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Ten Steps to Effective Kanban Design

Steps  1-4

The Ten Steps

The author likes to think in terms of ten basic steps to analyze and design kanban systems and these steps are summarized here. For many, perhaps most, systems the steps do not require as much detail, formality and rigor shown in the examples; many times an educated guess is quite adequate. But, the educated part of the guess requires that you know what you are trying to do in that step and why it is important.

Most kanban systems are easy to change. So, a reasonable guess followed by monitoring and fine tuning will result in a near-optimum system with reasonable effort. When the system may be difficult to modify, a more rigorous analysis is in order. Another reason for informality is that accurate data may be unavailable.

Analyze Products-Volumes for Upstream Work Center

Upstream work centers may produce multiple products, often for several downstream workcenters. Some of these items may be unsuitable for kanban and this will become clearer with the Product-Volume analysis .

This is also the time to ensure that the upstream work center has adequate capacity to produce this product mix and volume.

Analyze Downstream Demand Patterns

The purpose of the Stockpoint is to buffer any differences between downstream demand and the ability of the upstream workcenter to precisely track that demand. If the upstream workcenter can track downstream demand exactly, there is no reason for the kanban system and direct link (a.k.a. FIFO) or a broadcast system is more appropriate for coordinating the two workcenters. The greater the disparity between downstream demand and upstream ability to supply it, the larger the kanban stock.

To examine this downstream demand, prepare a short-term demand chart as shown in Figure 4. Normally this will be a daily demand chart but it might be hourly, weekly or some other period. Figure 4 shows that, for this example, the daily demand over a five-month period exceeds upstream capacity on only six days. Later, we must decide whether to provide enough stock to cover these particular occurrences or cope with them in some other way.

Overall capacity, however, is only one factor that affects the upstream workcenter’s ability to track demand. Setup times, lot sizes and downtime are also considerations. It may also be necessary to examine demand on an item-by item basis.

Identify Kanban Products

In Step 3, identify those products suitable for kanban. For this example, Figure 3 shows that of the 18 products, only four have enough volume to justify a kanban stock. The remaining twelve will be made to order. It is assumed that the general pattern demand for individual items reflects the overall demand and this may not be the case. For example, Item #9S10 might be sold in a different market that orders in very large lots but these orders are few and far between. Such a pattern does not fit well with kanban and would require a large kanban stock that is used only rarely even though the total volume appears to be mid-range.

Identify Appropriate Lot Sizes

Lot sizes are important for both the upstream and downstream workcenters. Generally, the smaller the lot sizes, the smaller the kanban stock and the better the system works. Small downstream lots smooth demand on the upstream workcenter. Small upstream lots enable that workcenter to better track downstream demand.

Contrary to some assertions, Economic Lot Size analysis is still relevant (Figure 5). We can make it irrelevant through SMED techniques that reduce setup time and cost. But, until setup cost is near zero, building in lots will likely be necessary. Until we can build in lots of one, kanban stock is necessary and the amount of that stock is determined partly by lot sizes. Next Page Button

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