Kanban Replenishment for All Types of Industries

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• Kanban Replenishment for All Types of Industries
• (Manufacturing Non-Manufacturing)

Tom Brown Colibri Limited Roswell, Georgia
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Why consider kanban control?

• Lower inventory investment
• Better customer service
• Reduced administrative costs

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What is kanban control ?

• A method of Just-in-Time inventory replenishment
  that originated in Japan.
• Kanban techniques can be used by both
  manufacturingand non-manufacturing orgs
• Kanban systems can be
• 100 manual
• 100 Oracle
• A hybrid of Oracle and manual techniques
• Non-manufacturing organizations will likely want
  to use a hybrid approach

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What makes kanban control different ?

• Kanban is pull based driven by actual usage
  not forecasts
• Kanban replenishment is simple

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Kanban Systems

• Can use different methods to trigger
  replenishment activity
• kanban cards are the most common
• kanban containers are frequently
• bar coding of cards / containers helps when
  automating kanban systems

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Kanban Systems

• Not suited for all inventory items look for
• items with frequent usage
• items with short lead times
• items with willing suppliers

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Replenishment Flow for Kanban Cards
When container is empty, signal sent to source
to replenish kanban
Wait until minimum order quantity is reached
Planner determines when to add / remove cards
When received, kanban status is updated and
container is moved to usage area
When order minimum is reached, a Job, PO, or Move
Order is created
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Oracle Kanban Flow for Manufacturing
Kanban replenishment auto- creates Purchase
Requisition
Supplier Kanbans
AutoCreate PO or Blanket Release
Blanks Sub-Inv
Supplier
Paint Op
Press Op
Assembly Sub-Inv
Assembly Line
Finished Goods
Production Kanbans
Kanban replenishment autocreates WIP Job
Material Flow
Kanban Flow
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Oracle Kanban Flow Non-Manufacturing
Kanban replenish auto-creates Purchase
Requisition
Purchasing Creates PO or Blanket PO Release
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Pull Sequence
1. Setup a pull sequence to define Source,
Replenishment, and Planning Parameters
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Kanban Cards
2. Add kanban cards associated to the pull
sequence
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3. Set supply status of each card
automatically updated by transactions
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Determining the number of kanban cards /
containers needed for each item

• 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)

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Kanban Plans
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Oracle Kanban Planning Assumptions

• Constant rate of demand
• While average daily demand is 50 per day, what
  is the maximum daily demand?
• 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?
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Kanban Planning Using MS Excel
Determine which items are good candidates for
kanban control
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Kanban Planning Using MS Excel
Determine number of kanbans to activate
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Types of Kanbans Used by Oracle

• When the supply status of a kanban card changes
  to empty, it triggers transactions that pull
  material from different sources and locations.
• Four types of kanbans are available
• Inter Org Triggers creation of an internal
  requisition
• Intra Org Triggers creation of a
  subinventory transfer
• Production Triggers creation of a discrete job
  (released status)
• Supplier Triggers creation of a purchase
  requisition (approved status)

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Card Status versus Supply Status

• Card Status
• Active kanban card is in the replenishment
  chain
• Hold card temporarily removed from
  replenishment chain
• Canceled card permanently removed from
  replenishment chain

• Supply Status
• New kanban just created and not yet part of
  replenishment chain
• Empty kanban is empty and replenishment signal
  has been generated - impacts Inter-Org and
  Supplier source types
• Full kanban has been replenished and material
  is available for use
• Wait kanban is waiting for minimum order
  quantity to be met by the aggregation of cards.
• Inprocess For the Supplier source type, PO has
  been approved. For Inter-Org source type,
  internal requisition has been approved