Tag: Lean manufacturing

Lean manufacturing: Picking activities and kanban line events

When using Lean manufacturing in Microsoft Dynamics AX 2012, you can model production flows that use multiple activities to produce a single product. This was described in the whitepaper, Lean Manufacturing: Production flows and activities, in the section “Semi-finished” on page 26. In that context, “semi-finished” refers to the output product from an activity that has not yet reached the next BOM level and requires additional activities.

With R2, we extended this functionality with the capability to distribute the material consumption over the different activities of the production flow. In order to achieve this, specific picking activities must be created and assigned for each process activity of the production flow. This determines which kanban line will be associated with which kanban job.

In this blog, I will walk you through a small scenario, to illustrate how to define a production flow that uses this capability, and to provide a couple of hints to help you understand the possible issues in this process.

Assume the following production flow:

A finished product is produced from one lean production flow with a kanban rule spanning over two activities. The finished product needs two components, the first is consumed by process 1 and the second is consumed by process 2.

Additionally, both components are pulled to the activities by using a withdrawal kanban line event kanban.

In the following we will explain the critical elements of the definition of the production flow. We will not include every step of the configuration, to keep the focus on the elements that influence and enable the specific desired behavior.

We start with defining the products and the bill of material (BOM):

Consider that the BOM and BOM version do not specify a site, and the lines specify resource consumption. This allows us to produce the same product on multiple sites or multiple alternative production flows. The warehouse
and locations will be determined out of the production flow during creation of the kanban.

Now we will define the work cells, the production flow, version, and the respective activities.

We define two work cells for the two activities, WCP1 and WCP2 as resource groups:

SpProd is the warehouse on the production shop floor on Site 2. Each work cell has a dedicated input and output location. The input location of WCP1 is Input, the input location of WCP2 is SpAsm.

The finished products will be put to location Pack when the kanbans are received.

We will now create a production flow and version:

And then create the activities for that version:

The first activity is Process 1, activity type Process.

In the next step, we select the work cell WCP1. As this activity is not the activity that finishes the product and posts the receipt of the product back to inventory, we must deselect Update on hand receipt. Instead we select receive Semi finished product, to specify that this activity requires one (or multiple) successor activities to finish the product.

As the first process activity in the production flow, the Pick up semi finished check box must stay unselected. Because this check box is unselected, the next step will open the Picking activity definition and show the default picking activity that has been created for the input location of work cell WCP1:

The picking activity is set up to Update on hand and Register scrap by default. Click Next.

In the last step we assign an activity time, and finish the creation of the activity. (Note that time and capacity are not specifically discussed in this blog, as they do not influence the discussed behavior. However, they are mandatory data to set up to make the scenario work.)

We will now create Process 2.

Again, we assign a Name and select the activity type Process.

As the second activity in the flow after Process one, we have to specify the activity as Pick up Semi finished product. If you forget this setting, you will receive an error when you attempt to create the activity relation between these two activities.

As this is the last activity in the production flow, the activity must be set to Update on hand receipt. The output of the activity must be posted to inventory. This configuration deselects and disables the Receive Semi Finished product check box.

Because the activity is set to Pick up Semi finished product, the Next button will take you directly to the activity time definition. Notice that there is NO default picking activity defined for this activity. You may define picking activities in a later step by using the activity details form. We will return to this, as this must be done for the given scenario.

Back to our activity, again, we have to specify a runtime to complete the creation:

Then we can finish the creation of the activity.

If everything has been correctly created, you should be able to create the activity relation between the two activities now:

The next step is to create the two transfer activities that will be used to pull the material to the work cells.

Again, add a new version activity:

Select the name Transfer 1 and the type Transfer and click Next.

For transfer activities, the second page of the activity wizard is different. To make the configuration simpler, you can directly select the work cells that replenish or are replenished by this transfer activity. In our case, we select WCP1 as the replenished work cell, as the activity should pull material to this cell. (Note that the relation to the work cell is not persisted in the data model. This is just used to provide the input and output locations from the selected work cells.)

Use the default settings for finished products and update the on hand for this activity. (There are variations to this scenario that would not update the on hand inventory, but that is another story.)

On the next page, note that the Transfer to location has been included from the replenished work cell WCP1. Select a source warehouse and location for the transfer, and select Shipper in the Freighted by field:

Finish creating the activity by assigning an activity runtime. Then you can assign Transfer 1 as a predecessor activity to Activity Process 1:

Be aware that this only works because there is a default picking activity on activity Process 1, that matches the target warehouse and location of the transfer activity. If one of these conditions is not met, an error message is displayed.

We will now repeat the activity creation for Transfer 2, to replenish WCP2:

Again, specify a process time to complete the creation of the activity.

However, our attempt to connect this transfer activity to Process 2 will fail:

As mentioned earlier, Process 2 does NOT have a default picking activity.

In order to create the activity relation, we need to create a default picking activity for this activity. We can do this in the activity details form:

Open the details form for Process 2, open the FastTab for picking activities, and add a new line:

Add a default picking activity for warehouse SpProd and Location SpAsm. A default picking activity has NO item and no product dimensions.

Close the form and repeat the creation of the activity relation and you will get the following result:

We are now almost done.

In order to configure the expected picking behavior of Process 2, we need to get back to this activity again and change the picking activities once more. For this, open the details again:

To ensure that Component 2 is picked for Activity 2 and that a kanban line event is created for this activity, there must be a valid picking activity for Component 2. The previously created default picking activity (no item) would be valid for this as well. However, it would also catch Component 1 to be picked at activity 2. Therefore, the picking activity should be updated with Component 2 and the default picking activity should remain on Process 1.
Remember that for any product that should be picked on Process 2 instead of Process 1 you will need to add a line to the picking activities of Process 2. You can also do this after the production flow has been activated.

You can now activate the production flow. (Depending on your capacities, you may have to adjust the takt requirements of the production flow version. Again this mandatory setup, but it is not important to the outcome of this scenario.)

We will now proceed with creating the kanban rules. We start by creating the two kanban line event rules for Component 1 and Component 2:

The kanban rule type is Withdrawal. Select the activity Transfer 1 and the replenishment strategy Event. The kanban line event should be set to Automatic. The product selection is Component 1.

Create a similar rule for Component 2 and activity Transfer 2:

Finally, create the kanban rule for the finished product:

Select Manufacturing type. The replenishment strategy could be any. In this case we use Fixed. The first plan activity is Process 1. Check multiple activities, which activates the last activity field. Fill in Process 2, which opens the selection of the Kanban flow form. As this is the first rule created for these activities, you need to generate the flows by using the Generate flow button and then confirm the warning message that will be shown.

There will be one resulting line: Process 1 > Process 2. Select the line and close the dialog with Ok.

Enter the default quantity and the fixed kanban quantity to complete the kanban rule definition.

If you now go to the Kanbans FastTab and click Add, you can create the first kanban:

After the creation of the kanban, open the kanban details form and view the Jobs and Pegging FastTabs:

Two kanbans and the respective kanban cards have been created and pegged to each of the activities of the parent kanban.

Summary:

To model more complex material flows for Lean manufacturing for Dynamics AX you need some basic understanding of the underlying concepts:

  • Use kanban line events to pull material to kanban activities
  • Use activities  that consume or receive semi-finished products (work in process between two BOM levels) to model lean manufacturing processes that require multiple process activities to produce a product
  • Use picking activities to allocate material consumption to specific activities in a production flow
  • Understand and use default picking activities in production flows that have multiple activities

When you have understood these basic concepts, the full power of the Lean manufacturing for Microsoft Dynamics AX is available to you.

 

 

 

Supply chain excellence in manufacturing

Today I had the opportunity to take part at a Master Class on Supply chain management with Professor Martin Christopher from Cranfield University, Bedford, UK. The master class was hosted by Implement Consulting and the attendants were coming from all Industries in Denmark.

 

Professor Christopher succeeded to draw a relevant picture of the future trends and challenges to global supply chain management and to manufacturing in particular, and I would like to share a couple of quotes and thoughts.

 

  • Move from forecast driven to demand driven – Instead of planning to replenish inventory, establish supply chains that allow you to fulfill demand as a single event.
  • For products, where individuality and responsiveness are relevant, the agile supply chain – and the agile manufacturing process – must be designed for responsiveness,      not for the lowest cost. Responsiveness has to be built in the process and comes with a certain cost.
  • Substitute information for inventory – sharing information on demand and supply chain execution across the supply chain helps reducing or even eliminating inventory.
  • Flexible capacity – Move from static capacity to flexible capacity models, that allow to scale according to actual demand. Instead of acquiring manufacturing and distribution capacity based on forecast before the fact, a now model of
         acquiring capacity options that can be used on specific actual demand is emerging in the markets.
  • Economics of scale vs. Economics of scope – Instead of the volume of products, the bandwidth of products that can be delivered out of a supply chain drives the economic success.

 

It was an inspiring morning, leaving me with a lot of thoughts and ideas.

If you are inspired as well about these topics, join Roxana, Sverre and me at our session on Mass customization in a distributed supply chain in Microsoft Dynamics AX 2012 R2 at Convergence EMEA in Barcelona next
week, where we will share our vision on how the combination of product configuration, intercompany planning and lean manufacturing can bring you to the next level of supply chain excellence.

 

Whitepaper "Lean manufacturing – Capable to promise and Kanban job scheduling" for CU6 now available for download

With Microsoft Dynamics AX 2012, two new concepts were introduced for lean manufacturing:

  • Event kanbans,  which support build-to-order and assemble-to-order scenarios, and also – in combination with the product configurator – configure-to-order scenarios.
  • Capable to promise (CTP), a new delivery date control method that can be used to calculate the expected delivery date at the time of order entry, based on an update of  the dynamic master plan.

 

In the recently released cumulative update 6 for Microsoft Dynamics AX 2012 R2 these concepts have now been combined to work together.

 

The white paper starts by explaining the fundamental mechanics of kanban job scheduling for simple and complex production flow configurations. It then introduces the concept of capable to promise in general (lean and non lean applications), and explains how CTP interacts with planned and actual kanban jobs. Finally, it explains how CTP can be combined with event kanbans, and what changes are introduced in cumulative update 6 for Microsoft Dynamics AX 2012 R2 to provide better support for build-to-order and assemble-to-order scenarios with CTP.

 

You can download the whitepaper from these locations (requires registered Microsoft account):

 

Download URL – Customersource – Partnersource

Kitting in Microsoft Dynamics AX 2012 using product configuration and sales event kanbans

Many Microsoft Dynamics AX users have asked for a solution that supports kitting. To support a kitting solution, two primary components are needed:

  • Configuration of a kit for the order management
  • An activity that assembles the kit

Many ERP and SCM solutions support kitting as part of the Warehouse management or logistics functionality. Without having native support for kitting, Microsoft Dynamics AX 2012 offers an approach where it might not have been expected: Using to product configurator to configure kits based on a product configuration model combined with a lean process activity where the kits are built or packaged to order.

So in fact, the kits are built based on sales event kanban’s, with a single kanban per kit.

It all starts with modeling the kit as a configurable product, and then creating a configuration model that represents the products that can be combined in kits, possibly also including the packaging material.  In our example we have a configurable speaker set that consists of two front and two rear speakers per kit. This is represented by a simple product configuration model.

The model structure is rather flat, and consists of the front and the rear car speaker set. The products that can be selected in each configuration step are modeled as conditional BOM lines. In our example the configuration model makes sure that while different models of speakers can be selected for the front and rear speaker pairs, all speakers – front and rear – will have the same cover color.  Because the assembly of the kit is done by a lean production flow, route operations are not
needed in the configuration of the product model.

Therefore a global attribute of Color is associated to the Car speaker set. This constrains the selection of components to the common color.

 

Based on the model shown above, a sales order taker can configure the kits based on the customer’s demands, or use pre-configured kits by selecting a specific configuration of the kit.

The individual configuration is done in the sales order line as shown below, by clicking Product and supply > Product model > Configure line.

The Configure line form allows the configuration of the kit to be based on the product model.

Before finishing the configuration, the sales price of the kit can be calculated based on the configuration of the new kit:

After the configuration is done, a new variant of the kit is created with a corresponding BOM version, and the sales line is updated with the new configuration and sales price.

Note that the BOM version is automatically approved and activated.

Once the configuration is final, the order taker can create the kanban that is to assemble the kit on the packaging work cell directly in the order form:

This creates one or more kanbans, depending on the number of packages that are needed, and load them on the kanban board of the packaging work cell.

In our example, Set05 with the new configuration has been added and is now ready to be picked and completed.

On the same work cell, other preconfigured kits (in our example  CSS_SS1B) and other products can also be packaged and delivered to order or to stock.

The kanban rule

The magical configuration that enables this process is the kanban rule. A kanban rule uses the activities that are configured for a production flow. Evaluating the possibilities of configuration of the production flow would go too far for this blog entry. To learn more about that, refer to the Whitepaper “Lean manufacturing for Microsoft Dynamics AX 2012 – Production flow and activities.” Assume that for the kitting application, a single activity production flow, as described in the whitepaper, could apply.

In the actual case, the kanban rule is a manufacturing kanban rule with a replenishment strategy event.

The packaging activity is followed by a transfer to a vendor managed warehouse.

Some highlights of the kanban rule configuration should be emphasized in the context of our scenario. Let’s start with the Product selection field in the Details FastTab of the kanban rule.

Notice that product CSS_SS_CUST is a configurable item for which the configuration dimension is mandatory. A configuration is not assigned to the kanban rule, so it is valid for all configurations of this product. In other words, any kit that is configured based on this model by using the product configurator will be supplied using this kanban rule.

The Events FastTab specifies the events that will trigger the creation of a kanban. In this case, Manual is selected in the Sales event field. The event cannot be created automatically when using the product configurator because the configuration of the line must be completed before the event kanbans are created.  The dependency to the source requirement – in our case the sales line – ensures that the sales line cannot be shipped before all kits have been assembled and received. However, in the current example, a reservation is not needed. Because every sales line will have a separate configuration it’s unlikely that the wrong kit will be reserved so the lean approach would be to not make a reservation.

The maximum quantity of a kit per kanban is 1. Every kit creates a separate kanban and receives a separate kanban card. The automatic planning quantity of 1 ensures that every
kanban is directly loaded to the schedule, so the picking and packaging can start immediately after the kanban is created from the sales order line.

Depending on the settings of the kanban rule, the kanban card can be printed automatically in two ways:

  • When the kanban is created,
  • When the first activity is planned for the kanban and printed on the printer that is associated to the work cell responsible for the picking activity.

The picking list can be automatically added to the kanban card as well. Instead of having to look at the kanban board first, the worker can take the kanban card directly from the printer and start the picking process. When the kit is assembled, the worker can complete the packaging activity by scanning the card ID.

Costing the Kit

In many cases, the cost of a kit is mainly driven by its components. The cost of the packaging activity can be calculated based on the activity time. To enable the full cost support for the kitting solution, the cost price needs to be calculated and activated for each configuration. However, the value of costing the kitting might be really low, especially if this process usually creates no or only low variance. On top of that, the configured kits usually don’t stay in the warehouse for very long because they are assembled to order shortly before the shipment. For this reason, it might be a good idea to configure the kit so that it has only one standard cost activated for all of its configurations. This is done by clearing the Use cost
price by variant check box in the product master.

 

 

 

This configuration will result in material variances because different materials are used in the kits. To avoid manual corrections, the account that is used for material variance could be redirected to the cost of goods sold. Some people might disagree with this, but from the lean perspective, if costing of the kits and the related variances are not an issue then a manual or even an automatic cost calculation and activation should be avoided.

Both Product configuration and Lean manufacturing in Microsoft Dynamics AX 2012 are powerful tools that support manufacturing and the logistics processes required in many industries. When combined, they can support many use
cases in a very flexible way. I hope this example provides insight into the capabilities and opportunities and how they can be used to empower your business.

The approach that is described in this blog might leave open a couple of requirements that a kitting process in your company might require. If that’s the case, we’d very much like to hear more about your scenarios. But without a doubt we would also like to hear from you if this matches your requirements.

 

Lean manufacturing for Microsoft Dynamics AX 2012: Event kanbans – the single piece flow

The ultimate lean goal – the single piece flow with zero inventories – is not an illusion. Many industries have been able to replace build to stock/supermarket by assemble to order scenarios that support single piece flow. Lean manufacturing for AX 2012 provides a powerful new instrument to support these scenarios: Kanban production and replenishment based on Events.

The best implementations of Lean manufacturing I have seen so far are mostly driven by a common pain: The explosion of item variants – for the most different reasons – makes it impossible to hold inventory on final product level, without running into a huge risk of holding excess inventory or even worse – constantly depreciating or expensing products that have been hold in the final product stock but cannot be sold based on material expiry or engineering changes.

The need to remove or at least reduce this huge waste of money and resources usually leads to the cleanest implementations of lean manufacturing. Final assembly, packaging and shipping activities are streamlined and aligned to the targeted sales lead time – shipping the product out of final assembly within a very short lead time, usually days or few weeks (ideally 1). Some industries – like JIS (just in sequence) in Automotive – reach lead times of 2.5 hours from call-off to shipment for an assembly process!!

No need to explain that this requirement lies beyond Master scheduling – even if some implementations of Microsoft Dynamics run a net-change on master scheduling in a frequency of 30 minutes.

The new Lean manufacturing framework of Microsoft Dynamics AX 2012 allows definition of kanban rules with the replenishment strategy Event. The creation of event kanbans based on this strategy is triggered by a source requirement and the new kanban is pegged to the source requirement.

The event kanbans replace the previously released modules of LOS-BTO Schedules (Lean order schedules – Build to order) and PTO Kanbans (Pull to order)  that were part of Lean manufacturing for Microsoft Dynamics AX 2009 with a single
architecture.

The sales event

The sales event is triggered by the creation or a change of a sales line – no matter if this is happening manually, through enterprise portal or using the sales creation services of Microsoft Dynamics AX.

Each sales line creates one or multiple kanbans to fulfil the related demand, based on the maximum product quantity defined in the kanban rule that corresponds to the maximum handling unit size.

The kanban cards printed for sales event kanbans contain customer and customer order references and can be used as shipment labels for the handling units.

The kanban line event

Kanban line events can be created to pull from a pre-processing activity. In the following example a lean work cell assembles painted parts (B) to finished products (A). The kanbans for A can be of any replenishment strategy – fixed, scheduled or event. While all standard colours – red, green or blue – are picked from a supermarket that is replenished as fixed quantity kanban, the special colours – gold and silver – create event kanbans.

 

Another application of kanban line events is transfer of material to a production location. In the following example we are assuming that products are produced on two sites 1 and 2, the related components are produced on site 1 and stored in a supermarket. While process B on Site 1 can directly pick from the supermarket, the material for process B on site 2 needs to be transferred to site 2.

 

By defining a kanban line event withdrawal rule for the transfer from site 1 to site 2 for the item relation All, transfer kanbans are created for all BOM-lines of items in Process B on Site 2. The related kanban transfer jobs can be grouped to consolidated shipments with non kanban material that needs to be transferred to Site 2.

The BOM line event

Like kanban lines, where the picking or transfer issues of a kanban trigger other kanbans, a production order can consume material that is supplied by lean manufacturing. Again, this can happen by picking from a supermarket or by creation of a BOM line event kanban, that pulls material to the production order.

On estimation of the production orders for the final assembly, the BOM Line event kanbans are created and loaded on the Pre-Assembly work cell.

The kanban rule can enforce a consistent reservation, to ensure that the components supplied by event kanbans are automatically reserved for the source of demand, in this case a production order.

Pegging event processing

In different application scenarios the volume of kanbans that are created based on events can be in a range of few event kanbans per day – where event kanbans only cover exceptions – to multiple kanbans per minute. To find the right balance between actual requirement view in the work cells and performance load each event definition on a kanban rule defines the kanban creation policy:

  • Automatic

    The event kanbans are created with the source of demand. On the creation of
    sales order lines the correspondent event kanbans are directly created,
    allowing the work cell or warehouse to take immediate action on the new demand.
    This setting is recommended to be used, when execution is expected to happen on
    the same day.

 

  • Batch

    Instead of the event kanbans a pegging requirement is created. A recurring
    batch process that is independent of master scheduling is processing all new
    pegging requirements. This light-weight process can be set up in the background
    specific to selected production flows or activities ensuring an appropriate
    reaction time for every application scenario.

 

  • Manual

    When event processing is a pure exception taken on priority and capacity
    considerations, an sales order line or a kanban can be manually selected to
    create event kanbans.

The minimum stock event

When running master scheduling in Microsoft Dynamics AX, additional planned orders are created whenever minimum on-hand is reached. For a lean manufacturing application that surveys minimum on-hand of important parts, this might easily lead to a delay of a day until the signal for replenishment reaches the replenishing work cell. The pegging event processing in Lean manufacturing for AX 2012 checks minimum inventory for selected kanban rules and creates the needed kanbans to replenish instantly.

Lean manufacturing without event driven scenarios is only half the story. Lean manufacturing for Microsoft Dynamics AX 2012 provides a complete suite of tools to model any pull based scenario and scale the processes on volume and frequency of demand. The time effective nature of the kanban rules that model the scenarios support continuous modification and improvement. The bad news is: you can no longer use Microsoft Dynamics AX as the reason why you are not going Lean – it is all up to you now.