Kanban

See also: Kanban (development) and Personal Kanban

Kanbans maintain inventory levels; a signal is sent to produce and deliver a new shipment as material is consumed. These signals are tracked through the replenishment cycle and bring extraordinary visibility to suppliers and buyers.

Kanban (カンバン), literally meaning "signboard" or "billboard", is a concept related to lean and just-in-time (JIT) production. According to its creator, Taiichi Ohno, Kanban is one means through which JIT is achieved.

Kanban is not an inventory control system. It is a scheduling system that helps determine what to produce, when to produce it, and how much to produce.

The need to maintain a high rate of improvement led Toyota to devise the Kanban system. Kanban became an effective tool to support the running of the production system as a whole. In addition, it proved to be an excellent way for promoting improvements because reducing the number of Kanban in circulation highlighted problem areas.

Origins

In the late 1940s, Toyota began studying supermarkets with a view to applying store and shelf-stocking techniques to the factory floor, based on the idea that in a supermarket, customers get what they need at the needed time, and in the needed amount. Furthermore, the supermarket only stocks what it believes it will sell, and customers only take what they need because future supply is assured. This led Toyota to view a process as being a customer of preceding processes, and the preceding processes as a kind of store. The customer process goes to this store to get needed components, and the store restocks. Originally, as in supermarkets, signboards were used to guide "shopper" processes to specific restocking locations.

Kanban uses the rate of demand to control the rate of production, passing demand from the end customer up through the chain of customer-store processes. In 1953, Toyota applied this logic in their main plant machine shop.

Operation

An important determinant of the success of production scheduling based on "pushing" the demand is the quality of the demand forecast that can receive such "push."

Kanban, by contrast, is part of an approach of receiving the "pull" from the demand. Therefore, the supply or production is determined according to the actual demand of the customers. In contexts where supply time is lengthy and demand is difficult to forecast, the best one can do is to respond quickly to observed demand. This is exactly what a Kanban system can help with: It is used as a demand signal that immediately propagates through the supply chain. This can be used to ensure that intermediate stocks held in the supply chain are better managed, usually smaller. Where the supply response cannot be quick enough to meet actual demand fluctuations, causing significant lost sales, then stock building may be deemed as appropriate which can be achieved by issuing more Kanban. Taiichi Ohno states that to be effective Kanban must follow strict rules of use (Toyota, for example, has six simple rules, below) and that close monitoring of these rules is a never-ending task to ensure that the Kanban does what is required.

Kanban cards

Kanban cards are a key component of Kanban that uses cards to signal the need to move materials within a manufacturing or production facility or move materials from an outside supplier to the production facility.

The Kanban card is, in effect, a message that signals depletion of product, parts or inventory that when received will trigger the replenishment of that product, part or inventory. Consumption drives demand for more. Demand for more is signaled by Kanban card. Kanban cards therefore help to create a demand-driven system. It is widely espoused^{[citation needed]} by proponents of Lean production and manufacturing that demand-driven systems lead to faster turnarounds in production and lower inventory levels, helping companies implementing such systems to be more competitive.

Kanban cards, in keeping with the principles of Kanban, should simply convey the need for more materials. A red card lying in an empty parts cart would easily convey to whomever it would concern that more parts are needed.

In the last few years, electronic Kanban systems, which send Kanban signals electronically, have become more widespread. While this is leading to a reduction in the use of Kanban cards in aggregate, it is common in modern Lean production facilities to still find widespread usage of Kanban cards. In Oracle ERP, Kanban is used for signalling demand to vendors through email notifications. When stock of a particular component is depleted by quantity assigned on Kanban card, A "Kanban trigger" is created which may be manual or automatic, a purchase order is released with predefined quantity for the vendor defined on the card, and the vendor is expected to dispatch material within lead time.^{[citation needed]} This system is also available in enterprise resource planning software such as SAP ERP or Microsoft DynamicsAX.^{[citation needed]}

Toyota's six rules

• Do not send defective products to the subsequent process
• The subsequent process comes to withdraw only what is needed
• Produce only the exact quantity withdrawn by the subsequent process
• Level the production
• Kanban is a means to fine tuning
• Stabilize and rationalize the process

Three-bin system

A simple example of the Kanban system implementation might be a "three-bin system" for the supplied parts (where there is no in-house manufacturing) — one bin on the factory floor (demand point), one bin in the factory store, and one bin at the suppliers' store. The bins usually have a removable card that contains the product details and other relevant information — the Kanban card.

When the bin on the factory floor becomes empty, i.e., there is demand for parts, the empty bin and Kanban cards are returned to the factory store. The factory store then replaces the bin on the factory floor with a full bin, which also contains a Kanban card. The factory store then contacts the supplier’s store and returns the now-empty bin with its Kanban card. The supplier's inbound product bin with its Kanban card is then delivered into the factory store completing the final step to the system. Thus the process will never run out of product and could be described as a loop, providing the exact amount required, with only one spare so there will never be an oversupply. This 'spare' bin allows for the uncertainty in supply, use and transport that are inherent in the system. The secret to a good Kanban system is to calculate how many Kanban cards are required for each product. Most factories using Kanban use the coloured board system (Heijunka Box). This consists of a board created especially for holding the Kanban cards.

Electronic Kanban systems

Main article: Electronic Kanban

Many manufacturers have implemented electronic Kanban systems. Electronic Kanban systems, or E-Kanban systems, help to eliminate common problems such as manual entry errors and lost cards. E-Kanban systems can be integrated into enterprise resource planning (ERP) systems. Integrating E-Kanban systems into ERP systems allows for real-time demand signaling across the supply chain and improved visibility. Data pulled from E-Kanban systems can be used to optimize inventory levels by better tracking supplier lead and replenishment times.

See also

• Backflush accounting
• CONWIP
• Manufacturing
• Material requirements planning (MRP)
• Manufacturing resource planning (MRP II)
• Scheduling (production processes)
• Supply chain management
• Drum-Buffer-Rope
• List of software development philosophies
• Lean software development
• Visual control
• Continuous-flow manufacturing

Further reading

• Ohno, Taiichi (1988). Toyota Production System: Beyond Large-Scale Production. Productivity Press. ISBN 978-0-915299-14-0. 
• Waldner, Jean-Baptiste (1992). Principles of Computer-Integrated Manufacturing. John Wiley & Sons. ISBN 047193450X. 
• Louis, Raymond (2006). Custom Kanban: Designing the System to Meet the Needs of Your Environment. University Park, IL: Productivity Press. ISBN 978-1-56327-345-2. 
• Ladas, Corey (2008). Scrumban: Essays on Kanban Systems for Lean Software Development. Modus Cooperandi Press. ISBN 0578002140. 

External links

• Kniberg, Henrik (December 21, 2009). "Kanban and Scrum - making the most of both". http://www.infoq.com/minibooks/kanban-scrum-minibook. Retrieved December 22, 2011. 
• David Anderson & Arne Roock (February 2, 2010). "Software Engineering Radio, Episode 156: Kanban with David Anderson". http://www.se-radio.net/2010/02/episode-156-Kanban-with-david-anderson. Retrieved April 10, 2010. 
• Kanban Pizza Challenge, a Creative Commons Simulation to understand Kanban