What Is Kanban In Manufacturing?
By Mary Iannuzzi on November 7, 2019
This article explains the what, how, and why of Kanban in manufacturing using basic examples and explanation.
3 minute read
Kanban in manufacturing is an inventory organization structure that uses visual cues to move inventory though various stages of the manufacturing process.
It is a tool for lean manufacturing that aims to prevent inventory pileup by initiating production only to restock empty reserves.
Kanban is a “pull” system, meaning it responds to demand rather than predicting it. More inventory is created only when old inventory is “pulled” out of stock.
How Does It Work?
Let’s look at an example:
An American store sells shoes that are manufactured in Vietnam. They hold inventory in a warehouse, and only keep a small amount of shoes in their store at a time.
Using the Kanban system, the store only wants as much inventory in stock in the warehouse as is necessary to cover the manufacturer’s lead time.
The supplier takes 60 days to make an order of shoes, plus 30 days of shipping. During an average 90 day period, the store will sell 1,000 shoes. The store orders 2,000 at once from the manufacturer. They are separated into two bins in the warehouse.
As soon as the first bin is empty, a new order will be placed with the manufacturer. While the manufacturer is making their next order, the store is selling shoes out of bin #2.
The new order of 2,000 shoes, or two bins worth, should arrive to the warehouse just as the store has sold the final shoes from bin #2. The process then cycles infinitely.
In reality, production and inventory control is more complicated than two bins of shoes. Many production teams rely on a Kanban Table. Most of this is done electronically now, but can still be represented with a physical card system.
Check out the graphic below for a visual representation of a Kanban table in action.
You can see that this same principles apply as in our very basic shoe store example.
What Are The Benefits of a Kanban System?
- Prevents Inventory Pileup
- Lowers Overhead
- Facilitates Teamwork
- Controls Workflow
- Improves Communication
To name a few...
In a real company, each team would use it's own Kanban board. This controls supply and demand within a single company as individual teams act as customers to each other. Overall, Kanban is a great tool for lean manufacturing. At its core, it is a centralized, controlled communication structure that, when implemented properly, guarantees consistent, efficient workflow.
For companies that outsource some or all of their manufacturing, it is helpful to work with suppliers that also offer Kanban programs. Michigan Manufacturing International partners with American manufacturers to source and stock custom mechanical components. Our subsidiaries and decades-long partnerships provide low-cost manufacturing across the globe while our domestic Kanban stocking programs keep your inventory available instantly. Visit our website to learn more about our services.