Kanban – Push to Pull Processing

Just in time manufacturing (JIT) is the practice of maintaining and manufacturing just enough inventory to fulfill the orders that have been placed, and not a single piece more. With the advent of next day shipping, modern tracking systems, and worldwide interconnectivity through the internet and satellites, JIT is not only possible, but some businesses could not run without it. Their margins are so razor thin that they would go out of business if they had to allocate any more money toward inventory than they already do.

If JIT is the entire system that defines the pull version of production and manufacturing, then Kanban is the signal that triggers the production. Kanban is the path toward JIT achievement, and consists of cards, balls, or other devices like markers or trolleys. It can also be an electronic signal, and many companies are using RFID’s as the signal in Kanban.

Developed by Toyota, Kanban is an integral part of Lean manufacturing and is best used alongside Kaizen and JIT. Unless the company that wants to use the Kanban tool is fully versed in lean manufacturing and all of the tools associated with it, it should not be used. To fully and properly implement the process, they have to coincide with each other and require a complete analysis of the manufacturing plant and all of the processes associated with it.

When the Kanban tool is properly used, the JIT manufacturing plan can effectively work. This means that a company can use all of its inventory to send to the end user, instead of stacking it on their shelves, freeing up capital for the company so they are able to expand and improve their bottom line.

The effective use of Kanban can be demonstrated with a simple example. An auto parts manufacturer wants to expand their product line to include brake pads, but they do not have the cash necessary to purchase the equipment needed to start manufacturing the quality brake pads they want to start building. Management then got together and decided they would try to slim down costs by implementing lean manufacturing processes.

After accomplishing a few other things, they turn toward JIT manufacturing to start producing some of their larger parts, one of them being pistons. They have accurate sales data for the previous year on their piston line of products. They decide to cut back on the manufacturing so they can get rid of their backlog and inventory and shift to the JIT system.

One of the company’s major customers has decided to help the company in employing their JIT system. They have agreed to help them use the Kanban system by keeping track of their inventory and using the company’s standardized Kanban cards. These cards contain all of the information about the pistons… their model number, their dimensions, weight, color, etc. There is one card for every 50 pistons.

When the customer runs out of pistons, they send the company one of their Kanban cards This triggers the manufacturing of more pistons and subsequently more pistons are made… 50 to be exact. The Kanban card represents a signal from the customer that more inventory is necessary in order to keep up with demand. The 50 pistons are not manufactured until the company that needs them is in need of them, and this is the epitome of JIT manufacturing.

It should be pointed out that a true JIT manufacturing system is an incredibly complex system that can quickly force complex issues that may turn out to show significant costs or losses to the company that they may not be able to handle.

A perfect example of this is the creation of a bar code, internet processing, and assembly line manufacturing system. When introducing the internet processing system, there is an entire system that is now being utilized by the company that requires upkeep, maintenance, and quality assurance. Without these, the system will quickly render itself ineffective. Of course, because of these requirements, additional costs are incurred and the costs saved by switching to a JIT system may not be realized. The bar code is represented by the yellow lightening in Figure (1), which portrays the signal that is generated anytime a customer requires an order. That signal, or The Kanban, goes straight to the supplier to order more material, as well as the fabricator to begin assembling additional product.

Additionally, the timeliness and quality of the product may be effected when switching to a JIT system. Because they are waiting for an item to become depleted without ordering more of the inventory, the order will always be rushed and with that comes the hurried atmosphere that is the backdrop for errors and waste. The company may also lose its unique selling position if they are to fall behind their competitors in speed of delivery of a product, and they may lose the market share associated with those types of customers.

While it is not the answer to every problem a company faces with their supply chain, JIT manufacturing is a great tool that some businesses may find very useful to integrate into some, if not all, of their processes. It is strongly recommended that upper level management be the ones who decide the implementation strategy of this effective tool, and a complete redesign of the supply system be rethought.

JIT, if done properly, has the potential to save companies a substantial amount of money, particularly if they are involved with manufacturing and distribution. By reducing the inventory necessary to meet the demand of the customer, the company is investing in their own business through cost reduction.

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Kaizen – The Wheel Keeping Lean Running

When Tiger Woods won his first Master’s championship, what did he do the next day? Did he rest on his hands and take a few days off, congratulating himself because he officially was the best in the world at that very moment? No, instead, he was on the golf course, fixing the very few things that he noticed wrong with his swing during the 72 holes of golf he had just finished playing. Businesses can learn something from Tiger, and it probably isn’t what you think.

Instead of resting on his laurels, Tiger decided that he would constantly be improving his game. As you can probably guess, this is one of Tiger’s few secrets to becoming the absolute best at his sport. While businesses can learn from Tiger’s skill, perseverance, concentration, and focus, more importantly, businesses should learn to focus on Tiger’s example of constant improvement. Luckily, there is a process that already exists that systemizes the ability to constantly be improving one’s business. Enter the Kiazen business practices.

Kaizen, as you can imagine, got its first start in Japan, and can be directly traced back to account for a large portion of Japan’s success as a country in the days following World War II. It is now accepted as common culture within most places of business and is adopted by the most successful people and business without fail. It is also used in the self improvement area of development, but the main focus of this article is in the business management application.

Kaizen is the process of constant improvement in all processes, procedures, and methods that drive a business by focusing on small, continuous improvements in everything every single employee does in that company. While it is easy to chalk this up as a very helpful production tool and lean manufacturing tool, the reality is that Kaizen starts to truly come alive when it is incorporated into daily business practiced by every single member of the company, from the CEO all the way down to the most untrained, new line worker. As can be see

When taken on board, Kaizen teaches people to think about every single aspect of their business at all times. In this day of automation and consistent, repetitive tasks, this usually poses the biggest hurdle for the process to take effect. When the workers finally do decide to internalize the efficiency process, they are taught to keep an open mind about every single thing they do, and then use the scientific method to identify, deduce, troubleshoot, and improve any inefficiencies that they may see.

As demonstrated in Figure (1), Kaizen is a constant business process, with each stage in the cycle feeding and merging in with each other for a constant state of improvement, leading to the leanest company and processes possible with the most self propelled improvement culture allowed.

The end result of using this business practice is a more streamlined business that has employees that continue with the process of improvement almost automatically, whether you tell them to or not. In the following example, you’ll see how the Kaizen business practices can be incorporated into the everyday life of any business.

Frank works in an office cubicle in which he processes a 2 page claimant form for returns of a company’s product. This claim form is a document that is filled out by the customer, Frank himself, or the customer service representative that talks to the customer over the phone. Frank’s job is to review the claimant’s form, decide whether the claim is a valid claim for reimbursement, refund, or denial. A few forms even end up going to the legal department because either the customer is threatening legal action or there is a vulnerability in the legal policies of the company that may someday lead to a lawsuit.

Unfortunately, Frank’s job is very tedious and after reading over 100 claims per day, he quickly becomes tired, bored, and unhappy with the monotony. He then was ordered by his manager to attend Kaizen business training. When Frank came back, he realized there were quite a few problems with the way they were going about processing claims.

First, Frank noticed that he was finding that there was a lot of unnecessary information requested on the claim form. By restructuring the form, Frank got the size of the form down to one page, saving the company money on paper costs, as well as time needed to process the claim.

He also found that the decision to send a claim to legal was one that anybody could make, with a certain amount of training and guidance. He suggested to his manager that the customer services representatives, which accounted for over 80% of the forms, should be trained to decide whether a form goes to legal or him, and cut him out of the loop of reviewing the forms. This saved the company tens of thousands of dollars as well as cut about 2 days of processing time off of those applications.

As you can see, the process can be practiced by anyone in the workplace, not just CEO’s or lean managers. In fact, when Kaizen is internalized by a company, it will only become effective if every single member of the company jumps on board with the changes. Because of the small change nature of the practice, if this is not internalized by all, the company may only see small changes in their bottom line.

If practiced correctly, a business that employs Kaizen thinking will always have an improving bottom line. They will be constantly thinking of ways on the worker level to improve their own jobs, even if it is slightly and borderline immeasurable. After a short period of time, however, many small changes turn into big changes (for the better) to the bottom line.

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JIT – The Backbone of Lean Manufacturing

For many businesses, the biggest expense they face is inventory cost. The never ending struggle of having enough inventory to fulfill orders and leave room for growth while keeping enough cash on hand to meet any need they may meet is the number one cause for business failures, according to the Small Business Association. There are many ways around the skyrocketing costs of carrying a large amount of inventory, and a just in time, or JIT inventory management is one that can increase the business’s bottom line and return on investment.

The JIT inventory management strategy is one that is based on the idea that a business can order exactly the right amount of inventory necessary to fulfill their upcoming orders and not a single piece more. This reduces the cost of warehouse space, transportation costs, and other costs that can be reduced by this form of lean manufacturing.

The philosophy associated with this theory is that inventory is considered to be waste, and the lean process of JIT will eliminate that waste. By exposing the hidden causes of inventory, a set or series of signals can be developed that define what the company can use to measure and regulate the inventory necessary to meet the demand needs.

Identifying the signals that guide the inventory demand and calculating, harnessing, and predicting the same signals is at the core of the JIT system. Couple this with today’s modern day next day shipping capabilities, and you have a very capable JIT system. The signals necessary to make a JIT system successful are able to be generated with the modern UPC and online tracking systems. By tracking sales and the patterns that follow a business can plot the demand necessary, manufacture the products, and send them out next-day shipping. This model made famous by quite a few companies, but mostly by Dell computers, can greatly increase the quality as well as efficiency of a business.

A second aspect of JIT manufacturing is in the setup of the manufacturing plant. The workers, as well as the machines in the plant are oftentimes multifunctional, allowing flexibility in the plant’s ability to manufacture parts as necessary, independent of equipment or personnel status. With small lot sizes, this is the perfect setup for a dynamic, demand-driven supply chain.

As can be seen in Figure (1), in a JIT system, customer orders are generated in a variety of ways. But each one of those ways generates a signal that is processed by the sales department, represented by the lightening bolts in the diagram. Many times, the sales department is nothing more than a remote server that is capable of taking and distributing orders in a JIT system. The necessary components and raw materials are calculated, and the signal is sent to the suppliers and the fabrication assembly to start manufacturing the product. As you can see, because each order generates a new signal, no inventory is incurred.

Dell computers is a perfect example of JIT manufacturing. By getting started in the business by manufacturing computers out of his dorm room, Michael Dell quickly learned that he could not spend all of his money on stockpiled parts and equipment. He decided that his computers would be designed exactly to the specifications to the customer, and his selling point would be along the same lines.

Without realizing it, his business was the perfect example of JIT manufacturing. His company was founded on the idea that any average person can log on to the internet, and with a little bit of assistance, can identify the parts necessary to build a computer from scratch. When the customer ordered the computer, Michael, in trying to come up with a solution for his dilemma of hot having any money or location to house all of the pieces needed to assemble a computer, stored a few few parts he would need to get the job done, then buy and manufacture new parts, jus as soon as the customer orders them. The raw materials are re-odered, sometimes automatically, and the end user gets a computer that they build online within 15 minutes!

Sometimes the end result effects are not always as perfect as planned. When Toytoa decided to shift to a JIT manufacturing process, they hit quite a few bumps in their process capability. The problem that Toyota found is one that will plague all JIT systems that do not make contingency plans for a quickly generated, unannounced increase in demand.

Since the entire supply chain system is built around the flexibility and speed of a company to respond to a demand, they do not have the ability to meet large quantity orders quickly. Normally, this is fine, since the large quantities can be forecasted by the signals generated and production increased to meet the demand.

However, sometimes demand rapidly increases without any significant explanation. Sometimes it is due to unplanned media coverage, and sometimes it is just due to the viral success of the product. Whatever the reason, the entire supply chain has to be redesigned and pushed to its capacity when one of these unexpected increases in demand shows.

JIT manufacturing was the wave of the future a few years ago, and while it has actually worked for some companies, most have unsuccessfully tried to implement it into their systems. In order to success, JIT manufacturing requires the perfect combination of speed, management, and product… something not many companies have. However, those that do find themselves on the receiving end of severe quality increases and cost decreases.

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Use Poka-Yoke to Rest Easy

The purpose of Six Sigma is to reduce defects to an acceptable level more consistently. This can be accomplished with a focused attention and everlasting drive toward improving the quality of the processes that are used during manufacturing and other aspects of the business. Ufortunately, even the most lean and highest quality processes have one unavoidable, detrimental flaw. We are only human, and mistakes will always be made. But there is hope, as there is a certain lean tool that may actually assist in removing the human error factor from the equation.

While it is impossible to completely eliminate the possibility of removing mistakes from the workplace, it can be possible to make the probability of them occurring so low, that they are virtually impossible. The technique of mistake proofing a process or workstation is called Poka-yoke, and is one of the most effective ways of reducing the number of defects over the course of time. The basic premise of the practice is that the process or conditions involved are designed in such a way that it is virtually impossible for a human, no matter what amount or training or background, to make a mistake when attempting to perform the task.

If the quality manager, or any manager for that manner, of a plant or process starts noticing an unexplained increase in the number of defects in a part of a process, the answer may lie in Poka-yoke. The best way to decide whether this tool may be the right answer for your team is to decide whether the flaws that are happening are due to a “careless error”, or tend to happen at times that are prone to lapses in judgment, such as Mondy mornings, the end of shifts, or Friday afternoons. While this isn’t a steadfast rule, experience shows that human errors occur at these times more frequently than others.

Another way to approach the decision to use Poka-yoke is by interviewing the workers themselves. Frequently they have anecdotes that outline how easy it is to make mistakes that can only be classified as mistakes. Additionally, you can audit your processes and identify certain elements that are critical to quality (CTQ), or have CTQ characteristics associated with them. These are perfect candidates for mistake proofing because a flaw in a CTQ can be detrimental to the entire product’s performance.

The key attribute behind mistake proofing is to keep the processes simple, and anticipate the locations in the process where the mistakes are most likely to happen. Then you can use methods like shaping tools and putting tools on lanyards so that the mistakes cannot happen without the blatant change of the tool’s function or scope.

Let’s use an example of a manufacturing plant that is piecing together a piece of electronic equipment to place onboard locomotives, as can be seen in the “before” section of Figure (1). The electronic piece of equipment has a cover that must be installed using a grounded screwdriver, in order to prevent the discharge of static electricity into the card.

A manager started realizing an increasing trend in the breakdown of quality of the results that the electronic equipment was putting out. The voltages that were being produced were going out of specification much more frequently than before, and the manager decided to investigate.

She found that the erroneous output was a function of a card that is installed by a workstation on the other side of the line from where the covers are installed. At first, it appeared that there was a severe manufacturing defect in the cards and the workstation that was producing the card. The manager decided to take a closer look, or a “deep dive” and find out through a “fishbone diagram” and root cause analysis what all of the possible causes of a faulty card could have been. After this was done, she realized that there was a possibility the cover was not being installed properly.

It was this time that she monitored the worker installing the covers. 1 out of every 5 times, the worker used a screwdriver that was not properly grounded. This is shown in Figure (1) in the “before” section, where the worker becomes confused with which tool to use. Her immediate reaction was that this worker was being careless, or was not properly trained in the process that he was conducting. Because she was a good manager, she asked the worker why he didn’t use the properly grounded screwdriver. The worker had explained to her that he thought he was using the correct screwdriver, since the both the grounded screwdriver and ungrounded one were on a lanyard and looked exactly the same in every other respect.

Employing Poka-yoke, the manager shortened the lanyard for the ungrounded screwdriver such that it could not be brought to the workstation that installed the cover on the equipment without cutting the lanyard, as can be seen in the “after” section of Figure (1). By doing this, she made it virtually impossible to use an ungrounded screwdriver to install the cover in question, and in doing so dramatically increased the quality of the product.

As stated before, Poka-yoke is not just for managers and business executives. If instilled properly, every worker and employee of the company should be properly trained in the best methods of mistake proofing, and should provide input on how to eliminate the factor of human error.

Mistake proofing is the most effective, and usually the most cost effective, way of increasing quality. The human element is always a variable in every quality equation, but with Poka-yoke, the impact of that variable can be reduced to a mere fraction of a percent of occurrences than if it were never employed.

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Start Cleaning House with 5S – A simple yet powerful lean tool

There are many parts to lean manufacturing. When you, or any of your colleagues, start thinking about lean, you probably begin with the aspect of paperwork reduction. Of course, we all feel the pain of excessive and tedious red tape, but lean processes, in fact, touch on every single part of manufacturing, and non-manufacturing, business practices.

5S is a perfect example of a bottoms-up approach to the lean methodology. There are many businesses, particularly in manufacturing, that are incredibly disorganized, leading to massively inefficient business practices, lost time, and sometimes even workplace injuries. 5S refers to the practice of workplace organization, and the methodical process of optimizing the layout of a manufacturing plant or workstation to become the most efficient, upbeat, and productive workplace it can become.

Appropriately named, 5S is the name given to the process because each step starts with the letter ‘S’. Started by Toyota in the 1960’s, it has framed the success of many manufacturing plants. The fundamental basis behind 5S is that a person or workstation will never waste time looking for tools and equipment because everything has its own place, is appropriately labeled, and flows to the point where the tool is within reach of where the worker will find themselves when working. If 5S is implemented properly, it is common to see efficiencies increase by a solid 20-30%.

One of the more common missteps when a company implements 5S is to have the focus come from the top-down, with management recognizing the need for process improvement, but never consulting with the worker that will be practicing and implementing the 5S on a daily basis. Without buy-in from every person on the shop floor, a company will never truly achieve the goals outlined by a 5S method.

The 5 S’s, while seemingly complex, are actually relatively straightforward and simple. They are best viewed as pieces and independent of each other instead of holistically. If broken down into its fundamental parts, the 5 steps, you will find that they are nothing more than a standardized approach to optimization. As you can see in the Figure (1), the 5S concept is one in which every step should be intertwined within each other. If an organization is truly on board with the 5S process, the sustainment of the process should maintain a constant cycle of improvement, and each ‘S’ should merge with the other steps, making it near impossible to determine when one starts and the other begins.

The first ‘S’ is “Sort”, or “Seiri”. Management, or possibly the workers themselves, should go about the workplace and take note of which tools, equipment, and supplies are not needed for the everyday operation of the plant. If one is not needed, it is discarded, or at the very least, removed from the shop floor. Some tools and equipment will not be able to be discarded or removed because they are used, but only infrequently. If this is the case, then these tools should be noted as infrequently used, to be dealt with later.

The next phase is oftentimes considered the most important phase of the five. This is where items are arranged, or 'Straightened' (or 'Seiton') systematically and methodically. All of the tools that were identified as unnecessary in the ‘Sort’, phase have been discarded, so this phase should be easy. You just simply place the tools such that workflow is maximized, and no tool is any more than 30 seconds away from even the least experienced worker. This step is best accomplished either by the worker that will be conducting the work or with their direct input.

It may help to include a diagram of all tools and their locations that is readily accessible for reference for the worker during this step.

The next, and least popular stage is ‘Sweep’, or Seisō. This step is where the shop is cleaned, and a new policy of periodic cleaning is implemented. Most manufacturing facilities find that performing this step at the end of every shift is the ideal time for this action. The most important aspect here is to maintain the shop in the order in which step 2 has identified as being ideal.

As discussed earlier, all of the processes described here are not worth anything unless complete buy-in by the average worker on the floor is achieved and practiced. This is where step 4 comes in, ‘Standardize’, or ‘Seiketsu’. This is the step in which all personnel who will be practicing the 5 steps on a daily basis are brought completely onboard and the practices are standardized by forms, procedures, personnel assignments, and workstation ownership.

The final step is that of ‘Sustain’, or ‘Shitsuke’. This step focuses on the requirement to maintain a constant expectation of good lean practices through feedback systems, evaluation and mentoring, training, and auditing. The company has come a long way in improving the workplace, and maintaining it in that improved state is a necessity.

It may not always be apparent as to when a company should use the 5S methodology to improve the workplace. Before any improvement is attempted, management should commission a study to improve their chances of finding the processes that should lead to a leaning of the workplace through 5S. The following is a good example of how the entire process can be conducted.

A new manager was hired to help improve the processes conducted on the shop floor of a generator manufacturing plant. The second day on the job, he notices something that triggered his experienced eye: a worker was walking all the way across the floor, passing by two working cranes, to go to a toolbox and retrieve a specialized tool in order to perform one of the steps he had to perform in order to output a certain component characteristic to his workstation.

The manager requested approval from his management to conduct a 5S study in order to identify places in which improvement could be achieved.

For one full shift, he plotted out the path of the worker he took note of earlier. He found that not only did the worker go to the toolbox while walking under the crane, he also made a couple of stops to the grinding workstation to polish a part, which was on the other side of the shop as well.

The next day, the manager talked in depth to the worker, and helped go through his workstation. He found that there was about 11 tools that were old, outdated, and never used anymore. Thos tools were immediately discarded. After this, the manager helped the worker get a new set of tools that included the one he was going to the toolbox for. He also subtracted the polishing of the part from the process and instead added it to the procedures for the workstation that actually had the grinder at the station. This way, a separate trip was not necessary for the tool nor the grinder.

After they went through and rearranged the tools such that they were always within arm’s reach for the worker, they came up with a schedule for the entire shift to clean the last 15 minutes of their shift. These were all written down and signed by every worker in every shift.

This is a simple example, but most 5S implementations are this simple. If you have any interest in making your manufacturing plant more efficient, you have to start looking at each workstation as a conduit in which work should flow with no restriction. Do this, and your profits will skyrocket.

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