Agility Centre kanban.

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Kanban
Explanation
A Kanban system is employed within a production pull system to maintain process supply
and re-supply.
The system employs cards or signals to link processes that are used to replenish stocks
usually within a pull system. This provides a scheduling signal, which disciplines output
replenishment based upon customer usage.
A typical application is a “Two Bin System”, where the reorder card is placed at the bottom of
the first bin. When this bin is empty, a third party supplier or previous workstations use the
reorder card to replenish the bin. Whilst these parts are being sourced the second bin is
employed, such that when the first bin is replenished, the second is ready for replenishment.
It is worthwhile noting that without the reorder card, no replenishment will take place ensuring
that over stocking doesn’t arise.
This type of system would be typically managed by visual means, which enables these
systems to be set up relatively quickly.

Where appropriate
A Kanban system is best suited to products with high volume sales of which have a high
stock turn and products of low complexity.

Requirements when implementing

When implementing Kanban the following strategies need to be identified: -
• Management Strategy.
• Visual based strategy.
• Computer based strategy.
• Replenishment Strategy.
• Re-Order Point Control.
• Min, Max.
• Economic Order Quantity (EOQ).
• Safety Stock.
• Etc.

Relationship to Environmental Turbulence Indicators (ETI)

• Dynamic Customer Requirements.
• Supply Chain Turbulence.

Relationship to Agility Capabilities Indicator (ACI)

• Operational Agility.
• Replenishment Strategy.
• Management of Replenishment Methodology.

Tips and Tricks

The following will assist you in setting up an effective and efficient Kanban system: -

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Agility Centre kanban.doc

1. The replenishment process must be balanced to reduce the risk of over stocking or
potential stock outs.
2. If cards are used they must always accompany the container from the supplier until it is
out of the Kanban staging area, this ensures visual control of materials.
3. Each container must have a separate Kanban card with part number, description,
quantity and the location of both the consumer and producer.
4. No parts should be produced without a Kanban signal.
5. Parts are always to be pulled through by the succeeding workstation or process.
6. No defective part should be sent through to the succeeding workstation or process.
7. Amount of output produced should correspond directly to the quantity withdrawn by the
succeeding workstation or process.
8. The number of Kanban’s should be properly calculated so the minimum is used, thus
allowing monitoring and reduction where necessary.

Risks
The stocking quantities and re-order levels need to be calculated accurately otherwise you
run the risk of over stocking or even running out of stock. However, due to the nature of the
“Two Bin System” it does mean that large amounts of floor space are required to store this
inventory.
In terms of managing these stocks, if a visual management system is agreed on then training
is paramount. Staff should know that as soon as a bin becomes empty it should be
replenished. If a computer-based system is chosen, then the data on the system must be
accurate and up to date. Strict procedures must be followed on receiving and issuing stock
and this needs to be done on a regular basis.

Benefits
The benefits of implementing accurate stocking quantities and re-order levels means that you
are greatly reducing the risks of over stocking or even running out of stock.
In terms of managing these stocks, the benefits of employing a visual management system
are that it is quick to implement and providing staff are trained it will basically manage itself. If
a computer-based system is chosen then the benefits are that a central data source is
generated and reports can be run to calculate what to order and when. This enables
company’s to easily manage complex products. With this data that is being collected,
accurate performance measurement can be undertaken. As the computer is calculating what
to order and when, it frees up the users time to address other issues.

References
Roberta S. Russell & Bernard W. Taylor III, “Production & Operations Management “,
Prentice Hall, ISBN 0-205-14733-X

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