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IMPLEMENTING KANBAN ALTERNATIVES IN LEAN MANUFACTURINGEnterprise Resource Planning
WHITEPAPER
WHITEPAPER IMPLEMENTING KANBAN ALTERNATIVES IN LEAN MANUFACTURING 2
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EXECUTIVE SUMMARY Manufacturing companies are adopting Lean because of its
efficiency—lowering costs and lead-time, while improving quality
and performance. In today’s highly competitive and challenging
markets, companies need every available advantage.
Many people equate Lean manufacturing with the use of kanbans:
physical or visual signals that trigger replenishment. While kanban
use is indeed a part of many Lean programs, it is not the only
solution for triggering the movement of material. Kanban has its
place, but there are more appropriate alternative approaches in
situations where kanban is not a good fit.
It is important to remember that Lean is an approach and an
attitude—not a specific set of techniques or tools. The most
important aspect of Lean is a focus on the elimination of “waste”
(i.e. anything that does not contribute directly to making the
product). Kanban and kanban alternatives focus on inventory
reduction, proper staging of parts and materials (reduced
handling and delay), and efficient procurement/production of
replenishments.
KANBAN AND LEAN Kanban is a replenishment signal that acts as the primary linkage
in a “pull” environment. Typically a substitute for a manufacturing
order or purchase order, the kanban signifies that an item,
material, or assembly has been used and that another can and
should be made, moved or acquired to replace it. When properly
applied, kanbans help reduce inventory and shorten lead-time,
reducing waste in support of demand-driven “pull” operations.
Kanbans work best where demand is steady for a given period
of time. Once the appropriate number of kanbans is put into
circulation, material flow is timed to usage, inventory remains
constant, and shortages should be eliminated. However, the
kanban system is not designed for frequent demand changes. If
demand increases, shortages occur; if demand decreases, there
will be excess inventory. Management must continually monitor
the number of kanbans in circulation and make the appropriate
adjustments.
Where there is a varying demand and/or a mix of products being
produced, particularly with small quantities, computer techniques
do a much better job of having the right parts available with
minimum inventory investment. In addition, computer techniques
are designed to track changes in demand and usage and
automatically adjust activities to accommodate those changes.
ERP—NOT A FOUR-LETTER WORD People tend to define ERP as a traditional system. In reality, these
so-called traditional systems plan inventory availability quite
precisely, based on the forecast. Best performance is achieved
when the forecast is accurate (or at least closely managed), and
execution is carried out effectively. Also, ERP can be a lot more
forgiving of challenging business conditions, such as rapidly
changing forecasts, supplier schedule changes, and the like.
In a make-to-order or assemble-to-order situation where kanban
does not fit, ERP with a product configurator offers the most
effective approach. Components, materials and/or assemblies are
planned and stocked according to a forecast. The configurator
captures customer specifications and generates the production
Time waste differs from material waste in that there can be no salvage. The easiest of all wastes and the hardest to correct is the waste of time, because wasted time does not litter the floor like wasted material.
Henry Ford
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WHITEPAPER IMPLEMENTING KANBAN ALTERNATIVES IN LEAN MANUFACTURING 3
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or assembly work order for quick completion and shipment.
Planning systems coordinate replenishment of components used
in accordance with minimum inventory/maximum availability
objectives. Such a system is not hampered by the variation in
demand of products and configurations. In fact, it is designed
to operate in this environment and generate minimum inventory
consistent with availability and customer service objectives.
Hose Master of Euclid, Ohio successfully pursues this strategy.
This 200 employee firm makes both custom and standard hose
products for domestic and export sales. The company uses a
configurator-enabled ERP system to process 6,000 quotes and
2,500 orders each month. Since implementing the system, Hose
Master has improved service levels and maintained or shortened
delivery times, while handling an increased quote volume.
Hose Master Benefits:
• Faster, more automated configure-to-order quoting system
led to improved service levels, faster quote delivery, and
quicker new hire training
• Able to handle increased business with previously publicized
lead times; improved lead times in some instances
• Offered self-service features via the Web
BECOMING LEAN Lean is all about eliminating waste—cutting unnecessary costs
like excess inventory levels, reducing lead time and handling,
and focusing on doing things right the first time. A variety of
techniques and tools can be applied across the wide range
of manufacturing situations to control material flow, reduce
inventory, and shorten lead-time.
For materials and parts with relatively steady usage, kanban offers
a paperless- and orderless-approach. For custom manufacturing,
a configurator integrated with a full-function ERP system is
the answer. In the vast area between these two extremes, the
following provide the best tools for reducing waste, lead-time,
inventory, handling, scrap, rework, and other non-value-adding
activities:
• Integrated ERP system with comprehensive applications
that address the full range of a manufacturer’s activities,
including customer service and supplier relationships.
• Solid forecasting and master scheduling processes that keep
close track of demand and ensure that execution is fully in
sync with customer needs.
• A focus on process improvement and waste elimination,
heavily reliant on empowered workers and responsive (and
responsible) management.
• Automation where it makes sense—shop floor data
collection, RFID, electronic ordering, self-service web, and
more.
• An open mindedness toward new and innovative
approaches like Theory of Constraints, demand-driven
strategies, and collaboration—consistent with the company’s
position, products, customers, and capabilities.
In today’s highly competitive world, success is all about satisfying
the customer, controlling costs, and maximizing profits. Every
improvement program can achieve these goals when capitalizing
on the best of lean manufacturing and overall best practices.
A modern, integrated ERP suite that supports not only manufacturing, but also financials, supply chain, and customer management—and is supported by functionality for tracking a company’s performance—can help support the proliferation of lean throughout the enterprise.
Excerpt from: “SMBs: Embrace Lean as Part of the Current Business Transformation” by Simon Jacobson
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Copyright © Aptean 2012. All rights reserved.
WHITEPAPER IMPLEMENTING KANBAN ALTERNATIVES IN LEAN MANUFACTURING
More than 9,000 customers around the world rely on us to give them a competitive edge. By providing innovative, industry-driven enterprise application software, Aptean helps businesses to satisfy their customers, operate most efficiently, and stay at the forefront of their industry.
For more information, visit: www.aptean.com
www.aptean.com
NEXT STEPS A textbook Lean implementation can be quite daunting—value
stream mapping, intense training and implementation, radical
changes in processes and company culture. But you don’t have
to do all that to take advantage of Lean thinking and gain
Lean benefits. All it takes is openness to new ideas, trust in the
knowledge and experience of the workers, and a willingness to
make changes. You can adopt Lean practices incrementally and
continuously in a gradual, extended journey toward improvement.
When software capabilities are key to achieving your business
objectives, Intuitive ERP and Made2Manage ERP software and
services meet the wide range of manufacturing and business
requirements. They are matched closely with specific customer
needs, incorporating deep industry knowledge and experience.
Plus, each is continually enhanced to meet evolving customer
requests and suggestions.
Notable for ease-of-use, fast navigation, tailored views and tight
security, Intuitive and Made2Manage applications deliver the
functionality without the fuss, permitting manufacturers to focus
on process improvement and their Lean journey.
Intuitive offers rich functionality for a broad range of
manufacturing environments, including electronics, medical
devices, aviation and others, and makes implementation easy for
small to midsized companies. Made2Manage provides full ERP
capabilities for custom manufacturers centered on a “casual” bill-
of-material for making complex products, while continuing with
design and engineering activity.
Active product support and enhancements deliver the capabilities
and technologies that customers want and need in their specific
industries, including ERP, Business Intelligence (BI), Customer
Relationship Management (CRM), Advanced Planning Systems
(APS), Manufacturing Execution Systems (MES), and configuration
from one supplier.
Intuitive and Made2Manage are backed by an experienced
management team and deep financial resources, combining high-
fit solutions, solid customer relationships, and a strong balance
sheet into a value proposition unmatched by other vendors. Both
are ready to provide the information management solutions and
support you need to keep your business lean, productive, and
ahead of the competition in today’s rapidly changing market
environment.
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