Kanban

It happens every time I visit a client. "Here's our kanban", they exclaim and I, naturally, start looking around for a card, or a sign, or a signal of some sort. In other words, I start looking for a kanban. When I ask where this mysterious kanban is I'm always told it's "right here", and the person always points to racks of inventory.

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Kanban is not inventory. Kanban is a communication tool. Kanban means "sign board", but in today's Lean enterprise a kanban can be any communication tool that signals a need for replenishment of an item or part.

Kanban, itself, is an admission of failure. This might sound harsh but it's true. One of the two pillars of the Toyota Production System is "Just In Time". The other is "Respect for People". Just In Time means just in time. Just In Time is the ultimate in "one-piece flow". Make one and move one only when it's needed; not before, certainly not after, and only in the quantity that's needed.

That's an unreasonable if not impossible goal for most manufacturers. The solution for Toyota was to have a small supply of parts that would be readily available--just in time--in order to keep a production line moving. This small supply came to be known as a "supermarket". The tricky part was in knowing when to replenish these small supplies. That is where kanban came to be used. The kanban, or sign board, was the signal to replenish the supply. Kanban became the solution for failing to have true "just in time".

So kanban is not inventory. Kanban is a tool to help control inventory levels by signaling when these inventories need to be replenished. These signals can be any number of things: A card, an electronic sign, an empty space, an empty container, or a market of some type.

At least one company uses colored golf balls. Yes, golf balls. Each time a unit of inventory is used a golf ball is rolled down a tube to the supermarket area. Once the tube is filled, that is, once a predetermined number of golf balls have been sent down the tube that is the signal to replenish the supply of that particular part. Different parts use different color golf balls.

Kanban and printing

How and where does this apply to printing? Well, take a look at your total square footage. How much of that is dedicated to actual production, which is the place where value added activities are conducted? How much of your floor space is filled with inventory, including all raw materials (paper, ink, packaging, press parts, etc.), WIP, and finished goods? Don't just count inventory racks--count every box and every pallet sitting on your floor. Divide your cumulative inventory square footage into your total square footage. The number will probably shock you. Ask yourself this question: Are you a manufacturer or a warehouse? Most of you will think you're a manufacturer, but the reality is you're a warehouse because you have a higher percentage of inventory square footage than any other function or department, including production.

Choose wisely

Kanban is a powerful tool. Used properly in a complete Lean Enterprise system it can help eliminate 50 to 90 percent of your inventories without disrupting your schedules. Just think of the cash savings you'll realize by eliminating not only the physical inventories but the costs associated with storage and handling. Invest that cash back into your business and you continue the cycle of continual improvement and growth.

Used improperly kanban can run you out of product and cause you to miss critical delivery dates, so it's important to start small and choose parts or items that you know that you can quickly replenish in a matter of hours or a couple of days if an emergency were to arise.

Pick non-critical consumables like chipboard, corrugated, and doctor blades to start with. Use visual signals--sign boards, index cards, or painted lines on a shelf where inventories can be "seen" by where they fall in relation to a vertical painted scale (green = good, do not order; yellow = getting low, initiate a reorder; red = critically low, attention is needed immediately). You can outline pallet positions on a floor and create a standard work procedure whereby the inventoried item stored on that pallet (or pallets) is not replenished until a specified number of pallet positions are empty.

Kanban and CONWIP

Kanban can also help control inventory aging, as FIFO lanes (First In, First Out) can be combined with kanban to create what's called CONWIP, or "constant work in process". If you have, say, four pallet positions in a CONWIP FIFO lane for item "A", your inventory variances month to month for item "A" will never be more than the value of what's in that FIFO lane, and your bottom line becomes more predictable.

Kanban vs. consignment

Kanban should not be confused with "consignment" inventories. Consignment inventories are nothing more than free warehouse space for your suppliers. You're paying for the real estate, the heat, the electricity, the racks, the insurance, the property taxes and the labor to unload, transport and store this supposed "free" inventory that's doing nothing more than taking up valuable space that could be used for production. If a supplier can keep you stocked with consignment inventories then you have a supplier with whom you can establish a kanban system for inventory replenishment, and you can stop being a free warehouse for that supplier. Establishing FIFO and using kanban can also help your suppliers with their own inventory management, as they'll begin to see what your actual consumption patterns are so it's a win-win scenario. They no longer have to scramble to replace 50 units when 10 are all that you need in your FIFO lane. You've now become a predictable, steady customer instead of one who is always calling in emergency orders that wreck everyone's schedule.