UNIVERSITY OF NORTH FLORIDA

KANBAN
By Henry Ho Professor Scott Lane TRA 4935 Warehouse Management
3/19/2012

This research paper presents an introduction to Kanban, a lean tool that involves producing a scheduling system that helps organizations reduce waste and cost by implementing production based on actual usage rather than forecasted models. This paper presents a brief history about the origin of Kanban and also its benefits and the Kanban implementation process.

Kanban INTRODUCTION

Ho1

Kanban is a Japanese word whose literal translation to the English language is signboard; however, Kanban is also recognized around the business world as a synonym for demand scheduling and it is associated with the practice of just in time (JIT), having the supplies a firm needs at the exact moment that they are needed. In order to accomplish this goal a firm must constantly be seeking ways to reduce waste and enhance value (Gross & McInnis, K. R., 2003). John Gross (2005) wrote in the Industrial Engineer magazine that Kanban is a scheduling

Figure 1 Kanban system

production system that uses visual and physical signaling to help improved inventory management, organizational design and supplier relationships (pages 37-38) . Kanban is a tool for managing the flow of materials or information in a process without the materials necessary in order to complete a task. Whether is a part or the proper information at the time it is require, causes setbacks and waste. Then again, having too many parts on hand or too

Kanban

Ho2

much work in process (WIP) is also a form of waste. One of the most popular systems used to reduce waste is Kanban cards and bins. (Fig 1), The Kanban cards or bins may be multicolored, based on priority, are stored in a bin or container that holds the items. They describe the parts, supplier and quantity. When the bins no longer hold a product, the Kanban is use to order more of the depleted product. A two-card Kanban system uses "move" cards to relocate items from one workplace to another and "production" cards to replace the material when it is used or sold (Klipp, n.d.).

HISTORY Kanban is a production system developed by the Japanese automobile manufacturer Toyota. Taiichi Ohno, a mechanical engineer, saw an opportunity to increase production output during the late 1940s and early 1950s. Tahiti Ohno (Picture 1) experimented with different types of set ups looking to increase manufacturing output. During a visit to the United States in 1956, Ohno observed the way supermarkets supplied groceries to their
Pict. 1 Taiichi Ohno

customers. Onho noticed the way supermarkets used empty spaces on

their shelves as a trigger point for product replenishment and consequently commencing a chain of events that ensured product availability at all times. Ohno applied this basic principle by replacing the projection material of push out to pull out. In other words, the end user determines the amount of material, parts, or information required at different stages of production (McMillan, 1981), and developed a Kanban control system looking to reduced WIP inventory along with reducing the cost linked to holding inventory (Gross & McInnis, K.R, 2003).

Kanban KANBAN BENEFITS In the world of business, the word implementation is a synonym with investing capital and expecting a return on the investment. Kanban leads businesses to improve productivity by

Ho3

providing more efficient production processes and reducing capital cost by reducing inventory cost. According to Gross and McInnes (2003): Kanban is an execution tool that directs the daily operations and is not intended to replaced material planning; however, Kanban provides the daily schedule activities to operate the production process and the need for production planners and supervisors to continuously monitor schedule status to determine production. In addition to saving financial resources, implementing Kanban also brings the following additional benefits associate with improving efficiency and effectiveness (Gross & McInnes, 2003): 1. Reduces Inventory after calculating Kanban quantities based on the current conditions, the result should show a decrease in inventory levels. According to Gross & McInnes (2003), inventories usually show a reduction in inventory between 25 percent and 75 percent in inventory levels. Consequently, reducing the cost of carrying inventory may open physical space that provides an opportunity to bring more business in house or eliminate the need for leasing additional space. 2. Improves Flow - implementing Kanban improves the flow of operations by providing detailed instructions for each step in the production process. 3. Prevents Overproduction - by using visual signals, Kanban alerts the operators to start or stop production. Simple visual signals such as an empty space on a shelve indicates the amount of product required.

Kanban

Ho4

4. Places control at the operations level - Kanbans indicates to operators when to run or stop a process. Consequently, Kanban also empowers operators to run a process with minimal supervision. 5. Creates Visual Scheduling and Management of the Process - visual indicators such as containers, cards, floor markings, reduced the amount of paper work. Visual indicators such as colors provide may tell operators the item and quantities requested and provides information about problem resolution strategies. 6. Improves Responsiveness to Changes in Demand - under Kanban, inventory automatically respond to changes on demand. If demand decreases, the rules within Kanban will trigger a reduction in production. Conversely, if demand increases, the rules within Kanban will trigger an increase in production. 7. Minimizes Risk of Inventory Obsolescence - since Kanban is set up to stop overproduction, there is not a risk of having inventory that might lose its total value due to undesirability. If an organization considers the above benefits as sufficient to consider implementation of Kanban, then the organization should research for the best implementation techniques that will fit that organization.

TECHNIQUES TO IMPLEMENT KANBAN Before considering implementing Kanban, organizations must consider putting together a cross-functional team. The team should include members from each area of the organization that takes part in the processes that will benefit from Kanban systems. Members must include personnel from production management, material management, warehouse handlers and

Kanban

Ho5

operators or personnel directly involve in production. Members from other departments such as sales and human resources should only be included if their expertise will contribute to implementation. Along with selecting team members, a team leader should also be selected by the team members and then set the rules and roles of each member. Finally, top management should review and approve any recommendations by the implementation team; otherwise, the implementation is bound to fail. According to the information accumulated to complete this research paper, there is not a set list of steps to achieve Kanban. However, different authors have many common approaches to implement Kanban. Paul Klipp (n.d.) on his book Getting Started with Kanban states that Kanban is a flexible system because it is applicable to systems already in place and that applied the following three basic rules that will help identify opportunities for improvement to those systems already in place: Visualize Workflow A well know phrase a picture is worth a thousand words may apply to this rule. A visual representation of the process lets you see exactly how tasks change from being not done to done right (Klipp, n.d.). The more intricate a process is, the more useful and important creating a visual workflow becomes, creating a board with different steps required to complete a task allows the participants to visualize the status of WIP. Limit WIP Regardless of the teams size there is a limited amount of WIP that may be accomplish at once. Otherwise, efficiency may be compromise (Wang, 2004). Measure and Improve Flow - Improvement should always be based on objective measurements, and Kanban is no different. Finding and applying good metrics is usually a difficult step, but with todays advances in software application, metrics become simple measures automatically

Kanban

Ho6

generated by software applications allowing Kanban users to tweak their processes and optimize flow with maximum efficiency. In contrast to Klipps Kanban rules of implementation, Phil Robinson in his book Business Excellence, the integrated solution to business planning (1997) proposed that Kanbans implementation must adhere to the following simple rules in order to achieved maximum efficiency: Keep all work under Kanban control in designated areas - it is human nature to protect ourselves from scarcity. Consequently, we accumulate items deemed necessary to our existence and may fail to recognize that efficient businesses do not require accumulation of products, instead a constant flow of products gives businesses a better chance of survival. Therefore, a business under Kanban rules must maintain a minimal amount of products within designated areas of production to ensure a constant flow throughout. Never pass on a known defect - under most systems of production management, quality is check at the end of the process. Kanban provides for every person involved in production to question quality at every stage of the process. The person or team that found quality problems most inform the preceding stage or stages of the problem in order to take proper correcting action and avoid further problems. Work when, but only when, you have a Kanban signal - this rule maybe get interpreted incorrectly because a lack of a Kanban signal does not mean to sit around waiting for a signal to stared working. To illustrate this concept it is a good idea to use a supermarket as an example. If the demand trend for a certain product is high, this should not be considered a signal to overflow shelves with this product assuming the trend will continue forever. Instead, we should let the demand continue triggering the signal without deviating from Kanban.

Kanban It is imperative that organizations have a

Ho7

commitment to change in order to implement a new system like Kanban by accepting the awkward feelings associated with change (Schonberger, 2002). Although Klipp and Robinson make compelling arguments about
Table 1

implementing a Kanban system, Gross & McInnis in their book Introduction to Kanban, provide seven simple, but comprehensive actions listed on table 1 as a road map to implement Kanban. This road map takes in consideration the current situation, the goals, and the way to reach those goals. 1. Data collection - assuming that a team is already in place to implement Kanban then the team must collect data provided from current methods. This data should be analyzed to find potential improvement objectives. 2. Calculate the Kanban size - using current information the Kanban implementation team should calculate the optimal Kanban size. This approach uses a number of mathematical computations that will provide an optimized number of units measured during the analysis. 3. Design the Kanban- depending on the organizations structure and beliefs the organization should select the system that best fits the organization. However, the design should include a signal mechanism, rules for operation, and a visual management plan. 4. Train everyone - during this phase of implementation all parties involved in operating under e Kanban should receive the proper tools and information to operate the Kanban. 5. Start the Kanban - use a dry run to start the Kanban and use this opportunity to identify problems, operator behavior and identify any weak links in the process.

Kanban 6. Audit and maintained the Kanban - at the beginning of the process the team should schedule daily audits for all new processes to make sure that all rules are still valid. After the initial implementation phase, audits should continue on a weekly basis to maintain process integrity and to find potential improvement opportunities.

Ho8

7. Improve the Kanban, after the Kanban system has been in place for a prudent length of time, the organization should look for reducing inventories to the lowest amount possible without compromising customer service.

CONCLUSION Kanban is a scheduling system designed by Taiichi Ohno from Toyota Corporation. Kanban delivers a systematic option to reduce waste and improve efficiency in organizations that are looking to reduce inventorys carrying cost. In addition to inventory cost reduction, Kanban also benefits organizations by providing the tools necessary to achieve a smooth production process that alleviates incorrect amounts of production output. Organizations under Kanban promote direct operators involvement, consequently, increasing employees morale and accountability. The Kanban system brings a clear method to achieve production goals by using clear and simple visual aids that give operators a clear picture of the task. Along with visual aids, Kanban also provides the means to keep an efficient production operation regardless of fluctuation on demand. The Kanban system advantages also include diminishing the possibility of Inventory Obsolescence. Organizations that consider Kanban beneficial should consider implementation techniques that are compatible with that organizations culture and resources. Techniques suggested on this research document include visualize workflow, limit WIP, and measure and improve flow

Kanban by Paul Klipp (n.d.) on his book Getting Started with Kanban. Phil Robinson in his book Business Excellence, the integrated solution to business planning (1997), adds to Klipps

Ho9

suggestions about Kanban implementation, the following ideas to implement Kanban: keep all work under Kanban control in designated areas, never pass on a known defect, and work when, but only when, you have a Kanban signal. Moreover, Gross & McInnis in their book Introduction to Kanban (2003), presents a broad approach to Kanban implementation with a guide that include seven steps that assess organizations current operational status, and help organizations determine obtainable goals. The Kanban system is a lean tool used to reduce waste. Kanban strikes to improve production efficiency by targeting inventory holding cost reduction. Positive results from implementing the Kanban system depends in the commitment from all parties involved during the production process, regardless from the type of organization, whether the organization is either a service or a production enterprise.

Kanban References

Ho10

Gross, J. (2005). Implementing successful KANBANS. Industrial Engineer: IE, 37(4), 36-39.

Gross, J. M., & McInnis, Kg. R. (2003). Kanban made simple [electronic resource] : demystifying and applying Toyota's legendary manufacturing process / John M. Gross, Kenneth R. McInnis. New York : AMACOM, c2003.

Klipp, Paul. (n.d.). Getting Started with Kanban. Retrieved from http://Kanbanery.com/ebook/GettingStartedWithKanban.pdf

McMillan, C. J. (1981). Production planning and organization design at Toyota. Business Quarterly (Pre-1986), 46(4), 22-22. Retrieved from http://search.proquest.com/docview/224681788?accountid=14690

Robinson, P. (1998). Business Excellence, The Integrated solution for planning and control. Burgess Hill, England: The Business Performance Improvement Consultancy Schonberger, R. J. (2002). Kanban at the nexus. Production and Inventory Management Journal, 43(3), 1-12. Retrieved from http://search.proquest.com/docview/199884446?accountid=14690 Wang, S. S., & Sarker, B. R. (2004). A Single-Stage Supply Chain System Controlled by Kanban under Just-in-Time Philosophy. Journal Of The Operational Research Society, 55(5), 485-494.