Steve,
Question: how did you calculate Kanbans if you don’t know replenishment time? (time from trigger to stores and replenishment). That is, how are you going to ensure that you don’t have a stock-out situation if you don’t know replenishment time? (The Kanban lot size is never less than average daily demand multiplied by the replenishment time).
To answer your question, a very important metric is process lead-time improvements (to your internal/external customers) – since you are moving from push to pull (and smaller lot sizes) you should see improvements in lead-time. You don’t need to calculate LT savings for each one – just look at your highest volume parts and, using the routing/process plan, and see how much time you’ve shaved off your processing time.
Another intangible measure is simplified scheduling. Since you’ve already calculated ADD, etc. you have the system pre-stocked with appropriate levels of inventory; planners don’t have to ‘chase’ in-process materials, etc.
There are many variations in Kanban calculations, but here’s what I use:
ADD = Average daily demandR = Replenishment time in daysReplenishment Amount = ADD*RSafety Factor (SF) = (Highest demand – ADD)/ADD Total Qty = Replen. Amt + SF Stock# Kanbans = Total Qty / Container Size
Additionally, if you have ‘service level’ information from your suppliers it can also be included and replace SF.
Service Factor Factor Used 80% 0.8490% 1.2895% 1.6597% 1.9699% 2.33100% 3.08
Service Amount (SA) = service level factor * supply std. dev. (replaces SF if std. dev. Is available from supplier deliveries)# Kanbans lots = (ADD * R * (1+SF) + SA) / standard container qty
Hope that helps – good luck!
Zack Guthrie
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