A kanban is a signal to perform work or to move a product from one place to another. It is usually part of a “pull system” where items are consumed and replenishment is then requested.

Kanban pull systems are usually implemented where the regular scheduling system begins to fail. Symptoms of failure include:

  • Stock outs - production downtime due to missing components or materials
  • Excessive inventory
  • Incorrect inventory mix - too much of some items, too few of others

Kanban vs. ERP Systems

Benefits of Kanban Systems

  • Visual management of materials and standardization of unit loads improves the production process. Material handling and presentation can be better designed when the unit load is standardized. Inventory accuracy improves with standard container sizes as well.
  • The system corrects itself - ERP and APS systems rely on highly sophisticated models of supply and demand sources and tries to synchronize everything. But these systems do not respond quickly to actual events on the floor that disturb the plan. Kanban systems are pull based. If for some reason an item is not ready to build, items are not pulled and production is not triggered further upstream. This reduces the problem of “parts waiting for other parts” or “parts waiting for machines.

Benefits of ERP/APS Systems

  • Direct link to maintained item list, routings/operations and bills of material
  • Better for one time demand. A pull system on the other hand, will generate a replenish order for something that may not be needed again.
  • Less effort to set up and sustain a visual management system. Only jobs need to be physically managed.

Steps required to implement a kanban pull system

  1. Compile an items list with consumption history
  2. Map the product flow to identify points of supply and consumption (Pull Sequences)
  3. Calculate the average demand rate
  4. Determine a standard unit load (eg. Box, Pallet, Bag) - the standard unit load should be visual. For example, if you buy resin in 5 lb bags, the kanban should be in terms of bags, not pounds of resin which would be difficult to measure visually.
  5. Estimate the replenishment interval - should include order placement time, average queue at upstream processes, production time and delivery time. This can become a circular or recursive process because the replenishment interval itself may be dependent on the quantity replenished. In most cases though, the queue / scheduling / delivery times will cause the lead time to be the same regardless of quantity.
  6. Calculate the number of kanbans in circulation: K=(Demand During Replenish Interval)(1+safetyfactor%)/(Unit Load)
  7. Determine the type of kanban
    1. 2 bin system - consume one bin while other bin is being replenished
    2. fill level
    3. circulating cards
    4. electronic system

Steps to Maintain a Kanban System

If Kanban pull systems aren't sustained with standard work and kamishibai (in depth lean audits), they eventually fail due to changes in demand patterns and loss/damage of kanban cards. The following are recommended practices to sustain kanban systems:

  1. Perform a pull sequence audit at regular intervals to verify all the kanban signals are available for use and are being used properly.
  2. Recalculate kanban sizes every 6 weeks based on changes in demand patterns.
  3. Monitor the function of the kanban system. Experiment with pulling cards out of circulation to reduce average inventory. Consider adding cards if they are circulating too rapidly and stock-outs are threatened, but first do root cause analysis to determine if there are any un-natural delays or variability that should be addressed.

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