Kanban Prerequisites

Overview
There are 6 kanban prerequisites that must be in place prior to implementing a kanban
system: Heijunka, small lot production, defect-free delivery, attaching kanban to
containers, 5S discipline, and expose and solve problems. These 6 prerequisites to
implementing kanban are not optional.

Prerequisite One: Heijunka

The first kanban prerequisite is that heijunka, or level loading, must be in place. Heijunka is a
prerequisite for kanban because, otherwise, inventory levels would have to be set at peak
levels, or production capacity which includes people, equipment, materials would have to be
set at peak levels in order to meet demand. If capacity is set below peak levels, the
production processes may not be able to ramp up effectively and deliver the quantity required.

In order for Kanban to function properly, there must not be large swings in volume or
product mix. The smoother the mix and volume, the easier it will be to pull. The production
schedule must be created based on “heijunka” or an average mix and average volume on a
daily basis. When heijunka is not in place, or when production volume is fluctuating widely,
running a Kanban system becomes difficult. One of the reasons is that the inventory levels will
constantly need to be adjusted. If the process or the supplier does not have heijunka in place,
Kanban can result in an inventory increase in order to support the downstream pull.

Producing an average quantity of products off of the end of the line, or shipping the same
quantity every day is not enough to call it “Heijunka”. You must be producing an average mix
of products within the day also. Adjustments to the capacity and the number of kanban cards
to be circulated in the process is typically done a month in advance based on a firm capacity
plan. A kanban system will only function if you know what you will produce tomorrow.
There must be a daily schedule based on monthly production requirements.

The averaged sequence and daily mix schedule will be sent to one point only, which is called
the pacemaker process. The kanban, or pull signal, links the execution of the actual daily
production with the customer demand triggered from the downstream process, based on
actual pull. A schedule based on pull is a “reflexive” system because it does not take into
consideration a large number of factors, it simply reacts to downstream demand.

The Kanban cards are what link the customer pull with production instruction. This does not
mean that pull is “dumb”, and most pull systems will use some form of MRP to do the thinking
and long-term material planning. This is an example of Heijunka with one cycle per day,
compared to Heijunka with 2 cycles per day. The Kanban Board, Heijunka Box, or other

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visual shop floor scheduling device will identify the sequence of products that must be
produced during each time period.

The more cycles you can repeat during the day the more flexibly you’ll be able to respond to
customer demands. You must take into account the time available for changeovers, the effort
to convey materials from process to stores and shipping and continuously improve towards
multiple daily cycles.

Prerequisite Two: Small Lot Production

The second prerequisite to kanban is small lot production. Without small lot sizes the kanban
system has more kanban cards, due to long replenishment lead times caused by large batch
sizes. The system will also have off-line storage areas for parts not needed in the kanban
system, and the system will be less responsive to downstream changes in customer pull,
resulting in more inventory and related waste.

One of the most important aspects of being able to produce in small lots is having the ability
to perform lightning fast changeovers. If Quick Changeover isn’t in place and changeover
times are long, there may be a loss in production capacity as changeovers become more
frequent when the kanban system responds to the customer pull.

Long changeover times will also limit the reduction of batch sizes, which in turn limits the
flexibility and forces an increase in buffer inventories. As a result, increased inventories result
in longer lead-times. In order to avoid these issues and to increase velocity, Quick
Changeover is a must. We cover the topic of Quick Changeover in great detail inside our
course called Quick Changeover: The SMED System. When you use Quick Changeover to
increase velocity, you’ll also increase inventory turns and improve cash flow. In addition, you
will be able to actually create value faster in your organization by giving customers what they
want sooner.

Here we see an example where changeover times were reduced allowing us to produce 3
different types of product in the same day. This type of flexibility is required for a kanban
system to work correctly.

Prerequisite Three: Defect-free Delivery

The 3rd prerequisite is defect free delivery. Without defect-free delivery, the kanban system
will have a mismatch between the information and the actual materials. The system will also
have material shortages when there are defects, or the system will have “Just in case”
inventory within processes to cover for defects, defeating the purpose of the kanban system.

There must be a culture focused on quality, with systems that allow managers, supervisors,
and workers to prevent, detect, and rapidly take root cause corrective action. And within
that quality system the three don’ts of Built in Quality must be in place. We must not accept
poor quality, we must not make poor quality, and we must never ship poor quality internally

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or externally. This is easy to say, but impossible to do without a supporting system of built in
quality.

Prerequisite Four: Attaching Kanban to Containers

The 4th prerequisite is to attach kanban to containers. Without kanban attached to containers,
the kanban system will have mismatches between the information and the actual materials, and
we’ll also suffer a loss of the visual control function of kanban to instruct production or
movement of goods.

This is why, during the kanban simulations we always showed how the Production Kanban
would be removed and replaced with the Withdrawal Kanban card before the container is
moved. Without this type of discipline the kanban system will eventually fail. Here’s an
example of a how kanban cards can be attached to the actual container.

Prerequisite Five: 5S Discipline

The 5th prerequisite to kanban is 5S discipline. If you can’t sustain a high 5S level, we strongly
discourage the use of kanban. Without 5S discipline, the kanban system will have shortages
due to misplaced materials. The system will also have delays due to searching for misplaced
materials as well as excess materials due to lack of adherence to controls.

The 5S concept is a fundamental characteristic of Lean, and has many things in common with
what it takes to do kanban. Keeping unnecessary items out of the workplace, having set
locations for all necessary items, and maintaining cleanliness standards are all necessary to
avoid losing cards, parts, and containers.

Here are two examples of 5S levels. In the example on the left we can clearly see they are
not ready for kanban while the example on the right is ready to give it a try from a 5S
perspective assuming the other 5 prerequisites are in place.

Prerequisite Six: Expose and Solve Problems

The 6th prerequisite to kanban is to use kanban to expose and solve problems. Without
exposing and solving problems, the production system will have more inventory than before
using kanban. The system will also suffer chronic problems that make people want to increase
buffers while also creating a a disconnection with the continuous improvement culture. Put
another way, we must use kanban as a tool for process improvement and not to hide
problems with inventory.

We often use water to explain how inventory can be used to cover up issues such as long
changeover time, poor scheduling, and machine breakdowns. Staying with this analogy, as the
number of Kanban cards in the system are reduced, part shortages, defects, machine
downtimes, and other stoppages become painfully obvious. Rather than increasing Kanban or
inventory levels, we want to attack these problems that become visible and continue to

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minimize Kanban quantity. Not only does the reduction of Kanban drive down inventory, it
keeps everyone aware of problems that exist within the production system.

Soon after you implement Kanban, you may find that your material handling costs are going up.
This is because you’re making more frequent pick-ups and drops in order to keep the
production going at a lower inventory level. Rather than arguing to increase inventories, use
this opportunity to implement Lean Logistics focused on taking waste out of the material
handling and distribution process.

Depending the maturity of your organization you may be ready to implement kanban
immediately, but in some cases you may have some work to do before attempting kanban.

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