The Kanban System—Optimal Replenishment Management

From time-eater to profit-maker: downtimes in production or in the warehouse, time lost in processing orders, or even high stock levels—these tie up a lot of capital. There are enormous consequences if material supply is not continually ensured. The solution is a well functioning Kanban system. But what exactly is that? What constitutes a Kanban system and according to which principle does it work?

The term Kanban

“Kanban” is actually a Japanese word that means something like card, receipt, or container. Kanban was developed by Taiichi Ohno in 1947, who was inspired by the principle of shopping as a way to control material flow in production more flexible and efficiently.When manual Kanban is used, the missing quantities are manually taken from the upstream material store and refilled independently in the production stage.

For production in which processes are controlled by a Kanban, the following applies: production may only take place if there is a Kanban available for it. This system is known as demand-oriented pull control. The process is supported by self-regulating control loops. These ensure that the material flow is constantly guaranteed.

A simple explanation of the Kanban system

Kanban system: The optimal replenishment management

Full shelves and enough replenishment on hand—that is how the aisles in the supermarket usually look. So if the consumer is standing in front of the store shelf and needs a package of noodles and a can of tomato sauce, the consumer will get them.

Depending on how many goods actually flow out, employees and suppliers ensure that there is enough product stock on the shelves, which is known as the buffer stock. Once the shelves are filled, the cycle starts over.

How does a Kanban system function?

A Kanban system functions with linked, self-regulating control loops. This is the term used to describe the organization of multi-stage production processes in a Kanban system. Every individual control loop consists of a manufacturing stage and an upstream material store. For the individual manufacturing processes, the requisite material is taken from the container in the assigned material store. In this way, stockouts from the upstream manufacturing are refilled independently (decentralized). This also applies to every operation, because each time, a downstream operation only takes the required part from an upstream one in the required quantity and the required time.

This just-in-time principle makes it possible to reduce stock levels to the quantities that are actually used. While the flow of materials moves from the starting material to the end product, the information flows in the opposite direction in the form of Kanbans, i.e. (physical or electronic) cards or containers. These document and report back the withdrawal and manufacturing of material at every stage. This creates a self-organizing system that minimizes warehousing and facilitates faster throughput times. In this way, value creation can be cost-efficiently controlled at every manufacturing or production stage.

L-mobile digital production—Kanban system, the optimal replenishment management

If an empty container is available at the corresponding withdrawal location or is controlled via a Kanban board, then this signals the production order. If there is no Kanban signal, in other words, no production order, then no production takes place. As soon as the defined unit is refilled again after withdrawal, the full Kanban container is delivered back to the location of the user. The parts are then made available in a “Kanban supermarket.”

Why do you need a Kanban system?

In most traditional production planning, the entire material requirement is pre-planned in advance. This means that the individual production stages can hardly react to fluctuations in throughput. These types of systems in conventional organizations are thus extremely inflexible. Add to that the sometimes missing IT support, so that problems go undetected. If there are any last-minute changes, the huge coordination effort that entails can make production sluggish. And what happens? Centrally organized systems require a bigger materials stock to compensate for the lack of flexibility, increasing both material costs and warehousing costs.

Kanban is the tool of choice for such scenarios. Kanban systems are extremely adaptable for last-minute changes in demand, because the replenishment of required products is triggered in a timely manner and above all in a short time. In a Kanban environment, information related to demand is forwarded ad hoc and adapted to the requirement situation of the user. This drastically reduces unnecessary warehouse stock levels and significantly shortens throughput times.

Even in production involving a large variety of variants or long supply chains, Kanban is a useful application, for example, if advanced information technology is in use. Thus, the Kanban principle can be used wherever large amounts of material are required within a short time.

Avoidance of overproduction and a limitation of inventories

A Kanban system gives you the optimal means to regulate stock levels. This creates the side benefit of needing less warehouse space.

High material availability

The self-regulating Kanban system provides faster throughput times in production and higher stock turnover.

Less planning and control work

Kanban also reduces organizational workloads, which increases productivity in purchasing, procurement, planning, and control.

Increased customer satisfaction

The Kanban system shortens delivery times and increases delivery reliability, which naturally make your customers happy and strengthens customer relations.

How to make your replenishment management practically run on its own: L-mobile E-Kanban

A large product range, different storage locations, or many suppliers—these are all difficulties that you have to overcome in your daily production.

Whether you use RFID Kanban rack, mailbox, or bulk identification, our L-mobile E-Kanban solutions make it possible for you to control your material replenishment without the need to visually verify the process and also avoid posting errors.

We are happy to show how you will no longer need safety stock, even with an increased range of variants and how you can still ensure that the required materials are in the right place at the right time.

Automated replenishment with L-mobile E-Kanban

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Uses of E-Kanban for your warehouse and production environment
In the webcast, we show you how you can make your replenishment processes transparent and without changes in media.
Live demo of the most important functions
In our live demo, you’ll get an in-depth view of automated replenishment with L-mobile E-Kanban.
Helpful practical examples
Through the successful examples of our customer projects, you’ll learn about the advantages of automated replenishment processes and the various application options.

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What are the different types of Kanban systems?

Supplier Kanban
The goal of a supplier Kanban is to guarantee demand-driven parts provisioning by suppliers. This type of Kanban goes beyond of a company’s boundaries and involves external suppliers. As a result, it increases supply security and reduces replenishment time by suppliers. The supplier Kanban can be used as an extension to an internally used Kanban system or as a standalone. In the classic Kanban system, the requirement notification is not sent to an internal point but rather to an external supplier who has this part in stock.
Transport Kanban or stock transfer Kanban

As soon as the material in a container is used up at a manufacturing area, a transport Kanban is issued, which replenishes the container from the buffer stock. In the buffer stock, the production Kanban enclosed with the container for transport is replaced by the transport Kanban from the manufacturing area. The required material is then returned to the manufacturing area in accordance with the information on the Kanban. This type of transport Kanban serves as an internal transport order.
Production Kanban or Kanban in manufacturing
This type of Kanban is used in production in which the Kanban triggers a production order for the materials listed on the Kanban. If the material is in the same control loop, the production Kanban can simultaneously serve as a transport order from the source to the manufacturing area. The important thing here is that no production will take place without a production Kanban, otherwise, production will not longer be controlled by actual consumption.
Customer Kanban or Kanban in a retail/wholesale store
Customer Kanban refers to when a supermarket (e.g., a storage area or shelf) is set up directly for the customer, who can take the parts they need. If a Kanban is used up, the customer reports that the part is out of stock, a signal that tells the supermarket to restock. When E-Kanban is used, the most advanced concepts can easily be set up quickly and cost-effectively, such as a consignment warehouse.

Stepping stones in a Kanban system

Involve all employees from the start

Usually, when a business switches to a Kanban system, it can confuse its company philosophy. Employees in production, regardless of their position, must first adapt to the new system and learn to “think lean.” This can be easily avoided if employees are involved in the process from the beginning.

Technical accuracy

An accurate technical rollout is also important. If the Kanban cards contain errors, contain too little or too much information, or are not used consistently, errors will occur in production and in processes. This causes production flow to stall and disruptions to occur.

Supplier control

But issues with suppliers can also cause problems. If deliveries are not on time or if parts are defective, this dramatically disrupts the process and creates production bottlenecks. It is therefore essential to conduct a close inspection of suppliers and products.

How to fully leverage Kanban methods

The classic Kanban methods are based on six principles. No matter what Kanban system a company uses, the following principles should be followed to fully leverage all the benefits:

1. Understandable rules
Transparent rules are the top priority. These must be clear, understandable, and implemented for everyone involved.
2. Limitation of tasks
The number of tasks for employees must be consistently defined.
3. Workflow
Steps must be taken to ensure that it is possible to work continuously and without disruptions.
4. Analysis
A regular analysis of Kanban processes helps to increase and optimize efficiency and how work is performed.
5. Leadership
Workflows at all employee levels should be supported and potential optimizations should be ensured.
6. Cooperation
Teamwork between management, customers, as well as suppliers improves work results.

The key question: manual Kanban or electronic Kanban?

L-mobile digital production—The E-Kanban rack with small load carriers is especially well suited to c-parts management

The use of traditional Kanban cards involves various risks. The manual notification of an order is time-consuming and also delayed. Another factor is that Kanban cards can be lost or are no longer readable. Changing mediums creates gaps in stock transparency, stockouts, or overly full warehouse, which ties up excessive amounts of capital.

Electronic Kanban: lean, smart, and simple!

Whether your business involves manufacturing, c-parts management, or warehouse management, these are all difficulties you have to master in your daily operations. Even with a small change in your Kanban processes, you can use IT support to control your material replenishment without the need to visually verify the process and also avoid posting errors. This system has to be mastered and we know how. With full automation. Real time. And with RFID. How does that work? There are a few scenarios:

Kanban rack Kanban mailbox Kanban RFID gate

The RFID Kanban rack: Bin up and done! Reorder sent.

Challenges: Seamless c-parts management. Since c-parts are always needed, it is an absolute must to reliably ensure their continual replenishment.

Solution: The RFID Kanban rack. The empty small load carrier is placed on the intelligent rack shelf. This triggers a wireless order for the missing parts via the RFID tag and posts the order in real time to the ERP system.

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The RFID Kanban mailbox: Is the bin empty? Card in, reorder out!

Challenges: Speed up processes and accurately collect data from multiple work stations in a manufacturing group.

Solution: The RFID Kanban mailbox. This standalone solution functions like a smartphone. With a modest investment, you can send requirement notifications via RFID and work with these across your company landscape.

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The RFID gate: One time through and everything there!

Challenges: Touchless, automatic and correct registration of materials during transport with direction recognition.

Solution: RFID gate. Instead of separate, manual postings of every Kanban card, RFID gate performs a bulk identification during transport. The software recognizes the right direction and uses an intelligent algorithm for filtering to avoid incorrect postings.

More information

L-mobile E-Kanban—Optimized production control

Do you want to automate your material supply and ensure that goods are always available at the right time? Do you want to reduce throughput times and tie up less capital in your warehouse stock? Whether you are interested in RFID Kanban Rack, RFID mailbox, or RFID gate, our experts are here to help you decide which electronic Kanban system solution would be perfect for your company.

Experience the electronic Kanban system online or in person at our LIVE events

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Advantages of a Kanban system

Reduces material stock levels

Shortens throughput times

Increases transparency in operational processes

Improves work productivity

Greater flexibility for short-notice deliveries

Increase in quality assurance

E-Kanban and RFID: Making processes mobile and efficient

L-mobile E-Kanban is a web-based, multi-client capable software solution that maps Kanban processes and trigger replenishments. The connection to most ERP systems provides end-to-end processes with consistent data management. The use of L-mobile E-Kanban frees your employees from performing non-value adding activities so that you can optimize your processes and automate your posting activities.

With RFID Kanban to optimized processes

Through the use of compact RFID readers at the point of consumption, requirement notifications are directly sent via RFID Kanban Rack, RFID Kanban mailbox, or RFID Kanban gate in real time. Besides system integration expertise, L-mobile also offers the various Kanban options including transponders, RFID readers, and the right software solutions.

Timing is everything: electronic Kanban systems perfectly tuned to your ERP system

Don’t see your ERP system listed? Contact us today and let’s talk about how we can implement Perpetual Inventory linked to your ERP system.