Kanban

- basics of Kanban as part of a supply chain management system used to ensure continued supply of components for manufacturing.

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Kanban is a scheduling system for lean and just-in-time, or JIT production processes.

Kanban is often referred to as a "pull system" as it pulls new components into the manufacturing system as they are required.


Kanban overview

The kanban inventory control system arose out of the need particularly for volume manufacturers to be able to control inventory accurately and efficiently. If production lines stop because of shortage of components or materials, then it causes significant disruption to the production line as elements of the product cannot be completed and have to be stored part finished until the shortages are fulfilled.

To overcome these problems, car manufacturer Toyota studied the ways in which supermarkets kept shelves stocked. They saw that supermarkets only stocked what they believed would sell. As a result they noted that customers would only take what they need because of the virtual guarantee of their future supplies. In this way people did not stock more than they needed.

They also saw that the customer process in supermarkets involved the customer going to the supermarket and removing items from the shelves. Continuous monitoring of stock levels would enable the store to know when stock of a given product needed to be restored. Deliveries of new stock would empty stock at the main distribution centres that would then flag that they needed to replenish, and so forth back along the supply chain.

Using this example, Kanban uses the rate of demand to flag replenishment requirements along the supply chain until it reached the original manufacturer who would know what rate to produce the product.

As a result, Toyota used this principle in their production tool shop and then flowed the principle out from there.


Kanban pull vs push systems

Traditional methods of supplying a manufacturing process rely on forecasting the demand. This can be viewed as demand "pushing."

By contrast the Kanban system takes the approach using a "pull" from the demand that is created. In this way the supply or in the case of a manufacturing supplying goods, the production is determined according to the actual demand of the customers. This is particularly helpful in situations where demand is difficult to forecast and by using actual demand, it is possible to gain the best insight into the supply requirements.

In situations where the supply response is not able to be fast enough to meet actual demand fluctuations, it may be necessary to build some stock to take account of this - this is achieved by issuing more Kanban.


Kanban cards

Kanban cards form a key element of the Kanban system. They form one of the key indicators that can be picked up to tell when stocks are falling to the degree where they need to be replenished.

The Kanban card provides a simple and effective means of indicating stock requires replenishment. Once stock becomes low, the Kanban card becomes visible and is used to convey the need for more material.

With the advent of more electronic control, many organisations use the electronic equivalent of Kanban cards. Whatever the medium, provided the basic principle of adhering to a "pull" system where demand is driven by the need for more material, the means of indicating the need is not an issue.

By Ian Poole

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Supply chain Obsolescence Kanban Just-in-time, JIT
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