Microsoft Dynamics AX 2009 Lean Kanban

Microsoft Dynamics®

AX

Lean Kanban

User Guide

Date: August 2009

http://www.microsoft.com/dynamics/AX

SOLUTIONS

http://www.microsoft.com/dynamics/AX

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Table of Contents

Introduction ................................................................................................ 4 Assumptions ........................................................................................................................ 4 Kanban defined .................................................................................................................... 4 Process overview .................................................................................................................. 4

Setting up kanban ....................................................................................... 5 Overview ............................................................................................................................. 5 Kanban base parameters ....................................................................................................... 6

Control tab ....................................................................................................................... 7 Replenishment tab ............................................................................................................. 8

Kanban setup ....................................................................................................................... 9 Setup - basic tab ............................................................................................................... 9 Setup - advanced tab ........................................................................................................ 11 Setup - advanced static tab ............................................................................................... 12 Temporary kanbans tab ..................................................................................................... 13 Replenishment tab ............................................................................................................ 14 Versions tab ..................................................................................................................... 15 Tote size tab .................................................................................................................... 16 Subcontract tab ................................................................................................................ 16

Fixed kanbans ........................................................................................... 17 Fixed kanban types – Overview .............................................................................................17 Fixed purchasing kanban ......................................................................................................18

Setup purchased kanban – Overview/Setup - basic tabs ........................................................ 19 Setup purchased kanban – Setup - basic tab ........................................................................ 20 Receiving process for purchased vendor supplied kanban ....................................................... 21

Fixed replenishment kanban ..................................................................................................22 Setup replenishment kanban – Overview tab ........................................................................ 22 Setup replenishment kanban – Setup - basic tab .................................................................. 23 Setup replenishment kanban – Replenishment tab ................................................................ 23 Create replenishment kanbans ........................................................................................... 23 Kanban replenishment ....................................................................................................... 24

Fixed manufacturing kanban .................................................................................................24 Manufacturing kanban – General tab ................................................................................... 24 Setup manufacturing kanban – Setup - basic tab .................................................................. 25 Create manufacturing kanbans ........................................................................................... 25 Manufacturing kanban completion ....................................................................................... 26 Lean order schedule (LOS) Processing of manufacturing kanbans ........................................... 27

Subcontract kanban .............................................................................................................28 Subcontract scenarios ....................................................................................................... 28 Subcontract kanban setup ................................................................................................. 28 Subcontract tab ................................................................................................................ 29 Subcontract Receipt method .............................................................................................. 30 Payment methods ............................................................................................................. 30 Journal setup ................................................................................................................... 31 Subcontract only kanban ................................................................................................... 31 Subcontract partial process kanban ..................................................................................... 34

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Other kanban types ................................................................................... 38 Target and phased target kanbans .........................................................................................38

Target kanbans – Overview ................................................................................................ 38 Target kanbans – Example ................................................................................................. 39 Auto-create kanbans ......................................................................................................... 40 Phased target kanbans – Overview ..................................................................................... 43 Phased target kanbans – Example ...................................................................................... 43

Black hole kanbans ..............................................................................................................47 Black hole kanban – Overview ............................................................................................ 47 Black hole kanban – Example ............................................................................................. 48

Temporary and dynamic kanbans...........................................................................................51 Temporary kanbans – Overview.......................................................................................... 51 Temporary kanbans – Example ........................................................................................... 51 Dynamic kanbans – Overview ............................................................................................. 52

Pull-to-order and template kanbans .......................................................................................52 Overview ......................................................................................................................... 52 Example .......................................................................................................................... 52 Setup item template ......................................................................................................... 53 Check primary parameters ................................................................................................. 55

Generic kanbans ..................................................................................................................57 Overview ......................................................................................................................... 57 Example .......................................................................................................................... 57

Kanbans – Additional topics ...................................................................... 59 BOM printing on kanban ticket ...............................................................................................59 Converting manufacturing to subcontract kanban ....................................................................61 Date-constrained kanban ......................................................................................................62 Firming percentage ..............................................................................................................63 Free text printing on kanban ticket .........................................................................................64 PTO replenishment kanbans for manufacturing kanbans ...........................................................66 PTO replenishment kanbans for subcontract kanbans ...............................................................69 Quantity-constrained kanban .................................................................................................72

Kanbans and scrap .................................................................................... 73 Scrap percentage in production .............................................................................................73 Scrap replacement ...............................................................................................................76

Kanban visuals .......................................................................................... 79 Inventory status on visual board ............................................................................................79

Visual production .............................................................................................................. 80 Manufacturing stop go ..........................................................................................................81 Heijunka scheduling .............................................................................................................81

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Introduction

The kanban feature in Lean Manufacturing for Microsoft Dynamics AX 2009 provides a comprehensive solution for the management of kanban within a production environment.

In order to support the diverse production environments of users, there are several variations of kanban available, all of which are interoperable within a single company environment. These are:

1. Fixed

2. Target and phased target

3. Black hole

4. Temporary and dynamic

5. Pull-to-order and templates

6. Generic

All types of kanbans can support purchasing, manufacturing, or internal (store-to-store) replenishment.

This white paper discusses the principles of the kanban functionality and introduces the reader to initial configuration, methods of issue, and resupply.

Lean Manufacturing and quarantine management are not designed to be totally integrated.

Assumptions

It is assumed that the user will have knowledge and experience of the following modules in Microsoft Dynamics AX:

Production

Inventory management

Accounts payable

Kanban defined

The word kanban is Japanese for visible record. As such, kanbans have been adopted by many industries as a method of controlling production and internal supply.

Kanban is an essential part of a pull system of supply which is itself a critical element of Lean production and supply. When a kanban has been consumed, it should be passed (triggered) to the supplier, production, or supermarket that will replenish it.

Kanban may be cards or electronic records. Lean Manufacturing for Microsoft Dynamics AX 2009 will support both approaches, but greater benefits can be obtained through the use of alert capabilities that are linked to the use of electronic kanbans, which will provide a paperless, integrated internal and external supply chain, while providing high visibility throughout the business.

Process overview

The kanban feature is a central component of Lean Manufacturing for Microsoft Dynamics AX 2009. The feature defines how kanbans are to be used by associating a kanban record with its source of supply and its destination, the point of consumption.

You can also set rules for supply, trigger supply instructions, and, upon receipt of a full kanban, update inventory through purchasing, production, or an inventory transfer.

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Figure 1 – How a kanban record is related to points of consumption and sources of supply

A unique kanban record will be created for each location where an item will be stocked and consumed (the stock point). Stock points will be represented by warehouses in Microsoft Dynamics AX, and it is normal practice to create a warehouse record for each work center or cell where materials are consumed. Therefore, if an item is consumed in three cells within a production unit, there will be three

kanban records created and these will be linked to three warehouses. For each kanban record, rules will be set to determine how many physical kanbans are used at each stock point, the quantity of component carried, and the method of resupply for those kanban.

Setting up kanban

Overview

Kanban replenishment forms one of the key elements of a pull-based production system.

Kanban tickets are used to act as the trigger for product to be delivered from one step in the

production process to another. As such, it is important to understand that a kanban card is only presented to the point of supply when the items are required. No material is being supplied unless there is a demand for it.

In Microsoft Dynamics AX, the kanban functionality is designed to replicate the operation of a kanban pull system.

InternalManufacturingSupplied

Kanban

Kanban

Pull

ExternalPurchaseSupplied

Cell

Cell

Cell

Kanban

CustomerRequirement

Pull

Pull

Lean Manufacturing Environment

ReplenishmentSupermarketSupplied

Kanban

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As a minimum, the kanban feature allows material issues and replenishment to be managed by using

a simple process that can be reflected throughout Microsoft Dynamics AX. Thus, the receipt of a kanban from production triggers a series of processes that raise a work order, perform a goods receipt, and optionally back flush materials as one step.

Kanban base parameters

Lean manufacturing > Setup > Kanban parameters

Kanban Relationships

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Control tab

Icon visualization: Turns on the icons for the kanban planning board.

Kanban stock corrections journal: This journal name will alter the Microsoft Dynamics AX stock position, but it will not invoke the Kanban amendment form.

Empty color (kanban empty): Sets display color in session kanban parameters for all empty kanbans.

In use color (kanban warning): Sets display color in session kanban parameters for all in use kanbans that are not full or empty.

Nominal color (kanban full): Sets display color in session kanban parameters for all full kanbans.

Subcontract BOM journal: When a subcontract kanban of type Part of process or Final process is used, then the item that is transferred to the subcontractor is the parent item with the component items being consumed. This is achieved by standard BOM journal that you select here.

Subcontract transfer journal: The journal that is associated with the moving to and from the subcontractor warehouse.

Production order status: The status that the production order is closed to: Finished or Ended.

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Replenishment tab

Create PTO from sales orders: Will generate a PTO (replenishment) kanban to pull inventory from a warehouse to a shipping warehouse based on the kanban parameter setup (including template).

(For more information, see the Use LOS when kanban quantity insufficient field on the Lean order parameters form.)

Pull PTO kanban directly from source: If this parameter is selected, the PTO sales kanban will pull

directly from a manufacturing cell if there is insufficient inventory in any intermediate warehouse.

Kanbans in free locations: Normally locations are specified on the kanban (and the recommendation is, where possible, to not use locations). It is possible to hold kanbans in any location and allow the system to find them. See your administrator before setting this parameter.

Standard work package: A standard work package in this context relates to the amount of replenishment pulls that can be executed in any given period. Execution in this context is the actually physical process of getting inventory from the supermarket to its point of use. This parameter actually

controls the number of tickets that will be printed within the standard work package.

Job horizon: Number of days ahead that will be displayed on the Kanban replenishment form.

Empty kanban journal: Accounting journal used to empty a kanban.

Black hole journal: The profit/loss journal that is used to transfer material into a black hole warehouse.

Days ahead on replenishment: This is the number of days ahead that kanbans will be displayed automatically on the Kanban replenishment form.

For example, if Days ahead on replenishment is set at 3 days, today’s date is May 20, 2006, and the kanban was dated May 24, 2006, it would not be displayed.

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Kanban lead time: Picks up the lead time (kanban offset) that is associated with the kanban to determine the delivery date.

Delivery date for LOS release: Uses the delivery date in calculating the release date of PTO manufacturing kanbans.

Green hands only: Prints the kanban tickets when the inventory status of the kanban is Available (this is symbolized by an icon of a green hand).

For example, if one sales order produced two pulls, and one could not be satisfied, then this order would not be included in the standard work package.

Free standing kanban item: Lean Manufacturing for Microsoft Dynamics AX 2009 produces pulls based on the item code and the point of use (normally a warehouse). This is known as the kanban parameter and defines whether the item is under kanban control. Lean Manufacturing for Microsoft

Dynamics AX 2009 supports items under pull control and traditional control. Where we would like to create a pull (on a nonlean item), we do this by linking the item with the warehouse as a point of use.

The system will automatically create these pulls based on the template item (item code) and a template code.

Kanban template group: The default kanban template group (template code) that can be used if there is not one specifically set up for an item.

Kanban setup

Lean manufacturing > Kanbans

Setup - basic tab

Work cell: Work cell where the kanban is manufactured (if manufactured kanban).

Item number: Item number to be associated with the kanban.

Warehouse: The point of use, that is, where the kanban is stored.

Active: Activates the kanban.

Item name: Item name to be associated with the kanban.

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Subcontract: Indicates if the kanban will incur the subcontracting process.

None: No subcontracting is associated with the kanban.

Subcontract only: The components are given to the vendor who performs the service (for example, the assembly of the item) and returns the finished item, which goes directly into stock.

Start process: This represents the situation where a subcontract operation is to be performed before any other in-house operations. This is currently not supported.

Part of process: This represents the situation where a subcontract operation is to be performed during the overall process. That is, in-house operations will occur both before and after the subcontract operation.

Final process: This represents the situation where a subcontract operation is to be performed as the last operation, after which the item is deemed to be finished goods.

Quantity: The quantity of the item contained within one kanban. The quantity for the totes.

Kanban level: The number of kanban held at point of use. The number of totes to be generated.

Group code: The group code that is used for generating the unique kanban order records. Used for generating the sequential number for the kanban (ticket).

Item origin: The type of kanban: Replenishment, Manufactured, or Purchased.

Pull-to-order kanban: Indicates a pull to order kanban (versus fixed). It should be noted that pull-

to-order kanbans are designed to work with fixed kanbans and not target.

Profit/loss journal: The profit loss journal to be used in the background inventory transaction. Used for putting stock in/out of Microsoft Dynamics AX (for example, Initial stock load).

Transfer journal: The transfer journal to be used in the background for inventory transfer transaction. Used for replenishment kanbans.

Vendor account: The vendor account that is associated with the kanban. Used for supply chain management.

Purchase order: Purchase blanket order in association with the purchased kanban.

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Setup - advanced tab

Kanban in use: Identifies which unique kanban record is active and being consumed.

Dynamic: Select to update the kanban levels based on usage.

Kanban offset: The number of days offset.

Use manufacturing/purchase location: When using locations, a replenishment kanban (that pulls from a location type warehouse) would need to be set up for every location that inventory could exist

within. To avoid this problem, you can select this check box, which means that you would use the location that was used to place the inventory into the warehouse you are pulling from.

Trigger level: Used in target kanbans to specify the level at which the creation of additional kanbans will be triggered.

Check returned stock: Checks for material in the returned stock warehouse when deciding whether to schedule the order line or create a PTO.

Black hole: Used to designate a kanban that replenishes or is being replenished from the black hole

warehouse.

Tote code: Specify the code used to distinguish totes.

Maximum kanban quantity: Select to define the kanban as a maximum quantity kanban. When the total produced on this kanban reaches the defined maximum, the system will generate no more target

kanbans.

Maximum quantity: Specify the maximum inventory quantity above which target kanbans will no longer be generated.

Total quantity produced: A field that displays the running total of items produced. It is used in conjunction with a maximum quantity kanban.

Date constrained kanban: Select to define the kanban as a date constrained kanban. Beyond the specified constraint date, the system will no longer generate target kanbans.

Constraint date: Specify the constraint date beyond which kanbans will no longer be replenished.

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Setup - advanced static tab

High kanban boundry: The boundary at which the kanban color turns from green to yellow.

Low kanban boundry: The boundary at which the kanban color turns from yellow to red.

Kanban display group: Assigns the kanban to a particular kanban group. Used in determining the

kanban planning board visualization.

Use warehouse management: Triggers activities in a third-party warehouse management system.

Use combined warehouse: Used for the kanban template setup. If selected, you do not need to state a supply warehouse. By selecting this check box, you would be using this rule, regardless of

where it comes from. If you do have to state a supply warehouse, for each point of consumption you would need an individual template.

Customer account: The customer account that is associated with the kanban.

Manual kanban: Indicates that the kanban is manually emptied.

This means that back flushing is not being used and kanbans are not automatically emptied.

Minimum quantity: This is normally used on the stop/go board and as the minimum position (of inventory in the Kanbans form) that should be maintained within a cell.

Ratio: Ratio in terms of the item's consumption of drumbeat.

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Temporary kanbans tab

Number of temporary kanbans: The number of temporary kanbans to be created.

Temporary kanbans are used to accommodate temporary surges in demand. The kanban will not renew after the end date.

Temporary quantity: The quantity per temporary kanban.

To date: The period where the temporary kanban is active until.

From date: The period where the temporary kanban is active from.

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Replenishment tab

Kanban location: If the item uses the storage dimension Location, specify a location for the item within the point of use warehouse.

Replenishment warehouse: The warehouse that is used to replenish this kanban. The

replenishment warehouse is often referred to as the supermarket.

Replenishment location: If locations are used in the supermarket (warehouse), this field will define the location from where material is picked to replenish this kanban.

Black hole: Used to designate a kanban that replenishes or is being replenished from the black hole warehouse.

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Versions tab

BOM: The BOM version to be associated with the kanban.

Route number: The route number to be associated with the specific kanban instead of using the default.

Quantity: The physical stock recorded in Microsoft Dynamics AX.

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Tote size tab

Kanban group code: The group code that is associated with the kanban tote. Used for generating the sequential number for the kanban (ticket).

Tote code: The code that is used to distinguish totes.

Subcontract tab

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Warehouse: The subcontract warehouse that is used to hold the item/inventory while the goods are at the vendor (subcontractor).

Vendor account: The vendor account defines the vendor (subcontractor) who undertakes the service. Select the vendor account that represents the subcontractor.

Blanket order: The blanket order for the subcontract arrangement.

Payment item: The payment item is from the line on the blanket order that will be used to pay the supplier. The price comes from the item/blanket order line.

Receiving method: When determining how to move the inventory from the subcontractor warehouse to the kanban warehouse for Part of Process and Final Process type kanbans, there are two options: Production order or Transfer journal.

The following are the recommended settings:

Subcontract only: Production order (must be used if components need to be consumed).

Start of process: Production order (must be used if components need to be consumed).

Part of process: Production order.

Final process: Transfer order (either can be used).

Sub contract kanban type:

Consignment: This is where material has been supplied to the subcontractor by another route;

for example, on consignment and it is not being supplied with the kanban. This means that when the kanban is sent to the supplier, no material actually moves to the subcontractor as he already has it. This is only applicable on subcontract kanbans of type All subcontract.

Discrete: This is where material moves to the subcontractor with the kanban.

Fixed kanbans

Fixed kanban types – Overview

There are three types of fixed kanban that are used for purchasing, replenishment, and

manufacturing.

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Note: A true Lean enterprise would deliver the product directly to the cell warehouse, and the replenishment kanban process would not be required.

Fixed purchasing kanban

Before purchasing kanbans that can be used, it is necessary to create a purchase blanket order in

Microsoft Dynamics AX. This will normally be created to cover a significant period, typically one year, and it will include the price and delivery warehouse.

Main

Warehouse

Supplier

Main

Warehouse

Cell

Warehouse

PURCHASE

KANBAN

REPLENISHMENTK

ANBAN

MANUFACTURING

KANBAN

Associated with a

Work Cell

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Setup purchased kanban – Overview/Setup - basic tabs


New purchase kanbans are created by using the Overview and Set up tabs in this form.

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Setup purchased kanban – Setup - basic tab

In the Item origin field, select Purchased.

In the Vendor account and Purchase order fields, select the vendor account and purchase blanket order.

In the Quantity and Kanban level fields, enter the kanban quantity and kanban level.

In the Group code field, enter akanban group code.

In the Profit/loss journal and Transfer journal fields, select the profit and loss and transfer journals.

Click the Create kanbans button to create purchased kanbans.

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Receiving process for purchased vendor supplied kanban

Lean manufacturing > Journals > Kanban purchasing

In the Quantity supplied column, enter the quantity for the kanban.

The kanban is marked prior to selecting receive kanban.

A purchase order is automatically created for the kanban quantity as a call off from the blanket order.

The delivery note is generated and may be selected for printing as shown in the following screen shot.

If the vendor supplies the goods with the kanban barcode (as attached to the e-mail schedule), the delivery may be received by scanning of the barcode.

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Lean manufacturing > Periodic > Bar code scanning > Mobile bar code scanning > Kanban bar code entry

Fixed replenishment kanban

Setup replenishment kanban – Overview tab


New kanbans are created on the Overview tab.

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Setup replenishment kanban – Setup - basic tab

In the Item origin field, select Replenished.

Setup replenishment kanban – Replenishment tab

This is the warehouse where the inventory is being pulled from. Warehouses are mandatory; the use of locations is optional.

Create replenishment kanbans

Click the Create kanbans button to create new kanbans.

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Kanban replenishment

Lean manufacturing > Journals > Kanban replenishment

Kanbans are replenished when inventory is taken from the replenishment warehouse to the kanban warehouse. To do this, select the Marking check box for the kanban and click Replenish.

Production of the kanban is optional, depending upon the setting of the relevant parameter.

Fixed manufacturing kanban

Manufacturing kanban – General tab


New kanbans are created by using the General tab. The warehouse on the General tab is the warehouse that the manufactured item will be moved to after production.

The cell is A1 and an associated warehouse is required to store material at the cell.

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Setup manufacturing kanban – Setup - basic tab

The item origin is set as manufactured for a manufacturing kanban.

Create manufacturing kanbans

Click the Create kanbans button to create three kanbans.

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Manufacturing kanban completion

Lean manufacturing > Journals > Kanban manufacturing

Completion of manufacturing is recorded by selecting the kanban, by confirming the quantity, and by clicking Firm.

This causes a standard Microsoft Dynamics AX production order to be created, reported as finished and posted.

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Lean order schedule (LOS) Processing of manufacturing kanbans

Manufactured kanbans can also be processed by using the Lean order schedule. This process is used based on the parameters in the work cell that is associated with the kanbans:

LOS book to order (BTO) cell:The LOS BTO cell check causes manufacturing kanbans to be loaded on the schedule.

Manual kanban release:The manual release check puts the manufacturing kanbans on the Heijunka

board before loading them on the schedule. They must then manually be placed on the Lean order schedule.

Statuses:Once the manufacturing kanbans are created, they will either have the status LOS BTO loaded or LOS BTO generated, depending on whether the Manual kanban release check box is selected in the Work cell column.

Those with the status LOS BTO generated will automatically be scheduled on the LOS. Those with

the status LOS BTO loaded will be found on the Heijunka board and must manually be firmed before

appearing on the LOS.

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After the kanbans appear on the LOS, they can be processed as a normal entry, and at the point of

receive, they will then change to the status Received.

Subcontract kanban

Subcontract scenarios

The subcontract functionality allows for any of the following three scenarios:

1. Subcontract only – The components are given to the vendor who assembles the item and returns this assembled item to use. This assembled item is then placed in stock and the kanban

updated. The components are initially transferred the subcontractor’s warehouse and then consumed from there by a production order back flush. The vendor is then paid for the service. This type of kanban is initially displayed on the Kanban manufacturing form. It is recommended, but not mandatory, that a subcontractor cell that represents the subcontractor is established.

2. Partial process – This represents the situation where a subcontract operation is to be performed

during the overall process. That is, in-house operations will occur both before and after the subcontract operation. Here the cell performs some work (for example, converting components into the assembled item), and then gives the assembled item to the subcontractor for some form of service. The subcontractor then returns the item to the cell for further work. In this scenario, the assembled item is moved to the subcontractor’s warehouse and consumed from there when eventually finished. The subcontractor is then paid for the service.

3. Final process – This represents the situation where a subcontract operation is to be performed as

the last operation, after which the item is deemed to be finished goods. This is similar to the partial process above with the exception that when the kanban is returned from the subcontractor it goes to its point of use in a received state. The subcontractor is then paid for the service.

Subcontract kanban setup

A kanban is set up as one of the subcontract processes. The option None is the default value and indicates that the kanban will involve no subcontract activity.

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Subcontract tab

This defines:

The subcontract warehouse that is used to hold the item/inventory while the goods are at the

vendor (subcontractor).

The vendor account defines the vendor (subcontractor) who undertakes the service.

The blanket order for the subcontract arrangement.

The payment item is from the line on the blanket order that will be used to pay the supplier. The price comes from the item/blanket order line.

The subcontract receive method allows you to choose how you want to move the inventory from the subcontractor warehouse to the kanban warehouse, if you select subcontract kanbans of type

Part of Process or Final Process. The options are Production order or Transfer journal.

Select the subcontract kanban type:

Consignment: When material has been supplied to the subcontractor by another route; for example, on consignment and it is not being supplied with the kanban. This is applicable only to subcontract kanbans of type Subcontract only.

Discrete: When material moves to the subcontractor with the kanban.

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Subcontract Receipt method

When determining how to move the inventory from the subcontractor warehouse to the kanban warehouse for Part of Process and Final Process type kanbans, there are two options: Production order or Transfer journal.

The following are the recommended settings:

Subcontract only: Production order (must be used if components need to be consumed).

Part of process: Production order.

Final process: Transfer order (either can be used).

Payment methods

The payment method defines whether a purchase order is raised to pay the vendor or whether standard auto-pay is invoked.

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Journal setup

The following journal types and journal names must be set up in Microsoft Dynamics AX:

These journals are used to move inventory to and from the subcontractor’s warehouse.

Subcontract only kanban

Kanbans are raised in the normal way.

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These kanbans are displayed on the Kanban manufacturing form. Note that the subcontract has not been performed, and the Subcontracting button is available.

The kanban is sent to the supplier by clicking Send after selecting the required line and confirming the quantity.

This creates a BOM journal that consumes the components following normal Lean rules (back flush

and so on). The assembled item is placed at the subcontractor’s warehouse.

The kanban is now represented at the vendor by appearing on the Subcontract kanbans form.

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The status of the kanban is Sent to contractor, and it no longer appears on the Kanban manufacturing form:

The subcontractor now performs the service, and the assembled items arrive back and are placed in their point of use. This is reported on the subcontractor form by selecting the Mark check box and clicking Receive.

Confirmation of the service is printed, and a purchase order for payment created.

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Subcontract partial process kanban

Kanbans are raised in the normal way.

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These are displayed on the Kanban manufacturing form. Note that the subcontract has not been performed, and the Subcontracting button is available.

The kanban is sent to the supplier by clicking Send after selecting the required line and confirming the

quantity.

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This creates a BOM journal that consumes the components following normal Lean rules (back flush and so on). The assembled item is placed at the subcontractor’s warehouse.

The kanban is now represented at the vendor by appearing on the Subcontract kanban form.

The status of the kanban is Sent to subcontractor, and it no longer appears on the Kanban manufacturing form:

Confirmation of the service is printed, and a purchase order for payment created.

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The kanban now reappears on the Kanban manufacturing form with the Subcontracting complete field selected.

As this subcontract operation is only part of the process, the remaining work is completed. At this point, the item inventory is still at the subcontractor’s warehouse until the receive action is performed. This raises a production order (and updates the kanban) in the normal way. The warehouse that is displayed on the BOM, however, is replaced by the subcontractor’s warehouse. The route remains the active route for the item.

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The kanban is now received, and the inventory updated accordingly.

Other kanban types

Target and phased target kanbans

Target kanbans – Overview

Target kanbans differ from fixed kanbans in using a target inventory as the means of determining how many electronic tickets are in circulation. A trigger level is defined for each item at its point of use and when inventory falls below the trigger, sufficient kanban tickets are generated to authorize resupply

up to the target level.

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Target kanbans – Example

In this example, we will show the use of target kanbans to keep the inventory of a manufactured item to a maximum of 1000.

Item setup

Enter the new item number as a manufactured item GD7-1.

Enter the item group Kanban.

Enter the item type BOM.

Set the sales warehouse as GW on the item.

Create the work cell GD7.

Setup of target kanban

Lean manufacturing > Journals > Kanban > Target kanbans

Note entry of Target total kanban quantity (1000) and the Trigger quantity (100) on the Overview tab. The quantity 500 is entered on the Setup - basic tab.

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Select Auto create target kanbans on the Target info tab.

Auto-create kanbans

Click the Create target kanbans button.

Two kanbans are created and can be completed by clicking the Firm button on the Kanban

manufacturing menu.

The auto create process works on the principle of virtual kanbans. As with targets, there is no physical

tote. Therefore, a pull is only executed when a virtual kanban is empty. For example:

Inventory = 30

Target = 30

Trigger = 10

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In Microsoft Dynamics AX, a transaction is performed that reduces the 8. 2 pulls for 10 (total of 20) will be executed as two virtual kanbans have been emptied. Three kanbans pulls would only be executed if the inventory goes to 0 (zero).

Repeat the preceding process for each of the two kanbans to manufacture inventory up to the

maximum target total (1000).

Creation of a sales order to generate demand

Create a sales order from warehouse GW for a quantity (950), which will reduce inventory below the trigger.

Both the inventory (1000) and the demand (950) are now visible on the Kanbans form.

Automatic generation of new target kanbans

If the delivery note is now posted for the full quantity (950), on the preceding order, a new kanban

will be generated.

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Demand is now 0 (zero) and inventory level is 50.

One new kanban ticket has been automatically generated.

If a second sales order is now entered for a quantity (50), to reduce the inventory to 0 (zero), a second kanban for a further quantity (500) will be automatically generated to return inventory to the target total (1000).

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Phased target kanbans – Overview

Phased target kanbans are a variation that allow the planner to define a supply profile that will allow the target inventory to be achieved over several user-defined periods. For example, where seasonal

inventory is built and the quantity planned is so great that it would overwhelm production capacity, dating the requirement will allow the inventory to be built-up in stages.

Phasing can be planned manually or derived from the sales forecast. The effect will be to generate

kanban tickets and a dated production schedule that displays the percentage of target to be produced.

Phased target kanbans – Example

Item setup

The item that is used in this example has been setup as shown in the following screen shot.

Setup of phased target kanban

Lean manufacturing > Journals > Kanban > Phased target kanbans

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In the Kanbans form, on the Overview tab, the target-dated kanban check box is selected.

The Setup – basic tab is similar to an ordinary target kanban.

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Click the Target phased (1) button to define time-phased supply profile.

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Generate Time-phased kanbans – Action.

Click the Create phased kanbans (1) button.

Click the View kanbans button.

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Click View phased schedule (y). Note how production is phased to meet the target dates.

Time-phased kanbans are built for stock. The sales order process is not used to regenerate kanbans, but a new schedule will be generated when the first has been completed.

Black hole kanbans

Black hole kanban – Overview

In an ideal lean solution, work in progress is reduced to a minimum and is not tracked in inventory. Material is consumed to the value stream, and the products are valuated against what is consumed over a period of time. In this implementation this is addressed by the usage of a “black hole”. Material that is moved into a black hole is expensed to the value stream. Products received from the black hole

create a profit for the value stream.

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Imagine a cell that produces subassembly in a totally lean visual way. We need to assist with the material going in, and the subassembly once produced only becomes visible to the system once produced.

Lean Manufacturing for Microsoft Dynamics AX 2009 supports both methods of operation through

black hole processing. Kanbans designated as black hole allow inventory to be received without performing the usual range of transactions to manage the production area. Cells may be managed through manual techniques and then a receipt transaction performed to book the manufactured item into inventory. This method, when deployed by Lean Manufacturing for Microsoft Dynamics AX 2009, allows both worlds to coexist, and more importantly, to work together.

Black hole kanban – Example

Replenishment kanban – into a black hole

We have 200 of part TXX05 in the main warehouse MW.

A replenishment kanban is created as detailed in the following example. The Black hole check box on the Setup - advanced tab is selected because we are to move the parts into a black hole.

The replenish from warehouse is not a black hole, and the Black hole check box on the Replenishment tab is not selected.

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If the replenishment kanbans are then created, and one of the kanbans is replenished, the inventory position is as shown in the following screen shot. The kanban has moved the items into the black hole,

and they are no longer visible in inventory.

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This inventory movement is accounted for by the creation of an Inventory black hole profit/Loss journal.

Replenishment kanban – not to a black hole

In contrast, the following examples shows what would have happened if the Black hole check box

had not been selected on the kanban Setup - advanced tab. The inventory remains visible in inventory in warehouse 006.

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In this case, the transaction is accounted for through a normal Inventory transfer journal.

Temporary and dynamic kanbans

Temporary kanbans – Overview

It is possible to create temporary kanban records for a point of consumption. These are used when it is necessary to increase the number of tickets in circulation to cope with temporary surges in demand, each temporary kanban record having a start and end date. When a temporary kanban is emptied after its end date, the system will not renew its record and thus the level of WIP is decreased.

Temporary kanbans – Example

In the following example, we have established three fixed kanbans, each with a quantity of 30.

Additional temporary kanbans may be set up on the Temporary kanbans tab on the Kanban

parameters form.

Click the Create kanbans button to generate additional kanbans, active during the period specified.

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The two additional kanbans are indicated by a T in the Kanban order column.

Dynamic kanbans – Overview

If an item is set to support dynamic kanbans, the number of tickets in circulation can be allowed to increase or decrease automatically in accordance with sales order demand. Where the quantity

ordered exceeds the quantity covered by the kanban records in circulation, the number of tickets will be increased to cope with the demand. As demand is satisfied, the number of kanban records will reduce to the original level.

Pull-to-order and template kanbans

Overview

Lean Manufacturing forMicrosoft Dynamics AX 2009 provides flexibility in how kanban inventory can be managed for low-usage and to-order items.

By designating a kanban as pull-to-order, an electronic ticket will be generated only when there is a pull from a sales order. Where this happens, the order number forms part of the ticket’s identity and inventory can be reserved automatically for the end-demand when the material is received at the

point of consumption. The parameter that controls the reservation is the Reserve stock parameter of the work cell. Pull-to-order kanbans do not operate under target kanban rules.

To allow for flexibility in the supply chain, it may not be possible to define kanban rules for every possible item and point-of-use combination. Therefore, templates are available to provide kanban rules where customer pull requires inventory to be taken from a warehouse not usually available for such a requirement. In such a case, a pull-to-order kanban is generated by using rules that are defined in the template.

Example

Create item for template

An item is created for use in the kanban template.

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Setup item template

Lean manufacturing > Setup > Kanban > Grouping > Kanban templates

Open the Kanban template form, and create a kanban record as normal. The example is for a PTO replenishment kanban.

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In the Kanban template group field, select the kanban template to be linked to the item that you want it to be under Lean control.

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Check primary parameters


Verify that the primary parameters are set for PTO direct from sales orders.

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Enter sales order

Create a sales order for the item. Note the Lean status on saving the order.

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Lean manufacturing > Journals > Kanban replenishment

Open the form and search for the replenishment kanban for the item. Note the from and to warehouses based on the kanban template.

The kanban order is referenced to the sales order.

Generic kanbans

Overview

To support minor variations in item configuration, generic kanbans can be used to allow inventory to be managed at a generic level without the complication of maintaining supply rules for all possible variations.

For example, a component part may be used with many variations of color scheme and pattern. If setup times and cost allow, kanbans may be maintained at the generic component level only and

when a particular variation requires replacement, a ticket can be generated manually with the user entering details of the specific color/pattern required.

This approach may reduce dramatically the overhead required to maintain kanban rules for every possible configuration.

Example

Lean manufacturing > Setup > Kanban > Numbers > Kanban generic number

The product options, for example, the color, are set up on the Kanban generic number form.

Before generic kanbans can be created, the item must be attached to a family group and Lean order schedule. For more information about family groups, see the Lean Order Schedules (Book to Sales Order) user guide.

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Click the Create generic kanbans button, and enter the kanban quantity, kanban generic number and number of tickets.

The required quantity of kanbans is created.

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Three additional kanbans of the color Red have similarly been created. They are displayed in the form

where the Kanban generic number column has been added to the standard form by the user.

Kanbans – Additional topics

BOM printing on kanban ticket

By using this functionality, it is possible to have the system print the bill of material (BOM) for the item when printing the kanban ticket.

The BOM will print as the second page of the ticket, or on the back of the ticket if a duplex printer is used.

Setup

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Converting manufacturing to subcontract kanban

By using this functionality, it is possible to convert a kanban that was originally set up as a

Manufacturing type to a Subcontract type. After this has been done, the kanban is processed in the same manner as a regular subcontract kanban.


Enter appropriate data, and then click OK.

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Note that the Subcontracting button is now active, and the kanban can now be sent to the subcontractor. From this point, the kanban is processed as a regular subcontract kanban.

Date-constrained kanban

By using this functionality, it is possible to prevent any more target manufacturing kanbans from being generated after a specified date.

This will be of help where it is necessary to limit the time period that manufacturing takes place for a

specific item.


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Firming percentage

By using this functionality, it is possible to have the system show a warning if it is attempted to firm a manufacturing kanban for a quantity greater than a specified percentage more than the kanban size.

This feature typically aids in preventing a user entering an erroneous value.

Setup


The following example shows a condition where a value of 1200 has been entered when firming a kanban of size 1000.

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Free text printing on kanban ticket

By using this functionality, it is possible to have the system print free text on the kanban ticket.

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You must previously have specified the text that you want printing at the item level by using the document handler.


Inventory management > Item details

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PTO replenishment kanbans for manufacturing kanbans

In the case of a manufacturing kanban, where component parts are stored in different warehouses, you may be required to transfer all of them to a single warehouse prior to commencing manufacture. One way of doing this is to generate PTO replenishment kanbans for the component items from the manufacturing kanban for the finished item.

Setup

For the purpose of this example, the warehouse into which the components are moved prior to being manufactured, we will call the Consolidation Warehouse. In this example, this warehouse is RPACK.

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It is very important that the following is set up:

The BOM of the manufactured item must draw all of the components from the Consolidation Warehouse, RPACK.

The to warehouse that is specified in all of the PTO replenishment kanbans must be the

Consolidation Warehouse, RPACK.

The following screen shot shows the BOM for PItem, the item to be manufactured.

The following screen shot shows the PTO replenishment kanbans for the components, PComp1,

PComp2, and PComp3.

The setup of the PTO kanban is typical.

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In the kanban manufacturing session, selecting the required kanban, and then clicking the Release button will generate PTO.

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After these kanbans have been executed, the regular manufacturing kanban process can be followed.

PTO replenishment kanbans for subcontract kanbans

In the case of a subcontract kanban, where component parts will be sent to the subcontractor, it may be expedient to move them from the different warehouses where they are stored, to a single warehouse from where they will all be shipped to the subcontractor. One way of doing this is to generate PTO replenishment kanbans for the component items from the subcontract kanban for the finished item.

Setup


For the purpose of this example, the warehouse into which the components are moved prior to being sent to the subcontractor, we will call the Consolidation Warehouse. In this example, this warehouse is RPACK.

It is very important that the following is set up:

The BOM of the subcontract item must draw all of the components from the Consolidation Warehouse, RPACK.

The to warehouse that is specified in all of the PTO replenishment kanbans must be the Consolidation Warehouse, RPACK.

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The following screen shot shows the BOM for SCManufItem, the item to be subcontracted.

The following screen shot shows the PTO replenishment kanbans for the components, SCPTOPart1, SCPTOPart2, and SCPTOPart3.

The setup of the PTO kanban is typical.

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In the kanban manufacturing session, select the required kanban, then click the Release button.

This will generate PTO replenishment kanbans for each item.

After these kanbans have been executed, the regular subcontract kanban process can be followed starting with send to subcontractor.

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Quantity-constrained kanban

By using this functionality, it is possible to prevent any more target manufacturing kanbans from being generated once a specified quantity has been produced.

Setup


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Kanbans and scrap

Scrap percentage in production

By using this functionality, it is possible to have the system ignore any variable scrap percentage that is specified on the BOM when executing a production order (and hence a manufacturing kanban).

This feature would typically be used when it is necessary to include scrap factor for the purpose of BOM calculation and costing, but to exclude it when back flushing components on execution of the production order (manufacturing kanban).

Setup


For kanbans that are not used in relations to work cells, the scrap method is defined in the Kanban

parameters.

Lean manufacturing > Setup > Work Cell

For kanbans that are related to work cells, the scrap method is defined in the Work cell field.

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Item MfgItem has a BOM of 2x item Component, and a variable scrap factor of 10%. The cost price of item Component is 5.00. Item MfgItem costs at 11.00, reflecting inclusion of the scrap factor.

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The following screen shot shows the firming of the manufacturing kanban.

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The results in transactions for item component is shown in the following screen shot. It reflects the use of the BOM line quantity only, not including the scrap factor.

Scrap replacement

By using this functionality, it is possible to write off an item in one unit of measure, and write on a different item in a different unit of measure. Both transactions will be displayed in a single journal,

providing an easy way of linking the two transactions.

This functionality is useful when a scrapped item can be recycled. For instance, if a scrapped metallic item can be melted down and reused, then the item could be written off in unit of measure piece and written on as feedstock in unit of measure gram.

Setup


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Inventory Management > Item details

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The resulting journal postings are shown in the following screen shot.

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Kanban visuals

Inventory status on visual board

Lean manufacturing > Setup > Kanban > Grouping > Kanban display groups

A display group is required for the visualization of kanbans.

Lean manufacturing > Kanbans > Setup – advanced static tab

Enter the kanban display group needs in the Kanbans form for all relevant kanbans.

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Visual production

Lean manufacturing > Journals > Kanban > Visualization > Visual kanban control

Selecting a warehouse and then a display group allows the inventory of parts in the selected

warehouse to be visualized. The indicator bars show the proportion of the kanbans for each part that has been fulfilled.

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Manufacturing stop go

Lean manufacturing > Journals > Kanban > Visualization > Kanban stop/go board

The status of the kanbans at the work cell can be viewed on the kanban stop/go board. In the example one of the kanbans has been completed and the other two are waiting. The status of the kanbans can be set by using the drop-down menu. The color status bar indicates consumption of drumbeat capacity.

Heijunka scheduling

Heijunka scheduling is a smoothing process to level production by averaging the mix of products to

provide a consistent level of output. Before kanban cards will appear on the Heijunka electronic planning board, both the LOS book to order cell and Manual kanban release check boxes must be selected.

Lean manufacturing > Setup > Work cell

An example of the electronic Heijunka board is shown in the following screen shot.

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The top half of the form contains details about the kanbans that are waiting to be scheduled and the bottom half contains icons that represent the work cell and its free drumbeat capacity today and for the next two days.

For more information, see the Lean Order Schedules (Book to Sales Order) User Guide.

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The information contained in this document represents the current view of Microsoft Corporation on the issues discussed as of the

date of publication. Because Microsoft must respond to changing market conditions, this document should not be interpreted to be a

commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information presented after the date of

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Microsoft Dynamics AX 2009 Lean Kanban

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