Kanban Systems
The Kanban system was developed by Toyota Motor Company, Japan. In order to use a Kanban system, firms should necessarily store their materials and other inventory items in a single-use container like trays or boxes. A card (also called Kanban) is attached to each container that holds a specific amount of materials or other inventory parts that are used to manufacture the product. The Kanban cards are used mainly to initiate the transactions. For instance, when the material in a container is depleted, a Kanban, that defines requirement of inventory items to continue the production process, is kept in the container.
A Kanban system uses three types of cards to initiate material transactions; production authorization card, vendor authorization card and conveyance authorization card. The production authorization card authorizes the production department to start the production process. This card describes the product's name, identification number and description and the list of materials needed for continuing the production process. A vendor authorization card describes the product's name, vendor's name, and the quantity ordered, and the issuing of this card authorizes a vendor to supply the required materials in the specified quantity. A conveyance authorization card authorizes a materials handling agent to move the tray to a specified destination. This card specifies the product's name, its identification number and the delivery destination.
Firms derive the following benefits through the effective use of these systems:
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Reduction of work-in-process and raw materials stores
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Elimination of stock-out situations
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Improvement in customer service through minimizing the lead time
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Effective supply chain management can be ensured.
Number of Kanbans = (Average demand during lead time + safety stock) / container size
N = {(dL + S) / C} where:
N is the number of Kanbans or containers
D is the average demand per unit time
L is lead time to produce a part
S is the safety stock
C is the container size
The Kanban set should be an integer and the value obtained is rounded off.
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