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Let’s talk about Kanban, the second pillar of TPS after JIT

The core of lean manufacturing, kanbans use the “pull” system to prevent waste by creating a cyclical relationship between the consumer, supplier, and manufacturer. The user of a material requests or “pulls” material from the supplier, as they need it. They do this using some form of notification.  Product consumption information is sent from the user upstream to the supplier so that consumed materials can be restocked as needed. Ultimately, this eliminates overproduction and waste from the previous unnecessary use of materials and machinery.

Roughly translated as “sign” or “visual card,” a kanban can be any device that communicates the need for an item. Kanbans ensure that only what is needed is ordered and in the proper amount.

The first kanbans, signboards, were used to transfer inventory information between production processes. Taiichi Ohno, former vice president of Toyota Motors, designed the concept in the mid 1950s after observing the operating system of an American supermarket. He was taken with the concept of only supplying what was needed, when it was needed, and how greatly this prevented unnecessary production and waste.

Considered one of the most price accessible means for inventory control, kanbans exist in manual and electronic forms (anything from a plastic container to a software program). It reduces unnecessary inventory, eliminate shortages, and cuts costs. Bringing improvements in price and quality, kanbans exists in three types: supplier, in-factory, and production.

  • Supplier kanban: Alerts parts suppliers as to what specific production parts are needed and how many.
  • In-factory parts-retrieval kanban: is used between factory processes to manage inventory.
  • Production kanban: Indicates operating instructions for factory lines.

Successful implementation requires that four rules be followed:

  • The production process works against the grain, starting with the consumer order and working it’s way back to manufacturing to eliminate any excess materials.
  • Manufacturers must only produce what has been ordered in the exact order and quantity it received in the request.
  • Products must remain 100-percent defect-free to continue down the production line.
  • Kanbans should be gradually decreased over time to uncover and correct production areas needing improvement.

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Electronic Kanban Helps TRANE Stay Lean

More than 80 percent of the firm’s purchasing is done online using an electronic kanban system.

TRANE Residential Systems, is a lean organization that knows about growth through innovation. In 1931, TRANE came up with the radical idea of using technology to provide relief from the summer heat. The 1938 launch of the Turbovac, the industry’s first hermetic, centrifugal refrigeration machine, fundamentally changed the concept of air conditioning in large buildings. This was the beginning of a long chain of innovations that eventually led to TRANE’s current CenTraVac, the industry standard for large commercial air conditioning systems. This energy-efficient system with its superior performance in minimizing refrigerant emissions, has earned TRANE the “Best of the Best Stratospheric Ozone Protection Award” from the U.S. Environmental Protection Agency.

The lean metrics are impressive.

As part of a Six Sigma project, TRANE Residential identified Ultriva, a lean manufacturing software solution, as part of its control plan. TRANE has been using the software for more than a year, and the work-in-process (WIP) and the raw and in-process (RIP) inventory are down more than $4 million. More important, that improvement has been sustained. More than 80 percent of the firm’s purchasing is done online in real time with suppliers using Ultriva’s electronic kanban pull system.

“The company now has total visibility of what’s where—something I’ve never been able to do with any MRP [material requirement planning] system, and I’ve worked in many,” says John Young, materials and supply chain leader of TRANE Residential Systems in Vidalia, Georgia. “All parts that go from our warehouse are kanban pull with manufacturing lines, and our entire fabricating department, where we make lots of stampings, is run off of this system—giving us tools such as capacity management as well as kanban pull.”

TRANE’s lean initiative

The lean initiative at this particular plant has been in process for about two years, says Young. “However we’ve had deep roots for more than ten years in demand flow technology and going so far as to have true mixed model flow production assembly lines during that time,” he notes. “Our entire plant-level team is, by function, a lean leader, including the plant manager. From a corporate level within our division [TRANE Residential Systems]—it’s mimicked similarly in that all functions are expected to be the lean leaders of our initiative. From a higher level of Ingersoll-Rand, even our CEO participates in two kaizen events a year at different plants, so it’s becoming part of our culture for sure.”

In the past, TRANE used differing types of kanban systems with sporadic success across TRANE Residential locations. There was no standardization and in most cases the kanban systems would not run correctly. Cards were lost, there was no known way to resize efficiently, and there was no visibility of kanban being in process with suppliers. Ultriva became a solution because of the organization’s desire to implement kanban.

“I wanted some technology enablers to allow us management tools as well,”  explains Young. “We came across Ultriva as a solution due to a Six Sigma project team I was helping lead on material planning improvements.”

Conditions needed improvement

TRANE was facing a variety of problems: there were too many stock outs, too much material, no parts visibility with suppliers, and no parts-in-transit visibility. There was also no ability to measure on-time delivery or have real-time receipts with suppliers.

“[TRANE Residential] needed poka-yoke on receiving processes and material control needs,” recalls Young. “We needed access to the data to address increases and decreases in demand for kanban systems, and there had to be a supplier portal to have visibility into our shop floor. All this was needed along with the ability to run MRP orders the same as kanban, but just as one-time orders.”

Several electronic kanban software programs were considered, including a home-written one that was being used for internal fabricated parts in the Tyler facility. “In the FMEA [failure mode effects analysis] of our Six Sigma project on material planning improvements, Ultriva was able to move almost all of our highest ranking issues to non-issues through poka-yoke or minimal issues through its superior methodology,” says Young.

In April 2008, TRANE Residential streamlined its purchasing system as well as its internal management of the fabrication department, which made capacity management more visual. The company officially moved to consumption-based replenishment purchasing using real-time bar-coded receipts with poka-yoke (to prevent double ordering or double receiving). The company now has total closed-loop procurement internally and externally through kanban systems, producing a much cleaner value-stream mapping process.

Specific benefits of consumption-based replenishment:

  • $4.7 million in material savings through the successful implementation of the control plan for the companies Six Sigma project
  • $243,000 savings in 90 days (pilot period)
  • Increased turns from low single digits to 25+ and is on track to hit 33 by the year’s end (measured as COGS)
  • Stock-outs with no visibility as to why its gone
  • When there is a stock-out, the company sees it coming and is certain as to the root cause after only minutes of data analysis.
  • On-time-delivery metrics for suppliers are now available, none previously existed.
  • Transit lead time metrics (impossible in other systems)

“We have a Fab Supermarket, too, that we manage through our electronic kanban system,” notes Young. “These parts have been reduced more than 50 percent in the past year. We have a true way to measure supplier on-time delivery. We never really could before. And this can be for any kanban loop. So even internally we can measure and adjust. Based on our running a successful pilot here in Vidalia more than a year ago, we chose this to be a solution at all Trane RS [Residential Systems] plants, and the other three sites are in process of implementing now.”

Lean technology providing a competitive advantage

The electronic kanban system is utilized within the entire supply chain across the TRANE Residential division, and implemented in more than 85 percent of Vidalia’s spending. All sites within TRANE Residential are expected to be on the system within the next year and a half.

“This [system] provides a competitive advantage in that we are able to see down to very granular levels of details, what’s happening in our supply chain,” Young explains. “This analysis tool allows a manager to truly zero in on root cause and remove emotions from analysis, and drive data-driven decision making. Being able to have full visibility into our supply chain allows us to react to unforeseen circumstances better, react to demand shifts, minimize impact to our financial stakeholders, as well as give realistic expectations to internal and external customers.”

Ultimately, this lean technology solution has become a major pillar of TRANE’s rapid improvements, both in the supply chain and in internal processes. “The technology is an absolute enabler and makes improvement sustainable; and it allows us to more rapidly identify and execute on improvements, which of course is the key to lean: continuous improvement,” says Youn

From Thomas R. Cutler in Quality Digest

 
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Posted by on July 8, 2009 in Lean Manufacturing, Toyota

 

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The Toyota Way is more than Tools and Techniques

So you set up your kanban system (Kanban is the Japanese word for “card”, “ticket”, or “sign” and is a tool for managing the flow and production of materials in a Toyota-style “pull” production system.) You put in the andon, which is a visual control device in a production area that alerts workers to defects, equipment abnormalities, or other problems using signals such as lights, audible alarms, etc. Finally with these devices your workplace looks like a Toyota plant. Yet, over time your workspace reverts to operating like it did before. You call in a Toyota Production System (TPS) expert who shakes her head disapprovingly. What is wrong

The real work of implementing Lean has just begun. Your workers do not understand the culture behind TPS. They are not contributing to the continuous improvement of the system or improving themselves. In the Toyota Way, it is the people who bring the system to life: working, communicating, resolving issues and growing together. From the first look at excellent companies in Japan practicing lean manufacturing, it was clear that the workers were active in making improvement suggestions. But the Toyota Way goes well beyond this; it encourages, supports and in fact demands employee involvement

The more I have studied TPS and the Toyota Way, the more I understand that it is a system designed to provide the tools for people, not less. It is a culture, even more than a set of efficiency and improvement techniques. You depend upon the workers to reduce inventory, identify hidden problems, and fix them. The workers have a sense of urgency, purpose and teamwork because if they don’t fix it there will be an inventory outage. On a daily basis, engineers, skilled workers, quality specialists, vendors, team leaders, and -most importantly- operators are involved in continuous problem solving and improvement, which over time trains everyone to become better problem solvers

One lean tool that facilitates this teamwork is called 5S (sort, stabilize, shine, standardize and sustain), which is a series of activities for eliminating wastes that contribute to errors, defects and injuries. In this improvement method, the fifth S, sustain, is arguably the hardest. It’s the one that keeps the first for S’s going by emphasizing the necessary education, training, and continuously improve operating procedures and the workplace environment. This effort requires a combination of committed management, proper training, and a culture that makes sustaining improvement a habitual behavior for the shop floor to management.

This chapter provides a synopsis of the 14 principles that constitute the Toyota Way. The principles are organized in four broad categories: 1) Long-Term Philosophy. 2) The Right Process Will Produce the Right Results. 3) Add Value to the Organization by Developing Your People, and 4) Continuously Solving Root Problems Drives Organizational Learning.

Summary of the 14 Toyota Way Principles

  1. Section I: Long-Term Philosophy.

    1. Principle 1: Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.
  2. Section II: The Right Process Will Produce the Right Results.
    1. Principle 2: Create continuous process flow to bring problems to the surface.
    2. Principle 3: Use “pull” systems to avoid overproduction.
    3. Principle 4: Level out the workload (heijunka). (Work like the tortoise, not the hare).
    4. Principle 5: Build a culture of stopping to fix problems, to get quality right the first time.
    5. Principle 6: Standardized tasks are the foundation for continuous improvement and employee empowerment.
    6. Principle 7:Use visual control so no problems are hidden.
    7. Principle 8: Use only reliable, throughly tested technology that serves your people and processes.
  3. Section III: Add value to the Organization by Developing Your People and Partners
    1. Principle 9: Grow leaders who throughly understand the work, live the philosophy, and teach it to others.
    2. Principle 10: Develop exceptional people and teams who follow your company’s philosophy.
    3. Principle 11: Respect your extend network of partners and suppliers by challenging them and helping them improve.
  4. Section IV: Continuously Solving Root Problems Drives Organizational Learning
    1. Principle 12: Go and see for yourself to throughly understand the situation (genchi genbutsu).
    2. Principle 13: Make decisions slowly by consensus, thoroughly considering all options implement decisions rapidly.
    3. Principle 14: Become a learning organization thorough relentless reflection (hansei) and continuous improvement (kaizen).

“How does TPS apply to my business? We do not make high volume cars; we make low-volume, specialized products” or “We are a professional service organization, so TPS does not apply to us”. This line of thinking tells they are missing the point. Lean is not about imitating the tools used by Toyota in a particular manufacturing process. Lean is about developing principles that are right for your organization and diligently practicing them to achieve high performance that continues to add value to customers and society. This, of course, means being competitive and profitable. Toyota’s principles are a great starting point. And Toyota practices these principles far beyond its high-volume assembly lines.

This text has been extracted from Jeffrey K. Liker (2004) The Toyota Way; 14 management principles from the world’s greatest manufacturer.  Ed. Mc Graw-Hill  2004 Find it on Amazon

 
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Posted by on June 6, 2009 in Uncategorized

 

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