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Kanban and the Operations Management Triangle

Pete Abilla — Mon, 17 Oct 2011 11:52:31 +0000

We are pleased to bring you this article by Evan Durant on Kanban and its application in a real-world environment within the constraints of Inventory, Capacity, and Information – the triumvirate he calls the Operations Management Triangle. He explains the transition from a traditiona MRP environment to a more consumption-based Kanban system and the challenges found therein.

Enjoy this article and learn more about Evan after the jump.

It can be a daunting challenge to set up and manage a kanban system in any manufacturing environment. This is especially true if you are converting from a traditional MRP-driven system to the more consumption-based kanban. Depending on the nature of your operation you may be dealing with highly variable demand for your product, unpredictable supplier delivery performance, variable lead times, high part number counts, material shelf life, or any of a variety of other complicating factors. The truth is that in a complex and variable operation setting up and managing inventory kanban is tricky. Many fail. Others simply give up.

But take heart. It is possible to reap the benefits that a material pull system has to offer, even in such environments. The key lies in understanding how all of the various factors affect the system and in coming up with ways to mitigate them. One useful tool that the science of Operations Management (OM) gives us is the OM Triangle. I will not attempt to explain its history and development in detail. For that, please see this article. Instead, let’s examine its application to kanban.

The triangle shows the interaction, and specifically the substitutability, of 3 key elements of any operation: inventory, information, and capacity. The basic theory is that a deficiency in any one element can be compensated for by increasing one or both of the other two.
Let’s say, for example, that you’re producing widgets. You can ensure that you always meet your customers’ demand for widgets by (1) keeping a lot of finished goods inventory on hand, (2) always knowing exactly which and how many widgets your customers will order well in advance, or (3) having the capacity to immediately respond to new and/or modified widget orders. In reality none of those conditions is both possible and desirable, so you use the other two to compensate.

Here are the implications for kanban:

Inventory: The expectation (if not the stated goal) of using kanban is to keep inventory low, thereby increasing working capital turnover. But simply lowering inventory levels when information and capacity are lacking can be disastrous.
Information: There are 2 components to this: information about your demand (how well you can forecast) and information about your supply chain (how well they can deliver). Often it seems that a lack of good information is simply accepted as a given. The link between strong communication among customers and suppliers and reduction of inventory is often not made. The stronger the information systems become the more stable and effective the kanban can be. Also, unpredictable material consumption is often internally driven. Taking the time up front to stabilize operations as much as possible will allow kanban to pay greater dividends later.
Capacity: The relevant capacity here is that of the supplier. The faster a supplier can respond to a material request the more you can tolerate lower inventories and/or information gaps. Effective communication with suppliers is key to success, as is the recognition of chronic supply issues that must be clearly communicated (information) and buffered against (inventory).

The expectations for each of these 3 elements must be clearly defined, often on a part-by-part basis. Not all suppliers and not all parts are the same. In some cases temporary increases in inventory levels have to be made to compensate for a lack of good forecasting or poor supplier performance. Conversely, supplier improvement efforts and stabilization of operations should be looked upon as vital to inventory reduction.

The important point is that managing a kanban requires a deep understanding of all 3 points of the OM Triangle and where your specific operation fits in to it.

About Evan Durant

I am a continuous improvement zealot currently helping to create, manage, and improve lean value streams in production as well as business processes. I am a student of lean thinking and Six Sigma with a Master Black Belt in Standard Work and 5S as well as a Six Sigma Black Belt. I enjoy being part of the global conversation on lean thinking and leadership and try to contribute through my blog The Kaizen Notebook.

To learn more about Even Durant:

Blog: Kaizen Notebook
Email: evan@kaizennotebook.com
Connect with Evan on LinkedIn and follow him on Twitter

Kanban and the Operations Management Triangle is a post from: Lean Six Sigma Consulting

Pull Systems, Push Systems: The Paper Airplane Game

Pete Abilla — Tue, 08 Mar 2011 13:18:34 +0000

As I teach the principles of Lean Manufacturing to others, I include games that are both fun and also illustrate the concepts in a way that are memorable and solidifies the concepts more clearly in the student’s mind. There are many games that help better explain the sometimes counterintuitive concepts of Lean. One of those games is the Airplane Game.

The Paper Airplane Game

The paper airplane game is a simple exercise that illustrates in a visible and experiential way the difference between pull systems and push systems. The game goes like this:

Participants

4 Workers
1 Quality Assurance Worker
1 Timer Worker (person that times in seconds)

Data Collection

Collect data according to the table below:

Layout

The layout of the assembly line is as follows:

We will use the layout above for both Round 1 and Round 2, but Round 2 will have a slight difference in between workstations.

Paper Airplane Assembly

Planes are to be assembled according to the instructions below:

Worker 1:

Worker 2:

Worker 3:

Worker 4:

Round 1

In Round 1, we will illustrate a push system.

Instruct workers to work at a comfortable pace, but there is a bonus for producing finished planes faster rather than slower.
The quality will be monitored by the QA associate and only he/she can specify quality rejects.
Goal: complete 20 airplanes at the Finished Goods Station.

Round 2

In Round 2, we will illustrate a pull system.

In between the work stations, there is a staging area for Work-in-Process (WIP) – a plane that’s partly finished.
The staging area between the workstations is the outbox from the previous worker and the inbox for the proceeding worker. In other words,
- Worker 1 and Worker 2: Outbox for 1 and Inbox for 2
- Worker 2 and Worker 3: Outbox for 2 and Inbox for 3
- Worker 3 and Worker 4: Outbox for 3 and Inbox for 4
A worker cannot put unless the staging area is empty.

The Layout for Round 2 looks like the following:

The Facilitator places 1 unit of WIP in the staging areas between workers. In other words, place 1 airplane halfway folded between Station 1 and Station 2. Do the similar step for the other staging areas.

Discussion Topics

Where was the bottleneck? How do you know?
Was there any finger pointing or blaming or cynicism? Why?
Why was the cycle time of Round 2 “Pull System” Run lower than Round 1 “Push System” Run?
Inventory – why was there lower inventory build-up in the Pull System than the Push System?
Is lower WIP necessarily better than higher WIP? Why or why not?
For Station 1 and Station 2, what was the difference in Idle Time between both Round 1 and Round 2? Is Idle Time necessarily a bad thing we should avoid or eliminate? Why?
If you managed an assembly line, which method would you choose? Push System or a Pull System? Why?
Assuming you’ve introduced the concept of Kanban, ask the participants what represented the concept of Kanban in the airplane game.

I’ve found that the discussion is very lively because the participants have experienced and have visually seen the difference between a push versus a pull system. And, when asked which system is better, it is important that the participants learn to defend their position.

In other words, instead of simply accepting “pull is always better than push” – ask them why and ask them to be very specific.

Remember that as you facilitate this exercise, meet your students wherever they are in their lean journey. But most of all, challenge them to think and challenge them to defend their assertions or claims. Doing so eliminates any unproductive discussions of push versus pull and crushes any dogmatic positions of “pull is better than push”, etc.

Pull Systems, Push Systems: The Paper Airplane Game is a post from: Lean Six Sigma Consulting

ERP, MRP, Kanban, Pull System, and Vending Machines

Pete Abilla — Wed, 29 Sep 2010 14:23:40 +0000

A critical concept in Lean Management is the concept of “Pull”.

In traditional production scheduling software or job shop software, such as Enterprise Resource Planning (ERP) and Materials Resource Planning (MRP), parts are produced and moved to the next process even if they are not needed. This process wouldn’t be so bad if parts could be produced exactly on schedule all throughout the entire process. But, if just one process has trouble and the line is delayed or stops, then downstream processes will suffer greatly. The result will either be a “feast” of parts or a “famine” of parts. This is often the result of traditional “push” systems.

On the other hand, pull systems eliminate underproduction or overproduction by limiting production to those parts demanded by the immediate downstream process.

The Vending Machine

A great illustration to show how a pull system works is the vending machine. In a typical scenario, the customer pulls product from the vending machine – the exact item, quantity wanted, and at the time it is needed. Then, the supplier replenishes only the items that need to be replaced.

In contrast, in Enterprise Resource Planning Software (ERP Software), the supplier replenishes the vending machine even if it doesn’t need to be replenished, resulting in produce overflow and over-inventory.

Most Processes Can be “Pull”

If you think about it – an unintuitive as it might seem – most processes are really push processes. For example,

software development: features are pushed from product development to the engineer, leading to overwhelmed engineers, project deadlines missed, feature creep, and feature bloa

A Challenge For You

Today, view the processes you are involved in from the perspective of Pull. No matter what the process is – try to view it from the perspective of pull. Ask,

If [this] process were a pull process, what would it look like? What problems might be avoided if it were a pull process?

Top 100 ERP Software Vendors

In case you were interested, based on a customer survey conducted by Inbound Logistics Magazine, below are the top 100 ERP Vendors and top 100 ERP Consultants.

Aankhen
Accellos
Agistix
AL Systems
Appian Logistics Software
Apprise Software
Apriso
Arigo
ASC Software
BestTransport
Cadre Technologies
CAPE Systems
CargoSmart
Cass Information Systems
Cheetah Software Systems
ClearTrack
CombineNet
Compliance Networks
CT Logistics
CTSI
Data2Logistics
Datex
Deposco
Descartes Systems Group
Elemica
Epicor Software
Foxfire Technologies
Freightgate
GlobeRanger
HighJump Software
IES
Infor
InMotion Global
Inovis
INSIGHT
Integration Point
Intergis
Interlink Technologies
IQMS
JDA Software Group
Kewill
Knighted Computer Systems
LeanLogistics
Llamasoft
Logility
Logistics Management Solutions
LOG-NET
Made4net
Magaya Corporation
MagicLogic Optimization
Management Dynamics
Manhattan Associates
MercuryGate International
Mincron Software Systems
New Generation Computing
Nulogx
nVision Global
New Generation Computing
Next View Software
NTE
nVision Global
One Network Enterprises
Oracle
PeopleNet
PINC Solutions
Precision Software (QAD)
Prophesy
QuestaWeb
RateLinx
Reddwerks
RedPrairie
Retalix USA
RMI
Robocom Systems Int’l.
Royal 4 Systems
SAP
Shippers Commonwealth
ShipXpress
Smart Software
SmartTurn
SMC3
SPS Commerce
Sterling Commerce
Supply Chain Consultants
TAKE Supply Chain
TCLogic
TECSYS
Telogis
Terra Technology
TMW Systems
ToolsGroup
TradeBeam
Transite Technology
TransportGistics
TransWorks
U.S. Bank Transportation SolutionsÝ
UltraShip TMS
UPS Logistics Technologies
USTC Live Logistics
XATA
Xterprise
YardView
Zepol

ERP, MRP, Kanban, Pull System, and Vending Machines is a post from: Lean Six Sigma Consulting

Kanban, Flow, Pull and Crying Babies

Pete Abilla — Mon, 19 Apr 2010 12:46:41 +0000

Kanban is a signaling system, designed to trigger an action. If you think about your experience, there are Kanban systems all around us – indeed, they might be so obvious that we miss them. In this article we discuss a simple Kanban system, the 7 simplified principles of Kanban, and an everyday example from my own family – an example which you might be able to relate with.

A Kanban can come in many forms. Some of you have seen the typical signboard Kanban, a walking alarm clock as an auidble Kanban to force you to awake, or an obvious signal Kanban from software development or manufacturing.

A Kanban can also be a “withdrawal kanban” or a “production kanban”.

Withdrawal Kanban: Authorizes the movement of parts from one stage to the next stage.
Production Kanban: Releases materials to the preceding or “upstream” step for replenishment of needed parts to produce.

They are closely related, but in this article we’ll highlight the withdrawal Kanban.

Regardles of Kanban format, a Kanban is designed to signal the following things:

Something is needed
What that something is
When it is needed
How much is needed
Who needs it and who needs to provide it
And some level of predictibility in the process – “operationalize the process” would be the business-speak for what we are talking about
Do not pass defects to the next stage – disrupts flow, causes defects, rework.

Given the elements of an effective Kanban above, one of the best natural Kanban systems is the cry of a baby. Let’s investigate.

Infant as Natural Kanban

Food is needed
Milk is needed from Mom or Dad (if bottle feeding)
This is where things break down in our example. Ideally, some lead time is signaled by the baby to the parents – maybe a 5-10 minute lead time prior to the all-out screaming cry for food.
Depending on the baby and doctor’s suggestions for feeding the baby milk in ounces
The baby needs to be fed by the caregiver – mom or dad
It has to be said – but do not feed the baby spoiled milk, or milk in a bottle that is not the right temperature of too hot or too cold – why? Well, spoiled milk will harm the baby and if the baby is selective, they might not drink the milk if it is too hot or too cold for their liking. Rework is the result of failing on the temperature requirement and panicky parents running about is an appropriate picture to have in your mind’s eye. In business, this is aptly called “firefighting” – which is an overly-charitable term we give to ourselves in business.
The process is predictible – all humans and babies have to eat and, since babies have no “schedule”, they do have a routine and they are not shy about letting the caregivers know when they are hungry and need to be fed.

Flow and Pull

The scream of a hungry baby as Kanban wouldn’t work well if we fed milk to the baby through a firehose. That approach is an extreme example of Push manufacturing – that is, producing more than is needed.

Imagine if we did do that. What would happen? The baby (which is our customer in this case) wouldn’t be satisfied. And, the baby would dribble most of the milk and much would be wasted. Rework would be the result, so the baby can be satisfied, exasperated parents because there was no “leveling” of demand, and a qualitative feeling that we didn’t do as well as we could have.

Back to natural Kanbans.

The baby bottle nipple, on the other hand, is a Pull mechanism. It is designed to help the infant eat only what is needed. Modern baby bottle nipples are designed as variable flow – which means that they can be adjusted to help the infant drink as much as they need at that time – no more, no less.

The result of all this is a natural Kanban that works incredibly well, with little to now waste. The baby is satisfied, little milk is wasted, and the providers of what was needed (milk for the baby, provided by Mom or Dad or caregiver) know what is expected of them, when it is expected of them, and know how to provide what is needed.

It’s Your Turn

What other natural Kanban systems do you see around you? How can you apply the principle of the Kanban to your professional life?

Kanban, Flow, Pull and Crying Babies is a post from: Lean Six Sigma Consulting

Kanban Family Job Chart

Pete Abilla — Wed, 25 Nov 2009 16:47:03 +0000

I’ve tried this a few times, but I think this time, with the help of the kids and my sweet wife, we’ve got it right for our family.

The Opportunity

We have a big family – we’ve adopted a bunch and we’re very thankful for our chance to be parents. We’ve got great kids.

But, because we have a big family, things get messy, busy, and we need everybody’s help to make this household run smoothly.

When something needs to get done, it’s either done through talking, then eventually yelling (not really), but that isn’t good for parents or for children. A core value we want to live is respect for the children.

Root Cause: since nobody really knows their job, or when to do it, it leads to confusion, argument, and lack of direction.

Countermeasure

Our family needs something that is visible, without equivocation, and shows the Person, Jobs, Day, and Status. So, we created a Kanban Family Job Chart:

Simply put, a Kanban is a sign or a card with instructions of what to, when, and how much. At Toyota, Kanban cards are very low-tech: they literally are cards with laminate on them and instructions for material release or work instructions.

If you ever get to visit a Toyota facility, you will see clothes lines connecting processes to each other. The clothes line is used to pass Kanban cards. For example, if a downstream process needs more material, that process can pass a Kanban Material Release card to the upstream process via the clothes line concept. Low-tech, but it works.

Kanban Family Job Chart

Our Kanban Family Job Chart has several elements that are important to discuss.

People (Who)

It is important to recognize the people on your team, by name and by face. This makes things Human and, we all know, that a pillar in the Toyota Production System is Respect for People. Even more so in a family.

Jobs or Tasks (What)

The element of jobs and tasks are next. For us, it was best to create various jobs on magnets, giving us the flexibility of moving jobs around as needed and when needed.

Day of Week and Status (When)

Knowing when a job is done is critical for everyone in the family. Because the impetus is on the person to indicate when something was done, it eliminates the micro-managing that often happens in families, work, and in every organization. For a family, this eliminates nagging. When a job is done, simply move the magnet from Red to Green.

A Few Concepts at Play

Agile, Scrum, and many other folks are now using the concept of the Kanban in their respective worlds. This is good. What is important is practice over theory, as Taiichi Ohno said many years ago.

Visual Management:

Visual Management provides instruction
Visual Management conveys information
Visual Management provides immediate feedback
Visual Management quickly exposes abnormalities in a process or work area
Visual Management quickly conveys progress or lack thereof

Respect for People:

The Kanban Job Chart conveys information and instructions so that Mom and Dad don’t have to. When Mom or Dad have to convey the information, it usually ends-up as nagging. That approach is irritating, disrespectful, and polarizes people. We want, instead, to teach self-reliance, demonstrate our trust in the kids, and help them grow in their own terms, but with our loving guidance.

We also have to make sure that the job is equal to the capability of the child – their mental capacity, hand size, strength, etc.

I Work Too:

Yes, while my face is not on the Job Chart, I have jobs – believe me – I have a lot of jobs.

Kanban Family Job Chart is a post from: Lean Six Sigma Consulting

Kanban Types and Analytical Sizing

Pete Abilla — Thu, 12 Apr 2007 20:15:50 +0000

Unlike traditional “push” systems, where material is moved downstream according to a schedule, or simply “shoved” downstream even when the downstream partner is not ready for it, a “pull” system encourages and almost forces cooperation, from a systems perspective. “Push” also causes congestion, which grows exponentially as more items enter the queue. Aside from cooperation and coordination, a “pull” system also eliminates overproduction, underproduction, work-in-process, and inventory. One key element that encourages “pull” in a system is the Kanban.

A Kanban is a low-tech, visual card that authorizes or request movement of material or process. It acts as a signaling system that notifies a supply partner that something is needed, and the amount needed. Below is an example of a Kanban:

Notice that this Kanban is simple and very low-tech. Yet, it powerfully enforces “pull” and coordination within a system.

Note that there are several types of Kanbans, or signaling systems, and variants also. There are withdrawal Kanbans, production Kanbans, rack Kanbans, Kanban squares, and Kanban bins (post office), All of which reinforce the fact that something is needed and the Kanban is the signal that notifies.

At one location where I spent some time, there was a Kanban binning system (post office), which looks something like the image below:

Again, it is very low-tech, yet it is incredibly powerful. The post office Kanban above is slotted with an entry and exit. What you see is the face, but the back is the exit. When an operator has finished picking and has completed an order, that order is placed in a slot. Another operator on the other side will then pack and ship that order from the other side. This Kanban is works very well for small items or parts or processes where orders can be staged until they are completed.

Again, the concept of a signal that reinforces coordination and cooperation within a system.

How about withdrawal Kanbans or production Kanbans? Well, these types of Kanbans are more like the first image above: a card that explicity says what is needed and how much. These types of Kanbas eliminate the need to forecast, because material is only requested when needed. Hence, the reduction or elimination of inventory is the eventual result.

To determine how many cards and the frequency of Kanban withdrawals requires some analysis — albeit simple. Below is the general rule to follow when thinking about the number of Kanbans:

Where,

Y: number of cards
D: demand per unit of time
T: lead time
C: container capacity
X: buffer, or safety factor

For example, suppose that hourly demand was 200 units, lead time was 12 hours, and the container capacity was 144 units. Assume that there was variation in lead time or demand, then we can set the safety factor to 15%:

Y = ((200*12)*(1+.15)) / 144= 20 Kanban Cards

How many hours worth of demand will 20 cards represent?

(20 cards * 144 units) = 2880 units

2880 / 200 units per hour = 14.4 hours worth of material

As you can see, this simple yet effective visual approach that encourages flow, reduces the need for forecasting — and all forecasting is almost always wrong no matter which model you choose — and the Kanban reinforces coordination and cooperation within a system.

Another simple implementation of a visual Kanban is something my wife came up with to encourage our children to work and instill some order in the work order process in our home. Below is a visual Kanban that she created for our twin boys:

On the left-hand side is the slot where jobs are assigned in the form of index cards. On each card will be a job, such as “get dressed” or “brush teeth”. The jobs are pretty simple for the twins because they are only 2 years old. When a job is done, then the index card progresses to the right-hand slot, which means that that job is done. My 2-year old twins enjoy this: they are learning to visually know if jobs have been assigned and they also know and enjoy moving the cards when they’ve completed a job. At the same time, they are learning how to work, in their 2-year old way.

Note: If I were to create the Kanban above for my twins, I would have made the “To Do” and “Done” different distinct colors, since 2-year old children know some colors at that age. That way, they can associate colors with tasks and feel good because they are making progress when cards or jobs are completed. The color dimension acts also as another dimension to the visual signal of a Kanban.

Kanban is a simple and very effective tool, which encourages flow and is a critical piece in the Toyota Production System. Kanban does not have to be high-tech to work; in fact, most Kanbans are very simple and low-tech, but they work phenomenally well.

Kanban Types and Analytical Sizing is a post from: Lean Six Sigma Consulting

Kanban, Takt Time, & All-You-Can-Eat Meat

Pete Abilla — Wed, 08 Nov 2006 18:41:11 +0000

Last year sometime, while I was in Dallas, Fort Worth, for business, a few buddies and I ate at a highly-recommended restaurant called Texas de Brazil. It’s one of those all-you-can-eat meat places, with gourmet-style meats, a great salad bar, and just an excellent atmosphere. While I’m not a huge carnivore, I have to admit the food was very, very good.

Another thing was impressive about their restaurant operations: they actually used elements of Lean: Kanban and Takt Time:

What is Kanban?

Kanban is an important step in the Toyota Production System. Kanban is a visual control that signals to the previous step that it is need of more resources, material, or something other. Kanban is similar to a gasoline light in a car. When a car is in need of gasoline, the gasoline light blinks as a signal to the driver to get more gasoline. At Toyota, every step in the manufacturing process has a Kanban, creating a “pull” effect that cascades backwards to the beginning of the manufacturing cycle. It’s a simple, yet very powerful way of satisfying customer demand, where the customer “pulls” and the Kanban is used to signal to every step in the process the need for resources.

At the restaurant, they had their own version of the Kanban. They had 2 colored coasters: Green and Red. Green is a signal for more meat; red is a signal to stop. Again, this was a simple system, but a powerful one. The coasters signals to the server, and when the server runs out of meat, he visits the kitchen for more meat, where they have their own Kanban system set-up. The cascade continues, beginning at the customer who “pulls” for resources and cascades all the way to the start of the process, in this case the cook in the Kitchen. It was fascinating and remarkably powerful and easy.

What is Takt Time?

Takt time comes from a German word “takt”, which means rhythm or beat. Takt time is not the same thing as Cycle Time or Lead Time, though Takt Time has a very real relationship to both. Takt Time must be measured through a simple calculation:

(Takt Time) = (Net Available Time per Day / Customer Demand per Day)

Takt time is measured as (Time/Piece), not the other way around. This is important because the operator knows that he or she only has so much time per x.

In my restaurant experience, there were several servers on the floor. But, it appeared that they were moving to some beat. As they visited tables to serve meat, I qualitatively noticed that they were at the table for ~20 – ~30 seconds. This appeared to me to be some sort of soft Takt Time, such that they have (30seconds/table) in order to keep the rhythm or beat in constant motion — to a large measure, Takt Time is about the maintenance of “Flow”, which is very important in queueing efficiency. This, of course, is not a strict example, because people eventually stop eating meat, but the volume of people this restaurant had, I think, justifies Takt Time for servers.

Kanban: A Conclusion

All in all, the food was great. And, I was able to see an innovative manifestation of Kanban and Takt Time. A great experience.

Kanban, Takt Time, & All-You-Can-Eat Meat is a post from: Lean Six Sigma Consulting