1. Case Study
Benefits of Transitioning from Manual Kanban to eKanban
Major Medical Device Manufacturer
July 2011

2. Building the Business Case for Change – How They Did It
Manual Kanban vs. eKanban Process Assessment
1. Created a flowchart (process map) of current
state manual kanban processes.
2. Conducted interviews with process subject
1. Draw
matter experts (SME’s) and staff to validate the Flowchart
current-state process map and gather estimates
of current performance characteristics. 6. Build Business Case, 2. Interview SMEs &
Obtain Buy-in, Transition Capture Metrics
3. Analyzed the quantitative process
performance metrics (i.e. Time, Cost, Resource
Utilization, Service Level, etc.) required to
support the manual kanban process Rapid
5. Design Process 3. Analyze
4. Identified, categorized and prioritized Future-state Performance
& Compare Assessment
process/systems improvement opportunities
enabled by transition to eKanban.
5. Designed the future-state eKanban process
and performed comparative analysis to current
state.
4. Capture
6. Established business case, presented findings Improvement
and recommendations to management, gained Opportunities
buy-in and support, implemented eKanban,
audited new current-state and adjusted to
achieve optimal performance.

3. Summarization of Benefits –
Directly attributable to transition from manual kanban to eKanban
People Process System
Resource time reduced by 92% Process time reduced by 92% Implementation of closed-loop,
electronic pull-based
replenishment system
Resource cost reduced by 93% Queue Time Eliminated Extensive use of barcode
technology
Headcount reduced by 50% - Service level increased by 57% Business rules and automated
reassigned to other areas alerts linked to specific workflows
Significant improvement in buyer Process simplified and automated. Real-time updates on all material
and supplier collaboration Went from 24 steps to 13 steps. replenishment transactions
Transition from reactive to Transition from open to closed- Complete audit trails on all
proactive management loop material replenishment material replenishment
processes transactions
Single version of the truth on all Stock-outs eliminated Rapid deployment (90 days w/ERP
material replenishment Integration) and sub one year ROI
transactions
100% adoption by end-users & Inventory trending down - $1M+ Low TCO
suppliers reduction in first six months
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4. Manual Kanban
Process Analysis
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5. Manual Kanban Process Observations
• Staffing Assumptions
– 12 FTE Buyers, Burden Rate $28.00/Hr.
– 6 FTE Material Handlers, Burden Rate $15.00/Hr.
• Process Observations
– Average Manual Kanban Releases = ~400/Week
– Kanban releases are 100% manual
– Email, fax & phone are the primary means of communication with suppliers
– Kanban card prep./management is labor intensive
– Manual kanban process is open-loop
– Limited capability to collaborate with suppliers
– Multiple failure modes throughout process
– Limited to no capability to track, measure and report on supplier
performance
– Reactive vs. proactive management system
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6. Manual Kanban Process Flow – Complex and Error Prone!
Complex Process Steps
1. Process Trigger: KRS Set-up & Management
2. Buyer establishes part classification „K‟, „R‟, „D‟
3. Buyer calculates bin size
4. Buyer creates Kanban Release Sheet „KRS‟
5. Buyer forwards „KRS‟ to WH Material Handler
6. Material Handler sets up bin “consumption and
signal”
7. Material Handler pull parts from consumption bin
8. Decision: Bin Empty
9. Material Handler Switches Consumption and Signal
bin
10. Decision: 2 Bin or ROP
11. Material Handler Faxes to Buyer
12. Material Handler Places original „KRS‟ in Pending
Confirmation Bin
13. Material Handler checks for received confirmation fax
14. Supplier Reply in 24 Hrs.?
15. Check due date & qty.
16. Material Handler attaches copy to „KRS‟ and places
in Buyer alert bin
17. Material Handler files faxed copy in date slot of date
sorter and „KRS‟ in consumption bin
18. Material Handler monitors date sorter
19. Decision: Part arrives on due date?
20. Decision: Parts critical for line?
21. Decision: Parts Qty. and Dock date correct?
22. Material Handler transfers actual qty. and dock date
to „KRS‟
23. Material Handler sends all completed fax copies to
Purchasing Support for entry into Supplier
performance database
6 24. Process End

7. Manual Kanban Process KPIs –
Per Manual Kanban Transaction
Key Performance Metrics
Process Time per Execution 18.39
Duration 49.36
Service Level 43%
Takt 5.63
Arrival Rate Per Minute 0.2
Arrival Rate per Wk - Releases / Week 400.00
Resource Cost $ 7.25
Hours Per Work Period 7.5
Work Periods Per Day 1
Days Per Week 5
Time Units Minutes
Time / Cost Per Manual Kanban Execution
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8. Manual Kanban Resource Time & Cost Analysis –
Per Manual Kanban Transaction
Resources Probability-Weighted Statistics
Process Resource Resource
Resource Time Time Cost
Buyer 12.25 12.25 $ 5.72
Material Handler 6.14 6.14 $ 1.53
Total 18.39 $ 7.25
Resource Time & Cost
Per Manual Kanban Transaction
Time Units are in Minutes
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9. Manual Kanban Resource Time & Cost Analysis –
Annualized (250 Production Days / 20,000 Manual Kanban Releases
KRS Process - Pre Ultriva Annual Resource Time & Cost Analysis
Planning Period 250.00 Days
Time in Planning Period 112,500.00 Mins
Demand Node Number of Items
KRS Set-up & Management 20,000.00
Resource Productivity Factor Available FTE's Available Time Required Time Cost
Buyer 0.75 12.00 1,350,000.00 Mins 237,777.78 Mins $ 110,962.96
Material Handler 0.75 6.00 675,000.00 Mins 163,651.11 Mins $ 40,912.78
Total 2,025,000.00 Mins 401,428.89 Mins $ 151,875.74
Annual Resource Time & Cost
Analysis to Support Manual Kanban
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10. Manual Kanban VA/NVA Analysis
Process Key:
White = VA Tasks
Red = NVA Tasks
Yellow = Failure Modes & Proposed
Solutions
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11. Manual Kanban Failure Modes & eKanban Solutions
KRS Failure Modes eKanban Solutions
~1 – 3% of the time the Material Handler Ultriva’s Collaborative Electronic Kanban (CEK)
would forget to fax kanban release to Supplier. solution supports a closed-loop, pull-based
This routinely resulted in stock-outs situations. material replenishment process. Electronic
material replenishment signals are
automatically sent to supplier on scan of empty
bin.
~3% of the time the Material Handler would CEK handles both blanket and discrete POs. For
forget to fax ROP sheet to Buyer. Routinely blanket POs, electronic material replenishment
resulted in stock-outs. signals are automatically sent to suppliers on
scan of empty bin. For discrete POs, Buyers are
automatically notified to release a manual PO
on scan of empty bin.
• Material Handler did not check to ensure due Supplier specific ‘Business Rules’ w/ automated
date and qty. were correct on kanban card. Buyer & Supplier alerts established for each
• Material Handler did not update supplier material replenishment loop. Order qty./due
confirmation info to on kanban release sheet. date/receive qty./etc. confirmed on scan of
barcode label. Supplier performance metrics
updated with each scan.
Material Handler did not notify Buyer of need Automated notification to Buyer whenever an
to create new PO for discrete orders. Item reaches its ROP to release discrete PO.
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12. Manual Kanban Failure Modes & eKanban Solutions
KRS Failure Modes eKanban Solution
Suppliers claimed they did not receive the Automatic alerting to both Buyer & Supplier
kanban release fax. when Supplier does not acknowledge and
satisfy each electronic replenishment signal
within pre-determined time frames.
Material Handler did not update kanban Automated updates to CEK when receiving
release sheet with actual qty./dock date scans barcode label. Associated supplier
impacting KPI tracking/reporting on supplier KPIs automatically updated.
performance.
Unable to determine if part qty./dock date Order qty., due date, actual received qty.
correct. and receive date automatically validated
upon scan of barcode label. Associated
supplier KPIs automatically updated.
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13. Collaborative Electronic Kanban
Process Analysis
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14. Collaborative Electronic Kanban Process Highlights
• Staffing Assumptions
– 12 FTE Buyers, Burden Rate $28.00/Hr.
– 6 FTE Material Handlers, Burden Rate $15.00/Hr.
• Process Observations
– Average Manual Kanban Releases = ~400/Week
– Kanban releases are 100% electronic
– Electronic signals are the primary means of communicating demand to
suppliers
– One-time set-up of electronic kanban loops. System monitors and suggests
resizing based on actual consumption patterns
– All material replenishment processes are closed-loop
– Real-time updates on material status based on barcode scans
– Significant reduction in overhead support requirements
– Actionable business intelligence on supplier performance
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15. Collaborative Electronic Kanban Process Flow –
Simplified & Automated
Simplified & Automated Process
1. Process Trigger: Release Electronic
Kanban Signal
2. Material Handler Scans Kanban Card
3. Email automatically sent to
Supplier/Buyer
4. Decision: P.O. Needed?
5. Decision: Supplier accepts within 24
hrs?
6. Order in Process at Supplier
7. Supplier Prints Kanban Label(s) &
Ships Part(s)
8. Decision: Goods Ship On-Time?
9. Decision: Goods In-Transit?
10. Receiving Scans Barcode Label to
Receive Goods
11. Decision: Are Goods Dock to Stock?
12. PointMan Automatically Updated to
Show Goods On-Hand
13. Process End
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16. Collaborative Electronic Kanban Process KPIs –
Per Manual Kanban Transaction
Key Performance Metrics
Process Time per Execution 1.50
Duration 1.75
Highest Utilization 2%
Service Level 100%
Takt 6.92
Arrival Rate 0.1
Arrival Rate per Wk 325.00
Resource Cost Per Execution $ 0.53
Yield 100%
Hours Per Work Period 7.5
Work Periods Per Day 1
Days Per Week 5
Time Units Minutes
Time / Cost Per KRS Execution
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17. Collaborative Electronic Kanban –
Process & Resource Time & Cost Analysis Per eKanban Transaction
Resources Probability-Weighted Statistics
Process Resource Resource
Resource Time Time Cost
Material Handler 0.25 0.25 $ 0.06
Material Handler Scans Kanban Card0.25 0.25 $ 0.06
Buyer 1.00 1.00 $ 0.47
Buyer Adds P.O. 1.00 1.00 $ 0.47
Receiving Clerk 0.25 0.25 $ -
Receiving Scans Barcode Label to Receive Goods
0.25 0.25 $ -
Total 1.50 $ 0.53
Resource Time & Cost
Time Units are in Minutes Per eKanban Transaction
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18. Collaborative Electronic Kanban –
Annualized (250 Production Days / 20,000 eKanban Releases)
Electronic Kanban - Post Ultriva Annual Resource Time & Cost Analysis
Planning Period 250.00 Days
Time in Planning Period 112,500.00 Mins
Demand Node Number of Items
Release Electronic Kanban Singal 16,250.00
Resource Productivity Factor Available FTE's Available Time Required Time Cost
Material Handler 0.75 6.00 675,000.00 Mins 5,416.67 Mins $ 1,354.17
Buyer 0.75 12.00 1,350,000.00 Mins 21,666.67 Mins $ 10,111.11
Receiving Clerk 1.00 1.00 112,500.00 Mins 4,021.88 Mins $ -
Total 2,137,500.00 Mins 31,105.21 Mins $ 11,465.28
Annual Resource Time & Cost
Analysis to Support eKanban
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19. Manual Kanban vs. Collaboratively Electronic Kanban –
Process KPI Comparison Report
KRS Pre Ultriva vs. Electronic Kanban Post Ultriva Process KPI Comparison Report
Profile Current State Future State
Map Type Transactional Transactional
Buyer creates
Kanban
Release Buyer Adds
Bottleneck Sheet ‘KRS’ P.O.
Arrival Rates Differ 0.18 0.14
Hours Per Work Period 7.5 7.5
Work Periods Per Day 1 1
Days Per Week 5 5
Activity Nodes 34.00 13.00
Start Nodes 1.00 1.00
End Nodes 4.00 2.00
Paths 34.00 4.00
Performance Current State Future State Difference % Difference
Process Time 18.39 1.50 (16.89) -92% I
Required Resource Time 18.39 1.50 (16.89) -92% m
Total Queue Time 24.81 0.00 (24.81) -100% p
Cycle Time 43.19 1.50 (41.70) -97%
r
Duration 49.36 1.75 (47.61) -96%
Utilization 89% 2% -87% -87% o
Service Level 43% 100% 57% 57% v
Minimum WIP 7.68 0.22 (7.46) -97% e
Cost $ - $ - $ - -
m
Resource Costs $ 7.25 $ 0.53 $ (6.72) -93%
User Property Costs $ - $ - $ - - e
Total of All Costs $ 7.25 $ 0.53 $ (6.72) -93% n
Rolled Throughput Yield 100% 100% 0% 0% t
Time Units are in Minutes
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20. Manual Kanban vs. Collaborative Electronic Kanban –
Annualized Time & Cost Comparison Report
KRS Process - Pre Ultriva Annual Resource Time & Cost Analysis
Planning Period 250.00 Days
Time in Planning Period 112,500.00 Mins
Demand Node Number of Items
KRS Set-up & Management 20,000.00
Resource Productivity Factor Available FTE's Available Time Required Time Cost
Buyer 0.75 12.00 1,350,000.00 Mins 237,777.78 Mins $ 110,962.96
Material Handler 0.75 6.00 675,000.00 Mins 163,651.11 Mins $ 40,912.78
Total 2,025,000.00 Mins 401,428.89 Mins $ 151,875.74
Electronic Kanban - Post Ultriva Annual Resource Time & Cost Analysis
• $140K in labor savings
Planning Period 250.00 Days • Three FTE resources freed-up
Time in Planning Period 112,500.00 Mins
• Eliminated stock-outs
Demand Node Number of Items
Release Electronic Kanban Singal 16,250.00
• Improved OTD
• Reduced inventory
Resource Productivity Factor Available FTE's Available Time Required Time Cost
Material Handler 0.75 6.00 675,000.00 Mins 5,416.67 Mins $ 1,354.17
Buyer 0.75 12.00 1,350,000.00 Mins 21,666.67 Mins $ 10,111.11
Receiving Clerk 1.00 1.00 112,500.00 Mins 4,021.88 Mins $ -
Total
20 2,137,500.00 Mins 31,105.21 Mins $ 11,465.28

21. Key Contact Information
Frank Kapper
Director of Sales
Ultriva Inc.
1601 South De Anza Blvd, Ste. 260
Cupertino, CA 95014
Ph: (408) 828-8454
Email: frankk@ultriva.com
Web: www.ultriva.com
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