SYNCHRONOUSMANAGEMENT

51 Seaside Ave.
Milford, CT 06460
Phone: 203-877-1287
Fax: 203-878-2939

 How can we use kanban when we have long lead times, batch production, or long travel distances?

 How do we convert customer demands into the minimum inventory buffers required to support maximum material flow?

 How do we maintain correct buffer sizing to reflect inevitable changes in customer demands, product development, engineering designs and production processes?

 How do we obtain the advantages of visual signals on a high volume of parts without having to maintain hundreds or thousands of kanban cards?

The AutoKanban system is implemented in several major steps.  We begin with a determination of demand rates for shippable end items, as well as whether or not each item is to be supported by kanban.  Second, the end item demand rates are exploded through a bill of materials and summarized to get demand rates for components.  Third, a model of your inventory buffers is constructed, based not on theory, but on your ever-changing supply and demand constraints.  The final component is an automated visual display of inventory buffers and production priorities for both your internal and external suppliers.

MANAGING DEMAND. . .

End item demand rates are usually calculated based on some combination of historical shipments, customer order backlog, and market forecasts.  Systematizing this process simplifies the recalculation of kanban inventory buffers as demands change.  Figure 1 shows the forecasted demand for seven end items.  Based on the average weekly forecasts, and the repetitive nature of each end item, the master scheduler has determined that items 100001, 100004, and 100007 should be supported by component kanban inventory buffers, and has set the rates of demand for those items to be used in the buffer calculations of their components.

COMPONENT DEMAND RATES. . .

The next step is to explode the weekly pull rates through the bills of materials of the end items. Using a bill of materials explosion simplifies the resizing of kanban buffers when demands or product structures change. Figure 2 shows the bill of materials explosion for the three kanban end items.  To account for commonality among end items, the bill of materials explosion should be summarized to calculate the total demand for each component. 

MODELING INVENTORY BUFFERS. . .

The AutoKanban Buffer Sizing table in Figure 3 shows the order quantity and order point calculations for the six component items produced for these end items.  The key data for calculating the order quantity and order point are the daily demand, the order cycle, the lead time, and the container quantity (See CAPACITY-BASED LOT SIZING for the order cycle calculation). The order quantity is the order cycle in days times the daily rate of consumption, rounded up to a container quantity. The order quantity for ITEM 400376, for example, is 1800 per day times 2 days = 3600, rounded up to a multiple of 1000 = 4000 pieces. The order point for that same item would be 1800 per day times a 3-day lead time = 5400, rounded up to a multiple of 1000 = 6000 pieces.  Thus, a replenishment order of 4000 pieces of ITEM 400376 should be released when the on-hand inventory drops below 6000 pieces.  The order points and order quantities on the other items are calculated in the same fashion.

DISPLAYING THE SCHEDULE. . .

The AutoKanban Scheduling Panel in Figure 4 provides an electronic, graphic representation of inventory levels and production priorities for the parts. The red tiles indicate the order point; green indicate the order quantity. These sections are separated by a blue "trigger line".  As inventory of an item is consumed, the tiles in its column are changed to yellow, from the top down, to indicate that a container has been emptied. For example, with ITEM 400376, there are 6500 pieces in inventory. Thus three of the authorized ten containers are empty. The remaining red and green tiles are a graphic indication that there are between 6001 and 7000 pieces in inventory.

When all of the green tiles for an item are converted to yellow, that item should be the next one produced. As the table indicates, ITEM 400380 is stocked out, and should be produced immediately. The next priority is item 400386, since the yellow tiles are now below the blue trigger line. None of the other items need to be produced at this time.

FINALLY. . .

AutoKanban is not a proprietary software system; it is developed for your company using simple tools, such as Microsoft Excel and Access.  The data for the AutoKanban table are maintained in a database - not on cumbersome kanban cards, and AutoKanban is interfaced with your inventory system. The data may be refreshed from your master production schedule, bills of materials, and routing files, or the system may be maintained separately. Then, as changes are made to these data, the suppliers, order quantities, and order points for each item are updated automatically.

Since AutoKanban does not require physical kanban cards or trigger boards, it can be easily applied to hundreds or thousands of items at once. The AutoKanban screen is updated in real time as inventories are replenished and consumed, and is displayed on monitors throughout the facility via your company's intranet.  It can be accessed anywhere in the plant (and by outside suppliers) to provide immediate visual control of kanban requirements.  All of this, without making a single kanban card!

For more information, just give us a call at 203-877-1287 or email us.