For years, eKanban has been touted as a lean manufacturing strategy capable of automating parts consumption tracking and replenishment, but most of the talk has been as empty as a consumed kanban bin. Tracking material flow in real time by electronic signal (electronic kanban) rather than by hand (manually read kanban cards) can offer significant efficiencies if executed properly, but initial efforts fell short.
Early RFID tags and hardware that were expected to enable hands-free goods receiving and parts inventory tracking failed to deliver the accuracy required. Replenishment needs were calculated based on actual parts consumption, ignoring ERP production plans that could affect the needed quantities. Replenishment orders to external parts suppliers had to be faxed, e-mailed or sent to a portal for supplier retrieval.
Today RFID technology has matured with improved accuracy, and kanban lot sizing can be dynamically adjusted based on the ERP production plan. Previously manual tasks such as ERP data entry are being automated, and pull signals to outside suppliers can be
automatically routed through the normal EDI (Electronic data interchange) stream to form an automated replenishment loop. True end-to-end hands-free eKanban has arrived, reducing overhead as well as providing real-time visibility of demand to enable more precise parts replenishment on the production line.
In Germany, for example, a major producer of automotive electrical equipment uses an eKanban system in an award-winning production logistics project utilizing RFID-tagged load carriers to manage small parts. The system tracks filled bins as they move through the plant and directs carriers with the appropriate parts to the correct assembly line as determined by the production planning system — all without manual kanban card handling or barcode scanning — by reading and transmitting information programmed into RFID tags attached to the kanban card on each bin.
In Asia, a leading U.S.-based consumer electronics manufacturer is currently rolling out a major eKanban project to track and replenish parts on all production lines in its three-floor production facility. The system — replacing a manual kanban deployment — will eliminate manual data entry, data integrity issues, consumption update lag time, and the need to maintain duplicate inventory locations on each floor because lots will now be easily locatable via RFID. It will also automatically generate and transmit stock replenishment messages to external parts suppliers via EDI.
Notably, both deployments are seamlessly integrated with the respective manufacturers' ERP systems to enable real-time demand balancing based on production forecasts, lead times and optimum inventory levels when calculating just-in-time material needs. This capability — one of the critical missing links in early eKanban implementations — delivers real-time visibility of material use to enable never-before-possible accuracy, smaller lot sizes delivered more frequently, and lower carrying costs related to precise demand calculation that leans needed buffer stock.
The core innovation of today's eKanban systems involves incorporating RFID tags programmed with parts and inventory data into the laminated kanban ("card signal") cards. This is the first major upgrade of kanban processes since Toyota pioneered the kanban parts replenishment methodology in the 1950s.
The tags transform conventional kanban cards into eKanban cards that not only replace manual tags, physical handling, and manual tracking, management and reading processes, but also have the ability to hold additional data such as PO, ASN, GRN and supplier lot numbers as well as link to the ERP system for critical production/operations information. Typically, single-use packing containers employ reusable eKanban cards for each part number, while reusable containers are fitted with permanent tag holders. The tags are scanned by RFID gateways as the goods move from the receiving dock through quality control, warehouse and production line, enabling inventory data to be passed to the eKanban software, converted to ERP-readable format and forwarded to the ERP system in real time.
When a pallet of 1,000 pieces packed in kanban lots of 100 arrives at a plant, for example, it is scanned as it moves off the truck to the delivery dock and automatically read as 10 kanban lots of 100, matched to the corresponding ASN, and posted to the ERP system as received — completely electronically.
The result is fully automated goods receiving, automatic inventory updating, real-time visibility of production line consumption and — when integrated with a B2B gateway for EDI messaging — instant notification to suppliers of pull signals based on actual material use. No manual intervention or data entry is required, and material handlers don't have to wait to get kanban cards picked from empty pallets or parts containers to know that it's time to restock.
Beyond the Basics
While the RFID portion of the system has been ready for prime time for the last several years, the real-time ERP-based demand balancing, integrated EDI connectivity and associated business logic required to automate and optimize the entire process from end to end are newer developments that overcome the deficiencies of earlier solutions.
In addition to updating inventory in the ERP system, for example, the newest eKanban platforms communicate with the ERP production planning system to determine whether fixed kanban lot sizes and/or reorder quantities need to be modified based on current production requirements, demand fluctuations, inventory management needs and pre-defined business rules for each part.
This ability to trigger both production line and supplier replenishment by matching material consumption against production plans in real time is a breakthrough in supply chain visibility. Automated ERP-generated pull signals are sent to the manufacturer's warehouse management system as well as to external suppliers via EDI/B2B messaging as needed.
Integrating EDI into the electronic workflow simplifies the process of alerting suppliers to the need for immediate lot replacement, allows them to check daily/hourly usage to optimize shipment quantities, and eliminates the need for manufacturers to fax orders, e-mail spreadsheets, or have suppliers log into a portal to monitor pull signals. In addition, kanban lot consumption can be matched to blanket PO's or other ordering processes so that suppliers have valid order numbers to fulfill replenishment requests.
These and other newer automation capabilities bring all the pieces of the parts tracking and replenishment puzzle together for the first time, rooting out manual processes as well as increasing the accuracy of calculating replenishment needs. This in turn lowers material-on-hand needs because all inventory levels are easily associated with current demand and assembly requirements without guesswork.
Added to other benefits such as eliminating manual data entry, manual card reading, lost kanban cards and replenishment delays associated with manual card handling, these newer systems are filling the gaps in early implementations. After years of automating some processes but not all, true integration of RFID, ERP and EDI is taking eKanban to a new level of lean.
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