Kanban is a Japanese term that literally translates to “signboard”, and is a critical part of implementing Pull (instead of Push) into your organization. When production makes use of a Pull strategy, work is based on actual customer (internal and external) demand at that time, as opposed to a forecast, or based upon uneven upstream operations.
Balanced with Takt time and operations cycle times, implementing a Kanban system allows organizations to be more nimble and better able to adapt to changes in demand whilst minimizing (or eliminating!) inventory. Executed correctly, Pull systems allow businesses to operate and deliver work in between departments and work cells “just in time”. Kanban cards are a vital part of this system. They serve as visual triggers that control the flow of materials or parts during the manufacturing process. They ensure that the correct number of parts are delivered when & where you need them. Other benefits include:
- Drastically Lowers inventory & inventory costs
- Increases operations efficiency (OEE)
- Improves flow, productivity & absorption
- Maximizes production capacity
- Reduces expedite costs (overtime, expedite charges, premium freight)
- Prevents Overproduction (one of the 8 Wastes (make this a link to Lean 8 Wastes))
- Improves responsiveness to changes in demand
We recently assisted a MA-based manufacturer incorporate Kanban into their operation, leading to a Work-In-Process (WIP) reduction of 65%, saving $1,000’s every month. Prior to implementing the Kanban system, the team experienced stock-outs due to miscommunicated production requirements and bad MRP data. This, in turn, lead to expedite charges from supplier and premium freight costs, which further ate away at profit margins. Once Kanban was put into place, stock-outs were eliminated, increasing manufacturing efficiency, organizational profitability and increasing customer satisfaction and On-Time Delivery. Finally, the manufacturing team members were much happier, as they didn’t have to deal with the roller-coaster of imbalance.