SAP KANBAN

Currently, SAP KANBAN functionality is used only for procuring raw materials from outside vendors and transferring stock between plants.
Interplant transfers (STO's) use internally generated schedule lines for replenishment. Vendor kanban uses Summarized JIT Calls to communicate JIT requirements to suppliers.
Interplant Kanban is transparent to supplying plant. No additional work is required from the supplying plant.


Advantages:
1. Keeps raw material inventory in check 
2. Prevents overshipping 
3. Incorrect inventory balances, BOMs, etc. do not affect shipping 
4. Supplier schedules stay in sync with actual production
Disadvantages:
1. Requires more discipline from the supplier and the shop floor.  Example: controls in processing of scrap; maintenance and tracking of Kanbancards;adherence to ship windows.
2. More master data to maintain.
3. May hide procedural or data problems.
T-codes for Kanbans
Control cycle is a pre-requisite for KANBAN. You can create it with t code PK01
The major steps in KANBAN are:
1. Maintain supply area, PK05 
2. Create control cycle, PK01 
3. Kanban correction, PK31 
4. Quantity signal input, PK22 
5. Kanban board, PK13N
Origins

The term kanban describes an embellished wooden or metal sign often representing a trademark or seal. Kanban became an important part of the Japanese mercantile scene in the 17th century, much like the military banners had been to the samurai. Visual puns, calligraphy and ingenious shapes were employed to indicate a trade and class of business or tradesman.
In the late 1940s, Toyota began studying supermarkets with a view to applying store and shelf-stocking techniques to the factory floor, figuring, in a supermarket, customers get what they need, at the needed time, and in the needed amount. Furthermore, the supermarket only stocks what it believes it will sell, and customers only take what they need because future supply is assured. This led Toyota to view a process as a customer of preceding processes, and the preceding processes as a kind of store. The customer process goes to this store to get needed components, and the store restocks. As in supermarkets, originally, signboards were used to guide "shoppers" to specific restocking locations.
"Kanban" uses the rate of demand to control the rate of production, passing demand from the end customer up through the chain of customer-store processes. In 1953, Toyota applied this logic in their main plant machine shop.^[3]

Operation

An important determinant of the success of production scheduling based on "pushing" the demand is the quality of the demand forecast that can receive such "push."
Kanban, by contrast, is part of an approach of receiving the "pull" from the demand. Therefore, the supply or production is determined according to the actual demand of the customers. In contexts where supply time is lengthy and demand is difficult to forecast, the best one can do is to respond quickly to observed demand. This is exactly what a kanban system can help with: It is used as a demand signal that immediately propagates through the supply chain. This can be used to ensure that intermediate stocks held in the supply chain are better managed, usually smaller. Where the supply response cannot be quick enough to meet actual demand fluctuations, causing significant lost sales, then stock building may be deemed as appropriate which can be achieved by issuing more kanban. Taiichi Ohno states that to be effective kanban must follow strict rules of use^[4] (Toyota, for example, has six simple rules, below) and that close monitoring of these rules is a never-ending task to ensure that the kanban does what is required.

Kanban cards

Kanban cards are a key component of Kanban that utilizes cards to signal the need to move materials within a manufacturing or production facility or move materials from an outside supplier to the production facility.
The Kanban card is, in effect, a message that signals depletion of product, parts or inventory that when received will trigger the replenishment of that product, part or inventory. Consumption drives demand for more. Demand for more is signaled by Kanban card. Kanban cards thus, in effect, help to create a demand-driven system. It is widely espoused by proponents of Lean production and manufacturing that demand-driven systems lead to faster turnarounds in production and lower inventory levels, helping companies implementing such systems to be more competitive.
Kanban cards, in keeping with the principles of Kanban, should simply convey the need for more materials. A red card lying in an empty parts cart would easily convey to whomever it would concern that more parts are needed.
In the last few years, Electronic Kanban systems, which send Kanban signals electronically, have become more widespread. While this is leading to a reduction in the use of Kanban cards in aggregate, it is not uncommon in modern Lean production facilities to still find widespread usage of Kanban cards.

Toyota's six rules

• Do not send defective products to the subsequent process
• The subsequent process comes to withdraw only what is needed
• Produce only the exact quantity withdrawn by the subsequent process
• Level the production
• Kanban is a means to fine tuning
• Stabilize and rationalize the process

Three-bin system

A simple example of the kanban system implementation might be a "three-bin system" for the supplied parts (where there is no in-house manufacturing) — one bin on the factory floor (demand point), one bin in the factory store, and one bin at the suppliers' store. The bins usually have a removable card that contains the product details and other relevant information — the kanban card.
When the bin on the factory floor becomes empty, i.e., there is demand for parts, the empty bin and kanban cards are returned to the factory store. The factory store then replaces the bin on the factory floor with a full bin, which also contains a kanban card. The factory store then contacts the supplier’s store and returns the now-empty bin with its kanban card. The supplier's inbound product bin with its kanban card is then delivered into the factory store completing the final step to the system. Thus the process will never run out of product and could be described as a loop, providing the exact amount required, with only one spare so there will never be an oversupply. This 'spare' bin allows for the uncertainty in supply, use and transport that are inherent in the system. The secret to a good kanban system is to calculate how many kanban cards are required for each product. Most factories using kanban use the coloured board system (Heijunka Box). This consists of a board created especially for holding the kanban cards.

Electronic kanban systems

Main article: Electronic kanban

Many manufacturers have implemented electronic kanban systems.^[5] Electronic kanban systems, or E-Kanban systems, help to eliminate common problems such as manual entry errors and lost cards.^[6] E-Kanban systems can be integrated into enterprise resource planning (ERP) systems. Integrating E-Kanban systems into ERP systems allows for real-time demand signaling across the supply chain and improved visibility. Data pulled from E-Kanban systems can be used to optimize inventory levels by better tracking supplier lead and replenishment times


Read more: http://www.answers.com/topic/kanban#ixzz1De5MDJD6


Transitioning from an MRP 
driven approach to Kanban, without considering backflushing can 
be a major problem. When using MRP to backflush, the true cost 
of production becomes buried in what MRP "thinks" is being 
consumed, when in actuality the Kanban system should be 
controlling inventory levels through SAP. A totally controlled 
Kanban system is great if you can: 
A) Trust your personnel to account for scrap or rework, and 
follow the process 
B) Parts, or sub assemblies on Kanban do not change frequently 
C) Replenishment signals are easy to accomplish, I mean REALLY 
easy (Have major problems w/ personnel not scanning cards) 
D) Whole system is designed to KISS (keep it simple, stupid) 
Standard