How Does This All Play Out?

It is a seemingly simple question, but one that is not asked as often as it should be. It challenges managers to consider the responses of other stakeholders and think beyond immediate consequences. It checks their “bias for action,” and makes them take a pause to think farther than one move ahead.

If you outsource an item, for example, will the new supplier eventually morph into a competitor? What know-how might you lose? How will it affect employee morale? Are you putting your quality reputation at risk?  The question is an invitation to work through multiple scenarios of responses by your suppliers, your work force, and your customers, reaching into the future.

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The Truth About Kanban | Bill Waddell

Bill Waddell, intellectual sparring partner for almost 20 years now, has put out this video revealing “The Truth About Kanban”:

Michel Baudin‘s comments:

This video is just Bill’s talking head against the background of a brick fireplace with a few books on top, notably “Toyota Kata.” It contains no moving pictures of Kanbans in action and all you learn from viewing is in Bill’s words, and I have a few quibbles with these words.

I usually get impatient with this kind of video, because voice is a slow medium, and you would get the same information five times faster reading the transcript. But I have never met Bill in the flesh, and I was curious to hear his voice. It’s a good radio voice, albeit curmudgeonly, reminiscent of a younger Tommy Lee Jones.

Now, about the content, Bill makes three main points:

  1. What you use for a pull signal doesn’t matter.
  2. You can use Kanbans with long lead time items.
  3. The Kanban system is a mechanism to drive improvement.

I agree with Point 3, but find Points 1 and 2 problematic.

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A summary of mistakes about Lean

In an invitation to the Lean Enterprise Academy ‘s Lean Summit 2014, David Brunt included the following summary of Lean since 1990:

“Early implementations focused on empowered teams and continuous improvement (kaizen) or attempts to replicate a pre-defined box of tools such as 5S, SMED, SPC and kanban. For others lean became synonymous with kaizen events – that were actually kaikaku – radically reconfiguring individual operations. For some, this led to them developing their version of Toyota’s famed Production System (TPS) including their own schematic ‘house’ or ‘temple’ of lean along with departments of continuous improvement specialists.”

It is a pretty accurate account of what happened — the only major omission being the omnipresent VSMs — and it goes a long way towards explaining why the vast majority of these efforts failed. They were limited at best to superficial details of TPS, included elements that were not part of TPS, and misjudged implementation priorities. Let’s us go through the list:

  1. “Empowered teams.”  As a manager you have a team to work with. What decisions should you allow this team to make on its own? This is best subjected to the sleep-at-night test. Knowing that you are responsible for the outcome, what can you delegate to the team and still sleep at night? It obviously depends on the team. If it is a team of production operators with 10 years of TPS practice behind it, the answer will not be the same as if they are beginners. Implementations that start with empowering teams put the cart before the horse.
  2. “Continuous improvement (kaizen).” Lean, or TPS, are often described as approaches to continuous improvement (CI), when CI is in fact only one component of the system. You cannot convert a plant from mass production to Lean manufacturing by continuous improvement, because it is not about tweaking details. For example, if you have implemented cells in machining or assembly, you can make them perform better with CI, but you have to have cells first, and that is beyond the scope of CI.
  3. “Replicate a pre-defined box of tools.” It can work, if your situation is sufficiently similar to the one you are copying, you really know what the tools are, and you master them.
    • SMED and Kanban are tools of TPS but often misunderstood. For example, you often see SMED used to try to increase equipment utilization instead of flexibility, and Kanban is often confused with the two-bin system or even reorder-point.
    • SPC is not part of TPS. This is so shocking to American and European professionals trained by the Quality establishment that they just inserted it back in, regardless of what Toyota actually did. The latest examples of SPC control charts at Toyota are from the 1950s.
    • 5S is part of TPS, but is mistakenly assumed easy to implement because its technical content is trivial. In fact, the absence of technical content is what makes it difficult to implement and certainly unfit for an initial project.
  4. “Kaizen events” are an American invention and not part of TPS. As Brunt points out, the name is misleading, because what they do is not Kaizen. The popularity of this method over the past 25 years and the confusion created by the name have in effect prevented Lean implementation from including the real Kaizen.
  5. “Departments of continuous improvement specialists.” The creation of these departments has often made Lean implementation into a function alongside Production Control, Maintenance, or Quality Assurance, with the result of making it a professional specialty instead of part of everybody’s job. It works to make a good show for outside visitors, but not for much else. This department cannot be large enough to have the capacity to do all that needs to be done. Even if it did, it does not have the authority to make the changes take root in daily operations.

These efforts failed because the approach was simplistic. Both the technical and managerial content of TPS are deeper and take a while to learn. A successful implementation, particularly is a different industry, is not based on copying tools but on understanding underlying principles and deploying them as appropriate to the new context.

40 Years on, the Barcode Has Turned Everything Into Information | Wired

“Without the barcode, FedEx couldn’t guarantee overnight delivery. The just-in-time supply chain logistics that allow Walmart to keep prices low would not exist, and neither would big-box stores. Toyota’s revolutionary kanban manufacturing system depends on barcodes. From boarding passes to hospital patients, rental cars to nuclear waste, barcodes have reduced friction like few other technologies in the world’s slide toward globalization.”



Michel Baudin‘s comments:

While this article exaggerates a bit, the fact is that the bar code is the first successful auto-ID technology, so successful in fact that more advanced technologies, like RFID or even QR-codes, have yet to displace it. There are barcodes on Kanbans, but you really cannot say that the system depends on them, because Kanbans were used early on without barcodes more than two decades.

The 40th anniversary of the barcode is an opportunity to remember, or learn, who invented it and why. This article does not credit the actual inventors, Norman Woodland and Bernard Silver, who patented it in 1952, but only supermarket executive Alan Haberman, who made its use practical to improve inventory tracking and speed up checkout. In 1974 he led an industry committee to adopt the barcode as a vehicle to implement a Universal Product Code or UPC. It is as much the story of the emergence of a standard as a story of technology.

In Manufacturing, barcodes are used almost everywhere to identify warehouse locations and stock keeping units, to validate picks, and to track component serial numbers. While celebrating the success and the usefulness of this technology, we should, however, remain aware of its limitations. Even in supermarkets, barcode reading remains a largely manual process. A human still has to wave around small items in front of a reader, or a reading gun in front of large items, and it often takes multiple attempts before you hear the beep confirming a successful read.

Fully automatic barcode reading is occasionally found in manufacturing operations where the environment is clean, with good lighting, high contrast, and a controlled orientation. QR codes are less demanding. They can be, for example, etched on the surface of a metal workpiece, and read inside the work enclosure of a machine-tool.

RFID tags hold the promise of full automatic reading at a distance. It has made them successful in public transportation passes like the Octopus card in Hong Kong or the Navigo card in Paris, as well as in electronic toll collection in the Fastrak system in California.

Barcodes are also limited to IDs and cannot be updated. As a consequence, they have to be used in the context of an information system that contains all the data keyed on the ID, which can be “the cloud” in a supply chain, or a local manufacturing execution system in a factory. By contrast, a high-end RFID tag can locally contain the entire bill of materials of a product moving down an assembly line, its current location in the process, and any measurements that may have been made on it at earlier operations. For a finished product, it can contain the entire maintenance history of a unit.


What’s eating John Seddon?

I want you to cheatBack in 1992, Seddon published “I want you to cheat,” as a distillation of then seven years of consulting experience with service organizations in Britain. It contains some general principles, supported by examples. It is quite readable, and contains no personal attacks on anyone. While “I want you to cheat” does not reference any giant on whose shoulder the author sits, more recent publications from Seddon repeatedly acknowledge Deming and Ohno.

It was his comment that “This respect for people stuff is horseshit” at a conference in Iceland in 2012 that drew my attention to his work. While certainly aggressive, it was not a personal attack. The latest kerfuffle is about the following statements in his 11/2013 newsletter:

“Every time I have been to the jamboree they have had an American lean guru spouting nonsense and this is no exception. This time it’s the guru who claims lean fails because it is what he calls ‘fake lean’ and his lean is the way to go! His ‘real lean’ starts with ‘respect for people’. I can imagine ‘respect for people’ events and tee-shirts (he sells tee shirts) while there is no change to the system conditions that drive misery and other forms of sub-optimisation. Only in America; the home of the terrible diseases.

What would you call a profound idea in this guru’s head? A tourist!”

bob emiliani

Bob Emiliani

The target of this attack, although unnamed, recognized himself. It’s Bob Emiliani, and he posted a response on his blog, entitled Kudos to John Seddon.  Bill Waddell then chimed in with John Seddon – Where Ignorance and Arrogance Collide. To Bob, Seddon is like a student who did not understand the concept of “respect for people,” while Bill dismisses Seddon as a blowhard from a backward little country who has failed to understand the depth and the subtlety of the US version of Lean.

Bill Waddelll

Bill Waddell

There is a good reason while the etiquette of on-line discussion groups forbids personal attacks: they cause discussions to degenerate into trash talk and name calling. It may be briefly entertaining, but quickly turns off readers who don’t have a dog in these fights and just want to information. Besides insulting Bob Emiliani, Seddon has steamed up patriot Bill Waddell with derogatory comments about America. You reap what you sow.

I have, however, heard comments that were as strident as Seddon’s from other consultants, from Japan. They were equally dismissive of US Lean, of American management in general, and even the country as a whole. This was usually, but not always, in private communications rather than in publications. These “insultants,” however, often got away with it, with audiences looking past the invective for useful ideas, and I think it is the appropriate response. Ignore the rant and engage on substance. If some is offered, you will be better off for it.

It is also worth pondering why people feel compelled to act this way. For John Seddon, I don’t know; I am not privy to his thoughts, but I can guess. We should remember that, in the market of ideas, we in the US have a worldwide home court advantage. Ideas command more attention and are more credible simply because of the “Made in America” label.

Lean is the most ironic example. The Toyota Production System did not come out of the US, yet the worldwide internet chatter and consulting business about it is dominated by a US version known as “Lean,” which is as faithful to the original as Disney’s Aladdin and The Hunchback of Notre Dame are to Arabian Nights and Victor Hugo’s novel. Borrowing, metabolizing and even distorting ideas from other cultures is done everywhere, and is to be expected; what is special about the US is that the American version radiates back to the world and overwhelms the original.

Last year, the Olympics opening ceremony in London reminded the world where the industrial revolution began. For more than a century, the world looked to Britain as a model for politics, economics, and manufacturing, but these days are gone, and for an idea to come from Britain is now a handicap rather than a credibility enhancer.

John Seddon happens to be British. For 28 years, he has been making a living as a consultant to service organizations in the public and private sector and, as anyone with this kind of experience would, he has developed an approach to doing it. We may or may not agree with it, but it deserves a respectful hearing. What I read into Seddon’s current stridency is that he has not been getting it. I think he is turning up the volume to prevent his voice being drowned out in the Lean tsunami coming out of the US.

Seddon dismisses Lean consultants as “tool heads.” I like tools. I use tools all the time, both in private and professional life. But I don’t use them indiscriminately. Following are three questions about a tool, that I would not ask about a hammer or a phone, but would about, say, Kanban or SMED:

1.    Who invented this tool?
2.    What problem was he/she trying to solve?
3.    Do I have that problem?

They strike me as a reasonable way to decide whether to apply it or not. And where did I find these questions? On John Seddon’s website. I think I will use them with clients.


Manufacturing Wordsmanship

What you choose to call objects, ideas, positions, methods, tools, etc., makes a difference in your ability to lead and change the way your organization works. Engineers often believe that it makes no difference what words you use as long as what you do works; marketers know better. They know that “sushi” sells better than “raw fish,” “Lean” better than “TPS,” and “Black Belt” better than “Staff Statistician.” The “Toyota Way” or the “Toyota Production System” sound like appealing approaches; “toyotism,” like yet another plot to enslave workers. Words matter; they engage, motivate, and inspire, or they confuse, offend, and alienate. Following are a few thoughts on Manufacturing Wordsmanship, the art of naming manufacturing improvement tools and concepts:

The contrary body of opinion

In the TPS Principles and Practices discussion group, Dermot Freeman‘s summarized the engineering perception as follows: “Our (insert customers or clients or bosses or colleagues – whichever is appropriate for you) don’t really care what the tools or methods are called as long as they achieve the correct result.” Further in the same thread, Sid Joynson quoted the taoist philosopher Zhuangzi (莊子, 389-286 BCE), as saying:



“The fish trap exists because of the fish. Once you’ve gotten the fish you can forget the trap. The rabbit snare exists because of the rabbit. Once you’ve gotten the rabbit, you can forget the snare. Words exist because of meaning. Once you’ve gotten the meaning, you can forget the words. Where can I find a man who has forgotten words so I can talk with him?”

Sid also quoted Fen Yang, a follower of Zhuangzi 1200 years later, known in Japan as Zen Buddhism founder Funyo Zensho (汾陽善昭, 947-1024 CE) :

“When you are deluded (don’t understand) a thousand books are not enough. But when you have realised understanding, one word is too much.”

Attractive though these  pronouncements may seem, in manufacturing, we not only keep the trap, the snare, and the words, but also their models, revision and serial numbers… It is not a world where understanding exists independently of language. Understanding in manufacturing is not a matter of feeling or enlightenment, but of using words, drawings and numbers to turn materials into products with machines and tools. In Training Within Industry (TWI), the system developed in the US during World War II and later adopted by Toyota, being able to do a job is not enough. To be certified as proficient in it, you must also explain it step by step in words. If you have been doing the same repetitive work for a while, you certainly forget the words and go on automatic. But you have to pay close attention to the words to respond to changes that occur, for example when improving an operation, implementing engineering revisions in the product or process, or making custom-configured products.

How terms are used

An effective term serves not only to communicate with others, but also in your own mind as an address in memory to which you attach everything you learn about an object. If you have a name for it, you will notice it when you see it, and you will remember its characteristics. When you learn a new word in a foreign language, you suddenly start hearing native speakers use it in a variety of contexts. Knowing that this object on the shop floor is called a “broaching machine” lets you attach the broaching process, tools, times, and quality issues to this name and remember them. Conversely, terms that are difficult to remember, ambiguous, offensive, or inconsistently used —  or sound too much like other terms — sow confusion and impair both communication and learning. What you are trying to achieve on a manufacturing shop floor is free and open communication. Mutual understanding is the primary goal. While a challenge, it is an easier one than the restricted or confidential communication characteristic of many other activities. There, in addition to encoding and decoding for electronic communications you still use code words, cant, or jargon to confuse unintended audiences when speaking to someone next to you.

Methods of word formation

Different objectives call for different methods in choosing your words. As an example, I am going to focus on the vocabulary used in Japanese for the Toyota Production System (TPS), and its translation into English. To get the translations right, we need words that not only mean the same but resonate with local manufacturing people as well as the TPS terms do in Japanese. The worst we can do in translating TPS is over-intellectualize it. In the US, factory people rarely read the Harvard Business Review.  We should not translate  TPS terms into words that would fit in this journal. The TPS vocabulary doesn’t include entropyDNA, or Value Stream.

Borrowing from everyday life

"Wagon" or "Pirate ship"

“Wagon” or “Pirate ship”



To communicate with auto workers, TPS uses concrete words, and sometimes imagery like “spaceships” (宇宙船) and “pirate ships” for different types of fixtures. “Spaceships” hover over workstations, providing tools that hang over it; “pirate ships” are level with the work station and “board” it on its side, moving through the station along with the assembly line. These words are borrowed from everyday language. Kanbans are the shingles stores put out in the street. Andons are lanterns. That “Kanban” is borrowed from shop signs may not make it easier to understand how the system works, but it is a revealing choice in word formation: grab a word from common, everyday language and extend its meaning in a way that sort of makes sense to the people who are expected to use it.

Toyota raku-raku seat

Raku-raku seat

On its own website, Toyota gives “ergonomic seat” as translation for the raku-raku seat (楽々シート). The meaning is accurate, but the connotation different. “Ergonomics” is a word made up from Greek roots; “raku-raku,” in Japanese, is colloquial. Its connotation would have been better rendered by “easy seat” or “comfy seat.”

When borrowing a word to give it a new meaning, make sure it comes from a domain that is sufficiently different to avoid ambiguity and confusion. No one will confuse a Kanban used in production with a shop sign on the street. On the other hand, calling a shelf on which you store parts a “Kanban” creates confusion, because it is like using the same word for a theater ticket and for the seat it is for. You can contrast this with importing foreign words, using acronyms or mashing together Greek and Latin roots. Acronyms are the way to go if you want to create a code that excludes the uninitiated. Foreign words work that way too, but not with native speakers of these foreign words.

Borrowing foreign words

TPS also borrowed words that are foreign to Japan, such as:

  1. “Takt,” which is the German word for a musical bar, strokes in car engine or, as David Anderson noted, a regular interval between trains. Takt in German
  2. Phrases built from foreign words, like “just-in-time.”
  3. Acronyms built from oddly used foreign words, like “SMED.” I don’t recall a native speaker of English referring to an interval of less than 10 minutes as “Single Minutes.” In addition “Exchange of Dies” is wording that is specific to stamping presses, for which the method was originally developed, but you apply SMED to many machines that don’t use dies.

Combining roots from dead languages

European scientists mashed together roots from Greek and Latin to concoct new words like “entropy” or “isotope” for Greek and “tyrannosaurus rex” for Latin. Sometimes, they even mixed both Greek and Latin in words like “television” or “heterosexual.” Why didn’t they choose words from their own vernaculars? Today, using Greek and Latin roots shows off your classical education and excludes those who haven’t had one…. It is difficult to imagine another reason to refer to a periodic maintenance task as being “isochronal” in the US today. 200 years ago, a European scientist pushing the use of his own language would have been in trouble with foreign peers. Drawing on dead languages that scientists from Italy to Sweden and Portugal to Russia had studied as kids was a safe way to avoid any appearance of cultural arrogance. In Japan, the equivalent of Greek and Latin roots is Chinese roots, and the Japanese have been at it for 1,500 years, thus creating almost half of their vocabulary. In TPS, this has given us words like Heijunka, Jidoka, or Jishuken. Jidoka (自働化) is a case in point, because the Toyota version sounds exactly like the standard word for automation (自動化), but differing by two strokes added to the middle character, changing it from 動 for “moving” to 働 for “working,” the two strokes added being the radical for human (人). This is as brilliant as it is untranslatable.

CHAdeMO charger in action

CHAdeMO charger in action

In Japan, as in the US and Europe, this mode of word formation is perceived as solemn, official, and old-fashioned. It is still done, but not by anyone who wants to be cool. Combining fragments of English words, as in the “CHAdeMO” charging stations for electric cars, is cool. “CHA” is for “charge,” “MO” for “motion,” and the “de” is there to make the whole word sound like a fragment of a Japanese sentence for offering tea. I don’t know of any such words in the TPS lexicon, where coolness is not pursued.

Creating acronyms

Acronyms in everyday use include OK, laser, snafu, or flak; in manufacturing, JIT, WIP,  SMED, TQC and TPM. They are prized as convenient abbreviations but, unlike everyday words used metaphorically, they hurt communication by having no connection with their meaning. Too many sprinkled in a document or speech can make it unintelligible. It is striking how people qualify acronyms to reconnect them with meaning. Instead of “ATM,” they will say “ATM Machine,” even though the “M” in “ATM” already stands for “Machine.” Likewise, in Manufacturing, you hear of “MES Systems,” where the “S” in “MES” already stands for “System.” Acronyms work best when built from words that provide a clear and accurate definition, as is the case, for example with WIP. When creating acronyms, you should also be careful to avoid the following:

  • Acronyms that are jokes or can embarrass people in any of the languages used in your company. The “Project Information System” (PIS) was unfortunate, and so are the “Semiconductor Equipment Communication Standards” (SECS).
  • Acronyms in which some letters stand for another acronym. They just take too long to decypher.
  • Acronyms that are an exact match to an existing word. It is a good idea to make acronyms pronounceable, but an exact match with an existing word creates confusion, particularly in Google searches.
  • Acronyms that already exist with a different meaning.  It is particularly confusing when it is in the same context. In one plant, for example, successive inspection was called “Touch Quality Control,” abbreviated TQC, which outsiders understood to mean “Total Quality Control.”  Even when used in different contexts, search problems still occur. “5S,” for example brings up not only items about visual management in factories, but about 5-year old children in kindergartens and about the latest version of the iPhone.

Sometimes acronyms are used as mnemonics rather than abbreviations. TIMWOOD, for example, is a way to remember Ohno’s list of waste categories. It stands for “Transportation, Inventory,Motion, Waiting, Overproduction, Overprocessing, and Defects.” Acronyms are sometimes used to deliberately exclude the uninitiated. When Gus Pagonis, the general in charge of logistics for the first Gulf War, on p, 90 of his book Moving Mountains, discusses the Time-Phased Force Deployment List or TPFDL, pronounced “tipfiddle,” the purpose of using this term is obviously not to be universally understood.

Naming things after people

I can’t think of any TPS concepts that are named after people. On this subject, Frederick Stimson Harriman wrote the following:

“The Japanese practitioners that I know won’t even call a Gantt Chart a Gantt Chart. I have often heard Japanese call Gantt Charts 予定表 YOTEIHYOU (“schedule” or “plan”). What is called a “Pareto Chart” in the US among TPS/Lean practitioners is often called simply バーチャート BAA CHAATO “bar chart.” What many people call an “Ishikawa Diagram” is often referred to in Japanese as 特性要因図 TOK– USEI YOUIN-ZU literally “characteristic factor diagram” but “cause and effect diagram” is not an inaccurate translation. The Consultants I have worked with expect it to be translated either as “fishbone diagram” or “cause and effect diagram.” Of course these are all tools that are not specific to TPS, but are often used by practitioners in problem solving, etc. From my experience, Japanese have a general aversion to naming things after people. Note that Americans have no trouble immortalizing Gantt, Pareto, and Ishikawa, and it seems to be something that Japanese feel more comfortable avoiding. Even the name Toyota of “Toyota Production System” is for the company and not the family, which continues to pronounce its name ‘Toyoda.'”

This comment about the Japanese not naming things after people, besides being a challenge to find exceptions, raises the question of whether it is a good practice. Many Japanese companies are named after founders, like Matsushita or Honda. 20 years ago, a Japanese colleague of mine used a system of stickers to make flow charts that was called, as I recall, the Kitagawa method; my son took violin lessons on the Suzuki method; Norman Bodek is promoting  the Harada method; and, like everywhere else, Japanese scientific discoveries and theories are named after the researchers who are credited for making them, like the Ito integral.  But none of that is TPS. Generally, we can think of several good reasons to name things after people:

  1. It is gratifying to have people use something you invented and call it by your name.
  2. It tells everyone in the organization that they have a chance at immortality.
  3. It connects the thing with the context in which it was invented.

But there are downsides as well:

  1. A person’s name tells you nothing about what the idea is or what the thing does. “Pressure cooker” or “schedule chart” does.
  2. Individual recognition can create jealousy and conflicts about attribution, which discourages teamwork.
  3. People’s names are not always easy to pronounce.

Gantt charts were actually invented by Karol Adamiecki in Poland a few years ahead of Henry Gantt. Adamiecki called them “harmonograms.” So why do we call them “Gantt charts” and not “Adamiecki Harmonograms”? Who has time for eight syllables when two will do, especially when they roll off the tongue like “Gantt Chart”? Adamiecki may have been first, but he had the wrong name.

Par Versus Kanban: Managing Variable Usage | Lean Hospital Group

See on Scoop.itlean manufacturing
The great majority of hospitals in the United States manage hospital supplies using what is called the Par Level method. One of the strengths of this method, it is claimed, is that it works well in the face of variable usage.



Michel Baudin‘s insight:

If you have always wanted to know how hospitals managed their inventory of medicines, the article will both tell you the traditional method they have been using, and how the Kanban system can outperform it.

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How do I analyze historical consumption for 13,000 items?

Supply chain consultant Hadas Gur asked the following question:

I have data of demands for 13000 SKUs (consumptions from the last 5 years). 6000 of the observations are zeros.  I can’t recognize the distribution of the data . I have tried the q-q plot to find a match to any known distribution. What can I do in this case if I want to find the reorder point? Is it ok to use the reorder point formula which is in your post “Safety Stocks : Beware of Formulas” even though the distribution is not normal?

You do not give a context. Are those SKUs components supplied to a manufacturing company or retail items on supermarket shelves? The demand patterns may be radically different. In retail, for example, the demand for milk is the sum of the quantities bought by a large number of individual consumers acting independently, and the normal distribution is a likely fit. On the other hand, if you are supplying a model-specific part to a car manufacturer, it is unlikely to fit.

Do not try to apply the same approach to all 13,000 SKUs! For example, reorder point makes no senses for the 6,000 items that have had no demand in the past 5 years. You would want to investigate whether they should still be in the catalog and, if so, they are strangers and you need to organize to make or buy them when an order arrives.

For the others, I would suggest you explore the data rather than focus on fitting a distribution, starting with a Runner/Repeater/Stranger analysis. Then, starting with runners, investigate trends and seasonal variations. For repeaters, I would investigate ways to group them into families that make sense for what you are trying to do.

Do not use only the data. In order to understand what is possible, you need to visit the warehouses or distribution centers and understand how physical distribution distribution is organized, and the people involved.

Then consider a range of approaches for different items and item families, including just-in-sequence, Kanban, two-bin, reorder point, vendor-managed inventory, consignment, etc.  Examine how these approaches would have performed with the consumption pattern of the last 5 years. You can also simulate future demand.

Flow improvements called “5S” at Avanzar | Jeffrey Liker

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“Recently I revisited Avanzar, Toyota’s interior and seating supplier for their San Antonio, Texas truck plant.  Most major suppliers are on-site delivering directly to the factory which in the case of seat assembly is right across a wall. Avanzar’s CEO, Heriberto (Berto) Guerra, was very excited about their Japanese advisor, formerly of Toyota, and all he had been teaching them about real kanban.  I had visited a year earlier and Mr. Guerra was very excited about their Japanese advisor, formerly of Toyota, who was teaching them kanban. A year before that, he said they were making progress in a few model areas and now there was kanban everywhere. Mr. Guerra also raved about the way their advisor was teaching them 5S, which again I found confusing.”

Michel Baudin‘s insight:

A well-documented case of Lean implementation at a just-in-sequence supplier ot seats to Toyota’s plant in San Antonio, TX. An oddity of this case  is that they lump under the “5S” label all sorts of changes that are well beyond it, such as redesigning part presentation at assembly to make frequently used items easily accessible, or kitting parts.

Of course, as long as it works for them, they can call it whatever they want. For communication with the rest of us, however, as Jeffrey found, it is confusing.

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Is the Kanban system to ensure availability of materials or to reduce inventory?

Pranay Nikam, from VCT Consulting India, asked the following question:

“I have designed and implemented the Kanban System at various type of industries. The challenge I face now is not that of explaining people how the system is designed or how it works. But rather clearing the misconception/misunderstandings key industry people have about Kanban.

My understanding of a Kanban System is ‘A Consumption based replenishment system’ with Multiple Re-Order Point (multiple Bins) as opposed to the traditional Two Bin System. In simpler words you keep enough stock to cover for the total lead time and add a buffer for demand variation and supply failures. And keep replenishing the stock as and when you consumes. The replenishment can be through fresh production or withdrawal from Warehouses or procurement from supplier.

Prime objective of the Kanban System is material availability to enable High Mix and low volume production; ultimately to support production levelling instead of running huge batches.

However, some Lean Consultants propagate Kanban as a inventory reduction tool and nothing more than a material scheduling software that can be configured in any ERP Systems.

I would be happy be receive your comments on the two different perspectives.”

The Kanban system has many variants, discussed in Chapters 10 to 13 of Lean Logistics. All these variants, however, have the following characteristics in common:

  1. They implicitly assume the demand for an item in the immediate future to match the recent past. It is a naive forecast, but hard to beat on intervals that are negligible with respect to what Charlie Fine calls the clockspeed of the business. And the fluctuations are smoothed by leveling/heijunka.
  2. They use some form of tokens to signal demand. Whether these tokens are cards or electronic messages, they can be detached from bins and parts and processed separately, in ways that are not possible, for example, in the two-bin system.
  3. There is a fixed number of tokens in circulation for each item, which is a key control mechanism for the supply of this item.
  4. The protocols for handling these tokens provide unambiguous directions on what should be done. No human judgement call is required to decide which item to move or produce. There are variations where that is not the case, like the French Kanban, which, for this reason, I don’t consider genuine.

The Kanban system  is not just a multiple-bin system, because bins are not used as pull signals. The Kanbans are pulled from bins when you start withdrawing parts from it, which you couldn’t do if the bin itself were used as a signal. If the signals are cards, you can organize them in post-office slots or on boards, which you also couldn’t do with bins. And, of course, you can do much more with electronic signals, which does not necessarily mean you should.

Your description of Kanban omits the goal of keeping inventory as low as you can without causing shortages, and experimenting with the numbers of Kanbans in circulation to test where the limit is, which makes it a tool to drive improvement.

Kanbans work for items consumed in quantities that have small fluctuations around a mean, which means medium-volume/medium mix rather than low-volume/high mix. You use other methods for different demand patterns, like reorder point for bulk supplies, consignment for standard nuts, bolts and washers, or just-in-sequence for option-specific large items… In low-volume/high-mix production you have many items that you cannot afford to keep around and only order from your supplier when you have an order from your customer; it isn’t the way the Kanban system works.

You can do many things with ERP systems but, historically, they have been more effective in managing purchase orders with suppliers than in directing shop floor operations. If you have an ERP system with accurate, detailed data about your shop floor, you can, in principle apply any algorithm you want to produce a schedule. Most ERP systems, however, do not even have structures in their databases to model the behavior of production equipment at a sufficient level of detail, and are not capable of producing actionable schedules. They print recommendations, and the final decision on the work that is actually done is a judgement call by the supervisor, or even sometimes the operator. Within its range of applicability, the Kanban system avoids this with simple rules, by focusing on what is actually observable and controllable at the local level.

So, I suppose the answer to your question is that the Kanban system’s immediate purpose in daily operations  is to assure the availability of materials while reducing inventory, with the longer-term purpose of driving improvement. Pursuing either of these goals at the expense of the other would be easier but not helpful to the business.