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Kanbans are simple to use and can be utilized to greatly improve your
Operations while reducing your inventory. In addition, Kanbans can help improve
your throughput while eliminating inventory shortages.
There are many applications of Kanbans. For the purpose of this article, I will use
a couple of examples and how they can be applied to small businesses. One
method of Kanbans is called the Two-bin system. With a two-bin system, your
production team draws inventory from one bin while the other bin contains
enough inventory to cover production until the first bin can be refilled.
For example, if you manufacture portable grills, your employees may have one
part of the operation where they screw handles onto the grill top. In order for the
employees to operate smoothly, they should have a container with the handles.
Rather than having large amounts of handle inventory clogging up the floor, the
employees would have one bin containing X number of days or hours supply.
When the employees would run out of handles in the first bin there would be a
purchase card at the bottom of the bin. This card would go to the purchasing
department to alert them to order more handles. While the team waits for the new
order to arrive, they use the second bin, which should contain enough handles
for the production team during the order lead time.
It's important to note that the card at the bottom of the first bin could go to the
purchasing department to place an order or another section of the company that
stores the handles. You could also utilize a one-bin system, where the handle
container (or shelf) would have a visual line or color to indicate when to reorder.
In this instance, the handles below the reorder line would be enough to cover the
production team until a new order would arrive.
The second method of Kanban that I will discuss is a card replenishment system.
With the card replenishment system, when a product or material is used up, a
card attached to that material is placed in a container. The card attached to the
material will have the amount and the specific type of material written down.
At the end of the day, the purchasing department retrieves the container with the
cards and makes orders according to what was used up in that given day.
With this example, the card indicates that the material has been used up. The
card should be located at the point where there is only enough inventory to cover
the company during the purchasing lead time. For example, if you manufacture
flashlights your light-bulbs may be stored in a warehouse. Let's say you use light
bulbs at a rate of 1000/week and it takes 3 weeks to receive new light bulbs. You
would want a safety inventory of 3000 light bulbs. Once your employees used up
the last box before the safety inventory, they would bring the attached Kanban
card to the purchasing department. This card is a trigger for the purchasing
department to order new light bulbs. In the meantime, the employees will have
the last box plus the safety stock of 3000 light bulbs.
There is a lot of literature and examples of Kanban usage. The concept is simple
but its uses are widespread. Learn more about Kanbans and apply them to your
operation to gain productivity and efficiency.
Huge inventories are not cost effective. They are a large investment. Space is
also costly. With Kanban you stock inventory only when customers demand
products. For many Western facilities, maintaining small inventories may
appear somewhat problematic. Large inventories are thought to keep a facility
from running out of materials. With Kanban, PROPERLY IMPLEMENTED,
materials are always available to meet a facilities production demands.
Yes, there is a software based Kanban card. These systems rely on bar codes
and electronic databases to track production and inventory. In this electronic
system, managers can keep track of production from their offices or at any
other location where computer access is available.
The warehouse floor can be easily and economically marked too indicate the
proper locations for palletized or other large container storage (5S type
storage).Floor marking make this inventory easy to locate. Queues should be
restocked immediately since each queue is programmed to always have the
right replacement stock to meet customer orders. When orders and quantities
increase, these queues may need a small buffer stock to create flexibility with
increasing demand.
In the next and last LEAN series article, we will combine LEAN with Six
Sigma. Yes, it can be done. Common sense, you bet!