Kanban Cards or MRP?

OK so the title of this article was incendiary and just a ploy to get you here. Sorry. Instead of another vitriolic diatribe on the glories of kanban over MRP I want to look at a very specific trade-off when using lean manufacturing in Microsoft Dynamics AX. In the past few weeks I’ve had the chance to work with very experienced lean practitioners who are steeped in lean, TPS, and all things kanban. When I mention that in Dynamics AX kanbans can be planned by MRP, I get looks like I have two heads and a quizzical “Why ever would you want to do that?”

The heart of the confusion is terminology since to most lean folks, a kanban card represents a fixed quantity of product and a trigger to replenish that quantity when the kanban container gets emptied. But in Dynamics AX, a kanban is simply a signal to build a specific item, specific quantity, produced by specific processes, with a specific due date. In other words, a kanban is a “lean-flavored” production order.

Whether the term “kanban” in AX is right or not isn’t the point. The point is that MRP can generate planned orders to be fulfilled using lean pull and flow as easily as it can generate planned orders for discrete manufacturing. In fact, Dynamics AX is flexible enough to fully support traditional fixed kanban cards, “scheduled kanbans” based on MRP, and “event kanbans” to support true make to order production. In the world of high mix manufacturing, all three types of kanbans can be intermingled to manage the different demand patterns in the best way for each. For the high runner products, a fixed card might make a lot of sense. For the very infrequently ordered “stranger” products, an event kanban to build it only when ordered is clearly better than carrying an inventory just to use a kanban card to replenish.

Using fixed kanban cards sets an inventory level just as much as MRP settings for min/max inventory do. So which is better? Fixed cards which respond to increasing demand by cycling out and back through replenishment cycles faster or scheduled kanbans where MRP factors in time-phased demand and supply to create kanbans for only the specific quantity required?

Here’s a quick bullet list of some trade-offs between fixed cards and MRP-based scheduled kanbans.

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Written by Phil Coy
Director, Strategic Services – mcaConnect