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What is Kanban?

Kanban is a visual method for controlling production as part of Just

in Time (JIT) and Lean Manufacturing. As part of a pull system it
controls what is produced, in what quantity, and when. Its purpose
is to ensure that you only produce what the customer is asking for
and nothing more. It is a system of signals that is used through the
value stream to pull product from customer demand back to raw

Its literal meaning is that of a flag or sign, when you see that flag
you know that it is time to manufacture the next part. Kanbans can
take many forms but in most production facilities they will use
Kanban cards or bins to control the process, although there are no
limits to how you can control and design kanbans; only your

The Origins of Kanban

As with Just in Time manufacturing the idea behind kanbans

comes very much from Toyota and their observation of a
supermarket (Piggly Wiggly) operated in the US. The supermarket
would only replenish what was taken by the customers from the
shelves; this meant that shelves never overflowed with excess
stock or ran empty. This pull was transferred from the customers all
the way back to the various suppliers.

Just in Time was implemented and designed at Toyota by Taiichi

Ohno who took over 15 years to perfect their system. During the
1970s many western visitors would bring back Kanban cards and
want to implement the systems within their own manufacturing
facilities; often with little real understanding of how they worked. It
was not until the 1980s that Kanban control really started to be
understood in the West.

Push Production vs. Pull Production

The main focus of JIT is to pull production through the process as

the customer actually takes what they want. The ideal flow being a
single part manufactured as required; although this is not always
possible with many processes without significant redesign or
investment. This is very dierent to what most companies have
traditionally done.

Traditionally production processes are scheduled, raw materials

ordered, and then manufactured to create stock based on a
forecast of what the customer is expected to order. This is push
production and is driven very much by the materials being fed into
the start of the process and all processes being controlled through
a schedule or MRP. This typically produces products in large
quantities or batches and ties up a huge amount of your capital in
stock and Work in Progress (WIP).

Pull production however works in reverse, when a customer takes

a product from the end of your production process a signal is then
sent back down the line to trigger the production of the next part.

Just as a supermarket will fill the empty shelf each preceding

process in the flow will request the parts that it needs from its
preceding process. This process is controlled through the use of a

How Does Kanban Pull Production


In its simplest format a kanban is just a signal back to the

proceeding operation to make the next part. So for a simple
process that has single piece flow it would operate just as the
simple diagram below:

Of course production is rarely as simple as this. Many processes

just could not manufacture 1 product at a time economically and
quick enough even with rapid change overs. We also have many
production lines making multiple products for the customer. All of
these things complicate things and require a little more thought to
be put into designing the system.

However no matter what system you use the following rules for
Kanban should always be followed:

Kanban Rules

The later process collects product from the earlier process

The later process informs the earlier process what to produce

The earlier process only produces what the later process


No products are moved or produced without Kanban authority

No defects are passed to the later process

Decreasing the size or number of kanbans within the system will

increase the systems sensitivity to changes or problems. This is

often the best way to highlight issues within the process and to
drive improvements.

Implementing a Kanban System

Means That:

Earlier processes never push production onto later processes

Nothing is ever made without Kanban authority

Nothing is made if there are no Kanbans

You have to be able to identify defects as close to the source

as possible

You cannot operate with large batches or lots of plan changes

Where possible demand should be smoothed

Ideal Environment for Kanban


The following are the ideal conditions required for the use of
Kanban. The further you are from these conditions the harder it will
be to implement, and the larger the safety margin you will want to
build into the system to prevent problems:

Regular demand from the customer; if your customer

demand is highly irregular and dicult to predict it can be
hard to hold Kanban stocks in the traditional supermarket
style. You may end up holding larger than necessary stock
and work in progress levels without some careful thought
about organizing your system.

Low product variation; if you make many hundreds or even

thousands of dierent products then you will not want to hold
stocks of them all as this could easily increase the amount
that you hold. You will want to reduce this burden by ensuring
that there are many commonly used parts between products
and that you make the product unique as late in the process
as possible.

Clear flow; facilities that are organized in a silo style with all
similar processing being done in one location are hard to
control with a kanban system; although not impossible by any
means. A better arrangement is one in which all processes are
organized together to provide a flow line or cell.

Small dedicated machines; many companies will invest in

large all singing all dancing machines that will service all
products that they make. Often these machines will drive the
use of large batches and will be a bottleneck for the facility.
Far better if smaller dedicated machines are used within
product flow lines.

Quick changeovers; many machines and processes can take

a long time to set up to run a new product or variant. This
again drives large batches and can create significant
bottlenecks within your production. The use of Single Minute
Exchange of Die (SMED) techniques can make a significant
impact in this area.

Repeatable and reliable processes; if machines are prone to

breaking down and processes are not repeatable then it will
be hard to control any form of production system let alone
Kanban. The use of Total Productive Maintenance (TPM), 5S,
operator driven quality improvements, and standardized
operations will help you to put in place the foundations that
are required.

Reliable suppliers; your suppliers are a vital part of your

process and you will need to ensure that they are able to
support the kanban processes that you wish to implement

Not having these conditions does not mean that you cannot
implement Kanban and Just in Time. It just means that you will
have to put a little more thought into how your systems are
designed and how they will work. Irregular demand and large
variations in products for instance can require you to use CONWIP
systems rather than the more usually seen cards or bin systems.
While unreliable machines will require you to have a larger safety
factor in the quantities that you use within your system.

Often when you are starting out with JIT and Kanban you will start
with large Kanban quantities and slowly reduce the amount of
stock over time in a planned fashion to highlight and remove

problems. Lowering the inventory levels will uncover the many

issues that are there.

What Types of Kanban Systems Are


As already said, the system that you implement will always be

down to your specific needs and should be designed accordingly.
That being said there are some very common methods that will
almost certainly fit many of your needs:

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Kanban Cards

These are usually simple cards or sheets of paper that are attached
to a batch of material. Usually there are just two or three cards for
each product in the system although there may be more if you have
to handle larger batches of if the product size itself is large. These
cards will typically detail what the product is, where it is used, and
the quantities that should be there. For multiple cards systems it
will also say which card it is and of how many (Card 1 of 5).

When a process finishes using the materials to which the Kanban

card is attached the card is returned to the previous process. This
is then used as authority for that previous process to manufacture
replacement parts. In multiple card systems, the process will
typically have to wait for a set number of cards to be returned
before they start to manufacture the next batch.

How Does a Kanban Card System


Kanban Bin Systems

Bins are used in a very similar way to Kanban cards. However,

instead of their being cards attached to the materials the container
that they are kept within becomes the actual Kanban. These will
usually be labeled with similar information to the cards and will be
returned to the previous process as authority to produce when they
are emptied.

As with cards, you can have 2-bin Kanban systems, 3-bin systems
and upwards depending on the amount of stock that is required
within the system.

CONWIP Systems

CONWIP is CONstant Work In Progress; this system is more like

the actual idea of using supermarket shelves where the Kanban is
the actual location on the shop floor. So when a process removes a
product from the previous process the empty space is the Kanban
and the previous process will work to fill the hole.

This system works well for systems in which you can achieve near
to one-piece flow and within which variation is limited.

However, that being said it can also be used very successfully

within those areas in which there is a large amount of variation if
combined with a make to order type approach to planning. If the

Kanban location becomes vacant, the process will simply build the
next component or batch on their list.

How Does CONWIP Kanban Work?

E-Ban and Fax-Ban Systems

With technology available, it is often possible to have paperless

kanban systems put in place through the use of scanning barcodes
or each machine simply telling the previous that it has cycled. The
electronic processing and transmission of data works in much the
same way as any other Kanban system. One of the most common

areas for these systems to be used is between a company and

their suppliers.

Calculating Kanban Quantities

One of the main aims for any Just in Time system utilizing Kanban
is to try to reduce the amount of stock held within the system.
Therefore, you will want to calculate the number of component
within each bin or batch and the number of actual Kanbans in the

Kanban Calculation:

Calculating Daily Demand

Use real data; dont just make a rough guess as to what your daily
demand is. Your demand may vary seasonally as well as being
aected by a host of other issues so you will want to use a figure
for your Kanban that is going to eectively cope with any situation.

In most cases, it is best to aim for a figure that covers around 90%
to 95% of peak demand.

The more variation there is in the demand then the larger the safety
factor that you may want to use to try to cushion problems.

Calculating Lead Time

As with demand use actual data and aim for a figure that is
90-95% of the peak. A lot of variation in lead times will indicate
that you may have problems with machine reliability and repeatable
processes so you will want to look at improving them. If lead times
are long then you are going to be looking at large batches and
should really be looking to implement SMED to reduce them.

Safety Factor

This factor should be defined according to your confidence in the

system used. If you have total confidence in the reliability of your
processes then it can be set as 1. If however you feel that you have
issues with anything from machine reliability to supplier delivery
performance then you may want to set this higher. A higher safety
factor will help to protect you from stock outs when issues do
occur; however, they will increase your stock holdings.

Reducing Kanban Quantities

One of the biggest of the seven wastes is that of inventory. You will
want to remove as much inventory from your system as possible as
this hides many of the issues that you have within your processes:

Inventory Hides Problems

By reducing the size of your Kanban quantities, you will start to

reduce that safety net that you have in place and problems will
start to break the surface forcing you to take action. This is an
eective way to highlight issues and to start making continuous
improvement within your processes.

Implementing Kanban

As with implementing any other lean manufacturing tools you will

need to do it as part of an overall philosophy within your business.
There is an ideal environment for using Kanban and a Just in Time
system and as such you should be always trying to get closer to
that ideal.

Kanban is not something that is going to work overnight, nor is it

something that can be just dropped into place without explanation
or training. There is also no one size fits all solution that is going to
be right for you.

You are going to hit resistance due to problems with machine

reliability, set ups and a host of other issues. You are also going to
encounter problems with everything from Kanban bins that get

taken out of the system to be used to carry coee (It happens!)

through to suppliers just simply not understanding what is required
of them.

As with anything proper preparation and planning will prevent

poor performance. So ensure that you have a proper project plan in
place to implement Kanban along with the many other important
lean manufacturing tools that you need.