Kanban: Are You Ready?

March 1, 2004
By David McBride

I recently had an executive at a large organization tell me “We are going to implement a Kanban system first, and then we will think about a Lean implementation.” This seems to be common in companies today as they pick and choose the tools of Lean but do not look at them from a systems standpoint. Lean tools like 5S, SMED, Kanban, TPM etc., are very powerful but are so often misused due to improper thought process. Many companies look to Toyota and the success they have had with a Kanban implementation and think it is the answer to all their problems, but what they fail to realize is to be successful they must have stable production processes. Organizations should look at the success Toyota has had through development of the Toyota Production System (TPS), but they need to keep in mind that it has taken them 50 years. Let’s look at Toyota.

At the 2003 Automotive Parts System Solution Fair, held in Tokyo, June18, 2003, Teruyuki Minoura, then-managing director of global purchasing, Toyota Motor Corporation, talked about his experiences with TPS (the Toyota Production System), and what it means for suppliers and for the future of the auto industry.

In simplest terms, just-in-time is “all about producing only what’s needed and transferring only what’s needed,” says Minoura. Instead of the old top-down “push” system, it represented a change to a “pull” system where workers go and fetch only what is required. Tools, including the kanban (information card), andon (display board), and poka yoke (error prevention) were developed to implement the pull system. But, Minoura warns “simply introducing kanban cards or andon boards doesn’t mean you’ve implemented the Toyota Production System, for they remain nothing more than mere tools. The new information technologies are no exception, and they should also be applied and implemented as tools.”

There are several barriers in production processes that companies should look at as they begin a Kanban implementation.

Short die changeover and machine set-up time are critical to respond quickly to a production signal. If die changeover and machine set-up time is long, it makes the system less responsive. Toyota’s officials believe that short die changeover and machine set-up times have been responsible to a large extent, for the success of kanban implementation at Toyota. The reduction in die changeover and machine set-up times also reduces the production lot size. Short die changeover and machine set-up time offers the necessary flexibility for a pull system. A study conducted on the US automotive industry in 1997, reported that the die changeover time for Chrysler, Ford, and GM was nine times more than that of Toyota. Changeover cost being proportional to changeover time, the recommended economic lot size is three times that of Toyota. Additional finished goods inventory is required for a pull system to operate with long die changeover times to offset the effect of slow response time and reduced resource availability. Therefore, Toyota has an edge over the rest to implement the pull system.

Another roadblock to implementing a pull system is varying production schedules. Since a pull system causes production to start only when there is a demand for the product, a large variation in demand will cause production levels to change. A study at Toyota’s assembly plant showed that a hybrid system outperformed a pure pull system, in the case of variable demand.

The third obstacle to pull system implementation is production variability. Production variability is a result of problems in the production process. Two common reasons for stalling of production are equipment downtime and quality stops or rework. The reliability of the production process is very important to respond quickly to a production signal.

The fourth obstacle, large batch size, needs to be reduced to implement a pull system. Large batch sizes do not provide the production flexibility required for an effective pull system.

The fifth obstacle is a critical bottleneck in the production process. Applying the Theory of Constraints approach, the bottleneck is scheduled first, and the rest of the processes are forced to meet this schedule. This system is superior to a pure pull system.

The sixth and the last obstacle is long lead times. Long lead times prevent the produced parts from reaching their destination in time. For example, a pull system may not work when there are vast geographical distances separating assembly plants and suppliers. An analysis of Toyota’s Motomachi plant reveals that almost all its suppliers are within 30 kilometers of the plant. This physical proximity with suppliers reduces lead times.

Efforts to implement a pull system before making the necessary process improvements will fail to bring about the desired benefits. The implementation of kanban is not the only reason for Toyota’s success. The process improvements, prerequisites for the implementation of kanban, have resulted in Toyota’s world-class production system.

Click here to subscribe to our free e-newsletter Learning to Lean and receive three articles like this one each month.