This post will focus on how you can make the most of your Kanban system and ensure optimum performance.
To ensure a proper setup of Kanban in the workplace, Toyota has outlined six rules for an effective Kanban system:
- Customer (downstream) processes withdraw items in the precise amounts specified by the Kanban.
- Supplier (upstream) produces items in the precise amounts and sequences specified by the Kanban.
- No items are made or moved without a Kanban.
- A Kanban should accompany each item, every time.
- Defects and incorrect amounts are never sent to the next downstream process.
- The number of Kanbans is reduced carefully to lower inventories and to reveal problems.
Kanban works best when applied to parts with stable and repeatable demand. An effective way to quantify stability is to determine the mean (average) and standard deviation of daily or weekly demand for all parts under consideration, then calculate a “coefficient of variability” or CoV (CoV = Standard Deviation / Mean) for each part. Parts with a small CoV have more stable demand patterns than those with large CoV values. Another useful criteria is frequency of usage because frequently used parts tend to be more stable than infrequently used parts. Creating a scatter diagram of these two values on a simple Excel chart, can help you visualize where to “draw the line” on CoV and frequency rules. Finally, ABC class codes, which allow parts to be categorized according to both cost and demand, can add additional perspective to the equation. Many companies find it useful to set CoV, frequency, or other criteria differently by ABC code because A-items have a much higher impact on inventory investment than do B-items or C-items.