Acceptance Sampling is an Important Field of Statistical Quality Control That Was Popularized by...

7/30/2019 Acceptance Sampling is an Important Field of Statistical Quality Control That Was Popularized by Dodge and Romi

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Acceptance sampling is an important field of statistical quality control that was popularized by Dodge

and Romig and originally applied by the U.S. military to the testing of bullets during World War II.

Dodge reasoned that a sample should be picked at random from the lot, and on the basis of information

that was yielded by the sample, a decision should be made regarding the disposition of the lot. In

general, the decision is either to accept or reject the lot. This process is called Lot Acceptance Samplingor justAcceptance Sampling.

Acceptance sampling is "the middle of the road" approach between no inspection and 100%inspection. There are two major classifications of acceptance plans: by attributes ("go, no-go")

and by variables. The attribute case is the most common for acceptance sampling, and will be

assumed for the rest of this section.

Important point-A point to remember is that the main purpose of acceptance sampling is todecide whether or not the lot is likely to be acceptable, not to estimate the quality of the lot.

Scenarios leading to acceptance sampling-Acceptance sampling is employed when one or

several of the following hold:

Testing is destructive

The cost of 100% inspection is very high

100% inspection takes too long


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A lot acceptance sampling plan (LASP) is a sampling scheme and a set of rules for making

decisions. The decision, based on counting the number of defectives in a sample, can be to

accept the lot, reject the lot, or even, for multiple or sequential sampling schemes, to take anothersample and then repeat the decision process.

Types of acceptance plans to choose from -LASPs fall into the following categories:

Single sampling plans:. One sample of items is selected at random from a lot and the

disposition of the lot is determined from the resulting information. These plans are

usually denoted as (n,c) plans for a sample size n, where the lot is rejected if there aremore than c defectives. These are the most common (and easiest) plans to use although

not the most efficient in terms of average number of samples needed.

Double sampling plans: After the first sample is tested, there are three possibilities:

1. Accept the lot2. Reject the lot3. No decision

If the outcome is (3), and a second sample is taken, the procedure is to combine theresults of both samples and make a final decision based on that information.

Multiple sampling plans: This is an extension of the double sampling plans where more

than two samples are needed to reach a conclusion. The advantage of multiple sampling

is smaller sample sizes.

Sequential sampling plans: . This is the ultimate extension of multiple sampling where

items are selected from a lot one at a time and after inspection of each item a decision is

made to accept or reject the lot or select another unit.

Skip lot sampling plans:. Skip lot sampling means that only a fraction of the submittedlots are inspected.

Definitions of basic Acceptance Sampling terms -Deriving a plan, within one of the categorieslisted above, is discussed in the pages that follow. All derivations depend on the properties you

want the plan to have. These are described using the following terms:

Acceptable Qual ity Level (AQL): The AQL is a percent defective that is the base line

requirement for the quality of the producer's product. The producer would like to design asampling plan such that there is a high probability of acceptinga lot that has a defect

level less than or equal to the AQL.

Lot Tolerance Percent Defective (LTPD): The LTPD is a designated high defect level

that would be unacceptable to the consumer. The consumer would like the sampling planto have a low probability of acceptinga lot with a defect level as high as the LTPD.

Type I Er ror (Producer' s Risk): This is the probability, for a given (n,c) sampling plan,

of rejecting a lot that has a defect level equal to the AQL. The producer suffers when this

occurs, because a lot with acceptable quality was rejected. The symbol is commonlyused for the Type I error and typical values for range from 0.2 to 0.01.

Type I I Er ror (Consumer' s Risk):This is the probability, for a given (n,c) sampling

plan, of accepting a lot with a defect level equal to the LTPD. The consumer suffers when


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this occurs, because a lot with unacceptable quality was accepted. The symbol is

commonly used for the Type II error and typical values range from 0.2 to 0.01.

Operating Character istic (OC) Curve:This curve plots the probability of accepting the

lot (Y-axis) versus the lot fraction or percent defectives (X-axis). The OC curve is the

primary tool for displaying and investigating the properties of a LASP.

Average Outgoing Quali ty (AOQ):A common procedure, when sampling and testing isnon-destructive, is to 100% inspect rejected lots and replace all defectives with good

units. In this case, all rejected lots are made perfect and the only defects left are those inlots that were accepted.AOQ's refer to the long term defect level for this combined LASP

and 100% inspection of rejected lots process. If all lots come in with a defect level of

exactlyp, and the OC curve for the chosen (n,c) LASP indicates a probabilitypa of

accepting such a lot, over the long run theAOQ can easily be shown to be:

whereNis the lot size.

Average Outgoing Quali ty Level (AOQL):A plot of theAOQ (Y-axis) versus the

incoming lotp (X-axis) will start at 0 forp = 0, and return to 0 forp = 1 (where every lotis 100% inspected and rectified). In between, it will rise to a maximum. This maximum,

which is the worst possible long termAOQ, is called theAOQL.

Average Total I nspection (ATI ):When rejected lots are 100% inspected, it is easy to

calculate theATIif lots come consistently with a defect level ofp. For a LASP (n,c) witha probabilitypa of accepting a lot with defect level p, we have

ATI= n + (1 - pa) (N - n)

whereNis the lot size.

Average Sample Number (ASN):For a single sampling LASP (n,c) we know each and

every lot has a sample of size n taken and inspected or tested. For double, multiple andsequential LASP's, the amount of sampling varies depending on the number of defects

observed. For any given double, multiple or sequential plan, a long termASNcan be

calculated assuming all lots come in with a defect level ofp. A plot of theASN, versusthe incoming defect levelp, describes the sampling efficiency of a given LASP scheme.

The final choice is a tradeoff decision -Making a final choice between single or multiple

sampling plans that have acceptable properties is a matter of deciding whether the averagesampling savings gained by the various multiple sampling plans justifies the additional

complexity of these plans and the uncertainty of not knowing how much sampling and inspectionwill be done on a day-by-day basis.


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UNIT 3

Lean management is an important part of lean thinking. As we implement lean in any organization the

traditional way of managing does not guarantee right focus nor help sustaining lean initiatives. If no

action is taken to change the way we manage process, people and products we are likely to see failure

of lean implementations. Many people on lean journey fail to apply lean in a holistic manner. Usuallythey start with applying tools without proper guidance and leadership the company cannot move to the

next level. Thus a management system that specifically meets the needs of a transforming organization

is very much essential.

What is lean Management?

Lean is all about customer focus. Value is defined by the customer and we develop and maintain

processes to provide this value. Processes are run by people. Only support and proper leadership and

guidance you can drive your people to continuously improve the processes that add value to the

customer. The management system that helps you to achieve this is a Lean Management system. Lean

Management system uses various tools to connect the purpose (Providing value to customer) to the

process and people. Some of the lean management tools which are commonly used are Leader standard

work, visual control boards, and daily accountability.

The tools itself are not effective unless used with right mindset. There is a lot of work needed to be done

at individual level for the mangers to become lean managers. To start with lean management we have to

start developing managers in to Lean Managers. What are you doing to become a lean manager?


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Lean manufacturing,

lean enterprise, orlean production, often simply, "Lean," is a production practice that

considers the expenditure of resources for any goal other than the creation ofvaluefor the end

customer to be wasteful, and thus a target for elimination. Working from the perspective of the

customer who consumes a product or service, "value" is defined as any action or process that acustomer would be willing to pay for.

Essentially, lean is centered onpreserving value with less work. Lean manufacturing is amanagement philosophy derived mostly from theToyota Production System(TPS) (hence the

term Toyotism is also prevalent) and identified as "Lean" only in the 1990s.[1][2]

TPS is renowned

for its focus on reduction of the original Toyotaseven wastesto improve overall customer value,but there are varying perspectives on how this is best achieved. The steady growth ofToyota,

from a small company to the world's largest automaker,[3]

has focused attention on how it has

achieved this success.
http://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Toyota_Production_Systemhttp://en.wikipedia.org/wiki/Toyota_Production_Systemhttp://en.wikipedia.org/wiki/Toyota_Production_Systemhttp://en.wikipedia.org/wiki/Lean_manufacturing#cite_note-womack-1http://en.wikipedia.org/wiki/Lean_manufacturing#cite_note-womack-1http://en.wikipedia.org/wiki/Lean_manufacturing#cite_note-womack-1http://en.wikipedia.org/wiki/Muda_(Japanese_term)http://en.wikipedia.org/wiki/Muda_(Japanese_term)http://en.wikipedia.org/wiki/Muda_(Japanese_term)http://en.wikipedia.org/wiki/Toyotahttp://en.wikipedia.org/wiki/Toyotahttp://en.wikipedia.org/wiki/Toyotahttp://en.wikipedia.org/wiki/Lean_manufacturing#cite_note-Reuters-3http://en.wikipedia.org/wiki/Lean_manufacturing#cite_note-Reuters-3http://en.wikipedia.org/wiki/Lean_manufacturing#cite_note-Reuters-3http://www.vpk-engineering.de/Lean%20Excellence.htmhttp://www.google.co.in/url?sa=i&rct=j&q=lean+management&source=images&cd=&cad=rja&docid=Ko41j2Fy4qud2M&tbnid=a3I_ur8oYSeLxM:&ved=0CAUQjRw&url=http://www.frost.com/prod/servlet/market-insight-print.pag?docid=165187974&ei=mbuIUZbHIdGzrAfV2IE4&bvm=bv.45960087,d.bmk&psig=AFQjCNEmho0lxs4B3U2URWcIaWwpGLL3HA&ust=1368001805859698http://www.vpk-engineering.de/Lean%20Excellence.htmhttp://www.google.co.in/url?sa=i&rct=j&q=lean+management&source=images&cd=&cad=rja&docid=Ko41j2Fy4qud2M&tbnid=a3I_ur8oYSeLxM:&ved=0CAUQjRw&url=http://www.frost.com/prod/servlet/market-insight-print.pag?docid=165187974&ei=mbuIUZbHIdGzrAfV2IE4&bvm=bv.45960087,d.bmk&psig=AFQjCNEmho0lxs4B3U2URWcIaWwpGLL3HA&ust=1368001805859698http://en.wikipedia.org/wiki/Lean_manufacturing#cite_note-Reuters-3http://en.wikipedia.org/wiki/Toyotahttp://en.wikipedia.org/wiki/Muda_(Japanese_term)http://en.wikipedia.org/wiki/Lean_manufacturing#cite_note-womack-1http://en.wikipedia.org/wiki/Lean_manufacturing#cite_note-womack-1http://en.wikipedia.org/wiki/Toyota_Production_Systemhttp://en.wikipedia.org/wiki/Value_(economics)


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Lean management is usually fully realized in the final state of lean transformation. If you are

trying to implement tools of lean management and do not have a culture that support lean

thinking, your success may be very limited. What are some of the cultural enablers that help youbuild the foundation for lean transformation and ultimately lead to lean management?

Leaders should show humility and respect their subordinates and peers. Senior leadership should be willing to accept lean as a philosophy and not just another

project for cost cutting

Managers be trained and committed to solving problems

People in the organization should feel secure about their job

Daily informal/formal feedback should be facilitated at team and individual level to align

the performance

Suggestion system for all employees to provide feedback and ideas for improvement

All information required to make decision or track performance should be shared with

people who need it

People need to be empowered to make decisions and solve their problems

Training should not be done only once but should be conducted on regular basis Senior leaders needs to be trained for mentoring young and future leaders

People need to be trained to use visual controls Leaders need to be trained to use Gemba walks as mentoring / training tool and also as a

tool to find waste and problems related with flow of materials and information

Lean management derives its values from 2-key principles of lean; Respect for People and

Continuous Improvement.

Continuous Improvement:
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A lean manager is focused on solving problems incrementally. Each solution is an experiment

which helps in the learning process and paving the path to the next level.Small improvements

followed by time of stability and then again a small improvement , is a cycle that is preffered in alean environment . this form of small changes are easier to manage without much disruption to

the suppoorting proceses like material supply to the line.

Respect to People :

As easy as it seems this by far has been the most difficult things to understand . It has often beendescribed as an important quality that any lean manager should posses . A lean manager respects

people by giving them the authority to solve their problems .This way lean manager uses the

knowledge of the people who actually add value to the process and also able to get buy in byengaging all the employees . This does not mean that a lean manager completely disconnects

himself from problem solving. He guide his people to solve their problems by asking the right

questions ,till they find the root cause.

A Lean Manager is a person who has trained himself at lean thinking by practicing the principlesof lean manufacturing. He has developed the right mindset which is essential for the developing

and sustaining the lean initiatives of the company. The Lean Manager is the key for the LeanManagement to evolve organically within the organization. Here is a list of Qualities that I think

any Lean Manager should have:

1. Lean Manager is a problem solver; he always tries to solve the problem in scientific way2. He does not like to sit at his desk but when the problem arises he goes the source

(Gemba) and finds the root cause by asking questions3. A lean manager does not randomly use tools; he chooses the right tool for the means of

solving a problem on gemba

4. A lean manager always shows respect to all people5. A Lean manager is not a treat lean as a project, but as something to be practiced daily insearch of perfection.

6. Lean Manager is not afraid of failure, he treats each solution as an experiment to learnmore and get one more step closer to the ideal state

7. Lean Manager always questions the status quo, he tries to rethink problems and learn bypracticing

8. Lean Manger uses Socratic Method to stimulate lean thinking in others

THEORY OF CONSTRAINTS:

Theory of Constraints (TOC) is a technique which tunes the planning to the bottlenecks. The course covers the

TOC philosophy and the concepts of TOC, which can be condensed into 10 rules. The participants will experience

the drum-buffer-rope - principle during the bottleneck game. The goal of this game is to optimize the output of a

production line. This interactive exercise shows that management of your buffers guarantees a smooth flow of

material and controls the work-in-process.

The theory of constraints (TOC) is a management paradigm that views any manageable systemas being limited in achieving more of its goals by a very small number ofconstraints. There isalways at least one constraint, and TOC usesa focusing processto identify the constraint and

restructure the rest of the organization around it.
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TOC adopts the common idiom "a chain is no stronger than its weakest link". This means that

processes, organizations, etc., are vulnerable because the weakest person or part can always

damage or break them or at least adversely affect the outcome.

A constraint is anything that prevents the system from achieving more of its goal. There are

many ways that constraints can show up, but a core principle within TOC is that there are nottens or hundreds of constraints. There is at least one but at most only a few in any given system.

Constraints can be internal or external to the system. An internal constraint is in evidence when

the market demands more from the system than it can deliver. If this is the case, then the focus ofthe organization should be on discovering that constraint and following the five focusing steps to

open it up (and potentially remove it). An external constraint exists when the system can produce

more than the market will bear. If this is the case, then the organization should focus on

mechanisms to create more demand for its products or services.

Types of (internal) constraints

Equipment: The way equipment is currently used limits the ability of the system toproduce more salable goods/services.

People: Lack of skilled people limits the system. Mental models held by people can causebehaviour that becomes a constraint.

Policy: A written or unwritten policy prevents the system from making more.

The concept of the constraint in Theory of Constraints is analogous to but differs from the

constraintthat shows up in mathematicaloptimization. In TOC, the constraint is used as a

focusing mechanism for management of the system. In optimization, the constraint is written intothe mathematical expressions to limit the scope of the solution (X can be no greater than 5).

The Theory of Constraints states that constraints determine the performance of a system. A constraint is

anything that prevents a system from achieving a higher performance relative to its goal. A system is any

collection of interconnected parts sharing a common goal. The Theory of Constraints was first applied to

business systems.

The theory of constraints is an important tool for improving process flows. The implications of the theory are far

reaching in terms of understanding bottlenecks to a process and better managing these bottlenecks to create an

efficient process flow.

The theory of constraints is an important tool for operations managers to manage bottlenecks and improve process

flows. Made famous by Eliyahu M. Goldratt in his book The Goal, the implications of the theory are far reaching in

terms of understanding bottlenecks to a process and better managing these bottlenecks to create an efficient process
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flow. Simply put the theory states, the throughput of any system is determined by one constraint (bottleneck). Thus

to increase the throughput, one must focus on identifying and improving the bottleneck or constraint.

Goldratt in another book, Theory of Constraints, outlines a five-step process to applying the theory:

1. Identify the process constraints

2. Decide how best to exploit the process constraints

3. Subordinate everything else to the above decisions

4. Evaluate the process constraint

5. Remove the constraint and re-evaluate the process

Synchronous manufacturing embodies various concepts related to focussing and synchronising

production control around bottleneck resources. These concepts are more commonly known as Theory

Of Constraints (TOC), bottleneck management, or the goal system. The main focus of synchronousmanufacturing is efficient utilisation of those resources that are most constraining and prevent additional

production.

Synchronous manufacturing coordinates the production process, improves workflows, thereby, reducing

operating costs, inventory, and lead times. As a "pull-type" system, synchronous manufacturing offers

several advantages in a repetitive manufacturing operation, such as for automobiles, computers,

consumer products, or integrated circuits (ICs).

For instance, the IC fabrication processes involves many steps with long cycle times. This makes them

vulnerable to production-rate variations, which in turn generates inventory waves or bubbles even in a

"balanced" operation. Synchronous manufacturing helps to reduce such unexpected inventory- and

operating-expense fluctuations. It also carries the benefits of higher throughputs and better customer

service

Definition of Synchronous Manufacturing

Synchronous manufacturing is a manufacturing management philosophy that includes a consistent set of principles,

procedures, and techniques, where every action is evaluated in term of the global goal of the system.

Synchronous manufacturing uses TOC as a way to incorporate forward scheduling. It focuses on critical resources so

that time-wise forward scheduling is done. Non-bottleneck or non-critical resources are used to resolve critical

constraint. Process-batch size and transfer-batch size are charged in synchronous manufacturing to reduce lead time

and WIP. A backward scheduling technique, such as MRP, cannot perform this task. Synchronous manufacturing is a

relatively newer approach, which uses forward scheduling to manage the production/manufacturing system. Just-in-

time (JIT)-based system of kanban-approach and Drum-buffer-rope (DBR)-based system of TOC-approach are the

two common types of forward scheduling approaches. MRP, on the other hand, is a backward scheduling approach.

In synchronous manufacturing, production occurs in different production centers; some centers have constraints that limit the rate

of production and some centers do not. Both types of centers must focus on using raw materials to produce goods that are near ly

ready for shipment to customers, with the production schedule closely following the level of customer orders. The manufacturer

saves money on the cost of transporting raw materials to production centers and by preventing the storage of raw materials near

production centers that aren't required for satisfying actual customer orders.


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This concept of synchronous manufacturing was started in 1984. It has been

defined as: an all-encompassing manufacturing management philosophy that

includes a consistent set of principles, procedures, and techniques where every

action is evaluated in terms of the common global goal of the organisation.

A set of seven principles are associated with synchronous manufacturing:

1. Do not focus on balance idle capacities; focus on synchronizing the production

flow.

2. The marginal value of time at a bottleneck resource is equal to the throughput

rate of the products processed by the bottleneck.

3. The marginal value of time at a non-bottleneck resource is negligible.

4. The level of tilization of a non-bottleneck resource is controlled by other

constraints within the system.

5. Resources must be utilized, not simply activated.

6. A transfer batch may not, and many times should not, be equal to the process

batch.

7. A process batch should be variable both along its route and over time.

According to synchronous manufacturing principles 2 and 3, the return on

improvements at a bottleneck resource is very high. But the return on

improvement made at non-bottlenecks is marginal at best. The synchronous

manufacturing philosophy required managers to focus on those areas

of operations where there exist potential global improvements.


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Material Requirement Planning ( MRP-I )

It is a part of production operation system. Management has to develop a lot of

strategies for production plan. In early 1960s a material acquisition plan was first

introduced known as Material Requirement Plan ( MRP-I ). MRP-2 is latest all-round development of that plan.

A brief history of MRP 1

Material requirement planning is a computerized production scheduling system

which takes the forward schedule of final product requirements (the master

production schedule) and translates it progressively into the numbers of sub-

assemblies, components and raw materials required at each stage of the

manufacturing cycle.

It is a management information system providing a basis for production decisions

when what is manufactured has a composite structure and when lead items are

important features. Obviously, the ability of the system to deliver what is required

in the correct place at the correct time will be dependent on the quality of

information which is put into the computer model.

Aims of material requirement planning:

1. Determine for final products namely, what should be produced and at what

time.

2. Ascertaining the required units of production of sub-assemblies.

3. Determining the requirement for materials based on an up-to-date bill of

materials file (BOM).

4. Computing inventories, WIP, batch sizes and manufacturing and packaginglead times.

5. Controlling inventory by ordering bought-in components and raw materials in

relation to the orders received or forecast rather than the more usual practice of

ordering from stock-level indicators.


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Benefits : Detailed forecast of the inventory position is highlighted period by

period.

What is MRP-II (Material requirements planning)?

A material requirements planning (MRP) system is a computer based inventory

information system which is used to plan and control raw material and

component parts inventories.

Pre-requisites for successful operation of MRP:

1. Strict adherence to the schedule : The successful operation of MRP system

requires a strict adherence to the latest production and purchasing schedules.

Workers must be educated to understand the importance of schedule adherence,

and controls should be in place to ensure this adherence.

2. Accurate data base : Data accuracy is vital to the system. If a plan is based on

inaccurate data it may be impossible to adhere to the schedule. For example, if

the bill of materials file is not updated to reflect any changes in product

composition it will be impossible to adhere to the schedule.

MRP II is the extension of MRP I

When the scope of MRP-1 is developed further which includes

1. Planning of raw material

2. planning of component & sub- assemblies

3. Compute the other resources e.g. machine or labour capacity

4. to create a full integrated plan for management

then it is known as Manufacturing resources planning ( MRP-II)

MRP II (also written MRP-2 ) adds the MRP schedule into a capacity planning

system and then builds the information into a production schedule. It is also seen


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as a link between strategic planning and manufacturing control. The sequence of

events is as follows :

A manufacturing, plan is developed based upon inputs from purchasing &

production. Adjustments may be necessary to allow for production rates.

Possible inventory levels in seasonal trades & the size of the workforce. The

manufacturing plan leads into a detailed master production schedule which is

akin to the original philosophy of MRP already outlined.

If correctly applied, MRPII provides a common data base for the different function

units such as manufacturing, purchasing and finance within a firm.

What are needed to operate MRP successfully?

A material requirements planning (MRP) system is a computer based inventory

information system which is used to plan and control raw material and

component parts inventories. Like all computer-based information system, MRP

systems can be divided into following:

i) Pre-requisite information

ii) System input

iii) System processing,iv) System output.

Material Requirements Planning:MRP calculates and maintains an optimum manufacturing plan based on master

production schedules, sales forecasts, inventory status, open orders and bills of

material. If properly implemented, it will reduce cash flow and increase
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profitability. MRP will provide you with the ability to be pro-active rather than re-

active in the management of your inventory levels and material flow.

Implementing or improving Material Requirements Planning can provide the

following benefits for your company:

Reduced Inventory Levels

Reduced Component Shortages

Improved Shipping Performance

Improved Customer Service

Improved Productivity

Simplified and Accurate Scheduling

Reduced Purchasing Cost

Improve Production Schedules

Reduced Manufacturing Cost

Reduced Lead Times

Less Scrap and Rework

Higher Production Quality

Improved Communication

Improved Plant Efficiency

Reduced Freight Cost

Reduction in Excess Inventory

Reduced Overtime

Improved Supply Schedules

Improved Calculation of Material Requirements

Improved Competitive Position


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The consultants at Inventory Solutions can provide an un-biased review of your

operations and make suggestions on how you can improve your process. If you want

the productivity improvements that MRP can deliver,contact Inventory Solutions

today.

MRP uses the following elements to plan optimal inventory levels, purchases,

production schedules and more:

Master Production Schedule (MPS)

Bill of Materials (BOM)

Quantity on Hand (QOH)

Part Lead Times

Sales Order Quantities / Due Dates

Scrap Rate

Purchase Order Quantities / Due Dates

Lot Sizing policies for All Parts

Safety Stock Requirements

Success of an operation department of any organization is dependent upon an efficientproduction plan. One of the key essential of a production plan is material and manufacturing

planning system. Material requirement planning plays a pivotal role in assembly-line production.Material requirement planning is a system based approach, which organizes all required

production material.

Material requirement planning is an information system for production planning based on

inventory management. The basic components of material planning are:

Material planning provides information that all the required raw material and products are

available for production.

Material planning ensures that inventory level are maintained at its minimum levels. But alsoensures that material and product are available whenever production is scheduled, therefore,

helping in matching demand and supply.

Material planning provides information of production planning and scheduling but also provides

information around dispatch and stocking.
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Objective of Material Requirement Planning

Material requirement planning is processed which production planning and inventory controlsystem, and its three objectives are as follows:

Primary objective is to ensure that material and components are available for production, andfinal products are ready for dispatch.

Another primary objective is not only to maintain minimum inventory but also ensure right

quantity of material is available at the right time to produce right quantity of final products.

Another primary objective is to ensure planning of all manufacturing processes, this scheduling

of different job works as to minimize or remove any kind of idle time for machine and workers.

Advantages and Disadvantages of Material Resource Planning

As with every system based process, material resource planning also has its advantages anddisadvantages, and they are as follows:

Advantages of Material Resource Planning

It helps in maintain minimum inventory levels.

With minimum inventory levels, material planning also reduces associated costs.

Material tracking becomes easy and ensures that economic order quantity is achieved for all lot

orders.

Material planning smoothens capacity utilization and allocates correct time to products as per

demand forecast.

Disadvantages of Material Resource Planning

Material planning is highly dependent on inputs it receives from other systems or department. If

input information is not correct than output for material planning will also be incorrect.

Material planning requires maintenance of robust database with all information pertaining

inventory records, production schedule, etc. without which output again would be incorrect.

Material planning system requires proper training for end users, as to get maximum out of the

system.

Material resource planning system requires substantial investment of time and capital.

Material Resource Planning Inter dependency of Business Function

Material planning not only benefits operation department but is also beneficial to the other

department of organization. They are as follows:

Material planning is useful in determining cash flow requirement based on material

requirements and final dispatch schedules.

It helps procurement team in scheduling purchase of necessary material.

It helps the sales team in determining delivery dates for final products.


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Implementation of Material Resource Planning

Implementation and success of material resource planning dependent on following factors:

Acceptability of by top management about advantages and benefits

Proper training and participation of all workers and personnel Precision and accuracy of input data for accurate and reliable results

MRP will plan production so that the right materials are at the right place at the

right time. MRP determines the latest possible time to product goods, buy

materials and add manufacturing value. Proper Material Requirements Planning can

keep cash in the firm and still fulfill all production demands. It is the single most

powerful tool in guiding inventory planning, purchase management and production

control. MRP is easy to operate and adds dramatically to profits.

Material requirements planning (MRP) is a production planning andinventorycontrol systemused tomanagemanufacturingprocesses. Most MRP systems aresoftware-based, while it is

possible to conduct MRP by hand as well.

An MRP system is intended to simultaneously meet three objectives:

Ensurematerialsare available forproductionandproductsare available fordeliveryto

customers.

Maintain the lowest possible level of inventory.

Plan manufacturing activities, delivery schedules and purchasing activities.

Contents

1 History

2 The scope of MRP in manufacturing

3 Problems with MRP systems

4 Solutions to data integrity issues

5 See also

6 References

7 External links

History

Prior to MRP and before computers dominated the industry, reorder-point/reorder-quantity

(ROP/ROQ) type methods like EOQ had been used in manufacturing and inventory

management. In the 1960s,Joseph Orlickystudied the TOYOTA Manufacturing Program and

developed Material Requirements Planning (MRP), andOliver WightandGeorge Plosslthen

developed MRP intomanufacturing resource planning(MRP II).[1]

. Orlicky's book is entitled The

New Way of Life in Production and Inventory Management (1975). By 1975, MRP was
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implemented in 150 companies. This number had grown to about 8,000 by 1981. In the 1980s,

Joe Orlicky's MRP evolved into Oliver Wight's manufacturing resource planning (MRP II) which

brings master scheduling, rough-cut capacity planning,capacity requirements planningand

other concepts to classical MRP. By 1989, about one third of the software industry was MRP II

software sold to American industry ($1.2 billion worth of software).[2]

The scope of MRP in manufacturing

The basic function of MRP system includes inventory control, bill of material processing and

elementary scheduling. MRP helps organizations to maintain low inventory levels. It is used to

plan manufacturing, purchasing and delivering activities.

"Manufacturing organizations, whatever their products, face the same daily practical problem -

that customers want products to be available in a shorter time than it takes to make them. This

means that some level of planning is required."

Companies need to control the types and quantities of materials they purchase, plan which

products are to be produced and in what quantities and ensure that they are able to meet

current and future customer demand, all at the lowest possible cost. Making a bad decision in

any of these areas will make the company lose money. A few examples are given below:

If a company purchases insufficient quantities of an item used in manufacturing (or the wrong

item) it may be unable to meet contract obligations to supply products on time.

Data requirements to operate material requirement planning system:

1. The master Production schedule: This schedule specifies the quantity of each

finished unit of products to be produced, and the time at which each unit will be

required.

2. The Bill of material file: The bill of material file specifies the sub-assemblies,

components and materials required for each finished good.

3. The inventory file: This file maintains details of items in hand for each sub-

assemblies, components and materials required for each finished goods.

4. The routing file: This file specifies the sequence of operations required to

manufacture components, sub-assemblies and finished goods.

5. The master parts file: This file contains information on the production time of

subassemblies and components produced internally and lead times for externally

acquired items.
http://www.wikipedia.org/wiki/Capacity_planninghttp://www.wikipedia.org/wiki/Capacity_planninghttp://www.wikipedia.org/wiki/Capacity_planninghttp://en.wikipedia.org/wiki/Material_Requirements_Planning#cite_note-1http://en.wikipedia.org/wiki/Material_Requirements_Planning#cite_note-1http://en.wikipedia.org/wiki/Material_Requirements_Planning#cite_note-1http://en.wikipedia.org/wiki/Material_Requirements_Planning#cite_note-1http://www.wikipedia.org/wiki/Capacity_planning


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Kanban control

A lean manufacturing system is one that meets high throughput or service demands

with very little inventory. Despite its significant success, kanban control is nota

perfect mechanism to control a lean system. Kanban control uses the levels of buffer

inventories in the system to regulate production. When a buffer reaches its presetmaximum level, the upstream machine is told to stop producing that part type.

This is often implemented by circulating cards, the kanbans, between a machine and

the downstream buffer. The machine must have a card before it can start an operation.

It can then pick raw materials out of its upstream (or input) buffer, perform the

operation, attach the card to the finished part, and put it in the downstream (or output)

buffer. The number of cards circulating determines the buffer size, since once all

cards are attached to parts in the buffer, no more parts can be made. When the

machine picks up raw materials to perform an operation, it also detaches the card thatwas attached to the material. The card is then circulated back upstream to signal the

next upstream machine to do another operation. This way, a demand for a unit of

finished goods percolates up the supply chain.

Kanban control. Movement of parts shown in blue, circulation of kanban in red. Machines are shown as circles and

buffers as triangles. The last buffer is the finished goods (FG) inventory.

Kanban control ensures that parts are not made except in response to a demand. The

analogy is to a supermarket: Only the goods that have been sold are restocked on the

shelves. However, it has a major drawback: It uses the parts themselves as carriers of

information. A machine is told to stop production when its output buffer is full. This

requires that a number of parts sit in the buffer without serving any apparent purpose

but to block the upstream machine.

That's not quite right, though. The parts waiting in a buffer do serve a purpose: They

act as a buffer inventory, partially decoupling the operation of downstream machines

from any interruptions of upstream production. If a machine fails, the machinedownstream of it can continue production by consuming the parts that are already in

the buffer. With luck, the upstream machine will be repaired before the buffer is

empty, and the failure will not affect the downstream machine (or the customer on the

downstream end of the chain).

But we can do this in a better way.


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CONWIP controlCONWIP stands for Constant Work-In-Process, and designates a control strategy that

limits the total number of parts allowed into the system at the same time. Once the

parts are released, they are processed as quickly as possible until they wind up in the

last buffer as finished goods. One way to view this is that the system is enveloped ina single kanban cell: Once the consumer removes a part from the finished goods

inventory, the first machine in the chain is authorized to load another part.

CONWIP control. Movement of parts shown in blue, circulation of release authorizations in green.

This leads to subtly different behavior from a kanban control. First of all, like kanban,the CONWIP system only responds to actual demands that have occurred, so it is still

a ``pull'' type system. But unlike kanban, the resting state of the system has all buffers

empty, except finished goods, which is full. This occurs because any part released to

the system will move to finished goods. New parts will not be released if the finished

goods buffer is full. The inventory in finished goods is now available to serve the

customer, and there is no internal inventory to collect dust.

But what about the buffer inventories and the decoupling against failures? Something

subtle called ``part/hole duality'' is happening. It is true that inventory in a buffer

protects the downstream portion of the line against the consequences of failuresupstream. But it does not protect the upstream portion of the line against failures

downstream. If a buffer is full, and the machine downstream of it fails, a kanban line

will stop production upstream of the failure, no matter how many raging customers

line up at the end. When the failed machine is repaired, it will suddenly impose an

increased workload on the upstream portion of the system, since it needs to catch up

with the demand.

The mostly empty buffers in a CONWIP line contain valuable (but cheap) empty

space. This space is used to decouple the upstream portion of the line against failures

downstream. If the last machine in the line fails, the customers will be served from thefinished goods buffer, while new parts will be released to the line as usual and

proceed to the buffer in front of the failed machine. There they wait for the repair.

When the machine is repaired, it has a sufficiently large number of parts in its input

buffer to catch up with demand and replenish the finished goods buffer.


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Empty buffer space acts to decouple the machines also in a kanban line. But there, the

control policy is tofill up the buffers whenever possible. And this is possible most of

the time, unless the demand rate is greater than the system capacity.

Something remarkable just happened: We separated the flow of parts and information.

Then we got a control policy that allows the same throughput and service levels askanban, but at lower inventories. Intuitively, the advantage over kanban will be larger

for systems with more stages (since there will be more internal buffers), and for

systems with more process variability (since that requires larger buffer inventories to

achieve the same throughput).

As an added bonus, the CONWIP control is even simpler to implement than kanban,

since just one set of cards is circulating.

But we can do even better than this.

Hybrid control

Sometimes, if the system is very heavily utilized or there is a bottleneck in the line,

the buffers towards the upstream end of a CONWIP line will have quite high levels.

On the other hand, kanban control was designed to prevent individual buffer levels

from exceeding designated limits.

Therefore, we construct a hybridcontrol policy where the CONWIP control is

supplemented with secondary kanban cells. These detect problems in the line, and

block release of parts to the line if they cannot be processed further. We do not need aseparate kanban cell to block the last machine, since any material that has gotten this

far surely will reach the finished goods buffer if the machine can do an operation. The

resulting control policy acts mostly like CONWIP, but at decreased inventories when

trouble occurs.

Hybrid CONWIP/kanban control. Movement of parts shown in blue, circulation of kanban in red, and release

authorizations in green.

Note how similar this is to a kanban control: We circulate cards between the machines

and buffers. The sizes of the buffers are determined by the number of cards in

circulation. The only difference is that cards detached from finished goods are passed


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to thefirstmachine instead of the last. From there, they follow the parts back to the

finished goods buffer.

How big is the improvement?

In our simulation studies, we have seen service improvements of more than 40%(average backlog) combined with inventory decreases of about 25%, compared with

the best possible kanban control of the line. This was a 10-machine line running at

about 80% utilization, where the parameters were chosen such that 75% of the

demand was served from stock in both cases. The advantage over kanban grows with

the length of the process, the degree of process variability, and the service level target.

The advantage of the hybrid policy over CONWIP grows with the system utilization.

Service level vs inventory for various parameter choices. Kanban in red, CONWIP/kanban hybrid in green.

This figure is generated from simulations of several hundred parameter configurations

for each of the policies. For each choice of buffer sizes and inventory limits (when

applicable), the system was simulated for two years, and the resulting service and

inventory levels were recorded. The service level orfill rate is the fraction of demand

for finished goods that is served from stock. The inventory is all material in the line

and in the finished goods buffer. In this plot, leanness is indicated by high service


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levels at low inventories, i.e., by points towards the lower right corner. Note that for

any target service level, many parameter choices for the hybrid policy achieve the

target with less inventory than the best kanban policy.

For example, to achieve 98% fill rate in the six-machine line where these data are

taken from, the best kanban policy has 66.6 units of inventory, and the best hybridpolicy just 49.2. This is a 26% difference.

Kanban (()?) (literallysignboardorbillboard) is a scheduling system forleanand

just-in-time(JIT) production.[2]

Kanban is a system to control thelogisticalchain from aproduction point of view, and is not aninventory control system. Kanban was developed by

Taiichi Ohno, atToyota, to find a system to improve and maintain a high level of production.

Kanban is one method through which JIT is achieved.[3]

Kanban became an effective tool in support of running a production system as a whole, and it

proved to be an excellent way for promoting improvement. Problem areas were highlighted byreducing the number of kanban in circulation.[4

Kanban Production Control System

Kanban: Card or other device that communicates demand for work or materials from the preceding

station.

Kanban is the Japanese word meaning "signal" or "visible record".

Paperless production control system.

Authority to pull, or produce comes from a downstream process.

Kanbans also govern the assembly or Parts' movement authorization

Kanban FormulaWe can mathematically construct the Kanban Formula, If we designate the following alphabets

N = Total number of containers ( Or Kanban Cards)

D = Planned usage rate of using work center

T = Average waiting time for replenishment of partsplus average production time for acontainer of parts
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Kanbans maintain inventory levels; a signal is sent to produce

and deliver a new shipment as material is consumed. These

signals are tracked through the replenishment cycle and bring

extraordinary visibility to suppliers and buyers.[1]

Purpose Logistic control system

Implemented at Toyota

Date implemented 1953

v t

e

.

This article describes the 8 types of Kanban system available and what you need to do to choose,design, implement, and operate Kanban systems, size buffer stocks (the number of Kanbans),choose containers and signalling mechanisms. It shows the need to integrate the system with your

planning systems. It includes the impact on people, accounting, materials handling systems andsome important do's and don'ts. This type of system belongs to a category of materials managementsystems called "pull" systems. (See Materials Management & Stock Control.)

Links on the left to related training and (for topics highlighted in red)further reading
http://en.wikipedia.org/wiki/Kanban#cite_note-1http://en.wikipedia.org/wiki/Kanban#cite_note-1http://en.wikipedia.org/wiki/Kanban#cite_note-1http://en.wikipedia.org/w/index.php?title=Template:Kanban&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Template:Kanban&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Template_talk:Kanban&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Template_talk:Kanban&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Template:Kanban&action=edithttp://en.wikipedia.org/w/index.php?title=Template:Kanban&action=edithttp://en.wikipedia.org/wiki/File:Kanban_principles.svghttp://en.wikipedia.org/wiki/File:Kanban_principles.svghttp://en.wikipedia.org/wiki/File:Kanban_principles.svghttp://en.wikipedia.org/wiki/File:Kanban_principles.svghttp://en.wikipedia.org/w/index.php?title=Template:Kanban&action=edithttp://en.wikipedia.org/w/index.php?title=Template_talk:Kanban&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Template:Kanban&action=edit&redlink=1http://en.wikipedia.org/wiki/Kanban#cite_note-1


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Types of Kanban Systems

You may previously have thought that there was only one, or maybe two types of Kanban system! Infact there are 6 main types, (plus two significant variants), (excluding 2 bin & 3 bin systems) andhere they are:

One card systems

In the above diagram:

A signal is sent back from the consuming process to supplying process (or supplier). This is a signal:

a. To send some more (a transfer batch), via a buffer stock.b. To produce some more (a process batch), at the supplying work centre.

NB. Empty containers acting as a signal are a potential hazard as any empty container is a signal tofill it. Also occasionally containers have been known to go missing! Usually, for these reasons, thesignal is separated from the container.

Input / Output Control Kanban (Two variants)Sometimes called the ConWip (constant work in process) system, this type imposes input / outputcontrol, where the signal travels directly from the end of a line or section to the preceding section orraw material stores. In this case the supply chain is treated as one unit rather than a series of linked

operations. So, as one transfer batch is completed (output) another is launched on the first operation(input), thus ensuring that work in process cannot build up. However there are some specialconsiderations required in the operation of the system, to avoid hidden capacity problems, which arenot so clearly visible when this method is used.

We have used adaptations of this system to manage workflow and capacity rather than materials ina number of environments including job shop & clerical / technical process environments.


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Kanban AccumulatorIn this method Kanban signals are allowed to accumulate at the supplying work centre until theproduction batch size is reached.

In this case buffers can be depleted or exhausted depending on the accumulation rules. Alsobecause buffers can be exhausted, slightly higher mixes can be accommodated.

Dual Card System (2 Card System) (Two variants)First used by Toyota, there are in fact now two types of two card system. The first method separatesthe replenishment (send some) signal, which is produced from the Kanban system, from the"produce" signal, which is produced by a scheduling system such as MRP. The purpose of each ofthe cards is as follows:

The scheduling system says which job is next. The Kanban says make it now. (I need some.)

The second variant of this method generates the second card (after authorisation) as a result of oneor more replenishment requests in a similar way to Kanban accumulators above.

These methods can deal with higher mixes. They can also deal with larger batch sizes, caused bylong changeovers, where scheduling is necessary, although you should be trying to reduce batchsizes (See Previous Technique: T019 Avoiding set ups and Reducing Changeover Times). In thiscase the buffer is depleted, and can be exhausted. In addition a longer planning system such asMRP1 (See "Levels of Planning & Control") is also necessary to that the system is durable. Kanbansystems operate at level 3 in this model.

Variable Quantity (fixed frequency) SystemIn some situations it is more convenient to replenish items used, by fixed frequency deliveries (orcollections), rather than respond to fixed quantity replenishment requests. This method forms thebasis of supplier "top up at point of use" systems, where a supplier visiting your point of use will topup stocks to a predefined maximum level. We have also used this method as the mechanism todrive "replacement systems" for maintaining stocks of critical spares items or maintaining "van stock"for on-the-road service engineers. (See Previous Techniques T015: Replacement Systems).

Also it is often better from a capacity viewpoint to use level scheduling techniques, (see PreviousBest Practice B005: Level Scheduling) to smooth demand, particularly in one-to-many supply chains(see below). (Also see Principle 4, ofLean Supply Chains: 13 Principles)

POLCA System("Quick Response Manufacturing" Rajan Suri)

This is mentioned for completeness only and is said to be prescribed for high-mix, variable-route,situations. However at this point, in our opinion, it is worth considering other simplification techniques(see "Organisational Redesign"), or as a last resort, the use of scheduling tools (See "AdvancedPlanning & Scheduling").
http://www.smthacker.co.uk/MRP1.htmhttp://www.smthacker.co.uk/MRP1.htmhttp://www.smthacker.co.uk/capacity_management.htmhttp://www.smthacker.co.uk/capacity_management.htmhttp://www.smthacker.co.uk/capacity_management.htmhttp://www.smthacker.co.uk/lean_supply_chains.htm#13Principleshttp://www.smthacker.co.uk/lean_supply_chains.htm#13Principleshttp://www.smthacker.co.uk/lean_supply_chains.htm#13Principleshttp://www.smthacker.co.uk/capacity_management.htm#APShttp://www.smthacker.co.uk/capacity_management.htm#APShttp://www.smthacker.co.uk/capacity_management.htm#APShttp://www.smthacker.co.uk/capacity_management.htm#APShttp://www.smthacker.co.uk/capacity_management.htm#APShttp://www.smthacker.co.uk/capacity_management.htm#APShttp://www.smthacker.co.uk/lean_supply_chains.htm#13Principleshttp://www.smthacker.co.uk/capacity_management.htmhttp://www.smthacker.co.uk/MRP1.htm


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Attributes of Kanban Systems

Some champions of Kanban Systems suggest that the system is universally applicable and has no

disadvantages. This is not true! There are some circumstances where they can be positivelyharmful. Also if they are not designed and managed correctly, disastrous! We have rescued several,and in two cases the system was responsible for accumulation of serious customer backlogs! Thesystem does have advantages and disadvantages and some of these are:

Advantages Low fixed stock (number of Kanbans in system) Low lead-time Quality problems visible Highly stable

Disadvantages Inflexible (transfer batch fixed, except with "Variable Quantity Systems" above) Can cause stoppages (often viewed as an opportunity to solve a problem) Highly stable! (But you may need to change due to changes in demand for example, or it

may be an unstable environment). Pull systems do not plan. They react!

Where appropriateThe technique can be applied to any pair of resources, or pairs in a series of resources (includingclerical operations), where one feeds the other. It is important to choose suitable pairs. However you

also need to be careful to select the appropriate Kanban system for your situation. Some systemsare more appropriate to particular situations. In particular the mix, variability, and numbers ofresources in the supply chain network (e.g. one-to-many, many-to-many, many-to-one) are key. Alsothere needs to be a method of handling small orders or prototypes (not difficult if thought about atthe start). (See Previous Readers Question Q019: When is Kanban not Appropriate? Do I need extraequipment?). There are also some prerequisites which you need to consider such as having aplanning process which is integrated with the Kanban system. (See " Participative Sales & OperationsPlanning"). If this is not done the system will eventually fail!

Note:

Just because yourend product or service is not suitable, it is possible that some aspect or segment

of your business may be suitable. It is quite possible and sensible to segment control systems to suitthe needs of different parts of a business. The skill is in selecting suitable segmentation strategies.But we have seen a number of examples of the "one size fits all" philosophy being positivelydamaging!

Kanban systems are one type of control system out ofmany, which may be appropriate for you. Youcan use ourexpert system to determine which you need, by completing our confidential freequestionnaire in "What Control Systems do I need?". (This service is not available to consultants.)
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Kanban System Design

Kanbans and Capacity

If the Kanban system is incorrectly designed it can significantly reduce output, by causing thesystem to stop unnecessarily even though there is still unsatisfied customer demand! (See thequestion at the end of the article on "Lean Manufacturing".) This can be avoided in a number of ways.

Kanban systems if overloaded will simply not be able to service replenishment requests.

Supply Chain DesignBefore attempting Kanban implementation in anything but the simplest situation the supply chainmust be defined. Unless a fixed method comprising of stable relationships between supplying

resources and consuming resources can be defined, there is no basis for a replenishment systembased on Kanban. The first mistake made by early Business Process Reengineering (BPR) / cellularmanufacturing exercises was to assume that the successive operations had to be physicallyrelocated. They do not! Indeed in some circumstances it is counterproductive, and certainly anexpensive exercise which is hard to justify and difficult, if not impossible, to implement in somecircumstances. (See Previous Readers Question Q019: When is Kanban not appropriate? Do I needextra equipment?). However in a FMCG manufacturing plant implementation, a sophisticatedoverhead moving gantry system was replaced with work trolleys, a classic case of removingcomplexity. This was made possible by aligning the processes first so that materials movement wasreduced. I.e. The need for transport & thereby the need for sophisticated materials handing wasremoved.

The process of designing the supply chain follows the principles of BPR (see " Organisational

Redesign"), but it is generally not a simple task.

Positioning of buffersBuffers can either be:

Held at the supplying workstation Held centrally Held at the consuming work station

Economies of scale, numbers of supplying and receiving work centres, or simply available space,

may need to be considered here.

Buffer sizing (Number of Kanbans in the system)There are two schools of thought on Kanban buffer design:

1. To over-specify the buffers and remove Kanbans one at a time (in operation) to identifysystem constraints which need to be overcome.
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2. To design the buffers to accommodate known constraints, and the observed statisticalvariation in supply and / or demand caused by variables whilst working on them.

We subscribe to the latter approach having seen significant operational difficulties arising out of theformer. One example was a new production line with only limited inter-operation space.Unfortunately the process capability was initially very poor resulting in large queues of work waiting

for rework. The resultant chaos was an island of machines surrounded by a sea of WIP. Also if youremove one Kanban too many you can stop output unnecessarily.

In another case we were implementing a Kanban system in a bicycle manufacturing company. Wetrained the shop floor supervisors in the technique one afternoon. The following day a supervisorcame up to us and said "We have implemented that Kanban System you told us about yesterday,but there is a problem. Will you come to help us?" Amazed and intrigued by this statement we wentto the section where the cycle frames were being welded. Each welding booth was in line forsuccessive welding operations, with a chalk-mark square on the floor between each booth, which ifempty was intended to signify that another frame was required by the downstream operation. TheWIP present the previous week had gone and everyone was working very hard. "So what is theproblem" I asked? "Well", replied the supervisor, "when the first operator puts the frame in the emptysquare the second operator burns his hand when he picks it up." This was a sobering lesson incorrect buffer sizing. The solution in this case was to have two frames in the square, to allow each tocool before the next operation.

A further popular misconception is that you only have to calculate the number of Kanbans at theoutset of implementing your system. This is false! Kanban populations must be regularly reviewedand adjusted in all but the most stable situations.

Buffers and BottlenecksBottlenecks have a significant effect on Kanban system design. In particular the position of thebottleneck in the supply chain is important to buffer size calculations.

Buffer Size CalculationsThe buffer sizing calculation is governed by provisions for:

1. Variables still remaining in the system such as: Demand changes Lead-time (see below) Breakdowns Preventative maintenance

Absenteeism Quality problems (rework etc.)

And the risk of changes occurring at the same time, or in quick succession.

2. The mixHigher mixes, if buffers are to be maintained, require higher buffers (to last while the item is notbeing supplied). The calculation is dependent on batch sizes, set up times, and the mix, but can be


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minimised by employing the techniques described in " Organisational Redesign", and selecting theappropriate Kanban system, or the use of a combination of Kanban systems.

3. Transport timeThis is the time from production of a batch at the supplying resource to the arrival at the consumingresource.

You cannot operate "Just in Time" if your supplier is in Japan, and you are in the UK, or in NorthernIndia if your factory is in the South in the monsoon season. This consideration on a smaller scaleapplies to all movements, but in particular applies to inter-site movement and other difficult transportsituations.

4. Container fill-timeSmall is beautiful as far as containers are concerned in Kanban systems. However it still may takesome time to fill a container before supplying the consuming resource, for which time there needs to

be a buffer.

5. Signal timeSlow signals require bigger buffers. However "electronic Kanbans" provided by some ERP softwareproviders are rarely required except for inter-site transfers and even then they are hard to justify overfax, email, or other methods.

6. Automated materials handling systemsWhen calculating automated materials handling storage capacities & traffic rates managed by

Kanban systems, further considerations are necessary, which we will not go into further here.

Supplied as part of our training courseM01 Designing, Implementing and Operating Kanban Systemsis aMicrosoft Excel Kanban calculator template, which you can use to help you to calculate the numberof Kanbans required.

Container sizes (transfer batch sizes)This is largely a question of convenience. Again, small is beautiful for containers in Kanban systems.However there is a trade off between small containers and traffic generated by the number ofcontainers.

PrioritisationIt may be necessary to prioritise the work of the supplying resource(s), since they may receivereplenishment signals from more than one consuming resource simultaneously. Prioritisation ispossible using a Traffic Light (RAG) system. (See Previous Technique T036: Traffic Light (RAG)systems)
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Signalling mechanismsAlmost every signalling mechanism devised by mankind has been used to signal a replenishmentrequest. Ones we have used include: Coloured lamps, cards, "lego", "sticklebricks", faxes, electronicautomated materials handling equipment, empty containers, chalk squares on the floor, in trays,magnetic blocks, coloured labels on a rack, rings on a peg, voice, EDI, kitting trolleys, work trolleys,kitting trays, potato hoppers, re-usable packaging, shipping containers and articulated trailers.

The considerations in this decision include distance, speed, volume and complexity of the signals.

Sanity checkingWhen the design is mathematically complete it needs to be sanity checked. This can be done invarying degrees of sophistication from simply asking what could go wrong in this situation, through tosophisticated computer simulations, (which we have been generally able to avoid).

Implementation

Ring Fencing

It is possible to implement Kanban in a part of your process (first) perhaps as a pilot scheme. Inwhich case you will need to buffer your Kanban system upstream & downstream from the (as yet)volatile remainder of your environment.

Priming the SystemIt is no good implementing from an unbalanced state. It is unlikely to recover. The system must beprimed. On the other hand you may be overstocked, and need to segregate or drain out surplusstock. There are serious capacity considerations here! If your system is to retain its credibility itcannot be allowed to fail. So take the time to get the correct buffers in position.

People

Culture

Further information on culture and culture change can be found at "Focused Improvement Systems","Culture Development Methods,", and Malpractice M004: "Creating the wrong culture".

Kanban systems are one of the simplest systems to operate but they do require a change of mindseton behalf of the operator. Namely it is no longer acceptable to produce unwanted inventory or toleave the work at your workplace rather than where it is needed next. These simple rules areactually really difficult to implement. But once understood and in particular when the benefits of pull
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systems over push systems are understood, they can become a way of life. Ignoring the humanaspects of Kanban systems operation will doom your implementation to failure!

The operator previously was used to operating in a sea of work in process and as such, he or shebelieved there was plenty of work about. The initial view of the workplace following implementationis that it is empty. This can be very disconcerting to the operator, who now thinks that there is no

work about and is anticipating that redundancy notices will shortly appear!

To overcome these problems education of all operators by something like our"M22 Kanban & LeanEnterprise Simulation Game" is essential and this must be a simulation to which your operators canreadily relate. We feel the most powerful method of conveying this message is by allowing operatorsto discover for themselves the benefits of Pull systems in an environment which is relevant to theirown, (mimicking your products and processes).

IncentivesIndividual "piecework" type incentive systems are bad news for Kanban operation since theyencourage activity rather than useful activity. These individual incentives can only be removed if the

culture is sufficiently developed to overcome the issues that arise by removing them. (SeeOrganisational Redesign, and Culture Development Methods.

Productivity measures

If you measure productivity by measuring activity you are heading for some difficulties sinceunneeded activity leads to unwanted stock and work in process. Again ourKanban & LeanEnterprise Simulation Game graphically demonstrates that "working smarter" is much moreimportant. (See Previous Malpractice M006: "Hitting The Numbers".)

Accounting for value-added in short lead-time, low Work in

Process (WIP) systems

It is a legal requirement to value stock at either its current value or net realisable value (ifobsolescent). If WIP however is small and manufacturing lead-times are short, WIP accounting andWIP tracking can be reduced. Perhaps one of our most difficult and recurring implementationproblems has been to persuade accountants to simplify theirmethods of productivity measurementand inventory valuation, so that shop floor data capture could be reduced!

If you collect "profit" in stock "added value", you will make a "loss" in your first Kanban year, becauseWIP is usually dramatically reduced. Our view is that you only make a profit when you sellsomething. Until then it is a liability! However you can usually persuade your accountant toaccept this loss by telling them how much cash will be released, and including them in the Kanban &Lean Enterprise Simulation Game.
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Operating Kanban Systems

The general health of a Kanban system can be measured using "eyeball control". If there is anaccumulation of unfulfilled Kanban signals, or no unfulfilled Kanban signals, you are heading for acrisis. Both of

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