LOVELY PROFESSIONAL UNIVERSITY

Introduction:

Introduction

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 Acknowledgement

Nobody in this world is perfect in the field of study on any researches. Everybody needs
to be guide and supervised by some experienced and intelligent people. It is my proud privilege
to express my profound gratitude to my respectable guides and teachers. First of all I pay my
thanks to my guide Mr. Jagjit singh, lecturer in LIM, and His able supervision in valuable
guidance and sympathic attitude which enabled me to undertake the work on this term paper.

It is indeed a matter of privileged and good fortune for me to have been him for inspiring
encouragement and keen interest in completion of this study. I will be failing in my duty if I
don’t express my gratitude to my parents for their encouragement and valuable support.

Megha tah

M.B.A- 2nd semster

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TABLE OF CONTENTS

INTRODUCTION...........................................................................................................................................4
OBJECTIVES..................................................................................................................................................5
kanban system.............................................................................................................................................6
its types................................................................................................................................................6-8
kanban system design............................................................................................................................8-11
Attributes of kanban system......................................................................................................................12
Appliciability of kanban system............................................................................................................13-15
Review of literature..............................................................................................................................15-18
Kanban system in toyota......................................................................................................................17-21
Benefits of kanban to toyota..........................................................................................................22-23
Critical Appraisal ..................................................................................................................................24-25
Recommendations ....................................................................................................................................26
CONCLUSION.............................................................................................................................................26
BIBLIOGRAPHY...........................................................................................................................................27

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Introduction :
A two bin system is a popular known as Kanban (a signalling system). In principle it provides a
mechanism for stock re-ordering.Starting out with two full boxes when one of the boxes
becomes empty it acts as a re-order signal, the second box represents enough material to be
consumed while the empty box is restocked (bear in mind this could be carried out from an
internal warehouse or 3rd party supplier). Commonly a Kanban card may accompany the box
which carries certain information about the inventory required. The two-bin system is only
slightly more sophisticated than the physical count system. Using the marvels of modern
technology, this system uses two bins of materials. When one bin is empty, it's time to re-order.

One Bin Systems

A one bin system is the simplest way to make a compost pile, and is a great way to get started.
If you plan to make a lot of compost, one bin may not be enough capacity, but adding another
can be a simple matter. The basic idea of a one bin system is to make an enclosure for your bin
that is at least three feet (or about one meter) across, although you may also choose to use no
bin at all if you don't need to keep everything tidy. Possible construction materials include free
wooden pallets from local businesses, lumber, cinder blocks, or even steel posts and wire
fencing. Once you've made your bin (or decided not to), you might build a pile all at once if you
have the ingredients, but it's more likely you'll build the pile over time as you generate
compostable materials.

If you build the pile over time, the stuff on the bottom will decompose first, since it will have
been there the longest. When there is finished compost at the bottom of the bin, and you want to
use it, simply remove the unfinished compost from on top, take out what you need, and throw
the unfinished compost back on top. If your pile is not a high-temperature pile, you may want to
let redworms (a kind of earthworm) help make the compost. They'll make the process go more
quickly, and can create a very high quality finished product.

Two Bin and Three Bin Systems

These systems consist of two or three adjacent bins, and may be made out of the same materials
as a one bin system. The advantage of having more than one bin is that one can have a bin for
the pile being built (as ingredients are accumulated over a period of time) and another one (or
more) for a pile already built that is in a more advanced stage of decomposition. If you have the
space for such a system, and are generating or gathering enough materials to keep the bins in
use, this can be very convenient. When you start using a system like this, build your pile in one
of the bins. When this bin becomes full, 'turn the pile' by transfering it to the adjacent bin (a
garden fork or similar tool will help). This will aerate the pile and hasten decomposition. An
alternative that I have found to be very successful is to let redworms do the turning 'in place'
(this way I save myself labor and just leave the pile in its original bin). Whatever you choose to

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do, you can now begin to build a new pile in an empty bin while the first pile continues to
decompose.

OBJECTIVE OF THE STUDY:

1) The purpose of this study is to explain what a Two bin system is, how it works, and how
it can be implemented.
2) To know practical applicability of two bin system.
3) To know in detail two bin system in Toyota.

Two bin or kanban system

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Kanban (kahn-bahn) is a Japanese word that when translated literally means “visible record” or
“visible part”. In general context, it refers to a signal of some kind. Thus, in the manufacturing
environment, kanbans are signals used to replenish the inventory of items used repetitively
within a facility. The kanban system is based on a customer of a part pulling the part from the
supplier of that part. The customer of the part can be an actual consumer of a finished product
(external) or the production personnel at the succeeding station in a manufacturing facility
(internal). Likewise, the supplier could be the person at the preceding station in a
manufacturing facility. The premise of kanbans is that material will not be produced or moved
until a customer sends the signal to do so.

Types of Kanban Systems

You may previously have thought that there was only one, or maybe two types of Kanban
system! In fact there are 6 main types, (plus two significant variants), (excluding 2 bin & 3 bin
systems) and here they are:

One card systems

In the above diagram:

A signal is sent back from the consuming process to supplying process (or supplier). This is a
signal:

a. To send some more (a transfer batch), via a buffer stock.

b. To produce some more (a process batch), at the supplying work centre.

NB. Empty containers acting as a signal are a potential hazard as any empty container is a
signal to fill it. Also occasionally containers have been known to go missing! Usually, for these
reasons, the signal is separated from the container.

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Input / Output Control Kanban (Two variants)

Sometimes called the ConWip (constant work in process) system, this type imposes input /
output control, where the signal travels directly from the end of a line or section to the
preceding section or raw material stores. In this case the supply chain is treated as one unit
rather than a series of linked operations. So, as one transfer batch is completed (output) another
is launched on the first operation (input), thus ensuring that work in process cannot build up.
However there are some special considerations required in the operation of the system, to avoid
hidden capacity problems, which are not so clearly visible when this method is used.

We have used adaptations of this system to manage workflow and capacity rather than materials
in a number of environments including job shop & clerical / technical process environments.

Kanban Accumulator

In this method Kanban signals are allowed to accumulate at the supplying work centre until the
production batch size is reached.

In this case buffers can be depleted or exhausted depending on the accumulation rules. Also
because buffers can be exhausted, slightly higher mixes can be accommodated.

Dual Card System (2 Card System) (Two variants)

First used by Toyota, there are in fact now two types of two card system. The first method
separates the replenishment (send some) signal, which is produced from the Kanban system,
from the "produce" signal, which is produced by a scheduling system such as MRP. The
purpose of each of the cards is as follows:

 The scheduling system says which job is next.

 The Kanban says make it now. (I need some.)

The second variant of this method generates the second card (after authorisation) as a result of
one or more replenishment requests in a similar way to Kanban accumulators above.

These methods can deal with higher mixes. They can also deal with larger batch sizes, caused
by long changeovers, where scheduling is necessary, although you should be trying to reduce
batch sizes . In this case the buffer is depleted, and can be exhausted. In addition a planning
system such as MRP1 is also necessary to schedule the work.

Variable Quantity (fixed frequency) System

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In some situations it is more convenient to replenish items used, by fixed frequency deliveries
(or collections), rather than respond to fixed quantity replenishment requests. This method
forms the basis of supplier "top up at point of use" systems, where a supplier visiting your point
of use will top up stocks to a predefined maximum level. We have also used this method as the
mechanism to drive "replacement systems" for maintaining stocks of critical spares items or
maintaining "van stock" for on-the-road service engineers. .

Also it is often better from a capacity viewpoint to use level scheduling techniques, to smooth
demand, particularly in one-to-many supply chains (see below).

POLCA System ("Quick Response Manufacturing" Rajan Suri)

This is mentioned for completeness only and is said to be prescribed for high-mix, variable-
route, situations. However at this point, in our opinion, it is worth considering other
simplification techniques , or as a last resort, the use of scheduling tools .

Kanban System Design

Kanbans and Capacity

If the Kanban system is incorrectly designed it can significantly reduce output, by causing the
system to stop unnecessarily even though there is still unsatisfied customer demand! (See the
question at the end of the article on "Lean Manufacturing".) This can be avoided in a number of
ways.

Kanban systems if overloaded will simply not be able to service replenishment requests.

Supply Chain Design

Before attempting Kanban implementation in anything but the simplest situation the supply
chain must be defined. Unless a fixed method comprising of stable relationships between
supplying resources and consuming resources can be defined, there is no basis for a
replenishment system based on Kanban. The first mistake made by early Business Process
Reengineering (BPR) / cellular manufacturing exercises was to assume that the successive
operations had to be physically relocated. They do not! Indeed in some circumstances it is
counterproductive, and certainly an expensive exercise which is hard to justify and difficult, if
not impossible, to implement in some circumstances. However in a FMCG manufacturing plant
implementation, a sophisticated overhead moving gantry system was replaced with work
trolleys, a classic case of removing complexity. This was made possible by aligning the
processes first so that materials movement was reduced. I.e. The need for transport & thereby
the need for sophisticated materials handing was removed.

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The process of designing the supply chain follows the principles of BPR , but it is generally not
a simple task. Techniques for achieving this are discussed in the workshop.

Positioning of buffers

Buffers can either be:

 Held at the supplying workstation

 Held centrally
 Held at the consuming work station

Economies of scale, numbers of supplying and receiving work centres, or simply available
space, may need to be considered here.

Buffer sizing (Number of Kanbans in the system)

There are two schools of thought on Kanban buffer design:

1. To over-specify the buffers and remove Kanbans one at a time (in operation) to identify
system constraints which need to be overcome.
2. To design the buffers to accommodate known constraints, and the observed statistical
variation in supply and / or demand caused by variables whilst working on them.

We subscribe to the latter approach having seen significant operational difficulties arising out of
the former. One example was a new production line with only limited inter-operation space.
Unfortunately the process capability was initially very poor resulting in large queues of work
waiting for rework. The resultant chaos was an island of machines surrounded by a sea of WIP.
Also if you remove one Kanban too many you can stop output unnecessarily.

In another case we were implementing a Kanban system in a bicycle manufacturing company.

We trained the shop floor supervisors in the technique one afternoon. The following day a
supervisor came up to us and said "We have implemented that Kanban System you told us
about yesterday, but there is a problem. Will you come to help us?" Amazed and intrigued by
this statement we went to the section where the cycle frames were being welded. Each welding
booth was in line for successive welding operations, with a chalk-mark square on the floor
between each booth, which if empty was intended to signify that another frame was required by
the downstream operation. The WIP present the previous week had gone and everyone was
working very hard. "So what is the problem" I asked? "Well", replied the supervisor, "when the
first operator puts the frame in the empty square the second operator burns his hand when he
picks it up." This was a sobering lesson in correct buffer sizing. The solution in this case was to
have two frames in the square, to allow each to cool before the next operation.

A further popular misconception is that you only have to calculate the number of Kanbans at the
outset of implementing your system. This is false! Kanban populations must be regularly
reviewed and adjusted.

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Buffers and Bottlenecks

Bottlenecks have a significant effect on Kanban system design. In particular the position of the
bottleneck in the supply chain is important to buffer size calculations.

Buffer Size Calculations

The buffer sizing calculation is governed by provisions for:

1. Variables still remaining in the system such as:

 Demand changes
 Lead-time (see below)
 Breakdowns
 Preventative maintenance
 Absenteeism
 Quality problems (rework etc.)

And the risk of changes occurring at the same time, or in quick succession.

2. The mix

Higher mixes, if buffers are to be maintained, require higher buffers (to last while the item is
not being supplied). The calculation is dependent on batch sizes, set up times, and the mix, but
can be minimised by employing the techniques described in "Organisational Redesign", and
selecting the appropriate Kanban system, or the use of a combination of Kanban systems.

3. Transport time

This is the time from production of a batch at the supplying resource to the arrival at the
consuming resource.

You cannot operate "Just in Time" if your supplier is in Japan, and you are in the UK, or in
Northern India if your factory is in the South in the monsoon season. This consideration on a
smaller scale applies to all movements, but in particular applies to inter-site movement and
other difficult transport situations.

4. Container fill-time

Small is beautiful as far as containers are concerned in Kanban systems. However it still may
take some time to fill a container before supplying the consuming resource, for which time there
needs to be a buffer.

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5. Signal time

Slow signals require bigger buffers. However "electronic Kanbans" provided by some ERP
software providers are rarely required except for inter-site transfers and even then they are hard
to justify over fax, email, or other methods.

6. Automated materials handling systems

When calculating automated materials handling storage capacities & traffic rates managed by
Kanban systems, further considerations are necessary, which we will not go into further here.

Supplied as part of our training course M01 Designing Implementing and Operating Kanban
Systems we supply a Microsoft Excel® Kanban calculator template, which you can use to help
you to calculate the number of Kanbans required.

Container sizes (transfer batch sizes)

This is largely a question of convenience. Again, small is beautiful for containers in Kanban
systems. However there is a trade off between small containers and traffic generated by the
number of containers.

Prioritisation

It may be necessary to prioritise the work of the supplying resource(s), since they may receive
replenishment signals from more than one consuming resource simultaneously. Prioritisation is
possible using a Traffic Light (RAG) system.

Signalling mechanisms

Almost every signalling mechanism devised by mankind has been used to signal a
replenishment request. Ones we have used include:

Coloured lamps, cards, "lego", "sticklebricks", faxes, electronic automated materials handling
equipment, empty containers, chalk squares on the floor, in trays, magnetic blocks, coloured
labels on a rack, rings on a peg, voice, EDI, kitting trolleys, work trolleys, kitting trays, potato
hoppers, re-usable packaging, shipping containers and articulated trailers.

The considerations in this decision include distance, speed, volume and complexity of the
signals.

Sanity checking

When the design is mathematically complete it needs to be sanity checked. This can be done in
varying degrees of sophistication from simply asking what could go wrong in this situation,
through to sophisticated computer simulations, (which we have been generally able to avoid).

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Attributes of Kanban Systems

Some champions of Kanban Systems suggest that the system is universally applicable and has
no disadvantages. This is not true! There are some circumstances where they can be positively
harmful. Also if they are not designed and managed correctly, disastrous! We have rescued
several, and in two cases the system was responsible for accumulation of serious customer
backlogs! The system does have advantages and disadvantages and some of these are:

Advantages

 Low fixed stock (number of Kanbans in system)

 Low lead-time
 Quality problems visible
 Highly stable

Disadvantages

 Inflexible (transfer batch fixed, except with "Variable Quantity Systems" above)
 Can cause stoppages (often viewed as an opportunity to solve a problem)
 Highly stable! (But you may need to change due to changes in demand for example, or it
may be an unstable environment). Pull systems do not plan. They react!

Where appropriate

The technique can be applied to any pair of resources, or pairs in a series of resources
(including clerical operations), where one feeds the other. It is important to choose suitable
pairs. However you also need to be careful to select the appropriate Kanban system for your
situation. Some systems are more appropriate to particular situations. In particular the mix,
variability, and numbers of resources in the supply chain network (e.g. one-to-many, many-to-
many, many-to-one) are key. Also there needs to be a method of handling small orders or
prototypes (not difficult if thought about at the start). There are also some prerequisites which
you need to consider such as having a planning process which is integrated with the Kanban
system.If this is not done the system will eventually fail!

Note: Just because your end product or service is not suitable, it is possible that some aspect or
segment of your business may be suitable. It is quite possible and sensible to segment control
systems to suit the needs of different parts of a business. The skill is in selecting suitable
segmentation strategies. But we have seen a number of examples of the "one size fits all"
philosophy being positively damaging!

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Kanban systems are one type of control system out of many, which may be appropriate for you.
How to choose control systems is discussed in the training course: "SSC02 Material Control
Systems Selection". You can also use our expert system to determine which you need, by
completing our confidential free questionnaire in "What Control Systems Do I Need". (This
service is not available to consultants.)

APPLICIABILTY OF  KANBAN SYSTEM

A system of continuous supply of components, parts and supplies, such that workers have what
they need, where they need it, when they need it. The word Kan means "card" in Japanese and
the word "ban" means "signal". So Kanban refers to "signal cards".

Working of Kanban

Let's say one of the components needed to make widgets is a 42" stem-bolt and it arrives on
pallets. There are 100 stem-bolts on a pallet. When the pallet is empty, the person assembling
the widgets takes a card that was attached to the pallet and sends it to the stem-bolt
manufacturing area. Another pallet of stem-bolts is then manufactured and sent to the widget
assembler.

A new pallet of stem-bolts is not made until a card is received.This is Kanban, in it's simplest
form. A more realistic example would probably involve at least two pallets. The widget
assembler would start working from the second pallet while new stem-bolts were being made to
refill the first pallet.

If this was a high volume widget manufacturing facility, each widget assembly station might
empty a pallet of stem-bolts in just a few minutes, and there could be 15 or 20 widget assembly
stations. Thus there would be a continual flow of cards going back to the stem-bolt
manufacturing area that would cause a continual flow of pallets of stem-bolts to be sent to the
widget assembly stations.
Kanban is Pull (Demand)

This is called a "pull" type of production system. The number of stem-bolts that are made
depends on the customer demand--in other words the number of cards received by the stem-bolt
manufacturing area.

Systems other than cards may be used. For example, the empty pallets may be returned to the
stem-bolt manufacturing area. Each empty pallet received indicates a need to manufacture 100
more stem-bolts. For other types of components, bins, boxes or cages might be used instead of
pallets. Or components might be stored on shelves in the widget assembly area. When a shelf
became empty that signals that more components need to be manufactured and the shelf

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refilled.In Kanban the method of handling the components is flexible, and depends on the needs
of the manufacturing process.

An Alternative Kanban Model

Kanban can also operate like a supermarket. A small stock of every component needed to make
a widget would be stored in a specific location with a fixed space allocation for each
component. The widget assemblers come to the "supermarket" and select the components they
need. As each component is removed from the shelf, a message is sent to a "regional
warehouse" or component manufacturing facility, requesting that the component be replaced.
The "supermarket" might then receive a daily shipment of replacement components, exactly
replacing those that were used.

If we just change the term "supermarket" to "warehouse" we have our manufacturing example.

This "supermarket" model is different from the first Kanban example in that it would be used
when components are manufactured in facilities that are distant from the widget assembly plant.
Instead of moving around small quantities of components, larger quantities are shipped once a
day to the centralized warehouse.

Kanban - Responsive To Customers

Kanban results in a production system that is highly responsive to customers. In the above
example, the production of widgets will vary depending on customer demand. And as the
widget demand varies, so will the internal demand for widget components. Instead of trying to
anticipate the future (predicting the future is difficult) , Kanban reacts to the needs.

Kanban does not necessarily replace all existing material flow systems within a facility. Other
systems such as Materials Requirement Planning (MRP) and Reorder Point (ROP) may remain
in operation. Kanban is most beneficial when high volume/low value components are involved.
For low volume and value components, other materials management system may be a better
option.

JIT - Just In Time / Continual Improvement

Kanban is directly associated with Just-In-Time (JIT) delivery. However, Kanban is not another
name for just-in-time delivery. It is a part of a larger JIT system. There is more to managing a
JIT system than just Kanban and there is more to Kanban than just inventory management.

For example, Kanban also involves industrial re-engineering. This means that production areas
might be changed from locating machines by function, to creating "cells" of equipment and
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employees. The cells allow related products to be manufactured in a continuous flow.

Kanban involves employees as team members who are responsible for specific work activities.
Teams and individuals are encouraged participate in continuously improving the Kanban
processes and the overall production process.

Kanban is not a system indented to be used by itself. It is an intregal part of Kaizen and 5S.

Kanban Scheduling Systems

Kanban scheduling systems operate like supermarkets.  A small stock of every item  sits in a
dedicated location with a fixed space allocation. Customers come to the store and visually select
items. An electronic signal  goes to the supermarket's regional warehouse detailing which items
have sold. The warehouse prepares a (usually) daily replenishment  of the exact items sold.

In modern supermarkets Kanban signals come from checkout scanners. They travel
electronically (usually once a day) to the warehouse. Smaller stores still use visual systems.
Here, a clerk walks the aisles daily. From empty spaces he deduces what sold and orders
replacements.
    Another variation is the bread truck. Here drivers follow a fixed route from store to store.
They have a supply of bakery items in their truck. At each stop, they examine the stock and
replenish what has been sold.

Kanban scheduling in manufacturing works in the same way. The essential elements of a
system are:

 Stockpoint(s)
 A Withdrawal Signal
 Immediate Feedback
 Frequent Replenishment

REVIEW OF LITERATURE
M.C. Jothishankar, H.P. (Ben) Wang(1993) Studies the feasibility of using the metamodelling
technique for the performance analysis of a just-in-time manufacturing system. The data for
the analysis are generated by a Siman simulation model. Develops a regression metamodel
following an R-IV fractional factorial design. Results show that, of the 15 variables considered,
only assembly time, kanban capacity, and the interaction effect between demand and kanban
capacity are statistically significant. Performs cross-validation. Finds the results of the
metamodel developed to supplement the simulation model to be accurate. Sea Ling, Bohdan
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Durnota(1995) Modelling by means of specification languages is increasingly being recognized
as an important phase in system development. It encourages one to think about problems
using models organized around real-world situations. The system to be developed should then
be consistent, correct and unambiguous with respect to the models produced. The justin-time
kanban system is an example of a realworld problem with a multiple-supplier and multiple-
client architecture. Uses two specification languages LOOPN and Object-Z, proposed in the
literature to model the kanbansystem. Focuses on describing the kanban system in the
different notations, thus investigating how well they can express the just-intime system. The
kanban system consists of many replicated components, each having the same state space and
exhibiting the same behaviour. To describe each and every component in the system would be
repetitious and tedious. Discusses the ease of describing such a system. A F Guneri,  A
Kuzu, A Taskin Gumus(1996) Kanbans play an important role in the information and material
flows in a JIT production system. The traditional kanban system with a fixed number of cards
does not work satisfactorily in an unstable environment. In the flexible kanban-type pull control
mechanism the number of kanbans is allowed to change with respect to the inventory and
backorder level. Based on the need for the flexible kanban, a method was proposed by
(Husseini, S.M.M., O'Brien, C., and Hosseini, S.T., 2006. A method to enhance volume
flexibility in JIT production control. International Journal of Production Economics, 104 (2),
653-665), using an integer linear programming technique, to flexibly determine the number of
kanbans for each stage of a JIT production system, minimising total inventory cost for a given
planning horizon. Here, the effectiveness of the method proposed by Husseini et al. is examined
by a case study and compared with the results for the conventional method of fixed kanban
determination. This is also confirmed by a simulation study using artificial neural networks
(ANNs). The main aim of this paper is to show the cost advantage for Husseini et al.'s method
over the conventional method in fluctuating demand situations, and especially to prove that
simulation via ANNs ensures a simplified representation for this method and is time saving. A.
Andijani(1997) Investigates the trade-off between the average throughput rate and the
average systems time using kanban discipline. Considers a multistage serial production line
system with materials in the system controlled by kanban discipline. Presents simulation
results to evaluate the production system performance in terms of the average throughput
rate and the average system time for a fixed total number of kanbans over a given number of
serial workstations. Constructs and compares efficient allocation sets for three and four
workstations that are generated by kanban discipline for two processing time distributions,
namely, uniform and exponential distributions. Based on the simulation results from three and
four work-stations, develops a general design rule to maximize the average throughput rate
and to minimize the average system time. Analyses five and six workstations using the general
design rule. Tests the validity of the general design rule by considering five and six
workstations with a different number of kanbans. The results show that most of the efficient
sets generated by the design rule are identical to those generated by enumerating all
combinations of kanban allocations. However, using the general design rule reduces the
simulation work tremendous. Yannick Frein, Maria Di Mascolo, Yves Dallery(1998) Considers
a class of control systems known as generalized kanban control systems (GKCS) which can be

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used to implement a pull control mechanism in a manufacturing system. In a GKCS, the
production system is decomposed into stages, where each stage consists of a production sub-
system. There are two design parameters per stage: one controls the work-in-process in the
stage and the other determines the maximum number of finished products of this stage.
Investigates the influence of these design parameters on the efficiency of generalized kanban
control policies by deriving qualitative properties as well as using experimental results on the
behaviour of GKCS. G D Sivakumar,  P Shahabudeen(2002) The traditional kanban system
with a fixed number of cards does not work satisfactorily in an unstable environment. With the
adaptive kanban-type pull control mechanism, the number of kanbans is allowed to change with
respect to the inventory and backorder level. It is required to set the threshold values at which
cards are added or deleted, which is part of the design. Previous studies used local search and
meta-heuristic methods to design an adaptive kanban system for a single stage. In a multi-stage
system the cards are circulated within the stage and their presence at designated positions
signals to the neighbouring stages details concerning the inventory. In this work, a model of a
multi-stage system adapted from a traditional and adaptive kanban system is developed. A
genetic and simulated annealing algorithm based search is employed to set the parameters of the
system. The results are compared with a traditional kanban system and signs of improvement
are found. The numerical results also indicate that the use of a simulated annealing algorithm
produces a better solution. ALBERT FRANKLIN(2007) Implementing a kanban system with
suppliers helps manufacturers reduce the risk of over-stocking or running out of stock. For
Commercial Vehicle Group Inc, an electronic kanban solution helped the company increase
inventory turns by 28% and reduced overall inventory by 43%. The solution also helps supplier
relations. You are not asking a supplier to go out and spend thousands of dollars. All they have
to do is have an Internet connection and they can become part of you and see what you are
using day in and day out, and see what they need to be sending back to you on a daily basis.
Andrew Lee-Mortimer(2008) Learning lessons from its previous lean implementation
experiences, the company's adoption of Kanban was phased, and the final stage of gradually
building up the parts under the control of the electronic Kanban was combined with broad
involvement, widespread training and the addressing of cultural issues. This “pull” system has
delivered the expected dramatic reductions in lead times and inventory but, having used Kanban
to gain increased internal stability, the company is now planning to extend the system
externally. Interestingly, to make this work, it will require the replacement of Kanban control in
some internal areas of the plant with push control in the form of direct replenishment.B Vijaya
Ramnath,CElanchezhian,RKesavan(2009) Just-In-Time (JIT) manufacturing technique was
first developed by Toyota Motor Corp under the name Toyota Production System and is
referred to as JIT manufacturing in the US. Today, JIT manufacturing is a widely practiced
manufacturing technique all over the world. This paper focuses on inventory control using
kanban system for a typical manufacturing industry. The earlier method used was to get work
done from the suppliers within a specified time using an order memo. The problems with order
memo were that the exact production status of the supplier were unknown, due to which the
parent company was unable to receive the finished product from the vendors in the required
time. To solve this type of problem, JIT system is used. By adopting JIT technique, the
inventories can be minimized. Implementing kanban inventory gradually reduces maintaining
optimum level of stock. The sole concept of ?right material at the right time? has been achieved
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using this system. Muris Lage Junior,  Moacir Godinho Filho(2010) This paper reviews the
literature regarding variations of the kanban system, i.e. the aim is to study only the modified
kanban systems. Thirty two different systems were studied and classified according to six
categories: the publication year of the paper, the number of original characteristics conserved in
the variation, the operational differences between each variation and the original kanban system,
the advantages in relation to the original kanban, the disadvantages in relation to the original
kanban, and the way those systems were tested. A brief summary of each adaptation is shown,
integrating the scattered efforts undertaken by the authors with the aim of improving the
kanban system and adjusting it to the new and/or distinct necessities of the production systems.
Our analysis of the papers, using the proposed classification method, provides useful insights on
the anatomy of the literature about variations of the kanban system. It was found that, among
other topics, there is a great difference between the quantity of theoretical and practical
proposals

Kanban system in Toyota

Toyota Production System

Just-in-time-Philosophy to elmination of waste

JUST-IN-TIME

"Just-in-Time" mean s making only "what is needed, when it is needed, and in the amount
needed." To efficiently produce a large number of products such as automobiles, which are
comprised of some 30,000 parts, it is necessary to create a detailed production plan that
includes parts procurement, for example.
Supplying "what is needed, when it is needed, and in the amount needed" according to this

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production plan can eliminate waste, inconsistencies, and unreasonable requirements, resulting
in improved productivity.

Kanban system

In the TPS, a unique production control method called the "kanban system" plays an important
role. The kanban system has also been called the "Supermarket method" because the idea
behind it was borrowed from supermarkets. Supermarkets and mass merchandizing stores use
product control cards on which product-related information, such as product name, product
code, and storage location, is entered. Because Toyota employed kanban signs in place of the
cards for use in production processes, the method came to be called the "kanban system." At
Toyota, when a process goes to the preceding process to retrieve parts, it uses a kanban to
communicate what parts have been used.

- Why use a supermarket concept?

A supermarket stocks the items needed by customers when they are needed in t he quantity
needed, and has all of these items available for sale at any time.
Taiichi Ohno (a former Toyota vice president), who promoted the idea of Just-in-Time, applied
this concept, equating the supermarket and the customer with the preceding process and the
next process, respectively. By having the next process (the customer) go to the preceding
process (the supermarket) to retrieve the necessary parts when they are needed and in the
amount needed, it was possible to improve upon the existing inefficient production system in
which the preceding processes were making excess parts and delivering them to the next
process.

 Evolution of kanban through daily improvement

Through continuous improvements, the kanban has evolved into the "e-kanban," which is
managed using IT and increases productivity even further.

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Two kinds of kanban (the production instruction kanban and the parts retrieval kanban) are used
for managing parts.

MORE ON TOYATA PRODUCTION SYSTEM

(KANBAN SYSTEM)
Toyota Production System is one of the items in which Toyota Motor Co. instructs the
suppliers. This system is also called the Kanban system and has become well-known
internationally for its small quantity of stocks and thorough rationalization.
Toyota Production System has two major features, “Just-in-Time Production” and
“Jidoka (Automatic line stopping when something goes wrong)”.
The ideal state for producing goods is the one where machines, equipment and men
perform waste less operations which serve nothing but to increase added value. “Just-in-time
production” was thought out to convert this ideal state into practical one
everywhere, between each operation, each process, each line and each shop. In other
words by “Just-in-time production” each process can supply necessary parts in necessary
volume at necessary time. On the other hand “Jidoka” means that whenever an
abnormal or defective condition arises, machines, equipment or general conveyor lines
can be supported by the judgment of these machines, equipment and line workers
themselves. In short “Jidoka” lies emphasis not on operating machines to full extent but
on making them stop by themselves as soon as machining defects happen in order to
take necessary actions.
To make “just-in-time production” and “Jidoka” flexible to a workshop following conditions
are devised:
1) Hourly production at every process is leveled with respect to volumes and
specifications of products.
2) Attention is paid to prevent over production
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3) Occurrence of abnormality can be easily identified by some means of
indication (buzzer or lamp)
Toyota Production System employ “Kanban” or a form of order card as
working device. This is the reason why the production system is called “kanban system”
This system connects a supplier as a production process with each of Toyota’s plans and
realizes to minimize the work in process inventories,which every process in a shop used to keep
in considerable volume formally.
The production process consist of the following steps:
1) Die Preparation 2) Die Casting
3) Fin Removal 4) Machining
5) Washing 6) Stock Store
7) Assembly Line 8) Goods store
Production order is given by “Kanban” or order cards which a subsequent process bring to
the preceding process. The preceding process produces what the subsequent process demands
for. For instance, as one can see in the third frame of Fig., the washing process brings a order
cards to the preceding machining process when washed products stock reaches below the
prescribed level by the demand from the subsequent assembling process. The machining
process starts processing as soon as it receives the order card. “Kanban” or order cards are
circulated not only in a company but also between different companies. Dispatch of carburetors
of the company A is begun by the order card from the engine assembly division of Toyota
Motor Co. Then an order is given to the assembly process for the types of carburetors that were
removed from stock shelf and dispatched. In this way orders are given to the preceding
processes like chain reaction.

As one may have already noticed, following requirements must be met by production processes
in order to apply this “Kanban System” efficiently.
1.A production line must realize much shorter setup time than commonly can respond to
production order given every four hours or every hour for different kinds or specifications of
products.(Example) Shortening of die setup time
a) It used to take fifty minutes to change a die of a resin moulding machine.
By improvement on twenty four points it now takes three minutes .
b) Formerly it had taken 90 minutes, 60 minutes and 26 minutes respectively to set up 50 die
casting machines, 250 small stamping machines and 5 resin moulding machines. At present it
take less than one minute each.
2. Minimising the production of defectives
A subsequent process given an order for producing such small quantity of work-inprocess
inventory as follows:
a) On small stamping line: 100 units
b) On machine processing line: 10 units
c) On assembly line: 5 units
and when a defective is produced, it is necessary to reproduce the substitute from raw materials
(which needs much time and cost). So production of defective cannot be allowed. Reliability as
high as that required for electronics industry parts is expected to the machining processes.
3. Thorough preventive maintenance

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 For minimising the production of defectives it is demanded not to repair the machine tools
and equipments after they break down, but to reform these processing facilities themselves as
well as to examine them regularly. In short, preventive maintenance and reformative
maintenance are mandatory.
4. Observation of operation standards
As the products change in kinds and specifications each hour, a superintendent must clearly
show the operation standards on each product to the workers, and must check whether
operations are being performed as ordered.
As one may have been aware, Toyota guides the suppliers in applying “Kanban System” not for
spreading the usage of “Kanban” itself bu t for leveling up their production control, quality
control or workers’ capabilities, and strengthening the management system. At the time of this
case study among 200 suppliers of Toyota 175 were applying the “Kanban System.

Benefits of Kanban
Kanban provides a number of benefits to Toyota.

Reduce inventory and product obsolescence.

Since component parts are not delivered until just before they are needed, there is areduced
need for storage space. Should a product or component design be upgraded, that upgrade can be
included in the final product ASAP. There is no inventory of products or components that
become obsolete.

This fits well with the Kaizen system on continual improvement. Product designs can be
upgraded in small increments on a continual basis, and those upgrades are immediately
incorporated into the product with no waste from obsolete components or parts.

Reduces waste and scrap.

With Kanban, products and components are only manufactured when they are needed. This
eliminates overproduction. Raw materials are not delivered until they are needed, reducing
waste and cutting storage costs.

Provides flexibility in production.

If there is a sudden drop in demand for a product, Kanban ensures you are not stuck with excess
inventory. This gives you the flexibility to rapidly respond to a changing demand.
Kanban also provides flexibility in how your production lines are used. Production areas are not
locked in by their supply chain. They can quickly be switched to different products as demand
for various products changes. Yes, there are still limits imposed by the types of machines and
equipment, and employee skills, however the supply of raw materials and components is
eliminated as a bottleneck.

Increases Output
The flow of Kanban (cards, bins, pallets, etc.) will stop if there is a production problem. This
makes problems visible quickly, allowing them to be corrected ASAP.Kanban reduces wait

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times by making supplies more accessible and breaking down administrative barriers. This
results in an increase in production using the same resources.

Reduces Total Cost

The Kanban system reduces your total costs by:

 Preventing Over Production

 Developing Flexible Work Stations
 Reducing Waste and Scrap
 Minimizing Wait Times and Logistics Costs
 Reducing Stock Levels and Overhead Costs
 Saving Resources by Streamlining Production
 Reducing Inventory Costs

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Critical Appraisal

Ring Fencing

It is possible to implement Kanban in a part of your process (first) perhaps as a pilot scheme. In
which case you will need to buffer your Kanban system upstream & downstream from the (as
yet) volatile remainder of your environment.

Priming the System

It is no good implementing from an unbalanced state. It is unlikely to recover. The system must
be primed. On the other hand you may be overstocked, and need to segregate or drain out
surplus stock. There are serious capacity considerations here! If your system is to retain its
credibility it cannot be allowed to fail. So take the time to get the correct buffers in position.

People

Culture

Further information on culture and culture change can be found at "Focused Improvement
Systems", "Culture Development Methods", and Malpractice of the Week 004: "Creating the
wrong culture".

Kanban systems are one of the simplest systems to operate but they do require a change of
mindset on behalf of the operator. Namely it is no longer acceptable to produce unwanted
inventory or to leave the work at your workplace rather than where it is needed next. These
simple rules are actually really difficult to implement. But once understood and in particular
when the benefits of pull systems over push systems are understood, they can become a way of
life. Ignoring the human aspects of Kanban systems operation will doom your implementation
to failure.

The operator previously was used to operating in a sea of work in process and as such, he or
she believed there was plenty of work about. The initial view of the workplace following
implementation is that it is empty. This can be very disconcerting to the operator, who now
thinks that there is no work about and is anticipating that redundancy notices will shortly
appear!

To overcome these problems education of all operators by something like our "Kanban & Lean
Simulation Game" is essential and this must be a simulation to which your operators can readily
relate. We feel the most powerful method of conveying this message is by allowing operators to
discover for themselves the benefits of Pull systems in an environment which is relevant to their
own. Our Kanban & Lean Simulation Game Tool Kit will enable you to design your own game
by easily adapting our tried and tested game to mimic your products and processes, with
instructions of how to run the game to create the learning points. We now offer a one day

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course (M22a Kanban & Lean Simulation Game) where we will help you design the game to
suit your environment, and train you to deliver it.

Incentives

Individual "piecework" type incentive systems are bad news for Kanban operation since they
encourage activity rather than useful activity. These individual incentives can only be removed
if the culture is sufficiently developed to overcome the issues that arise by removing them. This
is covered by courses S02 Business Process Reengineering (Detail), and S13 Culture
Development Methods.

Productivity measures

If you measure productivity by measuring activity you are heading for some difficulties since
unneeded activity leads to unwanted stock and work in process. Again our Kanban & Lean
Simulation Game graphically demonstrates that "working smarter" is much more important.

Implementing a kanban system entails four major steps (which may be slightly modified
depending on the requirements of the facility):

Step #1 is to pick the parts you would like to kanban. In general, these parts should be used
repetitively within the plant with fairly smooth production requirements from month to month.

Step #2 is to calculate the kanban quantity. This quantity is based on the following formula:

Kanban Quantity = Weekly Part Usage * Lead Time * # of Locations * Smoothing Factor

The weekly part usage is, as the name implies, the quantity of the part under consideration used
per week. The lead time is given by the supplier. The usual manufacturing facility lead time is
5 working days per week. The number of locations tells us how many locations should have a
full container to begin with. The smoothing factor is used to account for seasonal fluctuations
in demand. It is a constant determined by the ratio of the fluctuating demand to the regular
demand.

Step #3 is to pick the type of signal and container to be used which holds a standard quantity.
The container should aid visual identification, ease of storage, and count of material at the point
of use.

Step #4 is to calculate the number of containers. This calculation is performed using the
following formula:

# of Containers = Kanban Quantity / # of Parts Held Per Container

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RECOMMENDATIONS

It must be noted that we never used kanban containers for transporting parts from raw materials
and transporting parts to finished parts storage. Ideally, we would want to pull from raw
materials and have finished parts pull from the previous station. However, due the manner in
which parts are supplied and stored, this just-in-time process would not be possible. Currently,
too many parts get stockpiled before kitting begins. The number of raw materials stored in the
beginning is actually much higher than that required at that time. Thus, introducing a MRP
system at these stations in conjunction with the proposed kanban system would be
recommended.

Another consideration that was not included in this report was the kanban of the nuts, screws
and other kitting materials. It was found that the current two-bag inventory is more suitable to
the application because of the ease allowed in purchasing these items. It would help further if
the kitting operation was somewhat more organized.

CONCLUSION

Toyota has promoted mutual prosperity with 200 component suppliers under the basic principle
of long term and stable transaction. AND TOYOTA continues to maintain and improve the
relationship with the component suppliers following this basic spirit.
For this reason Toyota will go with assisting the component suppliers in management as well as
quality control. And TOYOTA expects the suppliers to strengthen the management system of
their own and to supply the products of excellent technology and quality without presuming
upon or being too much dependent on the principle of long term and stable transaction. And
Toyota would like to carry on business with overseas suppliers with processes of excellent
technology and management foundation.

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BIBLIOGRAPHY:

 Schonberger, R.J. (1982). Japanese Manufacturing Techniques. New York, NY: The
Free Press.

 http://proquest.umi.com/pqdweb?
did=2003657511&sid=1&Fmt=2&clientId=129893&RQT=309&VName=PQD

 http://proquest.umi.com/pqdweb?
did=1880513781&sid=1&Fmt=2&clientId=129893&RQT=309&VName=PQD

 http://www.emeraldinsight.com/10.1108/01443579310039542

 www.emeraldinsight.com/10.1108/01443579510099733

 International Journal of Operations & Production Management VOL-7 ISSUE-5 PG(49-

50)

 elsmar.com/pdf_files/Toyota%20Kanban%20System.pdf

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