From the Archives of a Common Sensei Volume 20: THE KANBAN CALCULATION

If your organization is beginning the “LEAN Journey” or if you are having difficulty executing your Kanban ordering, perhaps this blog volume 20 will help you. These formulas for “standard/ordering” and “inter-process” Kanban were derived from work we did at Toyota Industrial Equipment (TIEM) during the early days of the 1990’s, but may also be relevant in your organization. As you might suspect, the standard Kanban calculation formula is generally meant for external ordering, and the inter-process Kanban calculation is generally used only when material is transferred (moved) internally. When reviewing these formulas to be used as guides, I have presented the suggested formulas and considerations. These formulas have been used in a variety of JIT and Kanban driven environments since I left Toyota (TIEM) and have helped create enormous value in the form of: shorter order lead times, shorter processing time, less inventory expense, less handling, less space, better quality, lower engineering costs, less overall waste, lower financial costs, etc. for those who choose to take deployment seriously. The use of Kanban must be executed with high discipline! Anything less is likely to result in errors and shortages of supply. The implementation of Kanban alone in an organization is not likely to produce the intended benefits mentioned above! This is where the culture of many organizations MUST be tackled at the same time (as discussed in our previous blogs). Every associate must understand the seriousness of their actions and the consequences of not performing their role in the overall process.

True value creation requires that every associate understand their role in executing to plan AND perform that role as intended!

Max Allway

As has been stated in other articles/blogs, this example of methods used or previously used at a Toyota operation are only meant as examples for consideration in your organization.  Hopefully you will benefit from this and previous “ideas” we have included in our blog postings.

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From the Archives of a Common Sensei Volume 17: SUPPLIER RATING SYSTEM (example from early US Toyota Operation)

In this volume of From the Archives of a Common Sensei, we are providing an example of the “Supplier Rating System for Parts and Raw Materials”. This example provides a foundational, but beneficial, means for evaluating your suppliers by rating their performance against your expectations. At Toyota Industrial Equipment, in the early days (1994), we assessed supplier performance against the foundational classifications of quality, cost, and delivery. Within these categories, we used sub-categories to provide additional detail and validation. These in turn were rated using a 6 (exceptional) to 1 (unsatisfactory) scale. By using the calculations on page 2 through page 7 to provide data for each supplier delivery, you can transfer those points to page one to calculate the overall picture for that specific supplier’s delivery. By accumulating these ratings, they can be used as valuable input to future supply contract winner negotiations and determination. Couple this type of supplier rating with physical operations visits and financial review and you will have a surprisingly good view of how that supplier will perform in the future.

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