# Kanban

Material accompanying card in mining

Kanban is a method of production process control . The procedure is based solely on the actual consumption of materials at the place of supply and consumption. Kanban enables a reduction of the local stocks of preliminary products in and near the production, which are installed there in products of the next integration level.

The aim of the Kanban method is to control the value chain at every manufacturing / production stage of a multi-level integration chain in a cost-effective manner. The withdrawals from the respective buffer stores and subsequent deliveries to the same buffer stores are carried out asynchronously. By distributing the buffer storage in production along the integration chain, a simple solution is achieved with simple means of information and short transport routes.

Kanban comes from Japanese . There か ん ば ん (看板) means something like “card”, “board” or “receipt”. Kanban is an implementation of the control method known under the synonyms fetch , shout or pull principle .

## Historical development

The original Kanban system was developed in 1947 by Taiichi Ohno at Toyota Motor Corporation of Japan . One reason for this was the inadequate productivity of the company compared to American competitors. Ohno described the idea as follows: “It should be possible to organize the flow of materials in production according to the supermarket principle, that is, a consumer takes a product of a certain specification and quantity from the shelf; the gap is noticed and filled again ”.

The increased expectations of customers in terms of production speed and readiness for delivery as well as the ever closer supplier relationships between the companies represented a new situation for which a suitable solution had to be found. High and thus, especially in a spatially cramped island state like Japan, cost-intensive stocks of raw and semi-finished materials were the cost drivers. In order to minimize these costs, a flexible and efficient manufacturing system was sought. This was found in the Kanban process, which replaced the previous common processes of production control and intralogistics . The actual production remained unaffected. As a result, this concept of short-term scheduling was adopted by numerous Japanese companies, adapted to the respective requirements and finally introduced throughout the Toyota Group. In the 1970s, this control concept was adapted and introduced by companies in the USA and Germany. The meaning of the word Kanban, which means “sign” or “card”, is also associated with Toyota and thus Japan. These cards are the basic element of this PPS system and serve to easily pass on information.

## Advantages over central production control

In traditional, centrally controlled production control planning systems , all material requirements are planned in advance at a central point down to the smallest detail. The individual production sites hardly have the opportunity to influence the flow of material in the event of fluctuations in throughput. This fact made these systems inflexible in a conventional organization with weak IT support and, in the case of short-term changes to the parts to be produced, also sluggish, since these changes have far-reaching consequences and a high level of coordination effort. This means that in the case of centrally planned systems, a high level of inventory is necessary to compensate for the lack of flexibility, which in turn causes high storage costs.

In contrast to this, the Kanban system offers a high potential for adjustment in the event of short-term changes in requirements, since the order for post-production is promptly triggered when a required pre-product is running out. The forwarding of information is always up-to-date and thus adapted to the current needs from the consumer to the producer or supplier. This means that unnecessary stocks can be drastically reduced and lead times significantly shortened.

Kanban represents a possibility for companies to operate the sometimes very complex and nested production control with autonomous control loops, which significantly reduces the control effort and increases the transparency of the process relationships. In advance, however, the local chains and the range of products must be precisely adjusted to the Kanban method. If this preparation is fulfilled, Kanban is particularly interesting for companies with a relatively small number of variants and relatively constant consumption, where storage costs are a major cost factor.

But Kanban can also be used sensibly with a large number of variants or long supply chains , for example if modern information technology is used. Here, however, a considerably greater planning and coordination effort is necessary.

Kanban is unsuitable for individual products or for special orders or even project production, since the required standardization of the production program is not given here.

Due to the high degree of flexibility and delivery reliability achieved , JIT orders are easier to cope with with Kanban than with conventional PPS systems .

The increased responsibility and qualification within the control loops can significantly increase the motivation of employees.

## aims

The aim of Kanban systems is to reduce inventory levels and thus reduce the amount of capital tied up and increase flexibility with regard to changed quantities required. This goal should be achieved without loss of readiness for delivery , without deterioration of reject rates , without increasing rework , additional transports, etc. All of this should be done with greatly reduced planning effort.

The frequently observed improvements in the area of ​​readiness for delivery, scrap rates, rework, etc. are secondary effects.

## Requirements for using Kanban

Kanban can require a variety of changes from companies to effectively implement this material control system. Takeda names seven essential requirements that must be met before using Kanban.

Construction of a flow production
The production program must be brought into an even flow. This means that the level of standardization of the products must be increased and production must be strictly synchronized.
Reduction of the lot sizes
In order to achieve just-in-time production and to reduce inventory levels, the conventional optimization of batch sizes must be abandoned . The goal, on the other hand, must be to avoid overproduction in order to realize demand-based production. Setup costs are negligible here.
Smoothed production
Since the Kanban system extends over several production stages, avoiding large fluctuations and precisely planning production at the last stage is extremely important. Any unforeseen fluctuation would be carried over to the upstream stages and lead to loads, which in turn would result in buffer stocks or buffer capacities and thus represent waste.
Shortening and standardizing the transport cycles
The reduction of stocks requires an increased transport effort . To ensure that production does not stall due to a lack of preliminary products, it must be ensured that the material transport from the upstream to the downstream location always follows the logistical principle.
Continuous production
A consistent utilization of the production sites should be achieved through Kanban . This must be done through suitable dimensioning and standardization of the Kanban system. However, cases such as special orders must also be taken into account.
Since the material flow in the Kanban system is controlled by cards, each producing and consuming point as well as each buffer store and each article needs a unique designation, which enables the exact allocation of cards, materials and containers. This system must be kept as transparent and simple as possible in order to avoid errors.
Consistent container management
Containers perform several tasks during transport. Among other things, they ensure the damage-free transport of the products and provide information on the number and type of content. When choosing the container, the needs of the subsequent process must be taken into account and the smallest possible container size must be selected.

Furthermore, the high quality of the preliminary products in connection with a pronounced quality assurance are key requirements for a functioning Kanban system, since the low inventory levels mean that bad parts can be compensated for in the production process. Therefore, a quality management system must be implemented that consists of automatic quality controls, self-control by employees and process controls.

## Suitability for Kanban production

Kanban is not always suitable as a control tool for production. In addition to the aforementioned requirements for using Kanban, the product structure in particular must be oriented towards Kanban. Here are the most important criteria that must be met:

• Products with a high proportion of value and high quantitative forecast accuracy , low fluctuations in demand ( AB / XY articles ) and a low proportion of special requests are particularly suitable . A large number of variants, one-off production or frequent product changes, on the other hand, can be problematic for the Kanban system and are therefore less suitable.
• In the production area, only those production sites are suitable that are characterized by relatively constant and short set-up times , qualified personnel and sufficient and relatively flexible capacities.
• If Kanban is to be used to control external purchasing, both the suitability of the suppliers for high delivery reliability and consistently high quality are decisive.

If the prerequisites and criteria are not met, problems arise that can lead to the failure of the implementation of the Kanban system. It is therefore of the utmost importance to critically assess these points in advance and to make changes to the processes if necessary.

## Areas of application

The system can be used very well with a single-stage vertical range of production ( end product production ) to supply the production facilities with parts from the warehouse. A reduction in stock is then not possible on its own.

Kanban can generally be used in most production areas, regardless of whether the parts are removed from the warehouse or manufactured first. In larger production facilities, the parts (and thus the automatic requirement notification) must be fetched by an independent internal transport system. Kanban is particularly suitable for relatively standardized products with a small number of variants and relatively constant demand.

Ultimately, Kanban is particularly suitable for series production .

Kanban is not suitable for one-off production . The purchase of raw materials and parts cannot be processed through it. It is also not suitable for bulky parts (for example packaging) that are delivered in truck or container size.

## How a Kanban system works

A Kanban system is basically controlled by the production of the last production stage : If the inventory of a certain material falls below a defined minimum value (reorder level), this is reported to the upstream production unit or the responsible warehouse. If necessary, this triggers production and then the provision of the material for the location.

In the classic Kanban system, this communication chain uses the Kanban cards that are delivered to the sink with the filled transport containers . As soon as the contents of the container are used up, the sink places the Kanban card in a Kanban collection box. The maps are regularly distributed to the responsible sources. The source is then responsible for providing the required material at the sink in good time.

After receiving the Kanban card, the source begins with the production or provision of the type and quantity of the material specified on the card and stores it in Kanban containers. As soon as the Kanban container is filled with the required quantity, it is transported with the Kanban card to the buffer store of the source. The sink then supplies itself from there. This creates a self-regulating control loop without a central planning entity.

This system is often compared with a supermarket in which the customers (sinks) serve themselves and the staff (sources) ensure sufficient stocks on the shelves (buffer storage). When the point of use reaches the reorder point again, the cycle begins again.

A general distinction can be made between the two-card system, which works with production and transport kanbans, and the one-card system, which uses the transport container as an aid.

While the two-card system is mainly used in internal production, the single-card system is often used for control in cooperation with external suppliers due to its simpler handling.

To ensure that there is a sufficient number of Kanban cards in the system, a Kanban coordinator determines the required number of cards in advance and adapts them to changed circumstances if necessary. The general rule for the number of Kanban cards in the system is that sufficient material must circulate to cover the required quantities during the replenishment period.

## Kanban rules

In order to ensure that the Kanban system functions smoothly, it is essential to adhere to binding rules. These are in detail:

The sink may only request as much material as it needs.
This means that only material with the associated Kanban cards may be in circulation.
The sink may not request material prematurely.
Failure to observe this rule would lead to disruptions in the production process, as all capacities are very closely coordinated.
The source may not produce in advance.
This would also lead to excesses in production capacities.
The source must ensure that the parts are of perfect quality.
Poor quality leads to production delays at the following locations due to the minimal stocks.
The Kanban coordinator has to ensure that the production points are evenly loaded.
Without an even load, goals such as low stocks and optimal material flow cannot be achieved.
The Kanban coordinator ensures that the number of Kanban cards is as small as possible.
Each individual card represents bound material, which generates costs in the form of storage and transport.

The employees who are heavily involved in the functions of the Kanban system must be trained in order to comply with these rules, and strict observance of these basic requirements must also be accepted by the employees.

## Elements and tools of the Kanban control

### Kanban cards

In the classic Kanban system, Kanban cards are the primary control element and the elementary information carrier, which contains all data relevant for production, storage, purchasing and transport from the source to the sink. These are among others:

• Article numbers / identification numbers
• Information on the type and capacity of the transport container
• Names of sources and sinks
• Work instructions / quality data
• Kanban card number

In general, there are six types of Kanban cards:

• Production Kanban
• Transport Kanban
• Shopping Kanban
• Track card kanban
• Warehouse Kanban
• Special Kanban

The number of Kanban cards within a Kanban circle (distance between source and sink) is determined on the basis of the following formula:

${\ displaystyle AK = {\ frac {SM + (TV \ cdot WBZ) + SZ} {SB}}}$

here means:

 ${\ displaystyle AK}$ Number of cards in the system or (in the Kanban area) ${\ displaystyle SM}$ Collective quantity (lot size that triggers post-production at the beginning of the kanban price (source) with ) ${\ displaystyle SM = SB \ cdot {\ mbox {number of containers}}}$ ${\ displaystyle TV}$ Daily consumption (the number of items that is demanded on average per day, i.e. flows out of the kanban rice considered (sink)) ${\ displaystyle WBZ}$ Replenishment time in working days (internal or external) to re-produce SM ${\ displaystyle SZ}$ Safety surcharge (amount that must be covered in the event that quality problems or machine downtimes etc. can arise) ${\ displaystyle SB}$ Number of pieces per container

The estimated average stock in pieces can also be determined from the number of cards in the kanban price (between source and sink):

Average stock in pieces ${\ displaystyle = {\ frac {AK} {2}} * SB}$

This value can be used because in Kanban control the quantity requested and the quantity produced are not subject to major fluctuations; is thus evenly consumed and reproduced.

#### Production Kanban

These kanbans trigger an order to produce the material named on the card and are added to the material that is in the sink's buffer store. As soon as the sink removes material from the buffer store, the production kanban is forwarded to the source, whereupon the production order is triggered.

In the event that the material produced is ordered in the same control cycle, the production kanban can also serve as a transport order from the source to the sink. It is important that, according to the Kanban rules listed, no production may take place without a production Kanban, as otherwise production is no longer consumption-controlled.

#### Transport Kanban

As soon as a sink has completely used up a container, it draws supplies from the buffer store by forwarding a transport kanban. There, the production kanban enclosed with the transport container is replaced by the transport kanban for the sink, and the required material is fed to the sink according to the information on the card. The transport Kanban thus serves as an internal transport order. At the same time, the production Kanban enclosed with the Kanban container is sent to the source and triggers post-production.

### Kanban container

As an alternative to the card system shown, Kanban control loops can also be controlled via the containers required to transport the materials. For this purpose, all necessary information is attached to the transport containers themselves, and production is controlled by monitoring the used containers. This means that when an empty container is received at the source, the production order is created ( container Kanban ). Regardless of whether it is controlled by means of two-card kanban or container kanban, it is important to ensure the size and shape of the parts as well as the handling, safety and distinguishability of the containers when designing the transport containers. In order to prevent possible mix-ups, the material to be transported with the container, e.g. B. be noted via an article number. In order to avoid unnecessary and costly transports, the size of the container should be adapted to the production lot size of the material.

### Kanban boards

Kanban boards fulfill several functions in the control loops. On the one hand, they are used to plan the sequence of the production orders triggered by various Kanban cards, and on the other hand, they are used for capacity planning and the division of the Kanbans into different levels of urgency. Kanban boards also prevent the loss of Kanban cards by using a uniform storage system for the cards involved in the production process. Although this aid is not an essential part of a Kanban system, the use of such boards is recommended for the reasons mentioned above.

Incoming Kanban cards are placed in the free fields of the board, starting from the left, according to their article number. One of these fields is marked with "Start". As soon as a newly arrived card is placed on the “Start” field, all production orders relating to this item number are carried out. In addition, the "Urgent" field can be used for special orders. It is important for a functioning Kanban board that the number of cards to be assigned does not become too high. Otherwise the advantage of clarity is lost and possible malfunctions or bottlenecks in the system are not recognized.

### Kanban boards with barcodes

In addition to signaling the statuses “full” and “subsequent delivery”, there is also the option of displaying the status “ordered” or “will be delivered shortly” with three-level information. The state of the Kanban container is shown to all those involved in the material cycle with a simple sliding mechanism. So z. B. the color green "full" or "contain sufficient material". If the barcode becomes visible by moving the board, e.g. B. on a yellow background, this means the request for subsequent delivery. The delivery order is generated by scanning the barcode and processed electronically. At the same time, the board is moved further to e.g. B. red, the scanning process is documented and it is signaled to everyone that the goods will arrive shortly. One example of such a sliding board is SLIDELOG. This procedure is particularly suitable at the end points of EDP systems where fully electronic recording would be cumbersome or too time-consuming.

### Signal kanban for buffer stocks

Another form of Kanban works without moving cards as an aid: The control is carried out by visual monitoring of the buffer stocks, which are stored in fixed locations near the source. These storage locations are identified by fixed, mostly triangular cards showing maximum and minimum stocks. As soon as a material type has reached the minimum stock, post-production begins. It is advisable to divide such a storage area into different colored segments in order to increase the clarity for the source.

### E-Kanban

Modern production systems are often dependent on the heavy use of information technology due to their complexity and variety. Therefore it became important for companies to integrate the introduced Kanban system into their PPS system . Various manufacturers such as B. SAP, CellFusion and others offer solutions that enable a kanban-controlled supply chain also via the Internet. This also makes Kanban possible for companies whose locations are widely distributed or which rely on other companies as suppliers. However, this creates numerous interfaces that have to be served by such a PPS system. Among other things, the areas of production control, purchasing, quality assurance, transport and assembly are affected and must be elements of the EDP. In order to create a system that is easy for the employees to use and therefore has few errors, the use of Kanban cards with barcodes is recommended. Through this, the status of an article can be changed from “available” to “post-production” and thus automatically trigger a production order with the supplier. When the goods are received, the material is posted as "available" again by being scanned again. It is particularly important that both the consumption and receipt of materials are consistently recorded by employees. Otherwise there may be stoppages in production due to the possibly long delivery times.

Another advantage of an EDP-supported Kanban system is that all control loops, sources and sinks as well as buffer storage can be graphically displayed at any time and thus bottlenecks or problems can be counteracted quickly. The supply chain is often graphically represented by dynamic network plans, which makes it easier to identify weak points in this. An example of the successful use of e-Kanban over a large spatial distance is the Daimler plant in Sindelfingen , which successfully controls the ordering of seat leather to the producer in South Africa.

## Example from production

The practical implementation of an electronic Kanban system is to be illustrated using the real example of a luxury article manufacturer who introduced such a system in 2003. The objective was to reduce the throughput times for production and the associated capital commitment. The high proportion of AB-XY parts with approx. 66% in the manufacturer's products proved to be an advantage , which due to their relatively constant consumption are well suited for Kanban production and accounted for a large part of the total turnover. For the remaining parts, which were less suitable for Kanban due to their low predictability and consumption, larger stocks were introduced to compensate for fluctuations in demand. Likewise, the high inventory levels that had existed up to that point were to be significantly reduced and delivery reliability increased at the same time. In advance, the processes involved were carefully checked for their suitability and the employees were comprehensively trained in order to achieve understanding and acceptance of the new system. As software, the existing system in the company was expanded to include Kanban functionality, which minimized software-related problems. In order to create the most error-free order management possible, a barcode system was introduced, which triggers and closes production orders by simply scanning the Kanban cards. External suppliers who were able to meet the requirements for Kanban are now directly integrated into the Kanban control loops, and the remaining suppliers use reorder point procedures in order to be able to continue using their conventional PPS systems .

Overall, this led to a 48% reduction in stocks and, by reducing set-up times and production batch sizes, increased flexibility in the event of changes in requirements. The readiness for delivery could also be increased to 98%, which was previously not possible by stockpiling in warehouses. Thus, the production could be made more efficient and the customer satisfaction increased, which the company rates as very positive.

## Cons and Problems

Although the system sounds simple, it is complex to implement. There must be space for at least two containers of each part at the point of consumption . The container size and the number of containers depends on the spatial dimensions of the individual items, the material requirements per day, the desired safety stock, the desired range of the supply and thus the frequency of replenishment and the space available at the point of consumption. Prefabrication and in-house transport must be able to be processed before the supply at the point of consumption is exhausted.

There are also production processes in which production is carried out “on stockpile” instead of according to consumption; for example plastic parts or stamped parts. Setting up the machines (mold change or tool change) takes a long time and the start-up losses (rejects) are high. Here, the requirements of a certain period are satisfied either according to average consumption, based on a sales plan or a control cycle with trigger level, minimum level, maximum level and possibly optimal lot size .

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