Kanban is the Japanese word for billboard and describes a system that controls scheduling. Most people think of kanban as an inventory control system that supplies inventory when it is needed in the quantities needed with minimal or no inventory. In terms of materials management, an effective kanban system can drastically reduce inventory levels, resulting in reduced muda in the form of lower inventory holding costs.
Kanban inventory management is sometimes called a two-bin system. One bin is the bin we are currently emptying; the second bin is an order cycle supply. When our current bin is empty, it triggers an order; the second bin becomes the current supply. When the order is received in inventory, it goes into the order cycle supply.
- Many organizations have inventory management systems in place. The question that needs to be asked is: Is your system efficient? Efficiency can be measured in terms of the amount of muda generated by determining for each specific item:
- What is the turnover rate for the item (cycle quantity)?
- What is the order cycle time from order placed to received?
- How much surplus inventory (on hand less cycle quantity) is on hand?
- How many rush orders were placed in the last year?
- What was the extra cost of those orders?
- How much inventory do you really need?
- When you have determined what you need, reset the trigger that initiates an order. This may mean readjusting a value in your computer system. It may be as simple as placing a card just before a cycle quantity that says “Reorder now to maintain adequate supplies.”
The two-bin kanban system has many applications outside of inventory management. It can be applied to many areas in the hospital. Kanban is a push-pull system. A push system gives the customer what it has on hand with limited or no choice to the customer, while a pull system gives the customer what they want when they want it. The key difference is that pull strategies respond to customer demand. These are a few examples of push systems that could be converted to pull systems:
- Outpatient surgery scheduling
- Medical records retrieval
- Patient billing
- OR supply management
The challenge is to convert push into pull systems.
The shift to a LEAN culture must include integrating kanban into the new culture. Initially, introduce kanban slowly, looking for some easy wins that will engage everyone. These are the recommended steps:
- Familiarize everyone with the kanban concept.
- Look for an opportunity to put it into place (materials management?).
- Plan your project carefully.
- Gather present state data before you begin.
- Set goals for the kaizen event, and follow the process.
- Begin implementation of kanban.
- Track and celebrate success.
Once you have accumulated several wins, celebrate as an organization and challenge others departments to implement kanban.