Kanban: A visual system for managing work as it moves through a process
Essentially, a Kanban is a pull system. It’s a signaling system where one process signals another when it needs something, and it can be done in 2 distinct ways.
#1. Let’s say there is a final assembly operation for a go-kart. Signals are sent upstream to provide a steering wheel, engine, and wheels. Then, those work centers that make those particular items are instructed to make them.
#2. The other way to organize a Kanban is by inventory. Let’s say that in a plant, there are 5 parts for a go-kart. 3 parts get used, and when that happens, there is a little card in front of the other 2 that says 3 more parts need to be made to refill the stock. It’s a signal to production to make more.
These signals either translate to paper cards that move from one place to another or via electronic systems. Regardless, the Kanban signaling system should be very simple.
How a Kanban System Should Work
Manufacturers don’t want to run out of inventory. This creates a big problem in order fulfillment so the goal is to always keep a specific number of parts in stock. Using our example from above, the goal is to always keep 5 parts on the shelf. When 3 parts are removed, there is a signal to fill 3 more parts in inventory. Once the signal has been sent via the Kanban system, it then becomes a work order or job order in the scheduling system.
The signal is not coming from sales orders or forecasting, it’s coming directly from inventory about what to make.
A lot of manufacturers don’t use Kanban and scheduling in this way. It’s part of the reason why scheduling has historically been so complex and confusing. Traditionally, manufacturers have used scheduling within the ERP to figure out what they should make based on inventory levels, sales order demand, forecasting, and a few other variables based on the availability of raw materials. Then, they decide what to build. It can lead to overproduction and producing the wrong parts and simply, not having the right parts. This is all too common and importing your scheduling from an ERP is just not enough.
While many manufacturers do it this way, the structure of Kanban signaling and scheduling also largely depends on the type of manufacturer you are. If are a make-to-stock manufacturer and keep a stock of 5 parts, every time you get down to 2 parts, you’ll want to replenish based on inventory levels, which is similar to a Kanban. The caveat is that the ERP is driving it.
If you’re a make-to-order manufacturer, you’re only going to make something if someone orders it. Production is based on the sales order. In this case, the order goes out and as the product is assembled, there are Kanban’s going back to prior steps in the process to signal the necessary parts.
What’s interesting is that if you keep a small amount of stock to ship to your customers, and you use those Kanban signals when inventory gets low, then you’re making to the actual demand of the customer rather than to a forecast or what you think you need.
Ok, ok so what we’re trying to say here is that the Kanban, in conjunction with the scheduling system, can help to create flow in a plant.
Is Kanban a Scheduling System?
The Kanban system is basically like an easy button. You press the button when you need to order more, and it works within the scheduling system.
You may have 5 parts on the shelf, but 3 are used to make a final product. You’re left with 2 parts. (Super basic math, we know, but it helps to convey the idea here, stay with us.) You hit the easy button (the Kanban) and it sends a signal, whether via paper cards or an electronic system, that 3 more parts are needed. That signal then tells the scheduling system to create a work order for 3 parts. And, viola, 3 more parts are made and sent to inventory to replenish the supply.
It’s a pretty basic example, but at the end of the day, this is what the two systems are doing. Kanban and scheduling work hand-in-hand. They simplify flow and processes in the plant. There’s no complicated ERP system in the way. Sure, there’s a bunch of work done upfront to plan and figure out what those base levels should be (aka how many parts you should keep in stock at any given time), but once it’s done, it simplifies the whole process.
Simplify Processes in the Plant
The Kanban is helping you figure out what you need to make and the priorities on those things. For example, you could have ‘A’, ‘B’, and ‘C’ categorized parts. ‘A’ parts are the highest priority. ‘B’ parts are a lesser priority, and ‘C’ parts can wait until the others are completed. The Kanban is helping the scheduler and scheduling system figure out what needs to be made. But, there is still work to be done. What can be made based on the restraints of the individual machines or plant as a whole? This is where a scheduling tool (not in an ERP) comes into play.
Hey, that’s us!
Mingo is a scheduling system that has all of your data and can tell you, on average, how much you can produce of each of these parts at any given time. You can make a really informed schedule that takes into account downtime, waste, scrap, and yield. Whereas other systems like an ERP are basing scheduling on a standard that’s updated twice a year and doesn’t really represent reality. (That’s not super helpful, right?)
With Mingo, manufacturers can see all of the demand, in advance, and can understand if they’re over or under capacity on certain machines, specifically bottlenecks, providing an understanding of if they can meet demand.
Kanban and Scheduling Provide Visibility
Kanban is the signal, the easy button, the pull system, that signals between different processes what to do. It’s signaling from one process to another that you need something and helps you figure out what to make. Scheduling (in Mingo) helps you figure out how to make it. It’s the, not surprisingly, scheduling and planning side of it.
If 10 people hit the easy button at the same time, the Kanban system sends a signal that parts need to be made, and scheduling helps you plan for and schedule those parts accordingly.
That’s the role Kanban plays in scheduling… and it’s an easy win for manufacturers.