kanban way in oracle applications
TRANSCRIPT
Oracle Applications
Inventory Management – the Kanban way
Inventory hides problems
What’s on mind ?
Reduce inventory levels to increase inventory turns
Inventory Costs = Raw Material + Raw material in-process + Work-in-Process + Finished goods
Inventory turns = Annual Requirements / Current Inventory level
When we define standard cost for items, we also define the material overheads. Hence, when we work on reducing the inventory level; the material overheads also need to be seen going down
To reduce inventory levels, concepts of EOQ, MRP, JIT, Supply Chain Planning and Constraint based Planning were applied. Each method has its own set of advantages. However, except JIT to some extent a common disadvantage is found among rest, which is a communication gap between the planning (supplying) team and production (consuming) team. On the other hand, communication is in-built in the Kanban philosophy
What is Kanban ?
● When the inventory is moved only when needed, it is referred as ‘pull’ system
● Kanban is an Just-in-Time inventory replenishment method that was conceptualized in Japan. Kanban is a Japanese word that suggests visual ‘sign’ or ‘signal’
● Pull based on actual usage and not forecast
● Can be used in both manufacturing and non-manufacturing organizations
● Best suited for items with frequent usage, short lead-times and willing supplying sources
● If a Kanban is too small, you might run out of material before it is replenished. If its too big, you carry excess inventory
Kanban in a typical Manufacturing flow
Work cell
Raw Material Supplier
Kanban
Purchased Parts
Supplier
Sub-assembly
Ship
Kanban
Kanban
Kanban
Kanban
Finished goods
Customer order
Final assembly
Kanban
Items are marked as Kanban controlled using the item attribute ‘Release time fence’ as below
Item setup for Kanban
For every Kanban planned item, a pull sequence must be defined which is a series of Kanban locations that model the replenishment network. Kanban location can be a subinventory or locator
Pull sequence
Kanban sources types in Oracle
● Intra-Org
Triggers a subinventory transfer to source material from a different subinventory within the same inventory organization
● Inter-Org
Triggers an internal requisition to source material across inventory organizations
● Production
Triggers a discrete job in a release status so that the material is produced
● Supplier
Triggers a purchase requisition to source material from supplier
Kanban Planning
Check if Kanban is for planning only
If you would enter Kanban size and number of cards, then select ‘Do not calculate’‘Kanban size’ – User needs to be specify the number of cards and Planning process calculates the size‘Number of cards’ – User specifies the size and planning calculates the number of Kanbans
Quantity of units in each Kanban
Number of Kanbans to be included in the item’s cycle
System will hold Kanban cards in wait status until the minimum order quantity has been met by aggregation of cards
* Algorithms used in Kanban planning to be discussed in a separate document
Replenishment Flow
EmptyNew Wait Inprocess
Full
● New card is added based on need
● Empty card sends a replenishment signal to the source
● Wait status until minimum order quantity is reached
● Inprocess status indicates that a job, PO or move order is created
● Full status indicates that Kanban is received
Quick notes
● When items are needed, Kanban cards change their supply status to Empty
● Kanban replenishment request is generated automatically
● If the item is internally or supplier sourced, then requisition is created and inserted into the interface tables. Requisition Import creates the Purchase Requisition or Internal Requisition in approved status based on whether the item is internally sourced or supplier sourced
● If the item is supplier sourced, Purchasing creates a Blanket Release (if a blanket PO exists) or a standard PO. Kanban card status is changed to Inprocess
● Using the standard receipts form, the items are received for the blanket release/standard PO/ Internal Requisition (if internally sourced) and the Kanban card status is changed to Full
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About the AuthorSAM has been working on ERP solutions such as Oracle Applications & Microsoft Dynamics in Implementation & support for past 13 years. Worked with clients in various industry verticals such as manufacturing, distribution, education, construction, professional services, hospitality and aviation across geographies
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