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Feature

A continuing lean journey: an electronic


manufacturer’s adopting of Kanban
Andrew Lee-Mortimer
Lee Business Communications Ltd, Manchester, UK

Abstract
Purpose – 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 an
electronic 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 company’s adoption of Kanban was phased, and the final stage of
gradually building up the parts under the control of the electronic Kanban was combined with broad involvement, widespread training and the
addressing 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 the
replacement 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-term
business 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 to
explaining how the plant’s new system operates, and observing some of the finer details of the electronic Kanban system, the paper looks at the
interesting planned steps in the system’s “evolution”.

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

Paper type Case study

Introduction Undeterred, and with the support of the Manufacturing


Advisor Service North West, the operation started to tackle
Prior to embarking on its lean journey in 2005, Siemens some of the key process issues highlighted.
Standard Drive’s Congleton factory had already seen the The products produced at Congleton are all based around
benefits of a highly effective continuous improvement printed circuit boards (PCB), and so its main production
program. This had delivered a major culture change along processes include automated surface mount lines, through-
with significant OEE and quality improvements to the UK
hole assembly, PCB testing, an automated protective spray
plant, which is part of Siemens Automation & Drives and
coating process and final manual assembly. This last stage is
employs 420 people in the design and manufacture of a range
where boards are assembled into the end product’s metal
of electronic drives. Its achievements had been recognized by
frame and plastic casing, tested and then packaged ready for
the winning of a host of awards.
Therefore, the initial “surprise” for Congleton’s dispatch to the German Export Centre. The first area tackled
management when it started its new improvement offensive by the “Lean Manufacturing” initiative was PCB testing, as
was not that lean offered a way to deliver performance this had been shown to be a real bottleneck.
improvements, but just how much potential for Using SMED techniques, the changeovers within the test
lean improvement was still present within the site. A area were radically redesigned and standardised, with the
significant insight into the major challenges still facing the result that the plant gained reductions in change over times,
plant, and the level of “waste” and unnecessary cost still for example, from 10 down to 1 min.
present, was brought home to the senior management team Then, having established increased flexibility and output
when it undertook a value stream mapping exercise. from the test area, the next big challenge tackled was the final
assembly areas for the plant’s core MM4 products. These
account for 80-85 per cent of production by volume.
The current issue and full text archive of this journal is available at Adopting lean techniques to redesign the final assembly area
www.emeraldinsight.com/0144-5154.htm into cells and balancing the workload within each cell,
dramatic improvements were gained. These included
reducing cell WIP from 195 trolleys to 3, improved
Assembly Automation quality and reduced rework, productivity up well in excess
28/2 (2008) 103– 112
q Emerald Group Publishing Limited [ISSN 0144-5154]
of 45 per cent, assembly lead time down to 7 min from 5 h,
[DOI 10.1108/01445150810863662] and increased output.

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Overall, these changes constituted an important step demand, and smaller batch sizes, and the best way to create
towards the plant’s ultimate goal of creating a build to order this pull of products through the factory would be via
system. Yet, the improvements did not come without facing Kanban” (Figure 2).
severe problems when the cells initially went live. (Details of Other long-term drivers for the change to Kanban included:
the developments are covered in the article previously .
the opportunity to provide more visibility and control into
published in Assembly Automation “A lean route to production processes and to capture historical data for
manufacturing survival.”). trend and improvement analysis;
In fact, as David Roberts, Congleton’s Production .
the opportunity to empower operators to make production
Manager, reports, crucial to the ongoing success of the cells related decisions, such as prioritising work and create
was the slightly belated introduction of Gembi Kanri; visual production orders;
control charts and workplace management. “By getting .
the opportunity to improve communication across work
operators directly involved in tracking output and centres by making material supply and consumption data
performance, and ensuring both management and operators available to everyone;
sort problems on a daily basis – driven through morning .
the opportunity to reduce manufacturing lead time and
meetings held at each cell – the new approach to workplace thereby reduce inventory both in production and at our
management is one of the key reasons why the cells have Export Centre in Germany (LZN);
become so successful.” .
the opportunity to respond faster to changing demand by
However, these developments have proven to be far from having Kanban stocks throughout the production pipeline;
the end of the plant’s lean journey. In particular, in early 2006 and
the management realized that although significant inroads had .
the opportunity to analysis historical production data to
been made by optimizing certain processes, so reducing some identify production issues such as capacity constraints,
internal processing times, removing non-value-added over production and delivery failures.
activities and increasing productivity, the overall material
flow in the factory was still far from efficient. As a result, the But, it was also recognised that going from push to pull would
plant was still a long way short of delivering against overall be a big culture change, challenging well established
lead-time and flexibility improvement goals. procedures. There was also the considerable tangible risk
Therefore, another major change in practice and culture involved with this move, of losing production and missing
was needed, and it was decided to adopt a Kanban production output targets. The problem had been highlighted by the final
control system. 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 drive for pull the greater level of understanding of lean throughout the
Essentially, it had become obvious that the major barrier to company, and, critically, the level of senior management
further lead time and inventory reductions was the traditional support for the change.
“push”-based production environment still being operated at
Congleton.
As the factory does not supply customers directly, but an Testing the water
export centre based in Germany, the demand placed on it Taking into account the risks involved with the introduction of
comes from the Corporate SAP ERP system. This dictates Kanban, the first practical step taken by the plant was the
output, based on actual sales, forecast sales and warehouse development of simulations to see how the factory might
stock, and provides firm orders for 15 days in advance and operate with Kanban controlling production.
forecasts beyond that. From this data, Congleton’s As Tobias Cock reports, using the site’s reporting system
production planners produce a rolling four-week production (COBRA) daily production data was extracted for all of the
plan, with the last two weeks fixed, and, traditionally, a daily high-volume products over the previous 12 months. This
MRP run has then determined the necessary works orders for information was used to calculate standard deviation in
each work centre. demand for each product group and to estimate the volume of
This meant that in effect, all activity in each work centre products that were qualified for being included in a Kanban
was centred on producing in accordance with material system.
availability and efficiency (i.e. large batch sizes), with the In addition assumptions were made that:
result that part processed PCB boards were constantly being .
demand variability will be reduced by 50 per cent because
pushed through the factory, regardless of the demand from planners are allowed to plan in smaller batch sizes;
downstream processes. This was naturally causing larger than .
work centres will on average use half a day to respond to
necessary amounts of WIP, which was often increased as a down stream demand; and
backlog of certain boards could rapidly build up if .
the acceptable risk for material stock-out for any given
downstream processes could not consume them for any item is 0.5 per cent.
reason. Also, overall lead-time was dictated by the MRP
driven work sequence and batch sizing (Figure 1). From this, a Kanban simulation was developed to estimate
According to Tobias Cock, Operations Graduate and head inventory and expected lead-time reduction for qualified
of the Kanban project, “We needed to change this situation Kanban items.
and become more efficient in getting the right boards through The simulations showed that with the factory already
the plant at the right time, and in so doing reduce lead time arranged in terms of flow, a full Kanban implementation was
and WIP and improve overall productivity. This meant not only feasible but could also generate significant
encouraging a way of working that was based on internal improvements (Figure 3).

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Figure 1 Traditional push manufacturing at Siemens Standard Drives Congleton

Before

Procurement MRP Planning

A&D Export
Suppliers S5 A6 F7 A10 K1
Centre

Lead time 4 - 5 days

Additional key

S5 - Surface mount
A5 - Through-hole board assembly
F7 - PCB testing
A10 - PCB coating
K1 - Final Assembly

Figure 2 Reducing batch sizes delivers reduced WIP

WIP levels highly reflect the


Before After amount of variability in
production batch sizes. By
encouraging planners to plan
orders according to demand
Batch sizes

Batch sizes

WIP and not based on optimum


batch sizes a significant
WIP reduction in inventory has
been achieved with the aid
of the Kanban
Days Days

Figure 3 Estimated reduction in inventory from the introduction of Kanban


600.0
Average Inventory
500.0 (using SAP with 4
days lead-time)
400.0 Average Inventory
(using the Kanban
300.0 system)

Total estimated inventory


200.0
reduction 37.48%
100.0 (See Appendix A for the
complete calculation)
0.0
1790L820A
1790L825A
1790L830A
1790L837A
1790M827
A5E00138091
1790L848A
1790L849A
1790L851A
1790L854A
1790L855A
1790L856A
1790L858A
1790L871A
1790L875A
1790L876A
1790M844
A5E00137379
A5E00137380
1790L868A
1790L869A
1790L888A
1790L889A
1790L944
1790L945A
1790L946
1790L947A
1790L948A
1790M864
1790M865
A5E00140080
1790M845

Based on this the plant took the first implementation steps in nothing at that stage that Congleton could do about the
February 2006. Again, to reduce risk and see in practice how Corporate ERP system still dictating the order demand being
the process would work in the factory, this consisted of the placed on final assembly.”
introduction of a simplified manual card-based system that Therefore, the trial system was based on employing the
only controlled the largest volume board produced. production plan to stipulate when final assembly would
As Tobias Cock notes, “One of the key aspects of this trial, produce the required products (instead of the ideal of a pull
which lasted several months, was to see if the Kanban system from the warehouse). The Kanban system then controlled the
could be operated effectively in combination with the ERP internal production of the boards within the trial. This meant
system. This was vital because, although the intention was to that as soon as final assembly consumed a certain number of
introduce Kanban control throughout the factory, there was boards in its Kanban stock, a signal – the Kanban card with

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the replacement quantity – was sent to the preceding work being scanned at each work centre for transactional purposes.
centre to request re-supply, with subsequent triggers pulling Secondly, it had an IT department who were capable of
new boards through the whole production processes producing the system in-house.
(Figure 4).
This trial not only confirmed that the combined control
process was feasible, but it also provided good insight into
Full implementation
potential benefits of improved flow and reduced WIP that By August 2006, a small team of people from Congleton’s
could be generated by a larger scale Kanban system. It also operations and IT had not only created a functional electronic
proved to be a fundamental tool in starting to change the Kanban system, but it also had been made available site wide.
culture within the plant (Figure 5). This implementation not only replaced the card-based
However, it also highlighted a potentially big problem. The system, but also significantly expanded the number of
large variation in demand for the operation’s products, which boards under Kanban control to cover the majority of items
was not helped by final production being driven by ERP, needed for its core MM4 product range.
resulted in the constant need to change the Kanban According to Tobias Cock, as with the manual approach the
thresholds (the size of the Kanban stock held at each centre basic premise of the electronic Kanban system, which is now
and replenishment request). With an enlarged paper-based fully operational, is that it runs in parallel with the ERP
system this would require considerable effort, with someone system. A production plan continues to determine output
physically having to produce and introduce new Kanban cards from final assembly, with MRP still operating in the
on a regular basis for all products being controlled by background for the whole plant by producing work orders,
Kanban. It was recognised that this could become a major and managing material procurement. However, now the
headache, and not only in terms of changing the cards but Kanban system – with Kanban controls introduced between
also the need to keep each work centre informed of all the each work centre – drives what and how many of each item
changes. (the Kanban threshold), a work centre produces against the
The solution chosen to overcome this constraint, while also works order at any one time (Figure 6).
being considered a more realistic option for the long-term, For instance, the overall works order covering the next
was the development and adoption of an automated, week’s production may be for 150 boards of a particular type.
computer-based Kanban system. Two further factors helped But production of the board will not start until signalled by
in determining this route forward. First, a key advantage that the Kanban system, and the amount produced in any one
Congleton had, as regards going for an electronic system, was batch is stipulated by the threshold (say 30). The rest of
that it had a board bar coding and scanning infrastructure in the “order” remains unmade until subsequent Kanban
place on which to build the system. Every item was already 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

Before

Procurement MRP Planning

A&D Export
Suppliers S5 A6 F7 A10 K1
Centre

Lead time 4 - 5 days

After

Procurement Planning

A&D Export
Suppliers S5 A6 F7 A10 K1
Centre

Lead time 2 - 3 days

Information
Materials / Products

Additional key

S5 - Surface mount
A5 - Through-hole board assembly
F7 - PCB testing
A10 - PCB coating
K1 - Final Assembly

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Figure 5 Representation of the manual card-based Kanban trial


1790L800ASM
Total No Number Number Number
Kanban of Red of Yellow of Green
Tickets Tickets Tickets Tickets
Surface Mount (S6)
10 5.8 2.1 2.1

1 Transaction

Lead time: 2.24


CARD Deviation: 1.77
Batch Size: 100
CARD

Conventional Build (A9)

2 Transaction

CARD Lead time: 0.75


Lead time: 1.61
Deviation: 0.44
Deviation: 0.56
Batch Size: 40
Batch Size: 40

3 Transaction Lead time: 0.88


Deviation: 0.52 4 Transaction
CARD Batch Size: 40
PCB Test (F7) Coating (A10)

CARD
1790L800A
Total No Number Number Number
Kanban of Red of Yellow of Green
Tickets Tickets Tickets Tickets CARD
36.6 23.2 6.7 6.7

6 Transaction Lead time: 0.5


Deviation: 0.3
Batch Size: 40 5 Transaction
Mechanical Assembly CARD Options (K2)
(K1)

1790L811A
CARD
Total No Number Number Number
Kanban of Red of Yellow of Green
Tickets Tickets Tickets Tickets

14.7 7.3 3.7 3.7

production is undertaken in much smaller batches, and if final need to produce anymore at present. If yellow, this shows that
assembly – for whatever reason is in backlog for one product there is likely to be demand to replenish the downstream
for two days – there is not two days worth of high-added Kanban soon. If the gauge is in the red, then the work centre
value boards in WIP. needs to produce some of these straight away to avoid
With the electronic system, the signals for processing are
stopping downstream production.
conveyed to each work centre via digital Kanban displays.
The display box below the dial also clearly shows:
Through these, any work centre can see exactly what it needs .
Stock. This is how many boards are left between it and the
to be working on. The information is updated automatically
next work centre. For instance, this could be 14, and the
as each board is scanned and the activity undertaken recorded
at every work centre. reason why the dial could be in the red, even though 14
The display is primarily in the form of a gauge for each boards are still in stock, is that the dial takes into account
board variant, item, with a dial that moves between green, the set up time required to start building new boards of
yellow and red zones (Figure 7). If in the green, there is no this type.

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

Current Replenishment Procedure


Kanban Replenishment Kanban Replenishment
Week 4 Week 3 Week 2 Week 1
Production Plan

Open Open Closed Closed S5 A6 F7 A10 K1

Total Respond Time (15 business days)


German Export Centre
Additional key

S5 - Surface mount
A5 - Through-hole board assembly
F7 - PCB testing
A10 - PCB coating
K1 - Final Assembly

Figure 7 Examples of the electronic Kanban displays A “Unit Consumption” signal is automatically triggered
when the next work centre starts consuming its stock of the
board. 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 and
simplified charts that will help clarify the situation about every
(The Kanban Display available to item across the factory.”
operators on the shop-floor)

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
.
Batch size. This is the number of items needed to get the determining the actual lead times between work centres,
item’s Kanban threshold up to maximum in the green. including response time to a demand signal, and then
The work centre is not allowed to build more than the calculating the size of the Kanban thresholds for each item.
stated batch size as this would entail wasting resources on Some work centres have as many as 40 different board
boards that are not going to be needed at present, and variations, and if a large number of these go into the red then
taking away resources from other boards that probably they cannot respond to all at the same time. Therefore, to
need more being produced (i.e. also in red or in yellow reduce the risks the system started with quite large thresholds
state). However, the group leader can decide to build less – in many cases larger than needed in theory. These “safety
than the batch size stated, in order to get some stock, levels” have then been gradually fine tuned and typically
(and get the dial into yellow) but may then transfer onto reduced as the process has become more stable and
another board which is also critical. confidence in the approach has increased
He claims, “We decided that it was far more important to
A “Build in Progress” signal shows if that board is being initially get the system operating successfully, and not risk it
produced. This is more of an indicator for production control. falling over because of trying to take out too much inventory
It shows if work centres are responding to the dials in one go. This approach was made far easier by the adoption
appropriately. For instance, if they see some items in red of an electronic system.”
across the factory, and no build in progress for it at any work The electronic system also means that the Kanban
centre then they can react to this situation. thresholds can be constantly monitored and changed to

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Andrew Lee-Mortimer Volume 28 · Number 2 · 2008 · 103 –112

reflect anticipated changes in demand. For instance, by wrong assumptions were made about the level of
looking ahead at future demand forecasts and recognising that understanding of how the new cells would operate in practice.
demand for some products is historically always different in For the Kanban system, several training sessions and a half-
December as opposed to July, then gradual changes day workshop were arranged for everybody involved with the
in thresholds can help smooth out these changes in new system to ensure they were correctly trained and that any
requirements. concerns or questions were specifically addressed. A Kanban
Another major issue was deciding how to manage the operating manual was also produced and made available to all
surface mount area, which is where the company has most operators and group leaders using the Kanban.
capital tied up. Finally, there are always some problems when new
It was important to ensure that production in this area, approaches are introduced, and the tendency is for the
which is at the beginning of the process, was not dictated just changes to be blamed. This is what happened previously with
by efficiency, and was still focused on responding to the
the introduction of the cells, and again there were some
demand mix of actual production, and not a forecast plan.
instances of this with the implementation of Kanban.
However, it was also recognised that significant reductions in
However, states Tobias Cock, “This time there has also
batch size and increased changeovers could have had serious
been a greater awareness that any problems are far more likely
efficiency impact. Therefore, it was decided that it would be
controlled by the Kanban system, but that to balance demand to be the result of the new system highlighting long standing
and efficiency needs, it would operate with a “healthy” issues, and this has resulted in less ‘blame’ and faster remedial
Kanban threshold. This decision was helped by the fact that action. For example, while some work centres have found it
many of the boards produced at surface mount are consumed more difficult than others to stay within the Kanban
by a number of different sub assemblies. In addition, the thresholds, this has generally been quickly recognised as
boards at this point boards have limited added value and are problems related to the nature of their process, which have
easy to store. needed modifying, not the introduction of Kanban.”
The decision to develop the system in-house offered a way Part of this different attitude is due to a greater understanding
to avoid the big bang deployment of a full-scale system, which of what change entails, from senior management downwards.
can often require a significant amount of capital investment, But it has also been helped by focused support mechanisms.
and outside resources, from the outset. But it also posed some In this case, in order to effectively record and review
challenges. However, the plant’s IT operation proved more Kanban related issues, a SharePoint site was introduced and
than willing and capable, and by developing the system in is available for everyone to report problems relating to
stages – adding features that were seen as needed or useful – overproduction, stock-outs and response time failures.
no major problems were encountered. The site is reviewed by the Kanban coordinator on a daily
“We started with a relatively simple system, just 30% of basis and actions prepared accordingly (Figure 8).
features now available, and this has been built up over the past Further, to record improvements and to identify trends and
year, as we have better understood the dynamics of the problems within production all historical Kanban data is
process in operation, and the requirements of those using it,”
collected by Congleton’s reporting system (COBRA). A
says Tobias Cock.
number of reports now available to help continuous
Naturally, the prospect of moving people away from the safe
improvement efforts include inventory performance,
practices and behaviours associated with a long established,
and working, push system, to the relatively unknown and production lead time, production response time and
untried pull system techniques raised some cultural concerns. Kanban replenishment performance (Figure 9).
For instance, production controllers, who were in effect losing As David Roberts adds, “With the introduction of the
some responsibility and control to the shop floor, might have Kanban, we have now more data available to better
been less than enthusiastic. But according to Tobias Cock, understand the constraints and challenges in production
this has been far from the reality, and in fact the production that were previously hidden by excess inventory and lead
controllers have proven, to be very supportive in working with times. Through our Kanban reporting system we can now
group leaders to determine and manage how best to meet easily identify trends and problems in production and prepare
Kanban demands and improve flow. actions accordingly. Additionally the Kanban screens provide
The increased responsibility and ownership placed on the us with valuable real time information on how each individual
group leaders, who now must focus on reacting and work centre are performing, enabling us to be more proactive
responding to their customer and not just building to to capacity shortages or backlogs, thereby reducing the risk of
forecast plan, has taken longer for some to adjust to than delivery failures.”
others. But, overall the transition has gone well, with the key
to this, and the refocusing of all operators, being the amount
Figure 8 The sharepoint site for recording Kanban-related issues
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 (SharePoint site for recording kanban related Issues)

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Figure 9 Kanban reporting tools


1,100

1,000

900

800

700
Stock Level KPI
600 Ok
Prepere
500
Build Now
400

300

200 (Kanban
100 reporting tools)
0

900
800
700
600 Stock Level KPI
500 Prepere
400 Build Now
Ok
300
200
100
0
Dec-06 Dec-06 Dec-06
1790L800A A5E00142029 A5E00203785

Key results entering surface mount right through to final assembly, as


opposed to the 4 days planned by the old push method.
Since, the introduction in August 2006, the Kanban system
This indicates that our vision of move to build to order is
has been expanded to include 78 per cent of the boards used by
increasingly realistic.”
the MM4 product range; a range that represents 80 per cent
Also, above predictions, the reduction in inventory has come
of all production at Congleton. Moreover, as well as mastering
down in proportion with lead time, with a 70 per cent WIP
the new system, its performance is now being tracked and
reduction in whole the process since introduction of Kanban.
measured on the balanced scorecard used to monitor the whole
It is also recognised that the Kanban system is providing as
operation’s performance. One key Kanban measure is the
number of times that a work centre hits zero stock for any item; yet unmeasured benefits. These include:
with most regularly meeting the present performance target of
.
Reduced overproduction that ensures resources are used
only hitting zero once per item per month. Another important more efficiently and board obsolescence reduced.
measure is over-production, which is monitored to help
.
With reduced inventory in the pipeline the cost of quality
determine how well each work centre is managing the system. failures are being kept to a minimum.
Overall, the Kanban system has delivered numerous
.
Fewer and more quickly resolved interruptions to the flow
improvements within different business areas, where the along with reduced waiting times means that the Kanban
most noticeable and measurable relate to inventory and lead- has enabled an increase in production using the same
time reduction. resources.
For instance, the average lead time of all the work centres
.
The Kanban system makes capacity constraints and
has been reduced from 180 to 60 h – with the biggest availability very visible and enables group leaders to move
reductions coming through since January 07 when the highest operators from areas with excess capacity to areas with
running power boards came under Kanban control capacity shortage. This ensures that they can utilise the
(Figure 10). This is not the average lead-time per product “variable hours scheme” employed at the factory more
as not every product goes through all the work centres effectively.
Although as David Roberts states, “We have measured .
As well as reducing waste internally, the Kanban has
some PCBs going through the factory in just six hours, from equipped the factory with an increasingly stable production

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Figure 10 The reduction in average lead time through all process work centres
Average lead-time per work centre for all Kanban items
Hours
180
Post-kanban
160
140 A10-Coating
F7 - Teradyne Spectrum
120 A9 - Selective Solding
A6 - STREKFUSS
100 A5 - SEHO
80 B3 - Pre-Assembely
S6 - Surface Mount Si Place
60 S5 - Surface Mount
S3 - Surface Mount Si-Place
40
20
0
Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07
Month in 2007

system that will enable it to approach upstream and time of three business days which includes transportation.
downstream supply chains to remove additional waste This is instead of the present 15-day lead-time. So as well as
through the use of external Kanban systems. further reducing inventory across the whole delivery process,
this new system will generate improved delivery
Beyond Kanban performance.”
However, to make this work is far from straight forward.
In fact it is this last benefit that has driven the site onwards Firstly, there is still the problem that demand on the LZN is
with the development of its next major lean step forward; the highly variable. Therefore, overall “unconstrained” demand
extension of Kanban control, over the next year, through to on final assembly could be greater than factory capacity, and
the LZN. so production would have to be managed to continue
Tobias Cock explains, “We realise that what has been producing into subsequent days to bring the dials into
implemented so far is only part of the overall solution. The “Green” while trying not to heavily impact the next days
Kanban to date has undoubtedly helped us reduce lead-time demand. Alternatively, demand may be much lower than
and inventory within the factory. But to gain the real benefits capacity and in these cases production would again have to be
of ‘pull production’ especially in terms of improved customer managed, but this time to over produce to agreed limits, such
service, we must have a direct Kanban link with the LZN, so as 20 per cent above threshold.
that final assembly becomes driven by a ‘pull’ from the By far the bigger issue is that to make this approach work
warehouse, rather than pushing stock in.” will require further changes to Congleton’s own process flow,
This is because at present the operation is still susceptible to and more specifically will mean that parts of the recently
the typical problems of using forecast demand to plan final introduced Kanban system will be replaced.
production 15 days in advance of delivery. The system shows Explaining the anticipated new process, Tobias Cock
that stocks of certain items are down and with planned sales reports that to support the pull driven final assembly, a
these need to be replenished. So these are put into the build relatively large buffer inventory of completed boards will be
plan, only to find that the sales do not come through as introduced in front of final assembly. This will ensure the cells
anticipated and there is an overstock. Whilst, other items that are in a position to immediately start building any product
had healthy stock levels, and so no production in the plan, pulled by a Kanban signal, and continue building while new
suddenly see a couple of major orders that leave the LZN with boards are being processed upstream and delivered to
no stocks and with no immediate plan to replenish them. replenish the buffer, before it runs out.
Therefore, one element of the planned future changes is the The key to this is that the lead time for processing new
removal of the ERP driven production plan, and its boards through board assembly, testing and coating will have
replacement with live stock data from the LZN. When to be sorter than the time it takes for final assembly to
combined with known stocks in transit and finish goods at consume the buffer. Unfortunately, at present this would not
Congleton, this data will provide a total warehouse inventory, be possible mainly because of the stock levels and existing
which will then be used by the Kanban system to create lead-time within the factory, which is dictated by the Kanban.
a direct pull demand on Congleton’s final assembly from Therefore, the intention is to remove the internal Kanbans
the LZN. that now operate between these three processes and introduce
“Essentially we are looking to create a situation whereby the direct replenishment (Figure 11). This should give much
Kanban system will drive final assembly to produce today the faster throughput within the factory.
mix and volumes needed to replenish what was consumed In effect, as soon as final assembly (K1) starts consuming
from the export centre yesterday, says Tobias Cock. boards, information on what is being produced and build
He continues, “Therefore, we will have a one day response quantity will be relayed to board assembly (A6), which will
time to what is happening in the warehouse – and a total lead then start producing the necessary replacement boards;

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A continuing lean journey Assembly Automation
Andrew Lee-Mortimer Volume 28 · Number 2 · 2008 · 103 –112

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

Kanban Replenishment Kanban Replenishment


Week 4 Week 3 Week 2 Week 1
Production Plan

Open Open Closed Closed S5 A6 F7 A10 K1

Total Respond Time (15 business days)


German Export Centre

Suggested Planning Procedure


Kanban Replenishment Kanban Replenishment

S5 A6 F7 A10 K1
Inventory Inventory Total Respond Time (3 business days)

Information Flow German Export Centre


Product Flow
Electronic Direct
Replenishment List
Additional key

S5 - Surface mount
A5 - Through-hole board assembly
F7 - PCB testing
A10 - PCB coating
K1 - Final Assembly

“pushing these through subsequent operations as fast as “All the theory and research suggests that the full evolution of
possible up to the final assembly buffer”. a Kanban system should actually result in its removal. Kanban is
To ensure the internal lead time can be reduced to that not necessary the most efficient approach, but what it
needed to enable continuity of operation, issues such as work does enable is for a company to get control of its production
balance and capacity alignment are likely to be tackled process and create stability. In turn, this stability enables the
through the introduction of dedicated testers and a two stage gradual reduction of lead times and stocks, and the tackling of
board assembly, with two operators building the same PCB. issues and variables that can cause instability (the icebergs
Fortunately, the coating process is highly automated and typically hidden by high WIP levels). However, once stability is
extremely flexible, and can work on any board without any achieved, in theory the next improvement step is to move on
mechanical set up changes. from Kanban and back to some form of push. Now this is not
Finally, while the surface mount lines will continue to be easy to comprehend, or achieve, but in developing our new
driven by a Kanban from board assembly, another change intended process we believe we are moving forward by
needed to make this new system work will be a larger buffer eliminating the Kanban in certain areas.”
stock between the two operations. This stock may be higher He concludes, “We have already done simulations that
than the present Kanban threshold stock, but this increase is show that the new system should work, but there is still a long
more than compensated for by the elimination in any stocks way to convert theory into practice.”
between the subsequent operations. Ends
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
Corresponding author
push mechanism in the form of direct replenishment.
However, as Tobias Cock notes, this should not be such a Andrew Lee-Mortimer can be contacted at: andrew@
big surprise. lee-mortimer.prestel.co.uk

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