Journal of Manufacturing Technology Management

Implementation of hybrid Kanban-Conwip system: a case study

Dênis Gustavo Leonardo, Bruno Sereno, Daniel Sant Anna da Silva, Mauro Sampaio, Alexandre Augusto Massote, Jairo
Celso Simões,
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Dênis Gustavo Leonardo, Bruno Sereno, Daniel Sant Anna da Silva, Mauro Sampaio, Alexandre Augusto Massote, Jairo
Celso Simões, "Implementation of hybrid Kanban-Conwip system: a case study", Journal of Manufacturing Technology
Management , https://doi.org/10.1108/JMTM-03-2016-0043
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 Implementation of hybrid Kanban-Conwip system: a case
study

Abstract Purpose – Shop floor control systems are generally major points of

discussion in the production planning & control literature. This article investigates how

lean production control principles can be used in a make-to-order job shop, which
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typically presents low volume and high variety. This paper examines the procedures

involved in implementing a CONWIP/Kanban hybrid system in a shop floor

environment. We will also provide insights and guidelines on the implementation of a

hybrid system in a low variety/low volume environment.

Design/methodology/approach – The authors have reviewed literature on Kanban,

CONWIP and CONWIP/Kanban hybrid system to analyze how lean production control

principles can be used in a make-to-order job shop. The second part focuses on the

process of implementation. Using a case study of a manufacturer of electromechanical

components for valve monitoring and controls, this paper describes how the operation is

transformed in order to have more efficient shop floor control systems. Real

experiments have been used to compare pre- and post-improvement performance.

Findings – The study shows that the proposed hybrid CONWIP/Kanban system

reduced the cycle time and achieved an increase of 38 % in inventory turnover. The

empirical results from this pilot study provide useful managerial insights for a

benchmarking analysis of the actions to be taken into consideration by companies that

have similar manufacturing systems.

Research limitations/implications – it is impossible to present a statistic generalization

 of the results due to the use of a single-case method of study.

Originality/value – we provide insights and guidelines on the implementation of a

hybrid system in a high variety/low volume environment. Literature on real applications

of Hybrid CONWIP/Kanban by case study are limited.

Keywords Kanban; CONWIP; Hybrid CONWIP/Kanban;

Paper type Research paper

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1. Introduction

Several authors have already studied and discussed production planning & control in the
literature (Fernandes and Godinho Filho 2010, Prakash and Chin 2015, Framinan,
González, and Ruiz-Usano 2003). We are familiar with several pull systems such as
production control mechanism (PCM), namely Kanban, CONWIP, Hybrid
CONWIP/Kanban, among others (Prakash and Chin 2015). A PCM aims at reaching
high customer service level without increasing inventories; however, the key issue
today is to find the one which has the best performance in a specific environment (Lage
Junior and Godinho Filho 2008, Farnoush and Wiktorsson 2013).
The most popular is Kanban (Ohno 1988, Shingo and Dillon 1989), wherein a
product is produced by a workstation according to its immediate downstream needs;
however, Kanban is slow to respond to demand changes. Another widely known system
is CONWIP – Constant Work In Process (Spearman, Woodruff, and Hopp 1990)
production control system. In practice, this means that when certain parts are required at
the end of a line, card(s) is/are passed to the beginning of the line to fulfil that need.
This procedure limits WIP inventories within a line. Spearman, Woodruff, and Hopp
(1990) conclude that CONWIP is more responsive to changes in customer demand. The
combination of these systems gave rise to a production system called the Hybrid
CONWIP/Kanban (Bonvik, Couch, and Gershwin 1997). Nevertheless, we still know
little about the possible gains related to the adoption of these methods, mainly when it
comes to small-batch productions with high customization and uncertain demand.
Literature on CONWIP system modelling and simulation is rich and can be used to
build and enhance theoretical understanding. Nevertheless, literature on real
 applications of Hybrid CONWIP/Kanban by case study are limited (Framinan,
González, and Ruiz-Usano 2003, Prakash and Chin 2014).
This research aims at understanding, describing, and investigating the following
production control methods: Kanban, CONWIP, and the Hybrid CONWIP/Kanban. It
will identify the main difficulties and bottlenecks companies face to implement these
pull systems, the gain in productivity, and mainly the increase in the level of service of
a company with small batch production, which has high customization and uncertain
demand. It will demonstrate that these aspects are relevant to the performance of control
systems. We have developed all concepts related to Kanban, CONWIP, and the
CONWIP/Kanban Hybrid Method in order to explore these pull systems and discover
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which of them best fits the company under study. Guidelines for the reproduction of the
system for similar production environments are also provided.
In short, we intend to answer the following research questions: what were the
project’s results and what were the key variables that have determined them? When is
the Hybrid CONWIP/Kanban more appropriate in productive systems? What are the
results obtained with the application of the Hybrid CONWIP/Kanban in a low
variety/low volume environment?
By analyzing a case at a manufacturer of electromechanic accessories to manage
and monitor valves, we will attempt to provide insights and guidelines on the
implementation of a hybrid system in a low variety/low volume environment.
Alternative procedures for releasing material into the process are evaluated in order to
determine which of them offers the best advantage to managers.
The remainder of this paper is organized as follows. In the next section, we
summarize the literature related to pull systems. This is followed by a presentation of
the method. In following section, we present in details: the case study, the problem, and
implementation evolution. In the concluding section, we draw and incorporate
suggestions to further research on pull systems.

2. Theoretical background
Leaders of industries face the typical problem of improving the performance of
processes in manufacturing industries (Fernandes and Godinho Filho 2010). In the
1980s, the system boosted by the Japanese industry, named Kanban, became popular all
over the world. In the 1990s, a team of researchers from the Massachusetts Institute of
 Technology (MIT) declared it to be the most competitive production model among the
ones adopted by automakers throughout the world.
However, researchers observed over the years that Kanban did not behave
satisfactorily when subjected to a variable mix of products with varying levels of
demand. In this case, it resulted in high inventory levels, a reduction in production, an
increase in storage costs, and unsatisfactory levels of service. So Kanban is only
suitable for a high volume production environment with relatively few part types
(Bonvik, Couch, and Gershwin 1997).
Ten years later, the CONWIP method was proposed (Spearman, Woodruff, and
Hopp 1990), which, according to the authors, solved the problems found in Kanban.
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Similarly, the Hybrid CONWIP/Kanban (Bonvik, Couch, and Gershwin 1997) was
proposed based on the results of the experience with the application of these two
methods separately. It aimed at incorporating their respective positive aspects, whose
combination would generate a significant increase in the level of customer service.

2.1. Kanban
Kanban is a Japanese word that means visual record and refers to a manufacturing
control system developed and used in Japan. The Kanban cards are used for information
communication and inventory control. Its main function is to control inventory levels,
keeping them as low as possible without compromising production. Kanban has control
loops that connect each production stage with its immediate predecessor, as Figure 1
shows. When the work-in-process of the following stage is low, Kanban allows
production to start at the previous stage. According to Boonlertvanich (2005), we can
find several versions of KANBAN control, such as single card, two cards, etc. The
comparison of the several KANBAN systems is present in the work of Muckstadt and
Tayur (1995).

Figure 1: Kanban System

Source: Adapted from Gaury, Pierreval, and Kleijnen (2000)

 A Kanban system is very efficient in an ideal environment: low process and demand
variability, few breakdowns, and so on. The main drawback of the Kanban system is
that the system, especially in the upstream stages, may not respond quickly enough to
the changes in demand (Sharma and Agrawal 2009).

2.2. CONWIP

CONWIP is a shop floor control procedure presented in Spearman, Woodruff, and

Hopp (1990), which sets a limit on the total WIP in the entire system in order to reduce
costs and lead time. As Figure 2 shows, the CONWIP system has a single loop from the
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final to the initial production stage. The system will release jobs into the system
whenever another job completes processing at last workstation. As CONWIP feedbacks
the message of demands immediately to the first work center, some researchers called it
a single-stage Kanban system. In effect, the CONWIP control system can be considered
as a pull system at the end of the line, or a push system from the beginning of the line
towards the end (Boonlertvanich 2005).

Figure 2: CONWIP System.

Source: Adapted from Gaury, Pierreval, and Kleijnen (2000)

CONWIP is applicable to production environments that produce many kinds of

products. The CONWIP system seeks to control the plant at a constant level of work in
process although it does not attempt to control the location of the WIP within the
system.

2.3. Hybrid Kanban/CONWIP

According to Bonvik, Couch, and Gershwin (1997), a disadvantage of CONWIP

is that inventory levels inside the system are not controlled individually: for example,
high inventories can appear in front of slow machines. Therefore, the authors proposed
 a new control strategy called the Hybrid CONWIP/Kanban, in which the CONWIP
control is completed with secondary cells controlled by the Kanban, as seen in Figure 3.
The last stage does not need a Kanban control, since any part that has progressed so far
will replace a delivered finished good part (CONWIP control principle).
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Figure 3: Hybrid Kanban/CONWIP

Source: Adapted from Gaury, Pierreval, and Kleijnen (2000)

For Gaury, Pierreval, and Kleijnen (2000), the idea is to combine the advantages of
CONWIP (high throughput with a low overall WIP level) with those of Kanban (control
of inventory levels at each stage).
Bonvik, Couch, and Gershwin (1997) show that the advantage of Hybrid
Kanban/CONWIP over Kanban grows with the length of the process, the degree of
process variability, and the service level target. CONWIP systems handle a mix of parts
having different bottlenecks with more ease than Kanban systems.

2.4. Real applications of CONWIP

There are a number of existing studies about comparing Kanban, CONWIP and hybrid
systems. The majority of the existing literature used a conceptual model or a simplified
problem to illustrate CONWIP/pull control strategies effectiveness considering various
performance parameters. However, literature on the implementation and empirical
analysis of case studies are limited. The applicability of CONWIP/pull control strategies
in solving a practical size problem is not well-documented in the literature (Yang, Fu,
and Yang 2007). Table 1 shows the main case studies published about CONWIP. We
will briefly synthesize each of them, highlighting their contributions and the main points
related to the theme of this research.
 Table 1 - Researches that address real application of Conwip

Reference
Huang, et al. (1998)
Bonvik, et al. (1997)
Gilland (2002)
Yang, et al. (2007)
Slomp, et al. (2009)
Farnoush and Wiktorsson (2013)
Prakash and Chin (2014)
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Test
Hybrid
System characteristics Simulation pilot CONWIP
method
Cold rolling plant


Automobile assembly line



‘Intel’ microprocessors factory


Integrated circuit


Conductor components factory



Automotive production company


Composite subassemblies

Ni and Wang (2015) Semiconductor Assembly

Huang, Wang, and Ip (1998) were the first authors to introduce a simulation
study on the application of CONWIP in a semi-continuous manufacturing environment,
a cold rolling plant. The simulation study compares the CONWIP system and the
original control system for the four situations in a cold rolling plant. The simulation’s
results show that the CONWIP production control system is very efficient for the
production and inventory control of semi-continuous manufacturing. It can greatly
reduce the work-in-process (WIP), decrease the average inventory and average
inventory costs, and guarantee a higher throughput rate and facility utilization.
Bonvik, Couch, and Gershwin (1997) studied the performance of the Kanban,
minimal blocking, base inventory, CONWIP, and hybrid Kanban-CONWIP control
policies in a four-machine tandem production line making parts for an automobile
assembly line. The authors found that the best parameter choices for the hybrid policy
decrease inventories by 10% to 20% over the best Kanban policy while maintaining the
same service levels.
Gilland (2002) analyzed the problem of managing the flow of material into a
manufacturing cell in order to maximize the output rate for a given level of work-in-
process inventory. The author demonstrated that when one or more bottlenecks are
present, a policy called drum-buffer-rope (DBR) outperforms other release rules, even
the CONWIP system.
Yang, Fu, and Yang (2007) addressed an evolutionary-simulation optimization
approach in solving a multi-CONWIP pull strategy problem. The authors state that a
simulation-optimization approaching could be a barrier to solve a practical problem
 because a real problem required a significant amount of modeling time and experiences
to build a simulation model.
Slomp, Bokhorst, and Germs (2009) presented the development of a lean
production control system for a high-variety/low-volume production unit. The main
contribution is the illustration that lean control principles, such as levelling, pull and
takt time can be used in such a context. The lean production control system has led to
short and reliable flow times on the shop floor.
Farnoush and Wiktorsson (2013) presented a study on the applicability of four
different production control mechanism in an automotive production company with
high variety of products and divergent lines. Their study shows that m-CONWIP is
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recommended in this situation, as it leads to more reduction in the WIP amount and
throughput time, while the throughput value does not decrease.
Although many practical cases prove that CONWIP systems are effective, only
Prakash and Chin (2014) have investigated the implementation of a modified Kanban
and hybrid system. This case study proves that pull systems can be successfully
implemented in production environments that do not conform to the typical
prerequisites of the Kanban system.
Ni and Wang (2015) assisted manufacturers in achieving real-time ordering and
obtaining integrated optimization of shop floor production planning and scheduling for
mixed flow production systems.
With this literature revision, we can conclude that CONWIP and the hybrid
CONWIP/Kanban systems are of the interest of researchers, but most of the studies are
still focused on simulation, as Table 1 shows. The occurrence is rare in real life.

3. Methodology
The purpose of this research is to investigate an emerging phenomenon, the adoption of
the practice of Hybrid CONWIP/Kanban in the Brazilian business environment, an
event over which the researcher has no control. In this context, the methodology
suggested by several authors (Ellram 1996, Yin 2013, Eisenhardt 1989) is the case
study. The available knowledge on the phenomenon of interest is scarce, observed by
the low index of publications on the topic. In this case, an exploratory research is
essential to develop and provide new ideas and discoveries.
According to Yin (2013), we can find two types of case studies: a single-case
study, in which the unit of analysis is only one case; and multi-case studies, in which
 several cases are analyzed in order to allow comparisons. The author also classifies the
single-case study as holistic or incorporated. The holistic type has a unit of analysis
considered in a specific context. On the other hand, the incorporated type has more than
one unit of analysis for each case, i.e. it has sub-units of analysis.
Yin (2013) establishes another classification of the case study regarding the
research objective: descriptive (describing the phenomenon within its context),
exploratory (dealing with little known problems, aiming at defining hypotheses or
propositions for future researches); or explanatory (intending to explain the relations of
cause and effect from a theory).
Therefore, according to Yin’s parameters, this study is presented as single-case,
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holistic, exploratory, mainly due to the rare nature of finding cases to apply the Hybrid
CONWIP/Kanban in the market.
In the case study methodology, it does not seem to make sense to establish a
formal a priori hypothesis. However, according to Yin (2013), the establishment of
study propositions helps the researcher to guide the task of gathering information:
Proposition 1 –The choice of the production control method is directly related
to the characteristics found in each productive process, such as size of the batch, degree
of demand forecast, level of repetition, diversification (variety of different products),
and distinction (variety of models), as defined in the studies by MacCarthy and
Fernandes (2000) and Fernandes and Godinho Filho (2010).
Proposition 2 – The CONWIP/Kanban Hybrid Method is more productive in a
high variety/low volume environment.
Proposition 3 – The results achieved via the Hybrid CONWIP/Kanban are
superior to the results achieved through methods of Kanban and CONWIP in production
environments of small batches with customized products.
One of the problems, which is most commonly related to the case study, is
external validity, as it is impossible to generalize from single-case studies. The
objective of this study was not to carry out statistical generalizations of the results, but
only analytical generalizations.
According to Yin (2013), the validity and reliability of a study are also very
dependent on techniques of collection and treatment of data used, and the adaptation of
these techniques to the research objectives. If these techniques are selected and properly
applied, with the procedures explained, the problems will be reduced.
 3.1 Unit of Analysis
The unit of analysis for the present case study was a multinational company from the
industrial automation sector, which adopts the Hybrid CONWIP/Kanban. The level of
analysis considered was the opinion of its decision-makers: executives, directors, and/or
managers.

3.2 Case Selection

We selected a company with a very peculiar characteristic – the production of small
batches with high customization. The objective of this analysis was to understand the
implementation process of the production control methods (Kanban, CONWIP, Hybrid
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CONWIP/Kanban), analyze the generating needs, highlight the problems faced, and
finally discuss the results obtained with the implementation of their system for
coordinating purchase and production orders.

3.3 Data Collection Protocol

Several authors (Yin 2013, Eisenhardt 1989) state that the collection of qualitative data
must be based on multiple sources of evidence, but always converging to the same set
of facts and discoveries. Qualitative data are considered evidence of the connection
between data and propositions. We have carried out this present case study including in-
depth interviews with the company’s personnel, as Table 2 shows. Eight meetings were
held which lasted approximately 3 hours, with leaders of the implementation process of
the production control methods in the company.

Table 2 – List of Interviewees

Department Position
Administrative Operational Manager
Operations Process engineer
Quality engineer

3.4 Interviewee

The pilot project was led by the operational manager of the company’s unit in Brazil
who is also the lean engineer of the company. The main source of data was the
interviews carried out with the production and operations managers. We have obtained
 information regarding records, operational and managerial performance indicators,
market positioning, among others.

Yin (2013) warns researchers that it is important to have an analytical strategy to

collect evidence from a case study before starting any field studies. The analysis
structure of the case study was: firstly, we carried out a simple narrative of the case at
issue; secondly, we dedicated a section to show the historical results and posterior to the
implementation of the method. A matrix of the important variables was structured
during the interviews with the company’s executive and personnel.

4. Result
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4.1 Company and project background

The case study was a subsidiary company of a North American group, manufacturer of
hi-tech electromechanical products, including innovative solutions to manage and
monitor valves. The company studied is a global firm with production, sales, and
facilities in Brazil, the U.S., and the U.K.
The company only represented the brand in Brazil until 1990. Its operation
started in 1991, as a subsidiary in the city of São Paulo, operating exclusively as an
importer. In 1997, it started assembling CKD (Completely Knock-Down) sets imported
from other global units. In 2010, it started nationalizing its products to the Brazilian
market, from development to manufacture.
At the end of 2014, the company had 180 employees divided into the following
areas: 5 employees in management, 15 in sales, 28 in administration, and 132 in
operation, working with four production lines divided into four cells each, with local
revenue of approximately 20 million dollars per year. The company worked with the
following types of production: MTS – Make to inventory and MTO – Make to Order.

4.2. Studied Period

This study focuses on the events from 2012 to 2014, when a series of changes happened
at the company. We intend to demonstrate these changes through the result analysis of
the three main years of this period – 2012, 2013, and 2014.
 4.3. The case study problem
A steady increase in product demand was verified, followed by an increase in
production, when the company started to move manufacturing back from China to a
factory in São Paulo, which not long ago had been expected to close. As a result, the
mix of products increased and demands became even more varied, without any forecast
possibility.
In 2011, the company marketed a total of 39,500 SKU, equivalent to 63 distinct
families. Figure 4 indicates a Pareto chart of the families on demand within the studied
period. The number of families marketed is on the x-axis on a logarithmic scale, and the
quantities of items per family are indicated on the y-axis.
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Figure 4: Pareto chart of the families by logarithmic demand – reference data: Jan/2011 to
Dec/2011

Source: the Company

The families were subdivided into three main groups: A, B, and C.

• Group A – hatched columns: families with demand over 180 pieces per
month. This group represents 6% of the variations, 64% of the items
produced; however, only 10% of sales revenue.
• Group B – columns without filling: families with demand under 180
pieces and over 12 pieces per month. This group represents 16% of the
 variations, 29% of the items produced, and it corresponds to 56% of sales
revenue.
• Group C – dot-filled columns: families with demand under 12 pieces
per month. This group represents the largest percentage of variations,
totaling 78%, with only 7.5% of the produced items and a total of 34% of
sales revenue.

In Figure 5, we can verify how the three pieces of information in each group
relate: quantity of supplied items, turnover, and number of distinct families.
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Figure 5: Groups A, B, and C

Source: the Company

We can verify that the three groups of products studied have their importance.
They can occupy production capacity with high volumes (Group A), represent a large
sale revenue (Group B), or meet the needs of the market through the quantity of families
(Group C).
In order to illustrate the variation and lack of predictability of demand which is
intrinsic to this type of market and inherent to the family of products at issue, Figure 6
refers to the behavior of three of these families which belong to the groups A, B, and C,
during the period of approximately three years.
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Figure 6 : Demand for Finished Products – Group A, B, and C

Source: the Company

From the analysis of the graph in Figure 6, we can observe that regular
seasonality is not present in the volumes consumed, which hinders programming
production based on forecast, given that the demand is unpredictable.
The company’s problem in this scenario was how to program production, taking
into account this variable mix of products and low sales predictability. In order to solve
this issue, the company’s managers implemented a series of processes / methodologies,
which will be approached henceforth.

4.4. Processes and Implementation

As a result of the nationalization of products and processes and the increase in volume,
the need to adapt the productive process to some production control method arises.
Following the matrix guidelines, the company decided to implement production
control through MRP (Manufacturing Resource Planning), programming production
with analysis of demand forecast based on the records. This process had a maturation
period of almost two years before being implemented.
As a result of this adaptation, the production line was characterized as illustrated
in Figure 7.
 Figure 7: MRP Production Control

Source:
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The MRP interacts with the master production schedule, the bills of material file,
and the inventory records file. Product demand data for MRP systems come from two
sources – from customers who have placed firm orders and from forecasted ones. The
master schedule will level the load so requirements for work centers remain within the
available capacity and inventory policy. Purchase and production orders are
automatically sent to the suppliers and programmed for production, respectively, when
they reach minimum levels of inventory for finished product.

As the Demand Forecast re-feeds the beginning of the process instead of the
effective demand, it corresponds to the concept of a push system. The tendency is that
the warehouse and intermediate inventory are maintained elevated, even during periods
without demand.
The Manufacturing Resource Planning did not efficiently correspond to the
company’s needs regarding three particularities of the scenario:
• The variable mix of products tends to elevate inventory levels (storage at
all levels);
• The MRP concept is complex and depends on reliable and non-existing
statistical information, causing an erroneous programming of production;
• The lack of demand predictability, added to erroneous programming,
resulted in the customers’ needs not being met, generating long delivery
times and a low level of service.
The company’s general manager declared that a lack of coordination and
harmonization with MRP leads to inefficient, competitive, and even contradictory
interventions with negative results. The next attempt to improve process was via
 Kanban. This methodology was implemented in early 2012, conceiving its production
line as illustrated in Figure 8.

Figure 8: Kanban System

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Source:

In order to adapt production with the Kanban control method, we identified the
good production batches for each piece and calculated them, i.e. the number of Kanban
cards, as well as the levels of WIP at each stage of production: store, supermarket, line,
and finished product.
When the inventory of finished products reaches the minimum pre-determined
level, the Kanban card is transferred to the line, which is its previous inventory. This can
also happen in case of sales orders. This process is repeated continuously among
previous stages, supermarket and store, until the balances are sufficient to meet the
demand.
This corresponds to the concept of a pull system on account of the loading
process only occurring in response to a demand, and the tendency is that inventories
always maintain half of the stored demand, even without demand. When a process
stops, the following inventory’s process allows it and the others to proceed, at least until
the content of that buffer ends.
The implementation of Kanban still did not efficiently correspond to the needs
of the company studied regarding three particularities:
• The variable mix of products tends to raise inventory levels at the store,
supermarket, and line because the demand for each item is very unstable;
• The varied demands prevent information from arriving rapidly to the
beginning of the chain, delaying the release of purchase orders, and
consequently the non-fulfillment of established delivery times;
• The same production operators execute the movement processes,
maintaining the inventory effect neutralized. This happens because they have
 to stop production in order for the movement to happen, hindering the
efficiency of this method and losing the essence of Kanban.
In search for a method, which explained the reality of the company, we
implemented production control via CONWIP. In early 2013, its production line was
conceived, as illustrated in Figure 9:
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Figure 9: CONWIP Production Control

Source: the Company

The CONWIP Control Method can be considered a single-stage Kanban. The

stand-by intermediate inventory levels are null, and only the inventory levels for the
finished product are established.
When the inventory level for finished products reaches its minimum level, and
in case of sales order, a production order is generated for the first stage, causing the
pieces to be pushed as fast as possible through the system.
This corresponds to the concept of a pull system due to the loading process only
occurring in response to a demand. The store's inventory, supermarket, and line are
exhausted because they are dimensioned according to the batch of sales order. The
feasible operations are advanced until the compromised pieces are exhausted.
Its main disadvantage is a tendency to accumulate pieces at the buffer before the
bottleneck, or where the process stopped. Besides, as the concept was designed for
productive instead of loading processes, it becomes illogical when applied to suppliers,
since the delivery time of the inputs is long and cannot meet the real demand.
Therefore, the re-supply of external suppliers needed to be treated separately
through demand forecast statistical calculations, based on the records, and it deals with
storage at suppliers due to its long delivery time and multiple needs, as Figure 10
shows.
 Figure 10: CONWIP Production Control with Suppliers

Source: the Company

The CONWIP Control Method was the one that better adapted to the scenario of
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the company studied until 2014. However, it still did not fully correspond to the needs
of the market regarding some particularities:
• This method greatly minimizes the levels of inventory in line when
compared to Kanban because a component is only moved when demand
really occurs to the final item. However, the variable mix of products is
still responsible for considerable levels of inventory in other places;
• The production of small batches, associated with the variable mix of
products, makes it difficult to meet the delivery times jointly defined
with the clients.
Therefore, the CONWIP method presents better results when compared to
Kanban, but not enough to meet the needs of the market.
An important particularity was met:
• The delay effect caused by varied demands was reduced to its minimum
as the information directly arrives at the beginning of the chain, pushing
the production more rapidly.
While looking for academic researches, the Operational Manager found a study
from MIT on the Internet, carried out by Bonvik, Couch, and Gershwin (1997), which
optimizes production and delivers a better customer service performance. The manager
then found a similarity between the study and the reality of his production line
(composed of up to four assembly stages) regarding the variable mix of products and
varied, unpredictable demands. Analyzing the propositions and benefits presented in
this study, the Operational Manager concluded that the application of the Hybrid
 CONWIP/Kanban to control production would bring better results, being implemented
in early 2014.
This new methodology conceives the scenario illustrated in Figure 11.
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Figure 11: CONWIP/Kanban Hybrid Production Control

Source: the Company

Similarly to CONWIP, the re-supply of external suppliers needs to be treated

separately via Manufacturing Resource Planning due to its long delivery time and
multiple needs.
The levels of stand-by intermediate inventories are basically null, and only the
inventory levels for the finished product are established.
When the inventory of finished products is empty and sales orders are present, a
production order is generated for the first stage of CONWIP. As the finished product
demand feeds the beginning of the chain, it corresponds to the concept of a pull system.
We could observe that a large part of the marketed products, despite their high
level of customization, had a standardized level until a certain stage (sub-groups). With
this new method, before the production order went to production, the system generated
a list of sub-groups, which would be used in the products to meet the sales order,
grouping and sending them to production through Kanban. Therefore, the semi-finished
production was controlled through Kanban, which determined good batches from each
sub-group.
The pieces are pushed as fast as possible through the system until they arrive at
the final production, which used the sub-group to customize the finished product to
meet the sales order.
In this scenario, the Hybrid CONWIP/Kanban completely met the needs of the
company regarding three particularities:
 • The variable mix of products tends to raise inventory levels. On the other
hand, with the increase in production rate, the products had a faster turnover,
reducing the inventory levels even more than in CONWIP. The increase in
inventory caused by the product mix is compensated by the speed of the
process.
• Even with the variable mix of products and low volume production, the
delivery times were met through the agility that the production of sub-
groups in Kanban offered to the system, generating better levels of service
than the ones previously reached.
• Similarly to CONWIP, the delay effect caused by varied demands was
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basically neutralized because the information arrives directly to the

beginning of the chain, pushing the production more rapidly.
Throughout every stage of the problem-solving process, we could observe the
behavior of the total inventory level (finished product, inventory in process – work-in-
progress, and raw material).
The professionals involved with this project concluded that the inventory level
decreased as the method was more adapted to the process. Figure 12 aims at illustrating
this statement.

Figure 12: CONWIP/KANBAN Hybrid Production Control

Source: the Company

 4.5. The analysis of the production system at a product level
In spite of the huge number of product families, a set of characteristics are common to
all the them, determining the conception of the production area layout.
Basically, almost all the products are composed of a kind of box (in different
materials and designs) with the respective cover, some kind of a visual indicator on the
top and a bracket on the bottom (also with a large number of designs), to couple the unit
to hundreds of different valves.
Inside the box, several kinds of electronic or electromechanical devices can be
accommodated, depending upon the specifics of every valve, on a one by one basis. So,
although there are hundreds of possible combinations, we can say that there are
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important characteristics that are common to all of them:

• They all have a housing (with dimensions and weight approximately
similar and can be handled unitarily by a person without the need of
special tools).
• The quality requirements in terms of final product tests and inspections
may be divided in a small number of categories
• The products are mostly assembled in production lines from buyout
components. Very simple and light machinery is necessary.
Based mainly on these characteristics and on the expected capacity, the plants were
designed the way they are:
• 4 assembly lines with 4 working stations each
• 4 single position cells, for special tooling production
• Reserved space on both extremes of every line and corridor space for
cart traffic along the line, opposite to the operator’s side.
• The corridors between the shelves of the stockroom must be wide
enough for the carts transit along

Figure 13 shows the layout of the company under study in its final configuration, with
the Hybrid CONWIP/Kanban system implemented.
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Figure 13: Layout

The company’s production process is divided into two stages – the sub-assembly
and the final assembly processes. Simply put, the productive process can be described
as an initial stage, which encompasses the arrival, storage, and preparation of
component batches to supply the sub-assembly area. This process carries out the
assembly of the central part of the valve command and the final assembly, which
integrates the final components customized by the end customer. Figure 14 illustrates
the main stages of this process.

Figure 14: Stages of the productive process

The batch preparation stage is responsible for the separation of all components,
which will be used at the sub-assembly and/or final assembly processes. It refers to a
group of employees in charge of this activity – technicians with expertise in identifying
the correct component for each product to be produced. These parts are only sent to the
 assembly lines when needed. After receiving the components, the sub-assembly line
carries out the basic manufacture of the valve command body, and then sends the
assembled set to a supermarket of semi-finished products. After receiving the order
from the final customer, the batch preparation area once again separates the components
required by the end customer and the previously pre-assembled sub-set, and then sends
these materials to the final assembly area, which carries out the assembly desired by the
customer, forwarding the final product to packaging. Finally, they are shipped to the
end customer.
The only exception to this sequence are high-volume products, which are
completely assembled without passing through the supermarket of semi-finished
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products. As a sample, Table 3 shows the results of this process in the production line of
a Group B family.
"B" Family with demand = 100 uni./month
MRP KANBAN CONWIP CONWIP/KANBAN HYBRID
Production stages
Inventory Utilization Time/Piece Inventory Utilization Time/Piece Inventory Utilization Time/Piece Inventory Utilization Time/Piece
1. Batch Preparation 0 0% 30 40% 10 80% 6 90%
2. Subassemby 80 40% 55 52% 12 77% 8 88%
3. Semi Finished Goods 60 days 55 days 20 70% 25 days 15 92% 20 days
4. Final Assembly 94 45% 46 43% 8 72% 4 90%
5. Package 65 48% 55 45% 7 65% 2 88%
Finished Goods 50 40 80 93
WIP 239 186 57 35
Delivery Reliability 50% 40% 80% 93%
Customer order 100 100 100 100
Table 3 - Results at a group B family level

Firstly, the company decided to implement a production control through MRP,

and as Table 3 shows, after a maturation period the company’s results were: inventory
level was at 239 pieces, utilization 50% and time spent on one product was 60 days. The
variable mix of products tends to elevate inventory levels. The worst record in the Table
3 is order delivery reliability to customer, which remained only on 50% of all orders of
this specific product family.
The next attempt to improve process was via Kanban. KANBAN is a pull
system that means the customer orders are already known in advance and are not
produced to stock as it is in push system but they are made to order. The results are
shown in Table 3. From the data, it is seen that the WIP fell from 239 pieces to 189
pieces. The variable mix of products tends to raise inventory levels. Utilization was
40% and the time needed to produce one product is 55 days.
In search for a better method, the company decided to implemented production
control via Conwip. The Conwip Control Method can be considered a single-stage
 KANBAN. The stand-by intermediate inventory levels are null, and only the inventory
levels for the finished product are established. When the inventory level for finished
products reaches its minimum level, and in case of sales order, a production order is
generated for the first stage, causing the pieces to be pushed as fast as possible through
the system. The results are shown in Table 1. From the data, it is seen that the WIP fell
from 186 pieces to 57 pieces. This method greatly minimizes the levels of inventory in
line when compared to Kanban because a component is only moved when demand
really occurs to the final item. Utilization was 80% and the time needed to produce one
product is 25 days.
As a final planning system, the company used Hybrid Conwip/Kanban to control
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production. Similarly, to Conwip, the re-supply of external suppliers needs to be treated

separately via Manufacturing Resource Planning due to its long delivery time and
multiple needs. Production results are shown in Table 3. From the data, it is seen that
the stock is 35 pieces, utilization is 93% and the time required to produce one product is
20 days. We must not forget also on ability to fulfill orders the in this case it is at 93%
success rate. Of all the periods of production in which the company worked, has nothing
changed in the processes, only the method of planning.
Improving the reliability and throughput using the Hybrid CONWIP/Kanban
system lies in the fact that manufacturing orders are pushed to the production processes,
but only to the extent that the production volume reaches its maximum capacity. After
the release of the finished order, other commands can be pushed to the production. New
orders can be pushed to the production not only when there is enough space, but also
after a signal, or after crossing a minimal state level of the stock.
An important indicator of a company's operating performance is Inventory
Turnover. In the case of this type of enterprise, this issue is quite critical because with
the large variety of items with low unitary consumption, Inventory Turnover tends to be
very low. Although high levels of turnover cannot be achieved anyway, Table 3 denotes
the strong benefit impact that the WIP implementation brought to the company.
Considering that around 2014 the company had $ 20 million dollars, of Revenue, this
measure allowed a reduction of half of this amount in working capital immobilization
and a 40% reduction in the area occupied by inventories.
The use of the Hybrid CONWIP/Kanban planning system in this medium-sized
company was very helpful to plan and control its production, as it kept its Inventory
 values low, presented more efficient work, and optimized the process with low costs. It
provided the customer with the best quality for the best price.

4.6. The analysis of the production system at aggregate level

In order to express the results obtained, we have considered only the three main
years, period in which the production control methods were implemented, as Table 4
shows.
Table 4 – Period x Production Control

Year Production control method

2012 Kanban
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2013 CONWIP
2014 CONWIP/Kanban hybrid

The first result we will present is the OTD – On-Time Delivery, as shown in
Figure 15.

Figure 15: On Time Delivery - Annual from Oct/2012 to Sep/2014

Source: the Company.

 On Time-Delivery had a significant evolution when compared to different years,
as analyzed in the graph of Figure 15.
In 2012, On-Time Delivery presented an average of 53% with the use of the
Kanban method; however, the average in 2013 was 72% with the CONWIP method.
Finally, with the use of the Hybrid CONWIP/Kanban, the service was elevated to 89%.
It improved by 34% between 2012 and 2013, and by 24% between 2013 and 2014.
Figure 16 identifies the evolution of delivery time continuously throughout the
three years analyzed to better verify this growth.
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Figure 16: On-Time Delivery - Linear from Oct/2012 to Sep/2014

Source: the Company.

By analyzing the graph of Figure 16, we can verify that On-Time Delivery had a
growth rate of approximately 30% per year during the three-year period, and 1.2 times
at the end of this period. This demonstrates that this improvement is connected to the
evolution of the company’s production control methods.
With the implementation of control via the Hybrid CONWIP/Kanban in 2014,
the company was able to meet the established goal for On-Time Delivery in most
months, reaching levels above 90%.
Another significant improvement was the inventory Turnover (IT), which can be
verified in Figure 17.
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Figure 17: Evolution - Inventory Turnover.

Source: the Company.

The inventory turnover had its worst result during the period that Manufacturing
Resource Planning controlled production (2007 – 2014), reaching an average turnover
of only 1.8 times per year due to the high inventory level needed to meet it.
With the maturity of Manufacturing Resource Planning, the Inventory Turnover
increased to 2.6 times per year at the end of its use.
During the following three years, the Inventory Turnover increased from 3.2 to
3.4 and 3.6 times per year with the implementation of Kanban, CONWIP, and the
Hybrid CONWIP/Kanban.
Other important gains of the company, whose data are not illustrated in specific
figures, were: an increase of 40% in productivity without the increase of headcount,
when comparing the years of 2010 and 2014; an increase of 18% in revenue during the
same period; and a reduction of more than 70% in slow moving items due to the high
rationalization of inventories, which were reduced by 20% of their value and almost
50% of their area.
During the interview with the Operational Manager, we collected and classified
factors related to the implementation of the Hybrid CONWIP/Kanban, according to
Figure 18.
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Figure 18: Results obtained by implementing the Hybrid CONWIP/Kanban

Observing the results from Figure 18, we can verify that the support from the
directors, the choice of a multifunctional team, the user’s involvement, the choice of a
leader for the project, and company culture were decisive factors for the success of the
implementation of the Hybrid CONWIP/Kanban.
No external consultant was involved during the development of the project, as
the method at issue was little explored, especially here in Brazil.
It is important to highlight the lack of a defined methodology to implement the
Method, which reinforces the project leader’s acumen and his capacity to involve and
mobilize the team. As observed, the suppliers’ support was essential to understand the
problem and work on its solution.
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Figure 19: Factors that affect the Hybrid CONWIP/Kanban.

We can perform a synthetic analysis of Figure 19 regarding the results obtained

from this implementation by assessing some parameters developed throughout this
study. Among them, we can highlight: an expressive reduction in forecast errors, i.e.
programming of the production adapted to the demand; decrease in levels of inventory;
improvement in delivery times; reduction in workforce in process; and especially
increase in the level of customer service and improvement in the quality and reduction
of product defects due to wrong assembly or change of components during production.
 5. Conclusion, managerial implications, limitations and future research
steps
This study aimed at understanding, describing, and investigating the systems for
coordinating purchase and production orders regarding Kanban, CONWIP, and the
Hybrid CONWIP/Kanban, implemented in a real production environment, in order to
identify their results and main difficulties found. According to Lage Junior and Godinho
Filho (2008),
[…] the study of application in practice to adapt KANBAN systems only theoretically
developed is a theme with several opportunities for exploration.
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This was the objective of this work.

The study investigated the system implemented in a manufacturer of hi-tech
electromechanic products, including innovative solutions to command and monitor
valves. Their operations executives tried several systems for coordinating purchase and
production orders from 2010 to 2014, including MRP, Kanban, CONWIP, and the
Hybrid CONWIP/Kanban as Bonvik, Couch, and Gershwin (1997) proposed, focusing
on meeting their demand goals with the lowest cost.
The theoretical and practical learning allowed the company’s executives to
understand their processes and obtain positive results. The small-batched productive
system with high customization and uncertain demand became more efficient with the
implementation of the Hybrid CONWIP/Kanban, as the summary the company’s main
indicators shows in Table 5.
Table 5- Production Aspects vs. Control Methods

Kanban/MRP CONWIP/MRP CONWIP/Kanban

Production aspects Kanban
hybrid
CONWIP
hybrid hybrid

Demand Stable Predictable Unstable Predictable Unstable

Product variability Low Low High High High
Volume High High Low Low Low
inventory level High High high Moderate Low
Lead time Just in time Just in time High Moderate Low
These results indicate that the operational performance with the Hybrid
CONWIP/Kanban was superior to the pure systems tested. Therefore, we can affirm that
this company aims at searching for hybrid systems, mainly due to the increase in variety
of products that the market demands, followed by a reduction of the volumes requested.
This demands more flexibility and velocity from the productive system.
 In addition to the reports on the results found, we investigated some academic
research questions, and here are their answers:

1) Which variables have an impact on selecting the system for coordinating

purchase and production orders, aiming at maximum level of service
with lowest cost?

This company’s peculiar characteristic indicate that the following characteristics

are relevant and influence decision-making when selecting the system for coordinating
purchase and production orders: volume of production (high or low), level of demand
predictability (high or low), size of production batches (high or low), level of repetition,
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diversification of the product mix regarding the families of products, and distinction
between each family regarding the variety of models.

2) When is the Hybrid CONWIP/Kanban more appropriate in productive

systems?

Table 6 shows a summary of the characteristics the researched company’s

executives find to be important.
Table 6 - Results Obtained vs. Control Methods

Kanban/MRP CONWIP/MRP CONWIP/Kanban

Results Kanban CONWIP
hybrid hybrid hybrid

Level of service Low Low Moderate Moderate High

Inventory High High Moderate High Low

The Hybrid CONWIP/Kanban is the most efficient one for productive systems
dedicated to small batches and high level of customization.

3) What are the results obtained with the application of the Hybrid
CONWIP/Kanban in a company of customized products, small batches,
and uncertain demand?

The lessons learned in this case studied are very important, especially because
they refer to a Brazilian company that is presenting positive and concrete results with
the adoption of the Hybrid CONWIP/Kanban. The executives’ testimonials revealed
that the Hybrid CONWIP/Kanban is not a system for all types of organizations; we need
 to consider a series of environmental and marketing conditions, as well as operational
requirements, whose presence is mandatory to enable its adoption. The question is not
wanting to implement the Hybrid CONWIP/Kanban, but being able to do so. The
organization needs to have minimum conditions of structure, infrastructure, and inter-
organizational relationship for its implementation. Another important point is the
cultural aspect involved in the implementation. Not only does the system’s efficiency
depend on the present technical operational conditions, but it also depends on the
transformation of relations among sectors of the company and other companies. In this
context, it is important to break organizational barriers that usually hinder collaborative
relationships. As Fisher (1997) states, the project of a responsive process is not a simple
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task; however, the reward – a notable competitive advantage – can make these efforts
worth it.

It is important to mention some research limitations. Firstly, the impossibility of

statistic generalization of the results due to the use of a single-case method of study.
Secondly, the research evaluated the results obtained with several systems for
coordinating purchase and production orders; however, it had the disadvantage of
studying only one case from each category.

5.1 Future Researches

We recommend some points for future studies:

Research on different sectors, such as electronics, represents a contribution to

evaluate the process of spreading the practices of the Hybrid CONWIP/Kanban in the
Brazilian market;

Several authors have studied the impact of pull programming on a company;

however, few of them have investigated the impact on the members upstream or
downstream the supply chain. A relevant study would be to investigate this theme;

More focused reproductions of this study in the Hybrid CONWIP/Kanban would

bring additional contributions.
 Acknowledgment
The authors would like to thank the anonymous reviewers for their helpful comments
that helped improve the presentation and content of this paper. We also would like to
acknowledge the financial support from FEI University.

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