Pull and Kanban in

SAP

Topics

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What is Pull and when do I use it

Procurement Decision Tree

Kanban Calculator

SAP reports

Fields

eKanban/Reorder Point Setup

Purchase Pull System

• Part shortages are reduced and/or eliminated (reducing expediting)• Total inventory is reduced through better mix (right sizing)

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Manufacturing

StrategicBuffer

Supplier Lead Time8 Weeks

Process Lead Time2 Weeks Customer Expectation

3 Weeks

Replenishment Signal (Purchase Order)

ConsumptionSupplier

• Pull systems establish strategically located “buffers” of parts within a process.• Inventory (or part) replenishment is “triggered” based on consumption versus

pushed based on net requirements.

Pull System Design Drivers• Pull is about

– Set Up– Maintenance

• Demand is dynamic and changes over time– Seasonality, ramp up/down, engineering changes, etc. drive need to resize Kanban quantities– Need to review Kanban sizes at least quarterly

5Effectiveness, then efficiency

Goal1. Establish

inventory control (Kanban sizing)

2. Stabilize process

3. Reduce inventory

Kanban

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Coefficient of Variation?• Coefficient of Variation (CoV) measures the variability of demand

– It is defined as the ratio of the standard deviation (σ) to the mean (μ)

• Used to determine if an item is a good candidate for pull– Low variability: good candidate for pull– High variability: poor candidate for pull

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CoV>=1.5

Push

1.0<CoV>1.5

Additional Data Required

CoV<=1.0

Pull

CoV Example

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Weeks DemandA B C

1 25 30 02 25 40 03 25 40 04 25 30 05 25 30 06 25 70 1507 25 0 08 25 0 09 25 0 0

10 25 0 011 25 60 012 25 0 150

Mean (Average) 25 25 25

Standard Deviation (Variation) 0.0 25.0 58.4

CoV 0.0 1.0 2.3

• Parts A and B meet the rule of thumb COV<=1

• Part C has same average demand, but high variability

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CoV alone does not always indicate a good candidate for pull

The Run Ratio• The Proportion of Time a

Part is Used or Sold– A: 12/12=100%– B: 7/12=58%– C: 2/12=17%

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Frequency of Demand

Weeks DemandA B C

1 25 30 02 25 40 03 25 40 04 25 30 05 25 30 06 25 70 1507 25 0 08 25 0 09 25 0 0

10 25 0 011 25 60 012 25 0 150

Mean (Average) 25 25 25

Standard Deviation (Variation)

0.0 25.0 58.4

CoV 0.0 1.0 2.3

Run Ratio 100% 58% 17%

Kanban Calculator

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Helps determine good candidates for Pull– Performs all of the calculations automatically– Compares current situation vs. expected if part is converted to pull

Calculates needed stocking levels (bin sizes) to maintain desired service level– Requires Master Data integrity– Fields can be manually adjusted in the calculator

Kanban Calculator

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ZMMR is the first transaction that is run. This transaction gives us the Usage data for the materials.

MC.1 and MCBZ

ZMMR

ZMEV

ZPIRN

ZMEV is the second transaction that is run. This transaction gives us the master data for the materials.

ZPIRN is the third transaction that is run. This transaction gives us the Supplier for the materials.

MC.1 is the fourth transaction that is run. This transaction is used to get the 3 month average inventory and forecast data for the materials.

PK18PK18 is the last transaction that is run. This gives us the current Bin sizes for any materials currently on Kanban

Calculator Transactions

Calculator Demo

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Kanban

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Kanban

InternalWorks with Production Orders

for internally procured material between workcenters at a plant.

ExternalWorks with purchased parts,

auto-generating PO’s, and vendor replenishment.

Regular Inventory

ConsignmentInventory

SAP eKanban Master Data• Supply Area

– Person Responsible– Storage Location

• Control Cycle– Number of Bins– Bin Quantity– Replenishment Strategy

• In house Production• External Source• Stock Transfer

• Kanban Specific Vendor (if the vendor has multiple Ordering addresses)– New Info Record

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SAP eKanban External Procurement

• Step 1: Create Supply Area PK05• Step 2: Alter Material Master MM02• Step 3: Enter Materials into PK01• Step 4: Managing the eKanban board

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Step 1: Create Supply Area PK05

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First Transaction PK05The supply area

Step 1: Create Supply Area PK05

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Click New Entries to Setup Supply Area Information

Step 1: Create Supply Area PK05

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Step 1Enter the Supply

Area and description

Step 2Click drop down

for Storage Location be sure to choose the proper area (thus must be an IM

location)Step 3

Click drop down and select corresponding MRP controller code of the area

EP Step 2: Alter Material Master

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Enter “MM02” to alter the Material Master. Enter the desired Part Number and

Plant Number on the following screens

EP Step 2: Alter Material Master

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Select “MRP1” tab

You may want to create a special MRP controller for

eKanban Items

Change MRP Type to “ND”

EP Step 2: Alter Material Master

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Enter desired backflush location that items will be

received into.

Select “MRP 2” tab

Enter Lead Time vendor has committed to.

EP Step 2: Alter Material Master

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In the “MRP 4” tab click

“Organizational Levels”

Key in the IM storage location

you wish the items to drop into

once received

EP Step 2: Alter Material Master

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Change this Field to 1 (must be excluded

from MRP) and save.

This is also accessible through the transaction

MMSC

EP Step 3: Enter Materials PK01

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Enter transaction PK01 to create Kanban control

cycle

EP Step 3: Enter Materials PK01

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Enter Material Number

Enter Plant NumberEnter Supply Area

EP Step 3: Enter Materials PK01

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Enter “001” to issue PO’s and press “Enter”

Enter Number of KanbansEnter Kanban Quantity

EP Step 3: Enter Materials PK01

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Enter Purchasing Org

Enter Vendor #

Leave Agreement field blank unless using

Scheduling Agreement, then fill in Agreement #

and Line #

EP Step 3: Enter Materials PK01

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Kanban Indicator must be marked “X” for Sch. Agreements at the Line Item level

EP Step 4: Managing the eKanban board

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Enter transaction to view kanban Bin status and to process Kanban

order.

EP Step 4: Managing the eKanban board

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Enter Plant Number and Supply Area

EP Step 4: Managing the eKanban board

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In this view you can see the status of Bins in the Supply Area. This is where the operators can Empty the Bin in order to create a Purchase order to replenish

stocking level of the Bin. The initial status of the Bin is Wait”. There are several statuses that can be set. Check the legend to see. To set the Bin empty, Select both bins and click the “To Empty” button. Multiple Bins can be emptied at the

same time.

EP Step 4: Managing the eKanban board

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When a Kanban Bin is emptied the Bin icon will turn red.A Purchase order will automatically be released.

EP Step 4: Managing the eKanban board

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To change a Bin status to anything other than empty or full, Right click on a Bin and select “Kanban correction.”

EP Step 6: Managing the eKanban board

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Double click a line. Select the desired status. If you are keying it to full, enter a qty. Once complete, select the “Status/qty” button.

EP Step 6: Managing the eKanban board

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To set to the “Full” Status manually, select a bin and click “To Full”. This will make a FULL MIGO_GR! So be careful. Also, the bin will automatically be set

to Full once any partial/full Migo_GR has been posted against the PO.

EP Step 4: Managing the eKanban board

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To get any information about the bin, double-click on a bin. The PO can be altered by clicking the Replenishment button. The PO is also displayed here.

The time the Bin status was changed is displayed in EST.

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Triggering Kanban in SAP

Two Ways to Trigger Kanban:

1. Using the PK13N Transaction in SAP

2. Using the RF gun and Scanning the Kanban Label

SAP Kanban - Demand View

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SAP Transaction: PK13N Green Bin (FULL) = Bin is full or being used currently in production Red Bin (EMPTY) = Bin is empty (on order) Purple (WAIT) = Temporary status

Kanban RF Process

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1. When a Kanban Bin is Empty, Scan the Barcode Card for the Empty Bin

2. Flip the Status Card to “On Order”

BIN EMPTYBIN 2BIN 1

SAP RF Menu

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Using the RF Tablet, Select 6 3 1

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Reorder Point/Min. Max.• The reorder point ("ROP") is the level of inventory when a fresh

order should be made with suppliers to bring the inventory up to a fixed level or by a fixed quantity.

Reorder point quantity includes safety stock. The PO quantity depends on the lot size (e.g., fixed).

Settings

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• MRP Type = “ZR”• Lot Size Key = “HB” – Replenish to the

maximum stock level• Maximum Stock Level: This is a required entry.

It denotes the quantity of stock that may not be exceeded

• It calculates the Lot size using the following two Formulas and creates an order proposal using the greater of the two lot sizes calculated

• MRP Type = “ZR”• Lot Size Key = “FX” – Fixed Order Quantity• Fixed Lot Size: This is a required entry. It

denotes the quantity that will be procured in the event of a shortage.

• If the amount of the shortage is less than the fixed lot size, it is the fixed lot size that is procured (and not the lesser quantity that is actually required).

• If the amount of the shortage is greater than the fixed lot size, a multiple of the fixed lot size is procured. The system creates several purchase order proposals for this purpose.

Fixed Order QuantityMaximum Stock Level

Kanban vs. Reorder Point

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Does not include future demand

Operator triggers orders

Provides good visual control

Shop Floor Ownership

Forward Looking: includes spikes

System-driven (MRP) orders

BOMs MUST be accurate

Purchasing Ownership

KanbanReorder Point

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Questions