by Asbjoern M. Bonvik, Christopher Couch and Stanley B. Gershwin

A lean manufacturing system meets high throughput or service demands with very little inventory.

Despite its significant success, kanban control is not a perfect mechanism to control a lean system. Kanban control uses the levels of buffer inventories in the system to regulate production. When a buffer reaches its preset maximum level, the upstream machine is told to stop producing that part type.

This is often implemented by circulating cards, the kanbans, between a machine and the downstream buffer. The machine must have a card before it can start an operation. It can then pick raw materials out of its upstream (or input) buffer, perform the operation, attach the card to the finished part, and put it in the downstream (or output) buffer. The number of cards circulating determines the buffer size, since once all cards are attached to parts in the buffer, no more parts can be made. When the machine picks up raw materials to perform an operation, it also detaches the card attached to the material. The card is recirculated upstream to signal the next upstream machine to do another operation. This way, a demand for a unit of finished goods percolates up the supply chain. 

Kanban control ensures parts are not made except in response to a demand. The analogy is to a supermarket: Only goods that are sold are restocked on the shelves. However, it has a major drawback:

It uses the parts themselves as carriers of information. A machine is told to stop production when its output buffer is full. This requires that a number of parts sit in the buffer without serving any apparent purpose but to block the upstream machine. 

That’s not quite right, though. The parts in a buffer do serve a purpose: They act as a buffer inventory, partially decoupling the operation of downstream machines from any interruptions of upstream production. If a machine fails, the machine downstream of it can continue production by consuming parts already in the buffer. With luck, the upstream machine will be repaired before the buffer is empty, and the failure won’t affect the downstream machine (or the customer on the end of the chain). 

Kanban is effective, but there is a better way. 

CONWIP control
CONWIP stands for constant work-in-process, and designates a control strategy that limits the total number of parts allowed into the system at the same time. Once parts are released, they are processed as quickly as possible until they wind up in the last buffer as finished goods. One way to view this is the system is enveloped in a single kanban cell: Once the consumer removes a part from the finished goods inventory, the first machine in the chain is authorized to load another part.

This leads to subtly different behavior from a kanban control. First of all, like kanban, the CONWIP system only responds to actual demands, so it is still a "pull" system. But unlike kanban, the resting state of the system has all buffers empty, except a finished goods buffer, which is full. This occurs because any part released to the system moves to finished goods. New parts aren’t released if the finished goods buffer is full. Inventory in finished goods is available to serve the customer, and no internal inventory collects dust.

But what about the buffer inventories and the decoupling against failures? Something subtle happens called "part/hole duality." It’s true that inventory in a buffer protects the downstream portion of the line against the consequences of failures upstream. But it doesn’t protect the upstream portion of the line against failures downstream. 

If a buffer is full, and the machine downstream fails, a kanban line stops production upstream of the failure, no matter how many raging customers line up at the end. 

When the failed machine is fixed, it suddenly imposes an increased workload on the upstream portion of the system, since it needs to catch up with demand. 

The mostly empty buffers in a CONWIP line contain valuable (but cheap) empty space. This space is used to decouple the upstream portion of the line against failures downstream. If the last machine in the line fails, the customers will be served from the finished goods buffer, while new parts will be released to the line as usual and proceed to the buffer in front of the failed machine. There they wait for the repair. When the machine is repaired, it has a sufficiently large number of parts in its input buffer to catch up with demand and replenish the finished goods buffer. 

Empty buffer space acts to decouple the machines also in a kanban line. But there, the control policy is to fill up the buffers whenever possible. This is possible most of the time, unless the demand rate is greater than the system capacity. 

A remarkable thing happened here: We separated the flow of parts and information. Then, we got a control policy that allows the same throughput and service levels as kanban, but at lower inventories. Intuitively, the advantage over kanban is larger for systems with more stages (there is more internal buffers) and for systems with more process variability (it requires larger buffer inventories to achieve the same throughput). As a bonus, CONWIP control is even simpler to implement than kanban, since just one set of cards is circulating. 

This is all pretty good, but we can do even better.

Hybrid control
Sometimes, if the system is very heavily utilized or there is a bottleneck in the line, the buffers toward the upstream end of a CONWIP line have quite high levels. On the other hand, kanban control was designed to prevent individual buffer levels from exceeding designated limits. 

Therefore, the Leaders for Manufacturing Program at the Massachusetts Institute of Technology created a hybrid control policy where secondary kanban cells supplement the CONWIP control. These cells detect problems in the line and block release of parts to the line if they can’t be processed further. We don’t need a separate kanban cell to block the last machine, since any material that got this far surely will reach the finished goods buffer if the machine can do an operation. The resulting control policy acts like CONWIP, but at decreased inventories when trouble occurs. 

Note how similar this is to a kanban control: We circulate cards between the machines and buffers. The sizes of the buffers are determined by the number of cards in circulation. The only difference is that cards detached from finished goods are passed to the first machine instead of the last. From there, they follow the parts back to the finished goods buffer. 

How big is the improvement?

Simulation studies show service improvements of more than 40 percent (average backlog) combined with inventory decreases of about 25 percent, compared with the best possible kanban control of the line. This was a 10-machine line running at about 80 percent utilization, where the parameters were picked such that 75 percent of demand was served from stock in both cases.

The advantage over kanban grows with the process length, the degree of process variability and the service level target. The advantage of the hybrid policy over CONWIP grows with system utilization.

The figure at right is generated from simulations of several hundred parameter configurations for each of the policies. For each choice of buffer sizes and inventory limits (when applicable), the system was simulated for two years, and the resulting service and inventory levels recorded. The service level or fill rate is the fraction of demand for finished goods served from stock. The inventory is all material in the line and in the finished goods buffer.

In this plot, leanness is indicated by high service levels at low inventories — i.e., by points toward the lower right corner. Note that for any target service level, many parameter choices for the hybrid policy achieve the target with less inventory than the best kanban policy.

For example, to achieve a 98 percent fill rate in the six-machine line where these data are taken from, the best kanban policy has 66.6 units of inventory. The best hybrid policy has 49.2 units, a 26 percent difference.

Now that’s lean!

This article is based on research from the Massachusetts Institute of Technology’s Leaders for Manufacturing Program. To learn more, e-mail or visit: http://web.mit.edu/manuf-sys/www/

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