Kanban for productions @goodrich aerospace (live project)

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BHAVAN-MARSHALL INSTITUTE OF MANAGEMENT, #43, RACE COURSE ROAD, BANGALORE - 01

KANBAN FOR PRODUCTION CONSUMABLES

1. ABSTRACT

This research report is based upon the inventory management of

consumables at Goodrich Aerospace Pvt. Ltd... The process adopted was to

implement a Two Bin Card Kanban System along with a Visual Status Dash

Board for the management of consumables on a weekly basis as well as help

in proper implementation of the 5’S process. The implementation will

eventually lead to smooth management of inventory and also reduce the

storage of excess stock leading to lower costs and lower storage area.


KANBAN FOR PRODUCTION CONSUMABLES

2. INTRODUCTION

The principle of just-in-time (JIT) is aimed at eliminating all sources of

manufacturing waste by getting the right quantity of raw materials and producing the right

quantity of products in the right place and at the right time. The heart of the JIT system is the

Kanban, a Japanese term for ‘visual record’, which directly or indirectly drives much of the

manufacturing organization. Kanban literally stands for ‘card signal’, a tag-like card that

communicates production information. The Kanban system is one of the simplest, most

effective, and inexpensive means of production and inventory control. The Kanban system

has proved to be helpful in reducing inventory, eliminating stock-outs, replacing over use of a

computer, slashing overheads, and as an empowering factor thereby improving both service

and quality.

The introduction of a Kanban system often evokes strong emotional response from

both proponents and detractors, and sets a variety of organizational phenomena at work

against it. To many production managers, Kanban may only look like a pure production

method, having little or nothing to do with the surrounding environment. Instead, the concept

takes form on the shop floor, in close interaction between work force and management, and

more importantly, involves both internal and external customers. Kanban is not just designing

and calculating neither numbers nor a magic bullet, rather it is an organizational shift towards

decentralization of various responsibilities to the level of workmen. It involves multi-machine

manning/working structure, standard operations, quality control circles, housekeeping,

automation (decision by a worker to stop the line), suggestion system, layout improvement

and continuous improvement (Kaizen).


3. LITERATURE REVIEW

Goodrich aerospace limited, a major parts supplier to Boeing and Airbus has been

facing certain inconveniences with their inventory system. Due to the lack of significantly

less floor space for their consumables, which caused disorganized arrangement of inventory,

they wanted to find out the feasibility of using Kanban for their production consumables.

Kanban is a card used to indicate the need for inventory replenishment. A system built

on Kanban principles is a pull method of keeping production lines optimally stocked with

parts and components when they are needed and in the right quantity. As a product is

consumed during the production process, an order for depleted inventory is immediately

placed, either a Kanban card or electronically through a computerized Kanban program. As

this system of consumption driven replenishment proves its applicability across tiers of

distribution and supplier networks, it is becoming a compelling alternative to traditional

material requirements planning (MRP) for several reasons. One of the most significant is that

push-style MRP system rely on forecasts to determine what and how much to replenish.

Although forecasts have proven useful in predicting overall demand, they can be poor

indicators of exactly which products will be needed and when. (Reference: Narayan

Laksham, President, Ultriva, Inc, June 2006, “When Push Comes to Pull, Kanban Wins”,

Supplier Strategies)

Pull Kanban has two systems the first one is pull system and the other one is Kanban

system. In pull system the whole facility operates at the rate of customers. Demand through

the use of visual triggers. Traditionally the first operation usually loaded with materials and

batch are pushed through the subsequent operation causing inventory and long lead times.


Kanban facilitates an even flow of production through the different stages of the

process reducing work in progress. A typical Kanban system for material supply operates as

follows: When requested, a bin of components is issued to an assembly line. The bin contains

the Kanban card. As soon as the first component is used from the bin, the card is placed in a

designed position fro collection. At a regular time interval, the Kanban cards are collected

and immediately sent to the component supplier. This becomes his signal to deliver another

bin of components immediately. (Reference: Chris McKellen October 2004 “Pull Kanban”

Metalworking Production)

The Kanban system is a simple way of implementing a pull control policy, by

transferring information from downstream to upstream. The aim of this paper is to develop a

general analytical method for performance evaluation of a large analytical method for

performance evaluation of a large class of Kanban systems. The production system is

decomposed into several stages. Each stage corresponds to a subpart of the production

system. A stage may consist of a single machine, a set of identical machines, or a more

complex system. With each stage is associated a fixed number of Kanban. (Reference: Maria

Di Mascolo and Yannick Frein, 1992, “An analytical method for performance evaluation of

Kanban controlled production system”)

The pull system of production/materials control requires employee participation and

involvement strategies. A relatively new approach that managers are using in the

manufacturing process to empower workers is work teams. Expectations are key elements in

the motivational process. Employees have to understand that they are going to be

compensated for their performance, but it is very important that a match exists between

managers, supervisors, and worker expectation. (Reference: Stephanie G. Adams, University

of Nebraska – Lincoln and Bianey C. Ruiz-Ulloa, University of Nebraska – Lincoln, “An


Investigation of Personnel Issues Affecting Kanban Performance: A Case Study”

Engineering Management Journal Vol. 15 No. 4)

One of the prime reasons why most of the organization fails to embrace pull strategy

is “FEAR”. They fear change, loss of control, lack of employ ability, job security, running

out of materials etc. In order to overcome these fears or barriers, what an organization need is

strong leadership to boost the confidence of its employees and motivate them to embrace

Kanban scheduling. These are the sensitive issues if not monitored or controlled properly, can

prove to be a disaster for the company. Recognizing the fears that are associated with Kanban

implementation will greatly increase the chances for successful implementation. Use these

fears to formulate plans that allow you to address and overcome them. Don’t allow fears to be

a roadblock, but rather turn them into stepping stones to the organization’s success.

(Reference: John gross, April 2005, “Implementing successful Kanban”)

Setting of two Kanban systems can improve the production. The advantage of this

process is that the trade-off between inventory holding and material handling costs can be left

up to the station supervisors. The two card Kanban system is a demand pull system. Only the

last station has a schedule. For all other stations, the signal to produce is the physical removal

of a container of parts from a stations output material queue.

The performance of a two card Kanban controlled station is measured by its ability to

meet the demands of downstream stations, as represented by the arrival of withdrawal

Kanban, from stock. It is not possible to measure stations performance by conformance to a

production schedule because only the last station has a schedule. The fill rate is defined as the

proportion of demands met from stock. The Kanban production control literature has focused

mainly on the problem of setting the number of Kanban to achieve a desired performance

level. However, in practice, setting the number of Kanban is often easier that setting


minimum performance levels. Given a desired performance level, such as a minimum

average fill rate or maximum average withdrawal Kanban queue time, stations supervisions

can often quickly converge, by trial and error, to the necessary number of Kanbans.

(Reference: B.J.Berkley, 1993, “Setting minimum performance levels for two card Kanban

controlled lines”)

Toyota's dual-card Kanban technique, with a productivity improvement feature, is

contrasted with a less-potent and simpler technique employing a single Kanban. In the Toyota

Kanban system every component part type, or part number, has its own special container

designed to hold a precise quantity of the part number, preferably a very small quantity.

There are two cards, or "Kanban," for each container, and the Kanban identify the part

number, container capacity, and certain other information. One Kanban, the production

Kanban, serves the work centre producing the part number; the other, called a conveyance

Kanban, serves the work centre using it. Each container cycles from the producing work

centre and its stock point to the using work center and its stock point, and back, and one

Kanban is exchanged for the other along the way. (Reference: Richard J. Schonberger,

August 1983, “Applications of Single-Card and Dual-Card Kanban”)

The Kanban is a visual cue that is used to signal the replenishment of goods at each

stage in the production process. It is the classical mechanism to manage the flow of materials

through a JIT system. The number of circulating Kanbans is important to the effective

operation of the JIT production system. Too many Kanban cards produce excess work-in-

progress inventory, while too few lead to production-floor disturbances. Moreover, the

number of Kanbans can significantly influence the load balance between processes, and the

amount of orders needed to obtain supplies from subcontractors. Quite often JIT with

Kanbans is used in environments not meeting the criteria for optimal performance. These

criteria may be unstable product demand, highly variable processing times, or highly variable


vendor supply times. When these conditions exist, a buffer of inventory is necessary to

smooth production flow in the shop. The result is a factory saturated with work-in-progress

inventory often characterized by a large number of Kanbans at each work centre. Poor factory

performance may also result from excessive machine idle times, long lead times and output

shortages that produce a factory that is ‘starved’ for work-in-progress inventory. Such a

system is typically characterized by a very small number of Kanbans at each work centre.

(Reference: Richard G. Mathieu, Barry A. Wray and Ina S. Markham, 2002, “An Approach

to Learning from both good and Poor Factory Performance in a Kanban-Based Just-In-Time

Production System”)


4. PROBLEM DEFINITION

“Due to the increased size of consumables there is increased storage area,

poor 5S and not the least waste way.”

5. KANBAN AT GOODRICH

Over the years, GOODRICH Aerospace Services Pvt. Ltd. has been facing problems

related to inventory management. Currently order is placed for 12 months requirements and

the supplier is delivering two months requirements alternate months. This is creating

disadvantages such as increasing storage area, poor 5S and not the least way. Therefore it

became necessary for the implementation of Kanban which is an inventory control

mechanism. The following advantages of Kanban give us the feasibility of implementing it in

Goodrich.

1. Low costs associated with inventory storage: Kanban improves operations that are being

used in production by emphasizing reduction in inventory costs. By implementing

Kanban, a company is able to reduce their inventory levels to only what is needed for

each process; this helps lower inventory costs dramatically.

2. Provides quick response to changes: Kanban cards also create a visual schedule for

production. They state how many parts should be created and when they must be created

by. This allows a company to put more emphasis on the orders that are due in the near

future, such as a couple days, versus the orders that are due in a couple weeks.

3. It is a simple technique so its cost is low: A Kanban card is initially attached to a batch to

be processed by that workstation. The Kanban card stays attached to the batch until a

downstream workstation has a Kanban card available. When this occurs the attached


Kanban card is freed from the workstation's product and the previously freed Kanban card

from the upstream workstation becomes assigned to that batch. Thus a free Kanban card

allows a workstation to obtain material from the previous station when the material is

available.

4. Lead times are reduced: If operators are doing more than just producing their required

parts, more work is being done which in turn helps to increase productivity levels for the

company. If productivity increases, it is only natural that lead times will also be reduced,

which will help a company establish better relationships with their customers.

Kanban serves two functions for a company: to help control production and to help

improve processes. Kanban ties different manufacturing processes together, ensuring that the

necessary amounts of material and parts arrive at the appropriate time and place, which

guarantees that only the required amounts of parts are being used and there is no excess

inventory in process. To help processes, Kanban improves operations that are being used in

production by emphasizing reduction in inventory costs.

Prior to implementing Kanban we can determine the:

a) Anticipated decrease or increase of your inventory levels if you were to employ

Kanban

b) Specific numbers, whose demand patterns are too erratic for Kanban

c) Appropriate safety stock setting for each part number based upon its unique demand

pattern.


6. IMPLEMENTATION

6.1 Setting:

The setting up of the Kanban process and the necessary arrangements requires

specific location on the production floor where it can be implemented. The area allocated to

us is around 10ft X 4ft (Figure1, figure 2). This area is where the Kanban process is setup.

Certain other requirements would be the construction of a shelf whose specifications are

provided.

6.2 Project team formation:

A Kanban implementation team needs to be formed from personnel from different

functional areas. This team would be solely responsible for the proper implementation of the

process. The team should consist of one technical officer to make changes in the inventory

level data, one operating crew should take charge of the Kanban cards, and two production

officers (producer and consumer) one should carry the Kanban cards and consumables to and

from the suppliers and another should communicate with the suppliers. Apart from this the

entire production unit and whomsoever will be using the system has to be trained.

6.3 Introduction of 5S within the scope of Kanban in Goodrich:

5S means Sort, Set in Order, Shine, Standardize, Sustain. 5S is a system to reduce

waste and optimize productivity through maintaining an orderly workplace and using visual

cues to achieve more consistent operational results. Implementation of this method "cleans

up" and organizes the workplace basically in its existing configuration, and it is typically the

first lean method which organizations implement. 5S is an organized, relentless, never-ending

effort to remove all physical waste from the workplace; set things in order; clean and inspect


constantly; and create a culture that promotes, endorses and rewards all of the above - from

management to the shop floor. The implementation of the shelf for storing the inventory

helps the company to follow the 5S efficiently. It helps us to sort the consumables and set

them in order. Due to this the workplace looks clean and shines. This makes the system

standardized and repeating the 5S discipline we can sustain high quality of work culture.

6.4 Process setting:

Kanban is one of the primary tools in a JIT (just-in-time) replenishment system. It is

literally based on cards that signal the need for a replenishment cycle for production and

materials in a manufacturing environment. It can also be applied as an inventory control

system for parts management. Here is how Goodrich could implement Kanban for their

production consumables. The lead time for the supplies of consumables is 2 to 3 weeks and

IPA does not have lead time. Depending upon the lead time, the supplier or the warehouse

only delivers components to the production line as and when they are needed, so there is no

storage in the production area. Here is how it works:

1. Kanban cards (Figure 3) are placed with all parts in boxes or containers.

2. When a production worker begins using parts from the box or container, they pull the

card and put it in a Kanban mailbox. Starting a cycle of sorts.

3. The cards are picked up regularly and are brought to a sorting room and are placed in

an empty box.

4. The part supplier sends a driver to the sorting room. The driver picks up the empty

boxes with the Kanban cards. This is the suppliers cue to replenish the part.

5. The order (Kanban card) is brought to the supplier’s facility where the box is

restocked with parts.


6. The driver for the supplier returns the box of parts back to the manufacturing facility

where it is ready to be delivered to the production line.

7. The driver stops by the sorting room to pick up any new Kanban cards and the cycle

is repeated.

8. A proper visual status dash board (Figure 4) has to be implemented for finding out the

status of the stock levels of the inventory.

9. Once the cards are sent to the supplier, they are placed in the receiving slot.

10. When the order arrives, the Kanban cards are pulled from the receiving slot and are

matched to the incoming parts. Resolve with supplier any parts not received for the

Kanban cards.

11. The parts are restocked in inventory. The Kanban card is returned to the bin.


7. KANBAN CARD:

The Kanban card (Figure 3) has been designed according to industry standards. The

following gives the details of the content in the card. The numbers are corresponding to the

figure2.

1. List the company name on the card to let the supplier know what company they are

pulling the parts for. It helps their people when pulling the order.

2. The supplier’s name is printed on the card as well. This helps your employees send

the order to the right supplier.

3. This is the supplier’s part number. No more worry about putting the correct catalogue

number when typing up a Purchase Order. The part number is always on the reorder

card.

4. This is a description of the part. The description helps when they pull parts to

replenish trucks.

5. This is the reorder quantity. This tells the supplier how many parts to restock on the

order.

6. This is the unit of measurement (i.e. – box, roll, etc.).

7. This is for your company’s reference. It shows the stocking level.

8. This is where the part is located in your facility. It helps your employees restock the

parts when they come into your facility.

9. This system uses two cards. One stays with the bin & parts. The other is actually the

transport Kanban. This comment line identifies the two distinctive Kanban cards.

10. This shows the date the card was printed and the information was last updated.


8. INVENTORY CONTROL STATUS DASH BOARD

An inventory control status dash board (figure 4) has been created in MS-Excel for

showing the status of the inventory- safe(green), moderate(yellow), critical(red). The

consumables list has been shown in a tabular column with their weekly requirement

adjacently. Then there is a workspace shown which covers the consumption in the entire

week. If there is a stock out in between the week then there is provision for adding new

inventory. The colour of the status cell changes according to the inventory level set in prior.

1. If there is 50% or more inventories then the status shows green, i.e. safe.

2. If the inventory level is between 25% and 50% then the status shows yellow, i.e.

moderate.

3. If the inventory is less than 25% then the status shows red, i.e. critical and

replenishment is required.


9. EVALUATION OF THE PILOT PROCESS

(IMPLEMENTATION OF THE KANBAN SYSTEM)

Like all systems the Kanban system should be primed and measured. Since stock is

fixed, the main measurement is due date compliance. However, other measures will indicate

the health of this system before it collapses. After designing the Kanban system, reducing the

setup time, implementing housekeeping and statistical process control (SPC), the whole

system should run on a pilot basis to evaluate and measure the performance of the Kanban

system and measure the effectiveness of the system with respect to parameters such as WIP

inventory, reduction in setup time, time lost due material, absenteeism and technical reasons

etc. The system should be evaluated for two months of running on a pilot basis.

10. CHALLENGES

Ignoring the human aspects of the Kanban system will result in failure of Kanban

implementation. The Kanban system is one of the simplest systems to operate but it does

require a change of mindset on behalf of the operator. These simple rules are actually really

difficult to implement. The Kanban system requires modifications to the wage system to

compensate for team works and the number of different jobs performed and thus rewarding

for both technical and people skills.


11. CONCLUSION

The study provides a document methodology for practising managers to implement

the Kanban system from scratch by developing a set of applicable rules from the abstract

ones in a day-to-day inventory control process. The intricacies involving the detailed steps

using Kanban, 5S and Status Dash-board described in the text will be useful for developing a

complete operational plan in any organization. The study also reveals the extent of benefits

accrued by the combined effect of various elements required to enhance productivity,

training, 5S, SPC, visual control. The relationship of the wage administration system and its

impact on the degree of success of implementing the Kanban system in an organization are

well documented which provides a new opening to practitioners. The integrated Kanban

system for both calculation of the number of cards and its scheduling on the shop floor can be

considered for future research in developing practical models for industry.


(FIGURE 1)

KANBAN SHELF FOR STORING CHEMICALS ON THE FLOOR


(FIGURE 2)

KANBAN SHELF FOR STORING INVENTORY ON THE FLOOR


(FIGURE 3)

KANBAN CARD


(FIGURE 4)

STATUS DASH-BOARD


12. REFERENCES

1. Bruce D. Henderson, “The logic of Kanban”

2. B.J.Berkley, 1993, “Setting minimum performance levels for two card Kanban

controlled lines”

3. Chris McKellen October 2004 “Pull Kanban” Metalworking Production

4. John gross, April 2005, “Implementing successful Kanban”

5. Maria Di Mascolo and Yannick Frein, 1992, “An analytical method for performance

evaluation of Kanban controlled production system”

6. Narayan Laksham, President, Ultriva, Inc, June 2006, “When Push Comes to Pull,

Kanban Wins”, Supplier Strategies

7. Richard G. Mathieu, Barry A. Wray and Ina S. Markham, 2002, “An Approach to

Learning from both good and Poor Factory Performance in a Kanban-Based Just-In-

Time Production System”

8. Richard J. Schonberger, August 1983, “Applications of Single-Card and Dual-Card

Kanban”

9. Stephanie G. Adams, University of Nebraska – Lincoln and Bianey C. Ruiz-Ulloa,

University of Nebraska – Lincoln, “An Investigation of Personnel Issues Affecting

Kanban Performance: A Case Study” Engineering Management Journal Vol. 15 No. 4

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Date post:	12-Sep-2014
Category:	Education
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Kanban for productions @goodrich aerospace (live project)

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