MRP_II

Lecture 8
• MRP-II facilitators,
Just-In-Time Production system and Kanban.
Withdrawal Kanban(WK) and Production Ordering Kanban(POK)
Just-in Time production implementation and
Toyota production system.
• Elimination of wastages in Supply Chain Management
MRP I included the following three major functionalities:
• master production scheduling
• bill of materials
• inventory tracking

MRP II includes those three, plus the following:

• machine capacity scheduling
• demand forecasting
• quality assurance
• general accounting
 Success and Failure of MRP II Implementation
• The objectives are to reduce inventory holding cost by procuring sub-assemblies and
components just before they are needed, to improve customer service and plant
operating efficiency.
• The major players in the field of MRP II implementation are manufacturing companies,
hardware and software suppliers, and consultants.
• Ollie Wight’s plan for MRP II implementation, the ‘proven path’.
• The proven path constitutes a discrete set of activities which, the consultants argue, must
be achieved in sequence if MRP II is to be successfully implemented, within a specified 18-
month period.
• Key performance indicators:
• Inventory levels • Just-in-time
• Customer service • Management and total quality control
• Productivity
• Purchasing costs
Just-In-Time Production system
• JIT, inventory ordering process has been around since the 1970s.
• Much newer examples show how much more efficiently a business can run when it
adopts the practice of ordering what is needed only when it is needed.
• Companies that are successful in using just-in-time methods minimize inventory,
maximize efficiency, and increase profitability.

• The JIT inventory system is popular with small businesses and major corporations
because it provides more efficient use of working capital and enhances cash flow.
• Especially helpful to small businesses that are just starting out.
• It can reduce the amount of capital required to get the business up and running.
• Companies tie up less money in unused inventory and need less storage space.
• Obviously, using this sort of inventory method works only if a company has an
efficient inventory management system and reliable suppliers.
• Retailers, restaurants, on-demand publishing, tech manufacturing, and
automobile manufacturing are some examples of industries that have
benefited from just-in-time inventory.
Examples of the Just-In-Time (JIT) Inventory
Process Burger King
Apple Inc.
• Starting as Apple's chief operating officer (COO) in
1998, Cook pulled the company out of
manufacturing, closing Apple's warehouses and
factories around the world.
• He opted instead to establish just-in-time
relationships with independent manufacturing
contractors, many of them located in China where
labor and cost of goods were much cheaper.
• Cook's supply chain improvements reduced the
amount of time Apple's inventory sat on the
company's balance sheet, which went from
months to days.
• Cook credits these changes as a key factor in
Apple's growth and profitability.
• Burger King franchisers keep a substantial
inventory of hamburger ingredients on hand
all the time, but a hamburger is only cooked
when it is ordered. This saves waste and
gives the chain bragging rights for the
freshness of its food.
On-Demand Publishing
• On-demand publishing is a prime example of
the JIT inventory method, and it has become
popular with independent publishers and
self-publishing businesses. Master
manuscripts of books are kept on hand, but
texts are only printed and assembled as
needed when a retail sale is made. This
reduces book store returns and wasteful
pulping of unsold inventory.
Lean workflow management method

defining,
managing, and
improving services that
deliver knowledge work.

Helps to optimizes work delivery across multiple

• visualize work, teams and
• maximize efficiency, and handles most complex projects in a single
• improve continuously environment.

Became a territory claimed by Agile software development teams.

 Withdrawal Kanban(WK)
• A withdrawal Kanban is a Kanban card that highlights
the items or components that need to be moved.
• Withdrawal cards are also known as movement or
conveyance cards as they signify moving the card or
work task from one step to another.
• They can be used for both digital or physical products.
For example:
• If a company is creating blogs for their website, the
writing team will use a withdrawal card to share that
their blog is ready for review. On this cue, the editing
team will pick up the blog under review and start their
editing process on it.
• By using withdrawal cards, the team can also signal that
they have completed the assigned work and they are
ready to take on the subsequent work that needs to be
done.
Example of a supermarket
• A team is restocking the shelves after customers
have completed their purchases.
• List of information that a typical withdrawal card
used in supermarkets would have:
• Store shelf number – Highlighting where an
item needs to be placed
• Item number – The unique number of the
product unit
• Item name – The name of the product
• Description – A line that states more
information about the product, including best
before date for consumption
• Using withdrawal cards helps in knowing when
products are sold out, expired, or need to be
restocked.
 Production Ordering Kanban(POK)
• Production Kanban starts with a comprehensive list of all items that need to
be completed at a specific time.

• The work station provides a production card to an area in the facility

requesting the types of materials (or tasks) they need.

• The production Kanban card signals the production system to start,

explaining the quality and quantity of the things that need to be produced.
 Supplier Kanban
• The supplier Kanban card is an unusual type of Kanban that allows
companies to include suppliers as part of the system.
• That way, the supplier cards go out of the organization and straight to the
supplier, requesting a new batch of a specific item to be delivered.

• Streamlines the process by cutting out the long wait times necessary for
making a supply request.
• So, instead of sending a request to the procurement department and
waiting for them to pass on the request, teams can communicate with the
supplier directly and get the items and materials they need without further
delays.
 Emergency Kanban
• Emergency Kanban deals with an unexpected situation that needs immediate
attention.
• Emergency cards usually signal the need for replacement of a faulty or defective
part or a sudden change in the quantity of input (product) required.

• Used when a problem with a part or series of parts is discovered to signal the
team that was previously working on the items what kind of problem exists, so
they can make sure the rest of the items don’t have the same issue.
• If the problem is serious, the emergency card can even signal the whole team to
stop working so they don’t create a backup while the team dealing with the
problematic items can address the issue.
• That way, teams won’t generate waste, and the production will keep running
smoothly.
Express Kanban
• The express Kanban system also deals with situations that must be resolved
immediately. But unlike emergency cards which signal problems and defects,
express Kanban cards signal the shortage of a specific item.

Through Kanban
• The through Kanban system and Kanban cards are a combination between
production and withdrawal Kanban in situations where two different production
teams that work together are also physically close to each other.
• That way, instead of having the teams pass two different cards between each
other, one to signal the start of work, and the second that the next team is
ready to receive more work, the teams would use one through card to signal
both of there actions, accordingly. This saves time and makes work more
efficient. https://leanmanufacturingtools.org/kanban/
 When the upstream and downstream workstations are close to each other, so they can
share the same stock buffer.
When a B operator withdraws a container
from the buffer, he removes the POK from the
container and posts it on a board

A operator knows that one container with a

specific part-number must be replenished in
the stock buffer

outbound buffer inbound buffer

“Production Order Kanban”
One-card kanban system
(POK)
 Each workstation has separate inbound and outbound buffers
warehouse-keeper

replenishment

WK contains information on
quantity to be withdrawn

outbound buffer has a POK

Two-card kanban system work-in-progress (WIP) container has a WK attached

• Then, warehouse-keeper moves the corresponding quantity of the
indicated material from the A outbound to the B inbound buffer, while
exchanging the related POK with the WK on the container, restoring the
initial situation.
• Finally, he posts the left POK on the POK board. Hence, like in the
previous scenario, A workstation operator knows that one container of
that kind must be replenished in the outbound stock buffer.
 Just-in Time production implementation
TOYOTA
• No parts are included in the next node or station unless they are required to
in production process.
• Keeps the amount of inventory to a minimum which lowers costs.
• Allows to adapt quickly to customer’s demands,
• Significantly reducing risk of having excessive inventory at its disposal.
Apple has only one central warehouse in the US and about 150 key suppliers
worldwide; they developed strong and strategic relationships with their
vendors.
This outsourcing of production made Apple leaner and resulted in slashing
costs and reducing overstock.

With only one central warehouse in the US, most of their inventory is at their
retail stores.
Adding further to the JIT mix, Apple began to take advantage of
dropshipping.
As a result, this reduces shipping costs, wastage, and storage costs.
 Toyota production system
• The main objectives are to design out overburden (muri) and inconsistency (mura), and
to eliminate (muda).
•  Eight kinds of muda (waste)
• Transportation,
• Inventory,
• Motion,
• Waiting,
• Over-processing,
• Over-production,
• Defects, and
• Skills
• The TPS is a framework for conserving resources by eliminating waste.
• People who participate in the system learn to identify expenditures of material, effort
and time that do not generate value for customers and furthermore we have avoided a
'how-to' approach.
• Just-in-time – meaning "Making only what is needed, only when it is needed, and only
in the amount that is needed"
• Jidoka – (Autonomation) meaning "Automation with a human touch“

Continuous improvement
• Challenge (We form a long-term vision, meeting challenges with courage and creativity
to realize our dreams.)
• Kaizen (We improve our business operations continuously, always driving for innovation
and evolution.)
• Genchi Genbutsu (Go to the source to find the facts to make correct decisions.)
Respect for people
• Respect (We respect others, make every effort to understand each other, take
responsibility and do our best to build mutual trust.)
• Teamwork (We stimulate personal and professional growth, share the opportunities of
development and maximize individual and team performance.)
 Elimination of wastages in Supply Chain
Management
• By building checks and efficiency reporting into the core of your business
processes, you can:
• Eliminate waste and unnecessary rework.
• Establish ongoing cost savings.
• Ensure that no potential problem is overlooked for longer than it should
be.
• Empower employees to take greater responsibility and ownership of
their job.
Eight ways to eliminate waste from the supply chain
• Start at the end, with the customer
• Review production lines and administrative processes for unnecessary
procedures and rework
• Map communication channels to highlight breakdowns
• Review equipment and delivery policies
• Bring in suppliers and industry experts for a fresh perspective
• Review returns policy and handling
• Set up feedback loops and return for regular reviews
• Establish reports and tolerance levels to monitor future waste