Kanban

A common concern of most operations managers is making sure material and supplies get to the right work area at the right time and that no one runs out of what he or she needs to do his or her job. This is true whether that manager is running a hospital, a warehouse, a service operation, or a manufacturing facility… having the right amount of inventory is critical to success.

Kanban is an effective tool to ensure everyone in the supply chain is signaled when to supply more material and exactly how much to deliver. In fact, the word Kanban in Japanese means “signal or signpost.” Taiichi Ohno developed the concept of Kanban as part of the toolset he created for the Toyota Production System in order to facilitate JIT (Just-in-Time) applications. Kanban is the mechanism to create pull and flow in a supply chain process. It prevents stock-outs and over-supply.

Kanban is commonly used in materials management of purchased components in manufacturing, warehousing and hospitals. In factories, flow manufacturing or kanbanflow manufacturing uses kanbans within a flow cell, creating a pull system within the production process. However, the concept of pull has applications beyond materials and Ohno’s Kanban methodology has since blossomed to have applications in Kanban project management.

Based on the scope of the Kanban project, an implementation can take several weeks to several months. After we conduct hands-on training with the team, the first step is to gather data on demand, lead-times and capacities. Kanban quantity calculations are based on having sufficient quantity in the kanban to fulfill demand during the replenishment time. Replenishment time can be internally based or based on lead-time of vendors. After calculating kanban quantities, the team will decide which Kanban storage method is the most applicable. These include two-bin systems, multi-cards, one-bin, Kanban boards, and line balancing Kanbans. We work with the team to help them calculate appropriate Kanban quantities for each of the part numbers and products involved. In fact, Kanban implementation will often lead to important SKU rationalization decisions.

One of the added benefits of a Kanban implementation is that your team will manage by exceptions focusing on the vital few areas (production cells, departments, vendors) where you can clearly see you have problems. People involved with Kanban systems report improved supply, better communication and less stress.

Kanban Implementation Outline

1. Determine if application is for purchased materials, work-in-process or finished goods
2. Gather kanban data (demand, capacities, lead-time)
3. Calculate kanban quantities
4. Choose the appropriate application (two-bin, multi-bin, one-bin or line balancing kanban)
5. Develop the signal mechanism (empty bin, kanban card, Andon light)
6. Work with suppliers (internal and external) on kanban supply set-up
7. Test the Kanban system and adjust quantities as needed