Kanban

In this article we want to talk about another classic from Lean Management Kanban or the so called Pull System.

The word Kanban itself has its roots in the Chinese Japanese language and means card, label or sticker. In industrial manufacturing planning systems or general in logistics control Kanban describes a replenishment system for consumed parts according to the amount used steered by cards that give the signal following the Pull Principle.

The material in the Kanban System is exclusively oriented to the consumption of your production process. The cards are a key element of this kind of control system and provide proper information transfer. Kanban control loops from the work station of flexible production control and serves to smooth material flow through your inbound or even outbound logistics. In addition Kanban serves you to implement a sustainable reduction of material stocks, increases the ability to deliver and saves you pure cash.

In an ideal world Kanban would control your entire value chain from the supplier to the end customer. In this way you would have installed an complete smooth supply chain with almost no chance of interruption and massive stocks. And now comes the but – to steer production with Kanban – a continuous monitoring is required for a smooth material supply. To make it short: it requires discipline from all involved parties along the supply chain.

Lets have a look to the development of Kanban.

The first Kanban System was developed by none other than Taiici Ohno (of course) at Toyota Motor in the 1940s. One of the main reasons for the implementation of Kanban was the low productivity and efficiency of Toyota compared to western competitors. With the Kanban System, Toyota achieved a significant change towards flexible and efficient production control that had a massive impact on productions output while at the same time reducing the costs for inventory in raw material, work in progress (WIP) and finished goods.

To give the complete picture it wasn’t implementing the Kanban system itself to drive the success of Toyota, there are other key factors that together where making the difference. Just to name Just in time as an example of key elements of the Toyota Production System. It is and always will be a combination of different methods and philosophy that brings you forward.

In the 1970s the Kanban Concept was adapted in the industry in the USA and Germany. As they haven’t known better, they pretty much copied the complete Toyota Production System (TPS) in order to get the principles running.

Pull or Kanban System

Either way you call it, the material flow is controlled by boxes or cards. Kanban Cards serving in a simple way all information needed to identify what parts are needed in what quantity at what place. The amount typically is defined by the replenishment time at the work station. With the so called two box principle you make sure that the operator never runs short on components. Nowadays there are also digital version of it called eKanban, but the principle behind is the same. The trigger of supply is the Kanban Card starting of the pull chain of material.

To use Kanban efficient, it is not suitable for all parts. Kanban is perfect for small parts with a small amount of variants and a consistent demand. For this reason, you’ll see Kanban Systems in the industry mostly used for C-Parts management. The rest of the components are steered with the support of MRP. Only in rare cases you find that even the supply of big components are controlled with the Kanban methodology.

One nice side effect with Kanban, you can set up the way you can steer your bottleneck. That means, when you have done a proper value stream analysis you know the capacity for your bottleneck and will only order what this process step can handle.

Supermarket

When speaking of a supermarket in lean context we are talking about an independent instrument that is used to control production. In a supermarket raw material and pre-commissioned components can be found in defined areas. The amount is well organized according the replenishment times of each component, in general the inventory is limited and components are refilled as soon as they are used. Following the Pull Principle with the help of the Kanban-System.

Concerning the supermarket we see it as one of the pull strategies that can be implemented as link between two process steps when developing the future value stream. The supermarket is the third option when firstly One-Piece-Flow and secondly FIFO are no options at all.
The supermarket is a great methodology to help your organization to manage a variety of inventory where you don’t need to know in what order the components will be consumed. Through the so called Kanban-Pull-System “internal customers” will take components of the supermarket, which are replenished by the internal logistics following the Kanban-Pull-Principle or in a pre-defined interval. With this integrated pull system of the supermarket as link between logistics and production you can also speak of a general replenishment pull system. But let’s have a look at the supermarket, what it can be used for and how it could look like in your organization.

The supermarket itself is a mix of FIFO lanes for different components stored in Mobile Racks or a typical shelf where components are stored in bins or on pallets. Let’s assume on workstation A 3 different components are assembled, in the supermarket 1 lane would be dedicated to only this component following the FIFO principle. With this explanation you can see why FIFO itself is preferred the supermarket. The supermarket is either steered with two bin principle or kanban cards. According the replenishment time, the replenishment is triggered with the extraction of components and the stock dropping below the minimum quantity.
You see, the key question is when to use a supermarket instead of installing plane FIFO lanes or even follow the One-PIece-Flow.

Here are some examples when this is the case:

• Two main material flow streams come together before or are split after the supermarket

• Your organization follows the made to stock principle, then the supermarket is at the end of production and stores finished goods

• With the help of a supermarket different lead times of suppliers paired with a high variance can be leveled and production can be smoothly supplied

• Upstream processes are lacking quality, downstream process steps can easily replace defective parts/components (interim solution until problem is solved)

• Different change over times, when a downstream process needs a change over the upstream processes can fill the supermarket as a overflow stock that is drained after change over is done

All of this examples have in common that the final target is to eliminate the supermarket itself and improving the material flow in a way that simple FIFO lanes or a Two-Bin-Principle at workstations can be realized.
The size of a supermarket is always determined by the components and their space needed for storage and their replenishment lead times. So it is a good piece of advice to have a clear overview of your components, their recurring demand including their replenishment times and don’t forget about a little safety stock on top.

As already mentioned there are two principles that are already well-known for implementing and steering a supermarket. The first one we have a look at is the Kanban-Principle and the second the so called Two-Bin-Principle, in which the bins itself trigger the replenishment.

A supermarket running on Kanban Cards can be seen shematically in the picture below. Every component stored in the supermarket is represented by an individual card, on which all required information is listed in order to trigger the replenishment process. The Kanban-Card can be seen as order slip for suppliers. Usually Kanban-Cards are placed on the so called Kanban Board. This kind of a supermarket can be seen most of the time.

The Two-Bin-Principle is a kind of supermarket where the bins itself are utilized the same way the Kanban Cards are used. In this approach all components have e.g. two assigned bins, filled with the dedicated components for this exact bins. The full bins are placed at the workstation, components are used and the empty bins are placed on the empty conveyor, ready to be collected by the Mizusumashi. the Mizusumashi refills the bins with the defined components and brings the full set back to the workstation. This kind of “decentralized” supermarkets are typically used for small and C-parts, which are consumed by not only one but several workstations, e.g. screws, washers, etc. as the financial impact of c-parts are low and the space needed is small.

In the end the supermarket is the last possible way to implement a Pull System after failing on implementing a One-Piece-Flow or FIFO. The target is and always will be to reduce the size of the supermarket by changing it into a FIFO system or change the material flow in to One-Piece-Flow. Therefore the supermarket can be seen as needed but temporary. The size of a supermarket is always defined by the size of the components itself, the replenishment time incl. some safety surcharge and the consumption lead time of the production. By simply removing or adding Kanban Cards or Kanban Bins the level of WIP can be adjusted.

Signal Kanaban

Every container or bin in your production facility is marked with a so called Kanban card or signal. The time the last component is taken, the Kanban is send to the source it came in production and is added to the so called Kanban Board. This board actually shows you the amount of inventory you have in production. It is a great tool to minimize the risk of overproduction and can be used to steer your production facility. Besides this it helps you to have control of your inventories itself of course . Based on the design of Kanban Cards it is possible to identify directly where the container belongs to and in what interval you have to check on it.

The checking and supply of material or components lies in the hands of the mizusumashi.