Tag: supply chain

Kanban

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Kanban (看板) (signboard or billboard in Japanese) is a scheduling system for lean manufacturing and just-in-time manufacturing (JIT). Taiichi Ohno, an industrial engineer at Toyota, developed kanban to improve manufacturing efficiency. Kanban is one method to achieve JIT. The system takes its name from the cards that track production within a factory. For many in the automotive sector, kanban is known as the “Toyota nameplate system” and as such the term is not used by some other automakers.[clarification needed]

Kanban became an effective tool to support running a production system as a whole, and an excellent way to promote improvement. Problem areas are highlighted by measuring lead time and cycle time of the full process and process steps.[clarification needed] One of the main benefits of kanban is to establish an upper limit to work in process inventory to avoid overcapacity. Other systems with similar effect exist, for example CONWIP. A systematic study of various configurations of kanban systems, of which CONWIP is an important special case, can be found in Tayur (1993), among other papers.

A goal of the kanban system is to limit the buildup of excess inventory at any point in production. Limits on the number of items waiting at supply points are established and then reduced as inefficiencies are identified and removed. Whenever a limit is exceeded, this points to an inefficiency that should be addressed.

The system originates from the simplest visual stock replenishment signaling system, an empty box. This was first developed in the UK factories producing Spitfires during the Second World War, and was known as the “two bin system.” In the late 1940s, Toyota started studying supermarkets with the idea of applying shelf-stocking techniques to the factory floor. In a supermarket, customers generally retrieve what they need at the required time—no more, no less. Furthermore, the supermarket stocks only what it expects to sell in a given time, and customers take only what they need, because future supply is assured. This observation led Toyota to view a process as being a customer of one or more preceding processes and to view the preceding processes as a kind of store.

Kanban aligns inventory levels with actual consumption. A signal tells a supplier to produce and deliver a new shipment when a material is consumed. This signal is tracked through the replenishment cycle, bringing visibility to the supplier, consumer, and buyer.

Kanban uses the rate of demand to control the rate of production, passing demand from the end customer up through the chain of customer-store processes. In 1953, Toyota applied this logic in their main plant machine shop.

A key indicator of the success of production scheduling based on demand, pushing, is the ability of the demand-forecast to create such a push. Kanban, by contrast, is part of an approach where the pull comes from demand and products are made to order. Re-supply or production is determined according to customer orders.

In contexts where supply time is lengthy and demand is difficult to forecast, often the best one can do is to respond quickly to observed demand. This situation is exactly what a kanban system accomplishes, in that it is used as a demand signal that immediately travels through the supply chain. This ensures that intermediate stock held in the supply chain are better managed, and are usually smaller. Where the supply response is not quick enough to meet actual demand fluctuations, thereby causing potential lost sales, a stock building may be deemed more appropriate and is achieved by placing more kanban in the system.

Taiichi Ohno stated that to be effective, kanban must follow strict rules of use. Toyota, for example, has six simple rules, and close monitoring of these rules is a never-ending task, thereby ensuring that the kanban does what is required.

Toyota has formulated six rules for the application of kanban:

Kanban cards are a key component of kanban and they signal the need to move materials within a production facility or to move materials from an outside supplier into the production facility. The kanban card is, in effect, a message that signals a depletion of product, parts, or inventory. When received, the kanban triggers replenishment of that product, part, or inventory. Consumption, therefore, drives demand for more production, and the kanban card signals demand for more product—so kanban cards help create a demand-driven system.

It is widely held by proponents of lean production and manufacturing that demand-driven systems lead to faster turnarounds in production and lower inventory levels, helping companies implementing such systems be more competitive.

In the last few years, systems sending kanban signals electronically have become more widespread. While this trend is leading to a reduction in the use of kanban cards in aggregate, it is still common in modern lean production facilities to find the use of kanban cards. In various software systems, kanban is used for signalling demand to suppliers through email notifications. When stock of a particular component is depleted by the quantity assigned on kanban card, a “kanban trigger” is created (which may be manual or automatic), a purchase order is released with predefined quantity for the supplier defined on the card, and the supplier is expected to dispatch material within a specified lead-time.

Kanban cards, in keeping with the principles of kanban, simply convey the need for more materials. A red card lying in an empty parts cart conveys that more parts are needed.

An example of a simple kanban system implementation is a “three-bin system” for the supplied parts, where there is no in-house manufacturing. One bin is on the factory floor (the initial demand point), one bin is in the factory store (the inventory control point), and one bin is at the supplier. The bins usually have a removable card containing the product details and other relevant information, the classic kanban card.

When the bin on the factory floor is empty (because the parts in it were used up in a manufacturing process), the empty bin and its kanban card are returned to the factory store (the inventory control point). The factory store replaces the empty bin on the factory floor with the full bin from the factory store, which also contains a kanban card. The factory store sends the empty bin with its kanban card to the supplier. The supplier’s full product bin, with its kanban card, is delivered to the factory store; the supplier keeps the empty bin. This is the final step in the process. Thus, the process never runs out of product—and could be described as a closed loop, in that it provides the exact amount required, with only one spare bin so there is never oversupply. This ‘spare’ bin allows for uncertainties in supply, use, and transport in the inventory system. A good kanban system calculates just enough kanban cards for each product. Most factories that use kanban use the colored board system (heijunka box).

Many manufacturers have implemented electronic kanban (sometimes referred to as e-kanban) systems. These help to eliminate common problems such as manual entry errors and lost cards. E-kanban systems can be integrated into enterprise resource planning (ERP) systems, enabling real-time demand signaling across the supply chain and improved visibility. Data pulled from E-kanban systems can be used to optimize inventory levels by better tracking supplier lead and replenishment times.

E-kanban is a signaling system that uses a mix of technology to trigger the movement of materials within a manufacturing or production facility. Electronic Kanban differs from traditional kanban in using technology to replace traditional elements like kanban cards with barcodes and electronic messages like email or Electronic data interchange.

A typical electronic kanban system marks inventory with barcodes, which workers scan at various stages of the manufacturing process to signal usage. The scans relay messages to internal/external stores to ensure the restocking of products. Electronic kanban often uses the internet as a method of routing messages to external suppliers and as a means to allow a real-time view of inventory, via a portal, throughout the supply chain.

Organizations like the Ford Motor Company and Bombardier Aerospace have used electronic kanban systems to improve processes. Systems are now widespread from single solutions or bolt on modules to ERP systems.

In a kanban system, adjacent upstream and downstream workstations communicate with each other through their cards, where each container has a kanban associated with it. Economic Order Quantity is important. The
two most important types of kanbans are:

The Kanban philosophy and Task Boards are also used in Agile project management to coordinate tasks in project teams. An online demonstration can be seen in an Agile Simulator.

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Lean Construction

Lean construction is a combination of operational research and practical development in design and construction with an adaption of lean manufacturing principles and practices to the end-to-end design and construction process. Unlike manufacturing, construction is a project-based production process. Lean Construction is concerned with the alignment and holistic pursuit of concurrent and continuous improvements in all dimensions of the built and natural environment: design, construction, activation, maintenance, salvaging, and recycling (Abdelhamid 2007, Abdelhamid et al. 2008). This approach tries to manage and improve construction processes with minimum cost and maximum value by considering customer needs (Koskela et al. 2002), while it helps to achieve and maintain sustainability in construction sector (Solaimani & Sedighi, 2019).

Lauri Koskela, in 1992, challenged the construction management community to consider the inadequacies of the time-cost-quality tradeoff paradigm. Another paradigm-breaking anomaly was that observed by Ballard (1994), Ballard and Howell (1994a and 1994b), and Howell (1998). Analysis of project plan failures indicated that “normally only about 50% of the tasks on weekly work plans are completed by the end of the plan week” and that constructors could mitigate most of the problems through “active management of variability, starting with the structuring of the project (temporary production system) and continuing through its operation and improvement,” (Ballard and Howell 2003).

Evidence from research and observations indicated that the conceptual models of Construction Management and the tools it utilizes (work breakdown structure, critical path method, and earned value management) fail to deliver projects ‘on-time, at budget, and at desired quality’ (Abdelhamid 2004). With recurring negative experiences on projects, evidenced by endemic quality problems and rising litigation, it became evident that the governing principles of construction management needed revisiting. One comment published by the CMAA, in its Sixth Annual Survey of Owners (2006), pointed to concern about work methods and the cost of waste:

“While the cost of steel and cement are making headlines, the less publicized failures in the management of construction projects can be disastrous. Listen carefully to the message in this comment. We are not talking about just materials, methods, equipment, or contract documents. We are talking about how we work to deliver successful capital projects and how we manage the costs of inefficiency.”

Koskela (2000) argued that the mismatch between the conceptual models and observed reality underscored the lack of robustness in the existing constructs and signaled the need for a theory of production in construction. Koskela then used the ideal production system embodied in the Toyota Production System to develop a more overarching production management paradigm for project-based production systems where production is conceptualized in three complementary ways, namely, as a Transformation (T), as a Flow (F), and as Value generation (V).

Koskela and Howell (2002) also presented a review of existing management theory – specifically as related to the planning, execution, and control paradigms – in project-based production systems. Both conceptualizations provide a solid intellectual foundation of lean construction as evident from both research and practice (Abdelhamid 2004).

Recognizing that construction sites reflect prototypical behavior of complex and chaotic systems, especially in the flow of both material and information on and off site, Bertelsen (2003a and 2003b) suggested that construction should be modeled using chaos and complex systems theory.
Bertelsen (2003b) specifically argued that construction could and should be understood in three complementary ways:

The term lean construction was coined by the International Group for Lean Construction in its first meeting in 1993 (Gleeson et al. 2007). Greg Howell and Glenn Ballard (founders of the Lean Construction Institute in 1997) both maintain that Construction in Lean Construction refers to the entire industry and not the phase during which construction takes place. Thus, Lean Construction is for owners, architects, designers, engineers, constructors, suppliers & end users.

In any case, the term Lean Construction has escaped canonical definition. There has been a number of reasons for that. The body of knowledge is in a state of development since 1990. Nonetheless, a definition is needed to be able to operationalize the concepts and principles contained in the philosophy. It is insightful to study the change of definition over time as that represents the evolution and advancement in the state of knowledge about Lean Construction.

The reference to Lean Construction as a proper noun is not an attempt to falsely distinguish it from other areas that focus on construction project management. It is a proper noun because it refers to a very specific set of concepts, principles, and practices that are distinct from conventional design and construction management practices .

A number of groups have proposed definitions: The International Group for Lean Construction; The Lean Construction Institute; The Associated General Contractors of America; Construction Management Association of America, and others. Researchers have also put forward definitions as foundation for their work and to invite others to add, modify and critique. A sampling is provided here.

Lean Construction is a “way to design production systems to minimize waste of materials, time, and effort in order to generate the maximum possible amount of value,” (Koskela et al. 2002). Designing a production system to achieve the stated ends is only possible through the collaboration of all project participants (Owner, A/E, contractors, Facility Managers, End-user) at early stages of the project. This goes beyond the contractual arrangement of design/build or constructability reviews where contractors, and sometime facility managers, merely react to designs instead of informing and influencing the design (Abdelhamid et al. 2008).

Lean Construction recognizes that desired ends affect the means to achieve these ends, and that available means will affect realized ends (Lichtig 2004). Essentially, Lean Construction aims to embody the benefits of the Master Builder concept (Abdelhamid et al. 2008).

“One can think of lean construction in a way similar to mesoeconomics. Lean construction draws upon the principles of project-level management and upon the principles that govern production-level management. Lean construction recognizes that any successful project undertaking will inevitably involve the interaction between project and production management.” (Abdelhamid 2007)

Lean construction supplements traditional construction management approaches with (Abdelhamid 2007): (1) two critical and necessary dimensions for successful capital project delivery by requiring the deliberate consideration of material and information flow and value generation in a production system; and (2) different project and production management (planning-execution-control) paradigms.

While lean construction is identical to lean production in spirit, it is different in how it was conceived as well as how it is practiced. There is a view that “adaptation” of Lean Manufacturing/Production forms the basis of Lean Construction. The view of Lauri Koskela, Greg Howell, and Glenn Ballard is very different, with the origin of lean construction arising mainly from the need for a production theory in construction and anomalies that were observed in the reliability of weekly production planning.

Getting work to flow reliably and predictably on a construction site requires the impeccable alignment of the entire supply chain responsible for constructed facilities such that value is maximized and waste is minimized. With such a broad scope, it is fair to say that tools found in Lean Manufacturing and Lean Production, as practiced by Toyota and others, have been adapted to be used in the fulfillment of Lean construction principles. TQM, SPC, six-sigma, have all found their way into lean construction. Similarly, tools and methods found in other areas, such as in social science and business, are used where they are applicable. The tools and methods in construction management, such as CPM and work breakdown structure, etc., are also utilized in lean construction implementations. The three unique tools and methods that were specifically conceived for lean construction are the Last Planner System, Target Value Design, and the Lean Project Delivery System.

If the tool, method, and/or technique will assist in fulfilling the aims of lean construction, it is considered a part of the toolkit available for use. A sampling of these tools includes: BIM (Lean Design), A3, process design (Lean Design), offsite fabrication and JIT (Lean Supply), value chain mapping (Lean Assembly), visual site (Lean Assembly); 5S (Lean Assembly), daily crew huddles (Lean Assembly).

The priority for all construction work is to:

While lean construction’s main tool for making design and construction processes more predictable is the Last Planner System (see below) and derivatives of it, other lean tools already proven in manufacturing have been adapted to the construction industry with equal success. These include: 5S, Kanban, Kaizen events, quick setup/changeover, Poka Yoke, visual control and 5 Whys (Mastroianni and Abdelhamid 2003, Salem et al. 2005).

The early involvement of contractors and suppliers is seen as a key differentiator for construction so called ‘best practice’. While there are Trade Marked business processes (see below), academics have also addressed related concepts such as ‘early contractor involvement’ (ECI).

Using IPD, project participants can overcome key organizational and contractual problems. The IPD approach to contracting aligns project objectives with the interests of key participants. IPD relies on participant selection, transparency and continuing dialog. Construction consumers might consider rethinking their contracting strategies to share more fully in the benefits. The IPD approach creates an organization with the ability to apply Lean Project Delivery (LPD) principles and practices. (Matthews and Howell 2005)

There are at least five principal forms of contract that support lean construction

Other papers explain Integrated Project Delivery (IPD) and IFoA. PPC2000, IFoA and ‘alliancing agreements’ were among the topics discussed at the ‘Lean in the Public Sector’ (LIPS) conference held in 2009.

Integrated Lean Project Delivery (ILPD) is a process trademarked by The Boldt Group. It was created and is practiced by The Boldt Group’s subsidiary, The Boldt Company. The process aims to eliminate waste across the construction value chain, through evaluation of initial planning and design, and examination of construction processes to predict where and when waste will occur, which is then eliminated through the use of lean tools in the IPD process.

An ILPD contract is a multi-party agreement that specifies the use of lean practices as conceived in the Lean Project Delivery System. This distinction is needed because Integrated Project Delivery (IPD) is now[when?] only referring to the multi-party agreement regardless of what practices are used, the so-called IPD-lite or IPD-ish.

In the UK, a major R&D project, Building Down Barriers, was launched in 1997 to adapt the Toyota Production System for use in the construction sector. The resulting supply chain management toolset was tested and refined on two pilot projects and the comprehensive and detailed process-based toolset was published in 2000 as the ‘Building Down Barriers Handbook of Supply Chain Management-The Essentials’. The project demonstrated very clearly that lean thinking would only deliver major performance improvements if the construction sector learned from the extensive experience of other business sectors. Lean thinking must become the way that all the firms in the design and construction supply chain co-operate with each other at a strategic level that over-arches individual projects. In the aerospace sector, these long-term supply-side relationships are called a ‘Virtual Company’, in other business sectors they are called an ‘Extended Lean Enterprise’.

The UK ‘Building Down Barriers Handbook of Supply Chain Management-The Essentials’ states that: ‘The commercial core of supply chain management is setting up long-term relationships based on improving the value of what the supply chain delivers, improving quality and reducing underlying costs through taking out waste and inefficiency. This is the opposite of ‘business as usual’ in the construction sector, where people do things on project after project in the same old inefficient ways, forcing each other to give up profits and overhead recovery in order to deliver at what seems the market price. What results is a fight over who keeps any of the meagre margins that result from each project, or attempts to recoup ‘negative margins’ through ‘claims’, The last thing that receives time or energy in this desperate, project-by-project gladiatorial battle for survival is consideration of how to reduce underlying costs or improve quality’.

The Last Planner System, as developed by the Lean Construction Institute, is:

The collaborative, commitment-based planning system that integrates should-can-will-did planning (pull planning, make-ready, look-ahead planning) with constraint analysis, weekly work planning based upon reliable promises, and learning based upon analysis of PPC (plan percent complete) and reasons for variance.

Users such as owners, clients or construction companies, can use LPS to achieve better performance in design and construction through increased schedule/programme predictability (i.e. work is completed as and when promised).

LPS is a system of inter-related elements, and full benefits come when all are implemented together. It is based on simple paper forms, so it can be administered using Post-it notes, paper, pencil, eraser and photocopier. A spreadsheet can help.

LPS begins with collaborative scheduling/programming engaging the main project suppliers from the start. Risk analysis ensures that float is built in where it will best protect programme integrity and predictability. Where appropriate the process can be used for programme compression too. In this way, one constructor took 6 weeks out of an 18-week programme for the construction of a 40 bed hotel. Benefits to the client are enormous.

Figure 1: intense discussion during a programme compression workshop

Before work starts, team leaders make tasks ready so that when work should be done, it can be. Why put work into production if a pre-requisite is missing? This MakeReady process continues throughout the project.

Figure 2: part of a MakeReady form for documenting the process of making tasks ready (this one for use in design)

There is a weekly work planning (WWP) meeting involving all the last planners – design team leaders and/or trade supervisors on site. It is in everyone’s interest to explore inter-dependencies between tasks and prevent colleagues from over-committing.

Figure 3: part of a Weekly Work Plan form used by trade foremen on site or design team leaders to prepare for the WWP meeting.

This weekly work planning processes is built around promises. The agreed programme defines when tasks should be done and acts as a request to the supplier to do that task. The last planners (that is the trade foremen on site or design team leaders in a design process) only promise once they have clarified the conditions of satisfaction and are clear that the task can be done.

Figure 4: the promise cycle (after Fernando Flores)

Once the task is complete the last planner responsible declares completion so that site management or the next trade can assure themselves that it is complete to an appropriate standard.

A key measure of the success of the Last Planner system is PPC. This measures the Percentage of Promises Completed on time. As PPC increases. project productivity and profitability increase, with step changes at around 70% and 85%. This score is measured site-wide and displayed around the site. Weekly measures are used by the project and by individual suppliers as the basis for learning how to improve the predictability of the work programme and hence the PPC scores.

A key part of the continual improvement process is a study of the reasons why tasks promised in the WWP are delivered late. The following chart shows typical reasons:

Figure 5: example of a reasons Pareto chart

Recording the reasons in a Pareto chart like the one above makes it easy to see where attention is most likely to yield the most results. Using tools like 5 Why analysis and cause-effect diagrams will help the team understand how they can improve the clarity of information and ensure that there are sufficient operatives.

Last Planner benefits don’t stop at project predictability, profit and productivity; it contributes to positive changes in other industry KPIs. Danish research shows almost half the accidents and up to 70% less sickness absence on LPS managed sites.

LCI retains a registered Trademark on the term and Copyright in the idea and materials to prevent people who misunderstand or misrepresent the system from using it in trade. Consulting companies or individuals wishing to use the Last Planner System in trade (commercial offering of service) must first be approved by LCI. Consultants are expected to make financial and other contributions to LCI in recognition of the work and effort LCI put into developing Last Planner.

Last Planner System development continues under the direction of Lean Construction Institute Directors Professor Glenn Ballard and Greg Howell with support from users around the world. For more information about the development process see Ballard (1994, 2000) and Ballard and Howell (2004) for example.

For a detailed description and list of the benefits of LPS, see Mossman: Last Planner®: 5 + 1 crucial & collaborative conversations for predictable design & construction delivery and for additional references see the Designing Buildings wiki.

There are many differences between the Lean Construction (LC) approach and the Project Management Institute (PMI) approach to construction. These include:

Various networks and institutes conduct research and teach Lean Construction.

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