1. Kanban for Inventory Management

2. After completing this training, the learner will be able to:
Understand how to use Kanban to manage inventory and inventory replenishment
Know what is needed to begin a Kanban program in their department
Objectives

3. Kanban is the Japanese word for signal
Kanban is the Japanese word for signal. The Kanban system is a method for managing inventory.
What is Kanban?

4. Kanban is a just-in-time pull system where items are replenished at the rate they are consumed. It is low-tech and highly visual.
In Lean , a pull system is where the steps in a process flow smoothly and everything is ready for the next step at the right time.
What is Kanban?

5. Why Kanban? Prevents carrying excessive inventory
Prevents stockouts/emergency stock orders
Forces stock rotation to reduce inventory expiration
Requires less effort to manage inventory
Creates standardization

6. Let’s compare the Kanban method of inventory management to the traditional Par level method in a short exercise.
Have someone explain how par level is currently done in their department first?
See Kanban Simulation Instructions
Kanban vs. Par Level

7. Did you see differences between the two methods
Did you see differences between the two methods? Which method appeared to have the most benefits?
See Post-Simulation Discussion questions in the instructions for help in debriefing the exercise
Kanban vs. Par Level

8. Kanban = signal The signal in this system is a Kanban card.
Kanban cards should be labeled with: item name, number to restock, when to restock, and the location of more
When establishing numbers, weigh the cost of maintaining a lot of inventory vs. the cost of running out at a critical time
Replenishment may not need to be done by skilled employees
Planning ahead prevents interruptions in work (and stress)
Stockouts should trigger a root cause investigation
Kanban = signal

9. Sample Kanban Cards Stocking individual items vs. bins List Name
Location of both storage & usage
Ordering Info
When to restock
Number to restock
Sample Kanban Cards

10. Replenishment signals should be labeled with: item name, number to restock, when to restock, and the location of more
2-bin system = 2 bins of each item, when one empties, move to specified restock area & second bin is available
The 2nd bin should be turned so it isn’t used until the 1st bin is emptied (either on the bottom or behind #1)
Most locations use a combination of cards & bins, dependent on item size/container
Kanban System

11. Lab Storeroom To be ordered On Order
Note the Kanban cards placed between boxes of supplies. If you reorder when you get down to 2 boxes, the card is placed between the 2nd & 3rd boxes. When you take the 3rd box & expose the card, you place the card in the pocket.
Kanban cards placed in “To be ordered” pocket by staff removing stock
Pockets should be right by stock, or you risk cards getting lost
Moved to “Ordered” pocket by staff doing the ordering
Frees up skilled workers to do their work
Standardized times to order based upon usage
Stockouts should be investigated for root cause
Lab Storeroom

12. 2-Bin System For smaller/loose items
Two identical bins, only one is accessible, when it is emptied, you place it in a designated spot & second bin is used
Kanban card is inside (like taped to the bottom)
2-Bin System

13. 2-Bin System Empty bins are placed on top of shelf
Kanban cards are placed in pocket
Empty bin on top of shelf is the signal to restock
2-Bin System

14. 2-Bin vs. Kanban Card 2-Bin System Kanban Card System
More error-proof (small cards can be lost or moved out of place)
Kanban Card System
Uses less space
Costs less to implement
Most locations use a hybrid of both to handle different types of stock
Training is important either way
Not to use from 2nd bin until 1st is emptied, not to empty 1st bin into 2nd
Watch out for card, how to use it
2-Bin vs. Kanban Card

15. Data needed to start using a Kanban system:
Number/type of items in inventory
Consumption rate – how many are used in a day/week/etc.
Replenishment Timeframe – how long does it take to get more stock
This information needs to be collected before you start setting up a Kanban system
Data needed to start using a Kanban system:

16. Data is entered into an Excel template, which is then used to generate Kanban cards and bin labels.
The Lean Educator has this Excel file and can demo how to use it at individual department meetings.

17. Information Found in Riverside Storeroom Supply Catalog
Most general supplies are here
you may have specialty supplies whose information is kept in your department
Rivernet – applications – storeroom supply catalog (
You can get a report on your department’s supply usage from Materials Management
Information Found in Riverside Storeroom Supply Catalog

18. Restock Math As an example for the 2-bin system
Therefore, something you use 10 a day and has a 2 day supplier lead time =
(10 x 2) x ( ) = 30 per bin
Most of our departments get supplies once a week, so they often want to have 1 ½ - 2 weeks’ supply on hand at any given time
Restock Math

19. When implementing Kanban, use 5S to help organize stock.
A full lesson on 5S Workplace Organization is available.

20. 5S Workplace Organization
Sort = dispose of unneeded/expired stock
Straighten = organize by use, things that are used most often should be at waist or eye-level
Shine = light cleaning
Standardize = choose the best layout and label workspace
Sustain = audit to ensure organization is being maintained
5S Workplace Organization

21. Use the PDCA cycle to adjust your system as use begins.
Have an available clipboard/notepad for staff feedback on what’s not working
Be willing to make adjustments with team approval
Some locations don’t laminate their Kanban cards until they’ve used the system for a while and had time to adjust numbers as needed
If there are any stockouts, investigate the cause and adjust levels appropriately

22. Gather Information – Item Name, Ordering Details, Usage Data
Create Kanban Cards, Determine Where to Use Bins vs. Cards
5S and Organize the Location
Audit and Adjust
We will be setting up individual meetings with any interested department
You set the time frame based upon your department’s resources
Kanban Roll-Out Plan

23. If you have any questions or would like to learn more about Lean at Riverside, feel free to contact me:
Sara Meyer
Lean Educator
(815) x6392
Any questions?