Supply Chain Management: Kanban – Just in Time Production

Tuesday, February 14, 2012

Kanban – Just in Time Production

While reading articles on Toyota’s Production System I came across the term Kanban. Kanban is derived from the combination of two Japanese works, “Kan” meaning visual and “ban” meaning card or board. Kanban is a process relating to lean and just in time production, it is a scheduling system that helps determine what to produce, when to produce and how much to produce. Kanban maintains inventory levels by sending visual signals for production and delivery of new shipment as material is consumed. The signals are tracked through the replenishment cycle and bring extraordinary visibility to suppliers and buyer.

The Kanban system was developed by Toyota after they observed how supermarkets operated in United States. Toyota observed that the supermarkets only stocked items that they believed they could sell, and the customers only took what they needed. Toyota decided to adapt this process in the production system, considering themselves as customers of their suppliers and their suppliers as stores. Toyota would go to its suppliers and only get what it needed, and the suppliers would then restock.

Taiichi Ohno of Toyota defined six rules for effective implementation of Kanban.

Toyota's six rules 1

Do not send defective products to the subsequent process
The subsequent process comes to withdraw only what is needed
Produce only the exact quantity withdrawn by the subsequent process
Level the production
Kanban is a means to fine tuning
Stabilize and rationalize the process

Kanban uses the rate of demand to control the rate of production, passing demand from the end user through the supply chain. Boeing’s assembly line for its aeroplanes adapts a similar approach, where the speed of the assembly line is influenced by the customer demand. This approach is often referred to as the pull system, where the supply or production is determined according to the demand of the customers.

Traditional Manual Kanban card

Auto Generated Kanban card 2

Traditionally Kanban cards were paper cards that would be sent to notify the supplier to restock. The manual Kanban have now been replaced by electronic Kanban systems, where signals are automatically sent to suppliers as resources are consumed. Kanban have now even been implemented into Enterprise Resource Planning Systems such as SAP ERP and Microsoft Dynamics.