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Kanban Examples - ADDVALUE - Nilesh Arora

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Learn How does Kanban work by Nilesh Arora, a founder of AddValue Consulting Inc. Check Kanban examples, category of kanban, rules of kanban etc. – PowerPoint PPT presentation

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Title: Kanban Examples - ADDVALUE - Nilesh Arora


1
Kanban
by
Best Performing Consulting Organization
Adding Value In Totality !!
2
?? Kanban
  • ?? Kanban literally means visual card,
    signboard, or billboard.
  • Toyota originally used Kanban cards to limit the
    amount of inventory tied up in work in progress
    on a manufacturing floor
  • Not only is excess inventory waste, time spent
    producing it is time that could be expended
    elsewhere
  • Kanban cards act as a form of currency
    representing how WIP is allowed in a system.

3
What is Kanban
  • Kanban means many things.
  • Literally, Kanban is a Japanese word that means
    "visual card".
  • At Toyota, Kanban is the term used for the
    visual physical signaling system that ties
    together the whole Lean Production system.
  • Kanban as used in Lean Production is over a half
    century old.
  • It is being adopted newly to some disciplines as
    software.

4
Categories of Kanban
5
Rules of the Kanban
  • Never Pass on A Bad Part
  • The Parts Are Always Withdrawn From The Prior
    Process
  • Produce Only What Is Necessary To Replenish The
    Quantity Withdrawn
  • Level Load Production, Rapid Changeover, Small
    Lot Production, Zero Defects
  • Kanban Is Used To Fine Tune (Not Provide For
    Major Changes)
  • The Process Must Be Capable Of Producing Good
    Parts (Rational And Stable)
  • Need Efficient Methods Of Transportation,
    Shortest Routes Possible
  • Disciplined Organization
  • Nothing Is Made or Transported Without A Kanban.
  • Kanban Cards Always Accompany the Parts
    Themselves.
  • The Number of Kanbans Should Decrease over time.

6
Kanban Options
  • No Cards
  • Visual (Tape On Floor)
  • Two-Bin or Bin Systems
  • Supplier Containers
  • Painted floors, i.e. squares, circles
  • Card Systems
  • Electronic Kanbans - Fax or Emails
  • Warehouse Or Parts Racks
  • Kanban Boards Magnetic or Cards
  • Containers
  • Flow Thru Racks
  • Supplier Boxes

7
How does Kanban work?
  • There are many flavors, but the core of Kanban
    means
  • Visualize the workflow
  • Split the work into pieces, write each item on a
    card and put on the wall.
  • Use named columns to illustrate where each item
    is in the workflow.
  • Limit WIP (work in progress) assign explicit
    limits to how many items may be in progress at
    each workflow state.
  • Measure the lead time (average time to complete
    one item, sometimes called cycle time),
    optimize the process to make lead time as small
    and predictable as possible.
  • This is a direct implementation of a lean pull
    scheduling system.

8
Example Kanban
9
Kanban
  • The implementation of a kanban system, as well as
    other lean manufacturing methods, like 5s, and
    kaizen, can have significant benefits for almost
    any type of work.
  • Kanban is faster, more efficient, and saves
    significant money over most other production
    models.
  • A kanban system is also far more directly
    responsive to customer demand.
  • Kanban is a system that visually indicates when
    production should start and stop.

10
Kanban Examples
11
Double sided racks.
Variable size stackable bins
Stacking bins, when top is empty, remove and
start using the bottom bin.
12
Double sided racks
13
Special twinbins, top holds second inventory,
when bottom is empty, pull middle lever that
allows top inventory to drop into lower bin, flag
pops up identifying upper bin needs to be
refilled.
14
Stacked supply
Reserve supply behind
15
INVENTORY MIN-MAX
16
What are Inventories?
  • Finished product held for sale
  • Goods in warehouses
  • Work in process
  • Goods in transit
  • Staff hired to meet service needs
  • Any owned or financially controlled raw material,
    work in process, and/or finished good or service
    held in anticipation of a sale but not yet sold

17
What are Inventories?
Finished goods
Customers
Material
Inbound
Production
Outbound
warehousing
sources
transportation
transportation
Receiving
Production
materials
Inventories
in-process
Shipping
Finished goods
Inventory locations
18
Reasons for Inventories
  • Improve customer service
  • Provides immediacy in product availability
  • Encourage production, purchase, and
    transportation economies
  • Allows for long production runs
  • Takes advantage of price-quantity discounts
  • Allows for transport economies from larger
    shipment sizes
  • Act as a hedge against price changes
  • Allows purchasing to take place under most
    favorable price terms
  • Protect against uncertainties in demand and lead
    times
  • Provides a measure of safety to keep operations
    running when demand levels and lead times
    cannot be known for sure
  • Act as a hedge against contingencies
  • Buffers against such events as strikes, fires,
    and disruptions in supply

19
Reasons Against Inventories
  • They consume capital resources that might be put
    to better use elsewhere in the firm
  • They too often mask quality problems that would
    more immediately be solved without their presence
  • They divert managements attention away from
    careful planning and control of the supply and
    distribution channels by promoting an insular
    attitude about channel management

20
Types of Inventories
  • Pipeline
  • Inventories in transit
  • Speculative
  • Goods purchased in anticipation of price
    increases
  • Regular/Cyclical/Seasonal
  • Inventories held to meet normal operating needs
  • Safety
  • Extra stocks held in anticipation of demand and
    lead time uncertainties
  • Obsolete/Dead Stock
  • Inventories that are of little or no value due to
    being out of date, spoiled, damaged, etc.

21
Nature of Demand
  • Perpetual demand
  • Continues well into the foreseeable future
  • Seasonal demand
  • Varies with regular peaks and valleys throughout
    the year
  • Lumpy demand
  • Highly variable (3? ? Mean)
  • Regular demand
  • Not highly variable (3? lt Mean)
  • Terminating demand
  • Demand goes to 0 in foreseeable future
  • Derived demand
  • Demand is determined from the demand of another
    item of which it is a part

Accurately forecasting demand is singly the most
important factor in good inventory management
22
Pull vs. Push Inventory Philosophies
23
Costs Relevant to Inventory Management
  • Carrying costs
  • Procurement costs
  • Out-of-stock costs

24
Procurement costs
  • Price of the goods
  • Cost of preparing the order
  • Cost of order transmission
  • Cost of production setup if appropriate
  • Cost of materials handling or processing at the
    receiving dock

25
Carrying Costs
  • Cost for holding the inventory over time
  • The primary cost is the cost of money tied up in
    inventory, but also includes obsolescence,
    insurance, personal property taxes, and storage
    costs
  • Typically, costs range from the cost of short
    term capital to about 40/year. The average is
    about 25/year of the item value in inventory.

26
Out-of-stock costs
  • Lost sales cost
  • Profit immediately foregone
  • Future profits foregone through loss of goodwill
  • Backorder cost
  • Costs of extra order handling
  • Additional transportation and handling costs
  • Possibly additional setup costs

27
Inventory Management Objectives
  • Good inventory management is a careful balancing
    act between stock availability and the cost of
    holding inventory.
  • Service objectives
  • Setting stocking levels so that there is only a
    specified probability of running out of stock
  • Cost objectives
  • Balancing conflicting costs to find the most
    economical replenishment quantities and timing

28
Typical Inventory Conflicting Cost Patterns
Total cost
Minimum cost reorder quantity
Cost
Carrying cost
Procurement cost
Stockout cost
Replenishment quantity
29
Reorder Point Control for a Single Item
Quantity on hand
Q
Demand During LT
Place order
Q
ROP
Receive order
P
0
Stockout
LT
LT
Time
30
Reorder Point Control
Quantity on hand on order ?backorders
Quantity for control
Actual on hand
Inventory level
Q
ROP
Safety stock
0
Time
LT
LT
31
Periodic review control with demand uncertainty
M
T review interval q quantity on hand Qi
order quantity
Q2
Q1
Quantity on hand

q
Stock level reviewed
Order received
0
M maximum level M - q replenishment
quantity LT lead time
Time
LT
LT
T
T
32
Performance Metrics - Turnover Ratio
33
What are the benefits of Kanban?
  • Some commonly observed benefits are
  • Bottlenecks become clearly visible in real-time.
    This leads people to collaborate to optimize the
    whole value chain rather than just their part.
  • Useful for situations where operations and
    support teams have a high rate of uncertainty and
    variability.
  • Tends to naturally spread throughout the
    organization to other departments such as HR and
    sales, thereby increasing visibility of
    everything that is going on at the company.

34
Benefits of Kanban
  • Reduce Inventory
  • Kanban will reduce inventory, on average, by 25
    to 75. This saves any company significantly in
    terms of rent, electricity, and storage space.
  • In addition, all of the space freed by the
    implementation of a kanban system can be used for
    future expansions or new opportunities

35
Benefits of Kanban
  • Improve work flow
  • The visually organized environment ensures all
    parts are easily found and continually stocked.
  • The speed of moving from one task to another is
    significantly reduced by the creation of clearly
    marked flow lanes, kanban cards, and clearly
    marked labels.

36
Benefits of Kanban
  • Prevent Overproduction
  • Because parts are only created at the visual
    signal by the kanban label (link), inventory is
    much less likely to be overproduced. Resulting in
    significant savings in the holding of stock.

37
ADDVALUE Services
VALUE ADDED COACHING-VAC
BUSINESS COACHING
LIFE COACHING
Operation Excellence
Counselling
Team Excellence
Therapy
Adding Value In Totality !!
Business Excellence
Astrology
38
AddValue at a glance
Best Performing Consulting Organization
Business Coaching
Life Coaching
39
Thank You
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