Kanban

A Lean Manufacturing Tool

A Graphic Products Library Resource

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Protect your
overhead.
 KANBAN
Contents of the Kanban resource guide by Graphic Products, Inc.

IntroducTION.......................................................... pg 1
An Introduction to Kanban
-- Kanban Basics
-- Small Inventories

Benefits.................................................................. pg 3
Benefits of Kanban

Methods.................................................................... pg 4
Basic Methods of Kanban
-- Kanban Cards
-- Kanban Queues

Implementation.................................................... pg 6
Implementation of Kanban
pg 8 Collecting Data for Kanban -- Universal Customer
-- Kanban Preparation
-- Kanban Design

Data Collection................................................... pg 8
Collecting Data for Kanban
-- Process Measurement
-- Data Interpretation & Application

Sustaining............................................................ pg 11
Sustaining Kanban

pg 11 Sustaining Kanban

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The information presented in this guide was obtained from sources whom we deem reliable; Graphic Products, Inc. has made every effort to
ensure this information is correct. However, we do not guarantee accuracy or completeness. Graphic Products, Inc. makes no representations
or warranties of any kind, express or implied. Information in this guide is subject to change without notice. Except as expressly provided for
in writing, the liability of Graphic Products, Inc. arising from the use of this guide is specifically excluded and Graphic Products, Inc. disclaims
all warranties and any liability for damages of any kind and any liability, whether in contract, tort under statute or otherwise, for any injury,
damage or loss whatsoever. No reliance should be placed on information contained in, implied by or inferred from this guide. Users of this
guide should verify all information with ANSI and OSHA sources directly.
 Introduction

An Introduction to Kanban
Most facilities share two common business goals - decrease costs and increase production. How managers go about
accomplishing these goals may vary, but most can be achieved with the aid of Kanban.

Kanban is one of the While Kanban can be used in many businesses, it is

most popular efficiency most often used to improve assembly lines, warehouses
improving systems and other similar industrial facility processes. Anywhere
used in large and small inventories are relied on for production, Kanban has a
facilities. The ultimate place. Where implemented properly, the system is proven
goal of the system is to to help facilities become more time and cost efficient.
bring greater efficiency Implementations not only improve process efficiencies,
to individual processes. they often positively influence unforeseen elements of a
Improvements are facility. Worker safety, morale and even sales are known
achieved through a to improve with Kanban.
combination of regular In English Kanban has several similar meanings.
production research, Translations include instruction card, visible record
planning and the application of visual communication and signboard. All refer to a system where the status of
techniques. Where Kanban is properly implemented, production and inventory are clearly displayed using very
workers no longer guess how much raw materials or simple methods of visual communication. As a result,
components they will need for production. They can processes are streamlined and problems identified.
visually see these needs, so production and similar
processes go uninterrupted — even with small inventories. In this guide, several fundamental Kanban concepts are
addressed to assist a facility in implementation. Keep in
Developed in Japan during the country’s post-WWII mind, not all ideas or methods described in this guide are
reconstruction period, Kanban is credited with helping suitable for all facilities. You must decide what elements
many well known Japanese companies become very are right for the processes you hope to improve.
successful. In fact, one of the largest automobile
manufacturers in the world is credited as the first to
successfully implement Kanban.
Modern American business methods such as Training
Within Industry (TWI) and Total Quality Management
(TQM), developed in the 1930s and 1940s, provided the
foundation for Kanban. Japanese facility managers learned
of these methods during the U.S.-backed reconstruction
effort just after the war. Elements of TWI and TQM
were shared with industrial managers, which led to many
innovative Japanese methods and philosophies. The
Japanese refer to this early industrial period as The Quality
Movement. Several of these innovations are now popularly
used in industrial facilities throughout the world.

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custom labels and signs you need to implement Kanban.
We offer a variety of labeling supplies that are designed for
durability in even the toughest of industrial environments.

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Introduction

Kanban Basics
In industrial-method terms, Kanban is known as a pull
system. This means facilities stock inventory based almost
entirely on orders placed. The inventory is then pulled
through production purely by customer demand.
Kanban, however, offers greater efficiency than
a traditional pull system. Kanban relies on limited
inventories and visual markers to help workers improve
efficiency. Customer orders are then easily tracked from
start to end.

Small Inventories
When Kanban was first developed in Japan, many
facilities were starved for space. This made inventory
storage difficult to find and very expensive. Facilities soon
realized storing large inventories was not cost-effective.
To overcome this obstacle, Japanese managers began
applying new methods to reduce inventories. Instead of
stocking inventory based on projected demands, inventory
was only stocked when customers demanded products.
Many additional benefits were soon realized by these
Kit includes: early implementations. As an example, facilities rarely
overproduced because limited supplies naturally stop

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• Yellow
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from running out of materials. With Kanban properly
implemented, materials are always available to meet a
facility’s production demands.

4" • Blue
• Orange
• Green
In addition to improving process flow, Kanban helps
managers and workers control inventory size with
strategically placed visual communication. These are
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• White stocks to help workers easily monitor levels and rapidly
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 Benefits
Benefits of Kanban
By combining very simple controls and methods, Kanban will naturally create a “check-and-balance” system. Workers will no
longer be guided by facility-wide production goals. Instead, their goal is to ensure inventory stocks and individual production
duties keep up with customer order demands and don’t exceed them.
Once Kanban is properly implemented, workers
operating assembly stations will naturally gauge their own
work performance and adjust accordingly. As a result,
workers become more focused on meeting upstream
demands and less on individual achievements.
Common benefits include:
▪▪ Lowered overhead costs
▪▪ Standardized production goals
▪▪ Increased efficiency
▪▪ Reduced obsolete inventory
▪▪ More control for workers
▪▪ Improved flow
▪▪ Prevention of overproduction
▪▪ Progress reports for managers
▪▪ Improved responsiveness to changes in demand
To achieve a truly self-managed process, visual
communication is used to help workers easily identify
inventory levels at each step in a process. Strategically
placed labels and signs give workers minute-by-minute
production goals. In turn, processes have greater
transparency - promoting efficiency.
One of Kanban’s most celebrated benefits is its
inherent ability to help processes function with very
limited inventories. In fact, Kanban is known to reduce
inventories by as much as 75%. Inventory reductions
decrease overhead costs, increase efficiency and save
money.
Since nothing in Kanban is ever produced until a
customer’s order is placed, large stockpiles of inventory
are unnecessary. Kanban helps facilities program
processes so they are always supplied with what they
actually need and shortages are eliminated. Station
operators learn to work with smaller buffers and find ways
to be more efficient with the inventory on hand.
3 1-800-788-5572
Working with small
buffers provides many
benefits. One benefit
is the system’s natural
ability to expose
inefficiencies in
production. Inventory
stocks are easy to
monitor and issues
are quickly identified, With Kanban implemented station
almost as they happen. operators find ways to be more
efficient with the inventory on hand.
Solutions can then
be found, well before an entire process is affected. In
Kanban, unnecessary overstocking or obsolete items never
take valuable storage space. These limits help workers
focus on filling orders with greater efficiency.
Since station operators continually pull the supplies
they need from proceeding stations, production goals are
naturally established by customer demand. In Kanban,
the production goal for each station operator is to always
keep pace with a system’s continual pull. This eliminates
wasted time and energy by focusing production on actual
needs and not desired goals.
Kanban is designed to help implementation teams
make precise adjustments to a process. Processes must be
programmed to operate with tight buffers for adjustments
to function properly. Use visual communication to help
workers see when their station is behind or ahead of
production. These visual cues provide immediate feedback
to help workers rapidly adjust to ongoing changes in
pull. Visual cue adjustments can be made at any step in a
process to improve inventory flow.
Kanban promotes minimizing actions within a process.
Actions involved in each step of a process should be
boiled down to the least number of steps possible. This
way, materials are never moved or stored twice in a single
process. Goods immediately enter a process the moment
they land on the loading dock.
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 Methods
Basic Methods of Kanban
Kanban Cards and Kanban Queues are two common methods that make Kanban successful.
Kanban Cards
One of the earliest forms of Kanban is a simple card-
based system known as Kanban Cards.
KANBAN CARDS
Fig 1
Fig 2
Production and warehouse facilities use this system to
track inventory and control production. Even today,
Kanban cards are popularly used to track the status of
unfinished units and provide production with
special instructions.
To initiate production, Kanban cards are issued
to the first operator in a process. Each card visually
communicates important details about the order and
authorizes production.
In the example above (Fig 1), the first station operator
attaches an issued Kanban card to the production unit’s
storage container. The card remains attached to the
container throughout production. This provides all
subsequent station operators written authorization to
produce one unit and helps them see they are filling an
actual customer order.
Once the production unit and its associated Kanban
card arrive at the end of a process, the card is removed
and returned to the hanging file (Fig 2). Empty slots in the
hanging file visually communicate how many orders have
been issued and how many more must be produced to fill
all orders. Placing the hanging file in a central location
gives all workers access to the current production status.
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To document production times and other instructions,
Kanban cards should include an assigned production unit
number and space for additional production information,
like time in and time out.
Modern facilities may use more complex, multi-layered
forms of the Kanban Card system. Cards may include
carbon copies so each station or drop point within a
process keeps a physical record of each unit they produce.
The last copy may even be returned to the hanging file to
display the current production status to individual work
areas.
Other facilities have moved to a software based Kanban
card. This system relies on barcoded labels and electronic
databases to track production and inventory. Managers
can track production from any network or WiFi location ─
providing greater control over a process.
Kanban cards are normally printed on a durable,
industrial-grade material so they survive rough handling
common to production processes. DuraLabel’s DuraTag™
and magnetic supplies are both made of industrial-grade
materials ideal for use as Kanban cards. DuraLabel
printers make it easy to design cards in-house so they look
professional. With an in-house industrial printer, cards can
be printed on-demand and custom designed with things
like barcodes and special fields for improved tracking.
Stationary barcode scanners
can be positioned at
strategic locations to
provide “real-time”
tracking updates.
DuraTag™ is ideal for printing
Kanban Cards with barcodes,
company logos and other
critical information.
4
Methods

Kanban Queues
Warehouse floors are easily and economically marked
to indicate proper locations for palletized or other
large container storage. Kanban queues help visually
communicate dedicated storage locations to all workers.
Floor markings can be used help facilities organize
inventory or finished products. This visual communication
also makes inventory easy to locate and identify so stocks
are tightly controlled.
In Fig 3, additional inventory in the upstream queue
at Station 1 alerts the operator at Station 2 to replenish
his own queue. Queues are restocked immediately so
customer orders are filled on time.
When customer orders increase, production naturally
adjusts to meet these new demands. To avoid shortages,
program queues with a small, but necessary buffer.
Extra inventory within a process provides flexibility
so adjustments are seamless throughout a shift. Just
remember not to overstock buffers. The system depends
on limited inventories to function properly.
For rolling, or other moving inventories, colors can be
designed into queues. Workers use these colors to help
maintain accurate stocks and improve process flow. In
Fig 4, queues are marked with stop-light coloring to help
station operators react to pulls in demand as it happens.
With a properly programmed queue, time is never
wasted calculating upstream or a downstream demands.
Needs are visually communicated as stocks are removed.
Colors reveal downstream and upstream demands at a
Fig 3
glance ─ eliminating guesswork and overproduction.

Station 1 Station 2 Station 3

Fig 4

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 Implementation

Implementation of Kanban
Teach the basics of Kanban to all employees during facility-wide meetings. How it will be implemented in your facility should be
understood by all to be truly successful.

Kanban implementations can be as simple or complex as you make them. All require discipline and facility-wide support
to be successful. This is why it’s critical for all employees to understand the benefits of Kanban prior to implementation.
Once management is prepared to implement Kanban, form an implementation team to develop and manage the system.
Invite personnel from all facility levels to participate as members of this team. Having teams with varied perspectives
invites more feedback for planning. For a truly successful implementation, teams should meet regularly so issues and
concerns can be discussed and resolved.

Universal Customer
In a Kanban facility, workers are expected to treat
coworkers and managers as customers. Each employee
is asked to take it upon themselves to produce the best
possible products and services for their many customers.
The philosophy benefits a process in many ways. For
example, station operators in an assembly line consider a
downstream station operator as a customer instead of just
a coworker. They are motivated to provide quality goods
and services downstream, which results in a higher quality Benefits of “Universal Customer”:
product.
▪▪ Better communication
Satisfying the needs of coworkers and managers should
be the goal of all employees. When a worker’s customers ▪▪ Higher quality
are happy, it reflects positively on them. Satisfying the ▪▪ Lower production costs
needs of others helps workers take a personal interest in
the job they do. ▪▪ Less wasted-time formulating ideas

Treating coworkers and managers as customers has
always been much more than just a business philosophy
in Japan. It’s traditional cultural. Some claim Japan’s
dedication to satisfying the customer is the main reason
for their success.
Japanese employees are credited as the first to formally
apply universal customer to industrial manufacturing
and did so as early as the 1960s. Since then, employees
at facilities around the world have applied similar
philosophies to improve other Lean methods and systems.
▪▪ Reduced production lead times
Since Kanban helps workers focus on inventory and
production efficiency, the system easily integrates with
a number of popular Lean Manufacturing systems,
processes and philosophies.
If your facility has not already implemented Lean,
Kanban is an excellent first step. An implementation
shows how basic efficiency improvements are made
in Lean and the role visual communication plays. The
system is often used to pave the way for more complex
implementations like Lean.

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Implementation
Kanban Preparation
Kanban team leaders should begin researching and
documenting facility process elements. Diagrams are
one of the best ways to document a process and describe
how unfinished products travel through a process. Good
diagrams will continue to offer Kanban team leaders
excellent reference.
Since diagrams help describe processes in simple and
very visual terms, they expose inefficiencies more clearly.
Once identified, team members can use process diagrams
to develop and implement more effective Kanban
techniques and examine individual process stages more
closely.
The first stage in a Kanban process is a customer order
and the last stage is delivery of a finished product. The
assembly of each product type makes up an individual
process.
For the life of a facility, processes should be viewed as
imperfect. Team leaders should continuously look for new
ways to reduce inefficiencies and work to combine related
Kanban Design
For Kanban to provide the greatest return on investment,
facility managers must be willing to make considerable
changes to their operations. In some cases, this may
actually require relocating a process or facility. Keep in
mind, the goal of Kanban is to continuously strive for
the most efficient processes possible. Finished products
should provide the customer with the greatest possible
quality and value.
Access to materials, utilities and other critical process
resources should be continuously monitored by Kanban
team members. Where costs exceed benefits, relocation
may be required. Relocating a plant may dramatically
improve facility efficiency and, in some cases, save
facilities from becoming obsolete.
Compare costs versus benefits of your facility’s location to decide
if relocation is the best option increase facility efficiency.
7 1-800-788-5572
actions into single events. Streamlining a process into an
uninterrupted flow of production is the ultimate goal.
Implementation team members research each action or
step involved in a process and then consider alternative
techniques and tools to see if steps can be streamlined
into fewer actions. Whenever an unnecessary action is
eliminated, costs are reduced and efficiency is improved.
Keep in mind, the path materials take should never
represent a single process. As an example, manufacturing
facilities often retool assembly equipment to produce
different products.
Different tools or
equipment are generally
required at some point
when a different product
must pass through
Spend less time sifting through
the same assembly inventory when color-coding is used
line. Identifying each for labeling products, components
process by a finished and raw material storage. Print
Kanban Cards in-house with
good ensures data
repositionable tape and attached
accuracy. to most clean surfaces.
Just like an internal facility process, diagrams can be
used to describe each stage in an external process. This
is called value stream mapping. Diagrams are used to
help expose external inefficiencies so team members
can modify processes where necessary. As an example,
delivery of a specific material would be described as an
individual process and stages would be identified and
indicate man-hours, time and cost. This diagram would
offer excellent reference when researching relocation sites.
Facility layout is another critical element to consider
in Kanban. Process diagrams will likely expose
bottlenecks and other process delays due to poor layout.
Ensure materials flow uninterrupted through a process
by modifying layout where possible. As an example,
it may be beneficial to reorganize assembly stations so
interruptions in flow are eliminated. Other considerations
include workspace. Workers are often more efficient when
provided with adequate space. Eliminate obstacles so
routine tasks are performed efficiently and safely.
Well researched diagrams of all facility processes will
be beneficial in helping your team streamline production
and improve efficiency. Update your diagrams whenever
facility layout changes are considered. The goal is to
continually strive for maximum efficiency using the best
data available.
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 Data Collection

Collecting Data for Kanban

Sample data from all stages within a process to maximize process efficiency. Complete and reliable data results in more
accurate changes to processes.

Implementation teams should develop a disciplined
schedule for data collection. Longer periods will provide
more accuracy, but may be unrealistic for many processes.
In large facilities, with multiple processes, team
members should be assigned to collect data from
processes they are most familiar with. Refer to previously
diagramed process steps to help with data collection
research.
In Kanban, data is collected regularly from each
individual stage in a process. This generally provides data
collectors with measurable events occurring at each step.
Data collections should sample production times,
maintenance times, downtimes and retooling times. In
manufacturing, and some warehouse processes, units
produced and rejects are generally sampled for the
collection period.
Collections must be regularly scheduled and occur
over an established sampling period. Depending on
the accuracy required, a collection period could be a
The following list describes several examples of common
facility data collection guidelines:
▪▪ Processes should be divided by individual finished
products. Changeovers create separate processes.
▪▪ Data collectors should have access to computers to store
data electronically. Fig 5 shows process data stored in a
Microsoft® Excel spreadsheet.
▪▪ Videotaping the production of a single unit through a
complete production process offers valuable information.
▪▪ To increase data collection efficiency, all production units
and related components or materials should be assigned
a reference number.
BLEACHED FLOUR PROCESS
STATION 3 (Avg. per week)
Product Number 75Q-211

E
Product Name Bleached
week, several months or longer. Since Kanban works to
streamline processes, data collectors will find it much Production Rate 1498

easier to take accurate samplings once Kanban is fully

implemented.
PL
Production Order Demand

Time Per Drum

1500

35 sec.
M
Batch Size 1
To ensure the data is as accurate as possible, a calendar
of collection days should be created and provided to Retooling Time 15 min.
SA

Kanban team leaders. Collections must always fall within Preventative Maintenance 10 min.

established sampling periods, but occur randomly. For Downtime 15 min.

example, one collection may occur at the start of a shift Reject Rate 5
and another may start at the end of a shift. Mix these Fig 5
times up so data contains a good cross section of all shifts.
Extenuating factors, such as power outages or equipment
failures, are known to skew data. Document these
occurrences so their effects are factored in.
From this point forward, data collections should be a
regularly occurring activity for Kanban team leaders and
continue for the life of a process. Create data collection
guidelines to ensure accuracy.

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Data Collection

Process Measurement
Kanban data collection should focus on measuring
the routine elements of a process. These are generally
measurements of time and production. As an example,
the assembly of a single component by a station might
be one measurement.
Once team members define what data will be
collected, build a collection checklist for Kanban team
leaders to reference. Having a checklist ensures the
same process elements are always sampled. The goal
should always be to collect reliable data so process
modifications or adjustments are always accurate and Data collection is an important step of Kanban that helps to
improve efficiency. assess what facility processes may need adjustment.

The following measurement examples are commonly used in manufacturing processes. Implementation teams will need to
research whether these measurements apply, or develop a more applicable set of measurements.

▪▪ Batch Size – The smallest number of units a station
produces in one production run. As an example, the
batch size for canned beverage packaging is commonly
six. Automated tools generally determine batch sizes in
modern production facilities. Handmade items normally
have a batch size of one.
▪▪ Station Production Rate – The average number of
batches a station produces during the established
sampling period.
▪▪ Production Order Demand – The average number of
orders demanded. This will help you calculate production
requirements. As an example, a production order
demand of 100 finished units might require 100 man
hours to produce.
▪▪ Retooling Times – This is the average time it takes for
process tools to be changed over to produce a different
product. Lost time for shut-downs, clean-ups and start-ups
are factored in.
▪▪ Downtime – Any unscheduled stop in production. This
includes any unscheduled repair, employee emergency,
etc. Lunches, breaks and scheduled maintenance periods
are not factored in.
▪▪ Reject Rate – All finished products and materials
removed from a process.

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Data Collection
Data Interpretation & Application
As your implementation team compiles data, better
comparisons will be possible and trends more apparent.
Comparisons may occasionally show unusual data. Never
hesitate to retake a collection when this occurs. Incorrect
data diminishes Kanban’s effectiveness and can even
harm a process. This is why it is always better for data
collection to be accurate, than fast.
Setting guidelines can help Kanban team leaders avoid
common shortcuts and focus on consistency and accuracy.
As part of the guidelines, encourage team leaders to
research what’s really happening in a process. Document
any unusual activities or discoveries as a routine part of
their collections. Data collectors will be the ears and eyes
of the process.
Once complete, data should be transferred into an
electronic spreadsheet. Format the spreadsheet to display
each process individually. Breaking data up by process
helps organize data into useful and accessible groups.
Convert the spreadsheet into graphs and charts to
provide a more complete picture of a process. Highlight
improvements and issues.
To make the most of your team’s data, develop a set of
simple formulas to help gauge efficiency for all facility
processes. This figure will be your Kanban score and can
be calculated by averaging all process scores within a
facility. Track Kanban scores on a chart and share them
with facility employees by displaying them on posters
(Fig 6).
Display facility Kanban achievement scores on posters at
strategic locations. Visible scores provide workers with the
feedback they need to improve. In this example, a facility has
chosen to display the status of a “Kanban Score.” A score
is often calculated using a set of custom formulas based
on production time, supply efficiency and several other key
process measurements.
Fig 6
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Depending on process type, many popular efficiency
formulas can be used to calculate the efficiency of process
elements.
In manufacturing, popular supply chain management
formulas are used to calculate the Reject Rate, Production
Unit, Production Time, Scheduled Production Time,
Scheduled Retooling Time and Buffer Quantity. Once
Kanban team leaders select a formula for each, facility
improvements can be tracked and displayed as a single
facility Kanban Score.
As your team begins to record Kanban Scores, use
the results of these calculations as your team’s basis
for process redesigns. As an example, converting raw
material and component storage to Kanban queues will
likely decrease lengthy production times. Support team
members’ creativity and ingenuity. They will be important
assets as you and your team tackle a redesign.
Over time, buffers used to ensure sufficient station
inventory should be fine-tuned. Research shipping terms,
production lead times, vendor lead times and a facility’s
own level of comfort to set buffers. As adjustments are
made, Kanban scores should always improve. Help this to
occur by keeping workers focused on meeting customer
orders and eliminating over production.
Process stations generally find their optimum buffer
quantity through trial and error. For example, a very small
inventory buffer may result in stock shortages at one
station seven-days-a-year. By raising this level slightly, a
station may completely eliminate shortages and, in turn,
improve their Kanban Score.
Consultants and books are often valuable resources.
Both can provide detailed directions on how to apply
specific Kanban methods. One of the more popular
Kanban books is Kanban Made Simple by John M. Gross
and Kennith R. McInnis. The book contains many useful
process formulas to help your team tailor the right system
for your specific process type.
10
 Sustaining

Sustaining Kanban
Ensure Kanban continues to benefit the processes it’s
applied to. Use the following tips to help sustain Kanban for
the long-run.

Since processes are so different, there are many

Kanban methods and techniques not discussed in this
guide. Only general applications are covered for basic
implementations. Over time, Kanban teams should
consider developing custom methods and techniques
to improve data collection and efficiency. Kanban
should continually change to improve efficiency. This is
especially true as new technology becomes available and
facility needs change. Keep Kanban flexible so methods
and techniques are adaptable to changes. Processes must
always be operating at their optimum efficiency.
Program the processes in your facility to rely on the
most efficient level of inventory. Do this by limiting
inventory stocks so they never exceed customer demands.
Keep in mind, Kanban relies on facility-wide
participation to improve existing implementations.
Feedback should be encouraged from all employees. Their
unique perspectives will help guide your implementation
team to more accurate solutions and foster continued
support for Kanban’s sustained use.
The cooperation of all employees to continually improve facility-
wide processes will help to ensure the success of Kanban.
Kanban is best implemented alongside other popularly
used “Lean Manufacturing” systems and philosophies.
Two of these are 5S and Kaizen. The two go hand-in-hand
with most Kanban implementations. Having both in place
paves the way for a more successful Lean Manufacturing
implementation.
Make sure to share your Kanban success stories. Show
reductions in cost and resulting profits by displaying these
successes on highly visible banners. This helps employees
see the fruit of their labor and encourages improvement.
In time, using these techniques will help Kanban become
an accepted practice and integral element of a facility’s
overall operations.

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