Kanban Replenishment for All Types of Industries (Manufacturing & Non-Manufacturing) Tom Brown Colibri Limited Roswell, Georgia

4/26/2020

Why consider kanban control?

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Lower inventory investment

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Better “customer” service

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Reduced administrative costs

What is kanban control ?

A method of Just-in-Time inventory replenishment that originated in Japan.

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Kanban techniques can be used by both “manufacturing”and “non-manufacturing” org’s

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Kanban systems can be:

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100% manual 100% Oracle A hybrid of Oracle and manual techniques

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Non-manufacturing organizations will likely want to use a hybrid approach

What makes kanban control different ?

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Kanban is “pull” based – driven by actual usage not forecasts

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Kanban replenishment is simple ?

Kanban Systems

Can use different methods to trigger replenishment activity

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kanban cards are the most common

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kanban containers are frequently

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bar coding of cards / containers helps when automating kanban systems

Kanban Systems

Not suited for all inventory items – look for

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items with frequent usage

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items with short lead times

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items with “willing” suppliers

Replenishment Flow for Kanban Cards When container is empty, signal sent to source to replenish kanban Wait until minimum order quantity is reached Empty New Planner determines when to add / remove cards Wait When received, kanban status is updated and container is moved to usage area Full In-Process When order minimum is reached, a Job, PO, or Move Order is created

Oracle Kanban Flow for Manufacturing

Supplier Kanbans

Kanban replenishment auto creates Purchase Requisition AutoCreate PO or Blanket Release Blanks Sub-Inv Supplier Press Op Paint Op Assembly Sub-Inv

Material Flow Kanban Flow

Press / Paint Job Kanban replenishment autocreates WIP Job

Production Kanbans

Assembly Line Finished Goods

Oracle Kanban Flow: Non-Manufacturing Purchasing Creates PO or Blanket PO Release Kanban replenish auto-creates Purchase Requisition

Supplier Kanbans

Supplier Receiving Stock Room Customers or Consuming Departments

Material Flow Kanban Flow

#1. Setup a pull sequence to define Source, Replenishment, and Planning Parameters

#2. Add kanban cards associated to the pull sequence

#3. Set supply status of each card – automatically updated by transactions

Determining the number of kanban cards / containers needed for each item

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An item has a 2 day lead time (when a kanban is emptied it will take 2 days to refill it) An item has a 2 day lead time (when a kanban is emptied it will take 2 days to refill it) Average daily usage of the item is 50 per day You will need 100 within the replenishment lead time (average daily demand times lead time) Thus, you need to activate 5 kanban cards (demand during lead time divided by kanban size)

Oracle Kanban Planning Assumptions

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Constant rate of demand While average daily demand is 50 per day, what is the maximum daily demand?

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Constant lead time While average lead time is 2 days, what is the maximum lead time?

How can you account for these variances in demand and supply when planning kanban inventory?

Kanban Planning Using MS Excel Determine which items are good candidates for kanban control:

Kanban Planning Using MS Excel Determine number of kanbans to activate: