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Tuesday, April 3, 2007

Advantages and Disadvantages of Kanban

Advantages of Kanban
1. Optimize inventory and reduce product obsolescence.
Since component parts are not delivered until just before they are needed, there is a reduced need for storage space. Should a product or component design be upgraded, that upgrade can be included in the final product ASAP (As Soon As Possible). There is no inventory of products or components that become obsolete.
This fits well with the Kaizen system on continual improvement. Product designs can be upgraded in small increments on a continual basis, and those upgrades are immediately incorporated into the product with no waste from obsolete components or parts.

2. Reduces waste and scrap
With Kanban, products and components are only manufactured when they are needed. This eliminates overproduction. Raw materials are not delivered until they are needed, reducing waste and cutting storage costs.

3. Provides flexibility in production
If there is a sudden drop in demand for a product, Kanban ensures we are not stuck with excess inventory. This gives us the flexibility to rapidly respond to a changing demand.
Kanban also provides flexibility in how our production lines are used. Production areas are not locked in by their supply chain. They can quickly be switched to different products as demand for various products changes. Yes, there are still limits imposed by the types of machines and equipment, and employee skills, however the supply of raw materials and components is eliminated as a bottleneck.

4. Increases Output
The flow of Kanban (cards, bins, pallets, etc.) will stop if there is a production problem. This makes problems visible quickly, allowing them to be corrected ASAP.
Kanban reduces wait times by making supplies more accessible and breaking down administrative barriers. This results in an increase in production using the same resources.

5. Reduces Total Cost
The Kanban system reduces our total costs by:
• Preventing Over Production
• Developing Flexible Work Stations
• Reducing Waste and Scrap
• Minimizing Wait Times and Logistics Costs
• Reducing Stock Levels and Overhead Costs
• Saving Resources by Streamlining Production
• Reducing Inventory Costs

6. Improves Flow
7. Prevents overproduction
8. Places control at the operations level
9. Improves responsiveness to changes in demand
i.e. Synchronization of supply and demand

10. Lead time is kept to a minimum
11. Totally customer driven demand
12. Better machine utilisation
13. Reduced or eliminated queues
14. Limit the spaces for WIP to hide.
15. Quickly improve factory control and WIP reduction efforts.



Disadvantages of Kanban:


1. It is less effective in shared-resource situations. Suppose the upstream station made several parts. Then a request to make more of the part needed by the downstream station will have to wait if other parts have to be made. A buffer is needed to ensure the downstream station doesn't run out meanwhile. And, because each part needs a separate signaling card, the system becomes more complex than if the resources were dedicated.

2. Surges in mix or demand cause problems because kanban assumes stable repetitive production plans. It is less suited to industries where mix and volumes fluctuate.

3. Kanban in itself doesn't eliminate variability, so unpredictable and lengthy down times could disrupt the system; poor quality in terms of scrap and rework also affect its good functioning.

4. Kanban systems are not suited for manufacturing environments with short production runs, highly variable product demand, poor quality products, and a multitude of product types.

5. A breakdown in the kanban system can result in the entire line shutting down.

6. The throughput of a kanban system is not managed but is instead a result of controlled WIP and known cycle times.

Advantages and Disadvantages of Kanban

26 comments:

  1. very good information
    what is a kanban
    is it a one type of card

    ReplyDelete
  2. Hi,
    Kanban is not just about card/s. It is a inventory managment system.
    Cards are just the instrument which is used in Kanban and hence the card is called as Kanban card.

    ReplyDelete
  3. '5. A breakdown in the kanban system can result in the entire line shutting down.'..
    It can happen for other inventory mgmt sytm too like MRP
    .. correct me if i am wrong

    ReplyDelete
  4. Hi Samsaha,
    You are correct.
    When we say breakdown, it means the demand / supply is not in sink or not getting communicated properly. So it can happend in MRP as well.

    Thanks
    Devendra

    ReplyDelete
  5. Hi Devendra,

    I haven't expected so quick reply.Thanks!...

    Here wht I am trying to ask is ...we can not say this is disadvantage of KANBAN as it can happen for other planning method to like Reorder point planning etc,....so it s going to be disadvantage of evry planning system ,not specifically for KANBAN.

    Thanks,
    Sam Saha

    ReplyDelete
  6. I totally agree with you Sam.
    It's good to have discussion with you.

    ReplyDelete
  7. hi... i m a student from Korea,

    i don't really understand how upgrades in design can be contained in final pdt asap.. I thought.. kanban is a system which produce pdt when it is demanded.. then.. you mean.. consumers demanded new design ?

    ReplyDelete
  8. What is pdt?
    I did not understand your question, please elaborate...

    ReplyDelete
  9. ok.. pdt is short form for product..

    u said, upgrades of design are immediatly incorporated into product,, How this is done by kan ban ?
    in other words, how Kan ban enables new designs to be adopted in their product very quickly?

    ReplyDelete
  10. Now I got your point...
    Usually it is a industry practice to consume existing inventory before you launch a new product else old product will be with you forever because everybody will demand for newer.

    Due to Kanban you keep limited inventory. Hence whenever any change in design happens, the limited inventory of old design gets consumed very soon and you can push newly designed product on your line quickly.

    Thanks
    Devendra

    ReplyDelete
  11. oh.. now i understand.. thx a lot~

    ReplyDelete
  12. CAN SOMEONE PROVIDE ME SOME CASE STUDIES WHICH INVOLVE KANBAN...TO MY MAIL ID - e.g.srijith@gmail.com

    ReplyDelete
  13. srini final mechanical enggApril 1, 2010 at 10:46 AM

    it is very use full to my project

    ReplyDelete
  14. thanks....
    helped alot in my homework.....
    nice explaination.

    ReplyDelete
  15. by the way i didnt understand number 10 in the advantages

    ReplyDelete
  16. The advantage point "10. Lead Time is kept to minimum": this means, using Kanban you make sure that you do not run short of stock as well as you make sure that the supplier to the item is/are reliable, considering this the lead time come down. There are other Kanban points also which can brings lead time to lower level.

    ReplyDelete
  17. Fantastic stuff. I appreciate your practical knowledge as well as erp stuff. I am new to your fantastic site. Keep up the good work.

    ReplyDelete
  18. Do they use other high technology devices as well?

    ReplyDelete
  19. We are a supplier of parts for a company that uses this system. Can you give me an ADVANTAGE that this system has for us? I see more DISADVANTAGES...
    I understand that the lead time no longer becomes an issue because we will have a stock of parts for our customer BUT we also spent OUR manpower, material and building space to stock these parts for said company. Stocked parts to us means NO PAYMENT until they need the parts. How is that an advantage?
    Will our company go under because we do not receive payment right away...NO...But as it was mentioned earlier, what if there is a design change or a lack of demand from the consumer. That means we sit on these parts longer and wait longer for payment. If you do this for many different parts the costs can add up rather quickly.

    ReplyDelete
  20. To AnonymousApril 25, 2014 at 11:22 PM (reply didnt work)

    Of course there are better systems for managing your stock and its costs, thats not the power of KANBAN. The real strong point is its simplicity. If the proper calculation is made and the demand is rather steady a very simple inventory managing system can be obtained true KANBAN. If you want lower cost and stock you will need a far more specialised system which will give you lower costs for stock and lower stock but the costs for this system and its manpower are higher. Its simple and lean system (KANBAN => low costs), versus smart inventory system ( higher costs for managing but lower costs for stock). In long terms it seems to me that a more "smart" system will always be more cost effective hence the costs an amount of stock are high enough.

    ReplyDelete
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    ReplyDelete

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