/resources/image/template/step.png Kan Ban

Kan Ban

Kan Ban is a scheduling system for lean and just-in-time (JIT) production. Kan Ban is a system to control the logistical chain from a production point of view, and is not an inventory control system. Kan Ban was developed by Taiichi Ohno, at Toyota, as a system to improve and maintain a high level of production. Kan Ban is one method through which JIT is achieved.

Kan Ban overview

The Kan Ban inventory control system arose out of the need particularly for volume manufacturers to be able to control inventory accurately and efficiently. If production lines stop because of shortage of components or materials, then it causes significant disruption to the production line as elements of the product cannot be completed and have to be stored part finished until the shortages are fulfilled.

To overcome these problems, car manufacturer Toyota studied the ways in which supermarkets kept shelves stocked. They saw that supermarkets only stocked what they believed would sell. As a result they noted that customers would only take what they need because of the virtual guarantee of their future supplies. In this way people did not stock more than they needed.

They also saw that the customer process in supermarkets involved the customer going to the supermarket and removing items from the shelves. Continuous monitoring of stock levels would enable the store to know when stock of a given product needed to be restored. Deliveries of new stock would empty stock at the main distribution centers that would then flag that they needed to replenish, and so forth back along the supply chain.

Using this example, Kan Ban uses the rate of demand to flag replenishment requirements along the supply chain until it reached the original manufacturer who would know what rate to produce the product.

Kan Ban pull vs push systems

Traditional methods of supplying a manufacturing process rely on forecasting the demand. This can be viewed as demand "pushing."

By contrast the Kan Ban system takes the approach using a "pull" from the demand that is created. In this way the supply or in the case of manufacturing supplying goods, the production is determined according to the actual demand of the customers. This is particularly helpful in situations where demand is difficult to forecast and by using actual demand, it is possible to gain the best insight into the supply requirements.

In situations where the supply response is not able to be fast enough to meet actual demand fluctuations, it may be necessary to build some stock to take account of this - this is achieved by issuing more Kan Ban.

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