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In Japanese, Kanban means "signboard" or "billboard". It is essentially an organizational technique which helps a company produce as much product as supply and demand dictates. Basically, with Kanban, workers know what items should be produced, when it should be produced or ordered, and how much should be produced. It serves as a communiation device for the company to order from suppliers, as work instructions for the manufacturing area, and as a paperwork elimination tool. It is not an inventory control system, but instead a scheduling system.
Inventory is a vital part of every company, as the loss of one product or item could cripple the whole line. Kanban assures that less inventory will be lost, and can be beneficial in every industry. This system helps the company gain complete control of it's supplies, as it is always up to date. Kanban is one method in which just-In-time (JIT) production is met.
There are many different types of Kanban systems. Some factories and stores use designated areas, flags or signal lights as the visual indicator that inventory is depleted and needs to be replenished. One of the most common systems used is the card. In this system, cards are used as warning signs for the necessity to move stock and items within the manufacturing facility or store. Often, the "cards" are containers that serve as indicators. Cards are filled with infomation, most importantly the safety stock quantity, which tells staff when it's time to reorder. Cards may include bar code, item codes and the price to help with ordering. They may have a ward name, storage location and date of last update. Different colors of cards are used to indicate different actions. A red card would mean that there is an unfilled or bare part of the stock.
Another type of Kanban system is the twin bin chambers system. In this system, the bins are mounted vertically. One of the chambers serves as in-use stock, while the other is the reserve stock. When the in-use stock runs out, the reserve stock automatically replenishes it, signalling staff to refill the reserve stock. This is an easy way to keep track of inventory, and also assures a first-in, first-out system.
There are several other types of Kanban systems. When implementing a Kanban system, there are a few guidelines to follow:
Kanban production systems have a high success rate in companies. It has been proven to promote developments by reducing inventory loss, provides a scheduling system where companies produce only what they need, and informs companies of low stock so they know what to produce.