Extending the benefits of electronic kanban to closed orders
It is usual, even for companies that successfully use a kanban system, to keep receiving and managing closed orders, which usually come from MRP (Material Requirement Planning) software. Making kanban orders and closed orders coexist effectively, especially if they are made to the same supplier, allows for less onerous and faster management of your material flow.
If you use e-kanban software such as KanbanBOX you can handle both types of orders on the same platform and extend the benefits of kanban management to closed orders as well. The advantages we refer to are first and foremost those of traditional kanban, such as:
• Traceability of orders.
• Transparency and immediacy of information (visibility into the status of the warehouse and the entire materials restoration cycle).
To these advantages, we should also add the benefits that e-kanban software brings, leveraging its power to automate and analyze data:
• Real-time sharing of information even with external suppliers.
• Monitoring on consumption, inventory, own and suppliers’ lead times.
• Quick and accurate maintenance because suggested by the software.
The traditional management of closed orders
Closed orders usually come from the MRP and have the following characteristics:
• They do not repeat (this is the case with custom and tailored orders).
• Their consumption is irregular and unpredictable (it may be high at some time and at zero at others).
Based on a forecast calculation, the MRP calculates which and how many items you may need for the following months’ production. The MRP analyzes the orders received and a large amount of data (current stock level, production or purchase LTs, BOM…). Therefore, the MRP provides a detailed procurement plan that is predictive, and you can never be certain of its accuracy.
To avoid incurring constant adjustments, you could switch to mixed management, using the kanban system for everything that can be handled by this method. Kanban, by nature, is always tied to actual physical consumption.
How management changes by switching from MRP to kanban
With the kanban method, the consumption of a component (I used all the bolts in the box) triggers its restoration. There are no forecasts involved; once one item runs out, another one arrives. Thus, operators work without worrying about running out of parts, and the purchasing department does not have to play it by ear. Finally, the planner does not have to constantly readjust the MRP forecasts. The aforementioned problems are indeed among the major ones caused by MRP.
However, not all materials are suitable to be managed by the kanban method. To understand what can be managed by kanban, there is a very useful lean manufacturing tool: the ABC-RRS matrix.
This quantitative method combines two types of analysis: economic value assessment and usage frequency evaluation of the various components. By identifying the economic value of each component of yours and its frequency of use, you can decide what to handle with the kanban method and what to continue to handle with MRP. The choice will also depend on business strategies and should be discussed with your lean consultants, or internal lean managers. However, generally speaking, the cheapest and most frequently used materials (e.g., nails) are handled with the kanban method.
Managing closed orders and non-kanban orders with an electronic kanban
What to do, though, with single orders, or closed orders, i.e., non-kanban orders? Obviously, you don’t want to restore the components that you only needed for a closed order, and maybe no one will ask again. Here comes back the importance of being able to handle closed and kanban orders together. You could leave them on the MRP, but that would mean having two separate tools to control. Or, with e-kanban software like KanbanBOX you can view and handle all components on the same platform but differentiate the policies by which you manage them.
In some cases, it may be the vendor himself who suggests that you unify the way you work. Indeed, if it is working with you using different channels depending on the type of order it receives (e-kanban, MRP, offline e-mail exchange) it will be less efficient.
Managing spot orders with Synchro cards in KanbanBOX.
In KanbanBOX software, we have designed a feature to support companies that manage orders outside the kanban framework.
By using so-called Synchro cards, KanbanBOX can also handle orders which are exhausted in a single procurement cycle.
Thus, once the extra order is processed, the Synchro cards disappear from the board without triggering a new order.
MRP and Ekanban Integration
It is also possible to integrate KanbanBOX to any ERP. Thus, any new order will appear in the kanban board automatically. Once the supplier has restored the needed material, or the order has been fulfilled, the corresponding card will disappear from the board.
If you are interested, you can read more about how to integrate KanbanBOX with your ERP.