Top reasons why ekanban should be a key element of your lean manufacturing plan

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1 Infor ERP Top reasons why ekanban should be a key element of your lean manufacturing plan

2 Table of contents Executive summary... 3 Reactive manufacturing model... 4 Move over manual Kanban... 6 Electronic Kanban supports Lean manufacturing... 5 Manufacturing benefits... 6 Quality benefits... 6 Shipping/receiving benefits... 7 Conclusion... 7 About Infor... 8

3 Executive summary Kanban systems have been an integral part of Lean manufacturing since the card-based tracking system was first introduced as a way to better manage manufacturing shop-floor operations and inventory control. Traditional Kanban typically uses a manual card system that relies on the physical movement of cards in vinyl pouches attached to parts bins that contain electronicallycoded information on specifications and requirements for production. It is a simple-to-operate visual control tool that signals the need to take action in terms of when and where parts are needed for production assembly. Physical Kanban cards are exchanged between parties/operations during the production process. In many instances the empty container itself can act as the visual KB control signal. Kanban helps to manage production flow in manufacturing processes by communicating the types and quantities of products needed to a preceding process. The specifications and requirements embedded in the cards apply to parts, assemblies and related information, and facilitate production paced to customer demand, which saves on warehousing costs. It also minimizes raw materials inventories, work-in-process and finished goods, and maintains balance between work centers through customer-supplier communications. Additionally, Kanban systems spotlight abnormal situations in the material flow process and provide important information about problem areas / bottlenecks that can be used for future process improvements. The rules for Kanban systems are simple, yet strict. Operationally, the consuming process should withdraw the necessary parts and/or materials from the supplying process at the necessary point in time using a Kanban signal. Each container must have a Kanban card that indicates part number and part description, consumer and producer location, and quantity. The parts should always be pulled by the succeeding process, i.e., the Consumer. Additionally, no parts are produced without a Kanban signal and no defective parts may be sent to the consuming process. The producer can only produce the quantities withdrawn by the consuming process. Finally, the number of Kanbans should be properly calculated, minimized in number, monitored and adjusted accordingly. The number of Kanban cards in the system is critical because this determines the amount of inventory in the Kanban loop. Every effort is made to operate with the optimal number of cards so as to limit total costs, while improving the flow of materials throughout the process.

4 Reactive manufacturing model Manual Kanban systems have limited capability to communicate real-time material usage to the extended supply base and also have limited ability to adapt to customer demand changes quickly, which leads to less than optimal supply chain execution. The time required to process this data leads to a lack of speed and accuracy throughout the supply chain because suppliers do not have access to the most current data, which causes them to make decisions based on data that is oftentimes outdated. Because manual Kanban systems do not provide real-time visibility to parts demand and usage, suppliers operate in a less-efficient reactive mode. As important as Kanban systems are to providing information to control the manufacturing process, today s Lean manufacturing environment requires more in-depth information outside the four walls and speed than the traditional manual systems are designed to manage. As Lean dictates tighter margins and more accountability throughout the supply chain, the ability to track data in real-time at every step in the manufacturing and supply process is imperative. Move over manual Kanban Typical manual Kanban customer-supplier solutions have lacked a true Kanban system that is extended outside the customer s four walls and is truly collaborative with their supply base. Many so-called Kanban systems are quasi-kanban and apply the Kanban business rules only at the individual customer s manufacturing operation for inventory and process control. The true benefits of Kanban are not realized in this setting because information is not shared with the customer s suppliers to get an accurate view of the overall manufacturing process. These quasi-kanban systems lack a replenishment system that facilitates the industry best practice of replenishment based on consumption. If consumption is not being tracked in realtime, replenishment orders can be inaccurate and can result in overstocking, which increases warehousing costs, or under stocking, which results in incurring the added costs of premium freight.

5 Electronic Kanban supports Lean manufacturing Today s Lean manufacturing environment is dictating the ways in which suppliers manage their manufacturing operations and processes. The savvy supplier will employ processes that increase their competitiveness in the now-global Lean environment, which demands real-time data to help manage the supply chain as well as increased downward cost pressures. To address these issues, Infor developed an electronic Kanban solution that supports Lean. It allows customers to pull material based on their actual consumption rate, which provides new efficiencies and cuts costs. It also authorizes the supplier to manufacture and ship material at the same rate it is used, which facilitates a continuous level material flow that will minimize the need for costly premium freight. ekanban allows customers to focus on continuous improvements within the entire customer, manufacturing and supplier loop through the tracking of the signal across the entire replenishment cycle while automatically collecting cycle time data for analysis and continuous improvement. Infor s ekanban solution extends Kanban to the supply base and has significant advantages over a manual system using traditional Kanban cards. ekanban provides visibility of the entire Kanban loop to all partners with several added benefits including access to the status of each Kanban, no cards to lose or print, and the online maintenance of the history of each Kanban for post-process data review. ekanban also provides real-time updates to the Kanban workbench from shipment, receipt and consumption transactions. It also issues controls to ensure that the integrity of the shipping, receiving and consumption process is maintained. The Kanban workbench is integrated with the metrics and supplier performance modules to facilitate the processing and measuring of real-time information. Unlike its manual counterpart, ekanban provides exception-based alerting so that process issues can be addressed immediately. Infor provides one solution for manufacturers to manage all items and replenishment strategies with their supply base including Kanban, supplier managed inventory, discrete orders and standard releases. It is a flexible and configurable solution that can be tailored to meet the needs of specific manufacturers and provides scorecards and performance metrics to help better manage Lean manufacturing processes.

6 Manufacturing benefits Manufacturers will realize new benefits when switching to ekanban, mostly in the form of reductions to several key aspects of production that will help increase their competitiveness in Lean manufacturing. More efficient management of manufacturing processes will result in reduced inventories of parts purchased that will lead to economies of scale. Manufacturers will experience a reduction in containers needed to store parts and the resulting storage space needs will also be reduced. Production will occur in smaller batches that more closely match demand. And there will be an overall reduction in production hours and smaller loop sizes resulting from more streamlined processes and efficiencies created with the availability of real-time data. The use of ekanban will eliminate non-value-added steps in the manufacturing process and help manufacturers become Lean and more competitive. ekanban will provide immediate return on investment for manufacturers in two main areas: by lowering cost with streamlined processes that function on a just-in-time basis, and increasing cash flow by alleviating the need to tie up cash in keeping extra parts on-hand. There will be reduced material shortages and assembly line shutdowns with material inventories now being controlled with real-time information. And, higher inventory turns through replenishment that is more accurately managed will have a strong positive impact on the bottom line. Quality benefits In today s Lean manufacturing environment, quality issues management is of heightened importance to manufacturers as a way to control costs. ekanban can help resolve many of these issues before they make their way into an end product. With real-time visibility to the manufacturing process, ekanban can detect quality problems more quickly especially because less material will be in-process at any given time due to tighter control of the replenishment process. The electronic connections also facilitate integrating engineering changes into the system faster so that manufacturers can meet changing CUSTOMER requirements. With these new capabilities, ekanban reduces manufacturing defects and the need to rework parts or, the most costly problem, scrap them altogether. Reduction of defects saves the manufacturer much in terms of wasted materials, employee production time and costs to repair a defective part once it s produced. ekanban also facilitates quicker model and product changeovers by incorporating new specifications and requirements in real-time without the need to stop, or slow, the production process.

7 Shipping/receiving benefits With access to real-time information, ekanban provides for a steady and level flow of material into a manufacturer s receiving dock, which saves costs associated with the issues of having too much or too little material shipped in. This even flow enables suppliers to ship exact quantities of materials with no interpretation of schedules. Access through ekanban to information updates allows manufacturers and suppliers to have more strategic communication regarding materials needs and replenishments, and eliminates the need to manage emergency situations with premium shipments. Expediting is one of the largest hidden costs in materials replenishment. Conclusion Today s Lean manufacturing environment requires the real-time processing of information throughout the entire supply chain. Manufacturers are requiring their suppliers to be more agile in adapting to their changing requirements and ekanban gives manufacturers and suppliers increased ability to exchange information in real-time and to track and analyze data to manage continuous process improvements. ekanban facilitates a new level of communication that provides real-time information that helps streamline processes, alert to process problems early so they can be averted, and save costs by reducing inventories and making stocking more efficient. This improved communication is essential to be competitive in today s Lean manufacturing environment. Infor has extended traditional Kanban to everyone that participates in the material flow process.

8 About Infor Infor delivers business-specific software to enterprising organizations. With experience built in, Infor s solutions enable businesses of all sizes to be more enterprising and adapt to the rapid changes of a global marketplace. With more than 70,000 customers, Infor is changing what businesses expect from an enterprise software provider. For additional information, visit Disclaimer This document reflects the direction Infor may take with regard to the specific product(s) described in this document, all of which is subject to change by Infor in its sole discretion, with or without notice to you. This document is not a commitment to you in any way and you should not rely on this document or any of its content in making any decision. Infor is not committing to develop or deliver any specified enhancement, upgrade, product or functionality, even if such is described in this document. Infor Corporate Headquarters Morris Road Suite 4100 Alpharetta, Georgia USA Phone: +1(800) Copyright 2007 Infor. All rights reserved. The word and design marks set forth herein are trademarks and/or registered trademarks of Infor and/or related affiliates and subsidiaries. All rights reserved. All other trademarks listed herein are the property of their respective owners. INFWP_EMIGEENODD_

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