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Oracle MRP User's Guide
Release 12.1
Part Number E15188-06
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Kanban Planning

Overview of Kanban Planning

Kanban is a pull replenishment system whose aims are zero stockouts, shorter lead times, and reduced inventory with minimal manual supervision. Instead of waiting for an MRP plan to release materials down the supply chain, with kanban each operation pulls the materials it needs from its source when it needs them, signaling with a replenishment signal or a kanban that it needs to do so.

Kanban planning is part of Oracle Flow Manufacturing. You need a Flow Manufacturing license to use it.

Kanban Terminology

The following terminology describes features or processes in a manufacturing environment using kanbans.

Actual Production

Actual production refers to the discrete jobs, repetitive schedules, and flow schedules that are scheduled to be produced on the manufacturing line. Actual production is one of the demand types used in the Kanban Names window for calculating the kanban size or number of cards.

Flow Manufacturing

A kanban system is most effective in flow shops manufacturing organizations with well-defined material flows. Because the demand for customer-order items may be discontinuous even in a shop where the material demand is steady, you might want to only designate certain items as kanban items.

Kanban

The term kanban refers to a visual replenishment signal such as a card or an empty bin for an item. In a kanban system, each work center has several bins, each containing a certain number of the same item. When a bin becomes empty, the work center starts the process of replenishing the empty bin by sending the replenishment signal, or a kanban. Meanwhile, the work center can continue using the other (stocked) bins.

Kanban Cards

Kanban cards are the visual replenishment signals. Each kanban bin has one kanban card, so the number of kanban cards is the same as the number of kanbans for each item. Thus, if a work center must have 100 of the same kanban item within the replenishment lead time, and the kanban size is 20, there must be five kanbans for the item five kanban cards.

Kanban Items

An item that is pulled through the kanban system, rather than pushed by the planner, is called a kanban-released item, or simply kanban item. Your planning system can have kanban items as well as items released by the planner.

Kanban Location

The kanban location for a kanban item is the designated location where that item is stored (and where replenishment is delivered). You can designate location as a combination of subinventory and locator. You can use locators on kanbans even if the locator control is off.

Kanban Plans

The kanban plan indicates the number of kanbans and the size of each kanban required to satisfy the demand for all items that are either kanban released or have components that have kanban released items on the bill.

Kanban Size

Kanban size refers to the number of items in each kanban. Because a kanban is only replenished when it's empty, the kanban size should be a multiple of the lot size. For example, if you would normally order an item in lots of 20, you should not make the kanban size less than 20 because the supplier would not be able to fulfill such an order. You can specify the lot size using the lot multiplier on the pull sequences.

Pull Sequences

For every kanban location, there is a pull sequence ? a grouping of information that defines a kanban location, source data, and planning parameters.

In defining a pull sequence for a kanban item in Oracle Inventory, you specify the replenishment source for a kanban item at a specific location. You also specify what you want the kanban calculation program to calculate, the lead time for obtaining the kanban item, the allocation percentage, and order modifiers that you want to affect the calculation program.

See Also

Calculation Formula

One of the most important tasks of a kanban planning system is determining the optimal number of kanban cards. The kanban planning software takes care of this calculation provided you enter correct values for kanban size, average daily demand for the kanban item, and the lead time to replenish one kanban.

We provide a package that you can use to customize the calculation. See the Oracle Manufacturing, Distribution, Sales and Service Open Interfaces Manual.

By default, the standard calculation is:

(C - 1) * S = D * A * (L + SSD) where:

If you think through the kanban process, you will see why this formula works best when the demand for the kanban item is steady.

In addition to this basic formula, when the calculation program calculates kanban size, it takes into account the values for the following order modifiers (specified in the pull sequence), in the following order:

For example, suppose you've specified the Minimum Order Quantity for a particular item to be 50. You want the formula to calculate the kanban size (S), so you enter values for C and L. Even though strictly based on the values you enter for C and L?the formula should yield 40, the actual kanban size will be 50 because of the Minimum Order Quantity. If a Lot Multiplier of 15 is specified, the kanban size is rounded to 60 in oder to meeth both the Minimum Order Quantity and Lot Multiplier order modifiers.

Note: The program uses order modifiers only when calculating the kanban size. If you specify the kanban size and want the program to calculate the number of kanban cards, the program does not use order modifiers.

How the Program Determines Average Daily Demand

Before the kanban calculation program can calculate the kanban size or the number of kanban cards, it needs values for the other variables. It gets the values of L and C or S from the pull sequence you define in Oracle Inventory. The program calculates the average daily demand by following these steps:

  1. It identifies all the kanban items that you want to include in your kanban calculation, using the parameters you enter when you launch a kanban calculation.

  2. It finds location information for each kanban item.

  3. For each kanban item, it identifies every BOM in which the item appears so that it can explode the demand from the assemblies down to the kanban item.

  4. Using the MDS, MPS, Actual Production, or forecast you specify in the Kanban Names window - it identifies all the demand entries for each kanban item for which the demand is independent. For example, suppose that from the forecast you specified in Kanban Names, the program finds independent demand for 600 of kanban item A.

  5. It uses the Allocation Percentage specified in the pull sequence for each kanban item to determine how to distribute demand for the item among its different locations. For example, if the allocation percentage for item A at location L1 is 20%, then the program places demand of 120 (that is, 20% of 600) at location L1.

  6. Using the MDS, MPS, Actual Production, or forecast you specify in the Kanban Names window - it calculates demand for each kanban item for which demand is dependent on the demand for other items. It does so by using the following information:

  7. Finally, the program sums up the demand entries that fall within the kanban planning horizon for each kanban item at each location and divides the demand for each item at each location by the number of workdays. For example, if the number of workdays on the planning horizon is 20, then the average daily demand for item A at location L1 is 6 (because the total demand for item A at location L1 for the planning horizon is 120). The program prorates the demand from periodic forecasts for those days between the Demand window specified for the calculation program.

See Also

Oracle Flow Manufacturing Implementation Manual

Using the Kanban Calculation Program

Calculating the kanban size or the number of kanban cards involves two steps: telling the application what demand information to use and submitting a request for the calculation program.

Prerequisites

Before you can run the kanban calculation program, you must:

To specify demand information:

  1. Navigate to the Kanban Names window.

  2. Enter a new plan name.

    You can enter any name you want for this simulation plan.

    Note: An implicit plan named Production is created by the application to enable kanban comparisons.

  3. Enter a description to help you remember what's unique about this simulation plan.

  4. Select an input type to tell the quantity calculation program whether to use the demand information from a forecast, an MDS, an MPS, or Actual Production.

    A list of choices appears in the Forecast/Schedule field.

  5. Select the name of the specific forecast or schedule you want to use.

    Choose the Forecast/Schedule button to see more detail about the selected forecast or schedule. Then navigate back to the Kanban Names window.

  6. Optionally, enter the date on which this simulation plan is to become inactive.

To calculate the kanban size for a kanban plan:

  1. Navigate to the Kanban Names window.

  2. If the window displays more than one plan, choose which plan you want to do the calculation.

  3. Choose the Launch button to start the calculation program.

  4. In the Parameters window, enter the following information:

    Plan Name: the name of the plan for which you want to run the calculation program. Items From: the alphabetical beginning of the range of items you're interested in

    To: the alphabetical end of the range of items you're interested in Category Set: the name of the category set for the items

    Categories From: the alphabetical beginning of the range of categories you're interested in

    To: the alphabetical end of the range of categories you're interested in

    BOM Effectivity: the BOM effectivity date; the program uses BOMs that are effective as of this date. If you do not enter anything, the program uses today's date

    Demand Start Date: the start date on which the demand entries are considered

    Cutoff Date: the date up to which ' want demand entries to be considered

  5. Choose OK to set the parameters you've just entered.

    In the Launch Kanban window that appears, your parameters appear in the Parameters field.

  6. In the Launch Kanban window, make optional changes or choose Submit Request to start the calculation program.

    The calculation program uses all the information you entered, including the launch parameters, the demand information, and the pull sequences, to calculate either the kanban size or the number of kanban cards. It also takes into account several order modifiers.

To specify options just before submitting a request for the calculation program:

  1. Navigate to the Launch Kanban window.

  2. Specify the options you want. See: Submitting a Request, Oracle Applications User's Guide.

    Note: The concurrent program will complete with a status of Warning if the following conditions exist:

    Important: Kanban size or quantity is only calculated for pull sequences that have an exact match with the replenishment subinventory/locator combination specified on the bill or material or item master.

See Also

Viewing and Updating Kanban Calculations

You can view the recommended kanban size for each item at each location. You can compare plans and update parts of your production plan with your kanban simulation plan. You can also re-launch the kanban calculation program to see the effects of changing one or more variables, including kanban size, number of kanban cards, and source types.

Prerequisites:

Before you can view or update kanban calculations, you must:

Run the kanban calculation program to generate a kanban plan. See: Using the Kanban Calculation Program.

To view a kanban calculation, compare two plans, and update parts of your production plan

  1. Navigate to the Kanban Workbench window.

  2. Query the simulation plan you're interested in.

  3. Choose Compare. The Find Kanban Comparison window appears.

  4. Choose Find to find all items in the plan or narrow down your search by entering search criteria. To narrow your search, enter one of the following in the Field field:

    Item: if you want to limit your search to only certain kanban items.

    Kanban Number: if you want to limit your search to only items within a particular range of kanban cards (for example, items requiring more than 10 kanban cards).

    Kanban Size: if you want to limit your search by kanban size (for example, items with kanbans that contain between 20 and 100 units).

    Locator: if you want to limit your search to only items with a particular locator.

    Subinventory: if you want to limit your search to only items with a particular subinventory location.

    Category: if you want to limit your search to only items in a particular category.

    Planner: if you want to limit your search to those items planned by a employee associated to the items.

    Variance: if you want to limit your search to only items with a certain variance percentage from the manually entered plan.

  5. Enter the condition and values for From and To.

  6. Choose Find to find the items that match the criteria you've entered. The Compare Kanban Plans window appears.

  7. Notice the variances between your simulation plan and your production plan.

    Some items may have higher variances than others. You can decide by item which parts of the simulation plan to merge with the production plan, updating the production plan with those parts of the kanban calculation that make sense to you.

    Choose the check box next to each item for which you want to update the production plan with the simulation plan. Then choose Update Production.

To change one or more variables and re-launch the plan

  1. Navigate to the Kanban Workbench window.

  2. Query the simulation plan you're interested in.

  3. Choose the Details button.

    The Find window appears.

  4. Choose Find to find all items in the plan or narrow down your search by entering search criteria and then choosing Find.

  5. In the window that appears, choose the check box next to each item for which you want to make an adjustment.

  6. In the Calculate column for each item that you checked, choose what you want to calculate.

  7. For each item that you checked, scroll to the field whose value you want to change and enter a new value for the field.

    You can change these fields: Kanban Size, # of Kanbans, Source Type.

  8. When you've made all the adjustments you want, choose Simulation Replan.

    This button sends a request to the kanban calculation program to generate a new simulation plan based on the new values you've entered. After the request has been processed, you'll be able to see the results of the kanban calculation from the Kanban Workbench, just as you would for any simulation plan.

  9. You can update your plan from these results by selecting pull sequences and choosing Update Production.

To view demand for a particular kanban item at a particular subinventory and locator (based on the forecast or schedule)

  1. Navigate to the Demand window.

    The View Kanban Demand window appears. The demand shown is the total demand for the period, not the average daily demand the program uses in calculations.

To check the status of existing kanban cards or to define new kanban cards

  1. From the Tools menu, select Kanban Cards. You can print kanban cards by choosing Print Kanban Cards.

    See

    Using the Kanban Calculation Program

    Kanban Tools Menu

Kanban Tools Menu

You can access the tools menu for kanban when working in the Kanban Workbench window. Depending upon the currently active window and other conditions, the Tools menu includes:

Forecast/Schedule Navigates to the Item Forecast Entries window where you can review and update information for items in a forecast set
Kanban Cards Navigates to the Kanban Cards Summary window in Oracle Inventory where you can view, define, and update kanban cards.
Print Kanbans Navigates to the Print Kanban Cards window in Oracle Inventory where you can either batch or manually print kanban cards.

See:

Reviewing Forecast Detail Information Generating Kanban Cards, Oracle Inventory User's Guide

Printing Kanban Cards, Oracle Inventory User's Guide