Home > Forums
Topic Title: Modifying Kanban system
Topic Summary: Kanban for variable stock useage
Created On: 12/22/2016 04:08 PM
Linear : Threading
Send to a Friend Send to a Friend
Search Topic Search Topic
Topic Tools Topic Tools
View similar topics View similar topics
View topic in raw text format. Print this topic.
01/02/2017 07:27 PM
Print this message

Author Icon
MarkF
Mark Findlay



Hi,

We are a very small(7 people) manufacturing company that runs a Kanban system and for 50% of our product it works really well as they have relatively steady useage. For the other 50% which are variable use for example some weeks we might use 0 and some we might use up to 9 depending on customer requirements it doesn't work so well. We do a weekly order and our lead time from the supplier is 2 weeks. I can't get the reorder point to any number that covers us without carrying massive amounts of stock. I can predict what stock we will use 1 week out from using it. My current idea is to order the stock that we are going to use one week ahead of build time so that when it arrives it will replenish the stock used on that week due to the two week leave time. My two concerns are that this is going away from our Kanban system which I don't really want to do and there is no system to catch up faulty, damaged, or incorrectly used stock which the Kanban system does quickly recover from.

Does anyone have any suggestions or are my concerns unfounded?
01/09/2017 11:44 AM
Print this message

Author Icon
189836
Paul Johnson



Mark, You have the same challenge that most everyone does at some point, and without knowing enough about your business model it is hard to develop a sound solution.
If there isn't a reasonable opportunity to reduce the lead time from your critical suppliers to support a one week window (which supports your best vision to meet customer demand) and use a kanban replenishment system, then you will need to have that "Lean State of Mind" to drive out the most system waste that you can. That waste can be classified as stock outs, late or missed shipments, customer dissatisfaction from extended lead times etc. I always try to look through the eyes of a value stream map starting from the customer on back and removing any pain they would feel from us not meeting their expectations.....regardless of how difficult that may be, without them we do not exist. While at the same time you must run the business and make a profit - Profit is not a dirty word, it's why WE exist! Balancing your inventory investment and continually working to improve the conditions is what is important. Sometimes unconventional idea's come into view that may not look like a solution but give birth to others that will. Remember that your lean system is just that YOUR SYSTEM so whatever works best for your company is what's best....just be sure to always maintain that continually probing "Lean State of Mind" and you will continually improve your situation......and that's lean!
01/09/2017 11:44 AM
Print this message

Author Icon
miguelpereda
miguel pereda



Hi Mark,

The concept of Kanban should not be affected by the Mura (unevenness) caused by your demand variation. Pull-Kanban should work by the use of a replenishment signal. The reordering should occur when you reach a minimum level of inventory without risking to stop production. The formula is:

Lead Time= (Inventory/ Output).

In your example, 9 units max per week * 2 weeks lead time gives 18units inventory. That plus whatever safety factor you want to include is your replenishment signal!

I hope this helps.
01/09/2017 11:44 AM
Print this message

Author Icon
Robert_Simonis
Robert Simonis



First, try to implement hiejunka, or levelness to the production so materials flow at a steady and predictable rate. Assuming you have done this, and still have the problem described, kanban is best used for materials that are running at a steady rate and medium to high demand. For materials that have infrequent demand, or are very low demand, a different strategy should be used. You see the problems with trying to predict demand, and you see the problem with having kanban for some kinds of materials. If materials are very high volume and constant rate, you need a strategy for FLOW. When you have materials that are medium to high volume and the rate is less then +/- 30% variation week-to-week, a kanban strategy is probably the correct method. Low volume or very high variation needs a Build-To-Order (BTO) or release process to control the inventory levels. The goal is to have not interrupt production but also not to have money tied up in inventory. One single strategy will not do this in most cases and may require material segmentation and strategies.
01/20/2017 08:46 AM
Print this message

Author Icon
MarkF
Mark Findlay



Thanks all for the replies. You've given me the confidence to roll with it and see what happens. We've had a quiet period after Christmas so our stock has been replenished which provides me the opportunity to try a BTO model for a month knowing that we have back up if there is an issue. If that goes alright we'll work through the stock and rely wholly on BTO for that particular stock group. Our supplier is keen to trial it also which is great.
Note: These forums are moderated by the Lean Enterprise Institute. All posts are reviewed within 24-48 hours prior to appearing on the site. Views expressed in these forums do not necessarily represent the views of the Lean Enterprise Institute.