Tuesday, April 16, 2013

Kanban to the masses... not for beer drinking though!

Kanban is probably the simplest and most intuitive of all replenishment strategies in standard SAP; but that doesn't mean it's considered easy to do. A lot of people put a lot more to it then there is. Granted... to pick the right replenishment strategy is hard and some required customization settings don't come easy, but in its purest sense you can set it up in a breeze.

Kanban is an autonomous replenishment strategy, one that controls itself, and does not need any external signal. If the Kanban container is empty, the Kanbanesish (I made this up) process triggers replenishment; and that is the only time that happens. You can set the container to empty manually (in PK13N), have it emptied with an RF device or barcode reader or use quantity calculation, where you tell the control cycle how much you are taking out of the container, and since it knows how much there was in there before, it knows when it's empty.

The latter you should not confuse with Inventory Management. A goods issue posting will NOT, and should NOT, set your container to empty. Kanban is a visual "see" system, that does not go by potentially delayed or faulty inventory levels. I've seen it all over the place: 'enhancements' getting to trigger the Kanban signal by  issues in IM. Don't do it! It's not Kanban anymore then... you will loose all the advantages Kanban gives you in terms of simplicity, accuracy and 'pull' oriented replenishment when you need it.

Kanban can be used for purchased parts and raw material or finished goods, it can be used on the production line or for stock transport orders from one warehouse to the next.

so how do you set it up? First, you need a supply area. These are held in a customizing table but you can add a new one with a business transaction.

With a supply area you can create a control cycle for a material master in transaction PKMC. Switch to 'edit' mode and click on 'new record'. Before you can save the control cycle you have to maintain the Kanban quantity (how many containers and how much in each container) and select a replenishment strategy. The replenishment strategy determines what happens after a container is set to 'empty'. Will there be a production or process order? a planned order first? a stock transport order or a purchase order? are you using Kanban with or with MRP?

It would be too much to go through every possibility in this blogpost, but in the end, what's generated behind the scenes - after the Kanban container is set to empty - is an order to fill the container back up. And that is what it all comes down to in Kanban: We ONLY replenish when something went out the door and emptied what we had. If nothing is consumed - whether we anticipated it or not - nothing gets replenished.

And the reason that we have at least two containers is... so that we can still use the second, full container while the first, empty container is being filled. And the art of making Kanban work is to design the appropriate quantity in the control cycle; one that guarantees enough stock to get you through the replenishment cycle.

Kanban therefore is not for everything. If your consumption is very irregular or your replenishment cycles are very long, it's hard to do. And if it's too expensive to hold full containers of a product, then it doesn't make sense either.

Kanban board - demand view (PK13N)

Another Kanban 'killer' is perishability. Even though a lot of my friends refer to beer drinking in a bar as the perfect control cycle, I respectfully disagree. Imagine the bartender maintaining a control cycle for you and putting a full beer up there next to the one you are drinking. Every time your beer is empty, she will fill up another one, meaning that you have two beers - one in process, the other full - in front of you at all times (except for that short period between your last sip and the refill. Should you slow down in your drinking speed after your worst thirst is quenched, your second beer gets pretty old (and you actually never get out of this devils circle). Kanban is for never-ending stories and beer drinking should not be one of them. I'd rather leave my replenishment process deterministic (with a PD) and take on the disadvantage that once I drank my first beer, I will have to wait until the bartender makes me another one.