Lean Velocity: Kanban

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KANBAN

Course Summary

This course demystifies the language around Kanban and teaches participants how to implement and use Kanban to simplify decision making in their jobs. Participants will learn how to determine the correct amounts of inventory to carry out each step in the process and how to clearly signal others regarding what to make, how much of it to make and when to make it by. All this is accomplished through the use of Kanban.

The course also clears up the confusion about the interface between Kanban and the traditional MRP/ERP systems used in business today.

Course Key Deliverables:

Understanding the various types of Kanban used in business.
How to use Kanban with a variety of products.
How to calculate the correct level of inventory at each stage of operation.
Selecting the most effective method of Kanban in different applications.
Training others to use Kanban quickly and effectively.

Kanban maintains 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[1].

Kanban is a concept related to Lean or Just In Time (JIT) production, but these two concepts are not the same. (The Japanese word "kanban" is a common everyday term meaning "signboard" or "billboard" and utterly lacks the specialized meaning which this loanword has acquired in English.) According to Taiichi Ohno, the man credited with developing JIT, kanban is a means through which JIT is achieved.[2]

Kanban is a signaling system. As its name suggests, Kanban historically uses cards to signal the need for an item. However, other devices such as plastic markers (Kanban squares) or balls (often golf balls) or an empty part-transport trolley can also be used to trigger the movement, production, or supply of a unit in a factory.

It was out of a need to maintain the level of improvements that the kanban system was devised by Toyota. 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 restricting the number of kanban in circulation highlighted problem areas[3].

Origins

The term kanban describes an embellished wooden or metal sign which has often been reduced to become a trade mark or seal. Since the 17th century, this expression in the Japanese mercantile system has been as important to the merchants of Japan as military banners have been to the samurai. Visual puns, calligraphy and ingenious shapes, or Kanban, define the trade and class of a business or tradesman. Often produced within rigid Confucian restrictions on size and color, the signs and seals are masterpieces of logo and symbol design. For example, a sumo wrestler, symbol of strength, may be used as kanban on a pharmacy sign to advertise a treatment for anemia.

In the late 1940s Toyota was studying US supermarkets with a view to applying some of their management techniques to their work. This interest came about because in a supermarket the customer can get what is needed at the time needed in the amount needed. The supermarket only stocks what it believes it will sell and the customer only takes what they need because their supply is assured. This led Toyota to view earlier processes, to that in focus, as a kind of store. The process goes to this store to get its needed components and the store then replenishes those components. It is the rate of this replenishment which is controlled by kanban which give permission to produce. In 1953 Toyota applied this logic in their main plant machine shop.[4]

Implementation

With this in mind, it is not surprising that an important determinant of the relative merits of "push" and "pull" production scheduling is the quality of the demand forecast. Kanban is a pull system that determines the supply, or production, according to the actual demand of the customers. In contexts where demand is difficult to forecast the best one can do is to quickly respond to observed demand. This is exactly what a kanban system does, it acts as a demand signal which immediately propagates through the entire chain. "Push" systems often encounter serious difficulties when demand forecasts turn out to be inaccurate. Where the response cannot be quick enough, e.g. significant lost sales/downstream production, then stock building may be appropriate by issuing more kanban. Taiichi Ohno states that kanban must follow strict rules of use,[5] Toyota have six simple rules, and that close monitoring of these rules is a never ending problem to ensure that kanban does what is required.

A simple example of the Kanban system implementation might be a "three bin system" for the brought out parts (where there is no inhouse manufacturing) -- one bin on the factory floor, 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 shop floor is empty, the bin and Kanban card are returned to the store. The store then replaces the bin on the factory floor with a full bin which also contains a Kanban card. The store then contacts the supplier and returns the now empty bin with its Kanban card. The suppliers 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 also be described as a "loop", providing the exact amount required, with only "one" spare so there will never be an issue of "over-supply". 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 the purpose of holding the Kanban cards.

Another example of kanban thinking: in the production of a widget, the operator has two shelves, one on either side of their workplace. The raw materials can be designated to arrive on one shelf and the finished articles placed on the other. These shelves can then be designated to act as kanbans. The outgoing kanban signals the customer's need so that when it is empty, the operator must produce one more widget.

The Kanban is sized so that it can only hold a fixed number of items decided by the customer needs (usually one). When the operator begins work, he takes the raw material from the incoming kanban, which when seen by the supplier, signals that the customer needs one more.

Waldner, Jean-Baptiste (September, 1992). Principles of Computer-Integrated Manufacturing [1]. John Wiley & Sons, p128-p132. ISBN 047193450X.
Ohno, Taiichi (june 1988). Toyota Production System - beyond large-scale production. Productivity Press, 29. ISBN 0915299143.
Shingo, Shigeo (1989). A Study of the Toyota Production System from an Industrial Engineering Viewpoint. Productivity Press, 228. ISBN 0915299178.
Ohno, Taiichi (june 1988). Toyota Production System - beyond large-scale production. Productivity Press, 25-28. ISBN 0915299143.
Ibid p 30