Demystifying LEAN Subcontracting Implementation for Microsoft Dynamics AX 2012- Part Two

By - June 25, 2013

Imagine the subcontracting process for Microsoft Dynamics® AX 2012 resembles a large body of water in which you need to cross. It is not difficult with the correct boat and small motor, you simply need to navigate the shallow areas and ensure there is enough gas to last you past the deep water in the middle. In the previous article, we covered the setup of the subcontracting in LEAN manufacturing which acts as the shallow end of the lake. Now, we will cover processing using kanban rules, kanban tickets, planning jobs, starting jobs, and completing the manufacturing process. This will move us across the lake towards the goal of receiving goods from a subcontractor.

Terminology and Assumptions

Microsoft Dynamics AX uses the following terms in the implementation of LEAN manufacturing.

Subcontracting: The process of either outsourcing a specific resource or the capability to optionally outsource based on business logic of capacity planning.

Production Flow Model: Setting the capacity, calendar, and configuration for a group of work cells.

Work Cells: Using resources and resource groups. Activities within a production flow are assigned to a work cell.

Lean Schedule Groups: Mapping all work cell capacity settings to a common throughput scheduling in order to enable a complete line balance.

Kanban: A scheduling system consisting of boards, cards, and other tools that level production by creating specific jobs that pull product through the process. This is tied to quality and throughput stabilization.

This article is structured with configurations used from base data as a part of the LEAN manufacturing and production setup covered in the previous J.U.I.C.E. blog post, “Demystifying LEAN Manufacturing Part One”. The configuration of item model groups, service based inventory items, purchase agreements, resource information production flows is complete. Similarly, standard costing for products is setup. In addition, the kanban rules that replenish product families are configured with item allocation keys and product dimensions. This process can be automated using master planning and event kanbans, however, that is outside of the scope of this article.

Scenario

The Contoso database uses Fabrikam as an example of an audio products manufacturing company, which uses subcontracting to outsource the process of coating speakers for the purpose of a later final assembly. Refer to TechNet for specific information regarding the background of the data set used. In this case, ship left and right speaker assemblies over to the vendor for the coating process. Items need to be transferred, processed, and completed at the supplier’s facility.

Implementation

The implementation of subcontracting represents cruising across the lake. The following components are required for the implementation of LEAN Subcontracting.

  • Kanban Rules
  • Creating kanban Tickets
  • Replenishment
  • Kanban Planning
  • Starting the kanban process
  • Releasing purchase orders and receipt advices

Kanban Rules

A kanban rule is the first step to generating kanbans. There are two types of kanban rules, withdrawal and manufacturing. In relation to subcontracting, Withdrawal kanbans are the transfer of goods to the vendor. Manufacturing kanbans create process jobs. These are the action events of subcontracting that apply value add operations to the goods. Both types of kanbans rely on a replenishment strategy. The different methods are featured below:

  • Fixed – You can define and manually create a fixed quantity of kanbans. When a handling unit is emptied for a kanban that has a fixed replenishment strategy, new kanbans are created so that the number of kanbans in the kanban cycle remains constant.
  • Scheduled – Kanbans are generated during master planning or created manually by the planner, based on actual demand, forecasts, or minimum stock requirements.
  • Event – Kanbans are generated directly, based on demand.

In this example, both fixed and scheduled kanbans are used. Event kanbans are not within the scope of this article.

Kanban Withdrawals

In this case, take two standard inventory goods, speaker covers with distinct left and right orientation to be coated. This necessitates the creation of two different withdrawals (transfers) of inventory items to the vendor. The quantity is set at 100 (for each type) because 200 units will fit in the transfer truck at a time. Use the following procedures to create kanban withdrawal rules and define the basic settings for the rules.

Create a kanban withdrawal rule for the left speaker.

  1. Click Production control > Setup > LEAN manufacturing > Kanban rules.
  2. On the Action Pane, on the Setup tab, in the New group, click Kanban rule.
  3. In the Type field, select Withdrawal.
  4. In the Replenishment strategy field, select Scheduled.
  5. In the First plan activity field, select Transfer to 4101.
  6. Under the Details FastTab, in the Product field, select SCPS_UPSCL.
  7. Under the Quantities FastTab, in the Default Quantity field, select 100.
  8. Make a note of the Kanban rule number created.  In this example, it is 000090_1015.

Create a kanban withdrawal rule for the right speaker.

  1. On the Action Pane, on the Setup tab, in the New group, click Kanban rule.
  2. In the Type field, select Withdrawal.
  3. In the Replenishment strategy field, select Scheduled.
  4. In the First plan activity field, select Transfer to 4101.
  5. Under the Details FastTab, in the Product field, select SCPS_UPSCR.
  6. Under the Quanties FastTab, in the Default Quantity field, select 100.
  7. Make a note of the Kanban rule number created.  In this example, it is 000091_1015.
  8. Close the form.

Kanban Manufacturing

Once the goods are transferred, order the coating process. The coating booth only accommodates 10 speaker covers at a time. Use the following procedure to create kanban manufacturing rules and define the basic settings for the rules.

Create a kanban manufacturing rule for the left speaker.

  1. Click Production control > Setup > Lean manufacturing > Kanban rules.
  2. On the Action Pane, on the Setup tab, in the New group, click Kanban rule.
  3. In the Type field, select Manufacturing.
  4. In the Replenishment strategy field, select Fixed.
  5. In the First plan activity field, select Coating.
  6. Under the Details FastTab, in the Product field, select SCPS_UPSCL.
  7. Under the Quantities FastTab, in the Default Quantity field, select 10.
  8. In the Fixed kanban quantity, select 10.
  9. Make a note of the Kanban rule number created.  In this example, it is 000093_1015.

Create a Kanban manufacturing rule for the right speaker.

  1. On the Action Pane, on the Setup tab, in the New group, click Kanban rule.
  2. In the Type field, select Manufacturing.
  3. In the Replenishment strategy field, select Fixed.
  4. In the First plan activity field, select Coating.
  5. Under the Details FastTab, in the Product field, select SCPS_UPSCR.
  6. Under the Quanties FastTab, in the Default Quantity field, select 10.
  7. In the Fixed kanban quantity, select 10.
  8. Make a note of the Kanban rule number created.  In this example, it is 000095_1015.
  9. Close the form.

Creating Kanban Tickets

Now that the rules are established, the kanban tickets can be configured. Follow these steps to create kanban tickets for withdrawal kanbans.

Create a kanban withdrawal for the left speaker.

  1. Navigate to Production control > Setup > Lean manufacturing > Kanban rules.
  2. Find the withdrawl kanban rule created earlier, Kanban rule 000090_1015.
  3. Open the Kanbans FastTab.
  4. Click Add.
  5. Enter the Number of new kanbans as 2.
  6. Select the Due date/timeas Today (Click on date picker and select Today).
  7. Select the Create button.

Create a kanban withdrawal for the right speaker.

  1. Find the withdrawl kanban rule created earlier, Kanban rule 000091_1015.
  2. Click OK.
  3. Open the Kanbans FastTab.
  4. Select the Add button.
  5. Enter the Number of new kanbans as 2.
  6. Select the Due date/time as Today.
  7. Click Create.
  8. Click Close to close the Kanban rules form.

Follow these steps to create kanban tickets for manufacturing kanbans.

Create a kanban ticket for the left speaker.

  1. Navigate to Production control > Setup > Lean manufacturing > Kanban rules.
  2. Find the manufacturing kanban rule created earlier, Kanban rule 000093_1015.
  3. Open the Kanbans FastTab.
  4. Click Add.
  5. Enter the Number of new kanbans as 10.
  6. Click Create.

Create a kanban ticket for the right speaker.

  1. Find the manufacturing kanban rule created earlier, Kanban rule000095_1015.
  2. Click OK.
  3. Open the Kanbans FastTab.
  4. Click Add.
  5. Enter the Number of new kanbans as 10.
  6. Click Create.
  7. Click Close to close the Kanban rules form.

Replenishment

With the configuration for the kanbans successfully setup, the process can start. The first step is transferring goods to the vendor. For this case, send an initial 100 units of each item. Keep the second set of 100 units on the kanban transfer board so that it is ready in case it is necessary to initialize more.

Follow these steps to replenish the kanban transfer jobs.

  1. Navigate to Production control > Common > Lean manufacturing > Kanban board for transfer jobs.
  2. Select the Production flow as Speaker covers coating.
  3. Select Transfer to 4101.
  4. Click OK.
  5. Select the first Kanban for Item number SCPS_UPSCL.
  6. Click Transfer> Start.
  7. Click Transfer > Complete. It will become unavailable.
  8. Select the first Kanban for Item number SCPS_UPSCR.
  9. Click Transfer > Start to move up the board in priority.
  10. Click Transfer> Complete. It will become unavailable.
  11. Click Close to close the Kanban board for transfer jobs.

Kanban Planning

The real planning starts now. By moving the transfer jobs to a date and time, it commits the resources necessary to complete the work. Follow these steps to plan the kanban jobs.

  1. Navigate to Production control > Common > Lean manufacturing > Kanban schedule board.
  2. Click View > Change work cell.
  3. Select the Work cell as SubContrac.
  4. Click OK.
  5. Select the Kanban for SCPS_CSCL.
  6. Drag the Kanban to Today.
  7. Select the Kanban for SCPS_CSCR.
  8. Drag the Kanban to Today.
  9. Click Close to close the Kanban schedule board.

Starting the kanban process

To initiate the coating process at the subcontractor location, use the following steps and begin the kanban process jobs.

  1. Navigate to Production control > Common > Lean manufacturing > Kanban board for process jobs.
  2. Click Change cell.
  3. Select Work cell as SubContrac.
  4. Click OK.
  5. Select the Kanban for SCPS_CSCL.
  6. On the Action Pane, in the Manufacture tab, click Start.
  7. Select the Kanban for SCPS_CSCR.
  8. On the Action Pane, in the Manufacture tab, click Start.
  9. Click Close to close the Kanban board for process jobs.

Releasing Purchase Orders

The last step is the manual creation of the purchase order. This will tie the goods being produced to a master purchase agreement that was created in the setup article. Follow these steps to release purchase orders.

  1. Navigate to Production control > Periodic > Lean manufacturing > Subcontracting documents.
  2. Set the Production flow as Speaker coating.
  3. Select the Plan activity as Coating.
  4. Select Minimum job status as Not planned.
  5. Ensure Release purchase orders is selected.
  6. Select OK button.

Conclusion

This article covers the key aspects of implementing subcontracting for LEAN manufacturing. Specifically, it discusses kanban rules, kanban tickets, replenishment orders, kanban planning, and starting the kanban process. As an added feature, processing of a purchase order has been examined. This propels you across the lake and enables you to dock on the other side, which represents the standard process of receiving the coated speaker assemblies and placing them on the line for final assembly.

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