Michael Ford
Getting lost in the inventory supermarket is no longer a fait accompli.

Much is written about Kanban, which is essentially meant to be a simple technology to create a pull-based operation. One thing Kanban does effectively is communicate the “need” or “demand” from one process to another in a Lean way, which also in effect creates a demarcation between the two processes, and this can be a good thing. Effective management needs boundaries, which the Kanban protocol achieves as a representative of a great communication standard. Management within boundaries drives ownership and responsibility. We look this time at the importance of Lean communication and ownership.

In December last year, I wrote about “The Trouble with Kanban,” in which we looked at waste from the perspective of a product going through a factory, drawing the analogy with a person going through an airport. Waste in the flow was compared to the traditional approach of the analysis of waste at each process. Flow analysis is an important application of Lean where flexible production is needed.

After reading this article, Joseph Hnat contacted me to share his experience with Kanban control. He described how in SMT, they were building large batches to “throw over the wall to the hand soldering areas,” which worked well for SMT but was a huge problem for the next production areas, especially if there was a suspected quality issue. Joseph came up with an elegant solution that drove different behavior: “You build it, you own it.” WIP (work in progress) produced from SMT would remain in the SMT area and, with it, the responsibility.

Essentially, a supermarket between SMT and the next production areas was formed, managed by a simple Kanban system. As the next production area pulled the needed assemblies, the supermarket levels would decrease until a trigger would be set to build another SMT run. Because the cost of the stock-holding and management was a part of the SMT budget, SMT planners then started focusing on smaller batch sizes, and to do that, they investigated changeover process improvements, different material tracking techniques, build optimization, etc. Joseph noted the biggest improvements were made when SMT owned the inventory.

This is a good illustration of the effects that a well-placed Kanban can achieve. Rather than the reduction of waste from one process at the expense of another, the Kanban signal is communicating between two distinct production areas, permitting each to be free to optimize their own environment. Individual processes within the SMT area, including five SMT lines that Joseph had, could then be optimized based on their own complete environment. A great result!

The simple Kanban, then, creates demarcation and ownership, with excellent motivation for improvement. There are challenges to this model, but these are not unique to this Lean solution. What happens when demand suddenly changes, including the end-of-life of a product? First, the decisions of the upper and lower control limits of stock in the supermarket area are critical and may need to be reviewed and adjusted from time to time.

A simple computerization can be made to manage these changes. To do so, the demand pattern from the supermarket needs to be recorded. For each specific product, how many units are taken, when and in what quantities? A statistical analysis can then be made to show trends and predict the likelihood of peak requirement. A similar analysis can then be applied to the products coming in to the supermarket, looking at the batch sizes that the SMT operation has deemed the most optimum and the frequency with which they arrive. The fluctuation of stock in the supermarket between the upper and lower control limits can then be assessed.

As demand patterns change, or optimization parameters for the SMT lines change, the Kanban computerization can work out whether adjustments are needed for the stock-level control limits, and it can give some indication of space requirement and costs. Alerts can be generated when a pattern emerges that could lead to a shortage of product WIP or the need for more space. Then an additional input can be considered: the longer term demand for the product.

The inclusion of this element in the computerization is outside the local Kanban control environment to the final delivery schedule that the factory is expected to make. In some sense, we are then going outside of what some may consider as being “Lean,” but there are specific cases, hopefully quite rare, in which this can be a great help. One such example is when, for some reason, there is a sudden peak in demand for a certain product that falls outside the normal pattern of fluctuation. The end-of-life of a product is another example. These rare but important cases are built into the logic of the ERP function; however, they often trip up a pure Kanban approach. Heads-up of these events adds significant value to the Kanban computerization, without it losing its Lean credentials.

In terms of technology, inclusion of a Kanban computerization is a level above what a Kanban control is in its simplest form. Getting information from multiple sources in a timely way can be a significant challenge to many operations, far more so than the computerization itself in many cases. The new Open Manufacturing Language (OML) Internet of Manufacturing specification for PCB assembly is a free resource that can help bring standardized and normalized information from different parts of the operation into a Kanban-controlled computerization, bringing it well within the capabilities and resources of any organization to implement (omlcommunity.com).

The issue of ownership, as in the example that Joseph describes, provides the motivation and clear demarcation of responsibility that ensures different areas really pay attention to their Lean operation. The simple Kanban pull signal can then do most of the work, ideally augmented with Kanban computerization. This computerization can, of course, include the Kanban itself, a so-called electronic Kanban, so that continuous value and visibility is created. It has been many years since I was a young software engineer working on the manufacturing shop floor, but if I were there now I would jump on this opportunity because it’s a great practical application of Lean control in the Lean modern factory using the Internet of Manufacturing.

Michael Ford is marketing development manager, Mentor Graphics (mentor.com); michael_ford@mentor.com. His column runs bimonthly.

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