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1


Holy Angel University

College of Engineering and Architecture

Department of Industrial Engineering

Angeles City




Kanban System

in

Aquino Basket Shop



Submitted to:

Ruby Pineda
-
Henson Ph
-
D.


Submitted by:

De Jesus, Blessylda Grace P.

Maniago, Alexis
G.

Ortacio, Laurice A.



October
20
, 2010


2


TABLE OF CONTENTS

CHAPTER I: Introduction


1.1. Background of the study






4


1.2. Statement of the problem






5


1.3
. Objectives of the study






5


1.4. Scope and limitation







6


1.5. Significance of th
e study






6


CHAPTER II: Review of Related literature


2.1. Kanban system







7


2.2.
Two kinds of Kanban cards






7

2.3.
Companies using JIT






8



2.
4
. Kanban system application






9



2.
5
. Traditional manufacturing production system



1
1


2.
6
.
Quality








12


2.7. Productivity








1
3




CHAPTER III: Methodology


3.1. Theoretical framework






1
4


3.2. Research design







1
5


3.3.

Application of different theories to KMI




15

3.4.
Instrumentation







1
6





3


Appendices









19

Re
ferences










2
5
























4


CHAPTER 1

INTRODUCTION

1.1. Background of the study

The idea for the pull system was originally borrowed by the Japanese manufacturers from
the American service industry. The inspiration came while a Japanes
e delegation was
visiting United States. Some of the delegation had visited modern supermarket and they
observed that the shelves were not replenish based on a set schedule, but rather when the
customer remove the items from the shelf. This system required

no complicated
scheduling whatsoever because the shelve inventory level was visible and the restocking
process was designed to be very simple. They took the concept home to Japan and
perfected it for manufacturing (Chase & Aquilano, 1990).


Kanban system

is the method of production authorization and material movement in the
Just
-
in
-
Time (JIT) system. Kanban, in the Japanese language, means a marker (card, sign,
plaque, or other device) used to control the sequencing of jobs through a sequential
process. K
anban is a subsystem of JIT (Schroeder, 1989). It works on the basis that each
process on a production line pulls just the number and type of components the process
requires, at just the right time.


JIT facilitates very good quality since defects are qui
ckly discovered by the next process.
A JIT system is designed to expose errors and get them corrected rather than covering
them up with inventory (Schroeder, 1989).


5



The Philippines Islands are still a thriving area for basket making. The said art has ne
ver
been found suitable to mechanization, but standardization of hand methods and
concentrated production centers and facilities produce uniform, high
-
quality products.



1.2.
Statement of the problem


The study focuses on the Kanban system’s application i
n the manufacturing industry like
Aquino Basket Shop to reduce

rework and repair
.


1.3. Objectives of the study

1.3.1. General objective:



This st
udy aims to adapt K
anban
P
ull
S
ystem (KPS)

in ABS to minimize
rework and repair of items
in

production.

1.3.2.

Specific objectives



T
o
determine the points where KPS could be applied in production
in
ABS
.




To
design

a sys
tem through KPS
s principles
that will reduce rework and
repair of items
in

ABS
.




To design a Kanban card that could be used in production in ABS.





6


1.4.
Scope and Limitation


This study

covers the
points where KPS could be applied in ABS.

This
research paper

focuses on the production operations

such
as purchase order, weaving, framing, gluing,
drying, sanding, trimming, finishing top coat, packag
ing and boxing
.
This study also
focuses on two Kanban cards: Production card and Move card.
The researche
rs will apply
the theories of KP
S that wi
ll improve the efficiency of

production

in ABS
.


1.5. Significance of the Study

The gathered data, theories a
nd concepts in this study may be a reference/guide to other
rese
archers who may want to apply KP
S in other industries. The feasibility of the
proposed study can contribute information to the quality improvement and productivity in
manufacturing industry l
ike ABS.



The reduction of rework and repair will eliminate delays in every operation in production.
Through this, the production cost will be decreased.
There will be no waste and work in
process since the raw materials will be utilized as needed. We cou
ld also save time and
money because there will be no redundancy of operation once the item preceded the next
process
e
s
.






7



CHAPTER 2

REVIEW OF RELATED LITERATURE


2.1. Kanban System

One of the most popular JIT production methods used is known as the Kan
ban system.
Neumann
and Jaouen (1986) implied that
Kanban, the Japanese word for card originated
from the use of cards to operate “a pull system" of material control that linked all
supplying operat
ions to a final assembly line.


Furthermore, the ultimate
goal of this system is the conversion of raw materials into
finished products with lead time equal to processing time. Kanban attempts to achieve
this goal by concentrating on the following areas: reduction of inventory and lot sizes;
reduction of setup co
sts; elimination of queues; providing effective maintenance
programs to eliminate production defects entirely (improving quality); reducing lead
times; making vendors part of the team in terms of planning needs and delivery times;
and minimizing employee t
urnov
er through consensus management

(Neumann & Jaouen,
1986).


2.
2.

Two kinds of Kanban cards

2.2.1.
Withdrawal Kanban



also known as move card specifies the kind and
quantity of product which a manufacturing process should wit
hdraw from a
preceding proc
ess (M
onden,
1993)
.

8


2.2.2.
Production
-
ordering Kanban

-

specifies the kind and quantity of product
which the preceding
process must produce.
The production
-
ordering Kanban is
often called an in
-
process Kanba
n or simply a production Kanban (M
onden,
1993)
.


2.3.

Companies using JIT

American automotive companies such as Ford and General Motors have implemented JIT
into their production, however, not as smoothly as Toyota. They came across several
problems including strikes and the suppliers inability to suppl
y the materials demanded
(Glenn, T. 2001).


In 1914 Henry Ford introduced the idea of the moving assembly line to the world while
producing his Model
-
T Ford, this revolutionized manufacturing. By 1916, Ford began to
implement the idea of JIT manufacturing.

This reduced the inventory needed from $60
million to $20 million dollars to produce the same number of vehicles (Wren, 1999).


Production of Ford latest small car, the Ford KA has been a dramatic improvement
compared to Ford previous product, Fiesta (Ko
chan, 1997). This is a real example of
successful JIT implementation with all its outsourcing strategies. The production target of
1,100 KA cars per day has been reached only within 8 weeks since the launch date,
compared to 15 weeks required for Fiesta. F
ord found that the initial bottleneck was
caused by material handling, assembly time and inbound logistic.




9


2.4
. Kanban System Application

2.4.1.
Application of kanban in Toyota Manufacturing

According to Gross (2003), In the late 1940s and early 1950s,
Taiichi Ohno
developed kanban to control production between processes and to implement Just
-
in
-
time manufacturing at Toyota Manufacturing plants in Japan. By using
Kanban, work in process was minimized between processes and reduced the cost
associated with

holding inventory.



The production process consists of the following steps:

1.)

Die Preparation

2.)

Die Casting

3.)

Fin Removal

4.)

Machining

5.)

Washing

6.)

Stock Store

7.)

Assembly Line

8.)

Goods Store


Production order is given by “kanban” or order cards which a subsequent proce
ss
bring to the preceding process. The preceding process produces what the
subsequent process demands for. For instance, as one can see in the third frame of
Fig., the washing process brings a order cards to the preceding machining process
when washed prod
ucts stock reaches below the prescribed level by the demand
10


from the subsequent assembling process. The machining process starts processing
as soon as it receives the order card. “Kanban” or order cards are circulated not
only in a company but also between

different companies. Dispatch of carburetors
of the company A is begun by the order card form the engine assembly division of
Toyota Motor Co. Then an order is given to the assembly process for the types of
carburetors that were removed from stock shelf a
nd dispatched. In this way orders
are given to the preceding processes like chain reaction.


Toyota has promoted mutual prosperity with 200 component suppliers under
the
basic principle of long term and stable transaction. And Toyota continues to
maintain
and improve the relationship with the component suppliers following
this basic spirit. For this reason Toyota will go with assisting the component
suppliers in management as well as quality control. And Toyota expects the
suppliers to strengthen the manage
ment system of their own and to supply the
products of excellence technology and quality without presuming upon or being
too much dependent on the principle of long term and stable transaction. And
Toyota would like to carry on business with overseas suppl
iers with processes of
excellent technology and management foundation.


2.4
.2. Application of K
anban at Wendy’s restaurant

The original Wendy’s restaurants were set up so the cooks could see the cars enter
the parking lot. They put a pre
-
established numb
er of hamburger patties onto the
11


grill for each car. This pull system was designed to have a fresh patty on the grill
before the customer even placed an order (Chase and Aquilano, 1990).


2.4.3. Application of Kanban in supermarket

The kanban system has a
lso been called the "Supermarket method" because the
idea behind it was borrowed from supermarkets.

Supermarkets and mass
merchandizing stores use product control cards on which product
-
related
information, such as product name, product code, and storage l
ocation, is entered.



A supermarket stocks the items needed by customers when they are needed in the
quantity needed, and has all of these items available for sale at any time.

Taiichi Ohno (a former Toyota vice president), who promoted the idea of Just
-
in
-
Time, applied this concept, equating the supermarket and the customer with the
preceding process and the next process, respectively. By having the next process
(the customer) go to the preceding process (the supermarket) to retrieve the
necessary parts
when they are needed and in the amount needed, it was possible to
improve upon the existing inefficient production system in which the preceding
processes were making excess parts and delivering them to the next process.


2.5
. Traditional manufacturing pro
duction system

Traditionally, manufacturers have forecasted demand for their products into the future
and then have attempted to smooth out production to meet that forecasted demand. At the
12


same time, they have also attempted to keep everyone and everythin
g as busy as possible
producing output as to maximize “efficiency” and reduce costs.



2.5
.1. Inventories

Inventories were treated as asset. I
t protects against fore
cast errors, machine
problems, l
ate vendor deliveries. More inventories

are

"safer"
(Steven
son, 1990)
.


2.5
.2. Quality

It usually tracks what the actual scrap has been and develops

formulas for
predicting it
(Stevenson, 1990)
.


2.5.
3. Lead time

The longer the lead time is, the better. Most foremen and purchasing agent
s want
more lead time, not l
ess
(Stevenson, 1990)
.


2.6.

Quality Control

Quality control is an accepted and essential decision
-
making discipline of scientific
management. Like many other areas of scientific management, it began as a practical way
of improving manufacturing. Today QC

techniques are used by all management levels in
both manufacturing and non
-
manufacturing departments. This evolved scientific
discipline therefore influences the widest possible variety of business decisions. For total
quality control, all managers must a
pply the disciplines of quality control to their areas of
work.

13



It is the variability of all events and all work that gives the science of quality its
mathematical base in statistics. No matter how precisely we attempt to control some
equipment or area o
f work, there will be variability in the output. It s the techniques of
quality control that permit the degrees of variability entering into the work that is done to
be controlled by management. The mathematical disciplines of statistics permit us to
stoch
astically predict the outcomes before we do the work, once sufficient knowledge
about the process has been gained.


The purpose of a QC program was, for many years, to reduce variability to an economic
minimum and maintain it there consistent with manageme
nt objectives. The concept was
that, though zero variability was not necessarily beyond our ability to comprehend, part
of the variability of processes would always be beyond our ability to control it at an
acceptable economic level (Taylor, 1989).


2.7
.

Productivity

To increase productivity, management and the organization as a whole have only five
options to make the ratio bigger. Firs
t

is to make the output larger for the same input.
Second, make the input smaller for the same output. The third is to in
crease the output
while decreasing the input. Fourth, increase the output faster than input increases. Lastly,
decrease the output less than the inputs decreases (Gregerman, 1984).



14


CHAPTER 3

METHODOLOGY


3.1. Theoretical Framework

Waste reduction
improve
s status because of zero defects.
This defects are easily spotted,
thus the faults and problems could be seen quicker.
One of the theories that have been
used in this research is
The
Toyota Production System

(TPS). It is an
integrated
socio
-
technical system
, developed by
Toyota

that comprises its management philosophy and
practices. The TPS organiz
es manufacturing and logistics for the automobile
manufacturer, including interaction with suppliers and customers. The system is a major
precursor of the more generic "
Lean manufacturing
.
"


Another theory that the research used is the
Just
-
in
-
time

(
JIT
)
. It

is an inventory strategy
that strives to improve a business's
return on in
vestment

by reducing in
-
process
inventory

and associated
carrying costs
.

T
he process relies on signals or
Kanban

between different
points in the process, which tell production when to make the next part. Kanban are
usually 'tickets' but can be simple visual signals, such as the presence or absence
of a part
on a shelf. Implemented correctly, JIT can improve a manufacturing organization's
return
on investment
, quality, and efficiency.


In this research we also

used the principles of
Total Quality Management
.

The basis of
TQM is to reduce the errors produced during the manufacturing or service process,
increase customer satisfaction, streamline
supply chain management
, aim for
modernization of equipment and ensure workers have the highest level of training.

15


3.2. Research Design

The scheme or plan of action to be used in meeting the objectives of the study is the
des
criptive design where it describes and interprets contemporary events, situations or
conditions in the company. A case study will show the usefulness of the application of
Kanban system in a manufacturing industry like ABS.


3.3.
Applicat
ion of different
theories to ABS

Designing a good system in production process and implementing it properly is essential
to achieve the goal of production.



In
ABS,
the efficiency of the
worker

is
low. T
here
are
cases that the worker commits
errors like
missing the

basket

they have produced. The company was not able to detect
where to find those missing baskets.
Through TPS, it
prevents the production of defective
products, eliminates overproduction and focuses attention on understanding the problem
and ensuring that it ne
ver recurs.
With this
quality control process
,
it
d
etect
s

the
abnormality, stop
s

it,

fixes or corrects

the immed
iate condition and investigates

the root
cause
.


Manpower is the brain and heart of production.
Especially in ABS, since they are
manually opera
ted.

Empowerment of the employees will definitely increase the
efficiency of the production of
ABS
.



16


ABS also

needs a system that would lessen their cost. One of its issues is that, due to the
rework and repair of items, they often have additional costs i
n production. With JIT, the
inventory costs will be lessen because the it only requires the items needed in the process,
thus, it will have zero work in process. It is also a simple technique not involv
ing
computers so its cost will be lessened
. Kanban car
ds provide quick response to changes
and delegate responsibility to operators.


Another issue in
ABS

is the
frequent

missing

of their
materials and transferring the
basket with unnoticed defects from one station to another.
In
TQM
,
it will reduce errors

or defects thus, improve the quality of production. With TQM, it also assures that the
workers will be well
-
trained and improve their performance.



3.4.
Instrumentation


After applying the systems above mentioned, the researchers will use a
Kanban card

a
s
shown in Figure 3.1. Through this
card
,
the materials being used are

supervised
.




Figure
3.1.
Production
-
ordering K
anban

card

17


In order to avoid the rework
s

and repair
s

t
he
quality control

inspection staff

will then
place remarks if necessary

in the
w
ithdrawal K
anban

card

as shown in Figure 3.2
. This
card

will show if the given
baskets are well finished from the station where it came from.
If the quality control inspection staff saw defects from it, he/she will
not allow defective
parts to go from one

work station to the next.



Figure 3.2.

Withdrawal
K
anban

card









18


GANTT CHART

ACTIVITIES

JULY

AUGUST

SEPTEMBER

OCTOBER


05

08

27

28

29

03

10

17

02

13

25

30

01

04

06

07

Conceptualization



















Constructing the
topic justification



















Submission of
topic justification



















Collecting review
of related
literature



















Visiting the
Company



















Submission of
review of related
literature



















Constructing th
e
Methodology



















Doing the
presentation or
research

Proposal



















Oral defense


















19


APPENDIX
A
:

Existing process in ABS




20


APPENDIX
B
:

Kanban system applied in production at ABS


21


Appendix C: Questionnaire


H
oly Angel University

College of Engineering and Architecture

Department of Industrial Engineering


Sept 3, 2010



Dear Madam/Sir:


Greetings of peace!



We, the students of Holy Angel University under the College of Engineering and Architecture,
taking up
Introduction to Methods of Research, were asked to make a research proposal. We
would like to conduc
t a study regarding the Kanban S
ystem to lessen the rework of items.


In line with this, we would like to ask permission to gather data in your company. Res
t assured,
the information gathered will be kept confidential.


We hope for your favorable response.


Thank you
very much
and God bless!


Truly yours,



Blessylda Grace P. De Jesus



Alexis G. Maniago




Laurice A. Oratcio




Noted by:



RUBY PINEDA
-
HENSON
, PhD

Adviser



22


Please answer the follow questions by putting a check mark appropriate to the choice
that will support your company.


1.)
Type of Organization

[ ]

single proprietorship

[ ]

cooperative

[ ]

Partnership

[ ]

Corporation


2.)
Classific
ation according to Capital (PhP)

[ ]

Micro (less than 1.5M)

[ ]

Small (1.5


15M)

[ ]

Medium (15


100M)


3.)
Classification according to employment (number of employees)

[ ]

Micro (1
-
9)

[ ]

Small (10
-
99)

[ ]

Medium (100
-
199)


4.)
Number of employee
s


Direct workers




_________



Production


_________



Non
-
production


_________


Indirect/ Contract Worker

_________


Total






_________


5.)
Production


Annual volume of Production _______________________


Est
imated Value PhP______________________________





6
.) System
/
s used in terms of Production

23


Please specify __________________________________________



7
.) What are the processes in your production?

Please specify __________________________________________



8
.) What are the problems you encountered in production?

Please specify __________________________________________



9
.) What are the technical assistance
s

needed?

Please specify __________________________________________



10
.) Do you meet production d
eadlines?

Please specify __________________________________________



11
.) How much defective products produced in every production?

Please specify __________________________________________



12
.) What are your ways to
lessen

inventories

in your company
?

Please specify __________________________________________






24


Appendix D: Aquino Basket Shop








25


REFERENCE

Chase, R.B. & Aquilano, N.J. (1990). Production and operations management: A life
cycle approach. Homewood, Illinois: Richard D. Irwin, Inc.


Gregerman, I.B. (1984). Productivity improvement: A guide for small business. New
York, USA: Von Nostrand Reinhold Company.


Gross, J.M., & McInnis, K.R. (2003).
Kanban made simple: Demystifying and applying
Toyota’s Legendary manufacturing process.
Unite
d States of America: McInnis


Kochan, A. (1997).
Ford


Valencia: just in time and just on site: Assembly Automation
,
Vol 17 No 1


Monden, Y. (1993).
Toyota Production System: an integrated approach to Just
-
In Time.

Norcross, Georgia: Industrial Engineerin
g and Management Press


Neumann, B. R. and Jaouen, P. R. (1986). Kanban, Zips and Cost Accounting: A Case
Study.

Journal of Accountancy,
August, pp. 132
-
141.


Schroeder, R.G. (1989).
Operations management: Decision making in the operations
function.
United

States of America: McGraw
-
Hill.


Taylor, J.R. (1989). Quality control systems: Procedures for planning quality programs.
USA: McGraw
-
Hill,Inc.


Wren, D. A. (1999). Just In Time Inventory. Retrieved March 3,2004 from , Web site:


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