We tend to think of just-in-time manufacturing as a relatively new concept. Dell builds your PC when you order it, but does it quickly, so you are satisfied with the speed of delivery and Dell never has excess PC inventory on its hands. However, the idea is not new at all. In the 1940’s Toyota began applying the principal to its production lines after taking a lesson from an unexpected place: the grocery store.
Shopping for Parts
The grocery store metaphor makes it easy to understand the idea of Kanban (pronounced kahn-bahn). When you go to the grocery store, it is pretty unlikely that you will find an empty shelf and in the rare times you do, the shelves don’t stay empty for long. The reason is that the store has both the inventory on the shelf and some inventory in their own on-site warehouse. Grocery stores don’t want to stock more of an item than will be sold in a short enough time to ensure that the items are fresh and to reduce inventory costs. So, when a shelf is depleted, it is refilled from the on-site inventory and only then are new items ordered from the manufacturer to replace the warehouse products. This process is efficient and cost-effective for the store, and also reassuring to customers who can buy only what they need without fear of a future shortage of a favored product.
Toyota realized that the same principal would work for items needed on its manufacturing floor. They further enhanced the idea by adding Kanban cards, which served as a visual signal of the state of inventory. In fact, the word Kanban when translated directly means, “‘signboard, shopkeeper's in-business sign.” The approach can be applied to any business process, so its use is not limited to the manufacturing of hard goods.
Principle #1 – Visualize Workflow
Given the origin of the word, it isn’t surprising that the first principle of Kanban is about visualization. Unlike some business process approaches, Kanban doesn’t proscribe a workflow; it only requires that it be documented in a way that can easily be visualized. To begin a Kanban improvement, it is important to visually map the process as it currently exists. Only then will opportunities for improvement become obvious. Visualization continues once Kanban is implemented and serves as a way to communicate the state of projects, process, and inventory.
Principle #2 – Limit Work in Progress
The goal of Kanban is to move every bit of work efficiently from beginning to end with as little waste and lag as possible. This requires limiting the amount of work in the pipeline to what can reasonably be managed at a given time. Just like in the grocery store, inventory is pulled from the back room to the shelf only when customer demand makes space for it, so too, the Kanban approach moves work from one stage to the next only when it is pulled through by “customer” demand. Work is never pushed forward, so bottlenecks are avoided.
Principle #3 – Focus on Flow
When the first two principles of Kanban are in place, work flows freely and just feels easy. Your attention, therefore, should be focused on any interruptions in flow. These represent opportunities for additional visualization and process improvement.
Principle #4 – Continuous Improvement
Kanban isn’t something that is ever “finished.” The approach requires constant monitoring and analysis to look for the next best way to improve. Conditions, resources and customer demands change over time, so it is always important to assess flow and look for blockers or friction that can be alleviated.
Even if you don’t manufacture hard goods, the Kanban philosophy can be applied to whatever products you deliver, be it software, healthcare, or professional services. Creating a smooth, visualized flow from each work process to the next will help you decrease costs and increase value to your customers.
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