What is KANBAN?
KANBAN is the production system used by Toyota and is one of the most well-known examples of just-in-time production scheduling. It is a card based production process. The KAN card tells a supplier to provide a specific number of items. A BAN card is a request for a specific component or sub-assembly. The cards control the flow of production and item movement. KANBAN is a production scheduling system that relies on the reorder point to control inventory levels and it is defined by low setup costs, lead times that are short, smaller order quantities, and fewer suppliers involved with the production process. The following are some key characteristics of the KANBAN production system:
Inventory is considered to be a liability. An organization must take all measures possible to reduce inventory levels. Inventory comes with numerous costs; shelfspace, warehousing, lighting, personnel to count/track, potential for shrinkage/breakage, etc. Keeping inventory levels as low as possible reduces these associated expenses.
Quantities should be minimal; only what is needed immediatlely is ordered. Purchased quantities are based on the economic order quantity model.
The cost of setup should be insignificant. This is done through quick process changeovers (reducing operational impact), or having additional machines setup for production processes. This facilitates smaller lots and increases the ability to make a wide variety of parts.
Work in Progress
Work to eliminate work in progress. This will result in less inventory and reduce the likelihood of issues related to work in progress inventory. For example, keeping work in progress inventory on hand requires more space (warehousing), movement throughout the facility (increasing likelihood of breakage), more time spent tracking the inventory. All of these additional requirements are counterproductive to an efficient production system and they increase cost.
A benefit of working with fewer suppliers is a stronger business relationship, however under the KANBAN production system there are very high expectations set for suppliers. Additionally, due to fewer suppliers being involved, if a supplier has a shortage, the whole production line could be shut down costing a company significant money.
Work toward zero defects. If production and distribution are not at 100% quality it jeopardizes the entire system. Because each stage of the production process relies on the previous, if there is a defect at one stage in the process the defective part will be forwarded to the next. This creates tremendous rework if the part is not perfect (or at least within tolerances) as it moves through the production process.
Preventative maintenance is crucial. Excess inventory is necessary. A shutdown will adversely impact operations downstream. Taking the time, upfront, to ensure all machinery is following a preventitive maintenance plan will reduce the likelihood for failure during the production process. A failure that ocurrs in the process will not only adversely affect the direct process, but it will have an impact on downstream processes; all of these result in unproductive costs incurred.
Keep lead times short. This results in a reduction to uncertainties and the need for keeping safety stock on hand. Short lead times also ensures greater responsiveness throughout the system.