As a specialist business offering an array of plastics moulding technologies to a diverse manufacturing customer base, Broanmain first applied a Kanban system to stock management over 17 years ago.
This was initially at the specific request of one customer, Siemens, to meet its own requirements. Since then, Broanmain has offered it wherever the benefits are clear, to the point where over half of our business is structured around Kanban.
Here’s what we have learned over time and answers to some of our customers most common questions:
What does it involve?
We have probably seen as many versions of Kanban as we have customers who use it. One common element is our role in holding stock, rather than our customers. For specific parts, we jointly work out an optimum batch size. From then on, we stick with that number. When the stock falls below an agreed threshold, we produce a new batch.
In the first Kanban systems, a new ticket was generated when the prearranged stock level was reached. Today, it is more likely to be an ‘e-ticket’ flagged up on our Manufacturing Resource Planning (MRP) system.
In terms of logistics, companies with a larger contract would probably require a weekly delivery. For smaller contracts, we tend to limit deliveries to one a month. Only five per cent of our customers on Kanban incur charges for their deliveries.
What are the benefits?
Perhaps the key benefit for customers is the reduction in lead-times. For one-off orders, waiting times may be as long as four or six weeks. With Kanban, this time lag can effectively be eliminated, even with only monthly deliveries, where demand for regular stock items can be anticipated. At the same time, customers can dramatically reduce the amount of stock they hold.
Kanban avoids the need to estimate order sizes, once a fixed production batch quantity is agreed. It also reduces paperwork and administration, since neither invoicing nor formal ordering processes are required.
For suppliers, advantages include increased flexibility in production planning. Where it makes sense to do so, Kanban products can be produced in smaller runs than usual in the knowledge that they will contribute to a future delivery.
Additionally, peaks and troughs in sales are smoothed out, with the certainty that, under Kanban, a given value of product will be supplied every month, making forecasting significantly easier.
Kanban is perhaps most beneficial for all involved when it is integrated with a strategy of continual improvement. This relies on all parties, as well as the different departments within each business, seeking to resolve challenges together and communicating changes (and proposed changes) within their own planning and processes.
Is it relevant to all types of product?
Even the largest companies supplied on a Kanban basis only for their biggest-moving items. These are the components which are most frequently used, and for which demand is most predictable. Importantly, high levels of predictability do not always equate to what might objectively be called ‘high volumes’. We have customers with, say, six items supplied on a Kanban basis because they want to avoid standard four-to-six-week lead-times. Yet, the actual volumes of those six items may not be especially high in comparison to other products.
When Broanmain first supplied on a Kanban system, we predicted that our own stock holding would go through the roof. In fact, our production planning is so efficient, this hasn’t occurred. Nonetheless, undelivered stock can build up, and Kanban works on the premise that the product in question will not be discontinued, potentially leaving the producer with a quantity of unordered, unsold components. If you have real doubts about the longevity of a given product, range – or company – spot orders may be a safer option.
Does it suit every customer?
Many of our customers requesting Kanban for smaller volumes of product are SMEs, so Kanban is by no means the preserve of larger businesses. Even those unsure of the benefits are soon converts.
Some customers may initially have declined our offer to put a given number of their regular products on Kanban. But when they did eventually try it, they loved the system. Talk to us to find out more.