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The Kanban System

The Kanban System

The kanban system is a method of using cards as visual signals for triggering or controlling the flow of materials or parts during the production process. It synchronizes the work processes within your own organization as well as those that involve your outside suppliers. The Japanese word Kanban which is translated as “signboard”, has been seen as the substitute works of demand scheduling. In the late 1940s and early 1950s, Taiichi Onho developed Kanbans to control production between processes and to implement Just in Time manufacturing at Toyota manufacturing plants. And the strategy of Kanban became one of the pillars of Toyota’s successful implementation of JIT manufacturing. However, these Kanbans ideas hadn’t been accepted until the global economic recession blown the world. Under the global recession, people saw that Kanban could minimize the work in process (WIP) between processes and reduce the cost associated with holding inventory as well. The modern Kanban has been developed a lot comparing with the Japanese Kanban, which is seen as a software tool of Lean.

 Definition of Kanban

From different stages of Kanban development and the functions, Kanban has different definition. Some are more close to what is used in Toyota, some are more developed as a component of Lean. Two definitions will be showed below to form an overall understanding of Kanban.

Definition one

Kanban is defined as demand scheduling. In processed controlled by Kanbans, the operators produce products based on actual usage rather than forecasted usage. The Kanban schedule replaces the traditional weekly or daily production schedule. This schedule is replaced with visual signals and predetermined decision rules that allow the production operators to schedule the line. What Kanban replace is:

  • The daily scheduling activities necessary to operate the production process;
  • The need for production planner and supervisors to continuously monitor schedule status to determine the next item to run and when to change over. (John M.Gross, 2003)

In this case, it frees the materials planners, schedulers and supervisors to manager exception and to improve the process. Finally, it also places control at the value-added and empowers the operators to control the line.

Definition two

Kanban is a lean agile system that can be used to enhance any software development life-cycle including Scrum, XP, Waterfall, PSP/TSP and other methods. Its goal is the efficient delivery of value. (Linden-Reed, 2010)

  • Kanban promotes the lean concept of flow to continuously and predictably deliver value;
  • The work and the workflow is made visible to make activities and issue obvious;
  • Kanban limits WIP to promote quality, focus and finishing.

Comparing with the first definition, the second one is more abstract. It is defined by what functions it could deliver.

Need for kanban system

In the kanban system, a card (called a kanban) controls the movement of materials and parts between production processes. A kanban moves with the same materials all the way down the production line. When a process needs more parts or materials, it sends the corresponding kanban to the supplier; the card acts as the work order. A kanban card contains the following data:

  • What to produce
  • How to produce it
  • When to produce it
  • How much to produce
  • How to transport it
  • Where to store it

In an ideal world, demand for products would be constant. Organizations could always operate at maximum efficiency, producing exactly what was needed—no more, no less. But for most companies, the amount of work that must be done varies by the day, week, or month. An organization must have enough capacity so that there are enough people, machines, and materials available to produce what is needed at times of peak demand. But when there is a smaller amount of work to be done, one of two things can happen: 1) Underutilization of people, machines, or materials or 2) overproduction.
With the kanban system, workers are cross-trained to be knowledgeable about various machines and work processes so that they can work on different manufacturing tasks as needed. This prevents under utilization. Kanban systems also prevent overproduction, which is the single largest source of waste in most manufacturing organizations. When you use the kanban system correctly, no overproduction will occur. The kanban system also gives your organization the following positive results:

  • All employees always know their production priorities.
  • Employees’ production directions are based on the current conditions in your workplace. Employees are empowered to perform work when and where it is needed. They do not need to wait to be assigned a work task.
  • Unnecessary paperwork is eliminated.
  • Skill levels among your employees are increased.

Framework

  1. Mass customization

    Mass customization was initiated in 1987 by Stan Davis. The concept is defined by David as: “Mass customization is the ability to quickly and efficiently build-to-order customized products.” Practitioners of mass customization share the goal of developing, producing, marketing, and delivering affordable goods and services with enough variety and customization that nearly everyone finds exactly what they what.  Mass customization is a new form of competition that has arisen in the global market place. As Pine summaries, there are three main forms to face this challenge: Japan Inc., flexible specialization communities, and dynamic extended enterprises. Each form was simply trying to find its way to competitive advantage in a world increasingly characterized by a high degree of market turbulence.
    To summaries the new competitions, there are positive effects of mass customization on different functions in a firm, e.g. the production function, R&D function, marketing function, and financial function. Here list the positive effects on production function.

    Positive Effects

    • Low overhead and bureaucracy
    • Optimum quality
    • Elimination of waste
    • Continual process improvement
    • Low inventory carrying costs
    • High labor productivity
    • Integration of thinking and doing
    • High utilization of and investment in worker skills
    • Sense of community
    • Low total costs
    • High production flexibility
    • Greater variety at lower costs

    The focus of the manufacturing production function of the new competition is on total process efficiency. Process efficiency includes both productive and unproductive time. Unproductive time is the time materials spend in inventory or other non-operational activities such as handling, moving, inspecting, reworking, recoding, batching, chasing, counting, and repacking…. (Michael) According to the above table, the mass customization has potential to do changes on these aspects of production. When facing the new frontier of mass customization, there are proper strategies to response. There are three basic ways to do this: incrementally over time, more quickly via business transformation, or by creating a new business firmly planted in the new territory.

    Strategic Response When Appropriate
    Move Incrementally
    • Market turbulence low and not increasing dramatically
    • Competitors not transforming for Mass Customization
    • Middle-and lower-level managers and employees who want to change but cannot affect the business as a whole
    Transform the Business
    • Dramatic increase in market turbulence
    • Competitors already shifting to Mass customization
    • Only if instigated or fully supported by top management
    Create a New Business
    • Businesses based on new, flexible technologies
    • New ventures in large corporations
    • Most any new business
  2. Lean Manufacturing

    Lean manufacturing is a generic process management philosophy derived mostly from the Toyota Production System (TPS). Lean manufacturing or lean production is often simply known as “Lean‟. The core idea of lean is to maximize customer value while minimizing waste. Lean means creating more value for customers with fewer resources. A lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste.
    To achieve this, lean thinking changes the focus of management from optimizing separate technologies, assets, and vertical departments to optimizing the flow of products through entire value streams that flow horizontally across technologies, assets, and departments to customers.

     Lean principles

    There are five main principles of lean manufacturing: value specification, value stream, flow, pull and perfection.

    1. Specify value
      • Overproduction
      • Waiting
      • Unnecessary transport
      • Over processing
      • Excess inventory
      • Unnecessary movement
      • Defects
      • Unused employee creativity

      The main non-value-adding waste is overproduction, because it could generate other wastes. However, making flow does simply mean to eliminate waste one by one. It needs much preparation work and a holistic vision which guides a strategy towards flow.

    2. Identify the value stream

      The value stream is the set of all the specific actions required to bring a specific product through the three critical management tasks of any business. (Womack and Jones, 1996) identifying the entire value stream for each product is the next step in lean thinking. Lean thinking must go beyond the firm to look at the whole. Creating lean enterprises requires a new way to think about firm-to-firm relations, some simple principles for regulating behavior between firms, and transparency regarding all the steps taken along the value stream so each participant can verify that the other firms are behaving in accord with the agreed principles.

    3. Flow

      The third principle is Flow. Once value has been specified, the value stream for a specific product fully mapped and obvious wastes eliminated, it is time to make the remaining, value-creating steps flow. However the traditional “functions” and “departments” concepts always block producers realizing real flow. The performing tasks in batches are always thought as best. The batches and queues are common used by most manufacturers blinding other common senses. The lean thinking is to redefine the work of functions, departments, and firms so they can make a positive contribution to value creation and to speak to the real needs of employees at every point along the stream so it is actually in their interest to make value flow. There are three steps to make value flow. The first step, once value is defined and the entire value stream is identified, is to focus on the actual object and never let it out of sight from start to finishing. The second step is to ignore the traditional boundaries of jobs, careers, functions and firms to form a lean enterprise removing all impediments to the continuous flow of specific product or product family. The third step is to rethink specific work and tools to eliminate backflows, scrap, and stoppages of all sorts so that the design, order and production of the specific product can proceed continuously.
      There are also some practical techniques to prepare for flow:

      • Level out workloads and pace production by Takt time/pitch time;
      • Standardizing work and operating procedures;
      • Total productive maintenance;
      • Visualize management;
      • Reduce changeover;
      • Avoid monuments and think small
    4. Pull

      The subjective of pull is customer orders. Let the customer pull the product rather than pushing products onto the customer. It means short-term response to the rate of customer demand without overproduction. There are two levels which express the meaning of pull. On the macro level, the production process should be triggered by customer demand signals. The trigger point is expected to be pushed further and further upstream. On the micro level, there is responding to pull signals from an internal customer that may be the next process step I the case of Kanban or an important stage in the case of Drum/Buffer.

    5. Perfection

      The final one is Perfection. Perfection means producing exactly what customers want, exactly when without delay, at a competitive price and with minimum waste. The real benchmark is zero waste, not what competitors do.

     The five powerful ideas in the lean tool kit needed to convert firms and value streams from a meandering morass of muda to fast-flowing value, defined and then pulled by the customer. And it reveals the inherent thinking to pursue perfection. The techniques themselves and the philosophy are inherently egalitarian and open. Transparency in everything is a key principle.

  3. Just-In-Time

    Just-in-time (JIT) is developed by Taichi Ohno and his fellow workers at Toyota, one of the pillars of TPS. It means to supply to each process what is needed when it is needed and in the quantity it is needed. The main objective of JIT manufacturing is to reduce manufacturing lead times which is primarily achieved by drastic reductions in work-in-process (WIP). The result is a smooth, uninterrupted flow of small lots of products throughout production. These stock reductions will be accompanied by sufficiently great improvements in quality and production to result in unheard-of cost reductions. There are three main kind of stockholding: incoming material, work-in-process and finished goods. JIT aims to reduce each of them through a holistic principle. In the following text, the principle will be illustrated through each stockholding.

    1. Incoming material

      The incoming material control is always relates to a firm´s purchasing policy and its suppliers. In reality, the incoming material is unreliable or unpredictable. The excessive stocks and stock out of incoming material are always happen. What firm should do is to involve its suppliers into their own manufacturing instead of tell them what to do.

    2. Work-in-process

      In the factory buffer stocks exist everywhere in several forms. WIP is always been a key industrial measure. The total value forms part of the balance sheet, and industrial managers are under intense pressure to keep the figures as low as possible. However, there are many causes contribute to a high WIP. The causes include:

      • Production scheduling
      • Machine capability
      • Operator capability
      • Product mix
      • Product modification
      • Changing product priorities
      • Cross-functioned organization
      • Machine breakdown

      In order to achieve low WIP, JIT provides principles to deal with the above obstacles. There are some main principles mentioned as following:

      1. Level out the workload and pace production.

        JIT techniques work to level production, spreading production evenly over time to make a smooth flow between processes. Varying the mix of products produced on a single line, sometimes, provides an effective means for producing the desired production mix in a smooth manner.

      2. Pull production.

        With pull system, Kanban is always used. To meet JIT objectives, the process relies on signals or Kanban between different points in the process, which tell production when to make the next part. Implemented correctly, JIT can improve a manufacturing organization’s return on investment, quality, and efficiency. Its effective application cannot be independent of other key components of a lean manufacturing system.

      3. Finished goods

        In an idea JIT production operating the pull system, there will be no finished goods in stock. Even though the stockholdings would be illustrated separately, JIT should be designed as a whole principle to reduce the stockholdings on a holistic level. To summarize, JIT is pulling work forward from one process to the next “just-in-time”. One benefit of manufacturing JIT is reducing work-in-process inventory, and thus working capital. An even greater benefit is reducing production cycle times, since materials spend less time sitting in queues waiting to be processed. However, the greatest benefit of manufacturing JIT is forcing reduction in flow variation, thus contributing to continuous, ongoing improvement.

Selecting the physical signaling for the Kanban

When people think of Kanban, most of them will think of Kanban cards. Actually, there are different types of physical Kanbans could be applied in production system. Each company could definitely do some innovation on their own physical Kanban regarding of their unique production systems.

  1. Kanban cards

    Kanban cards are essentially pieces of paper which travel with the production item and identify the part number and amount in the container. Kanban cards serve as both a transaction and communication device. The following figure shows a Kanban card used between processes.

    Kanban system
    Production Kanban Card

    Kanbans using cards signal often follow the routines below:

    • A card is placed with the completed production container;
    • The container with its Kanban card is then moved into a staging area to wait for use;
    • When the container is moved to production work center for use, the Kanban card is pulled from the container to signal consumption.
    • The Kanban card is then placed in a cardholder, or Kanban post, to await transit back to the production line;
    • When the Kanban card returns to the production line, it is placed in a cardholder that has been set up to provide a visual signal for operation of the line;
    • The Kanban card sits in the cardholder waiting to be attached to a completed production container.

    The Kanban cards illustrated here mainly concern the concept used in Toyota production system. Individual company could do any verification regarding of its own condition. However, this Kanban card is more useful in assembly line than other type of production line.

  2. Kanban boards

    Kanban boards simply use magnets, plastic chips, colored washers, etc. as signals. The objects represent the items in inventory- backlog, in-process inventory. It helps to visualize the workflow, limit WIP and measure the lead time. There is a sample of Kanban board. Each firm could develop the column detail according to its own production condition.Kanban System

    The two columns stands side shows the product backlog and finished products. And the column in between illustrate the sequence processes. The stick notes are updated by operators going from backlog to finished products. To determine what gets produced next, operators just look at the board and follow its rules.
    Kanban boards work best when two conditions exist in the relationship of inventory storage and the production process:

    • The board can be positioned in the path of the flow of all the material to the customer;
    • The board can be positioned so that the production process can see it and follow the visual signals.
  3. Two-card Kanban

    Two-card Kanban is typically used for large items where flow racks are not utilized. It is a combination system of the Kanban board and the Kanban card racks. It works like this:

    •  When product is produced or received from a vendor, two cards are pulled from a Kanban card rack and filled out: one Kanban card goes with the container; the second Kanban card goes into a special FIFO box.
    • Whenever a container of this product is needed, a material handler goes to the FIFO box and pulls out the bottom card.
    • The material handler then goes to the location written on the card and pulls this product for the production operation.
    • The material hander then takes both cards and places them in the Kanban card racks, which show the schedule signals for production or record.

    This system allows pallet size items to flow while managing product rotation. It works especially well when used for floor stacked items.

  4. Look-see

    Look-see is a Kanban signal that behavior relying on the sensor of people` eyes. It includes visual signals such as floor marking that shows when to replenish the item. The basic rule with a look-see signal is that when yellow signal signs, then it is time to replenish the item. The red, or danger, signal is also integrated into this scheme. Look-see signals greatly aid in the implementation of the Kanban supermarkets.

Little´s Law

Little´ s law is firstly proved by John little in 1961. In queuing theory, it says:
“The average number of customers in a stable system (over some time interval) is equal to their average arrival rate, multiplied by their average time in the system. Although it looks intuitively reasonable, it’s a quite remarkable result. “
The strength of Little´s law is the fact that is makes no assumption about the probability distribution of arrival rate or service rate, or if they make a first-in-first-out queues, or some other order in which they are served. The only pre-condition or requirement for Little´s Law to hold is that it must be applied to a stable or a steady state system.  Little´s law one thing that constant and true in manufacturing field. In manufacturing field, little´s law could be expressed as: cycle time in time unit is equal to amount of work in process in units, divided by the output in units during this time unit. This is to say that if the total units throughout the work areas and the output per time unit are constant, the cycle time could be easily got. It is also true that if the WIP remains constant and the output is decreased, the cycle time will go up. And if the Takt is constant, when reducing the WIP, the cycle time would be reduced. If manufacturing could maintain close control over the cycle time of its product, from the input point till the completely release point, it could predict to customers what they expect in terms of delivery. If the process were completely under control, there could be no problem in guaranteeing delivery date. The customer satisfactory could be increased. In realistic manufacturing, manufacturing processes are mostly hard to predict. Problems occur everywhere, e.g. operator absence, machine breaking down, vendor problems etc. If the input is the same, and the output goes down, WIP will most definitely build up at the bottleneck. It is know that the bottleneck could change the pace until the problems are fixed. Little´s law tells that how much it could raise or lower the output. Once product is launched in shop floor, it is crucial to do everything to keep it moving. If the products are stuck somewhere, it is better to slow or stop launching new products in the production system. According to little´s law, if a production system is expected to increase its output, the way is not to increase the input amount when its output levels can`t be reached. The best way is to find the bottleneck and increase its output. Little´s law suggests that don‟t operate on the edge of capability or accept orders that challenge the edge of production capacity. If it does, there is a risk to prolong the delivery dates. Little´s law backs up the Flow theory in manufacturing field. Idealistically, if it is one-piece-flow, the output is much easy to predict and the cycle time would be limited to its extreme.

Determine rules of Kanban

Before developing rules for Kanban implementation, it is essential to make materials and physical Kanbans to move in a continuous flow. This is to determine how material and physical Kanbans move through the production process, and how the move Kanbans go back to production process when they are released.

Kanban systems
The Kanban design must create a continuous flow of materials and signals

The rules for developing the Kanban are its driving force. The rules are the guidance to allow the operation unit staffs to control the production schedule. The rules should include:

  • The part numbers covered by the Kanban;
  • How the design works-how the cards, magnets, etc., move
  • The meaning of the scheduling signals and how to interpret them;
  • Any scheduling rules of thumb;
  • The preferred production sequence
  • Who to go to and what the “helpers” should do when contacted;
  • Any special quality or documentation requirements.

When creating rules, one thing should be in head all the time: the rules are to communicate how to run the Kanban and to allow the process operator to schedule the line. The only way the production operators can take over scheduling the line is by the rules providing clear direction and scheduling guidance. When drafting the scheduling rules make them easy and unambiguous to follow. Think through possible misconceptions and correct them so they will not occur. Spell out what signals a normal changeover. Spell out what signals emergency changeover. Seek feedback to make sure that everyone else is as clear about how to interpret the signals as asked.
Additionally, the scheduling rules should contain clear-cut decision rules.  The decision rules should help the production operators make consistent production scheduling decision based on the stated priorities. The rules should provide rate information, if applicable, to allow the operator to develop production expectation. The decision rules should contain instructions on when and whom to call for help. Also the rules should include all the “everyone knows this” items that everyone seems to forget from time to time.

Create a visual management plan

The visual management plan will explain the Kanban to everyone and visually instruct everyone how the Kanban operates. The basic goal of visual aids should be to answer the questions that pop up on a daily basis: where do I get this from, where do I move that, which color buggy contains which part, is there a color scheme, do we have any more of this part?
To make the visual aids colorful and easy to read. There are some useful tips :

  • Keep the colors consistent with existing color schemes;
  • Avoid red-typically associated with safety or quality;
  • Avoid yellow-typically associated with safety;
  • Use large print for hanging signs and wall signs;
  • Avoid excessive words on signs-people don‟t read signs, they glance at them.

After the above three steps: Selecting the physical signaling for the Kanban; determine rules of Kanban; create a visual management plan. The Kanban design process could be finished.

Principles for Kanban design/implementation

This part is to summarize the above Kanban implementing details and provide a general guidance. Here is a minimal way to implement Kanban:

  1. Preparation stage:
    1. Review entire workflow. Look at the end-to-end process from initial concept forward through release. Analyse for any excessive time pockets. Remember to look at handoff times.
    2. Address bottlenecks. If bottlenecks are found, including upstream of the engineering phase, work to break them down and deliver their value in small increments.
    3. Switch from iterations to SLA(Service level Agreement). Forget about iteration time-boxes because they encourage excess batching of planning and of work. Instead, decide on the SLA (Service Level Agreement) time-box for each feature/epic. The clock starts when the active planning on each feature starts and ends when it is released.
    4. Classify by Cost of Delay. Classify each feature by type, e.g.: is it a fixed date or a rush job? Then have all stakeholders in a meeting use this classification to help prioritize a limited queue that the team can pull from. Update this queue weekly or however often you want but allow the team to continue on features they start.
    5. Set WIP Limits. With the team and the managers together, decide on a WIP limit for any workflow phases you want to limit (minimum: the In Progress phase). This is a limit of the features that can be in progress at a time. They only pull a new feature when a slot opens by finishing a feature.
    6. Make work visible. Have a visible task/story board where the team can see it. On the board, show the workflow phases on the board and the agreed WIP limits.
    7. Groom the queue. The team should periodically scope the features waiting in the limited queue to make sure they will fit in the agreed SLA time-box. If not, they are thrown back to the stakeholders to break down further.
  2. Implementation:

    The per-feature SLA clock starts now.

    1. Pull the next work item. When capacity is available, the team chooses a feature to pull. They will consider the Cost of Delay classification plus resource considerations when deciding which one to pull.
    2. Decompose the work items just in time. The team breaks the feature/epic into stories and/or tasks when it is pulled.
    3. Watch for flow. Everyone obeys the WIP limits. Note bottlenecks that occur. Adjust limits or other elements as needed till you achieve a smooth delivery flow.
    4. Inspect and adapt. Have daily stand-ups, periodic demos, and retrospectives (or you can deal with issues as they arise and get rid of retrospectives).
    5. Go live! Release a feature as soon as it is ready.

Functions of Kanbans

The key objective of a Kanban system is to deliver the material just-in-time to the manufacturing workstations, and to pass information to the preceding stage regarding what and how much to produce.
A Kanban fulfills the following functions:

  1. Visibility function
    The information and material flow are combined together as Kanbans move with their parts (work-in-progress WIP).
  2.  Production function
    The Kanban detached from the succeeding stage fulfills a production control function which indicates the time, quantity, and the part types to be produced
  3. Inventory function
    The number of Kanbans actually measures the amount of inventory. Hence, controlling the number of Kanbans is equivalent to controlling the amount of inventory; i.e. increasing (decreasing) the number of Kanbans corresponds to increasing (decreasing) the amount of inventory. Controlling the number of
    Kanbans is much simpler than controlling the amount of inventory itself.

Auxiliary equipment

  1. Kanban box: to collect Kanbans after they are withdrawn.
  2. Dispatching board: in which Kanbans from the succeeding stage are placed in order to display the production schedule.
  3. Kanban management account: an account to manage Kanbans.
  4. Supply management account: an account to manage the supply of raw materials.

Classifications of  Kanbans

According to their functions, Kanbans are classified into:

  1. Primary Kanban: It travels from one stage to another among main manufacturing cells or production preparation areas. The primary Kanbans are two kinds, one of which is called `withdrawal Kanban’ (conveyor Kanban) that is carried when going from one stage to the preceding stage. The other one is called `production Kanban’  and is used to order production of the portion withdrawn by the succeeding stage. These two kinds of Kanbans are always attached to the containers holding parts.

    The production Kanban
    The production Kanban
  2. Supply Kanban: It travels from a warehouse or storage facility to a manufacturing facility.

    The supply Kanban
    The supply Kanban
  3. Procurement Kanban: It travels from outside of a company to the receiving area.

    The procurement Kanban.
    The procurement Kanban
  4. Subcontract Kanban: It travels between subcontracting units.
  5. Auxiliary Kanban: It may take the form of an express Kanban, emergency Kanban, or a Kanban for a specific application.

Concepts to be used in Kanban

Before you can put the kanban system in place, you must first make your production process as efficient as possible. Two practices—production smoothing and load balancing—are helpful for doing this.
Production smoothing refers to synchronizing the production of your company’s different products to match your customer demand. Once you successfully accomplish production smoothing, daily schedules for your production processes are arranged to ensure production of the required quantity of materials at the required time. Your employees and equipment are all organized toward that end as well. To successfully do production smoothing, you first break down your required monthly production output into daily units using the following formula:Kanban systemThen you compare this daily volume with your operating hours to calculate the takt time. Calculating your takt time for production lets you determine how much to vary the pace of the work you must do. The mathematical formula for determining your takt time is as follows:kanban1
Then you look at your capacity, which is the ability of a machine and operator to complete the work required,and determine the number of employees required to complete your production processes. Don’t calculate your takt time based on the number of employees already working on your production line. That can result in too much or too little capacity. Instead, calculate your takt time based on the number of units required per day and then determine the number of employees needed to staff the line to produce at that rate. Load is the volume of work that your organization needs to do. Load balancing is finding a balance between the load and your capacity. Timing and volume are critical to achieving load balancing. Although kanban systems are a very effective way to fine-tune your production levels, they work best only after you have implemented value stream mapping  and one-piece flow. This is because kanban systems minimize your stocking levels and use visual management, error proofing, and total productive maintenance to ensure that quality parts and materials are delivered when a kanban triggers their flow through the production process. Perform maintenance and process-improvement activities during times of lower demand. This way, during peak demand times, every employee can be actively engaged on the production line. The kanban system fine-tunes your production process. But it cannot make your organization able to quickly respond to sudden large changes in demand. You might not be able to rally sufficient resources to produce a very big order in time, or to find enough alternate activities to keep employees busy when there is a sudden large drop in orders.

The general guidelines for using the kanban system.

When using the kanban system, it’s important to follow the six general guidelines listed below.

  1. An upstream process never sends defective parts to a downstream process.
    1. Operators at a process that produces a defective product must immediately discover it.
    2. The problem(s) that created the defective product must be resolved immediately.
    3. Machines must stop automatically when a defect occurs.
    4. Employees must stop their work operation when a defect occurs.
    5. All defective products mixed with good products must be separated promptly.
    6. Suppliers who ship defective parts to your organization must send the same number of replacement parts in their next shipment. This ensures that the exact number of good parts required is available for production operations.
  2. A downstream process withdraws only what it needs from an upstream process.
    1. No withdrawal of materials from a process is allowed without a kanban.
    2. Withdraw the same number of items as kanbans (unless a kanban indicates item quantities of more than one).
    3. A kanban must accompany each item.
  3. An upstream process produces the exact quantity of products that will be withdrawn by the next process downstream.

    1. Inventory must be restricted to an absolute minimum. This is called just-in-time inventory.
    2. Do not produce more items than the number of kanbans (unless a kanban indicates item quantities of more than one).
    3. Produce units in the order in which their production kanbans are received.
  4. Synchronize your production processes by regularly maintaining your equipment and reassigning workers as needed.

  5. Remember that the kanban system is a way of fine-tuning your production amounts.

    1. The kanban system cannot easily respond to major changes in production requirements. Your company also needs to have proactive sales and operations-planning procedures in place.
    2. The principles of load balancing must be followed.
    3. Employees receive work instructions for production and transportation of materials via kanbans only. No other production information is sent to employees.
  6. Work to stabilize and improve your production processes. Variations and impractical work methods often produce defective materials. Make sure you keep all your work processes in control, and keep variation levels within the requirements of your customers.

General description of Kanban operations

There are two basic types of kanban cards: production kanbans and withdrawal kanbans. A production kanban describes how many of what item a particular operation needs to produce. Once employees have a production kanban in hand, their operation can begin producing the item. A withdrawal kanban is used to pull items from a preceding operation or a marketplace, an area where materials are stocked in a supermarket system. The figure below shows the kanban system in use.For production stage i, when parts are processed and demand from its receiving stage i + 1 occurs, the production Kanban is removed from a container and is placed on the dispatching board at stage i. The withdrawal Kanban from stage i + 1 then replaces the production Kanban and the container. This container along with the withdrawal Kanban is then sent to stage i + 1 for processing. Meanwhile at stage i, the production activity takes place when a production Kanban and a container with the withdrawal Kanban are available. The withdrawal Kanban is then replaced by the production Kanban and sent back to stage i – 1 to initiate production activity at stage i – 1. This forms a cyclic production chain. The Kanban pulls (withdraws) parts instead of pushing parts from one stage to another to meet the demand at each stage. The Kanban controls the move of product, and the number of Kanbans limits the flow of products. If no withdrawal is requested by the succeeding stage, the preceding stage will not produce at all, and hence no excess items are manufactured. Therefore, by the number of Kanbans (containers) circulating in a JIT system, nonstock production (NSP) may be achieved.

General description of Kanban operations
General description of Kanban operations
Withdrawal and Production Kanban Steps
  1.  An operator from the downstream process brings withdrawal kanbans to the upstream process’s marketplace. Each pallet of materials has a kanban attached to it.
  2. When the operator of the downstream process withdraws the requested items from the marketplace, the production kanban is detached from the pallets of materials and is placed in the kanban receiving bin.
  3. For each production kanban that is detached from a pallet of materials, a withdrawal kanban is attached in its place. The two kanbans are then compared for consistency to prevent production errors.
  4. When work begins at the downstream process, the withdrawal kanban on the pallet of requested materials is put into the withdrawal kanban bin.
  5. At the upstream process, the production kanban is collected from the kanban receiving bin. It is then placed in the production kanban bin in the same order in which it was detached at the marketplace.
  6. Items are produced in the same order that their production kanbans arrive in the production bin.
  7. The actual item and its kanban must move together when processed.
  8. When a work process completes an item, it and the production kanban are placed together in the marketplace so that an operator from the next downstream operation can withdraw them. A kanban card should be attached to the actual item it goes with so that it can always be accurately recognized.

Kanban control

Toyota considered its system of external and internal processes as connected with invisible conveyor lines (Kanbans). The information flow (Kanban flow) acts like an invisible conveyor through the entire
production system and connects all the department together.

A General Kanban System
A General Kanban System

1. The production line.

Due to different types of material handling systems, there are three types of control:

Single Kanban system (using production Kanbans)

A single Kanban system
A single Kanban system

The single Kanban (single-card) system uses production Kanbans only to block material-handling based on the part type. The production is blocked at each stage based on the total queue size. In a single-card system, the size of a station output buffer and part mix may vary. Multiple containers contain the batches to be produced, as long as the total number of full containers in the output buffer does not exceed the buffer output capacity.  The following conditions are essential for a proper functioning of the single Kanban system:

  • small distance between any two subsequent stages;
  • fast turnover of Kanbans;
  • low WIP;
  • small buffer space and fast turnover of WIP; and
  • synchronization between the production rate and speed of material handling.

(2) Dual Kanban system (using two Kanbans simultaneously)

A dual Kanban system
A dual Kanban system

The dual Kanban system (two-card system) uses production and withdrawal Kanbans to implement both the station and material-handling blocking by part type. There is a buffer for WIP while transporting the finished parts from a preceding stage to its succeeding stage. The withdrawal Kanbans are presented in the buffer area.  This system is appropriate for manufactures who are not prepared to adopt strict control rules to the buffer inventory. The following conditions are essential for the dual Kanban system:

  • moderate distance between two stages;
  • fast turnover of Kanbans;
  • some WIP in a buffer is needed;
  • external buffer to the production system; and
  • synchronization between the production rate and speed of material handling

(3) Semi-dual Kanban system (changing production Kanbans and withdrawal Kanbans at intermediate stages)

Kanban system
A semi dual Kanban system

The semi-dual Kanban system has the following characteristics:

  • large distance between two stages;
  • slow turnover of Kanbans;
  • large WIP is needed between subsequent stages;
  • slow turnover of WIP;
  • synchronization between the production rate and speed of material handling is not necessary.

2. The receiving area.

Based on different types of receiving, three types of Kanban operations are performed:
(1) receiving from a preceding stage in the same facility
(2) receiving from a storage
(3) receiving from a vendor

The optimal number of Kanbans.

Cycle times of Kanban
Cycle times of Kanban

The number of Kanbans is determined based on the amount of inventory. It is important to have an accurate number of Kanbans so that the WIP is minimized and simultaneously the out-of-stock situation is avoided.
In the Toyota Kanban system:
number of Kanbans = (maximum daily production quantity) × (production waiting time + production processing time + withdraw lead time + safety factor)÷standard number of parts (SPN)
In Figure above, the cycle time of Kanbans (part{A, B, C})=
0.1 + 0.5 + 0.5 + 0.2 + 0.1 + 0.1 = 1.5 (days).
The number of Kanbans of part{A, B, C} =
1000 * 1.5/ 100 = 15 (Kanbans), where Qmax = 1000 and SNP = 100

Remarks

  1. The maximum daily production quantity is the maximum output based on the daily production plan. Note that the production quantity should not vary too much on a daily basis, which is one of
    the necessary conditions to implement the Kanban production concept.
  2. Production waiting time is the idle interval between two production commands (for example 0.5 day in Figure above).
  3.  Production processing time is the interval between receiving production command and completing the lot.
  4. Withdrawal lead time is the interval between withdrawing a Kanban from the preceding stage and issuing a production command.
  5. The safety factor is based on time unit, e.g. day. It allows avoidance of an interruption of the production line due to unexpected conditions.
  6. SNP represents the standard number of parts. A Kanban indicates the standard number of the parts. The number of Kanbans between adjacent stations impacts the inventory level between these two stations. Several methods have been developed for determining the optimal number of Kanbans

Adjustment of the Kanban system

(1) Insertion maintenance action

Insertion maintenance takes place when the number of Kanbans used in a current planning period is larger than the number of Kanbans used in the previous period. Additional Kanbans are introduced to the system immediately after withdrawing the production Kanbans and placing them on the dispatching board.

(2) Removal maintenance action

Removal maintenance, similar to the insertion maintenance, takes place when the number of Kanbans used in the current planning period is smaller than the number of Kanbans used in the previous planning period. The additional Kanbans are always removed immediately after withdrawing the production Kanbans and removal of an equivalent number of Kanbans from the dispatching board.

Supermarket system

Lean enterprises use a supermarket system to achieve just-in-time inventory. The concept of a supermarket system is similar to that of shopping at a supermarket. When you go to a supermarket, you do the following:

  • Select the type and quantity of food you need, taking into account the number of people in your family, the space you have available to store goods, and the number of days the supply must last.
  • Put the food items into a shopping cart and pay for them.

When you use a supermarket system for your organization’s manufacturing operations, the following steps occur:

  • The process that manufactures parts keeps them in a marketplace.
  • When the marketplace is full, production stops.
  • A downstream process requests parts from an upstream process only when it needs them.
  • The responsibility for transporting materials from one process to another belongs to the downstream process that uses them.

A storage area for parts is called a marketplace because it is the place where downstream processes go to get the parts and materials they need. For a supermarket system to work as efficiently as possible, the following must occur:

  • No defective items are sent from a marketplace to downstream processes.
  • Marketplaces are assigned the smallest space possible to fit the materials they must hold. A marketplace is clearly defined by a line or divider, and no materials are stored beyond its boundaries.
  • A minimum number of items is placed in each marketplace.
  • Marketplaces are maintained with visual management  techniques.

The kanban system for an automated assembly line

To implement the kanban system in an assembly line where no human operators oversee the production equipment, you must make some technical modifications. Automatic limit switches must be installed on your equipment to keep the machines from producing too many units. In addition, all your production processes should be interconnected so that they have the required quantity of standard stock on hand. A fully automatic kanban system is known as an electric kanban.

The kanban system for producing custom orders

A kanban system is an effective way of controlling the production of specialized parts or products that your organization makes. Using the kanban system for special parts or products ensures the following:

  • Your starting and transporting procedures are conducted in the right sequence and on a constant basis.
  • You can keep your stocking levels constant. This enables you to reduce your overall stocking levels.

Because companies do not ordinarily produce specialized parts on a regular basis, it’s important for employees to share information about their production in a timely manner. Information delays can result in increases or decreases in the number of units you have on hand. Circulating your kanbans more frequently enables you to produce fewer batches of specialized parts more frequently.

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