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What is Heijunka?

Updated on May 18, 2018
Heijunka means levelling production
Heijunka means levelling production | Source

Heijunka is a system of production-leveling that produces the right product mix as demanded by the customer by making optimal utilization of the available capacity.

This lean principle is typically applied to mature lean organizations that have successfully streamlined all their process using the appropriate tools. These capacity enhancements are a prerequisite for the implementation of this concept because system instability may result when implemented prematurely.

What is Heijunka?

Production leveling is a means of stabilizing production volume and variety by consolidating the total number of customer orders and then spreading out their production in an even manner throughout the day. This leveling is done to mitigate against the variation in customer demand that happens on a daily basis.

The even spreading-out of production ensures a high order fulfillment rate by meeting variety and volume requirements. Heijunka also provides that the internal output is balanced and that the established capacity is not over or under-utilized.

How does Heijunka Work?

The ideal situation in a lean production system would be to produce as per the customer order sequence. However, such operation would not work well because of the daily fluctuations that generally occur with customer orders.

At one moment there would be no orders, leaving the production capacity idle, while the next moment there will be a flood of customer orders that the current production capacity cannot satisfy.

Heijunka evenly spreads the production of customer orders by looking at the average demand over a slightly more extended period, then consolidating them into a production schedule that takes into account the volume and mix.

Heijunka results in flexibility in customer choice. There are two ways to level the production process:

  • Leveling by quantity
  • Leveling by product

The primary goal is to effectively produce what the customer needs when they need it and in the amount that they require. It results in a stabilized production that can withstand unusual spikes in customer demand. These spikes are what lead producers to operate in a mass production mindset that encourages large buffer stocks, over-production, over-staffing, and over-capacities.

Large batches of products increase the costs of production and eventually result in poor customer satisfaction ratios because resources are used to produce goods that are not in demand. Batching of production results in poor quality, overburdening of resources and increased costs of production.

The system leads to a predictable and stable working environment as the resources are evenly balanced over a specified period. By averaging out the number and variety of goods produced over a specific period, order fulfillment rate will increase.

Let us take an example of Company X that produces sandals. Company X delivers shoes of three different colors – red, blue and green:

Example of Production Levelling

 
8:30 TO 9:30
9:30 TO 10:30
11:00 TO 12:00
12:00 TO 13:00
14:00 TO 15:00
15:00 TO 16:00
16:00 TO 17:00
MONDAY
RED
RED
RED
RED
RED
RED
RED
TUESDAY
RED
RED
RED
RED
RED
RED
RED
WEDNESDAY
RED
RED
RED
RED
RED
RED
RED
THURSDAY
BLUE
BLUE
BLUE
BLUE
BLUE
BLUE
BLUE
FRIDAY
GREEN
GREEN
GREEN
GREEN
GREEN
GREEN
GREEN

From the example above, you find the production of red sandals is done for the first three days, followed by blue, then green sandals. This way of producing has several disadvantages:

  • If the customer suddenly decides to order a large number of blue shoes on Monday, the red ones in production will make it difficult to meet this order. The company might stop the output of the red slippers and try to expedite the new purchase order. Because of the change over of machine to cater for this new order, production sequence will become mixed up.
  • There is a possibility that the red sandals will accumulate due to lack of orders. This inventory build-up will negatively affect the profitability of the company, while at the same time customer order will not be fulfilled.
  • Labour and machines do not get adequately utilized because on some days there will be a heavy workload, while on others there will almost be no work to do.
  • The internal variability in production may lead to upstream instability. This variability means that suppliers will be inundated with random orders and might have to build-up too much inventory which they get stuck with when business is low.
  • The amplification of demand from one process to another is known as the ''Bullwhip effect'' and often leads to bigger inventory piles as you go upstream. This inventory pile continues upstream when in reality the downstream demands are relatively uniform.

Example in a production setting

Producing to customer demand at a steady pace within the organization is the aim of production leveling. It is a balance between the needs of the customer and the efficiency within the factory. The system utilizes capacity optimally and leads to stability along the whole value chain be it, upstream suppliers or downstream customers.

Levelled production

 
8:30 TO 9:30
9:30 TO 10:00
10:00 TO 11:00
11:00 TO 12:00
12:00 TO 13:00
14:00 TO 15:00
15:00 TO 16:00
16:00 TO 17:00
MONDAY
R
R
R
R
B
B
G
G
TUESDAY
R
R
R
R
B
B
G
G
WEDNESDAY
R
R
R
R
B
B
G
G
THURSDAY
R
R
R
R
B
B
G
G
FRIDAY
R
R
R
R
B
B
G
G
Production without heijunka
Production without heijunka

Benefits of Levelling Production

Spreading out of the production volume and variety in an even manner over a defined period helps in mitigating the effects of erratic customer demand by ensuring a stable and predictable manufacturing environment.

There are many compelling reasons for implementing heijunka but the following stand out:

  • Despite the misconceived notion that producing in large batches at a time will reduce changeovers and set time, the opposite happens. Such production methods often lead to long lead times, high stocks, poor quality and reduced utilization of available capacities.
  • To counter the effects of the Bullwhip Effect which is the amplification of demand throughout the value chain. Trying to respond to these fluctuating demands often leads to a myriad of problems within the supplier facility such as variation in production with periods of underutilization of capacity followed by periods when the company cannot satisfy customer demand.

Heijunka aims at leveling production in such a way that the problems mentioned above do not occur. To understand the negative consequences of the bullwhip effect on supply chains, we look at the typical sequence of events that lead to the situation:

  1. A supplier makes forecasts based on the average demand of the preceding period and produces accordingly
  2. After some time, a sharp decline in the orders prompts the supplier to stop building, and he utilizes the stock that he has accumulated to fulfill the small orders that are coming in.
  3. Customer orders increase once again, and the supplier again ramps up production to meet this increasing demand.
  4. These erratic production runs are in the meantime causing other problems within the production floor as workers lose morale and costs escalate.
  5. The cycle continues alternating between increased demand and a reduction in orders – each time the supplier trying to keep up with the fluctuations.

Instead of trying to follow the pattern of external demand that will always be erratic in nature, heijunka production leveling results in a consistent daily output which is determined by the average order that is spread evenly within a specified period, ideally a week.

Take for example a twelve-week production cycle for a particular product. Each week will have different customer order levels- some days these orders will be above the capacity of the production facilities, while on other days the purchase orders may vary below ability which may result in reduced utilization.

With heijunka, we take a four-week total demand, and then production will be planned on a weekly basis from the average. This average will result in the same number of units being produced thus preventing the issues that generally arise when production levels are different on every other day.

One thing that you will notice with heijunka is that there will be a need for an inventory of finished goods – which appears to conflict with lean thinking principles about keeping stock (it is a waste).

However, we must weigh this against the overall goals of the organization – which is basically to satisfy customer needs. It is, therefore, better to have some inventory of finished goods that are produced cost-effectively than trying to build in the exact sequence and quantity that is demanded by the market.

The following table compares the benefits of Just in Time (JIT) production to those of producing using heijunka production leveling:

Levelled Production with Heijunka
Levelled Production with Heijunka
Just in Time Production
Heijunka Production Levelling
Customer demand is fulfilled on request
Customer demand is met based on total demand over a given period
There is a smaller inventory of finished goods
Large inventory of finished goods to cater for high demand periods
There are many fluctuations in demand that are felt the higher up the value stream on goes
The predictable orders along the value chain result in reduced overall supply chain inventory
Erratic work schedules
Balanced work schedule
Overtime
Less overtime

Challenges of Heijunka

The heijunka production systems have more flexibility as well as higher customer satisfaction ratios than an unbalanced production that is characterized by large batches, long set-up times and long wait times.

While production leveling using heijunka is a powerful lean tool that can result in improved efficiencies within an organization, some technical and social factors may impede its proper implementation:

  • It requires a major tool redesign within an organization to ingrain the kind of flexibility needed for proper implementation
  • As production does not match actual customer demand, a relatively large inventory of finished goods will be necessary- along with the attendant issues that accompany substantial inventory levels such as stock obsolescence and high carrying costs
  • It requires a predictable environment as well as accurate and timely data without which it would be challenging to implement
  • Requires proper coordination with the customer so as to project future demand better
  • There has to be a very high degree of discipline within the workforce as well as well thought out work standards that must be followed at all times
  • As there is little operator leeway as to what and how to produce, there can be resultant issues of resistance due to lack of flexibility

When correctly implemented, heijunka is a powerful tool that stabilizes not only the individual business but the entire supply chain. There are circumstances whereby implementing the tool makes much sense while in other cases it does not.

For example, in businesses where the customer demand rarely fluctuates, heijunka would not be useful at all and may, in fact, have unintended negative consequences.

What businesses need to internalize is that production leveling of the kind heijunka demands requires plenty of accurate and actionable data for it to be successful.

The main reason for production leveling is to counter sudden fluctuation in customer demand through the production of a wider variety within the same production line.

Heijunka box and board

A heijunka box is a place where the production signals or kanbans in a levelled production system are kept. It is a visual tool to show the people working in the Gemba what should is next.

The Heijunka board is divided into rows which indicate the products to be built and columns which show the time for production. The production kanbans are placed in the time slots depending on the quantity and mix required.

All the time slots have an equal amount of work which ensures that production flow is constant throughout the day.

Heijunka is best applied to a production facility that has a large variety of products that have different demand characteristics. These kind of products have high variation in terms of type and quantity demanded by the market and there has to be some inventory in order to reduce the amount of fluctuation in the production facility.

This increase in inventory appears to contradict the lean system that considers inventory as a form of waste. However, the sensible use of inventory to balance production can eventually result in a significant reduction of the overall system inventory.

Building inventory to safeguard against fluctuations involves categorizing the type of inventory into four distinct types:

  • Build-to-order inventory is the stock that is kept so as to satisfy the real and current customer demand. It is what is required by the market or has already been order by the customer and is just awaiting dispatch
  • Seasonal inventory buffer is required by the market during certain periods within the year and is built up slowly over time (usually a monthly production target is set and spread out evenly over the months)
  • Safety stock is built in order to take care of market fluctuations that are normal for many products. A sudden spike in demand caused by increased orders can result in unfulfilled customer orders if there is no safety stock in place. The increased demand will have to be met by expediting within the production facility which only ends up in disrupting production
  • Buffer stock is kept so as to cater for internal disruptions such as machine downtime or staffing issues.

These inventory buffers should be stored in separate locations for ease of monitoring and replenishment should only be done using kanbans. When the maximum allowed quantity for a particular type of inventory has achieved, production efforts should be directed at the next inventory type that has not reached its maximum quantity levels. This is done so as to utilize the available capacity (labor and machine) in an optimal manner instead of leaving it idle.

For heijunka to be even more effective, there are several other internal improvements that must be made within the organization:

  • Standardization of work processes so as to achieve reliability and repeatability
  • Change-over time reduction which increases the available capacity
  • Error-proofing of machines and processes

Companies that have implemented heijunka have attained spectacular gains in terms of overall efficiency. Typical results that can be achieved through production levelling include:

  • 40% lead-time reduction
  • 70% change-over time reduction
  • 40% reduction in work in process (WIP)
  • 60% reduction is inventory obsolescence
  • 100% improvement in on-time customer delivery

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