A Systematic Approach to Part Shortages – Part 2

For kanban to work well, there has to be a solid foundation under it. That foundation is production leveling or heijunka.

Before I get to far into this, though, I would like to point something out: At the mention of leveling, people who are only just learning about kanban will point out all of the good reasons why leveling is difficult. Here is a key point: The problems caused by running kanban without good leveling pale in comparison to the total chaos that ensues if you try to run MRP without leveling. I’ll stay out of that little rabbit hole until another day though.

Production leveling has two parts.

1. Leveling the production volume.
2. Leveling the production mix.

The operation I described in Part 1 was relatively small, so it was a simple matter to set up a totally manual system to do this. By small I mean they had two major assembly lines running at a rates on the order of 10 units / day. The product was about the size and complexity of a medium to large-sized photocopier (though not a photocopier). The assembly lines had about half a dozen positions each. There were several hundred parts from about as many suppliers. (Different story.)

The objective in leveling volume is for the production line to see demand as an image of the takt time, and to protect that signal from variation in actual orders and shipping. At the same time, the shipping dock was to see deliveries to the finished goods buffer at takt time, regardless of minor and medium problems in production.

To accomplish this they separated the “big lump” of inventory that typically existed in shipping into two physically separate buffers.

The Withdrawal Loop

Customers, unfortunately, rarely order at takt time. The purpose of the buffer in shipping was to absorb this variation and make the actual demand appear as if it arrived exactly at takt. The organization also tried to take out some of the bigger spikes in customer orders by working with dealers to get more transparency into actual customer order patterns; as well as trying to level actual promise-to-ship dates at least weekly if they couldn’t get it to daily. That helped a lot. A more sophisticated order entry system would have worked better, but that luxury wasn’t in place yet.

Back to the buffers. Each unit in shipping had a withdrawal kanban card attached to it. As orders were released, a unit would be pulled from this buffer and shipped. The withdrawal card went back to the production control department. Those cards were placed in the inventory management box. This box had series of slots that indicated authorized inventory levels. A card in one of the slots indicated inventory we didn’t have, an empty slot indicated inventory on-hand.

There were limit markers at near each end of the row of slots. As long a the end of the row of cards stayed between those limit markers, everything was regarded as OK. They did not try to chase a particular level of inventory with production.

The scheduled production rate was 10 units / day.

Each morning Production Control would take 10 cards from their box and put them into the leveling box in shipping. That box had slots that corresponded to times of day. The cards were evenly distributed at the takt-time interval. As that time came up, shipping would take the withdrawal card from the box, go to the end of the production line, attach their card to a unit, and move it to the shipping buffer.

This seemed like a lot of trouble, but it served a purpose. It was to hide the irregularities of shipping schedules and actual order dates from assembly. They saw a clean, paced signal exactly at takt time. The process was designed so that assembly saw a perfect customer, even if the customers were far from perfect.

If management didn’t like the size of the shipping buffer, they knew exactly what problem(s) must be solved to reduce it – they needed to improve the dealer ordering and management processes so dealers would stop using deep reorder points and ordering weeks worth of product at once.

The Production Loop

When units were withdrawn from the end of the line, they were actual pulled from a FIFO buffer. In this case, the buffer held about 4 hours of production. Why? Most problems in production were cleared within that time. Only a bigger problem would starve the buffer and affect the withdrawal loop. Thus the purpose of this buffer was to make assembly appear as a perfect supplier to their perfect customer. They could supply exactly at the agreed-upon takt time.

Each of these units had a production kanban card attached to it. When shipping came to pull a unit, they would pull the production card and leave it in a kanban post. They would attach their withdrawal card and take the unit. Thus switching the cards transfers ownership of the product from one loop to the next. Since a kanban card authorizes a specific quantity to be in a specific location, if someone wants to take something somewhere else they need to attach a card authorizing them to do so. That was the case here.

The production cards went to the front of the assembly line. There were three slots there. One green, one yellow, one red. If everything was running smoothly, the card would go into the green slot, and when the next unit was started, the card would be pulled from the box and attached to the unit.

If the line were a little bit behind, there might still be a card in the green slot. Then the next card would go into the yellow slot. This would automatically signal the assembly manager that there was something that needed some attention.

The next card would end up in the red slot. This was the point when, if they weren’t already there for a known problem, they were in “line stop” mode. Anyone who could be helping to clear the problem should be helping to clear the problem. Why? The money machine has stopped running. Everyone is now being paid only because the shareholders are lending them money. The idea is to get the money machine running as quickly as possible, and it is the most important thing. This was a simple phased escalation process, and was part of their overall andon / escalation system.

Did it work?

All I can say is that it worked a hell of a lot better than what they were doing before. It took two or three serious tries to get this into place and keep it working, and they probably fell off the wagon a couple of times after that. There were always immense pressures to “reduce inventory” at the end of the quarter, for example, which would have management directing to starve out the shipping buffer, or push it out early. But, in general, when it was working, overtime was lower, things were more predictable, problems were identified very quickly.

But…

Yes, it looks like a lot of manual work involved. But I want to be really clear – the total time spent moving all of these cards around was a fraction of the time that had previously been spent investigating status, working action messages, making calls to find out what was happening, etc, etc. For some reason people seem to think that deliberate activities raise the total amount of labor involved, and that somehow, the time spent running after information and chasing problems is free.

Setting a standard and following it injects an element of stability and calm into an otherwise chaotic workplace. Once this basic foundation is in place it is far easier to improve overall efficiency because now there is an actual process to improve.