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Chapter Three

Whenever there is variation, we need inventory to compensate for the variation if we wish to maintain the production rate. This is not quite a true statement. Specifically, when we have variation, we need something to compensate for this variation, to maintain rate. We talk about inventory as being a countermeasure for variation, but in a more general sense we needa buffer. A buffer is some resource we have in excess that is designed to account for the fact that production cannot be in perfect lock-step with consumption. Buffers come in three forms: @ • Inventory • Capacity • Time There are three types of buffers: inventory, capacity, and time. • Finished goods inventory is a buffer because we must accumulate finished goods between customer pick ups. WIPinventory is a buffer. It is a natural response to variations in the production system, including scrap production, machine downtime, changeovers, and cycle time variations, to name just a few. • Excess rate capacity in a machine that requires changeovers is a buffer, a capacity buffer. • When we do not have a good understanding of our lead times—which for the sake of argument vary from three tofive days—we may enter a time buffer of six days into our planning program to make sure that when we release an order, it will be completed on time. In addition, a typical lean strategy is to run a plant 2 to 10 hour shifts. This strategy coupled with a some overtime, provides both a time buffer and a capacity buffer.

Kanban means sign board. A kanban can be a variety of things,most commonly it is a card, but sometimes it is a cart, while other times it is just a marked space. In all cases, its purpose is to facilitate flow, bring about pull, and limit inventory. It is one of the key tools in the battle to reduce overproduction. Kanban provides two major services to the Lean facility. • It serves as the communication system. • It is a continuous improvement tool.

Typesof Kanban
Kanban provides two types of communication. In both cases, it gives the source, destination, part number, and quantity needed.

I n v e n t o r y a n d Va r i a t i o n
Rule No. 1 Rule Later process goes to earlier process and picks up the number of items indicated by the kanban Earlier processes produces items in a quantity and sequence indicated by the kanban No items are made ortransported without a kanban Always attach a kanban to the goods Defective products are not sent to the subsequent process Reducing the number of kanban increases their sensitivity Function Creates pull, provides pick up or transportation information. The replenishment concept is formed here Provides production information and prevents overproduction Prevents overproduction and excessivetransportation Serves as a work order Prevents defective parts from advancing; identifies defective process Inventory reduction reduces waste and makes the system more sensitive



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The Six Rules of Kanban

• Parts movement information, the transportation kanban—this is like a shopping list.

• Production ordering information, the pro- the means by which the Toyotaduction kanban—among other things, this is Production system moves primarily a production work order.


kanban method is


Kanban Rules
The Six Rules of kanban management provide several unique functions. The rules and functions are listed in Table 3-1.

Taiichi Ohno From Toyota Production System

Kanban Calculations
Let’s analyze a production kanban system.Recall that the kanban represents the entire inventory in the system. To assure delivery to the customer we will use a management policy with our finished goods inventory. It will involve the use of three types of finished goods inventory. To assure we have stock on hand for the normal pick ups by the customer we will carry cycle stock. In addition, in order to provide supply to the customer we will...
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