College of Business Universiti Utara Malaysia

Group Assignment:

Kanban Flow Management Systems

By Loganathan Muniandy 806666 Chuah Siong Lim 806663 Koh Ling Ling 807814 Khor Wang Khin 807910 Jayney Moey Yoke Lan 809397 Tan Ai Ling 807820

MBA in Supply Chain Management

BJMP 5023 Operations & Technology Management

Introduction to Kanban Kanban introduced by Taiichi Ohno from Toyota in 1953. Its developed to manage production line and material flow. Kanban means signal from card in Japanese word. The card used to give signal and communicate on reorder information. The card is authorization to produce more inventories and deliver components to workstation when needed. Its called as pull system. Kanban plays important role in lean manufacturing and JIT. Kanban used in both concepts to minimize wastages and maximize profits. Lean is operational excellence strategy that enables to change for better. JIT only make what we need, when we need it. The downstream processes take whats needed from upstream processes. Kanban is just a tool in lean manufacturing and JIT. A properly designed kanban system will be tailored to fit the needs of the environment and will encounter minimal issues on a day-to-day basis. The rewards for properly designing and implementing a kanban system are enormous. A well designed kanban system can provide what is needed, when needed, in appropriate quantities while significantly lowering inventory, shortages, non-value added activities, and total overall costs. Customer on-time deliveries are dramatically improved while the overall quality of life for the organization is enhanced immensely permitting concentration on strategic matters versus continuously compensating for an ineffective replenishment system. With a proper kanban design and implementation the system will at a minimum match any competitor and in application appear to perpetuate itself without effort. Analysis needed on downstream order pattern to design a proper kanban system. The type of product, lot size, container size, quantity and stock point need to be identified. Then up-stream scheduling algorithm need to develop followed by analysis of product volume for up-stream work center. Finally fine tune needed while operating the Kanban system. Kanban required for short set up with proper machine lay out. Standardization of jobs required with stable repetitive production. Once implemented the kanban system acts a control system rather than a scheduling system. It implements a repetitive schedule embedded in the system. Every stage automatically knows how much and when to produce the parts required.

Kanban have some challenges on implementation. Its get complex when upstream workstation makes several parts, each with separate signaling card. Poor quality which leads to scrap and rework will affect functioning. Kanban less suited to industries where mix volumes fluctuated. Kanban at Toyota Toyota is regarded as an industrial leader and has developed one of the premier manufacturing system called as Toyota Production System (TPS). TPS was developed by Toyota Motor Company during the 1950s. Toyota uses a manufacturing principle called as JIT (Just-In Time) as a tool for process improvement. They are the first company who employed Kanban System in full scale into their production system. Although Kanban is originated in assembly type operations but the principles can be extended also in supply chain and to all operations. Toyota Production System has two major features, Just-In Time Production and Jidoka (Automatic line stopping when something goes). Just-in time production can supply the necessary parts in the necessary volume at necessary time. On the other hand Jidoka means that making them stop by themselves as soon as machining defects happen in order to take necessary actions. Figure A in Appendix page shows a real example of production, process and uses of Kanban at Toyota supplying carburetors. Hourly production at every process is leveled with respect to volume and specifications of products. Attention is paid to prevent over production. Occurrence of abnormality can be easily identified by buzzer or lamp. The production process consists of the following steps:1. Die preparation 2. Die casting 3. Fin removal 4. Storage 5. Machining 6. Washing 7. Stock store 8. Assembly line 9. Testing 10. Goods store

Toyota implemented dual cards in Kanban System. These cards are very simple, showing only the part number, name, the work centers involved, a storage location and the container capacity. There are 2 types of Kanban shows in Figure B Withdrawal Kanban and Production Kanban. Withdrawal Kanban functions is to authorize for movement from the production/work center to the using department. Production Kanban is release an order to the proceeding stage to build the lot size indicated in the card. The system involves the use of cards that are attached to containers which hold a standard quantity of a single part number. When a worker starts to use a container of parts the withdrawal card, which is attached to it is removed and is sent to the proceeding work center. This is the signal for the production department to send another container of parts to replace the one being used. The replacement container has a production card attached to it which is replaced by the withdrawal card before it is sent. The production card then authorizes the producing department to make another full container of parts. These cards are circulated respectively within or between work centers or between suppliers and the assembly plant. In order for Kanban to work effectively, there must be one card attached to a container at any one time. Never move or produce other than the quantity indicated in the card. The using work center (using department) must initiate the movement of parts from the proceeding center (production department) and Kanban cards must be handled on the a first-in, first-out basis. (FIFO). With the advanced IT technology, Internet-based Kanban is a just-in time management tool that you can use to drive costs, integrate disparate ERP systems and communicate throughout the supply chain. Web based Kanban provides tool for total customer satisfaction and increased efficiency through the elimination of lead times. Toyota has computerized its Kanban System and provides online to suppliers. The data recording technology enables the system to incorporate 100 times more data. The conventional Kanban cards take 7-8 hours for the card to reach production point. Under the new system, suppliers receive ordering instruction on line, print them out and attach them to ordered part during delivery to Toyota. So, technically if Toyota sent all its transaction to a specific supplier electronically then the supplier can save 2000-3000 hours per month.

Kanban in Servicing Industry Hospitals has also began looking for a better way to improve quality, safety and patient satisfaction. Virginia Mason Hospitals has tailored Toyota Production system to fit health care. In today business is all about total flow; no waiting, no waste and it's all about the patient. Hospital industries get so focus on the seriousness and specialness of health care, without realizing that they are way behind in information specialists and making waste out of their our process. For example, inventory waste -- having more materials and information than is necessary. For instance, stockpiling brochures and pamphlets kept in storage closets. They take up space and wasted cost by printing them and are not needed. Most of Virgina Mason Hospitals in the Seattle area implemented a Kanban system, which signals the need to restock. For example, when a nurse or physician sees the card, he or she knows it's time to refill. Supplies will never run out or over ordered. In another example is the development of a flip chart showing the level of mobility in physical therapy patients. The chart shows the appropriate picture of what the patient can do, and each nurse or physician who comes in the room does not have to waste time searching charts or asking questions. Another adaptation from the Toyota model is a patient safety alert system. The alert system allows nurses and physicians to signal a problem when it happens and fix it immediately. They have reduced appointment and telephone delays by having medical assistants handle incoming calls, instead of medically untrained operators. Also, instead of doctors waiting until the end of the day to go through a stack of patient records, they now write comments and recommendations immediately after seeing the patient before going to see the next one. The time saved increases the time a physician can spend with a patient. Medical director at Virginia Mason Kirkland, said most of the cost of medical care involves clogs in the flow of information. Patient records, lab results, phone messages, often leading to irritated patients. Working the backlog down costs more than if let things pile up in the first place.

The overall benefits include an 85 percent reduction in how long patients wait to get lab results back, and lowering inventory costs by $1 million. They have also redesigned facilities to make patient and staff work flow more productive. The hospital reduced overtime and temporary labor expenses by $500,000 in one year and increased productivity by 93 percent. They even have their patients start their appointment in the parking garage with a smart card that triggers their entire appointment process. No more waiting rooms, just move directly from the garage to an examination room.

Summary Kanban system is pull system, realizing JIT concept. Kanban system is not a solution for all industrial problems, its just a tool to communicate and control between stages. Kanban is a simple-to-operate control system, which offers the opportunity to delegate routine material transactions on the shop floor. The basic necessity need to be followed to implement Kanban successfully. A succesfull Kanban system will minimize the wastages and maximize the profit.

Appendix

Figure A : An example of Kanban System supplying carburetors (Pull System)

Figure B : Kanban card flow

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