Lean Kanban Systems Guide

1 April 9, 2016 – v2.0
Lean Kanban Scheduling Systems
by Operational Excellence Consulting LLC

2 April 9, 2016 – v2.0
Section 1: Introduction to Lean Management & The 7 Types of Wastes
Section 2: Lean Metrics & Performance Indicators
Section 3: Create Flow & Establish Pull
Section 4: Lean Kanban Systems
- Single Card Kanban
- Dual Card Kanban
- In-Process Kanban
Section 5: Step-by-Step Kanban Implementation Process
Lean Kanban Systems – Table of Content

3 April 9, 2016 – v2.0
Lean Management – The Five Lean Principles
Define Value - Specify value from the Customer
perspective.
Map Value Stream - Identify the value stream for
each product or service and challenge all of the
non-value adding steps (wastes) currently
necessary to create and deliver this product or
service. Add nothing than value.
Create Flow - Make the product or service creation and delivery process flow
through the remaining value-adding steps.
Establish Pull – Introduce pull between all process steps where continuous flow
is possible.
Pursuit Perfection – Manage toward perfection so that the number of steps and
the amount of time and information needed to create and deliver this product or
service is optimized.

4 April 9, 2016 – v2.0
Benefits of implementing Lean Principles, Methods and Tools are:
 Improved Lead Times – Ability to respond quicker, shorter set ups, fewer
delays.
 Improved Stock Turns – Less work in progress and inventory, so less
capital is tied up.
 Improved Productivity – Improvements in throughput and value add per
person.
 Improved Quality – Reductions in defects, rework and customer
complaints.
 Improved Customer Service – Delivering what Customers
wants when they want it.
 Improved Ownership – Employees are fully involved and
engaged resulting in improved morale and participation.
Lean Management – The Benefits of Lean

5 April 9, 2016 – v2.0
Lean Management – Three Types of Process Activities
Non-
Value
Adding
Business-
Value Adding
Value-
Adding
Customer is not willing to
pay for these activities
and they should be
eliminated, e.g. rework.
Customer are willing to
pay the organization
for these activities, e.g.
assembly.
Customers are not willing
to pay for these activities,
but the organizations
deems these activities as
necessary, e.g. preventive
maintenance.
Many process have
less than 20% value-
adding activities.

6 April 9, 2016 – v2.0
Value-Adding Work – A Definition
Three criteria for Value Adding Work
1. Customer wants you to do it (or will pay for it)
2. The material / information is being processed or transformed into final
products or services
3. It is done right the first time
Lean Management’s Key Objective:
Reduce Process Lead Time
→ Eliminate or Reduce Non-Value-adding Activities

7 April 9, 2016 – v2.0
How do you spend your time?
• Value-Adding (VA) – increases worth of a product or service
• Non-Value-Adding but Necessary (NVABN) – required to keep
the organization operating, e.g. compliance
• Non-Value-Adding (NVA) and Unnecessary – all other tasks not
identified above
• Lean Management reduces lead time through
– Streamlining VA work
– Minimizing NVABN work
– Eliminating NVA work

8 April 9, 2016 – v2.0
Lean Management – The 7 Types of Waste
Waste elimination is one of the most effective ways to increase the profitability of any
business. Processes either add value or waste to the production of a good or service. The
seven wastes originated in Japan, where waste is known as “muda."
→ T - I - M - W - O - O - D
Inventory
Over-Processing
Waiting
Transportation
Defects
Motion
Over-Production
The 7 Wastes

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The 7 Types of Waste – Transportation
Transportation
Transporting product between processes is a cost incursion which adds no
value to the product. Excessive movement and handling cause damage and
are an opportunity for quality to deteriorate. Material handlers must be used
to transport the materials, resulting in another organizational cost that adds
no Customer value.
Transportation can be difficult to reduce due to the perceived costs of
moving equipment and processes closer together. Furthermore, it is often
hard to determine which processes should be next to each other. Mapping
product flows can make this easier to visualize.

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The 7 Types of Waste – Inventory
Inventory
Work-in-Progress (WIP) is a direct result of over-production and waiting.
Excess inventory tends to hide problems on the plant floor, which must be
identified and resolved in order to improve operating performance.
Excess inventory consumes productive floor space, delays the identification
of problems, and inhibits communication. By achieving a seamless flow
between work centers, many manufacturers have been able to improve
Customer service and slash inventories and their associated costs.

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The 7 Types of Waste – Motion
Motion
This waste is related to ergonomics and is seen in all instances of bending,
stretching, walking, lifting, and reaching. These are also health and safety
issues, which in today’s litigious society are becoming more of a problem for
organizations. Jobs with excessive motion should be analyzed and
redesigned for improvement with the involvement of plant personnel.

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The 7 Types of Waste – Waiting
Waiting
Typically more than 99% of a product's life in traditional batch-and-queue
manufacture will be spent waiting to be processed. Much of a product’s lead
time is tied up in waiting for the next operation; this is usually because material
flow is poor, production runs are too long, and distances between work centers
are too great.
Goldratt (Theory of Constraints) has stated many times that one hour lost in a
bottleneck process is one hour lost to the entire factory’s output, which can
never be recovered. Linking processes together so that one feeds directly into
the next can dramatically reduce waiting.

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The 7 Types of Waste – Over-Production
Over-Production
Simply put, over-production is to manufacture an item before it is actually
required. Over-production is highly costly to a manufacturing plant because it
prohibits the smooth flow of materials and actually degrades quality and
productivity. The Toyota Production System is also referred to as “Just in Time”
(JIT) because every item is made just as it is needed. Over-production
manufacturing is referred to as “Just in Case.” This results in high storage costs
and makes it difficult to detect defects in a timely manner. The simple solution
to over-production is turning off the tap; this requires a lot of courage because
the problems that over-production is hiding will be revealed. The concept is to
schedule and produce only what can be immediately sold/shipped and improve
machine changeover/set-up capability.

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The 7 Types of Waste – Over-Processing
Over-Processing
Many organizations use expensive high precision equipment where simpler
tools would be sufficient. This often results in poor plant layout because
preceding or subsequent operations are located far apart. In addition they
encourage high asset utilization (over-production with minimal changeovers) in
order to recover the high cost of this equipment.
Toyota is famous for their use of low-cost automation, combined with
immaculately maintained, often older machines. Investing in smaller, more
flexible equipment where possible; creating manufacturing cells; and combining
steps will greatly reduce the waste of inappropriate processing.

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The 7 Types of Waste – Defects
Defects
Having a direct impact to the bottom line, quality defects resulting in rework
or scrap are a tremendous cost to organizations. Associated costs include
quarantining inventory, re-inspecting, rescheduling, and capacity loss.
In many organizations the total cost of defects is often a significant
percentage of total manufacturing cost. Through employee involvement and
Continuous Process Improvement (CPI), there is a huge opportunity to
reduce defects at many facilities.

16 April 9, 2016 – v2.0
The 7 Types of Waste – Summary
In the latest edition of the Lean Manufacturing
classic Lean Thinking, Underutilization of
Employees has been added as an eighth
waste.
Organizations employ their staff for their
nimble fingers and strong muscles but forget
they come to work everyday with a free brain.
It is only by capitalizing on employees'
creativity that organizations can eliminate the
other seven wastes and continuously improve
their performance.
Many changes over recent years have driven organizations to become world
class organizations or Lean Enterprises. The first step in achieving that goal is
to identify and attack the seven wastes. As Toyota and other world-class
organizations have come to realize, Customers will pay for value adding work,
but never for waste.

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Waste Typical Manufacturing Definitions Translation to Services Examples
Defects /
Rework
Making products that are not suitable for sale, or require
reprocessing to bring them up to standard
Client billing errors, defective client-server systems,
incorrect data entry, incomplete requirements
Over
Production
Producing product that has not been ordered. This is
the worst offender of all as it includes some elements of
all of the other wastes.
Duplicative data entry, making extra copies, producing
data or reports that aren’t needed, starting projects
that won’t be moved forward.
Waiting People or product waiting for processes to finish or
materials/tools to arrive. All inventory build up or delay
between value adding steps for any product.
Employee idle time, waiting on responses, approvals,
or service, delays in processing (including client). All
time between one value adding step and the next.
Non-Value
adding
Processing
Activities carried out on materials/products which do not
add value
(more commonly referred to as Over processing)
Unnecessary extra steps, transactional activities, or
approvals. Excessive reporting, unproductive
meetings, expediting, firefighting, changing priorities
Transport An activity that moves materials or products more than
is required.
Handoffs or reviews, interoffice movement of
materials, offsite storage transport
Inventory Product in storage or waiting for further actions to be
carried out. All parts not immediately needed.
Requirements, Documents, WIP, Assets sitting on the
shelf (e.g. laptops, air cards, people), excess emails
Movement Unnecessary movement of people, examples being
long distances between workstations, double-handling
of materials, poor tool placement.
Unnecessary travel, hunting for information or people,
manual workflow
Employee
Knowledge
Ineffective employee utilization / engagement. No
empowerment; people feel they should “check their
brains at the door and do what they’re told”.
Failing to capture ideas and knowledge, or ignoring
input from the real experts. Retention issues.
Employees used for repetitive or mundane tasks.
The 8 Types of Waste – DOWNTIME

18 April 9, 2016 – v2.0
The Three Lean Ms or the Lean Triad
• Lean is often associated with the elimination of Waste, or Muda in Japanese
• However, Lean Thinking also needs to considers two other problems:
– Mura: Irregularity or Variation
– Muri: Strenuous activity, or Overburden
• Together these are sometimes called the “Three Ms”
• In some cases, Waste or Muda may be eliminated temporarily but will keep
coming back if the other two Ms are not addressed simultaneously
• All three Ms must be attacked and substantially reduced to create a
sustainable Lean process or value stream flow.
M
3

19 April 9, 2016 – v2.0
Value vs. Non-Value Adding Work
Work Time
Wait Time
Walking Time
A Typical Process or Process Step
 It is not uncommon, when analyzing a process
or process step, to recognize that 60 to 70% of
the total work time is actual non-value adding
work – waiting, transportation, walking, and
unnecessary motions.
 Organizations often focus on the value adding
activities to further improve productivity and
efficiency, ignoring the often huge opportunities
if they would focus on eliminating non-value
adding activities.
Process
Start
Process
End

20 April 9, 2016 – v2.0
- Dual Card Kanban
- In-Process Kanban

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Lean Management – Metrics Definitions
Lead Time (LT)
• The average time it takes for one item to go through the entire processing
step, including time waiting before, during and after the processing step.
Cycle Time (CT)
• The average time between two consecutive items coming out of a processing
step.
Processing (or Touch) Time (PT)
• The average time it takes to actually do the work from beginning to end in a
processing step, if one is able to work on the item uninterrupted.
Value-Add Time (VT)
• The portion of the average processing time that actually transforms the item
in a way that the Customer is willing to pay for.
Takt Time (TT)
• Planning drumbeat. How often completed items NEED to come out the end of
the entire process - as established by Customer demand.

22 April 9, 2016 – v2.0
Lean Management – Takt Time
Takt Time is the “Production” Rate, in seconds, necessary to satisfy
Customer demand.
Amount of available “Production” Time per Interval
Number of Units needed by the Customer per Interval
= Amount of Time available to produce one Unit
7.5 hrs/shift x 60 minutes/hr x 60 seconds/min
450 Units needed by the Customer/Shift
27,000 seconds/shift
450 Units
= 60 Seconds = Takt Time

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Changeover Time (CO)
• The average time it takes to changeover (e.g. reset or change equipment) a
processing step from one item to another (Change Over Matrix).
Queue (or Wait) Time (QT)
• The average time between processing steps that the item gets shuffled
around or sits around waiting for someone to work on it.
Up Time (UT)
• The ratio of the actual available processing time of a processing step to the
available working time. Expressed as a percentage, uptime is calculated by
dividing actual available processing time by the available working time.
Working Time (WT)
• To calculate Working Time - deduct breaks, meetings, beginning of shift set-
up, end of shift clean-up, planned maintenance, and other planned non-
working time. Do NOT deduct unplanned downtime or changeovers.

24 April 9, 2016 – v2.0
Total Lead Time (critical path only)
• The average time it takes for one item to go through the entire process - from
start to finish - including time waiting before, during and after the processing
step.
Total Processing Time (critical path only)
• The average time it takes to actually perform the entire process - from start to
finish - if one is able to work on an item uninterrupted.
Total Value-adding Time (critical path only)
finish - that actually transforms the item in a way that the Customer is willing to
pay for.
% Complete & Accurate
• Percentage of the time a processing step receives work that is “usable as is”.

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Lean Management – Performance Indicators
Process Efficiency Ratio (PE)
Process Activity Ratio (AR)
Rolled % Complete & Accurate
where n is the number of processing steps.
Total Labor Processing Time
finish - if one is able to work on an item uninterrupted.
𝐴𝑅 =
𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑜𝑐𝑒𝑠𝑠𝑖𝑛𝑔 𝑇𝑖𝑚𝑒
𝑇𝑜𝑡𝑎𝑙 𝐿𝑒𝑎𝑑 𝑇𝑖𝑚𝑒
𝑃𝐸 =
𝑇𝑜𝑡𝑎𝑙 𝑉𝑎𝑙𝑢𝑒 𝐴𝑑𝑑𝑒𝑑 𝑇𝑖𝑚𝑒
𝑇𝑜𝑡𝑎𝑙 𝐿𝑒𝑎𝑑 𝑇𝑖𝑚𝑒
𝑅𝑜𝑙𝑙𝑒𝑑 %𝐶&𝐴 = %𝐶&𝐴1 × %𝐶&𝐴2 × ⋯ × %𝐶&𝐴 𝑛

26 April 9, 2016 – v2.0
Lean Management – Process Efficiency Benchmarks

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- Dual Card Kanban
- In-Process Kanban

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Flow where you can, Pull where you can’t.

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Lean Management – Create Flow
• Create Flow - Make the product or service creation and delivery process flow
through the remaining value-adding steps.
• Ideally, the “work item” passing through the value stream never stops. It moves
effortlessly from person to person, work team/station to work team/station,
department to department, … without hang-ups, hiccups, or unnecessary
delay.
• Ask yourself – “What is preventing the lead time from being the same as the
processing time for each and every process step or activity?”

30 April 9, 2016 – v2.0
"If smaller orders are released more often, the factory resources are loaded
much more easily. …This is analogous to the python swallowing dozens of little
piglets instead of one large pig. …Surprisingly, many factories prefer to 'stretch
the python' so it can swallow an even larger hog!"
Standard, Charles and Davis, Dale - Running Today's Factory: A Proven
Strategy for Lean Manufacturing uses the phrase "pig in a python" to describe
large inventory bubbles that move through a factory.
Lean Management – “Pig in the Python.”
Inventory
“Bubble”

31 April 9, 2016 – v2.0
Lean Management – Establish Pull
• The goal is to produce product only as it is “Pulled” by customer demand
– Make only the units ordered
– Just when they are needed
– In the exact amount required
– With minimum raw material and WIP
• Philosophically opposed to MRP / ERP driven “Push” of scheduled batch
quantities based on forecast
• Customer pull signals upstream demand and drives all activities
• Takt Time sets the pace of every process or sub-process
• Kanban Systems connect sub-processes with different
Takt Times and signal activities & material replenishment
requirements

32 April 9, 2016 – v2.0
Lean Management – The 8 Basic Questions
1. What is the Takt Time ?
2. Will you build to a finished-goods Kanban or Supermarket
System from which the Customer pulls, or directly to shipping ?
3. Where can you use continuous flow between processing steps ?
4. Where will you need to use Kanban or Supermarket Pull
Systems ?
5. At what single point in the production chain (the “pacemaker”
process) will you schedule production ?
6. How will you level the production mix ?
7. What increments of work will you consistently release ?
8. What process improvements will be necessary ?

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- Dual Card Kanban
- In-Process Kanban

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Lean Management – Kanban Systems

35 April 9, 2016 – v2.0
 History - In the late 1940s, Toyota studied supermarkets with the idea of
applying store and shelf-stocking techniques to the factory floor.
In a supermarket, customers obtain the required quantity at the required time.
Furthermore, the supermarket stocks only what it believes it will sell, and
customers take only what they need because future supply is assured.
This observation led Toyota to view a process as being a customer of preceding
processes, and the preceding processes as a kind of store.
The “customer process" goes to the store to obtain required components which
in turn causes the store to restock. Originally, as in supermarkets, signboards
were used to guide "shopper processes” to specific restocking locations.
Kanban Systems – History of Kanban Systems

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• Kanban is a scheduling system, not an inventory control system, that helps
determine what to produce, when to produce it, and how much to produce.
• Kanban scheduling systems are useful when
• lot sizes differ between process steps,
• processes are unbalanced, or
• when distance introduces time lag or variability
• Kanban scheduling systems are simple and work best
• withdrawal rates are steady and predictable
• Replenishment times are predictable
• Kanban scheduling systems may result in significant inventory and
experience frequent stockouts if not properly managed and adjusted based
on withdrawal rate and replenishment times.
Kanban Systems – Introduction to Kanban Systems

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• Kanban is a Japanese word that means, roughly, signboard or signal card.
Kan = visual, Ban = card
• Most often, a Kanban utilizes physical cards that move back and forth between
the different sections of the production process, serving as a signaling to
trigger the movement, production, or supply of material in a factory.
Kanban Systems – Introduction to Kanban Systems
• The most commonly used Kanbans are:
• “Withdrawal" Kanban – This Kanban is used to relocate
items from one workplace or process to another.
• “Production" Kanban – This Kanban is used to replace
the material when it is used or sold.
• “Signal” Kanban – This Kanban is used to initiate
production of a predetermined batch size of a specific
part.
• In-Process Kanban (IPKs) – These Kanban act as
signals to work, move, or respond in some way

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Kanban Systems – Value Stream Mapping Symbols
Kanban systems lead to an improved process flow, reduced scheduling
activities and can result in significant inventory reduction.
Kanban scheduling systems are useful when
• lot sizes differ between process steps,
• processes are unbalanced, or
• when distance introduces time lag or variability

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Kanban Systems – Benefits of a Kanban System
• Work in process between processes is always maintained and
managed
• Process materials are readily available and easily counted when
necessary
• Quicker quality feedback loop
• Fewer errors as the feedback is done more efficiently
• Work place is better organized, more comfortable, and safer
• Over-production (waste) will be at minimum
• Less Finished Goods Inventory is required
• Makes the vision of Lean Management possible
• Many more …

40 April 9, 2016 – v2.0
Kanban Systems – Some Success Stories
 A maker of fine table linens was able to slash its average order turnaround time
from 3-weeks to 3-days using a Pull System. The changes eliminated
bottlenecks in production and increased responsiveness to customer needs.
 A manufacturer of high-quality packaging machinery implemented a multi-
faceted Lean transformation. A Pull System was used to smooth the flow of
WIP. The changes decreased WIP by 62% and dramatically increased the
number of orders completed each day.
 Pull Systems/Kanban-and other lean techniques-were implemented by a
manufacturer of custom fiberglass and vacuum form products. These changes
increased productivity by 20%, reduced inventory by 53%, decreased lead-time
by 63%, and far exceeded their targeted goals.
 Another example of a successful application of Kanban system in hospitals is a
regional medical center in southern North Carolina. It saved $80,000 per year
in expired inventory. Kanban system was also applied to its OR scheduling.
The hospital was able to operate 6 more surgeries per week with the same
staffing levels working the same hours as before.

41 April 9, 2016 – v2.0
Kanban Systems – The Grocery Store
The basic concept of a Kanban system can be easily observed in a grocery store.
In a grocery store, every item has a defined inventory location that holds a specific quantity
of the item.
Customers select the required quantity of a specific item and proceed to the checkout
counter.
At the checkout counter, the cashier scans each item
and a signal will be transmitted to the grocery store’s
database, indicating the items part number and
quantity that has been “consumed”.
Once a certain quantity of a specific item has been
consumed, a grocery store employee will take for
example a carton of that item from the warehouse and
refill the shelf-space in the store.
The transfer of the carton will trigger a replenishment request to the supplier. …

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Kanban Systems – Basic Kanban Rules
To ensure a proper setup of Kanban in the workplace, Toyota has provided
us with six rules for an effective Kanban system:
1. Customer (downstream) processes withdraw items in the precise
amounts specified by the Kanban.
2. Supplier (upstream) produces items in the precise amounts and
sequences specified by the Kanban.
3. No items are made or moved without a Kanban card.
4. A Kanban card should accompany each item, every time.
5. Defects and incorrect amounts are never sent to
the next downstream process.
6. The number of Kanbans and the size of each Kanban
is reduced carefully to lower inventories and to reveal
problems.

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Kanban Systems – Basic Kanban Process Flow

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Kanban Systems – Basic Sizing Calculation
DDK x R
DDK: Daily Demand for Kanban (= Capacity ?)
R: Replenishment Interval (# of Days)
K =
This basic formula works well for purchased items or for
routine replenishment that happens no more frequently
than once per day.

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DDK can be the daily quantity required:
• At full capacity
• Under typical conditions
• Under near future expected conditions
In any case consider adding a buffer quantity:
• Small fixed safety buffer amount
• 1 to 2 standard deviations above historical usage (if normal distributed)
• Round up K (slightly!) to price break point
DDK x RK =

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R = number of days required to replenish the Kanban
• Lead time from vendor for purchased parts
• Time allotted to pull parts from storage location
• Time for internal supplier to produce
Key considerations:
• Supplier reliability (add 1 to 2 SD to lead time if normally distributed)
• Trade-off between inventory and shipping cost
• Criticality of the part
DDK x RK =

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Kanban Systems – Sizing with Fixed Batch Quantity
DDK x R
P
DDK: Daily Rate for Kanban (= Capacity ?)
P: Package (Batch, Pallet, Container) Quantity
K =
P is factored in when the vendor has a fixed package quantity or the
supplier has a set batch size. This can also be used to account for a
pallet or Kanban container quantity. The calculation gives the number
of packages.

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Kanban Systems – Sizing for Use in Multiple Products
Sum (DDK x Q) x R
P
DDK: Daily Rate for each Product
Q: Quantity Per Product (from Bill of Materials)
P: Package Quantity (if applicable)
K =
When the item is used in multiple products at the Kanban
location, this factors in different demands per product.

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PART IDENTIFICATION or NUMBER
DESCRIPTION
TODemand FROM
(Consumption Point) (Supply Point)
QTY
Kanban Systems – Typical Kanban Card Layout
Kanban size, replenishment lead time and other meaningful
information may be added if needed or seen necessary.

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Kanban Systems – “Single” Card Kanban System
In a single-card or one-card Kanban scheduling system, a “Signal” Kanban
card is taken from the Kanban location once a defined minimum stock quantity
has been reached.
The card is then for example placed on a Kanban board, signaling the need for
a stock replenishment order.
The “supplier” process responsible for the replenishment of the Kanban location
schedules its production based on the Kanban board and replenishes the
Kanban location.
The minimum stock quantity that signals or triggers the replenishment request
needs to assure that the remaining on hand inventory is sufficient until the
replenishment stock arrives and is based on the average consumption,
consumption fluctuation, and replenishment lead time.

51 April 9, 2016 – v2.0
I went to make a cup of tea in the afternoon. I took the last K-cup. so there was an
empty box
It was now time to use the Kanban system!
I went to the cabinet where coffee and tea inventory is stored. When I removed the
new box, there was a blue Kanban card sticking out. This represented the re-order
point.
Example from the Blog of Mark Graban
http://www.leanblog.org/2010/04/how-a-simple-office-kanban-system-works

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I put the new stock in place …

53 April 9, 2016 – v2.0
I then took the Kanban card
(pictured here) to the front
reception desk, placing the
card at a Kanban ordering
point (pictured on the next
slide).
NOTE: A better approach would be to have the Kanban ordering point near the
cabinet, and have the person in charge of reordering check it daily.

54 April 9, 2016 – v2.0
The top holder is for the supplies that
need to be ordered. Down below are the
cards for items that have already been
ordered (this prevents double ordering).
When new stock arrives, the Kanban
cards are taken from the bottom holder
and are matched with the inventory when
it is restocked.

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Kanban Systems – “Dual-Card” Kanban System
A very effective application for a dual-card Kanban scheduling system is the
“decoupling” of two very different sub-processes, for example a machining process
from an assembly process or two sub-processes with very different takt times.
A machining process is often fairly automated, resulting in high depreciation costs,
and requires significant setup time to change over from one product to another,
resulting in low utilization when producing small batches of different items.
An assembly process is often less capital intense and requires no or very little
changeover time.

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Kanban Systems – “Dual-Card” Kanban System
• A dual-card or two-card Kanban scheduling system uses "Withdrawal" and
"Production" Kanban cards.
• One card is attached to each container holding a pre-defined quantity of
items.
• To relocate or move a container from the “supplier” process or supermarket
to the “customer” process for consumption, the attached “Production” card is
removed from the container and placed on the Kanban board.
• The “Withdrawal” card is then attached to that container and the container is
moved to the “customer” process for consumption.
• The “supplier” process schedules production
based on the cards on the Kanban board and
pre-defined scheduling rules.
• Once a container of items has been produced,
a “Production” card is removed from the
Kanban board and attached to the container.

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Kanban Systems – “Dual-Card” Kanban System Phase 1
“Supplier” Process “Customer” Process
Kanban or Heijunka “Pigeonhole” Board
Phase 1: “Customer” process moves an empty container to the “supplier” process.
Standard Container (full) Standard Container (empty) “Production” Card “Withdrawal” Card

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Phase 2: “Customer” process places the “Production” card of a full container on the
Kanban board and replaces it with the “Withdrawal” card from the empty container.

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Phase 3: “Customer” process moves the full container with the “Withdrawal” card
to the “Customer” process.

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Phase 4: “Supplier” process produces new items and attaches the “Production” card
from the Kanban board to the full container.

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Kanban Systems – “Dual-Card” Kanban System Summary

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Kanban Systems – Kanban or Heijunka Board
Empty containers at Supplier Process,
but sufficient inventory at Customer
Process → Production can wait.
Empty containers at Supplier Process
and insufficient inventory at Customer
Process → Production required
immediately.

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Kanban Systems – Supermarket
• Customer Process goes to the Supermarket and withdraws what it needs when it needs
it. Supplying Process produces to replenish what was withdrawn.
• Purpose: Controls production at supplying process without trying to schedule. Controls
production between flows.
Supplying
Process
Customer
Process
"Production" Kanban "Withdrawal" Kanban
SUPERMARKET
Product ProductA B

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Kanban Systems – FIFO Lane
• In some cases a FIFO Lane between two decoupled processes can be used to
substitute for a Supermarket. A FIFO Lane is like a chute that can hold only a certain
amount of inventory, with the supplying process as the chute entrance and the customer
process at the exit.
• If the FIFO Lane gets full, the supplying process must stop producing until the customer
process has used up some of the inventory.
Supplying
Process
Customer
Process
SUPERMARKET
FIFO Lane
max. 20 pieces
A B
FULL ?
Kanban

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Kanban Systems – Pacemaker Process
 Try to send the Customer schedule to only one production process, the
pacemaker process.
 A process is called the pacemaker process, because it is used to control
production and sets the pace for all upstream processes.
 Note, the material transfer from the pacemaker process downstream to
finished goods need to occur as a flow.
Supplying
Process
Supplying
Process
Customer
Process
Customer
Process
Pull max. 20 pieces
DFIFO Lane CUSTOMERA
max. 50 pieces
FIFO LaneB C
SCHEDULE = Pacemaker Process
FLOW DownstreamUpstream

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Kanban Systems – Sequenced Pull
• Sometimes one can install a “Sequenced Pull” between 2 processes,
instead of a complete Supermarket or a FIFO Lane.
• Sequenced Pull means that the supplying process produces a
predetermined quantity of parts (e.g. one subassembly) directly to the
customer process’ order. This works if lead time in the supplying process is
short enough for “production- or build-to-order”, and if the customer
process follows strict “ordering” rules.
• Sequenced Pull is sometimes called the “Golf Ball
System” because colored balls or disks (that roll nicely
down a chute to the supplying process) are sometimes
used to provide production instruction.

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Kanban Systems – Lean and Human Resources
• People are the company’s competitive advantage
• Hire character, teach skills
• Look for personal responsibility, teamwork orientation, and challenge
mentality
• Orientation and training for up to 12 months. Much of the training is on Lean
Thinking.
• Employees are trained in problem-solving
– People feel safe exposing a problem
– Team is empowered to find a solution
• Extensive practical multi-skilled training with Mentors
• People are motivated to improve processes
• Those who actually run the process are the experts
• Leaders are judged on how they develop people

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FlowOne Up One DownPrimary
Station
Kanban Systems – Flexible People Utilization
Cross-trained multi-skilled flexible employees
• Increase productivity
• Enable Flow and Pull

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OP 1
Product
Flow
Customer
OP 2IPK
Kanban Systems – In-Process Kanban (IPK)
• Authorize inventory
• Signal movement or action required if full

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OP 110 OP 140OP 130OP 120
In-Process Kanban – “Holes” in the Line
• Cross-trained employees accommodate variation in
product mix, volumes and worker productivity
Downstream demand signals upstream work
Demand
?

71 April 9, 2016 – v2.0
In-Process Kanban – At the Operation where I am NOW
• Is there a signal to work here ?
– Is there a unit complete at my workstation ?
• If No - try to work on the next unit
• If Yes, then is my downstream IPK full ?
– If No - fill IPK with completed unit
– When both workstation and downstream IPK full
• Flex downstream in the direction of demand
– No unit to work on - upstream IPK is empty
• Move upstream to satisfy demand
• Continue to apply this logic perpetually

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OP 110 OP 130OP 120
In-Process Kanban – Alternate Work Stations
• Accommodate variation in product work content
• Balance lengthy or variable operation to takt time
OP 140
OP 140

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OP 110 OP 140OP 130OP 120
In-Process Kanban – Can OP 120 help OP 110 ?
?
C B A
B has a signal to work at OP 120, but has no unit to work on.
Ideally B would flex up to 110 and work - but C is already there.
Does it look like there is a quality place to help C at OP 110?

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In-Process Kanban – In Order to Help
• Work station must be designed for help
– 2 sets of tools, parts, and work instructions?
– Adequate space to effectively perform work
• Must have clearly pre-defined help criteria
– Job training includes how to give and receive help
– Protect integrity of unit when finished
• Both associates must agree on where they are in the work
sequence at that operation
• Flexing, helping and “bumping”, mixed models on a line - must of
course not endanger product or service quality

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In-Process Kanban – Quality Place to Help
• Ideally anticipate this need during factory design OR build this
requirement into 5S space utilization
OP 110 OP 140OP 130OP 120
C B A

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In-Process Kanban – Requirements for Employee Flexing
• The process is designed to allow flexing
– With “holes” in the line even at capacity
– Physical places to help - tools, kanban, and methods
– With simple, visual signals - tell when to work, move
– Flex stations at key integration or variation points
• Employees are trained for flexibility
– Certified a minimum of one-up and one-down
– Understand where signals tell them to move
– They see benefits in learning new skills
• Management emphasizes importance
• Team environment and recognition exist

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In-Process Kanban – Mixed Model Flow

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- Dual Card Kanban
- In-Process Kanban

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We suggest the following formal eight steps:
1. Analyze your products and processes and decide what parts and products
would benefit most from a Kanban scheduling system. While most Kanban
systems are developed for raw material and work-in-process inventories, the
system also works for finished goods inventory and even office supplies.
2. Study the hourly or daily usage (average and fluctuation) for each Kanban
part over the past six to twelve months and determine the appropriate
minimum and maximum stock levels for each part. Watch out for seasonality
or any other special consumption patterns. More inventory must be kept for
frequently used parts, and pull triggers need to be set accordingly.
Lean Management – How to design a Kanban System?
3. Study the lead times for each Kanban part. Lead times are
how long the product takes to arrive at your plant after your
place an order for it with the supplier, or how long it takes
your plant to manufacture a part. Reduce long supply lead
times if possible, either by negotiating better terms with
suppliers or switching to new, faster suppliers.

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4. Assess the minimum stock level for each part based on part lead time. Err
on the side of caution and take possible manufacturing, quality or supplier
issues into account. You can always tweak the quantities later, once
everything stabilizes.
5. Identify the Kanban locations and containers for each part. Create the
Kanban cards and Kanban board for a manual system or set up your
Enterprise Resource Planning (ERP) or Production Management System
(PMS) according to your Kanban parameters.
6. Develop scheduling rules and/or algorithm for the “supplier” process based
on the Kanban board to ensure timely replenishment of all Kanban
locations.
7. Order a full, maximum stock level for each item. Begin
the Kanban process for each item as its stocks are
filled.

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8. Observe the efficiency of the Kanban system. Tweak the minimum,
maximum, replacement quantities and pull trigger amounts until item usage
rates, lead times and inventory levels reach the “perfect” balance, with
replacement stock arriving just before existing inventory runs out. Keep a
small amount of "safety stock" on hand in case your tweaking results in
inventory shortages.

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Lean Management – Kanban System Discussion
• Can you identify some areas where a pull system production line
with flexible employees could help?
• Even if this cannot be fully implemented (yet!), where would cross-
training and flexibility immediately improve productivity or get you
closer to flow?
• Any other opportunities to apply the concepts from this section
(short term or medium-long term?)

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The End …
“Perfection is not attainable, but if we chase perfection we can catch
excellence.” - Vince Lombardi

84 April 9, 2016 – v2.0
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Lean Kanban Systems Guide

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