Oracle Inventory-   What is Kanban System, Advantages and Disadvantages of Kanban Class/24

Kanban is an inventory system which enables and syncs the demand and supply of material. It is also used for just in time inventory system which help company to improve production. Kanban means billboard or signboard in Japanese. The process replaces usual forecast with actual usage of material. Which in turn reduces material wastage and has low inventory carrying cost? In this process the production line pulls enough components that the process required to build the product.

There are two important types of Kanban:

1 Production P Kanban: This kanban card is used by the work center to produce fix amount of product. The P Kanban card is carried on the containers that are associated with it.

2 Transportation T Kanban: This Kanban card has the authority to transport full container to the destination. The T Kanban card is also carried on the containers that are associated for transportation again for the same destination.

After the parts or the components are being used the containers are returned to the factory store or the warehouse , which  is also known as inventory control point. A good Kanban system calculates just enough Kanban cards for each product.

There is a Three Way kanban system for the supplied parts, where there is in house manufacturing. One Bin card is on the factory floor, second is on the internal warehouse, and last is at the supplier.

Advantages of Kanban System

  • Optimize Inventory and reduce product from being obsolete : The components parts are not delivered until they are needed, there is a reduced space storage.There is no inventory of products which becomes obsolete
  • Reduces Wastage and Scrap: With Kanban, products and components are only manufactured when they are needed. Even raw material is also not delivered until they are needed. This in turn reduces waste and cutting storage cost.
  • Provides Flexibilty in Production: Kanban also provides flexibility in how our production lines are used. If there is a sudden drop in the demand of the product, Kanban ensures that we are not stuck with excess inventory.
  • Increases Output: The use of kanban (cards,bins,pallets etc) will stop if there is a problem. This in turn makes problem visible and adequate efforts are taken to rectify the problem. Kanban reduces wait times making supplies more accessible and breaking down administrative barriers.
  • Reduces Total Cost: It reduces total cost by:
  1. Preventing over production
  2. Reducing wastage and scrap
  3. Reducing inventory cost
  4. Improves flow
  5. Prevents overproduction
  6. Better Machine utilization
  7. Totally Customer driven demand
  8. Lead time is kept minimum
  9. Developing flexible workstations
  10. Reducing stock levels and overhead cost

 Disadvantages of Kanban :

  • A Failure or breakdown in kanban may result in the entire line shuting down.
  • Kanban system can not be suited for poor quality products and highly variable product demand.
  • It is less fitted in industries where mix and volumes fluctuate
  • Kanban is less effective in shared situation.
  • If the demand changes frequently then it causes problem as it assumes a repetitive plan.

Right now cycle counting and physical inventory needs to be integrated with kanban. The process of kanban increases the efficiency of work and maximizes production. The process reduces WIP, reduces rework and any other delay in manufacturing process. Production of the product enters the process and proceeds through it smoothly and continuously.A breakdown in kanban system may result in entire line shutting down. So it kanban is a industry practice to consume existing inventory before a launch of new product or else old product will be in demand.

While using Kanban the best advantage is that you do not run short of stock as well as you make the supplier more reliable, with this lead times comes down. Kanban also practices just in time process or JIT for manufacturing purpose.

Cycle time is amount of time it takes for unit of work to travel until the item is being delivered. In a Kanban framework it’s the entire team responsibility to ensure the working smoothly through out the process.

For every Kanban item there is a pull sequence, in which you specify the supplier, supplier site and supplier item for a Kanban item at a specific location. So in order to sum up Kanban is a minimal wastage process, increases production, and reduces lead time.

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