Kanban Inventory Management Tool

In today's fast-paced business world, efficient inventory and supply management are crucial for smooth operations and customer satisfaction. One effective system that has gained popularity in recent years is Kanban.

Two types of Kanban tools we use:

1. Kanban Inventory Management Calculator - scroll down below
2. Pull System - see 3rd paragraph below in "What is Kanban"
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What is Kanban?

Kanban, which translates to "visual signal," is a visual and pull-based inventory management system that originated from the Toyota Production System in Japan in the 1940s. It uses cards, bins, or other signals to indicate the status and quantity of inventory items in different stages of the production or distribution process. 

Imagine a physical board with columns representing different stages of production or tasks. Each task or item is represented by a card, which moves across the board as they progress from one stage to another. The cards can also be strategically placed in an inventory stack, triggering an action. The primary purpose of Kanban is to establish a smooth flow of work and enable teams to manage their inventory and supplies efficiently.

A basic example is having a pallet of 18x12x6 shipping boxes regularly used to ship goods. If the pallet has 500 boxes, you consume 100 per week, it takes one week to replenish the stock, and you want two weeks of supply on hand, you place a visual indicator after the 200th box (approximate placement should be acceptable in most cases). In this example, the warehouse associates get trained to place the visual indicator (a card in most cases) in the floor Supervisor's inbox. The card in the Supervisor's physical inbox becomes a task indicator for the Supervisor to order another pallet for delivery in a week. The card typically has order information indicated on it to prevent time loss in finding the vendor, minimum order quantity (MOQ), cost, and contact information.

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If you ask a big group of people to do one thing right manually all the time, you will have inconsistent results. Workflows, processes, and visual indicators are necessary for consistency and predictability versus depending on individuals to understand, interpret, and perform synchronously." - Arsen Janikyan, Founder & CEO of Ops Engine.

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The Principles of Kanban

1. Visualization
   As mentioned earlier, Kanban is all about creating a visual representation of your workflow. This allows everyone involved to clearly understand the tasks at hand, their current status, and potential bottlenecks.
2. Limiting Work in Progress (WIP)
   Kanban emphasizes setting limits on the number of tasks or items simultaneously in progress. This restriction ensures that teams focus on completing existing tasks before starting new ones, reducing multitasking and improving productivity.
3. Continuous Improvement
   Continuous improvement is a core principle of Kanban. Regularly reviewing and refining the workflow helps identify areas for optimization, leading to increased efficiency and reduced waste.
4. Pull System
   Kanban operates on a pull system, meaning work is only pulled when there is capacity to handle it. As a result, inventory levels are kept lean, reducing the risk of overproduction or unnecessary stockpiling.

Benefits of Kanban Inventory and Supply Management

1. Reduced Inventory Costs
   By limiting WIP and adopting a pull system, companies can minimize excess inventory, resulting in lower holding costs and improved cash flow.
2. Improved Workflow Efficiency
   Kanban promotes a smooth and transparent workflow, reducing lead times and ensuring tasks are completed steadily and consistently.
3. Enhanced Communication and Collaboration
   The visual nature of Kanban encourages better communication between team members, fostering collaboration and understanding of everyone's responsibilities.
4. Flexibility and Adaptability
   Kanban allows teams to quickly adjust to changing demands and priorities. It offers a flexible framework that accommodates varying workloads and priorities.

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Implementing Kanban Inventory and Supply Management using the following steps:

1. Map Your Workflow
   Begin by mapping out your current workflow. Identify the different stages, tasks, or processes involved in your inventory and supply management.
2. Visualize the Workflow
   Create a Kanban board with columns representing each stage of your workflow. Use cards or sticky notes to represent individual items or tasks.
3. Set WIP Limits
   Determine appropriate work-in-progress limits for each stage based on your team's capacity and resources.
4. Implement the Pull System
   Allow tasks to be pulled into each stage only when there is sufficient capacity to handle them. This helps maintain a smooth and steady workflow.
5. Monitor and Improve
   Regularly review the Kanban board with your team to identify bottlenecks, inefficiencies, and areas for improvement. Make adjustments as needed to optimize your process continually.

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Selecting the right team member to manage Kanban is imperative. This individual carries the following characteristics and is more than willing to train others. The more training invested into Kanban, the more seamless supply management will become holistically. This individual:

• Possesses an in-depth understanding of the service delivery process
• Is an active advocate for continuous improvement
• Can track workflow metrics and transform the insights into actionable knowledge
• Demonstrates a strong will to improve work processes to obtain positive organizational outcomes

6 Rules of Kanban inventory and supply management

1. Never Pass Defective Products
   Upstream processes should only pass products that meet the expected standards and level of quality. Defective products should be removed from the production line and dealt with outside of the workflow. This ensures that only quality products go to your customers, lessens waste, and decreases customer complaints.
2. Take Only What's Needed
   A successful Kanban implementation requires that downstream processes only pull what they need. This prevents overproduction, lowers costs, and makes operations more reflective of the market's demands.
3. Produce the Exact Quantity Required
   This rule works hand-in-hand with rule #2. Taking only what you need would lead to only producing the exact quantity of products that are required. If you overproduce, what will you do with that excess inventory? You're stocking up on more costs by utilizing resources and dollars that could add value elsewhere.
4. Level-Loading the Workload
   By level-loading, we mean spreading the demand across days or weeks evenly instead of one lump sum for a steady flow. This depends on the type of product and replenishment schedule. For example, if you operate a fleet of 30 retail stores, you cannot expect the inventory from the warehouse to pick, pack and ship on Monday for all 30 days. What will the warehouse do Tuesday through Friday? By overloading one day, you don't have consistency throughout the week. Supporting one side of the business (retail store) impacts the warehouse operations. Other negative impacts of not level loading affect supporting roles like management, allocations, and store staff.
5. Fine-tune the Production or Process Optimization
   Once the team has initialized its Kanban implementation, the next aim should be to utilize its Kanban system to surface pain points and improvement opportunities. This would require a closer look at how work is flowing and measuring their performance.
6. Stabilize and Rationalize the Process
   When you ensure quality, level production, and optimize your process, your process gains stability. A stable process enables standardization. You should document your process so that there is a common shared understanding of how your team should operate. Policies should manage any deviations from the process standards.

Conclusion

Kanban inventory and supply management is a powerful tool that can significantly improve the efficiency of any organization's workflow. By visualizing the process, setting WIP limits, and adopting a pull system, businesses can streamline operations, reduce inventory costs, and enhance collaboration among team members. Embracing the principles of Kanban empowers organizations like our 3PL e-commerce fulfillment center to stay agile, adaptable, and competitive in today's dynamic market. So, start visualizing your workflow with Kanban and experience the benefits firsthand!