KEYWORDS: LEAN, KANBAN, PRODUCTION, MATERIAL, TEAM, WORK, LIMIT, WIP, WIP limits, IMPROVE, CYCLE TIME, SUPPLY, SUPPLY CHAIN
The dot com bubble and the ensuing recession that shook the global economies, especially the original equipment manufacturers, (OEMs) in the electronics industry and information technology companies drove them to take cognizance of ‘Lean Manufacturing’ as a business process. Still, the problem they faced pertained to the fact that such lean manufacturing processes designed for vertically integrated enterprises. These are sought to be rectified by ‘Kanban,’ which conceptually addressed through what termed as ‘Extended Lean and Statistical Kanban.’
Kanban is a Japanese word, in English means a ‘billboard.’ It is a fundamental concept in lean management that is used to describe a ‘material replenishment process’ in which each stage of production signals the previous one when additional material is required or to convey a production executed, and a fresh one is ready to begin. What distinguishes Kanban from the rest is that based on a ‘pull production process’ based on real demand from a customer, as a result of which it eliminates all but a residual inventory, (safety stock), which serves as a re-order point. The merit of this is, it facilitates the manufacturers to respond to unanticipated surges in demand. Or interruptions in supply. The Kanban steps in when the material drops below a re-order by sending a signal to replenish it. David J. Anderson in his book “Kanban: Successful Evolutionary Change for Your Technology Business,” (2010) argues Kanban has been gaining popularity as it paves the way to ‘visualize and limit work-in-progress,’ especially in the informational technology sector. Consequently, more and more OEMs are adding ‘Kanban’ to bring about more agility to their businesses (https://businessagility.institute/learn/kanban-successful-evolutionary-change-for-your-technology-business-by-david-j-anderson/).
Core Principles & Practices under the Kanban Method
It should be applied directly to the current workflow without making any abrupt changes to existing processes. Such changes would have to take place over some time, in a gradual manner about which the team working with it has to be comfortable.
It does not call for imposing changes on the existing roles and functions of the personnel by way of organizational changes. It is the role of ‘teamwork’ that is emphasized upon, wherein the leadership is spread across the team and does not originate from the top and imposed down. It encourages collaboration, which helps in the overcoming of a barrier in the form of emotional resistance on the fear that employees can replace or become redundant due to the application of Kanban.
It starts with the visualization of the work, which put in either on a physical or electronic Kanban Board. When the team visualizes the process, it becomes easier for them to take cognizance of the current work the team is carrying out.
The work in progress, (WIP) has to be limited for a reason, as already pointed out, it is a ‘Pull-system.’ It encourages the team first to complete the work on hand. However, this may be somewhat difficult as it may not be possible to determine what the WIP limits would have to be. To overcome this, Don Reinersten, suggests ways and means track the Kanban, (https://kanbanize.com/kanban-resources/getting-started/what-is-kanban-board/). The key is to wait until sufficient data is accumulated to define the WIP limits. As a thumb rule, it may be useful for the team to put a WIP limit of 1 to 1.5 times the number of employees working with a specific workflow.
While the work process on hand enables the management of workflow, improving it is the next crucial step. That is why management assumes importance. Managing makes it possible to resolve the bottlenecks and barriers, which in turn would go towards reducing the ‘Cycle Time.’ When the predictability improves, it provides the team with the ability to forecast completion times in a realistic manner, which is considered a big positive of putting in practice a Kanban system.
While doing so, the Kanban method also confers yet another advantage in that it encourages the team to implement ‘feedback loops.’ Early feedback is crucial in the final delivery of the product or service to the customer within the shortest period.
The competitive atmosphere in which the global companies operate, businesses have to understand that lean supply chain is not optional but mandatory. Kanban is a fundamental concept that forms an integral part of the modern supply chain, wherein the ‘Statistical Kanban’ makes it possible for the manufacturers to anticipate ebbs and dips in demand and guarantee to keep up the supply of product or service levels. More importantly, it also takes into account the cost factor by factoring the amount a customer is willing to pay.
In short, Kanban, Statistical Kanban, and such other components act as key to implement ‘Extended Lean’ in the entire pyramid of the supply chain.