a continuing lean journey

8/14/2019 A Continuing Lean Journey

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Feature

A continuing lean journey: an electronic

manufacturers adopting of Kanban Andrew Lee-Mortimer

Lee Business Communications Ltd, Manchester, UK

AbstractPurpose This paper aims to examine the introduction of Kanban production control, at a UK-based electronic product-manufacturing operation.Design/methodology/approach The paper covers key implementation issues, including cultural factors, the reasons behind the adoption of anelectronic Kanban system, and explains in detail the working and benefits gained from the changes introduced.Findings Learning lessons from its previous lean implementation experiences, the companys adoption of Kanban was phased, and the final stage ofgradually building up the parts under the control of the electronic Kanban was combined with broad involvement, widespread training and theaddressing 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 thereplacement of Kanban control in some internal areas of the plant with push control in the form of direct replenishment.Originality/value The paper clearly shows how effective the progressive introduction of aspects of lean can be in terms of delivering long-termbusiness benefits. It also confirms the importance of recognizing that even well organized businesses are liable to suffer pain when implementing lean.It is critically important not to blame the new system, but to find the real causes, and this requires understanding and training. Finally, in addition toexplaining how the plants new system operates, and observing some of the finer details of the electronic Kanban system, the paper looks at theinteresting planned steps in the systems evolution.

Keywords Electronics industry, Kanban, Production management, Lean production, United Kingdom

Paper type Case study

Introduction

Prior to embarking on its lean journey in 2005, SiemensStandard Drives Congleton factory had already seen the

benefits of a highly effective continuous improvement

program. This had delivered a major culture change along

with significant OEE and quality improvements to the UK

plant, which is part of Siemens Automation & Drives and

employs 420 people in the design and manufacture of a range

of electronic drives. Its achievements had been recognized by

the winning of a host of awards.

Therefore, the initial surprise for Congletons

management when it started its new improvement offensive

was not that lean offered a way to deliver performance

i mp rove me nt s, b ut j us t h ow m uc h p ot en ti al f or

lean improvement was still present within the site. A

significant insight into the major challenges still facing the

plant, and the level of waste and unnecessary cost still

present, was brought home to the senior management team

when it undertook a value stream mapping exercise.

Undeterred, and with the support of the Manufacturing

Advisor Service North West, the operation started to tackle

some of the key process issues highlighted.The products produced at Congleton are all based around

printed circuit boards (PCB), and so its main production

processes include automated surface mount lines, through-

hole assembly, PCB testing, an automated protective spray

coating process and final manual assembly. This last stage is

where boards are assembled into the end products metal

frame and plastic casing, tested and then packaged ready for

dispatch to the German Export Centre. The first area tackled

by the Lean Manufacturing initiative was PCB testing, as

this had been shown to be a real bottleneck.

Using SMED techniques, the changeovers within the test

area were radically redesigned and standardised, with the

result that the plant gained reductions in change over times,

for example, from 10 down to 1 min.Then, having established increased flexibility and output

from the test area, the next big challenge tackled was the final

assembly areas for the plants core MM4 products. These

account for 80-85 per cent of production by volume.

Adopting lean techniques to redesign the final assembly area

into cells and balancing the workload within each cell,

dramatic improvements were gained. These included

reducing cell WIP from 195 trolleys to 3, improved

quality and reduced rework, productivity up well in excess

of 45 per cent, assembly lead time down to 7 min from 5 h,

and increased output.

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0144-5154.htm

Assembly Automation

28/2 (2008) 103112

q Emerald Group Publishing Limited [ISSN 0144-5154]

[DOI 10.1108/01445150810863662]

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Overall, these changes constituted an important step

towards the plants ultimate goal of creating a build to order

system. Yet, the improvements did not come without facing

severe problems when the cells initially went live. (Details of

the developments are covered in the article previously

published in Assembly Automation A l ean r ou te t o

manufacturing survival.).

In fact, as David Roberts, Congletons ProductionManager, reports, crucial to the ongoing success of the cells

was the slightly belated introduction of Gembi Kanri; visual

control charts and workplace management. By getting

operators directly involved in tracking output and

performance, and ensuring both management and operators

sort problems on a daily basis driven through morning

meetings held at each cell the new approach to workplace

management is one of the key reasons why the cells have

become so successful.

However, these developments have proven to be far from

the end of the plants lean journey. In particular, in early 2006

the management realized that although significant inroads had

been made by optimizing certain processes, so reducing some

internal processing times, removing non-value-added

activities and increasing productivity, the overall material

flow in the factory was still far from efficient. As a result, the

plant was still a long way short of delivering against overall

lead-time and flexibility improvement goals.

Therefore, another major change in practice and culture

was needed, and it was decided to adopt a Kanban production

control system.

The drive for pull

Essentially, it had become obvious that the major barrier to

further lead time and inventory reductions was the traditional

push-based production environment still being operated at

Congleton.

As the factory does not supply customers directly, but anexport centre based in Germany, the demand placed on it

comes from the Corporate SAP ERP system. This dictates

output, based on actual sales, forecast sales and warehouse

stock, and provides firm orders for 15 days in advance and

forecasts beyond that. From this data, Congletons

production planners produce a rolling four-week production

plan, with the last two weeks fixed, and, traditionally, a daily

MRP run has then determined the necessary works orders for

each work centre.

This meant that in effect, all activity in each work centre

was centred on producing in accordance with material

availability and efficiency (i.e. large batch sizes), with the

result that part processed PCB boards were constantly being

pushed through the factory, regardless of the demand from

downstream processes. This was naturally causing larger than

necessary amounts of WIP, which was often increased as a

backlog of certain boards could rapidly build up if

downstream processes could not consume them for any

reason. Also, overall lead-time was dictated by the MRP

driven work sequence and batch sizing (Figure 1).

According to Tobias Cock, Operations Graduate and head

of the Kanban project, We needed to change this situation

and become more efficient in getting the right boards through

the plant at the right time, and in so doing reduce lead time

and WIP and improve overall productivity. This meant

encouraging a way of working that was based on internal

demand, and smaller batch sizes, and the best way to create

this pull of products through the factory would be via

Kanban (Figure 2).

Other long-term drivers for the change to Kanban included:. the opportunity to provide more visibility and control into

production processes and to capture historical data for

trend and improvement analysis;.

the opportunity to empower operators to make productionrelated decisions, such as prioritising work and create

production orders;. the opportunity to improve communication across work

centres by making material supply and consumption data

available to everyone;. the opportunity to reduce manufacturing lead time and

thereby reduce inventory both in production and at our

Export Centre in Germany (LZN);. the opportunity to respond faster to changing demand by

having Kanban stocks throughout the production pipeline;

and. the opportunity to analysis historical production data to

identify production issues such as capacity constraints,

over production and delivery failures.But, it was also recognised that going from push to pull would

be a big culture change, challenging well established

procedures. There was also the considerable tangible risk

involved with this move, of losing production and missing

output targets. The problem had been highlighted by the final

assembly cell implementation, but in this case the whole

factory could grind to a halt if the system did not work as

anticipated. Fortunately, these concerns were partly offset by

the greater level of understanding of lean throughout the

company, and, critically, the level of senior management

support for the change.

Testing the waterTaking into account the risks involved with the introduction of

Kanban, the first practical step taken by the plant was the

development of simulations to see how the factory might

operate with Kanban controlling production.

As Tobias Cock reports, using the sites reporting system

(COBRA) daily production data was extracted for all of the

high-volume products over the previous 12 months. This

information was used to calculate standard deviation in

demand for each product group and to estimate the volume of

products that were qualified for being included in a Kanban

system.

In addition assumptions were made that:. demand variability will be reduced by 50 per cent because

planners are allowed to plan in smaller batch sizes;. work centres will on average use half a day to respond to

down stream demand; and. the acceptable risk for material stock-out for any given

item is 0.5 per cent.

From this, a Kanban simulation was developed to estimate

inventory and expected lead-time reduction for qualified

Kanban items.

The simulations showed that with the factory already

arranged in terms of flow, a full Kanban implementation was

not only feasible but could also generate significant

improvements (Figure 3).

A continuing lean journey

Andrew Lee-Mortimer

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Volume 28 Number 2 2008 103112

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Based on this the plant took the first implementation steps in

February 2006. Again, to reduce risk and see in practice how

the process would work in the factory, this consisted of the

introduction of a simplified manual card-based system that

only controlled the largest volume board produced.

As Tobias Cock notes, One of the key aspects of this trial,

which lasted several months, was to see if the Kanban system

could be operated effectively in combination with the ERP

system. This was vital because, although the intention was to

introduce Kanban control throughout the factory, there was

nothing at that stage that Congleton could do about the

Corporate ERP system still dictating the order demand being

placed on final assembly.

Therefore, the trial system was based on employing the

production plan to stipulate when final assembly would

produce the required products (instead of the ideal of a pull

from the warehouse). The Kanban system then controlled the

internal production of the boards within the trial. This meant

that as soon as final assembly consumed a certain number of

boards in its Kanban stock, a signal the Kanban card with

Figure 1 Traditional push manufacturing at Siemens Standard Drives Congleton

Procurement

Before

Suppliers S5 A6 F7

Lead time 4 - 5 days

MRP Planning

A&D Export

CentreA10 K1

Additional key

S5

A5

F7

A10

K1

- Surface mount

- Through-hole board assembly

- PCB testing

- PCB coating

- Final Assembly

Figure 2 Reducing batch sizes delivers reduced WIP

Before

Days Days

Batchsizes

Batchsizes

After

WIP levels highly reflect the

amount of variability in

production batch sizes. By

encouraging planners to plan

orders according to demand

and not based on optimum

batch sizes a significant

reduction in inventory has

been achieved with the aid

of the Kanban

WIP

WIP

Figure 3 Estimated reduction in inventory from the introduction of Kanban

600.0Average Inventory

(using SAP with 4

days lead-time)

Average Inventory

(using the Kanban

system)

500.0

400.0

300.0

200.0

100.0

0.0

1790L820A

1790L825A

1790L830A

1790L837A

1790L848A

1790L849A

1790L851A

1790L854A

1790L855A

1790L856A

1790L858A

1790L871A

1790L875A

1790L876A

1790L868A

1790L869A

1790L888A

1790L889A

1790M844

1790L944

1790M864

1790M865

1790M845

1790L946

1790L948A

1790L945A

1790L947A

1790M827

A5E00138091

A5E00137379

A5E00137380

A5E00140080

Total estimated inventory

reduction 37.48%

(See Appendix A for the

complete calculation)


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the replacement quantity was sent to the preceding work

centre to request re-supply, with subsequent triggers pulling

new boards through the whole production processes

(Figure 4).

This trial not only confirmed that the combined control

process was feasible, but it also provided good insight into

potential benefits of improved flow and reduced WIP that

could be generated by a larger scale Kanban system. It alsoproved to be a fundamental tool in starting to change the

culture within the plant (Figure 5).

However, it also highlighted a potentially big problem. The

large variation in demand for the operations products, which

was not helped by final production being driven by ERP,

resulted in the constant need to change the Kanban

thresholds (the size of the Kanban stock held at each centre

and replenishment request). With an enlarged paper-based

system this would require considerable effort, with someone

physically having to produce and introduce new Kanban cards

on a regular basis for all products being controlled by

Kanban. It was recognised that this could become a major

headache, and not only in terms of changing the cards but

also the need to keep each work centre informed of all thechanges.

The solution chosen to overcome this constraint, while also

being considered a more realistic option for the long-term,

was the development and adoption of an automated,

computer-based Kanban system. Two further factors helped

in determining this route forward. First, a key advantage that

Congleton had, as regards going for an electronic system, was

that it had a board bar coding and scanning infrastructure in

place on which to build the system. Every item was already

being scanned at each work centre for transactional purposes.

Secondly, it had an IT department who were capable of

producing the system in-house.

Full implementation

By August 2006, a small team of people from Congletons

operations and IT had not only created a functional electronicKanban system, but it also had been made available site wide.

This implementation not only replaced the card-based

system, but also significantly expanded the number of

boards under Kanban control to cover the majority of items

needed for its core MM4 product range.

According to Tobias Cock, as with the manual approach the

basic premise of the electronic Kanban system, which is now

fully operational, is that it runs in parallel with the ERP

system. A production plan continues to determine output

from final assembly, with MRP still operating in the

background for the whole plant by producing work orders,

and managing material procurement. However, now the

Kanban system with Kanban controls introduced between

each work centre drives what and how many of each item(the Kanban threshold), a work centre produces against the

works order at any one time (Figure 6).

For instance, the overall works order covering the next

weeks production may be for 150 boards of a particular type.

But production of the board will not start until signalled by

the Kanban system, and the amount produced in any one

batch is stipulated by the threshold (say 30). The rest of

the order remains unmade until subsequent Kanban

signals have been received. The result as anticipated is that

Figure 4 The key differences in control methodology between push and pull manufacturing at Siemens Standard Drives Congleton

Additional key

S5

A5

F7

A10

K1

- Surface mount


- PCB testing

- PCB coating

- Final Assembly

Procurement

Before

After

Suppliers

Procurement

Suppliers

S5 A6 F7



Information

Materials / Products

MRP Planning

Planning

A&D Export

Centre

A&D Export

Centre

A10 K1

S5 A6 F7 A10 K1


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production is undertaken in much smaller batches, and if final

assembly for whatever reason is in backlog for one product

for two days there is not two days worth of high-added

value boards in WIP.

With the electronic system, the signals for processing are

conveyed to each work centre via digital Kanban displays.

Through these, any work centre can see exactly what it needs

to be working on. The information is updated automatically

as each board is scanned and the activity undertaken recorded

at every work centre.

The display is primarily in the form of a gauge for each

board variant, item, with a dial that moves between green,

yellow and red zones (Figure 7). If in the green, there is no

need to produce anymore at present. If yellow, this shows that

there is likely to be demand to replenish the downstream

Kanban soon. If the gauge is in the red, then the work centre

needs to produce some of these straight away to avoid

stopping downstream production.

The display box below the dial also clearly shows:. Stock. This is how many boards are left between it and the

next work centre. For instance, this could be 14, and the

reason why the dial could be in the red, even though 14

boards are still in stock, is that the dial takes into account

the set up time required to start building new boards of

this type.

Figure 5 Representation of the manual card-based Kanban trial

Surface Mount (S6)

Conventional Build (A9)

CARD

CARDLead time: 2.24

Deviation: 1.77Batch Size: 100

Lead time: 0.75

Deviation: 0.44

Batch Size: 40

Lead time: 0.88

Deviation: 0.52

Batch Size: 40

Lead time: 0.5Deviation: 0.3

Batch Size: 40

Lead time: 1.61

Deviation: 0.56

Batch Size: 40

Total No

Kanban

Tickets

Number

of Red

Tickets

Number

of Yellow

Tickets

Number

of Green

Tickets

Total NoKanban

Tickets

Numberof Red

Tickets

Numberof Yellow

Tickets

Numberof Green

Tickets

Total No

Kanban

Tickets

Number

of Red

Tickets

Number

of Yellow

Tickets

Number

of Green

Tickets

6.76.723.2

14.7 7.3 3.7 3.7

36.6

CARD

CARD

CARD

CARD

CARD

CARD

Options (K2)

1790L800A

1790L800ASM

1790L811A

Transaction

Transaction

TransactionTransaction

Mechanical Assembly

(K1)

PCB Test (F7)

Transaction

Coating (A10)

Transaction

1

2

34

56

10 5.8 2.1 2.1


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. Batch size. This is the number of items needed to get the

items Kanban threshold up to maximum in the green.

The work centre is not allowed to build more than the

stated batch size as this would entail wasting resources on

boards that are not going to be needed at present, and

taking away resources from other boards that probablyneed more being produced (i.e. also in red or in yellow

state). However, the group leader can decide to build less

than the batch size stated, in order to get some stock,

(and get the dial into yellow) but may then transfer onto

another board which is also critical.

A Build in Progress signal shows if that board is being

produced. This is more of an indicator for production control.

It shows if work centres are responding to the dials

appropriately. For instance, if they see some items in red

across the factory, and no build in progress for it at any work

centre then they can react to this situation.

A Unit Consumption signal is automatically triggered

when the next work centre starts consuming its stock of theboard. This is another key indicator to help group leaders

make decisions on build sequence. For example, the dials for

two items might be in the orange zone, but only one might be

being consumed by the next centre hence highlighting the

more important one to work on.

A typical situation for any work centre is that 30% of the

dials will be in red, 30% in orange and 40% in Green, says

Tobias Cock. He adds, Obviously with this sort of balance,

not all decisions on build sequence are clear cut, and often all

the information available to Group Leaders has to be taken

into account to make some priority and build quantity

judgements. To help make this decision making easier, the

system is constantly being reviewed; and the latest addition is

to provide all work centres with filtered information andsimplified charts that will help clarify the situation about every

item across the factory.

Implementation challenges

In implementing this full, electronic, system Congleton faced

a number of process, technical and people related challenges.

As Tobias Cock observes, one of the key process issues was

determining the actual lead times between work centres,

including response time to a demand signal, and then

calculating the size of the Kanban thresholds for each item.

Some work centres have as many as 40 different board

variations, and if a large number of these go into the red then

they cannot respond to all at the same time. Therefore, to

reduce the risks the system started with quite large thresholds

in many cases larger than needed in theory. These safety

levels have then been gradually fine tuned and typically

reduced as the process has become more stable and

confidence in the approach has increased

He claims, We decided that it was far more important to

initially get the system operating successfully, and not risk it

falling over because of trying to take out too much inventory

in one go. This approach was made far easier by the adoption

of an electronic system.

The electronic system also means that the Kanban

thresholds can be constantly monitored and changed to

Figure 6 The key principles of the electronic Kanban control system introduced in August 2006

Current Replenishment Procedure

Week 4 Week 3

Production Plan

Open Open Closed Closed

Week 2 Week 1

S5 A6

Kanban Replenishment

Total Respond Time (15 business days)German Export Centre

Kanban Replenishment

A10 K1F7

Additional key

S5

A5

F7

A10

K1

- Surface mount


- PCB testing

- PCB coating

- Final Assembly

Figure 7 Examples of the electronic Kanban displays

(The Kanban Display available to

operators on the shop-floor)


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reflect anticipated changes in demand. For instance, by

looking ahead at future demand forecasts and recognising that

demand for some products is historically always different in

December as opposed to July, then gradual changes

in thresholds can help smooth out these changes in

requirements.

Another major issue was deciding how to manage the

surface mount area, which is where the company has mostcapital tied up.

It was important to ensure that production in this area,

which is at the beginning of the process, was not dictated just

by efficiency, and was still focused on responding to the

demand mix of actual production, and not a forecast plan.

However, it was also recognised that significant reductions in

batch size and increased changeovers could have had serious

efficiency impact. Therefore, it was decided that it would be

controlled by the Kanban system, but that to balance demand

and efficiency needs, it would operate with a healthy

Kanban threshold. This decision was helped by the fact that

many of the boards produced at surface mount are consumed

by a number of different sub assemblies. In addition, the

boards at this point boards have limited added value and are

easy to store.

The decision to develop the system in-house offered a way

to avoid the big bang deployment of a full-scale system, which

can often require a significant amount of capital investment,

and outside resources, from the outset. But it also posed some

challenges. However, the plants IT operation proved more

than willing and capable, and by developing the system in

stages adding features that were seen as needed or useful

no major problems were encountered.

We started with a relatively simple system, just 30% of

features now available, and this has been built up over the past

year, as we have better understood the dynamics of the

process in operation, and the requirements of those using it,

says Tobias Cock.

Naturally, the prospect of moving people away from the safepractices and behaviours associated with a long established,

and working, push system, to the relatively unknown and

untried pull system techniques raised some cultural concerns.

For instance, production controllers, who were in effect losing

some responsibility and control to the shop floor, might have

been less than enthusiastic. But according to Tobias Cock,

this has been far from the reality, and in fact the production

controllers have proven, to be very supportive in working with

group leaders to determine and manage how best to meet

Kanban demands and improve flow.

The increased responsibility and ownership placed on the

group leaders, who now must focus on reacting and

responding to their customer and not just building to

forecast plan, has taken longer for some to adjust to than

others. But, overall the transition has gone well, with the key

to this, and the refocusing of all operators, being the amount

and length of training undertaken, the broader involvement of

all concerned in the system development, and the setting up

of support mechanisms.

Fortunately, as most of the workforce had already been

through some lean training, the concept and basic principles,

and reasons for Kanban, were not new. Although this was an

advantage, as it overcame some of the normal initial

reluctance to new ideas, it was still recognised as critical to

effectively train people in the specifics of the new system. This

was a lesson learnt from the earlier cell introduction when

w rong assum ptions w ere m ade about the level of

understanding of how the new cells would operate in practice.

For the Kanban system, several training sessions and a half-

day workshop were arranged for everybody involved with the

new system to ensure they were correctly trained and that any

concerns or questions were specifically addressed. A Kanban

operating manual was also produced and made available to all

operators and group leaders using the Kanban.Finally, there are always some problems when new

approaches are introduced, and the tendency is for the

changes to be blamed. This is what happened previously with

the introduction of the cells, and again there were some

instances of this with the implementation of Kanban.

However, states Tobias Cock, This time there has also

been a greater awareness that any problems are far more likely

to be the result of the new system highlighting long standing

issues, and this has resulted in less blame and faster remedial

action. For example, while some work centres have found it

more difficult than others to stay within the Kanban

thresholds, this has generally been quickly recognised as

problems related to the nature of their process, which have

needed modifying, not the introduction of Kanban.Part of thisdifferent attitude is dueto a greater understanding

of what change entails, from senior management downwards.

But it has also been helped by focused support mechanisms.

In this case, in order to effectively record and review

Kanban related issues, a SharePoint site was introduced and

is available for everyone to report problems relating to

overproduction, stock-outs and response time failures.

The site is reviewed by the Kanban coordinator on a daily

basis and actions prepared accordingly (Figure 8).

Further, to record improvements and to identify trends and

problems within production all historical Kanban data is

collected by Congletons reporting system (COBRA). A

number of reports now available to help continuous

improvement efforts include inventory performance,

production lead time, production response time and

Kanban replenishment performance (Figure 9).

As David Roberts adds, With the introduction of the

Kanban, we have now more data available to better

understand the constraints and challenges in production

that were previously hidden by excess inventory and lead

times. Through our Kanban reporting system we can now

easily identify trends and problems in production and prepare

actions accordingly. Additionally the Kanban screens provide

us with valuable real time information on how each individual

work centre are performing, enabling us to be more proactive

to capacity shortages or backlogs, thereby reducing the risk of

delivery failures.

Figure 8 The sharepoint site for recording Kanban-related issues

(SharePoint site for recording kanban related Issues)


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Key results

Since, the introduction in August 2006, the Kanban system

has been expanded to include 78 per cent of the boards used by

the MM4 product range; a range that represents 80 per cent

of all production at Congleton. Moreover, as well as mastering

the new system, its performance is now being tracked and

measured on the balanced scorecard used to monitor the whole

operations performance. One key Kanban measure is the

number of times that a work centre hits zero stock for any item;

with most regularly meeting the present performance target of

only hitting zero once per item per month. Another important

measure is over-production, which is monitored to help

determine how well each work centre is managing the system.

Overall, the Kanban system has delivered numerous

improvements within different business areas, where the

most noticeable and measurable relate to inventory and lead-

time reduction.

For instance, the average lead time of all the work centres

has been reduced from 180 to 60h with the biggest

reductions coming through since January 07 when the highest

running power boards came under Kanban control

(Figure 10). This is not the average lead-time per product

as not every product goes through all the work centres

Although as David Roberts states, We have measured

some PCBs going through the factory in just six hours, from

entering surface mount right through to final assembly, as

opposed to the 4 days planned by the old push method.

This indicates that our vision of move to build to order is

increasingly realistic.

Also, above predictions, the reduction in inventory has come

down in proportion with lead time, with a 70 per cent WIP

reduction in whole the process since introduction of Kanban.

It is also recognised that the Kanban system is providing as

yet unmeasured benefits. These include:. Reduced overproduction that ensures resources are used

more efficiently and board obsolescence reduced.. With reduced inventory in the pipeline the cost of quality

failures are being kept to a minimum.. Fewer and more quickly resolved interruptions to the flow

along with reduced waiting times means that the Kanban

has enabled an increase in production using the same

resources.. The Kanban system makes capacity constraints and

availability very visible and enables group leaders to move

operators from areas with excess capacity to areas with

capacity shortage. This ensures that they can utilise the

variable hours scheme employed at the factory more

effectively.. As well as reducing waste internally, the Kanban has

equipped the factory with an increasingly stable production

Figure 9 Kanban reporting tools

900

800

700

600

500

400

300

200

100

0Dec-06

1790L800A

Dec-06

A5E00142029

Dec-06

A5E00203785

Stock Level KPI

(Kanban

reporting tools)

Prepere

Build Now

Ok

Stock Level KPI

1,100

1,000

900

800

700

600

500

400

300

200

100

0

Prepere

Build Now

Ok


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system that will enable it to approach upstream and

downstream supply chains to remove additional wastethrough the use of external Kanban systems.

Beyond Kanban

In fact it is this last benefit that has driven the site onwards

with the development of its next major lean step forward; the

extension of Kanban control, over the next year, through to

the LZN.

Tobias Cock explains, We realise that what has been

implemented so far is only part of the overall solution. The

Kanban to date has undoubtedly helped us reduce lead-time

and inventory within the factory. But to gain the real benefits

of pull production especially in terms of improved customer

service, we must have a direct Kanban link with the LZN, sothat final assembly becomes driven by a pull from the

warehouse, rather than pushing stock in.

This is because at present the operation is still susceptible to

the typical problems of using forecast demand to plan final

production 15 days in advance of delivery. The system shows

that stocks of certain items are down and with planned sales

these need to be replenished. So these are put into the build

plan, only to find that the sales do not come through as

anticipated and there is an overstock. Whilst, other items that

had healthy stock levels, and so no production in the plan,

suddenly see a couple of major orders that leave the LZN with

no stocks and with no immediate plan to replenish them.

Therefore, one element of the planned future changes is the

removal of the ERP driven production plan, and its

replacement with live stock data from the LZN. When

combined with known stocks in transit and finish goods at

Congleton, this data will provide a total warehouse inventory,

which will then be used by the Kanban system to create

a direct pull demand on Congletons final assembly from

the LZN.

Essentially we are looking to create a situation whereby the

Kanban system will drive final assembly to produce today the

mix and volumes needed to replenish what was consumed

from the export centre yesterday, says Tobias Cock.

He continues, Therefore, we will have a one day response

time to what is happening in the warehouse and a total lead

time of three business days which includes transportation.

This is instead of the present 15-day lead-time. So as well asfurther reducing inventory across the whole delivery process,

this new system w ill generate improved delivery

performance.

However, to make this work is far from straight forward.

Firstly, there is still the problem that demand on the LZN is

highly variable. Therefore, overall unconstrained demand

on final assembly could be greater than factory capacity, and

so production would have to be managed to continue

producing into subsequent days to bring the dials into

Green while trying not to heavily impact the next days

demand. Alternatively, demand may be much lower than

capacity and in these cases production would again have to be

managed, but this time to over produce to agreed limits, such

as 20 per cent above threshold.By far the bigger issue is that to make this approach work

will require further changes to Congletons own process flow,

and more specifically will mean that parts of the recently

introduced Kanban system will be replaced.

Explaining the anticipated new process, Tobias Cock

reports that to support the pull driven final assembly, a

relatively large buffer inventory of completed boards will be

introduced in front of final assembly. This will ensure the cells

are in a position to immediately start building any product

pulled by a Kanban signal, and continue building while new

boards are being processed upstream and delivered to

replenish the buffer, before it runs out.

The key to this is that the lead time for processing new

boards through board assembly, testing and coating will have

to be sorter than the time it takes for final assembly to

consume the buffer. Unfortunately, at present this would not

be possible mainly because of the stock levels and existing

lead-time within the factory, which is dictated by the Kanban.

Therefore, the intention is to remove the internal Kanbans

that now operate between these three processes and introduce

direct replenishment (Figure 11). This should give much

faster throughput within the factory.

In effect, as soon as final assembly (K1) starts consuming

boards, information on what is being produced and build

quantity will be relayed to board assembly (A6), which will

then start producing the necessary replacement boards;

Figure 10 The reduction in average lead time through all process work centres

180

Hours

160

140120

100

80

60

40

20

0

Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07

Month in 2007

Post-kanban

Average lead-time per work centre for all Kanban items

May-07 Jun-07 Jul-07 Aug-07 Sep-07Oct-06 Oct-07

A10-Coating

F7 - Teradyne SpectrumA9 - Selective Solding

A6 - STREKFUSS

A5 - SEHO

B3 - Pre-Assembely

S6 - Surface Mount Si Place

S3 - Surface Mount Si-Place

S5 - Surface Mount


Andrew Lee-Mortimer

Assembly Automation


111


10/10

pushing these through subsequent operations as fast as

possible up to the final assembly buffer.To ensure the internal lead time can be reduced to that

needed to enable continuity of operation, issues such as work

balance and capacity alignment are likely to be tackled

through the introduction of dedicated testers and a two stage

board assembly, with two operators building the same PCB.

Fortunately, the coating process is highly automated and

extremely flexible, and can work on any board without any

mechanical set up changes.

Finally, while the surface mount lines will continue to be

driven by a Kanban from board assembly, another change

needed to make this new system work will be a larger buffer

stock between the two operations. This stock may be higher

than the present Kanban threshold stock, but this increase is

more than compensated for by the elimination in any stocksbetween the subsequent operations.

The overall result is an interesting production control

approach, with the newly introduced pull mechanism, in the

form of Kanban, being combined with the re-introduction of

push mechanism in the form of direct replenishment.

However, as Tobias Cock notes, this should not be such a

big surprise.

All the theory and research suggests that the full evolution of

a Kanbansystemshould actually result in itsremoval.Kanban isnot necessary the most efficient approach, but what it

does enable is for a company to get control of its production

process and create stability. In turn, this stability enables the

gradual reduction of lead times and stocks, and the tackling of

issues and variables that can cause instability (the icebergs

typically hidden by high WIP levels). However, once stability is

achieved, in theory the next improvement step is to move on

from Kanban and back to some form of push. Now this is not

easy to comprehend, or achieve, but in developing our new

intended process we believe we are moving forward by

eliminating the Kanban in certain areas.

He concludes, We have already done simulations that

show that the new system should work, but there is still a long

way to convert theory into practice.Ends

Corresponding author

Andrew Lee-Mortimer can be contacted at: andrew@

lee-mortimer.prestel.co.uk

Figure 11 Comparing Kanban control system with that envisaged for adoption in the near future

Current Replenishment Procedure

Week 4 Week 3

Production Plan

Week 2 Week 1

Closed S5 A6 F7 A10 K1

S5 A6 F7 A10 K1

ClosedOpenOpen

Kanban ReplenishmentKanban Replenishment

Kanban ReplenishmentKanban Replenishment

Information Flow

Inventory Inventory

Electronic Direct

Replenishment List

Product Flow

Total Respond Time (15 business days)

Suggested Planning Procedure

German Export Centre

German Export Centre

Total Respond Time (3 business days)

Additional key

S5

A5

F7

A10

K1

- Surface mount


- PCB testing

- PCB coating

- Final Assembly


Andrew Lee-Mortimer

Assembly Automation


112

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