Page 54 - Orlicky's Material Requirements Planning

CHAPTER 3 The Four Critical Questions Answered 35

Probably the best example of a modern-day manual reorder point is the frequently
used lean technique of kanban:

Kanban (lean stock technique): A method of Just-in-Time production that uses stan-
dard containers or lot sizes with a single card attached to each. It is a pull system in
which work centers signal with a card that they wish to withdraw parts from feeding
operations or suppliers. The Japanese word kanban, loosely translated, means card,
billboard, or sign, but other signaling devices such as colored golf balls have also been
used. The term is often used synonymously for the specific scheduling system devel-
oped and used by the Toyota Corporation in Japan. 9

Today, many researchers and practitioners make the same comments about kanbans
that Orlicky made about the manual reorder points of his day. Kanbans tend to be man-
ually intensive, lack responsiveness to changes in the environment, limit planning visi-
bility, and force an unnecessary and wasteful level of independence into the manufac-
turing environment. This is not meant to say that kanbans do not have a time and a place
in modern manufacturing. The time and the place, however, are not “always” and
“everywhere.” Manual reorder points and kanbans are supplementary tools at best.
After years of experience in implementing kanban systems and heijunka board in a
variety of industry, it is clear that as the number of parts and components grows the man-
ual systems become increasingly difficult to manage. Kanbans are very easy to establish
and begin to use. However, when the company grows to any significant size, the over-
head to manage kanbans can quickly become overwhelming. The number of kanbans can
quickly grow to the hundreds. Reconciling the number and location becomes a substan-
tial task with a great deal of complexity. This is problematic for most midrange or larger
discrete manufacturers. Early adopters of lean were emphatic that technology was a
waste to be totally eliminated. The desired future state was one where the part would
move only when pulled by the next station. However the gremlins of variability made the
necessity of technology quickly apparent. John Constanza, the founder of JCIT, devel-
oped the first demand flow software to support lean. The technology was very different
than the MRP systems of the day. Early adopters struggled with how to manage the sheer
number of kanbans and how to trigger unique configurations. Even the first demand-
flow visionaries developed software to support their approach.
Rarely are kanbans realigned with the actual demand variation owing to the over-
whelming nature of completing that task. Kanbans almost always omit independent
demand, including service and repair. In addition, kanbans provide no forward planning
because they are a reactive pull signal assuming that the immediate future will look like
the past. Few suppliers are agile enough to support a company without some forward
planning. This can mean that suppliers add extra inventory for this unexpected demand
or reduce the variety that can be offered to customers. Manual reorder points are even
less effective in larger organizations. When an organization must plan across a large

9 APICS Dictionary, 12th ed. (New York: Blackstone, 2008), p. 70.