Acuity Business System
Kanban
1
Acuity Business System
5 Elements of Lean Transformation

U-shaped assembly cells

Standard Work

Point of Use Inventory

Kanban

Score Card
2
Acuity Business System
Training Agenda

Why are we doing this?

What is Kanban?

When to use Kanban?

Kanban information

ABC Analysis

Set up and Maintenance of Kanban

Storage Areas

Replenishment Methods

Calculating Kanban Signals and Kanban Size

When to Recalculate Kanban

Purchasing Strategy

Measuring Progress

Kanban Audit Tool
3
Acuity Business System
Why are we doing this?

Current process is not working

Nonnegotiable

Accountability
4
Acuity Business System
What is Kanban?
Defined:
Kanban is a pull system.
The Japanese word Kanban, loosely translated, means
card, billboard, or signboard.
Kanban is used to control overproduction, for visual
control, and as a way to link processes together.
5
Acuity Business System
When to Use Kanban?

When processes cannot physically be linked together in a
cell.

With low dollar items that the business does not want to
spend a lot of resources managing.

To help control inventory of high dollar items

To facilitate lead time performance
6
Acuity Business System
Kanban is Information
Information Flow
Steel Sup
Fab Area
Gotham Cell
Manage inventory at
the lowest level of
the bill of material
(raw material or
purchased
component)
Ballast Sup
DCs
Material Pulled By Customers
7
Customer
Acuity Business System
Manufactured Storage Rack





8
2 Cards placed in pocket
Material identification on
card and in box match
material identification on
rack
Parts stored back to back
NOT side to side
Quantity in unused box
matches quantity on card
Correct number of cards
in loop
Acuity Business System
Purchased Storage Racks
9

2 Cards placed in pocket

Material identification on
card and in box match
material identification on
rack

Parts stored back to back
NOT side to side

Quantity in unused box
matches quantity on card

Correct number of cards
in loop
Acuity Business System
Overflow Process

10
Overflow ticket directs
employee to use parts
in Overflow area first
Acuity Business System
Kanban Schedule Board

Traditionally found
near/adjacent to cell

Used for both
Purchased and
Manufactured Parts

Visually shows
expected arrival date
for parts and late parts
11
Acuity Business System
Kanban Drop Box

Place where Kanban
Cards are left for
Buyer/Planner

This indicates to
Buyer/Planner that the
parts need to be ordered
12
Acuity Business System
Kanban Card Key Dates

Turn In Date
– Date the card was
placed in Kanban Drop
Box

Due Date
– Date the part is
expected to arrive

Receive (Receipt) Date
– Date the part was
received
13
Acuity Business System
Kanban is Information
Functions and Rules for the Use of Kanban
1. Provides withdrawal or transportation information.
•
The subsequent process goes to the preceding process and withdraws
only the amount of goods indicated by the kanban
2. Provides production information.
•
The preceding process produces goods in the exact number and order
withdrawn as indicated by the kanban
3. Prevents overproduction, over ordering or excess
transport.
•
•
•
Do not produce or transport goods without a kanban
Prevents ordering extra inventory
When you empty a bin, turn in Kanban card
4. Acts as a work order.
•
Always affix a kanban to goods
14
Acuity Business System
Kanban is Information
Functions and Rules for the Use of Kanban
5. Identifies process where defects are produced
•
Do not allow defective goods to proceed down the line. This demands
100% perfection at every process.
6. Acts as a tool for inventory control and revealing
problems
•
•
Strive to reduce the number of Kanban
Never destroy or lose a Kanban card
7. Do not print on both sides of KB card
8. Do not change KB card quantity
9. Do not use parts from multiple KB bins
15
Acuity Business System
ABC Analysis
Purpose of the ABC Analysis:

The business goal is to have on time delivery while
minimizing inventory expense. We want to manage the
most inventory dollars with our limited resources.

By closely managing A and B items (50% of the stock
keeping units), we can control 95% of the inventory cost.
16
Acuity Business System
ABC Analysis
100
90
80
70
Percent
of
Annual
Dollars
60
50
40
A
30
Percent of Inventory Items
20
C
B
10
0
10
20
30
40
50
17
60
70
80
90
100
Acuity Business System
ABC Analysis Steps
1.
Multiply annual volume by unit cost to obtain annual
dollar volume for each stock keeping unit (SKU).
2.
Rank SKUs in descending extended dollar amount.
3.
Assign A, B, or C ranking to each SKU:
A
= top 80% of dollars
B
= next 15% of dollars
C
= bottom 5% of dollars
18
Acuity Business System
ABC Analysis
Inventory
Dollar Value
Inventory
Category
Percentage of
Items
80%
A
20%
15%
B
30%
5%
C
50%

Kanban

–A
–B
–C
Criteria for Moving to
Kanban
–Value – be mindful of
expensive parts
– Physical Size – large
parts may not be
candidates
– >4 Hits – repetitive
usage
Non Standard
–A
–B
–C
MOVE
19
On Hand Balance
Acuity Business System
Set up and Maintenance for Kanban
SET UP

Calculate Kanban quantity based on ABC Analysis

Produce Kanban cards (Utilize Bartender or other software
tools)

Set up excess storage area and process for Kanban items.
– Move excess out of Point of Use (POU) unless item can fit in 2 bin system

Put KB cards on containers

Move all current KB materials to POU by cell and issue KB
cards and Spike cards as needed to support production

Re-label racks with part #
20
Acuity Business System
Set up and Maintenance for Kanban
SET UP
 Set up Kanban board in each cell and populated as relocation
continues
 Move cardboard items out of area to alternate storage location
 Train cell personnel on Kanban and the functions of
buyer/planner, water spider and cell leader
MAINTENANCE
 Review shared component usages with other Focused Factories
within physical building. Biggest user should support all other
focused factories.
–

Only one cell making releases on Kanban card to Sourcing or Supplier
Conduct audits
21
Acuity Business System
Types of Storage Areas



Receiving drop zone
– Organize by cell
– First area where parts are delivered to facility
Point of Use
– Located at cell
– Used for standard parts
– Replenished by POU storage racks
Discrete (DSY/Non Standard)
– Organized by cell
– Parts are ordered based on schedule cards
– Waterspider will kit parts before storing in area
– Always look for on hand inventory first
•
•


Physically go to storage racks to verify
Do not rely solely on information in Oracle
– Physically move discrete parts to cell and identify as discrete parts only
Excess Storage (Overflow)
– Organized by cell
– Not intended to be a long term storage area
– Used for Standard and Non Standard parts
Supermarket
– Area with dedicated locations
– Used to locate parts that are used by many cells
22
Acuity Business System
Replenishment Methods

Kanban
– 2 card
– Multiple card (greater than 2)

Discrete (DSY) from schedule cards
23
Acuity Business System
Kanban Calculations
2 Bin/Card Capacity – The amount you should put in each bin
(Daily Usage x Lead Time) + Safety Stock*
•
•
•
Safety Stock = (Daily Usage x Lead Time) x Facility determined percent
Facility determined percent may differ for A, B, and C items or it may be the same
If daily usage is 100 units, lead time is 5 days, and facility determined percent is 10%, then
safety stock is (100 x 5) x .1 = 50 units
• 2 Bin Capacity = (100 x 5) + (100 x 5) x .1 = 500 + 50 = 550 units per container
Number of Multi KB bin/card
(Daily Usage x Lead Time) + Safety Stock
Container Capacity
+ 1
• Daily usage is 100 units, lead time is 5 days, facility determined percent is 10%, safety stock
is 50 units, and Container Capacity = 100
• # of Multi KB bin/card = {[(100 x 5) + ((100 x 5) x .1)]/ 100} + 1 = (550/100) + 1 = 6.5
bins/cards --- round up to 7 bins/cards
24
Acuity Business System
When should you recalculate your Kanban?

Leadtime Changes (Increases or
Decreases)

Supplier Performance (Improves or
Declines)

Quantity per container Changes

Standard Work Changes

Customer Demand (Part Usage) Changes

Audit Reveals Problems
25
Acuity Business System
Measuring Progress
Utilize existing +QDIP Measures
Delivery
– Past Due Dollars or Target Compliance
Inventory
– Inventory Dollars
26
Acuity Business System
Kanban Audit Dimensions
Audit should be based on the 5
parameters listed below:
No Card - Material is there
No Material - Card is there
No Material - No Card on a KB
item
Material being pulled from
multiple bins
Material is not in designated
location
KANBAN DAILY AUDIT (In order to pass, you must respond 'Yes' to each question)
Part #
Part #
Part #
Part #
Part #
Kanban Storage Rack
Manufactured Items
A) 2- Cards Placed in Container for Each KB Component
1- KB Schedule Card, 1-BackShop Card
*
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
B) If container is empty, card(s) is not on box and is on KB board
Do not audit this criteria if all bins are present and contain parts.
C) Kanban Material Placed in Correct Location
D) KB Material Being Pulled From only 1 bin at a time
E) Material Being received in Correct Carton Qty / Match Card Qty
F) No Additional Containers Other Than KB Requirement
G) KB Schedule Card "Receipt Date (Date Order Received)" Noted
Comments/Corrective Actions (If you answered 'NO' to any questions, state corrective action you will take to correct the problem):
Part #
Kanban Storage Rack
Yes
Part #
No
Yes
Part #
No
Yes
Part #
Part #
No
Purchased Items
A) 2 Cards placed on Container for each KB Component
1- KB Schedule Card, 1 - Goes to B/P to place order
*
B) If container is empty, card(s) is not on box and is on KB board
Do not audit this criteria if all bins are present and contain parts.
C) Kanban Material Placed in Correct Location
D) KB Material Being Pulled From only 1 bin at a time
E) Material Being received in Correct Carton Qty / Match Card Qty
F) No Additional Containers Other Than KB Requirement
G) KB Schedule Card "Receipt Date (Date Order Received)" Noted
Comments/Corrective Actions (If you answered 'NO' to any questions, state corrective action you will take to correct the problem):
Part #
Yes
Part #
No
Yes
Part #
No
Kanban Schedule Board
A) KB Card(s) Placed in Drop Bin
B) KB Schedule Card shows the date the card was placed on the board
C) KB Schedule Card "Release Date (Date order was placed)" Noted
D) KB Schedule Card Delivery Date (Date the Order is Expected to be
Delivered) AND Placed on board under the correct delivery date
Comments/Corrective Actions (If you answered 'NO' to any questions, state corrective action you will take to correct the problem):
Kanban Daily Audit
27
Yes
Part #
Part #
No
Acuity Business System
Purchasing Strategy
Going forward the ABL Blanket Purchase Order Strategy will be
as follows:
 Suppliers must deliver A and B type KB items within 1-5 days including
transit time (a list of your A and B items will be provided to you)
 Suppliers must hold inventory if mfg lead time is greater than 5 days
 Supplier who has delivery performance that is less than acceptable, will
be required to carry additional inventory to meet an acceptable delivery
performance
 Each part number on A and B type items will have their own specific
PO number to streamline receiving and invoicing transactions
 ABL Supplier Development Group is available as a resource
 SLC- If transit time > 4 days, it is supplier’s responsibility to engage a
3rd party warehouse or service to locate inventory closer to our facility.
28
Acuity Business System
Maintaining Kanban
Key to success:
Manage
the Kanban
System
29
Acuity Business System
30
Acuity Business System
Will a Forecast be provided?
Except for new components, forecast usage will not be
provided. Upon exiting our current agreement, both a
current-state and post-exit Kanban snapshot
(including container quantity, number of containers,
and lead time) will be provided for each component.
Going forward, it will be the supplier’s responsibility to
monitor their sales history to generate usage
information, and it will be up to each Focus Factory to
communicate any Kanban set-ups changes to the
supplier.
31
Acuity Business System
How will you communicate spike orders or demand
surges related to sales promotions?
When new orders reach our Assembly Cells,
they are reviewed for extraordinary material
requirements (“spike orders”).
Any demand surges related to spike orders or
sales promotion activities will be relayed to
suppliers by the Focus Factory Buyer.
32
Acuity Business System
Who are our Focus Factory buyer contacts?
A list of Focus Factories and the Buyer(s)
associated with each Focus Factory has
been posted at the following link, along
with other supplier-related instructional
and informational documents:
http://www.acuitybrandslighting.com/ABL_PartnerLinks.aspx
33
Acuity Business System
How can I provide materials within 1 - 5
days if my transit time exceeds 3 days?
Suppliers facing this challenge should make
arrangements to maintain inventory within 3
days transit of the Acuity destination facility.
Suppliers can either utilize a 3PL warehouse
provider, or make arrangements with another
Acuity supplier within the target distance who
may be willing to manage your inventory
locally.
34