Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

6.3.2 Kanban: A Technique of Materials Management

Intended learning outcomes: Present in detail the basic data for calculating the number of Kanban cards. Identify the number of Kanban cards in the system. Explain Formula to calculate the number of Kanban cards.

As each container must be accompanied by a Kanban, the number of Kanban cards in the feedback loop determines the amount of work in process. We can distinguish

  • containers in issue by the user operation
  • containers in buffer at the user operation
  • containers in transport
  • containers being filled by work at the feeding operation
  • containers queued at feeding operation[note 615]
  • containers that represent safety stock

To calculate the optimum number of Kanban cards in a feedback control system, the data are first defined in Figure

Fig.        Basic data for calculating the number of Kanban cards.

How many Kanbans must flow in a feedback control system to guarantee the availability of components? Figure examines the role of all Kanbans that lie “in front of” an emptied container and illustrates the situation formulated below:

Fig.        Number of Kanban cards in the system.

At the moment an order is signaled (i.e., a transport batch of empty containers), the quantity in the buffer and in process — that is, number of Kanban cards multiplied by the contents of a container — must correspond to the expected usage during lead time. To the number of cards calculated in this way, the number of containers of the transport batch itself is added.[note 616].

The value of A can thus be calculated using the formula in Figure Here, w*k is the transport batch size, which is also the batch size of procurement or production. Batch size can therefore be larger than the quantity that fills one container.[note 617] The value of w is at least 1, and for high-cost items, it should not — if possible — be any larger than 1.

Fig.        Formula to calculate the number of Kanban cards.

Notice the similarity of this formula to a further technique of order release according to consumption: the order point technique (Figure The way that the Kanban feedback loop functions, the Kanban rules, and now also the formula to calculate the number of Kanban cards, all indicate a technique of stochastic materials management.

To avoid large safety stocks due to demand fluctuations, such techniques must be as continuous as possible at all production structure levels.[note 618] The Kanban technique allows no large safety stock. For that reason alone, buffers are set up right on the shop floor and have to be kept to small dimensions. The number of Kanban cards can also not be changed frequently because of the great administrative effort involved. Moreover, Kanban rules allow no degrees of freedom for delivery delays. This results in the following:

The Kanban technique guarantees availability only if there is the most continuous possible demand; that is, with limited fluctuations in all Kanban feedback loops. The same holds for customer demand. Thus, this is production or procurement with frequent order repetition and small batch sizes.

The most interesting products when it comes to improving logistics techniques are, of course, those that add high value-added. Such products are often A items in an ABC classification. The ABC classification can be complemented by an XYZ classification, which yields a measure of the continuity of demand (see Section 11.2.3). X items are those items having the greatest continuity, and Z-items are those in lumpy demand. Kanban items are therefore typical A and X items.

Quiz: Find the correct answers to the following questions - not yet available
1. Which of the ansers are right in the context of kanban cards ?
2. Which of the answers are right in the context of kanban ?
3. Which items are typically managed using kanban ?

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Course section 6.3: Subsections and their intended learning outcomes

  • 6.3.3 Kanban: Long- and Medium-Term Planning

    Intended learning outcomes: Describe the role of a long-term plan (and, if required, a medium-term plan for resources according to an MRP II concept. Identify the lean / JIT principles that must be implemented as prerequisites for a successful implementation of the Kanban technique.