the art of

KANBANWRITTEN BY CREATIVE SAFETY SUPPLY | © 2010
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The Art of Kanban

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The Art of Kanban

WHAT IS KANBAN?

You might not be familiar with the word Kanban but you are probably familiar
with the process. Many businesses and homes already use an organization
system that is loosely based on Kanban without even knowing it. Simply put,
Kanban is an organizational system. The point of this, and really anyorganizing system, is to keep products running in an even manner. Kanban isa way of providing signals so that the process of maintaining inventory issimplified.

The word Kanban comes from the Japanese and means billboard or
signboard. This word is used because Kanban relies heavily on cards that areused as markers for moving and replacing inventory. The whole systemcenters around these visual cues that help you maintain inventory at theproper levels so that you never keep to much or too little of your products or!2010 www.CreativeSafetySupply.com | (866) 777-1360

The Art of Kanbanmaterials in stock. In order to use Kanban effectively it is important tounderstand a few other concepts related to it.

Kaizen And The Five S’s

Kanban is an inventory system that is normally integrated with Kaizen and 5S.
Kaizen, is also a Japanese creation, the word means continuous
improvement. Companies that use the Kaizen system are constantly on thelookout for ways to improve their operational functions. In some companies
there are teams of people whose job is to find ways to cut costs and improve
working conditions. In a Kaizen system this is a job for every employee.
Successful Japanese businesses like Canon and Toyota use this system.
They ask that every employee suggest ways to improve the company on aregular basis. They mean every employee too, whether it is the janitor or
members of upper management, all suggestions are taken underconsideration.

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The Art of Kanban
When these companies ask for suggestions they expect, and get them on
every aspect of their business. Someone working on the production line may
have a marketing idea or someone in marketing a production idea. The ideas
are not limited to big changes; they can be little improvements that help how
the business runs overall. In America we tend to run our lives in a mentality of“do not fix what isn’t broken” whereas the Kaizen system is based on the ideaof “doing things better, improving even if it is not broken so that we cancompete with those who do.”

The Japanese apply this concept to all aspects of their lives, even in social
situations. This is in part why they have been so successful in manufacturing
and other business ventures. If you set high standards and allow every
employee to help improve those standards the odds of success are in yourfavor.
Another concept borrowed from the Japanese and integrated in Kaizen is theFive S program. The Five S’s are simple and common sense principles torunning a business. By using them you can provide your employees with aneffective system that maintains cleanliness, visual order, organization, andstandardization to the business production lines. This will improve yourbusiness while also empower your employees to be more efficient and to pay
close attention to service and safety. Those things combined will lead to an
overall better work environment and increase in profits.

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The Art of Kanban

What Are The Five S’s?

1. Sort - Sorting is the process of going through each work area and getting
rid of any equipment, tools, or other materials that are not often used. These
excess things will be moved to a storage area or discarded. The result is tohave a much cleaner work area that is not just aesthetically pleasing, buteasier to maintain. It improves employee safety, and lessens the chance ofconfusion and wasted time.

2. Set In Order - This second step is all about organization. Examine
your work area and see to it that everything has a place. Set out to label spots
for materials so that they are easy to identify and locate. If your work area isin production, paint or clean as necessary and mark out lanes for work areas,storage, and finished products.

3. Sweep - This step is an ongoing cleaning of your work area. Since you
have taken the time to organize everything neatly you will want to ensure thatit remains that way. Set up a schedule for regular and daily cleaning so thatyou leave each day with your work area in the same condition as when you
started. You should also inspect equipment and tools for damage or leaks,
this way you can fix the problems while they are still minor.

4. Standardize - One of the ways to make sure you and your employees
do not fall back into old habits is to standardize the way things are done. Youmight consider making posters that direct employees to the new standard ofmaintaining their work areas so they are less likely to revert to old habits.

5. Sustain - This might be the most difficult step in the program,sustainment. The best way to maintain the previous steps is to have a formal
way to monitor the results of your effort. You must continually educate
employees on keeping up with the standards and adjusting to any changes.

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The Art of Kanban

If your workers employ the Five S’s to their work area and feel empowered
through the Kaizen system of improvement it will be easy for them to thenalso use Kanban. Most Kanban systems rely on the previously mentioned
cards and bins. The system is a simple act of placing bins on the floor of yourfactory, one in the store, and one with the supplier.

When these bins are empty there is a card that has all of the details about the
product on it, the Kanban card. When the factory bin is empty, it can be easily
sent to the store for more of the product, along with its Kanban card. The
same process then happens at the store as their bins are emptied they go to
the supplier to be refilled.

One other concept is the JIT or ‘Just in Time” production method. The twoformer ideas combined with Kanban organization allow you to get thematerials you need in time for use. The system will prevent you from having a
lot of excess materials lying around, instead you will have them when you!2010 www.CreativeSafetySupply.com | (866) 777-1360

The Art of Kanban
need them. As a fact, you should have them “just in time” to meet yourproduction needs.

By using these methods there will be enough time to refill one bin before theprevious bin is completely empty so there is never a lag in materials. It
becomes a cycle of refilling stock just in time without too much extra
inventory, or a lack thereof. Some factories keep an extra bin for fluctuations
in supply, however with properly managed calculations there is little need forthe extra bin.

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The Art of Kanban

ORIGINS OF KANBANAs previously mentioned Kanban began in Japan. The world renowned
carmaker Toyota began studying supermarkets in the 1940s. Supermarkets
have a unique in store system that use in store stocking techniques. Theirsystem always provides for adequate amounts of products on the shelves
without having to store excess amounts because customers know they canalways return to the store for more. Toyota believed that this same process
could be applied to the factory floor. The demand for the product guided theordering of products and their placement on the shelves. In 1953 Toyota
began using this system of Kanban in the machine shop of their main plant.

At Toyota they applied a number of rules to Kanban and to their plant which
helped tie the whole system together. Some of the rules included to neversending defective products down the line, and withdrawing only what isneeded in the process. These rules may seem obvious, but in writing themdown and actually implementing them in the running of a plant they were not!2010 www.CreativeSafetySupply.com | (866) 777-1360

The Art of Kanban
forgotten. Toyota eliminated a lot of human error, and therefore improved
productivity and profits.

At Toyota they knew that the demand for materials would need to be pulled by
employees so they needed a system to help them do that efficiently. By using
Kanban cards they were able to implement this system, along with a few otherrules, in order to make their company run effectively.

Although there were other manufacturing giants, like Ford Motor Company,
who used a manufacturing strategy, Toyota took it all one step further. Under
the direction of Taichii Ohno they also recognized the knowledge andimportance of listening to ideas from all employees. In addition they worked
on ways to use their systems for a variety of products or for multiple products
at the same time.

Soon the successes of Toyota lead to the Kanban process being used all overJapan. Once the quality of the system was apparent it began to be used allover the world. There were, of course some failures because many
companies were resistant to implementing all of the aspects of the Kanban
system. The sum of all parts of Kanban including the Five S’s and Kaizen arenecessary to its success.

By the 1980s popular American companies like General Electric were using
the Toyota system, although calling it by many different names, with muchsuccess.

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The Art of Kanban

BENEFITS OF KANBAN

There are major benefits to implementing a Kanban system in your company.
These improvements can reduce costs and increase employee morale. It is
important to note that employees who feel valued and who are treated withrespect will work harder and therefore improve production. Because Kanban
enlists the use of Kaizen your employees will become inherently more
involved in the company.

Employee loyalty does not have to be something that you only dream ofhaving. By asking for and taking seriously your employees ideas and opinions
you will not only get loyalty, but surely some excellent suggestions too.

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The Art of Kanban

Reduction In Waste And Inventory

The Kanban system is one that supplies your company with only the materials
that it needs when they are actually needed. By doing this your waste is
reduced in several ways. First, you will not waste space by storing excess
inventory. As all business people know, space comes at a premium cost, so it
is important to use every bit of space you have in the best possible way.
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The Art of Kanban
Storing excess inventory is usually not the best use of space. One of the otherbig drawbacks to holding onto an inventory of components is the risk of
having to waste them when a part is upgraded.
Since your company will also be using Kaizen and looking for ways to make
improvements it is likely that components will be upgraded or changed on aregular basis. If you store excess components you will have to dispose ofthem every time an improvement is made. This wastes a great deal of moneyin addition to the space and manpower needed to deal with the materials.

By the same token you will reduce the amount of waste and scrap materials
you produce. Again, costs will be cut and your needs for storage will lessen
because you will only keep the raw materials that you need at a specific time.
Once those diminish, more materials will be delivered so you will not lag inproduction, nor will you overproduce in an effort to use up excess materials.

Flexibility
When you manufacture something, production is never on the one constantlevel. Instead there are peaks and valleys that you will need to account for inyour business. The Kanban system is able to help you meet these needs
because the raw materials are shipped to you through the supply and demand
process. When production is high you will naturally get more materials
delivered to you and when it is low you will get less.

In addition to controlling materials this system also allows for quickchangeover should you need to manufacture a new product. Since the supply
chain is guided by your needs instead of a constant stream of materials andstorage you can switch to a new product whenever that is necessary. Of
course, there are limits based on the machinery you have and employee
training, but the problem of supply lines will not be an issue.

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The Art of Kanban
Cutting Costs
Cutting costs is probably the most important feature of a Kanban system. If
you were to look at your costs for maintaining inventory, you will probably
quickly see that it is quite expensive. When you are able to reduce inventory
you are also able to reduce costs. The same can be said for reducing
overproduction and costs. All of these things cost money, while a Kanban
system costs very little to implement and can save in big ways.

Another way that it cuts costs is by reducing logistical costs and wait times.
When your employees do not have the materials to do their job you losemoney. When you have to pay extra to get the things you need to get yourproduction moving along you also spend extra money. Using Kanban
prevents both of these problems because it is all based on supply anddemand. You should never again have to pay people to do nothing or pay
extra for a rush delivery of supplies.

Kanban is a system that saves time, saves money, reduces waste, andmaintains and improves employee morale. If you have all of these things inplace, continued success is sure to follow. These principles allow production
to flow in a more easy and manageable way so that there are fewer errors
and in fact, less room for them in every day processes.

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The Art of Kanban

HOW TO INTEGRATE KANBAN INTO
THE PRODUCTION PROCESS

To get started with Kanban it is important to remember that it is a process thatmust be done over time. You should expect to take several weeks or months
to get your system completely operational and to train your employees. It isalso important to remain flexible.

Realize that since every company or office is different so is each Kanban
system. You will need to adjust and change as you meet different challenges.
It is important to note that this is a multi-step process. The process of
implementing it in your factory is also multi-step, for long-term success you
must be willing to embrace the whole of Kanban not just the parts that areeasy.

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The Art of Kanban

Integrating Kanban

Step One - Learn all that you can about Kanban. Study how it has beenused in your industry and in other industries, knowledge is always key. Youmight be able to see a video, attend a seminar, or hire a Kanban consultant tohelp you understand the process.

Step Two - Choose the parts of the Kanban system that are going to work
best for your business. At its heart Kanban is as simple as a card in a bin, butthere are different ways to approach this idea. You might only need two bins
instead of three or maybe you need more to make your facility run efficiently.
Kanban uses visual cues to remind people to pull more supplies, but you may
want to back this up with a computer or bar code system. You might even findthat you simply need a Kanban manual for employees to follow as it’s guiding
principle.

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The Art of Kanban

Step Three - Plan your system. It is important to figure out where yourbins will be placed and who will handle the tasks associated with them. Keepin mind what you need your system to do. Is it to keep materials flowing freelyor are you more concerned with information? Once you know that you can set
up your Kanban cards.

Basic Kanban Card Information•

Supplier•

Card number•

Product information like barcodes or SKU numbers•

Kanban amount•

Location of materials•

Date of order•

Lead time•

Due Date•

Part usage!2010 www.CreativeSafetySupply.com | (866) 777-1360

The Art of Kanban

Step Four - Set goals. Remember that part of the Five S’s is to sustain, so
include this in your preplanning. Think about and write down what you want toaccomplish with the use of Kanban and how you will measure your goals.
Make sure to evaluate where you are prior to using Kanban so that you canadequately judge the results. Try not to limit yourself in terms of creativity andgoals. The system, if used correctly can lead you to great success. Be surethat you have a system in place that evaluates the overall company and theconditions that you work under. It would be easy to blame Kanban for failures
or to try to cheat the system. Avoid this at all costs by setting clear goals andstandards.

Step Five - Implement the system. This will require you to gather whatevermaterials you need, bins, pallets, boxes, and cards. Make sure that all
containers are labeled clearly and that the Kanban cards are easy tounderstand. You will probably start out with more bins than necessary, as
your system is refined these will go away until you have the ideal number foryour business. Because there is no set way any business operates you needto account for errors. At the beginning you should maintain a stock ofadditional materials or supplies so that production is not interrupted when
breakdowns in the system occur.

Part of implementing the system is also to introduce it to your employees. You
may be met with some resistance, as this is a common reaction to change.
Do not let it stop you from putting the system to work. Your employees willgrow to appreciate a system that reduces the chance for human error while
increasing productivity and self-reliance at the same time. Be sure to open
them up to the idea of Kaizen. As your eyes on the ground floor the help of
your employees will be very helpful in improving the system and suggestingnecessary changes to further your success.

Step Six - Follow up. Check in daily how the system is working for you andyour employees. Request input and be open to taking suggestions, even if
you are not sure that they will work. Make changes as necessary. It is easy to
get caught up in the excitement of a new system and fail to see its flaws. But
you must remember that guiding principle of fixing things before they are!2010 www.CreativeSafetySupply.com | (866) 777-1360

The Art of Kanban
broken. Even in the best systems in the world there is always room for
improvement.

Go back to the goals you set up and see which ones you have met. If you findthat your goals are not being met figure out why. There may be somethinginherently wrong with your system or perhaps the system by which you are
judging success. Again, try not to blame Kanban for failures; it is rarely thesystem that is flawed, but rather the way it has been implemented. Do not be
afraid to start from scratch should the need arise.

CONCLUSION
When most of us think about a company like Toyota we immediately think ofsuccess. However, we also think of that success as based on innovations in
the design of cars and not necessarily the production of them. In fact, thesuccess of Toyota has as much to do with improvements in production. As
forerunners of the Kanban system they figured out one of the best ways toreduce costs was to cut out the amount spent on inventory and lag time. The
system, driven by consumer demand, has been and continues to be part oftheir success. A testament to this success it the use of Kanban systems inalso sorts of industries and offices. Even in homes, Kanban is a way toensure that you have the things you need on hand all of the time.

Implementing Kanban into your workplace is a great way to improve theproductivity. The system is a relatively simple one that lets current demand
dictate supply. When materials in one area run low, the entire system goes
into action to replace them. Each bin in each separate location alerts anotherbin to the need for more materials. You will never wait for materials to arrive
because someone forgot to place and order because the system reminds
itself. You will also never have to spend time and money storing materials or
worry about those materials becoming obsolete whilst being in storage.

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The Art of Kanban
Instead, the dynamic system of Kanban keeps materials fresh and supports
the constantly changing needs of manufacturing.

Remember that the only blocks to success with the Kanban system are theones you set. An important step in the process is maintenance and evaluationof goals. If you do not maintain the system and show your employees how tomaintain the system you are destined to fail. Always improve it; always findways to be more efficient. If you can do that you will reap the benefits ofgiants like Toyota.

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