Kanban is a Japanese term and it means a signboard or billboard in Japanese. It is a system of scheduling for lean production and manufacturing based on just-in-time manufacturing. Taiichi Ohno, an industrial engineer at Toyota, built Kanban to enhance operational efficiency.
Objective of the Kanban System
An objective of the Kanban system is to restrict the accumulation of unwanted inventory at any step in the process of production. Inventory Limits on the number of items standing back at supply up-streams are developed and then minimized as inefficiencies are recognized and taken off. Whenever a limit is surpassed, this relates to an inefficiency that should be taken care of.
Operation in a Kanban System
A key drive towards the achievement of conventional production scheduling based on demand, pushing, is the capability of the forecast to figure out the right demand to go with a push onto the consumer market. Kanban, on the other hand, is part of an approach where the need to drive the demand from consumer or in other words Pull initiates from the demand and units are produced as per the order. Replenishment cycles or manufacturing is resolved as per customer orders.
In examples, where supply time is extensive and demand is challenging to forecast, many times the best thing one can go with is to act quickly to the demand as it is noticed. This reality is precisely what a Kanban system achieves, in that it is utilized as a demand signal that quickly goes through the supply chain. It ascertains that Work-in-process (WIP) stock remained in the supply chain are better utilized, and are mostly in smaller quantity as per the expected demand quantity. On the contrast in situations where the supply reaction is not smooth enough to comply with the real demand variations, resulting in likely lost sales, an increase in stock building may be identified as needed and can also be managed with the help of additional Kanban cards in the system until the process is compatible with the fluctuations of demand.
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