Explaining SAP KANBAN

The lean supply of material to the line with SAP Kanban is highly automated and offers various replenishment strategies: In-house production, external procurement, or stock transfer.

With Kanban, material is staged where it is used (for example, at the work centers in production) and is always available in small material buffers. The material flow is organized by using containers circulating between demand and supply source. Material staging does not need to be planned, instead, material that is consumed is replenished immediately (pull principle).

Each box contains the quantity of material that work center personnel need for a certain period of time. As soon as a container is emptied at the demand source, replenishment is initiated in Kanban. The supply source for the required material can be another place in production, an external vendor, or a warehouse. The operator at the demand source can use material from other containers until the requested container returns filled.

The aim is to control the replenishment process in production or warehousing itself and to reduce the manual posting efforts for personnel as much as possible. This self-management process and the fact that replenishment elements are created close to the time they are actually consumed means that stocks are reduced, and lead times are shortened (replenishment is only triggered when a material is actually required and not before).

Often, the difficulty with Kanban is not controlling the production process but fulfilling the prerequisites for using Kanban. In some cases, the prerequisites can only be fulfilled for certain subareas of production.

To use Kanban effectively, a number of conditions must be met:

• The supply source must be in a position to deliver the material quickly and in small lots. This requires that setup times be short and that capacity and components be available.
• Consumption of parts controlled by Kanban should be relatively stable in the replenishment lead time for a container. If large quantities of a material are required for a certain period, and then the material is not required at all for a certain period, a large number of Kanban containers are required to guarantee material availability. This means that relatively high inventory levels exist when the material is not required.
• Materials must not be produced in advance, since this involves unnecessary procurement and storage.

Basic master data object in SAP Kanban are the following:

• Production supply area
• Control cycle (will be described in the next step)

An existing production supply area is a prerequisite for creating a control cycle. With Kanban, material is staged in specific areas directly in production, known as supply areas. A supply area can be used by one or more work centers. The supply areas act as a buffer for the required materials, for example, on shelves or in marked-out areas on the floor.

The supply area is assigned the following objects in the system:

• Storage Location
• Person responsible
• Unloading point
• Delivery address

With SAP Kanban, you can apply the standard SAP processes for in-house production, external procurement, and stock transfer, where replenishment is triggered by creating the respective objects in the system.

• In-House Production: Repetitive manufacturing with or without MRP (planned order), discrete manufacturing with or without MRP (production order)
• External Procurement: Purchase order, scheduling line, transfer order, transfer scheduling agreement, Kanban summarized JIT call (with MRP forecast)
• Stock Transfer: Reservation (IM controlled warehouse), warehouse tasks (WM controlled warehouse)

To control the relationship between supply and demand source for a material, you define a control cycle. The most important objects and parameters for a Kanban control cycle are as follows:

• Demand source: this is the production supply area
• Replenishment strategy
• Supply source
• Number of containers
• Container quantity
• Delivery address
• Print parameters
• Parameters for the automatic Kanban calculation

A Kanban container is the link to a concrete replenishment object and contains information about its current status. The course of Kanban processing is controlled and made visible through setting the Kanban containers to the appropriate status. Kanban container details are, in general, set by the system, based on the Kanban control cycle master data.

The progress of production in Kanban is controlled by setting the Kanban container to the appropriate status. Usually, only the Empty and Full statuses are used. If the demand source is set to Empty, the system creates a replenishment element, instructing the material supply source to deliver.

All Kanban operations, such as material receipts or material consumption are represented by status changes. If a Kanban container is empty, the employee in production sets the status of the Kanban container to Empty. This Kanban container status usually automatically triggers replenishment, that is, the supply source receives the signal to refill the Kanban container. When the replenished Kanban container returns to the demand source, the employee at the demand source sets the Kanban container to status Full. These two statuses are generally sufficient to control the material flow in Kanban production control.

With the Kanban signal, the status of a Kanban container is changed when the activities associated with the status change are carried out.

The status change can be triggered in the following ways:

• You can explicitly change the Kanban container status, for example, to Empty or Full.
• You can withdraw quantity from a Kanban container. The Kanban signal is triggered as soon as the trigger quantity is reached, or when the whole quantity has been withdrawn from the Kanban container.

• Lean Manufacturing Monitoring Tool:

  The Kanban board is the main tool for monitoring circulating Kanban containers in the lean manufacturing environment. The production planner or production supervisor can see the actual situation on the Kanban board either at the lean workplace, or remotely at the desk. The Kanban board also eases communication, for example, between production operator and production supervisor. The users can personalize the view according to their needs by defining filters and characteristics which are displayed on the Kanban board.

• Support of Ad Hoc Analysis:

  The Kanban containers are displayed in colors representing their status. Symbols indicate further details, for example, if a Kanban container is locked. Because humans are eye-minded, the production planner or production supervisor understands immediately the current Kanban situation. For further Analysis, the user can drilldown into Kanban container details and check the documents which have been generated by the system in the background and which are assigned to the Kanban container.

• Visual Alerting and Issue Solving:

  Following the Jidoka principle, that is, automatic detection of errors during production and stopping work to solve the error early, the Kanban board displays Kanban containers in error with a special color. The production supervisor can quickly identify and eliminate errors. On the Kanban board, the user can see what error has occurred when displaying the details of a Kanban container.

• Immediate Actions from the Kanban Board:

  In the case of situations when the production supervisor needs to act at an operational level, the Kanban board can be used to execute immediate actions such as changing the Kanban container status or creating new event-driven Kanban containers to trigger the Kanban signal. For example, for a new and released Kanban control cycle, a change of Kanban container status from Waiting to Empty can be executed directly on the Kanban board. Typically, this is an exceptional case. Usually the Go Gemba principle is supported by the SAP Fiori Set Kanban Container Status app.

• Reduce Errors:

  Poka Yoke, that is, preventing incorrect operation by the user, is another important lean manufacturing principle which the Kanban board covers. The Kanban board displays only those Kanban containers and functions which make sense. For example, only released control cycles are displayed, or the user filters the relevant control cycles only. If the user wants to change the status of a control cycle, only valid status changes are offered, the most important next status is prominently displayed.

• Replication of production supply areas from SAP S/4HANA Kanban to embedded WM
• WM destination bin specified in the control cycle

• New replenishment strategy: stock transfer Kanban with warehouse task: direct integration between Kanban and WM (embedded EWM) avoiding creation of deliveries
• Enhancement for external procurement Kanban with summarized JIT calls: post goods receipt for summarized JIT call directly into bin in WM (embedded EWM)
  • Enhancement for repetitive manufacturing Kanban
  • Support synchronous posting in IM and WM (embedded EWM) for backflush and goods receipt
  • Possibility to specify destination bin for goods receipt in Kanban control cycle (override destination bin in production version)
  • Visibility of actual destination bin in the SAP Fiori app, Confirm Repetitive Manufacturing - Kanban (transaction PK41)