What is the Kanban method and how is it implemented?

Kanban, which in Japanese means “sign” is a method for managing work through visual cards. Some consider it as an information system, because they associate it as a set of interrelated components, but this definition seems to me a bit more confusing, so let’s consider it as a method.

Kanban is mainly associated with the world of lean manufacturing and also as an agile methodology. Both approaches start from the same concept, that of managing work through visual mechanisms; and today in Ingenio Empresa you will discover what it is, what it is for and practical examples of Kanban.

Shall we start?

What is Kanban

We have already defined Kanban as a method for managing work through visual mechanisms that are usually cards, banners or posters that show the stages that the work goes through. Hence, it is also considered a “card system”.

Kanban was created in 1940 by Taiichi Ohno, a Japanese industrial engineer famous for creating the Just In Time system at Toyota.

From a manufacturing perspective, Kanban allows you to control what is produced, quantity and time, which implies that production is run under a Pull system, i.e. production is adjusted according to actual demand and not forecasts, and this leads to low inventory levels.

Pull is the opposite of the Push production system, which is governed by the production of large quantities of products based on inventory forecasts that are later transferred to MRP (material requirements planning) and therefore lead to high inventory levels.

ejemplo de tarjeta kanban

If we shift to the software and services perspective, Kanban maintains its just-in-time essence by showing itself as an agile framework. Used as an agile methodology and initially applied by David J. Anderson in 2004, Kanban allows to adjust the work in progress (WIP) to the capacity of the team, through the development stages that are defined.

As you can see, in both cases the application is similar, however in the service industry and more specifically in the software industry, the implementation of Kanban is more immediate since all that is required is a Kanban board and cards, as opposed to a factory where physical adaptation is required.

We have mentioned Kanban board, and what is that?

What is a Kanban board

One of the main advantages of Kanban is the transparency over the process. This is achieved with the Kanban board, which shows at a glance the status of the current work according to the stages of the work cycle that are defined.

 Imagine that each of these stages represents a lane and there are 3 of them: To Do, Doing and Finished. That is, work to be done enters on the left and once it is finished, it exits on the right. .

Guess what goes in each lane according to its current status, exactly, the cards! Each card represents a work item and will give us as much information as we define. Hence, it is necessary for us to design our Kanban board.

Types of Kanban cards

Although it is the company itself who designs the cards according to its needs, in the case of manufacturing the literature offers classifications for Kanban cards.

Transport Kanban: Indicates to the supplier process the material requirement in the customer process. Imagine a store shelf where the product runs out, there should then be a card indicating the need to supply from the supplier process (the warehouse) to the customer process (the shelf). However, for this example it is more common to find the card on the board, which would indicate that that gondola or workstation requires inputs.

Manufacturing Kanban: These cards move in the same production process, usually moving in the workstation and represent a production order for the process receiving it.

Other classifications: Other classifications include supplier Kanban, urgency, unique, common, etc.

With this you already have a Kanban board implemented! However, it is not always so simple, and it is necessary that before venturing into the implementation of Kanban, you take into account its rules.

Kanban Rules

Any Kanban system in any type of company should comply with the following rules. Consider the customer process or stage as the one that is next to the supplier process or stage.

  • Defective outputs should not be sent to customer processes. The output is the result of the supplier process. Therefore, if a defective output is sent to the customer process, it is most likely that the work management in this process is not good.
  • The customer processes should only require what is fair and necessary from the supplier process.
    Only the quantity required by the customer process should be generated.
  • Production should be leveled. That is to say that the supplier process should not have more work items than it can handle, because in addition to increasing its times, eventually its outputs will be more than the customer process is able to receive.
  • Kanban is the only source of truth. This implies that there should be no speculation or changes to what is stipulated on the Kanban board.
  • Analyze the work item. This rule is interpreted differently depending on the type of company. For example in a factory, to analyze the work item is to have the activities standardized. From the software development perspective, as the work items may be different, to analyze is to reduce the uncertainty of what should be done in the work item.

How Kanban works

With what you have seen so far, you probably already have an idea of how Kanban works.

Let’s make a small summary.

It all starts with a previously designed board on which we place a group of cards. This card, which should also be adjusted according to the type of industry and stage on the Kanban board, is visible to the work team.

As the work associated with the card in its current stage is managed, it changes stage taking into account the compliance with the Kanban rules. Let’s go a little deeper into how it works, but from the perspective of how Kanban is implemented.

How to implement Kanban

tablero con tarjetas
Source: Wikipedia. Jeff Lasovski

It is likely that with what we have talked about you already have several steps in mind. To the steps we are going to list, we must add the principles and practices of Kanban. But let’s go in parts, first the steps to implement Kanban:

Step 1: Train staff

Remember that any change in the process requires going through a socialization stage. It is important that in this training, you present the Kanban rules. In a manufacturing context where the implementation of Kanban takes more time, it is not feasible to implement it all at once throughout the factory, so ideally it is better to start with a production line.

Step 2: Define workflow stages

Consider these stages as the lanes of the board. It is important that the stages are defined as a team to get the perspective of the different roles involved in the production or service. In a software team for example, the roles may comprise Tester, Developer, Devops and Product Owner.

Step 3: Define Kanban cards

Depending on the type of business, the cards will have more or less information. It’s no problem to adjust them as you implement Kanban, it’s all about continuous improvement, right? You can even use the color of the card to indicate more information, for example a red card indicates urgency.

Step 4: Assign a responsible person

It is important that there is a person who verifies the implementation of Kanban. Imagine for example a factory with a container with no product and neither the board nor the container has a card. What should be done? The generation of the alert in the work team to resolve the issue should be the immediate task of that responsible person.

Step 5: Measure

The concept of Kanban is simple, but its implementation in complex workflows may not be. It is important to measure each workstation and its times and inventories to detect bottlenecks. Let’s take as an example a machine that receives products from different process lines. If the workflow for product “x” arrives at this machine and this machine is processing product from line “y”, you have a bottleneck.

Step 6: Standardize

As the process becomes more standardized and you make more measurements, you will start to find average times. This is as long as the line personnel do not vary constantly and unproductive times are resolved.

Step 7: Extend Kanban

If you implemented Kanban in a small part of the company with positive results, it is time to continue expanding it to other parts of the company or production lines. Remember that not all processes are suitable for Kanban. For example, a process based on a Push production system with a stable demand can continue to work as it has been doing.

Kanban principles and practices

Kanban is very useful because of its flexibility, but its use is guided by principles and practices that make it easier and are as follows.

Starting with the principles:

Start with what you do now

In other words, Kanban can be applied on the current process. There is no need to create a process from scratch or anything like that.

Commit to pursuing incremental and evolutionary change

For a factory that has never implemented Kanban, there may be some resistance to change. This is not the case if we are talking about service companies or in the software industry, where this principle leads us to use Kanban with little resistance since we are looking to implement small, continuous and evolutionary changes on the current process.

Respect current processes, roles and responsibilities

Kanban implementation should not be understood as meaning that what is currently in place is wrong and should be eliminated. Current processes, roles and responsibilities may have value and their retention should be analyzed. This is aligned with incremental change, where changes are generated little by little that make the process evolve.

Promotes leadership at all levels

Kanban avoids the classic approach in which leadership is subject to only a few levels. Under the Kanban approach, leadership is promoted at all levels of the organization.

Continuing the practices of the Kanban method:

Visualize the workflow

It is not possible to improve a workflow if there is no clarity of the current workflow beforehand. Tools like the flowchart can help you for this purpose.

The clarity of the flow should be reflected in your Kanban board, where each column represents a step or state of the workflow.

Limit work-in-progress

Work-in-progress (WIP) should be limited. This is done to reduce the time it takes for a work item to go through the workflow stages, since the more work items, the more capacity load on the system and the less likely it is to finish work items in a short time.

Not to mention that having a limit on the number of work items in progress makes for higher quality output and creates a more sustainable work environment.

Manage the flow

By manage the flow, we mean creating a continuous workflow, to strive for constant value creation. This is achieved by following up on work items to identify bottlenecks and blockages, seeking their resolution as soon as possible.

Make policies explicit

Each work team defines its own policies. For example, the maximum number of work items in a stage or the criteria for a work item to move from one stage as “in development” to another stage as “in testing.”

Create feedback spaces

In Kanban, improvement must be constant and this cannot be achieved without feedback loops.These spaces are nothing more than meetings such as the so-called “daily” in which each team member shares what they did, what they will do and if they have blockers, as well as service retrospective meetings or risk review. In all cases these meetings should be short, preferably better than 15 minutes.

The Kanban method conceives a series of meetings with different purposes and frequencies. It is up to the team to decide whether to adopt them or not.

Improvement through collaboration

Improvement in Kanban is achieved through collaborative work, and this work is possible when there is a defined and shared vision of teamwork. In other words, when the team is aligned around the objectives.

Example of Kanban in manufacturing

There are several formulas expressed by the authors to perform calculations associated with Kanban in manufacturing.  On this occasion, we are going to base on the examples that Socconini exposes in his book Lean Manufacturing: Step by Step .

Calculating the quantity of parts per Kanban

The implementation of Kanban in the factory entails calculating the quantity of parts per Kanban or in other words, the quantity of parts that the card will carry.

Let’s move on to the formula:

Number of parts per Kanban = D x LT x U x (1 + %DV)

D = Weekly demand

LT = Lead time in weeks presented by the internal or external supplier.

For products to be purchased: LT = Order generation time + supplier delivery time + transportation time + receiving time + inspection and stocking time.
For products that are manufactured: LT = Order generation time + processing time + receiving and inspection time.

U = Number of storage bins

%DV = Level of demand variation

Consider the number of locations such as warehouses, for example at the beginning of the implementation it is recommended to have one location for the supplier and one for the customer.

Consider also the level of demand variation as the standard deviation of the demand divided over the average demand in the same period.

With this clear, let’s calculate the quantity of parts per Kanban of an engine mount.

Let’s take the following data:

  • Monthly demand = 22,534 pieces.
  • Weekly demand (D) = (monthly demand x 12 months) / # of weeks in the year = (22,534 x 12) / 52 = 5,200
  • Weekly lead time (LT) = 1 week
  • Number of locations (U) = 2
  • % Daily Value (%DV) = 25%

We calculate the percent daily value by dividing the standard deviation over the average.

The percentage of variation is 24.89%. We rounded it to 25%.

With this, we now have all the data to calculate the Kanban piece count:

Kanban piece count = 5,200 x 1 x 1 x 2 x 1.25 = 13,000 pieces.

Calculating the number of containers

The calculation of the number of containers is even simpler. For this we will only consider the capacity per container and the number of parts per Kanban:

Number of containers = UK / CC

UK = is the number of units per Kanban

CC = Is the capacity of the container

Considering 13,000 as the number of pieces per Kanban and 100 as the container capacity, we have that:

Number of containers = 13,000 / 100 = 130 containers.

Now, another necessary calculation is the number of kanbans in circulation. Let’s see…

Calculate number of Kanbans

We already know how to calculate the number of parts per Kanban but how many kanbans are needed? We will use another example with different data for this calculation.

And for that we will use the following formula:

LT = Lead time of the value chain, which goes from the raw material to the finished product.

TT = Takt time or time available to produce divided by demand. We have an article dedicated to takt time and its calculation.

UK = The number of units per Kanban.

SS = Stock or safety margin. It is used to maintain a level of confidence against possible eventualities.

We have the following data:

  • Process lead time per week = (450 minutes per working day * 7 days per week) = 3150 minutes.
  • Takt time = 7 minutes
  • Number of pieces per Kanban = 30 pieces
  • Safety margin = 20 pieces

Now we have all the data to make the calculation, let’s see:

Number of Kanbans = ((3150 / 7) / 30) + 20 = 35 kanbans

Software for Kanban implementation

We have already mentioned that Kanban can be implemented with just a board and a series of post-its for the cards. However, it is becoming more and more common (and now even more so in times of pandemic and in the boom of remote work) to use software for Kanban implementation.

There are not few software used for this purpose and although some are better than others, they all do their job. I think it is more important how the team implements Kanban than the software itself.
.

For this you don’t need to pay either, at least not with initial Kanban implementations. Notion is a free option for Kanban and you can implement it by following tutorials like this one. There are many templates in Notion from other users that are already tested and will help you to get started quickly in the use of Kanban.

Besides Notion, I have also worked Kanban with Jira of Atlassian and Monday. With any of the three options you will be able to work with Kanban.


Source:

Atlassian: Atlassian’s information on agile methodologies is very good and with Kanban is no exception. They explain Kanban concepts from a software industry perspective and they do it through images of their Jira software. Available here.

Agile Alliance: Exposes many Kanban concepts in a summarized and simple way. It does not go into much depth on each concept, but it is useful to have an outline of all the concepts that Kanban comprises. Available here.

Kanban Zone: Explains in a simple way the concepts of Kanban under a manufacturing approach. Available here.

Socconini, L M., & Sanchez, J. (2019). Lean Manufacturing. Paso a Paso, Spain: Marge Books. From a factory perspective, explains how to implement Kanban.

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