Kanban Replenishment for All Types
of Industries
(Manufacturing & Non-Manufacturing)
Tom Brown
Colibri Limited
Roswell, Georgia
12/5/2011
Why consider kanban control?
Lower inventory investment
Better “customer” service
Reduced administrative costs
What is kanban control ?
A method of Just-in-Time inventory replenishment that
originated in Japan.
• Kanban techniques can be used by both
“manufacturing”and “non-manufacturing” org’s
• Kanban systems can be:
– 100% manual
– 100% Oracle
– A hybrid of Oracle and manual techniques
• Non-manufacturing organizations will likely want to
use a hybrid approach
What makes kanban control different ?
• Kanban is “pull” based – driven by actual
usage not forecasts
• Kanban replenishment is simple
?
Kanban Systems
Can use different methods to trigger
replenishment activity
– kanban cards are the most common
– kanban containers are frequently
– bar coding of cards / containers helps
when automating kanban systems
Kanban Systems
Not suited for all inventory items – look for
– items with frequent usage
– items with short lead times
– items with “willing” suppliers
Replenishment Flow for Kanban Cards
When container is empty, signal
sent to source to replenish kanban
Wait until minimum order
quantity is reached
Empty
New
Planner determines when to Wait
add / remove cards
Full
When received, kanban status is
updated and container is moved to In-Process
usage area When order minimum is
reached, a Job, PO, or Move
Order is created
Oracle Kanban Flow for Manufacturing
Kanban replenishment auto-
creates Purchase Requisition
Supplier AutoCreate
Kanbans PO or Blanket
Release
Blanks Supplier
Sub-Inv
Press Paint Assembly Assembly Line
Op Op Sub-Inv
Press / Production Finished
Paint Kanbans Goods
Job
Kanban replenishment
Material Flow autocreates WIP Job
Kanban Flow
Oracle Kanban Flow: Non-Manufacturing
Kanban replenish auto-creates
Purchasing Purchase Requisition Supplier
Creates PO
or Blanket PO Kanbans
Release
Stock
Receiving
Supplier Room
Customers or
Consuming
Departments
Material Flow
Kanban Flow
#1. Setup a pull sequence to
define Source, Replenishment,
and Planning Parameters
#2. Add kanban cards associated
to the pull sequence
#3. Set supply status of each
card – automatically
updated by transactions
Determining the number of kanban cards /
containers needed for each item
• An item has a 2 day lead time (when a kanban is
emptied it will take 2 days to refill it)
• An item has a 2 day lead time (when a kanban is
emptied it will take 2 days to refill it)
• Average daily usage of the item is 50 per day
• You will need 100 within the replenishment lead
time (average daily demand times lead time)
• Thus, you need to activate 5 kanban cards
(demand during lead time divided by kanban size)
Oracle Kanban Planning Assumptions
• Constant rate of demand
While average daily demand is 50 per day, what is the maximum
daily demand?
• Constant lead time
While average lead time is 2 days, what is the maximum lead time?
How can you account for these variances in demand
and supply when planning kanban inventory?
Kanban Planning Using MS Excel
Determine which items are good candidates for kanban control:
Kanban Planning Using MS Excel
Determine number of kanbans to activate: