During the 1940’s primarily after the second world war Toyota
was experiencing the trouble of keeping their car prices low and keeping their
process efficient. They had to come up with a mechanism to reduce the inventory
which would further help in JIT (just in time) productions. Toyota started to
study the supermarket shelves where the customers obtain the required quantity
at the required time, no more and no less. Furthermore, the supermarket stocks
only what it expects to sell within a given time frame, and customers take only
what they need, since future supply is assured. Toyota saw the value in this
system and came up with a system to reduce inventory by applying store and
shelf-stocking techniques to their production centers.
A part of the complete evolution of the Toyota’s production
system (TPS), which was later adopted by all its competitors, they produced the
system of ‘Kanban’. Kanban-literally means a signboard or a billboard but was
more used as a signal for the next person the production chain. It is a
powerful method for linking customers and suppliers in the value chain. One of
the major troubles in a manufacturing stream is synchronizing and connecting
disconnected portions of value stream. With the introduction of Kanban systems
the Japanese car manufacturer saw a significant improvement in their process
efficiencies.
In TPS every person in
the production chain treated the next person as a customer and would provide
them with the best quality work possible. This would make processes more
efficient. During every step in line a Kanban was passed over to the next
person in line. A kanban was an automatic directional device which provided
information about, what to provide, when to provide, in what quantity to
provide, by what means and the way to transport. With this information being
handy every worker exactly knew what they were expected to do and what process
that they needed to follow.
Different from the conventional production systems that
followed a ‘push’ system the Kanban systems followed the pull system. It’s the
customer’s demand that drives the production. With every person being treated
as a customer to the previous one, the demand could be easily forecasted and
thus efficient production levels could be maintained. In contexts where supply time is lengthy and
demand is difficult to forecast, often, the best one can do is to respond
quickly to observed demand. This situation is exactly what a kanban system
accomplishes, it is used as a demand signal that immediately travels through
the supply chain. This ensures that intermediate stocks held in the supply
chain are better managed, and are usually smaller.
Where the supply response is not quick enough to meet actual
demand fluctuations, thereby causing significant lost sales, stock building may
be deemed more appropriate, and is achieved by placing more kanban in the
system. With the proven success of the Kanban systems there has been a
widespread implementation of this system. It is not only restricted to
manufacturing but the modern software development technologies like agile and
scrum use the kanbans as well.
The major ERP systems present today use the Kanban systems
for maintaining the right inventory levels ensuring JIT delivery of the
supplies. In modern day ERP systems like Oracle's JD Edwards and eBusiness
Suite, IFS AB, Infor ERP LN, SAP ERP, Deltek Costpoint or Microsoft Dynamics AX,
kanban is used for signaling demand to vendors through email notifications. When
stock of a particular component is depleted by the quantity assigned on kanban
card, a "kanban trigger" is created (which may be manual or
automatic), a purchase order is released with predefined quantity for the
vendor defined on the card, and the vendor is expected to dispatch material
within a specified lead time.
Kanban systems have been widely adopted by the software
development practitioners as well. The kanban development cycle follow six main
practices:
1.
Visualise
2.
Limit work in
progress
3.
Manage flows
4.
Manage policies
explicit
5.
Implement
feedback loops
6.
Improve
collaboratively, evolve experimentally
References
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