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How To Use Kanban For Inventory Management?

How To Use Kanban For Inventory Management?

Inventory management is one aspect of running a business that is always at the top of the priority list. With effective inventory management, you don’t only reduce wastage of resources, but you can save money while fulfilling your customers’ needs. All the thriving firms on an effective inventory management system have successfully enabled cost control operation, which has turned out to be their secret recipe for success.

Well, there are various ways to transform the way you manage inventory in your firm completely. But one of the most prized ones for those using any lean manufacturing system is the Kanban system. This is a unique inventory schedule system in which only the most essential company stocks are included instead of targeting all the tasks.

When a firm uses lean manufacturing, all the materials are pulled throughout the production and distribution processes. But when a Kanban system is incorporated into the inventory management system, the business can track when they need to replenish or reorder the stock.

The beginning of the Kanban inventory management system

The Kanban inventory management system is not a new kid on the block as it has been used for numerous decades. An industrial engineer at Toyota thought of using the inventory management system of supermarkets in his firm during late 1940.

By analyzing the inventory management system of supermarkets, the engineer realized that reordering or refilling stock only when they are needed improves the overall inventory management system. Based on this discovery, the engineer developed Kanban, and the name of that engineer was Taiichi Ohno.

The Kanban system is one of those unique processes that promote the flow of products through the entire Lean manufacturing process. It helps eliminate wastage of both effort and raw material. Although there are various aspects of Kanban and Lean, the most important one is the ‘Just in time’ feature. This feature confines the user to order what is needed and instated ordering for the future. In the late 1950s, the very popular Toyota Production System was introduced, which used Kanban as a scheduling system for lean manufacturing.

In most cases, you will see Kanban associated with lean manufacturing. In lean manufacturing, the main focus is on reducing wastage. And since Kanban also works on ordering stock when only needed, lean manufacturing and Kanban work well together.

 How To Use Kanban For Inventory Management?

What makes Kanban inventory management ideal for your firm?

Before introducing the Kanban system in Toyota, the entire inventory system worked based on a push system instead of the pull system. In this type of system, the customer demands were forecasted and then based on these forecasts, the materials were purchased. This type of approach led to the problem of overstocking in many firms, which also led to extended lead times.

But in the pull production system, the inventory is managed based on the actual orders that a company receives instead of working on forecasting. The just-in-time method works to balance the inventory level with the actual demand of the market. This method helps companies get rid of issues like overproduction, extended lead times, and overprocessing.

One of the best things about the Kanban system is it always has room for improvement, and it also has support for the entirety of the production system. The use of visual methods, cards, and bins streamline communication during the production process. But this improvement of communication isn’t only limited to the production process as it goes to buyers, suppliers, and even consumers.

Designing a Kanban system for inventory management

If you are planning on building a Kanban system for your firm, you must consider all the super-effective tools used in the Kanban system. You can customize the system to make it fit like a glove in your firm’s specific inventory management needs. Some of the essential tools that you must consider while designing a Kanban system are:

Kanban cards – These cards are used on the visual board for more oversized inventory items, and they also are paused through the line to show that the production needs to occur. You must mention specific information about the different stages of production in these cards.

Kanban bin – The bins are used for smaller inventory items like bolts and nuts during the manufacturing process; This is the main reason why one stage of production might have a two-in system.

Kanban board – This is a visual board on which the cards and the bins are used. The appealing representation of the entire process through the board helps in better tracking the process.