One of the most commonly applied best practices outlined by the ASCM’s SCOR model to enhance these attributes is the Kanban system. Let’s explore how Kanban works, its benefits, and its applications in modern supply chain management.
Understanding Kanban
Kanban, a method rooted in just-in-time production, uses standard containers or lot sizes with a single card attached to each. Originating from the Japanese word for “card” or “sign,” Kanban is a pull system where work centers signal their need to withdraw parts from feeding operations or suppliers using a card. This method, developed and popularized by Toyota, has become synonymous with efficient scheduling and inventory management.
At its core, Kanban is about inventory replenishment based on actual consumption. A classic example is the two-bin system, where one bin is at the point of consumption (e.g., on the factory floor), and the second bin is being refilled. When the first bin is depleted, it is sent to be refilled, and the second bin takes its place. This simple yet effective system ensures a continuous flow of materials without overstocking.
Calculating Bin Size
An essential aspect of implementing Kanban is determining the appropriate bin size. The formula for a two-bin system is:
Minimum bin size=Projected consumption per time unit×Cycle time to replenish, in time unitsNumber of bins\text{Minimum bin size} = \frac{\text{Projected consumption per time unit} \times \text{Cycle time to replenish, in time units}}{\text{Number of bins}}Minimum bin size=Number of binsProjected consumption per time unit×Cycle time to replenish, in time units
For instance, if the projected consumption is 100 items per day and the replenishment cycle time is 3 days, with 2 bins in use, the bin size would be:
100 items/day×3 days/2 bins=150 items/bin100 \text{ items/day} \times 3 \text{ days} / 2 \text{ bins} = 150 \text{ items/bin}100 items/day×3 days/2 bins=150 items/bin
This calculation ensures that the inventory is replenished just in time, reducing excess stock and optimizing the use of space and resources.
Modern Applications of Kanban
Today, Kanban can be implemented using various technological solutions. While traditional systems used physical cards, modern systems often leverage electronic signals and dashboards, integrated into enterprise resource planning (ERP) systems. These systems can further shorten the cycle time and decrease bin sizes, enhancing overall efficiency.
Key Processes Involved
Kanban integrates into several supply chain processes, including:
- Establishing Order Signals (S2.1, S3.1): Setting up the initial triggers for inventory replenishment.
- Scheduling Product Delivery (S2.2, S3.2): Planning the delivery of products based on Kanban signals.
- Issuing Raw Materials or Components (T1.3, T3.6): Ensuring that the necessary materials are available for production.
- Receiving and Picking Products (F1.1, F1.3, F2.1, F2.3, F3.1, F3.3): Managing the flow of products within the supply chain.
Metrics for Success
Kanban’s effectiveness can be measured using several key metrics:
- Cash-to-Cash Cycle Time (AM.1.1): The time taken to convert resources into cash flow.
- Inventory Days of Supply (AM.2.2): The average number of days that inventory is held before it is used or sold.
People and Skills
Successful implementation of Kanban requires various skills and roles, including:
- Inventory Management (HS.0058): Overseeing and managing stock levels.
- Supplier Relationship Management (HS.0139): Maintaining effective communication and collaboration with suppliers.
- Critical Thinking and Time Management (HS.0212, HS.0213): Essential for making informed decisions and managing workflows efficiently.
Conclusion
Kanban is a powerful best practice within the SCOR framework that drives efficiency and responsiveness in supply chain management. By implementing Kanban, organizations can achieve a more streamlined operation, reduce excess inventory, and enhance overall productivity. Whether using traditional methods or modern ERP systems, the principles of Kanban remain a cornerstone of effective supply chain management.
In a rapidly changing market, embracing practices like Kanban ensures that supply chain operations are not only efficient but also adaptable to future demands. As supply chain professionals, continuously refining our processes with tools like Kanban helps us stay competitive and resilient in the face of evolving challenges.
Link to ASCM and the SCOR model
https://scor.ascm.org/practices/best%20practices%20by%20category/BP.009
