Kanban sizing for Customization- The Lean Way

Wikipedia defines lean manufacturing as “The process of implementing a smooth flow of manufacturing by removal of wastes in the business processes”. Speed and asset leanness are two necessary but contrasting conditions for achieving lean manufacturing.

The customers’ tolerance for cycle times of “Inquiry to Quote” and “Order to Delivery” processes are becoming tighter and tighter even with customized products. Business constraints like ever increasing carrying costs, obsolescence due to shorter lifecycles do not allow maintaining high inventory levels of finished goods for custom products. Having dedicated production lines with single piece flow were luxuries of mass production or “high volume low product variety” age.

Hence, different set of thoughts, tools and techniques are essential to achieve efficiencies of lean manufacturing in this era of explosive customization. A robust, user-friendly IT tool like Product configurator becomes handy not only to customer facing field sales but planners sitting in the back-office. This single tool, when smartly interfaced with other enterprise applications like ERP, can produce phenomenal results in customer satisfaction and supply chain efficiencies.

In Lean manufacturing, Kanban technique plays a vital role in orchestrating production flow to tune of market demand. Kanbans are typically a re-order card or other method of triggering the pull system based on actual usage of material. Kanban size or re-order point is key driver for leanness of inventory assets. One of the key decisions in keeping the supply chain lean and responsive is determination of optimum inventory levels. The decision is relatively simple for standard products as lot of historical sales data is generally available for end products. But unlike fast moving consumer goods, one can’t use Point of Sale (POS) data of end products, to base the inventory decisions for highly customized or “high variety low volume” products. Demand and supply planning need to be done at sub-assembly level for such products. Product configurator acts as most accurate source of historical demand at sub-assembly level.

Intelligent analytics of configurations, both historical sales and inquiries, can help planner in planning production and inventory levels upto critical and fast moving sub-assemblies. This planning strategy can help in meeting customer requirements with minimum lead time and inventory…leading to Lean Customization.

Comments

[Manoj Nanda]

Hello Rajesh,

An excellent way to estimate the Kanban size for uncertain demand scenarios is use 'Statistical Kanban' as the ROP for inventory calculation. Cisco among a few others use this technique in their Lean implementation. The math is rather simple, but the manipulation is done outside in spreadsheet and the data is uploaded back to Oracle once in a month.

[Volet D. Asuque]

Hello,

I am now in the process of implementing Kanban a lean manufacturing system in my company using Kanban Cards. During gathering of empty cards (hundreds of them), what is the best and easy way to simplify the matching of cards with the actual part numbers? In short how do we manage the tracking of these kanban cards?

Yours truly,

Volet

[Rajesh Naik]

Dear Volet,

The problem you stated is generally handled in one of two ways as described below:

1. Automation: Rather than using physical cards, companies go for electronic Kanban. So rather than sorting them manually, system generates replenishment requests automatically. Some of the companies use barcode and a scan triggers the Kanban request for relevant material.

2. Classification: Depending on supply function - External Supplier, internal upstream function, one can use Kanban cards with different colour codes. For example, red for external supplier, blue for press shop, green for machine shop and so on.

Hope this helps. Please let me know in case you need any additional information.