In Part 1 of our blog series, we defined Lean manufacturing and Kanban’s association. Today, we take a look at Toyota, the company that pioneered the concept and we answer whether Lean and Kanban are still relevant.
PUSH and PULL Manufacturing
The main focus of JIT is to pull production through the process as the customer actually takes what they want. The ideal flow being a single part manufactured as required; although this is not always possible with many processes without significant redesign or investment. This is very different from what most companies have traditionally done.
Traditionally production processes are scheduled, raw materials ordered and then manufactured to create stock based on a forecast of what the customer is expected to order. This is push production and is driven very much by the materials being fed into the start of the process and all processes being controlled through a schedule or MRP. This typically produces products in large quantities or batches and ties up a huge amount of your capital in stock and Work in Progress (WIP).
Pull production however works in reverse, when a customer takes a product from the end of your production process a signal is then sent back down the line to trigger the production of the next part. Just as a supermarket will fill the empty shelf each preceding process in the flow will request the parts that it needs from its preceding process. This process is controlled through the use of a Kanban.
Kanban at Toyota
Cards of the Kanban methodology are used throughout the Toyota plants to keep inventory management lean — no cluttered warehouses, and workshops with sufficient access to parts.
Imagine that your workshop installs Toyota RAV4 doors and there is a pack of 10 doors in a bin near your workspace to be installed one after another, onto new cars. When there are only 5 doors in the pack, you know that it is time to order new doors. But you don’t have to do anything. An inventory replenishment manager, who we’ll call “Mary” whose job it is to check inventory levels of all bins in your shop area, notices that there are only 5 doors remaining in your bin. This is a “signal” that lets Mary know to replenish your RAV4 doors bin. Now, you have the peace of mind that new doors will be manufactured by the time you have used the remaining 5 doors. By the time you are installing the last door, another pack of 10 doors arrives. The result: Doors are only ordered when needed.
This is how the Kanban system works all over Toyota production floors. There are no warehouses with spare parts laying around for weeks or months. All the employees work upon requests and manufacture only the necessary amount of parts. If orders increase or decrease, production is modified accordingly. The main idea of Kanban methodology cards is to scale down the amount of work-in-progress (WIP). Use only what is needed.
The Problems With Kanban
Kanban systems are excellent for consistent production levels of consistent parts, but can be challenging when inconsistency is the rule. Such inconsistency can mean heavier than normal demand caused by a large order or an unusual rush of many orders for specific parts. A Kanban system cannot typically see heavy demand coming down the pipe, thus causing out-of-stock conditions. Even with companies that use Lean manufacturing techniques, a Kanban system typically requires a constant, complex reassessment of Kanban stocking levels for components because of inconsistency, seasonality and other factors.
“Inventory buffers are also useful when uncertainty is high and disruptions in the transportation network are frequent.”
For the sake of quality, inventory levels are driven to as close to zero as possible in the Kanban system. However, sometimes inventory buffers are needed to guard against not only poor quality items from suppliers but also poor quality from internal processes. Inventory buffers are also useful when uncertainty is high and disruptions in the transportation network are frequent.
Even though lean processes are still at the heart of most manufacturing operations worldwide and are increasingly important in other industry sectors, including distribution and financial services today, it pays to ask the questions, “Is lean still relevant?” and “How does a lean enterprise also embrace investment in new technologies like 3D printing and the Internet of Things?”
Fred Thomas writes in, It’s Time for a Lean Manufacturing Makeover, “While the concept and best practices of the Lean production system remain intact, the implementation on the plant floor faces a major facelift. That’s simply because the entire manufacturing dynamic has transformed to include new technology, new global competition, new government regulations, and a hyper-connected world of intelligent devices and social networks that enable seamless communication between companies and their customers.”
Thomas argues that in order for manufacturers to remain agile, Lean methodologies must adapt and change, otherwise organizations will remain stuck in the 1950s and competitors will vault ahead.
Lean-Here to Stay
So, are Lean and Kanban still relevant? In a word, yes.
Kanban is just one of the methods a manufacturer can utilize to create a lean facility operation. It is, however, a step towards the right direction and a step worth taking. Lean has proven to be a very powerful tool for improving manufacturing performance: higher throughput, lower costs, faster response and increased agility. Lean can be applied to direct production, supporting services, administrative and engineering activities, and just about anything else.
Lean is a singular focus on improvement, and making the most of all resources—from materials, equipment, and technology to the skills and experience of employees. Kanban has branched out of the manufacturing world and has been used as another method for applying agility to an organization. It’s commonly used for customer service teams, business teams and even in people’s personal lives to manage their small business or home life.
Lean Manufacturing is as relevant today as it was nearly 70 years ago. And Continuous Improvement is achievable through the repetition of these principles. Lean Manufacturing even impacts Six Sigma, as Lean Six Sigma has evolved into an approach taken to reduce waste, improve efficiency and drive profitability. Worldwide, companies today are looking to their supply chains to find cost savings. Those cost savings can be found by negotiating purchase prices with suppliers, but they can also be found in process optimization. If through the Lean process of waste reduction, you can drive manufacturing cycle times down or reduce scrap — you’re saving your company money beyond the basic cost of goods reduction.
Today’s manufacturers need to be up-to-date on practices like Lean Manufacturing, IIoT, Predictive Maintenance, Machine Learning and so much more. Have questions? We have answers. Contact us today.