Kanban: the art of matching supply and demand

Posted by Stephen Whitehouse on 22 Nov

supply-chain

kanban inventory managementIf your business is suffering from a supply chain that is out of control, excess inventory and waste levels which are far higher than you would like, you might be interested in the 'Kanban' method of matching supply and demand.

How does it work? 

Kanban is a Japanese word with a direct translation of 'signal card', referring to the re-ordering request which an employee would traditionally take to a manager when a particular product is out of stock. In today's technologically advanced world, this can be automated using software, which can ensure supplies arrive to replenish stock before the existing supply runs out, meaning business can continue as normal. Using this theory, this system can, in many cases, be used in tandem with ERP software for maximised efficiency around stock and inventory.

Why is this beneficial? 

By regulating the production of items in alignment with customer demand, it is a way of keeping manufacturing processes lean by reducing waste through inventory management and necessitating less labour. This is achieved by doing away with rough estimates for demand related to a product or item and basing calculations purely on the number requested on an ongoing basis.

Give me an example

Take food manufacturers for instance. They are a perfect example of how it can work effectively due to the tight controls they typically need to have due to perishable raw materials they may use or expiry dates they must keep to. If a number of food items they need in stock at a particular time are likely to be at the mercy of fluctuations in demand, they are at risk of a high level of waste.

What other rewards can I expect? 

Depending on the way you worked previously to taking on Kanban and the type of processes you have in place, it can give several advantages to managers of shipping operations, warehouses and logistics. You might be able to eliminate the problem of inventory being rendered obsolete, increase your efficiency across the board, reduce overheads, give more control to the personnel in your work areas, and make your production goals more standardised. Reports suggest that this inventory management method has succeeded in reducing inventories by up to 75% in some sectors ('Lean Manufacturing in the Developing World'; Springer; March 2014).

Communication is key

Clear communication is central to the streamlining of processes and problem solving that Kanban affords. This element is vital for a system which is based on customer orders in the short term, rather than mid to long term forecasts.

Kanban with ERP

Versatile ERP systems such as WinMan can help facilitate the straightforward implementation of Kanban, often integrating them easily. You may have to make some adjustments when it comes to software and thus train your workforce to adapt to the changes, but the result can be the combination of the Kanban 'pull' style system, with the reporting and communication advantages that come with ERP. WinMan is an example of an ERP system which has a range of integrated features and has a number of options to help you fine tune your Kanban processes within it.

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Topics: supply chain

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