“In a period of low economic growth, overproduction is a crime.”
Taiichi Ohno
Kanban is a visual tool used for inventory control. One of the continuous improvement goals is to deliver customer value in the shortest possible lead time. Delivery time is affected by how the product or service flow through the steps. Many companies seek to solve their flow problems by building inventory. There are three types of inventory.
Materials
Materials shortage happens very often when cash is limited. Some employees’ reaction is to hide some to ensure that they have available when needed. Did you ever see somebody keeping a private stash of office supplies in their desk drawer? Or maybe hiding ingredients in the bottom of the fridge? Because they are hidden, nobody will count those items as part of the inventory. As a result, there is a chance that you will end up buying stuff that you don’t need. Perishable items will be at risk of being spoiled and end up in the trash. Either way is a waste of money.
Work in process inventory
Did you ever see a kitchen where cooks prepare too many of several items in advance to ensure that they will not run out during rush hour? Or a receptionist that printed too many dated questionnaires? Understanding daily demand is not easy, but it is necessary. For example, in a restaurant, knowing how much is needed will allow for better food management. You will be able to go from making big batches of food to small batches delivered to the cooks just-in-time. Therefore, the food on the customer plate will be fresh, and wastage will be minimal.
Finished product
When you think of finished product inventory, most probably you think of a warehouse full of boxes. But there are many other examples that perhaps you see daily. For example, a bakery has a full display of all types of cakes, brownies, and other pastries. The counter looks good, but those pastries baked in the morning will not taste fresh in the afternoon. As a result, some of them maybe will end up in the trash.
What is Kanban?
Inventory is money sitting in a warehouse or storage room. The more you have around, the more money you have tied up to your operation. However, inventory does not mean that you are better prepared to respond faster to your customers.
A kanban is a visual tool that authorizes production or withdrawal of inventory. It synchronizes and gives instructions to internal and external suppliers and customers. Plus, it helps prevent material cuts and deliver the right amount in the right place at the right time.
How Kanban works
Kanban is a visual control tool that organizes behavior by signaling when it is time to move items. In other words, cards will tell people when it is time to move inventory. Each Kanban card signifies one product, paperwork, material, or task. Likewise, each one contains all information related to it. There are many different card designs to choose from. However, you can design your own. For instance, they can be as simple as a piece of paper, or as complicated as barcodes, scanners, and computer applications.
The kanban card should communicate at least the following.
- What? item description, part number
- Who needs to replenish? internal or external supplier
- Who needs the item? internal or external customer
- Where it goes? storage location, location of use
- How many items? lot size, minimum, maximum
Cards are not the only form of Kanban, below you can see others.
- Open floor space marked with a square or a silhouette to indicate that someone withdraw the items and needs replenishment
- A colored line on a conveyor or storage rack
- An empty parts bin
- A divider or color card between items or boxes.
Benefits of Kanban
Some of the kanban benefits are prevention of excessive inventory, prevention of stockouts, and forces stock rotation which is important for perishable items. Other benefits that stem from these are improvements in cash flow and reduction in expediting expenses and space requirements.
Kanban is becoming a very used tool in different industries besides manufacturing. Some examples are in technology, hospitals, and even for personal use. In my next publication I will describe how kanban works.