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Micro Lessons


Micro Lessons

When to consider a Kanban system.
Many organizations think implementation of a Kanban system is a must, but it is important to understand that Kanban pull is not the preferred methodology for controlling production or replenishment in the value stream. The preferred methodology is “flow”, the continuous advancement of material through the value stream in a pre-determined lot size — optimally a lot size of one. Only when a detailed analysis of the value stream proves that continuous flow is not readily achievable, should you move to implement a Kanban pull system.
Once deemed necessary… to calculate the number of Kanban required in a value stream for a product, you must; determine the product’s average daily demand and demand variation, understand the frequency at which “the customer” orders the product, determine the replenishment lead-time of the product, quantify the risks associated with anomaly demand spikes and supply reliability, and finally determine the quantity of the item per container.
The mathematical expression for determining the number of Kanban required using the above factors is:

No. of Kanban = Average Daily Demand x (Order Frequency + Lead Time + Safety Time)
Container Quantity

Keep in mind that Kanban is not a replacement for high-level planning and note that inventory may go up initially as a result of implementing Kanban. Kanban is not a silver bullet, it takes effort, but with the right resources/capabilities in place, your Kanban system will eliminate shortages, align production to customer demand, regulate the amount of inventory in the system and more.