Taking manufacturing optimization one step further: IoT-enabled Kanban

Maintaining small and dynamic lot sizes is a central Industry 4.0 topic. Making each item customized to the individual buyer’s specification is a huge milestone in moving away from mass production towards a more targeted and sustainable way of manufacturing products. These products have a near 100% chance of being sold and are only produced when and where they are needed. I look forward to having the option to reorder ‘just’ a left glove or to specify where I would like to have the USB ports placed in my new car.

In this blog you will learn how IoT-enabled digital Kanban can support the concept of optimizing supply chain and production processes and thus taking one step further towards small and dynamic lot sizes.

Kanban is a procedure for controlling production and material flow based on the physical material stock in production. Material that is required on a regular basis is continually kept available in small quantities in production. With Kanban, the replenishment or production of a material is triggered only when a certain quantity of the material has been consumed. This replenishment is triggered directly by production using previously maintained master data. Entries in the system are reduced to a minimum – for example, to the input of a bar code. All other actions in the system are carried out automatically in the background.

With Kanban, the production process is designed to control itself and the manual posting effort is reduced as far as possible. The effects of this are the shortening of lead times and reductions in stock levels.

In Kanban processes, the stock levels in a Kanban container are the smallest entity being monitored. Status changes trigger subsequent processes such as replenishment from warehouse or reordering from supplier. Whereas most of the processes following the status change have long been automized with the help of software solutions such as ECC or S4/HANA, the registration of the status change often still involves manual tasks. Paper-based Kanban cards, for example are collected at predefined points in production and the information is only later maintained in a central IT system. Another common approach is manual scanning of the relevant bar codes – indicating the target status for example the one for ‘full’ or the one for ‘empty’.

As comes with manual tasks, they are error prone and lead to high lead times.

Intelligent technologies such as the Internet of Things (IoT) can help to make the next step. In IoT-enabled Kanban, based on Auto-ID technology for example, tracking of container status is  automated establishing a direct connection between the physical material flow and its representation in the IT world. With the help of RFID tags, placed on the containers and mapped against the respective Kanban ID, the movement of the containers can be tracked automatically, and status changes are updated real-time. The graphic below gives an example. A Kanban container is set to status ‘empty’ as it passes the RFID gate at the central collection point. This can trigger a request for material in the warehouse or at the supplier. Once the container has been refilled and leaves the gate leading from warehouse to production area, the status is set to ‘full’. When the material in the container has been used, it arrives back at the central collection point and the process starts again.

RFID technology can be used beyond Kanban, too as indicated in the below graphic. The (semi-) finished product is brought to the warehouse using another RFID equipped container. Once this container enters through the gate of the product warehouse the goods receipt process is automatically triggered.

RFID in IoT-enabled Kanban

Real-time, automatic status updates are a big step forward towards optimal material flow with shorter lead time and reduced storage lading to reduced operational costs and higher efficiency.

With IoT-enabled Kanban companies can take the next step in reimagining the way their workers operate; the way they interact with suppliers and the way they create experiences for their customers as they are moving towards small and highly targeted lot sizes.

We are looking forward to delivering IoT-enabled Kanban integrated with business processes in S4/HANA very soon. The key aspect we currently focus on are integration of business objects, preconfigured rules to process Auto-ID events and the ability to integrate IoT devices like smart scales to automate fill-level adjustment.

We would also like to encourage you to virtually visit our digital Kanban showcase in Walldorf.