Photo by:  Dennis Hamilton

While many might be unaware of what Kanban actually is, it is something that forms an integral part of stocks and servicing of almost every company in 21st century. It is a logistic mechanism that includes the sending of visual signals from the inventory to the sales department, conveying the transfer or reception of goods or items. In Japanese, the word “Kanban” refers to a “sign” or “symbol”. This particular scheduling system is made use of mainly by the production departments that use JIT production system.

Kanban is most needed in organizations which make use of the work module WIP or Work-in-Progress. It is that product or item that is going through the process of the production without having achieved the status of a finished product. Since the process of production is a fairly long one, there are often various products going through some stage of production, proceeding gradually towards the final stage (becoming the finished product). Excluding the stage of inventory which deals with raw materials and the inventory which keeps track of the finished goods, WIP is concerned with all the stages that come in between. Kanban, on the other hand, is concerned with the inventory of finished goods. The relation between WIP and Kanban is the setting of maximum limitation of the production cycle and ensuring that there is no excess of the kind of goods that is not needed.

The overall purpose of using Kanban is to have an organized, fully stocked and always updated inventory at all times. It was first developed by an engineer at the Toyota, Taiicho Ohno, with the singular aim to improve the level of production, which would ultimately boost profitability of the company. It acts as the control room of a lean production system. This is because a Kanban communicates with all the respective areas of production, giving them relevant and timely instructions so that there is never an area of production sitting idle. Such a smooth communication can be achieved by combining “information flow” and “material flow”, which are two of the key processes inside production.

How the idea came into being

It might come as a fascinating surprise to many, but the actual concept of Kanban was hugely inspired by none other than supermarkets in the United States. Everyone is familiar with the way in which shelves in the supermarket are refilled every time a particular stock of an item runs low. This observation struck a chord with Taiicho, who then went on to apply similar logic when developing Kanban, which would then make a production process, called Just-in-Time, possible. It soon ended up being a methodology which adopted the idea of replenishing the stock of an item as soon as its number diminished, as a result of getting sold off.

How Kanban works

Since it has already been established that the concept of Kanban generated from the way in which a supermarket functions on a daily basis, it would be appropriate to explain the process of Kanban through the example of the same. The process starts off my allocating a fixed space for every item in the inventory, which sits in its designated spot, until moved. A Kanban card contains information such as the part number and name, the process name of the supplier, the quantity in every container, the storage and the delivery address and the total number of cards in the system. A withdrawal Kanban card is forwarded immediately from the shipping to the supermarket, when a requirement arises of a particular product in order to satisfy the demand of the customer. When the item in question is removed from the inventory of a supermarket, a production Kanban is generated. This production Kanban is conveyed to the assembly department, letting them know that an item has been withdrawn from the supermarket along with the respective details of that item. This in turn helps the assembly department come up with plans to replenish that item as soon as possible. Hence, the entire process ensures the proper stocking of the inventory at all times.

Difference between a Kanban and a traditional system

The several areas of production in a company are all interlinked with one another where even if a single area fails to perform, the entire system can come to a standstill. As such, the process of production resembles a chain in this sense. Traditional production tends to follow the push system, which makes the production chain an extremely uneven and loose design, which can easily fall into pieces at any given point of time. In such a situation, due to lack of proper communication and maintenance of the inventory accordingly, the company can end up stacking items which are less in demand and falling short on items which have the maximum demand in the market. The Kanban system follows a pull chain design which makes sure that items are produced only when requirement arises. This keeps the chain well knit and tight.

Functions of Kanban

Time and again the Kanban system has proven to be far more effective in controlling the inventory of big companies and industries. Some it’s most beneficial functions include:

  • Kanban sets a specific limit to the inventory. Without the approval of a Kanban, items cannot be transferred or produced by the company. Hence, it ensures that there is never the chance of surplus production that can lead to waste and loss of the company. Since it is up to the sole control of Kanban and its unique signals to enable the movement of goods from the inventory as well as sanction further production of items to restock the inventory, goods or products are only produced as and when they are needed.
  • Mistakes are rare when using Kanban because when a material is not attached to a Kanban card, or vice versa, one would know that something is not right. Hence, one always needs to ensure that a Kanban card is always sticking to the materials in the inventory or on the Kanban postbox.


Kanban videos

ASQ Six Sigma Black Belt Kanban Questions

Question: A store uses signs at specific points in its storage area to indicate when products need to be ordered. This practice is an example of

(A) kanban
(B) poka-yoke
(C) checkpoints
(D) hoshin

Answer: The answer is A Kanban. Kanban is a process of identifying just-in-time material flow. Poka-yoke is about error-proofing a concept. Hoshin is about enterprise strategy. Checkpoints are a quality control mechanism.

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