Today’s economy and market environment has placed new and additional pressures on manufacturers. With narrow margins, companies are looking for ways to cut costs. Did you know that the loss incurred by storing inventory for a year can be as much as 25 percent of the product value? Traditional push system manufacturing produces product based on a schedule and not based on demand. This can lead to excess inventory. A pull system, which has been described as moving forward by moving backward, uses consumer demand to drive production.

Kanban?

The executives of Toyota Automobile Corporation took interest in the way American supermarkets stocked and replenished product in their stores. The idea that the consumer drove when and how much product was restocked and reordered was a new concept to manufacturing. Toyota took this idea and implemented it in its manufacturing plants utilizing visual cards and containers to signal when materials were needed. Kanban, the Japanese word for “card,” became of the name of the pull system.

In a Kanban system, flow is controlled by replacing only what has been consumed. Minimum and maximum on-hand quantities are established for raw materials, WIP, and finished goods. This reduces many of the wastes and inefficiencies incurred by overproduction. 

As an example, a color-coded card is used to indicate that a specific quantity of parts needs to be produced. When the machinist receives the card, he or she will create the parts in the specific amounts listed on the card. No additional parts will be made and no parts will be created prior to receiving the card. Because employee time is not occupied by overproduction, overall turnaround time decreases, which in turn increases customer satisfaction.

Benefits of using a Kanban pull system

A pull system can be demanding. It requires discipline to synchronize flow, maintain minimum levels of materials and buffer stocks, and forecast continuously. The discipline required by the system may also be the biggest benefit. Through this regimented system, your company will realize benefits that can give you a competitive edge in the marketplace.

• Produce in small lot sizes
• Cut costs
• Be more responsive to your customers
• Reduce overproduction and excess inventory
• Decrease overtime and increase throughput
• Shorten your production cycle
• Develop an environment of continuous improvement

Job shops, repetitive manufacturing processes, or discrete fabrication assembly shops can all utilize and benefit from the Kanban pull system. Put it to work and bring new efficiency, greater customer satisfaction, and fewer costs to your systems.