What Is The Kanban Method?

For those who wonder, "What is Kanban?"You are not alone.In the manufacturing community, Kanban is a system that is designed to meet the requirements of Just In Time Manufacturing.

Traditional manufacturing uses demand forecasts to create a plan to make items.If these forecasts are incorrect, manufacturers can be left with far too much product.This is bad because it ties up resources that could be better used elsewhere and creates a situation where those products must be stored until they are needed for sale or they are removed from inventory as a business loss.The other side of the coin is that the manufacturer may have forecasted a significantly smaller demand than what there ends up being.This results in dissatisfied would be customers who may not be around to buy when the demand can be met.When the forecast is correct, this push type system works great.

Just In Time Manufacturing is a pull concept where nothing is made until there is a cue for it.Running through the system from the back to the front, it might look something like this.

The customer routinely orders twenty items from the factory.The factory has twenty items in a box waiting.That box is delivered to the customer and the Kanban, or demand card is taken from the box and given to the person who finishes the product by, for example, adding a layer of lacquer to it.That person finishes the twenty products that are on his or her shelf and delivers the Kanban for the raw product that he or she deals with to the station where people construct the product.The construction crew makes the requested product and brings it to the shelf of the finisher.They also take a card to the person that supplies the raw materials required to make the product at that stage.The Kanban is the signal that allows everyone to create whatever is required of them in their job.

The advantages of the system are that there is very little inventory kept on hand, and when raw materials are purchased only when they are needed and not before.That means that there is less risk of having far too much inventory leftover at the end of the selling season.It also means that resources can be spent elsewhere allowing for a greater return on investment and less of an opportunity cost.
Of course, that means that the disadvantages include that the raw materials may not be available exactly when they are needed, which may inhibit the company's ability to meet a rush demand.The other way that the system can be foiled is if the Kanban are not collected or delivered in a timely manner.

Using Kanban can create the greatest in efficiency when it is working correctly.As long as everyone knows the process, the cards are correctly gathered and distributed and there aren't any great surprises, Kanban can work wonders for inventory management at all levels of the process as well.

The Kanban, itself, will have the name of what is wanted on it, so there is no confusion about what is being ordered.This protects against a card being accidentally distributed to the wrong station and that station making the requested product without realizing that it isn't what was wanted at all.It will also have a description of the product and the number required.This allows the manufacturer to meet the needs of several companies at the same time.If one company usually wants twenty of an item, the Kanban will say twenty; if another company wants ten of the same item, its Kanban will have ten written on it.