Kaizen Scenario: Kanban Implementation

 

When improvement teams set up kanban loops, they often get very creative about how they actually operate. What follows is an example of one such loop, and then I am inviting comment and replies to some specific questions I have.

The process works like this:

  • The items are stored on a shelf in a warehouse. One item per carton. The carton is 60x60x90 cm and weighs about 70kg.
  • Next to a shelf there is a box containing the kanban cards for those items. The team is calling this box a “kanban post.”
  • One card represents a reorder for five units of inventory.
  • When a customer order is received, say for 35 units, the picker pulls the appropriate number of cartons to prepare for shipping.
  • Since there are 35 units in the order, and each card orders 5 units, he pulls 7 cards from the “kanban post.”
  • He takes the cards to the kanban administrator, who uses them to order new items from the factory.
  • When the replacement inventory comes in, it is sent to the shelf location, and the cards are returned to the kanban post.
  • The plan is to eventually apply this same process to the other parts in the warehouse (several hundred types of items)

You are a kaizen manager for the company. You are checking on your kaizen teams as they do their work, and discover they are implementing the above process. The kaizen workshop leader who is guiding this team works for you.

Questions:

What, if anything, would you think about this solution, and what, if anything, would you say to the kaizen team leader?

I am serious – I am looking for input here. I have my views, but I want to hear from others.

32 thoughts to “Kaizen Scenario: Kanban Implementation”

  1. My thoughts:
    – 70 kg is heavy. Shelf location may not be safe.
    – Kanban cards are posted next to inventory. Why not post the K/B cards directly on the inventory/items.
    – For replenishment, how is Order Demand & Lead-Time considered?

    Comment on the Kaizen Leader: Does not appear to have direct experience w/ Kanban process.

    Thanks,
    Aleks

  2. 1. I would set a more fixed order quantity with a lead time that is appropriate for the quantity ordered. The leadtime may or may not be correct depending on how many cards are turned in. If the quantity varies quite a bit, it may not be a good kanban candidate.
    2. I would post the kanban card in plain view where anyone can look at all of the stock on this shelf and see “A status”. If he must send the card to production, then keep a card on the rack that can be turned over where everyone can see it has been ordered since the kanban card is gone. If it was not ordered and thwe kanban card is gone, that’s a visual abnormal situation.

  3. I have two, perhaps naive, questions

    How do you ensure synchronization between cards and stock?

    Do customers always buy in multiples of 5? If not see question #1.

    Robert

  4. Is there a work and safety instruction to carry 70 kg items.

    How do you visually detect potential mistakes in this process:
    – picker forget to pull the 7 cards from the “kanban post” or pull another quantity than 7.
    – picker forget to take the 7 cards to the kanban administrator
    – the right quantity cards is not returned to the kanban post when replenishment inventory comes in

    How many cards are pull when the number of cartons is not a multiple of 5 ?

  5. The main issue I would have is not having the kanban attached to the packages themselves. With the method you describe, it seems very possible that somebody could pick (pull) items from inventory and forget to pull the cards that are there to reorder more material.

    On the flip side of the equation, assuming that the cards were pulled and replenishment material was ordered, what if somebody put the cards in the wrong “post?”

    I guess it all boils down to a more complicated system than I would like to see. A number of years ago, while serving as baggage carrier for one of my favorite Senseis (Mr. Nagamatsu), I watched him teach a team how to make a system simpler than they ever thought possible. He did this by first instructing them to design a system. On his next visit, he asked them if they’d done that. When they said that they had, he simply said (through his interpreter), “Very good, now make it simpler.” Then we left. He did that twice more. The final result was a marvel of simplicity. The system you describe doesn’t quite sound that way.

  6. Is 35 a typical order quantity? What is the demand like? I agree that the card should be affixed to the box somehow, but also perhaps the card can represent more parts if the order quantity is always 7 or 8 boxes. i.e. One card could represent 6 boxes, or a small skid if the order quantity is always this high. It doesn’t seem much like 1 piece flow.

    1. To answer some really good questions.
      35 is a typical order quantity.
      History shows daily customer orders ranging between 27 and 41.

      The team has set this supermarket up as the “pacemaker process.”

      They chose to keep the cards separate from the inventory because they believe that would help prevent lost kanban cars.

      Question:
      With this process as described, what would be the work breakdown and key points for the parts picker?

  7. I’m really at a disadvantage here. Kanban systems always confuse me. It’s like chess. My mind keeps going over the moves until I forget where I started. I’d have to do a simulation with paper dolls in order to understand even the simplest Kanban system.

    Bottom line is this Kanban system sounds too short. Pull a card take it to the administrator. The administrator buy’s more stuff. That does not sound like a Kanban system. This process could be done much easier with an old fashioned inventory system. Or a computerized inventory system. Enter what you have used into a computer, the administrator has a computer, and the computer tells them when to order more. Why be passing cards back and forth?

    I want to know more information about the whole process.

    5 units per card? If the customer orders 4 parts on each order, and the worker pulls a card, after a while they will have too much inventory.

    Ordering from the factory? Is this simply a warehouse? Why can’t the customer order go directly to the administrator? And the administrator issues the cards for the warehouse to pick the order?

    What is the problem they are trying to solve?

  8. How come when I go into a supermarket (food market), they don’t have Kanban cards sitting in boxes next to each product?

    How do they know when to reorder?

    1. How does a food market know when to reorder?
      Interesting question.
      Where is the point in the process when the supermarket is aware something has been sold?
      What was that point before the days of computerized scans at the register?
      They certainly didn’t have cases of tomato soup delivered based on a sales forecast, so what did they do?

  9. Mark, are you sure they didn’t? My own experience with a local grocerie some 25 yrs ago is that the owner was quite good at forecasting his sales.
    But yes, you’re right sometimes he had too much and sometimer too little.
    At the end of each day though the inventory was checked as we filled the shelves and moved the oldest items in front.

  10. But back to the issue that started the discussion, I cannot understand either why the kanban cards are using a quantity of five and are not on the boxes themselves.

    What is created is a model of reality next to the real items on the shelves. Now they must periodically verify their ‘model’. Not easy with these large boxes and quantities.

    Thinking of the quote in your Toyota Kata review (http://theleanthinker.com/2010/06/28/toyota-kata-the-how-of-engaged-leadership/) I would want the people to “turn their attention” to what makes the kanban get lost and what makes them use kanban cards per quantity of five.


    You say: “The plan is to eventually apply this same process to the other parts in the warehouse (several hundred types of items)”

    If I’m correct that the orders are not allways for one type of item only, than this system might get confusing for the orderpicker as he/she needs to calculate the number of cards to pick from the post.

  11. If the customer needs one part. Are they intending on ordering one part from the factory? If I buy one can of oyster soup at the grocery store and I’m the only one who does for that week; do they order one can of oyster soup from the supplier? I don’t think so.

    And I think this 5 units per card thing is crazy!

    OK, here’s a really simple idea:
    Each shelf is painted so that you can easily tell how many units are on the shelf. Create some kind of visual indicator to represent the volume that is on the shelf. For smaller parts, keep them in tiny bins, a certain amount for each bin. Paint spaces(squares with numbers) for each bin so you can look at the spaces and instantly tell how many bins there are. And so on…..

    There is one white kanban card for the whole shelf of stock. One card for one part number. There are two slots for the card. One white slot, and one red slot. The card has a number for safety stock and a number for reorder stock printed on the white side. On the backside, the card is red with a barcode on it and a number for emergency stock.

    When the stock level hits the reorder level the picker turns the card around to the red side and puts the card in the red reorder slot. Every day (or week) the administrator walks down the isle and reads the barcode on the red cards that are in the red slot and puts the red card back into the white slot. (Hey the exercise will do him good). Then the administrator orders all the items he has a bar code for.

    If the stock level reaches the emergency stock level, while the card is red, the picker calls the administrator and lets him know they will run out soon.

    When the shelves are restocked from the back, (that will keep the old stuff out front) then the restock person turns the card around to the white side IF the amount of stock equals or exceeds the safety stock level. If it does not he puts the card, red side out, into the red slot.

    Will this work????

  12. Oh wait I have a better idea. Forget the red slot. Have a card with a blue end that shows the emergency stock level. When the administrator scans the barcode he flips over the card so it’s blue. That shows stuff is on order. Yeah, that’s the ticket!

    1. What if the replenishment lead time exceeds the reorder interval?
      How do you prevent double orders?
      In a pull system, On Hand + On Order = Constant Value

      What could we do so nobody has to count or do math?

  13. Hummm. As I said in my first post why can’t the Kanban card go directly to the administrator?

    How’s this sound?
    The person taking the order sends kanban cards to the administrator. The administrator orders the parts. The Administrator gives the cards to the picker. The picker sends the parts and the cards to the shipper. The shipper ships the parts and sends the cards back to the order taker.

    The picker makes sure that there is always a safety stock level (minimum number) of parts on the shelf. If there is not he calls, someone?

  14. This is where in a single card system, I like to have the kanban attached to the “thing.” I have one like this running quite nicely right now in one of our factories and the flow goes like this:

    – When an item is pulled from the supermarket, the card on that item goes into a kanban post.
    – Twice a day, the cards are picked up by the Team Leader. They order only what they have cards for.
    – After ordering, the cards go into a card rack at the Receiving Dock.
    – When the truck arrives with the material ordered, the cards are then matched up with what’s on the truck, then placed in the supermarket.
    – Extra cards or extra material? – escalation.
    – Repeat as needed.
    – Cards are audited twice a week.

    When you don’t have the cards on the material, all sorts of weird things can happen.

  15. Maybe in addition to Tom’s post, since I also stumble over the calculation the picker had to perform:

    If the Kanban reorder quantity is ‘5’, I think the box quantity should also be ‘5’, one card per box, no calculus. This also makes the box lighter, no risk of back injuries.

    Put this Kanban to the outer bottom of the box, process:
    – when the box is empty, turn it over, which makes card accessible.
    – this also signals that an item has been already ordered.

    -> the admin shouldn’t care if he gets 7 cards belonging to one large box or to 7 small boxes.

    Greetz from Berlin, Germany,
    -Martin

  16. To Mark Rosenthal:

    I appreciate you getting us to think about this Kanban situation. It helps stimulate my Lean thinking.

    You probably knew that if you kept poking us you would eventually get us to try and come up with better ways of doing this job. So now we have an international online Kaizen team. This team is made up of some very smart people. However, this team is lacking something very important. We don’t have any team members that actually work at the facility.

    Gee, this team looks like some of the Kaizen teams we have had here where I work. And the results were dismal……

  17. the solution requires the picker to count, both during usage and during restocking. this will introduce error, which will introduce audits…and so on.

    what’s keeping you from eliminating counting?
    i believe i might start by asking the kaizen team leader this question.

    1. It also requires the picker to do math since the cards are not physically attached to the inventory, and they represent a different quantity than the pack size.

      Same thing at receiving.

  18. I would ask why is there one card for every five parts? My first thought was to have one card per part, attached to the part or carton.

  19. I am not sure if the 1-part-per-box approach makes the system faster or slower, since the initial post states 35 units to be a regular order qty.
    It is faster to count 5-10-15…. than 33,34,34, d’oh…start over!
    If you approach it this (better) way, I think one would need some kind of gauge or so.
    Then you can pour or sort the parts in, and the gauge tells you when you have the qty you need?

  20. Mark,
    in case it doesn’t matter if you get one part too much or too few:
    We made good experiences with the “gauge” I mentioned above. 5 cards give, say, 2 millimeters of thickness, so your 35 cards would give about half an inch.
    This way, you can use the Kanban post for counting as well.

  21. To eliminate counting, you give the picker 35 cards. He attaches a card to each unit. When he runs out of cards he stops removing units.

    Remember, these units are 154 lbs each at 2ft X 2ft X 3ft. He’ll be using some sort of forklift.

    The shipping department removes the cards and sends them to the administrator who orders more units. The administrator sends the cards back to the order taker.

  22. I have run into the same “water level” problem of having the part lead-time greater than the inventory check interval which caused us to discard that pretty quickly.

    If I was responsible to create this system, it would run like this:

    1) A card on every carton.
    2) When a carton is removed from the shelf, the card is removed and put in the kanban post.
    3) At a fixed time every day, the administrator pulls the cards from the post and places an order. If there is a specific (minimum) order quantity required, that is identified on the card and the cards are held until the minumum is met.
    4) When the order is placed, the cards go to receiving where they are filed by the date of expected receipt.
    5) When the parts are received, the cards are attached to the new cartons and the cartons put on the shelf. If the parts are not received on the expected day, that is cause for escalation. This gives some time to resolve the problem before it results in a stock-out.

    1. Hi Jim –
      Nice to hear from you here. 🙂

      If you encountered a workshop leader who had led the team to installing the system I described, what coaching questions would you ask him?

  23. My questions would revolve around the idea of consistency and clear visual signals. Some of them would be:

    What happens if an order is not for a multiple of 5?
    How do you know if any cards have been lost or misplaced? Do you wait until you have cards without parts or parts without cards?
    Will this system scale well? If it is expanded to all of the parts in the warehouse, how will I know which kanban post goes with each part?

    I would not get wrapped up in the theoretical, but focus on making sure the people using the system can do so successfully every time, every day.

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