Kanban

What is Kanban? 

Kanban is a method of managing the flow of materials and information with the aim of satisfying the customer by delivering the right product at the right time, in the desired quantity, and with the required quality. Kanban forms the foundation of the "Just in Time" system. 

Kanban originated within the production program of Toyota (Toyota Production System). Its author is Taiichi Ohno, an industrial engineer at Toyota. Kanban is inspired by the supermarket system, where shelves are restocked only when goods are running out. 

Kanban is an acronym for the Japanese term "signboard" or "signal card." 

Purpose of Kanban 

Kanban is a production system based on the pull system philosophy. The pull system philosophy involves initiating production based on customer demand. Unlike the push system philosophy, which produces whenever resources are available, the pull system reduces the number of raw materials, work-in-progress, and finished goods inventory. This helps save costs associated with storage and frees up resources tied up in excess inventory. 

However, the pull system has its challenges that manufacturers must face. If processes from material ordering to production and shipment are unstable, the manufacturer may not be able to fulfil customer orders (out of stock). This compels the manufacturer to identify bottlenecks in the processes and eliminate them. 

To make the pull system work effectively, processes must be managed to ensure their performance is predictable and stable. Additionally, the manufacturer needs to forecast customer demand in the future. This presents another significant challenge when implementing pull systems in a company. If customer demand is unstable, uneven, or unknown, the pull system may fail. 

The philosophy of the Kanban system supports the implementation of other elements of lean production and process management through statistical tools (Lean Six Sigma). 

Kanban serves to manage the pull system in real-world manufacturing conditions, where not all processes and customer demands are known with absolute precision. Kanban is based on the dissemination of information against the direction of the production process. This means that information flows from shipment, through the production process, to ordering and planning. The system operates on information visualization, which is achieved using coloured Kanban cards that move between Kanban boards. Information about the status of a work order is instantly available at every point in the process. 

For successful implementation, the following rules must be followed: 

• Each process issues requests (Kanban) to its suppliers when it consumes its inventory. 
• Each process produces according to the quantity and sequence of incoming requests. 
• No items are produced or transported without a request. 
• Each request is always accompanied by a request associated with the item. 
• Processes must not send defective items to ensure finished products are flawless. 
• Limiting the number of pending requests makes the process more sensitive and reveals inefficiencies. 

The signal propagation can be demonstrated in a simple process consisting of three steps: 

1. Material Order 
2. Processing in Production to a Finished Product 
3. Shipment to the Customer 

Example of a Kanban System: 

When the shipment delivers goods to the customer, it frees up space in the warehouse, which needs to be replenished with a new product. An expediter takes a Kanban card from the freed-up space and moves it to the production Kanban board. Production receives the information about the need to produce. The production process starts, filling items for shipment, while consuming raw materials. Similarly, in the case of missing raw materials, a representative from the production department moves a Kanban card to the purchasing department, conveying the information about the need to supply the missing raw materials for production. Meanwhile, production completes the order for shipment, stocks the goods, and places the Kanban card on the shipment board. The information about order completion is conveyed, and the goods are ready for delivery to the customer. At the same time, production concludes its operations. The raw material stored in the purchasing department is transferred to production together with the Kanban card. The information, similar to the shipment process, is conveyed, and production knows it has enough raw materials to start the next cycle. 

This simple example demonstrates that to maintain the entire system, it is essential to know the speeds of individual steps and anticipate the size and frequency of customer orders and delivery times. Therefore, the Kanban system is primarily used for stable customer demand. However, in practice, it can also balance fluctuations common in real supplier-customer relationships. 

Currently, physical Kanban tags are used in combination with electronic systems for visualization. 

Usage in Practice

Introducing Kanban into practice requires thorough preparation. First and foremost, it is essential to know and manage the production cycle time for each process, not just in manufacturing steps. Predictability of processes is a necessary condition for the functioning of the Kanban system. Next, it is necessary to calculate minimum levels of raw materials and work-in-progress to ensure that the production process does not stop due to shortages of materials, semi-finished goods, or other resources. To maximize efficiency, it is advisable to balance process speeds to minimize work-in-progress. 

Kanban operates based on three fundamental visualization tools that need to be implemented: 

• Kanban Card: Represents information about a customer's order 
• Kanban Board: A physical location where cards are physically moved between internal customers and suppliers. The board is a fundamental visualization tool 
• Kanban Box: A place to store cards, where customers deposit their requests 

The system functions when adhering to the rules mentioned in the previous text, and the number of Kanban cards in circulation must be in line with the needs of finalization. 

Kanban, when correctly implemented, can minimize work-in-progress in production, provide flexibility, and fulfil just-in-time customer requirements. 

An additional effect is the pressure for a transition from uncontrolled production with unpredictable processes to a managed and predictable production process. 

In addition to manufacturing plants, the Kanban methodology is also used in service management, logistics, and project management. 

Fig. 1: Example of a kanban card 

How we can help you 

To implement a kanban system, it is essential to know the processes across the entire range of production as well as administrative activities. Elements of Lean Management, SPC, Logistics and the drive for continuous improvement play a big part in successful implementation. 

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