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Kanban based on stock level

This is the simplest way to implement a Kanban and it is really efficient if:

  • the process produces faster than the consumption of its customers;
  • The number of references is low.



How does it work?

This type of Kanban is similar to a re-order point system (ROP). For a reference, when the inventory is lower than a specific level, production is allowed. The quantity to produce may be:

  • the quantity necessary to reach at least a specific inventory level (not recommended, but can be used when production is faster than the customer consumption);
  • a fixed quantity defined for each reference (recommended).

Of course, if there is no reference with an inventory lower than this specific level, production is not allowed.

2 main difficulties with this system:

  • you need to verify periodically the level of inventory of all references;
  • if you have more than one reference with an inventory lower than the level of the production trigger, you need to set-up priorities and define a production sequence. A second level of inventory lower than the first one can be defined to help this decision (like an "alert" level): a reference having an inventory lower than this level has to be produced first. But this technique is only a partial answer to this situation (you can have 2 references lower than this emergency point: in this case which is the one to be produced first?).



Colors

Colors are generally used to define these inventory levels:

  • red for the"alert" level. If a reference has an inventory lower than the red level, it means that you have to produce it as a priority;
  • green for the second level. You are allowed to produce all references with an inventory lower than the greenlevel (but the system does not tell you in which order). The green level is what we call the Loop for a KANBAN based on stock level.

Example 1

The conveyor length is based on the change-over time, the cycle time and the demand for the related reference. Inventory is limited by the conveyor length.

The 2 trigger levels (red and green) are painted on the floor. The piles of boxes are pushed from right to left on conveyors. Only boxes from the pile in front are consummed (FIFO).

Example 2

Green and red level are painted on the floor for each row (one reference per row).

Example 3

In this example, the solution is very simple but it does not insure the FIFO of the material. This could be an issue for traceability and quality (the lowest bin may be never consumed!).

Conclusion

This method is not systematic: it means that a specific situation allows generally different reactions and is not designed for complex situations.


It is generally used to control processes when changeover time is not very well known/under control or when the setup operator's activity is difficult to schedule. It requires a high inventory if you have a lot of references.

How to size a KANBAN based on stock level? The best method to size this simple KANBAN.

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