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Kanban System

GR # 2201176 GR # 2201348

 Kanban was developed by Taiichi Ohno, at Toyota, to find a

system to improve and maintain a high level of production.
Kanban is one method through which JIT is achieved.

 The word Kanban comes from Japan and it’s a translation

from Japanese to English. “Kan” means “card” whereas
“ban” means “signal”. This card signaling concept is used to
prompt “action”.
What is KANBAN System ?

 The Kanban method, as formulated by David J. Anderson,

is an approach to incremental, evolutionary process and
systems change for organizations.
 My layman’s way of describing Kanban is that it is

 “A way to organize the chaos that surrounds so many delivery

teams by making the need for prioritization and focus clear.”

 “A way to uncover workflow and process problems so you may

solve them in order to deliver more consistently to your
Kanban’s Roots

 Kanban originated in Lean manufacturing and

quickly grew in popularity as knowledge workers
embraced the technique to reduce costs and keep up
with the ever-increasing demands of their customers.
There are now thousands of companies in all types of
industries using the Kanban method of continuous
Advantages of Using the Kanban System

 There are many advantages to using the kanban

system as a way to manage work, including:
 Flexibility
 Focus on continuous delivery
 Reduction of wasted work / wasted time
 Increased productivity
 Increased efficiency
 Team members’ ability to focus
Advantages Contd…

 Other advantages to using Kanban revolve

around productivity and efficiency, two concepts that
also tie back to the reduction of waste.

 The Kanban system focuses on the reduction of waste in

all its forms: over-production, unnecessary
motion, defects, over-processing and waiting.
Just-in-Time — Philosophy of complete elimination of waste

 "Just-in-Time" means making "only what is needed,

when it is needed, and in the amount needed."

 For example, to efficiently produce a large number of automobiles,

which can consist of around 30,000 parts, it is necessary to create a
detailed production plan that includes parts procurement.

 Supplying "what is needed, when it is needed, and in the amount

needed" according to this production plan can eliminate waste,
inconsistencies, and unreasonable requirements, resulting in improved
 In the TPS (Toyota Production System), a unique production control
method called the "kanban system" plays an integral role.

 The kanban system has also been called the "Supermarket method"
because the idea behind it was borrowed from supermarkets. Such
mass merchandizing stores use product control cards upon which
product-related information, such as a product's name, code and
storage location, are entered.

 Because Toyota employed kanban signs for use in their production

processes, the method came to be called the "kanban system." At
Toyota, when a process refers to a preceding process to retrieve parts, it
uses a kanban to communicate which parts have been used.
Types of Kanban

 Based on Number of Bins

 Two Bin System
 Red Label Method

 Based on Authorization
 Simple or Transportation Kanban
 Production or Integrated Kanban (Dual Kanban)
Two Bin System

 A typical application of Kanban, where

the recorder card is placed at the bottom
of the first bin. When this bin is empty, a
third party supplier or previous
workstations use the recorder card to
replenish the bin.

 In a two-bin system, the consumer takes

his supplies from the first bin until it
gets emptied. The empty bin is returned
to suppliers while consumption goes on
the second bin. The supplier
understands the return of empty bin as a
signal asking for supply.
Two Bin System
Two Bin System
Red Label Method

 The red label method consists of placing of a red label in a position to

figure the order point.

 The consumer supplies himself from the boxes. Once the red label is
uncovered, it is returned to the supplier (order point reached). While
waiting for supply, the consumer uses the remaining inventory.

 Every label holds the basic information necessary for ordering:

 Part number
 Quantity to deliver
 Position where to put this label in the new supply
Red Label Method Cont.…
Steps in Implementing Kanban

1. List out all the components supplied.

2. Identify the runner and stranger components based on the pull rate/day

3. Collect the average Demand/day for the last 3 months for all the

4. Calculate Manufacturing Lead-time for all the components. Convert it into


5. Calculate logistics lead-time for all the components.

6. The Kanban quantity is to be fixed for the critical components.

Steps in Implementing Kanban Cont.…

7. Calculate 2 bin quantity,

 Total 2 bin Qty = Pull Rate*(Mfg. Lead time+Logistic lead time)*2

8. 8) Identify the type of tray or bin to be used in the two-bin area. Bins
in the 2-bin area should be different from the one used for dispatches.

9. 9) Calculate the trays/bin required for the 2-bin stock based on the
container size. Using the formula

 No. of tray = total bin quantity/ tray quantity.

Steps in Implementing Kanban Cont.…

10. Design the layout for keeping the tray.

11. Calculate the space required for keeping the bin. Mark the 2-bin area with

12. Design and fabricate the stand and bin.

13. Display two-bin status board near the dispatch area.

14. Design the bin card for the components.

15. Design two-bin cardholder. This post is used to keep the card for further
processing near the 2-bin area.
Steps in Implementing Kanban Cont.…

16. Stocking the materials in the Bins, prepare action plan for filling the bin
based on the critical components in a phased manner.

17. Cleaning of Trays/Bins should be properly cleaned on a weekly basis to

avoid dust and foreign particles in the components.

18. Replenishment of trays/bins should be properly done based on the pull

rate on 3 month basis so that we can avoid shortage of trays/bins.

19. Damaged bin to be replaced whenever necessary.

20. Plan, Do, Check, and Act is the cycle of performance, Hence the system is
to be regularly checked for the performance and update the process.
Basic Kanban Rules

 Rule 1:Move a Kanban only when the lot it represents is consumed.

 Rule 2: No withdrawal of parts without a Kanban is allowed.

 Rule 3:The number of parts issued to the subsequent process must be the exact
number specified by the Kanban.

 Rule 4:A Kanban should always be attached to the physical parts.

 Rule 5:The preceding process should always produce parts in the quantities
withdrawn by the subsequent process.

 Rule 6:Defective parts should never be conveyed to the subsequent process.

 Rule 7:Process the Kanban’s at every work center in the order in which they arrive at
the work center.
KanBan Evolution

 Many manufacturers have implemented electronic kanban

systems AKA an "e-kanban system." These help to
eliminate common problems such as manual entry errors
and lost cards.
 E-kanban systems can be integrated into Enterprise
Resource Planning (ERP) systems, enabling real-time
demand signaling across the supply chain and improved
 Data pulled from e-kanban systems can be used to optimize
inventory levels by better tracking supplier lead and
replenishment times.
Examples of Kanban Implementations
Most Common Application of KanBan