Chipotle Project

Kanban System (Figure 7.3)

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Copyright © 2018 by The McGraw-Hill Companies, Inc. All rights reserved.

Some companies control the movement of containers by using two types of kanban cards: production cards and withdrawal (move) cards. These cards are used to authorize production and to identify the parts in any container. Instead of using cards, production can also be controlled by kanban squares that visually signal the need for work (to fill the kanban square), or by visual control of the empty containers.

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Copyright © 2018 by The McGraw-Hill Companies, Inc. All rights reserved.

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The lean systems chapter begins with a broad orientation to lean and its elements with an historical perspective of its development. Then each element is discussed in detail in separate sections. The discussion includes situations in which elements of lean have been successfully applied, as well as situations in which they may not be applicable (e.g. smoothing the master production schedule in services). The chapter concludes with discussion on implementation of lean systems and how lean concepts can be applied to all business disciplines (manufacturing, services, government, etc.).

Here are our Learning Objectives for this course. Between these videos, the textbook, supplemental readings, assignments and Discussion Boards, you will end the course with some new skills and many new insights.

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After WWII the U. S. system of mass production was the envy of the world. Mass production – the production of standardized discrete products in high volume by means of repetitive manufacturing technologies – was the norm. Materials were purchased in large batches, and machines were made to run faster to reduce unit costs.

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Lean thinking is built around five tenets that include specific concepts, principles, and techniques to organize and deliver value to customers efficiently. This is where we will focus on what adds value to a product or service and non-value adding activities that increase cost and time.

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Remember that value is defined by the customer and provided in the product or service the customer needs at a place, time, and price the customer is willing to pay. If inventory is money sitting on a shelf, then why would a company want to overproduce and waste its resources? If you are familiar with your financial statements, then you will know that if the product is overproduced and has not sold, they suppliers and employees (inputs) must still be paid on time. This will result in needing to cover the company’s cost through capital funds, instead of revenue.

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When we seek to give the customer value and eliminate non-value activities, we are turning the supply chain into the value chain. The best method for doing this is to ensure all steps in a process are needed. Every process is a combination of steps. By flowcharting a process, we breakdown each activity within the process into steps. Within a 5 step process, I then seek to see if I can combine steps 1 & 2, and eliminate step 4. The number of the step is irrelevant. You can combine steps 2 & 3 and eliminate step 5 or 8. Your goal is to become more efficient by the reduction of touches or extra procedures that do not add value to the finished good or service.

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Here is a visual of mapping out a process into steps in order to identify what is needed (adds value) and what steps are not needed (non-value adding).

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One of the ways firms can move toward achieving the lean tenet of simple, smooth, and error-free flow is to level the amount of work that is performed each day. Remember we spoke of this earlier when we distributed the workload of producing 100,000 bicycles over 20 production days by manufacturing 5,000 per day. This practice is referred to as stabilizing the master schedule. The process of production planning for manufacturing starts with a long-range production plan using the forecast, which then is broken down into annual, monthly, and daily plans.

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Matching supply to demand or matching market demand to production of goods is illustrated by the concept of takt time. Takt is the German word for the baton that an orchestra director uses to regulate the speed of the music. A takt time of 2 minutes means that one unit is completed every 2 minutes, or 30 units are produced in an hour.

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Kanban is a method of production authorization and materials movement, which means the company will not over or under produce, but will meet supply with demand. The production system supports the tenet of producing only what is pulled by the customer. This alleviates the buildup of inventory by a pull production system.

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If the market stops or slows, it signals production to stop or slow, as needed, to meet demand. Go back and visualize having lunch at Chipotle or Subway. Remember the subassemblies that are in front of the customer ready to assemble-to-order based on the customer’s needs. If the customer (market) does not order, the subassembly does not empty, triggering replenishment.

Some companies control the movement of containers by using two types of kanban cards: production cards and withdrawal (move) cards. These cards are used to authorize production and to identify the parts in any container. Instead of using cards, production can also be controlled by kanban squares that visually signal the need for work (to fill the kanban square), or by visual control of the empty containers.

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Time is money and slow production rates waste a company’s resources. Inventory can be decreased by reducing the size of the containers or the number of containers used in the kanban system. This is done by reducing the lead time, the time required to circulate a container. When any of these times have been reduced, management can remove kanban cards from the system and remove a corresponding number of containers. It is the responsibility of managers and workers in a lean system to reduce inventory by means of a continuous cycle of improvement. I say “if it ain’t broken, break it!” Reducing lead time by reducing the fill, wait, move, use or return times is the key.

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Summarize

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