6.11 Just-In-Time Inventory Control
During the past several decades, there has been a trend to make the manufacturing process more efficient. One objective is to have less in-process inventory on hand. This is known as just-in-time (JIT) inventory. With this approach, inventory arrives just in time to be used during the manufacturing process to produce subparts, assemblies, or finished goods. One technique of implementing JIT is a manual procedure called kanban. Kanban in Japanese means “card.” With a dual-card kanban system, there is a conveyance kanban, or C-kanban, and a production kanban, or P-kanban. The kanban system is very simple. Here is how it works:
Four Steps of Kanban
Arrow 1: As shown in Figure 6.16, full containers along with their C-kanban card are taken from the storage area to a user area, typically on a manufacturing line (see arrow 1).
Arrow 2: During the manufacturing process, parts in the container are used up by the user. When the container is empty, the empty container along with the same C-kanban card is taken back to the storage area (depicted by arrow number 2). Here the user picks up a new full container, detaches the P-kanban card from it, attaches his or her C-kanban card to it, and returns with it to the user area (depicted by arrow number 1 again).
Figure 6.16 The Kanban System
Arrow 3: This detached P-kanban card is attached to an empty container in the storage area and then—and only then—is the empty container taken back to the upstream producer area (depicted by arrow number 3).
Arrow 4: This empty container is then refilled with parts and taken with its P-kanban card back to the storage area (depicted by arrow number 4). This kanban process continuously cycles throughout the day. Kanban is sometimes known as a “pull” production system.
At a minimum, two containers are required using the kanban system. One container is used at the user area, and another container is being refilled for future use. In reality, there are usually more than two containers. This is how inventory control is accomplished. Inventory managers can introduce additional containers and their associated P-kanbans into the system. In a similar fashion, the inventory manager can remove containers and their P-kanbans to have tighter control over inventory buildups.
In addition to being a simple, easy-to-implement system, the kanban system can be very effective in controlling inventory costs and in uncovering production bottlenecks. Inventory arrives at the user area or on the manufacturing line just before it is needed. Inventory does not build up unnecessarily, cluttering the production line or adding to unnecessary inventory expense. The kanban system reduces inventory levels and makes for a more effective operation. It is like putting the production line on an inventory diet. Like any diet, the inventory diet imposed by the kanban system makes the production operation more streamlined. Furthermore, production bottlenecks and problems can be uncovered. Many production managers remove containers and their associated P-kanbans from the kanban system in order to “starve” the production line to uncover bottlenecks and potential problems.
In implementing a kanban system, a number of work rules or kanban rules are normally implemented. One typical kanban rule is that no containers are filled without the appropriate P-kanban. Another rule is that each container must hold exactly the specified number of parts or inventory items. These and similar rules make the production process more efficient. Only those parts that are actually needed are produced. The production department does not produce inventory just to keep busy. It produces inventory or parts only when they are needed in the user area or on an actual manufacturing line.