.

44
3 Types of Inventory
Workshop Summary

• Cycle Stock
• Inventory required for the normal state
• Buffer Stock
• Inventory required to accommodate variation in
  volume and mix
• Safety Stock
• Inventory required to protect against things that
  could go wrong (within reason)

45
Types of Supermarket Pull Systems
Workshop Summary

• Top-Up System
• Signal Kanban
• 2-Bin Kanban
• 3-Bin Kanban
• Multi-Card Kanban

• Simple but poor inventory control

• Complex but excellent inventory control

46
Reducing Inventory
Workshop Summary

• Inventory requirement calculations are a great
  place to start, but theoretical calculations can
  either miss factors, and they can also be overly
  cautious
• Monitor inventory levels for a three months, and
  record the maximum range of inventory for each
  product (the highest amount the lowest)
• Remove half of the difference between this amount
  and the maximum and keep monitoring

47
Its up to you
Workshop Summary

• Whether you think you can, or think you cant
• chances are, youre right!
• - Henry Ford