USABILITY OF KANBAN IN INDUSTIES
The word Kan means "visual" in Japanese and the word "ban" means "card". So Kanban refers to "visual cards".
A system of continuous supply of components, parts and supplies, such that workers have what they need, where they need it, when they need it.
"Kanban" is an inventory scheduling system originally developed by the Japanese but now used worldwide. The main objective of kanban is to reduce inventory costs. This is achieved by moving inventory only as and when needed. The system is used in many manufacturing and service companies. This includes car manufacturers, supermarkets, fast food chains, retail chains and pharmacies. Kanban places an increased emphasis on quality production, low variability and tight schedules. Companies following kanban have developed it to suit their own production processes. Employees are trained to familiarize them to the specifics of the kanban process as used within their organization.
It is a visual aid that triggers action.
How Kanban works:
Let's say one of the components needed to make widgets is a 42" stem-bolt and it arrives on pallets. There are 100 stem-bolts on a pallet. When the pallet is empty, the person assembling the widgets takes a card that was attached to the pallet and sends it to the stem-bolt manufacturing area. Another pallet of stem-bolts is then manufactured and sent to the widget assembler. A new pallet of stem-bolts is not made until a card is received. This is Kanban, in it's simplest form.
A more realistic example would probably involve at least two pallets. The widget assembler would start working from the second pallet while new stem-bolts were being made to refill the first pallet. If this was a high volume widget manufacturing facility, each widget assembly station might empty a pallet of stem-bolts in just a few minutes, and there could be 15 or 20 widget assembly stations. Thus there would be a continual flow of cards going back to the stem-bolt manufacturing area that would cause a continual flow of pallets of stem-bolts to be sent to the widget assembly stations.
"Kanban" is a system used for inventory scheduling in companies that follow Just-in Time (JIT) or lean production methods. Kanban means "card" in Japanese, and the system uses a card or some other signal to indicate the time has come to move inventory from one area of the production process to another. This process of moving inventory through the plant only when it is needed in the different areas is called the "pull" system. A good example of the pull system is the movement of inventory in a supermarket. When customers buy products from the shelves, the managers make note of the material in stock; empty shelves serve as triggers to "pull " in stock from the warehouses or materials suppliers. Thus products or materials are moved only when needed.
Kanban is Pull (Demand)
This is called a "pull" type of production system. The number of stem-bolts that are made depends on the customer demand--in other words the number of cards received by the stem-bolt manufacturing area.
Systems other than cards may be used. For example, the empty pallets may be returned to the stem-bolt manufacturing area. Each empty pallet received indicates a need to manufacture 100 more stem-bolts. For other types of components, bins, boxes or cages might be used instead of pallets. Or components might be stored on shelves in the widget assembly area. When a shelf became empty that signals that more components need to be manufactured and the shelf refilled.
In Kanban the method of handling the components is flexible, and depends on the needs of the manufacturing process.
If the bakery has adopted the kanban system, then it will refill the stock only as and when the "pull" has been generated. In other words according to customer demand. So when the demand is less, production is less and vice versa. Now if there is some contaminant while making the baked goods, because the inventory throughout the production process moves only as and when needed, it is more easily detected and fixed. Say the dough in a particular batch is faulty; when the company is using kanban it is operating with smaller units at any given time so the faulty dough causes minimum loss. If the company was not using kanban the dough would have affected all the 100 units being produced, causing a greater loss.
An Alternative Kanban Model
Kanban can also operate like a supermarket. A small stock of every component needed to make a widget would be stored in a specific location with a fixed space allocation for each component. The widget assemblers come to the "supermarket" and select the components they need. As each component is removed from the shelf, a message is sent to a "regional warehouse" or component manufacturing facility, requesting that the component be replaced. The "supermarket" might then receive a daily shipment of replacement components, exactly replacing those that were used.
If we just change the term "supermarket" to "warehouse" we have our manufacturing example.
This "supermarket" model is different from the first Kanban example in that it would be used when components are manufactured in facilities that are distant from the widget assembly plant. Instead of moving around small quantities of components, larger quantities are shipped once a day to the centralized warehouse.
Kanban - Responsive To Customers
Kanban results in a production system that is highly responsive to customers. In the above example, the production of widgets will vary depending on customer demand. And as the widget demand varies, so will the internal demand for widget components. Instead of trying to anticipate the future (predicting the future is difficult) , Kanban reacts to the needs.
Kanban does not necessarily replace all existing material flow systems within a facility. Other systems such as Materials Requirement Planning (MRP) and Reorder Point (ROP) may remain in operation. Kanban is most beneficial when high volume/low value components are involved. For low volume and high value components, other materials management system may be a better option.
JIT - Just In Time / Continual Improvement
Kanban is directly associated with Just-In-Time (JIT) delivery. However, Kanban is not another name for just-in-time delivery. It is a part of a larger JIT system. There is more to managing a JIT system than just Kanban and there is more to Kanban than just inventory management.
For example, Kanban also involves industrial re-engineering. This means that production areas might be changed from locating machines by function, to creating "cells" of equipment and employees. The cells allow related products to be manufactured in a continuous flow.
Kanban involves employees as team members who are responsible for specific work activities. Teams and individuals are encouraged participate in continuously improving the Kanban processes and the overall production process.
Kanban is not a system indented to be used by itself.
Traditionally in factories the need for parts in one area was signaled by using a "card," hence the name "kanban." Today, even though the system is still called kanban, many facilities do not use cards but instead use flags, signal lights, or designated areas becoming empty as indicators that the inventory is needed. Usually the cards or the signals serve as indicators that one unit of inventory is needed by that part of the production. Thus inventory movement at any given time throughout the production facility is in small unit sizes.
The benefits of kanban
Kanban provides a number of benefits. The containers or the unit size of the inventory that is moved each time usually supplies only a few hours of production. Therefore, if supplies are inferior or a machine malfunctions, only a limited amount of faulty items are produced and problems are identified faster when they occur.
Buildup of inventory is a serious issue in companies. Inventory has various costs associated with it including storage costs, wastage costs, spoilage, theft and loss of demand. When companies follow constant rates of production irrespective of the "pull," they are following a "push" system. An example would be manufacturing clocks and then hiring sales people to market and sell the clocks. The inventory of clocks in this case would be a liability. By using kanban, companies reduce the buildup of inventory and thus reduce costs.
Reduce inventory and product obsolescence.
Since component parts are not delivered until just before they are needed, there is a reduced need for storage space. Should a product or component design be upgraded, that upgrade can be included in the final product ASAP. There is no inventory of products or components that become obsolete.
This fits well with the Kaizen system on continual improvement. Product designs can be upgraded in small increments on a continual basis, and those upgrades are immediately incorporated into the product with no waste from obsolete components or parts.
Reduces waste and scrap
With Kanban, products and components are only manufactured when they are needed. This eliminates overproduction. Raw materials are not delivered until they are needed, reducing waste and cutting storage costs.
Provides flexibility in production
If there is a sudden drop in demand for a product, Kanban ensures you are not stuck with excess inventory. This gives you the flexibility to rapidly respond to a changing demand.
Kanban also provides flexibility in how your production lines are used. Production areas are not locked in by their supply chain. They can quickly be switched to different products as demand for various products changes. Yes, there are still limits imposed by the types of machines and equipment, and employee skills, however the supply of raw materials and components is eliminated as a bottleneck.
The flow of Kanban (cards, bins, pallets, etc.) will stop if there is a production problem. This makes problems visible quickly, allowing them to be corrected ASAP.
Kanban reduces wait times by making supplies more accessible and breaking down administrative barriers. This results in an increase in production using the same resources.
Reduces Total Cost
The Kanban system reduces your total costs by:
* Preventing Over Production
* Developing Flexible Work Stations
* Reducing Waste and Scrap
* Minimizing Wait Times and Logistics Costs
* Reducing Stock Levels and Overhead Costs
* Saving Resources by Streamlining Production
* Reducing Inventory Costs
Getting Started With Kanban
Introducing Kanban Into Your Facility
Kanban is usually introduced gradually and typically may involve some trial and error.
1. The first step is to become familiar with Kanban and the options it offers. Some parts of Kanban may be suitable for your company, others may not.
This tutorial is just a brief overview of Kanban. Becoming familiar with Kanban will requiring in-depth reading, possibly attending a seminar or hiring a consultant.
2. Select the components of Kanban that will work in your facility. Not all parts of Kanban may be appropriate for the types of products you produce. Kanban may be appropriate for one product, and not for another. In some cases a simple manual Kanban will work well. In other cases computer automation of Kanbans may be the best option.
You will need to evaluate both your in-house production and your suppliers in order to determine which Kanban options will benefit your facility.
3. Plan your Kanban system. Kanban involves more than just manufacturing. Other functions such as purchasing, warehousing, shipping/receiving, quality control, transportation, accounts payable and engineering will be involved. Include all of those who will be effected in your Kanban planning and design process.
In planning, keep in kind that your object to to have what is needed (supplies, parts, manpower, information, energy, equipment, etc.), where it is needed when it is needed.
4. Set goals for Kanban. Based on your plan, set a schedule with measurable goals. What do you want Kanban to accomplish and when should that goal be reached? Determine what will be measured, and how it will be measured. Be sure to get baseline measurements of your current manufacturing system and inventory levels, before Kanban is implemented.
5. Begin implementation of Kanban. A common approach to implementing Kanban is to start with a generous number of Kanbans - containers, pallets, boxes, etc. Then systematically reduce the number of containers until the point at which the supply of materials is just in balance with the rate of use is reached. As containers are removed from the process, it will eventually reach the point at which production is delayed because the next container has not yet arrived. At this point add one container to the system to bring it back into balance.
In using this trial and error approach, be sure a safety stock is available so that production is not interrupted. You identify the point at which there is one too few containers as the point at which material from the safety stock is used.
This trial and error approach should be spread over a significant period of time to allow for normal fluctuations in production. In other words, don't remove a container every thirty minutes. Instead, remove a container once a day, or even once a week.
It is important that containers are clearly identified. Workers should be able to immediately identify the contents of a container just by looking at it. Color coding and labeling containers is an effective approach. For example, paint pallets or containers different colors so that each color is associated with one component or part. Use large labels, that are easy to read from a distance, making it easy for anyone to identify the contents of a pallet or container. In addition to color coding your containers, use the same color code for your labels. Label materials are available in a wide variety of colors, giving you flexibility in color coding Kanban containers.
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Consider a bakery supplying to supermarkets. The first assumption is that the company is not following the kanban system and has negotiated a deal with the supermarkets that it will supply 100 units of baked goods per week irrespective of demand. Therefore this company has to maintain sufficient inventory in terms of raw materials and finished goods to supply the markets. In this case the company has to produce at a constant rate. If there are problems at any point in the production process, it is not easy to detect it during the production.This system is an illustration of the "push" system. The company first produces goods and then "pushes" it to the market. So the inventory flow is the same; each production unit gets inventory pushed into it whether it is needed or not.
Kanban requires a very tight schedule of operation. Because the inventory at hand is low the margin for error is also low. The process of production must operate with minimum variability because defects impact the entire system. If the required inventory is not moved as and when needed, the lead times are affected and the entire production line is affected. Kanban places a lot of emphasis on meeting schedules, reducing setup costs, reducing lead times in production and economic handling of materials. Kanban as a process is adopted differently according to each industry and organization. Kanban is highly specialized according to the individual organization, therefore there are no standard education and training manuals. Though the concepts of kanban remain similar across industries, each organization develops its own method of training its employees in this process.