Kanban Training for ABL Suppliers

Acuity Business SystemAcuity Business SystemAcuity Business SystemAcuity Business System

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KanbanKanban


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5 Elements of Lean Transformation5 Elements of Lean Transformation

U-shaped assembly cells Standard Work Point of Use Inventory Kanban Score Card


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Training AgendaTraining Agenda Why are we doing this? What is Kanban? When to use Kanban? Kanban information ABC Analysis Set up and Maintenance of Kanban Storage Areas Replenishment Methods Calculating Kanban Signals and Kanban Size When to Recalculate Kanban Purchasing Strategy Measuring Progress Kanban Audit Tool


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Why are we doing this?Why are we doing this?

Current process is not working Nonnegotiable Accountability


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What is Kanban?What is Kanban?

Defined:

Kanban is a pull system.

The Japanese word Kanban, loosely translated, means card, billboard, or signboard.

Kanban is used to control overproduction, for visual control, and as a way to link processes together.


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When to Use Kanban?When to Use Kanban?

When processes cannot physically be linked together in a cell.

With low dollar items that the business does not want to spend a lot of resources managing.

To help control inventory of high dollar items To facilitate lead time performance


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Information Flow

DCsBallast SupCustomer

Fab AreaSteel Sup

Gotham Cell

Material Pulled By Customers

Kanban is InformationKanban is Information

Manage inventory at the lowest level of the bill of material (raw material or purchased component)


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Manufactured Storage RackManufactured Storage Rack 2 Cards placed in pocket Material identification on

card and in box match material identification on rack

Parts stored back to back NOT side to side

Quantity in unused box matches quantity on card

Correct number of cards in loop


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Purchased Storage RacksPurchased Storage Racks 2 Cards placed in pocket Material identification on

card and in box match material identification on rack

Parts stored back to back NOT side to side

Quantity in unused box matches quantity on card

Correct number of cards in loop


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Overflow ProcessOverflow Process

Overflow ticket directs employee to use parts in Overflow area first


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Kanban Schedule BoardKanban Schedule Board

Traditionally found near/adjacent to cell

Used for both Purchased and Manufactured Parts

Visually shows expected arrival date for parts and late parts


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Kanban Drop BoxKanban Drop Box

Place where Kanban Cards are left for Buyer/Planner

This indicates to Buyer/Planner that the parts need to be ordered


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Kanban Card Key DatesKanban Card Key Dates Turn In Date

– Date the card was placed in Kanban Drop Box

Due Date– Date the part is

expected to arrive Receive (Receipt) Date

– Date the part was received


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1. Provides withdrawal or transportation information.• The subsequent process goes to the preceding process and withdraws

only the amount of goods indicated by the kanban2. Provides production information.

• The preceding process produces goods in the exact number and order withdrawn as indicated by the kanban

3. Prevents overproduction, over ordering or excess transport.• Do not produce or transport goods without a kanban• Prevents ordering extra inventory• When you empty a bin, turn in Kanban card

4. Acts as a work order.• Always affix a kanban to goods

Functions and Rules for the Use of Kanban



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5. Identifies process where defects are produced• Do not allow defective goods to proceed down the line. This demands

100% perfection at every process.6. Acts as a tool for inventory control and revealing

problems• Strive to reduce the number of Kanban• Never destroy or lose a Kanban card

7. Do not print on both sides of KB card

8. Do not change KB card quantity

9. Do not use parts from multiple KB bins

Functions and Rules for the Use of Kanban



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ABC AnalysisABC Analysis

Purpose of the ABC Analysis: The business goal is to have on time delivery while

minimizing inventory expense. We want to manage the most inventory dollars with our limited resources.

By closely managing A and B items (50% of the stock keeping units), we can control 95% of the inventory cost.


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Percent of Inventory Items

10 20 30 40 50 60 70 80 90 100

90

80

70

60

50

40

30

20

10

100

A

BC

Percent of

Annual Dollars

0



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ABC Analysis StepsABC Analysis Steps

1. Multiply annual volume by unit cost to obtain annual dollar volume for each stock keeping unit (SKU).

2. Rank SKUs in descending extended dollar amount.

3. Assign A, B, or C ranking to each SKU:

A = top 80% of dollars

B = next 15% of dollars

C = bottom 5% of dollars


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Kanban– A– B– C

Non Standard – A– B– C

On Hand Balance

Inventory Dollar Value

Inventory Category

Percentage of Items

80% A 20%15% B 30%5% C 50%

Criteria for Moving to Kanban

–Value – be mindful of expensive parts– Physical Size – large parts may not be candidates– >4 Hits – repetitive usage

MOVE


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Set up and Maintenance for KanbanSet up and Maintenance for Kanban

SET UP Calculate Kanban quantity based on ABC Analysis Produce Kanban cards (Utilize Bartender or other software

tools) Set up excess storage area and process for Kanban items.

– Move excess out of Point of Use (POU) unless item can fit in 2 bin system Put KB cards on containers Move all current KB materials to POU by cell and issue KB

cards and Spike cards as needed to support production Re-label racks with part #


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Set up and Maintenance for KanbanSet up and Maintenance for KanbanSET UP Set up Kanban board in each cell and populated as relocation

continues Move cardboard items out of area to alternate storage location Train cell personnel on Kanban and the functions of

buyer/planner, water spider and cell leader

MAINTENANCE Review shared component usages with other Focused Factories

within physical building. Biggest user should support all other focused factories.– Only one cell making releases on Kanban card to Sourcing or Supplier

Conduct audits


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Types of Storage AreasTypes of Storage Areas Receiving drop zone

– Organize by cell– First area where parts are delivered to facility

Point of Use– Located at cell– Used for standard parts– Replenished by POU storage racks

Discrete (DSY/Non Standard)– Organized by cell– Parts are ordered based on schedule cards– Waterspider will kit parts before storing in area– Always look for on hand inventory first

• Physically go to storage racks to verify • Do not rely solely on information in Oracle

– Physically move discrete parts to cell and identify as discrete parts only Excess Storage (Overflow)

– Organized by cell– Not intended to be a long term storage area– Used for Standard and Non Standard parts

Supermarket– Area with dedicated locations– Used to locate parts that are used by many cells


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Replenishment MethodsReplenishment Methods

Kanban– 2 card– Multiple card (greater than 2)

Discrete (DSY) from schedule cards


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Kanban CalculationsKanban Calculations

(Daily Usage x Lead Time) + Safety Stock

Container Capacity

Number of Multi KB bin/card

2 Bin/Card Capacity – The amount you should put in each bin

(Daily Usage x Lead Time) + Safety Stock*

+ 1

• Safety Stock = (Daily Usage x Lead Time) x Facility determined percent • Facility determined percent may differ for A, B, and C items or it may be the same• If daily usage is 100 units, lead time is 5 days, and facility determined percent is 10%, then

safety stock is (100 x 5) x .1 = 50 units• 2 Bin Capacity = (100 x 5) + (100 x 5) x .1 = 500 + 50 = 550 units per container

• Daily usage is 100 units, lead time is 5 days, facility determined percent is 10%, safety stock is 50 units, and Container Capacity = 100

• # of Multi KB bin/card = {[(100 x 5) + ((100 x 5) x .1)]/ 100} + 1 = (550/100) + 1 = 6.5 bins/cards --- round up to 7 bins/cards


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When should you recalculate your Kanban? When should you recalculate your Kanban?

Leadtime Changes (Increases or Decreases)

Supplier Performance (Improves or Declines)

Quantity per container Changes Standard Work Changes Customer Demand (Part Usage) Changes Audit Reveals Problems


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Measuring ProgressMeasuring Progress

Utilize existing +QDIP Measures

Delivery – Past Due Dollars or Target Compliance

Inventory – Inventory Dollars


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Kanban Audit DimensionsKanban Audit Dimensions

Audit should be based on the 5 parameters listed below:No Card - Material is thereNo Material - Card is thereNo Material - No Card on a KB itemMaterial being pulled from multiple binsMaterial is not in designated locationKanban Daily Audit

Yes No Yes No Yes No Yes No Yes NoA)

* B)

C)

D)

E) Material Being received in Correct Carton Qty / Match Card Qty

F) No Additional Containers Other Than KB Requirement

G)

Yes No Yes No Yes No Yes No Yes No

A)

* B)

C)

D)

E) Material Being received in Correct Carton Qty / Match Card Qty

F) No Additional Containers Other Than KB Requirement

G)

Yes No Yes No Yes No Yes No Yes No

A)

B)

C)

D)

Comments/Corrective Actions (If you answered 'NO' to any questions, state corrective action you will take to correct the problem):

Part # Part # Part # Part # Part #

Part # Part #

KB Schedule Card "Receipt Date (Date Order Received)" Noted

KB Schedule Card "Receipt Date (Date Order Received)" Noted

Part #

Kanban Storage Rack


Part #

Part # Part #

KANBAN DAILY AUDIT (In order to pass, you must respond 'Yes' to each question)Part #Part # Part #Part #


2 Cards placed on Container for each KB Component 1- KB Schedule Card, 1 - Goes to B/P to place order

Kanban Schedule Board

KB Schedule Card shows the date the card was placed on the board

KB Schedule Card "Release Date (Date order was placed)" Noted

KB Card(s) Placed in Drop Bin

Kanban Material Placed in Correct Location

Purchased Items

Manufactured ItemsKanban Storage Rack

If container is empty, card(s) is not on box and is on KB boardDo not audit this criteria if all bins are present and contain parts.

1- KB Schedule Card, 1-BackShop Card2- Cards Placed in Container for Each KB Component

KB Schedule Card Delivery Date (Date the Order is Expected to be Delivered) AND Placed on board under the correct delivery date

If container is empty, card(s) is not on box and is on KB board

KB Material Being Pulled From only 1 bin at a time

Do not audit this criteria if all bins are present and contain parts.Kanban Material Placed in Correct Location

KB Material Being Pulled From only 1 bin at a time

http://abs/ET/Resource%20Material_08/KB%20Audit%20Form.xls


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Purchasing StrategyPurchasing StrategyGoing forward the ABL Blanket Purchase Order Strategy will be as

follows:

Suppliers must deliver A and B type KB items within 1-5 days including transit time (a list of your A and B items will be provided to you)

Suppliers must hold inventory if mfg lead time is greater than 5 days

Supplier who has delivery performance that is less than acceptable, will be required to carry additional inventory to meet an acceptable delivery

performance

Each part number on A and B type items will have their own specific PO number to streamline receiving and invoicing transactions

ABL Supplier Development Group is available as a resource

SLC- If transit time > 4 days, it is supplier’s responsibility to engage a 3rd party warehouse or service to locate inventory closer to our facility.


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Maintaining KanbanMaintaining Kanban

Key to success:

Manage the Kanban

System


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Kanban


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Will a Forecast be provided?

Except for new components, forecast usage will not be provided. Upon exiting our current agreement, both a current-state and post-exit Kanban snapshot (including container quantity, number of containers, and lead time) will be provided for each component.

Going forward, it will be the supplier’s responsibility to monitor their sales history to generate usage information, and it will be up to each Focus Factory to communicate any Kanban set-ups changes to the supplier.


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How will you communicate spike orders or demand surges related to sales promotions?

When new orders reach our Assembly Cells, they are reviewed for extraordinary material requirements (“spike orders”).

Any demand surges related to spike orders or sales promotion activities will be relayed to suppliers by the Focus Factory Buyer.


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Who are our Focus Factory buyer contacts?

A list of Focus Factories and the Buyer(s) associated with each Focus Factory has been posted at the following link, along with other supplier-related instructional and informational documents:http://www.acuitybrandslighting.com/ABL_PartnerLinks.aspx

http://www.acuitybrandslighting.com/ABL_PartnerLinks.aspx


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How can I provide materials within 1 - 5 days if my transit time exceeds 3 days?

Suppliers facing this challenge should make arrangements to maintain inventory within 3 days transit of the Acuity destination facility.

Suppliers can either utilize a 3PL warehouse provider, or make arrangements with another Acuity supplier within the target distance who may be willing to manage your inventory locally.

Kanban Training for ABL Suppliers

Documents

Transcript of Kanban Training for ABL Suppliers