How to Drive Business Growth with Kanban

In today’s challenging business world it is really important for business owners to continue to focus on their company growth in order to continue trading.   With globalisation continuing to grow each year, it becomes even more difficult to compete.

There are many different ways that companies choose to do this which includes setting clear strategic goals for both short and long term but there are also things they can look to do internally in respect to their operational performance to see if there are improvements that can be made which will help the company to grow and potentially free up cash for other investments.

If you look at things such as inventory – this is generally looked at as a bad thing (if there is excess amounts). Effectively any inventory in a business is tied up cash that has not yet been sold therefore the less amounts of this there is, the better.  Freeing up inventory and delivering only what the customer needs, when they need it would be a good thing?  One mechanism to help with this is Kanban.  Kanban looks to pull items through the operational production sequence based on the voice of the customer i.e. the customer demand.

As such, you only effectively make what has been asked for.  Sounds simple however there are some complications around this which will be explained later.   The concept itself was developed in the 1940s in Japan and mainly focussed around the automotive industry.   In today’s world, companies such as Toyota are the leaders of Kanban and you will see it is used in the majority of their manufacturing areas globally.

It is only in the recent last couple of decades that other companies have started to use this concept as they have seen the benefits from the Toyota case studies.

Why would you introduce Kanban to your Business?

There are many several reasons why a business would look to introduce Kanban.  These include:

– Reduce inventory

As mentioned in the introduction, this is clearly a quick way to reduce inventory. Currently, the business model that is common is to make more components or items than the customer needs and then store this.  There are some risks with this which include things like – If there is a specific quality problem and you change the component, then all the ones in storage would either require to be scrapped or reworked.

In addition to this, if the market changes and the particular item you have made there is not much more of a customer requirement for – what happens to the goods?  Effectively you have spent time and money making the items that you may struggle to sell.

– Bottlenecks

If there are bottlenecks in a process, Kanban will definitely highlight these. It is not the purpose of Kanban but it will definitely help in this respect.  The important thing about bottlenecks is that when you do identify them, you take immediate action to resolve.

The bottlenecks could be down to a number of reasons which include quality problems, poor OEE, machine breakdowns or running times.  Whatever the reason, if you have bottlenecks, it will directly affect the lead-time of your components therefore needs to be addressed urgently to ensure you still satisfy the customer demands.

Visual Management

Purchasing a Kanban board is absolutely a mandatory element to make your Kanban initiative work effectively.  Visual management of where every single item is in the value stream is crucial and the best way to do this is by placing a Kanban board in a key location that operators and other stakeholders will look to update on a very regular basis.

These boards do not require to be complex and there are many different elements of these.  Some of the boards will have the operation sequence marked along the top and there is then a card system that people will move underneath it to reflect where things are in the sequence.

It is really important to ensure that everyone within the company who will be affected by the Kanban system fully embraces it as if people then do not update their particular elements, the whole initiative could fall at the first hurdle.

Quality / Yield rates

If you do look to introduce Kanban then you need to ensure that any current quality issues or poor yield rates are looked at beforehand.  As you are only launching on customer demands then if you have a poor quality output in any of the operations then it will directly affect the effectiveness of the Kanban.

Poor quality can be classed as things such as, low Right First Time or even high rework rates.  Ultimately these things are not good for your production flow and you may wish to look at getting specific people or projects to look at these areas before implementation.