Implementing Kanban Alternatives

in Lean Manufacturing
Enterprise Resource Management

W H ITE PAPE R
August 2008
 EXECUTIVE SUMMARY
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Manufacturing companies are adopting Lean because of its

efficiency—lowering costs and lead-time, while improving “Time waste differs from material waste in that
quality and performance. In today’s highly competitive there can be no salvage. The easiest of all wastes
and challenging markets, companies need every available
and the hardest to correct is the waste of time,
advantage.
because wasted time does not litter the floor like
Many people equate Lean manufacturing with the wasted material.”
use of kanbans: physical or visual signals that trigger
replenishment. While kanban use is indeed a part of many Henry Ford
Lean programs, it is not the only solution for triggering the
movement of material. Kanban has its place, but there are
more appropriate alternative approaches in situations where
kanban is not a good fit.

It is important to remember that Lean is an approach and

an attitude—not a specific set of techniques or tools. The
most important aspect of Lean is a focus on the elimination
of “waste” (i.e. anything that does not contribute directly to
making the product). Kanban and kanban alternatives focus
on inventory reduction, proper staging of parts and materials
(reduced handling and delay), and efficient procurement/
production of replenishments.

KANBAN AND LEAN

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Kanban is a replenishment signal that acts as the primary

linkage in a “pull” environment. Typically a substitute for a computer techniques are designed to track changes in
manufacturing order or purchase order, the kanban signifies demand and usage and automatically adjust activities to
that an item, material, or assembly has been used and that accommodate those changes.
another can and should be made, moved or acquired to
replace it. When properly applied, kanbans help reduce
inventory and shorten lead-time, reducing waste in support
of demand-driven “pull” operations.

Kanbans work best where demand is steady for a given

period of time. Once the appropriate number of kanbans
is put into circulation, material flow is timed to usage,
inventory remains constant, and shortages should be
eliminated. However, the kanban system is not designed
for frequent demand changes. If demand increases,
shortages occur; if demand decreases, there will be excess
inventory. Management must continually monitor the
number of kanbans in circulation and make the appropriate
adjustments.

Where there is a varying demand and/or a mix of products

being produced, particularly with small quantities, computer
techniques do a much better job of having the right parts
available with minimum inventory investment. In addition,

2
 ERP—NOT A FOUR-LETTER WORD
......................................................................................................................................................................................................................................................

People tend to define ERP as a traditional system. In reality, Hose Master of Euclid, Ohio successfully pursues this strategy.
these so-called traditional systems plan inventory availability This 200 employee firm makes both custom and standard
quite precisely, based on the forecast. Best performance is hose products for domestic and export sales. The company
achieved when the forecast is accurate (or at least closely uses a configurator-enabled ERP system to process 6,000
managed), and execution is carried out effectively. Also, quotes and 2,500 orders each month. Since implementing
ERP can be a lot more forgiving of challenging business the system, Hose Master has improved service levels and
conditions, such as rapidly changing forecasts, supplier maintained or shortened delivery times, while handling an
schedule changes, and the like. increased quote volume.

In a make-to-order or assemble-to-order situation where

kanban does not fit, ERP with a product configurator offers Hose Master Benefits:
the most effective approach. Components, materials and/or
• Faster, more automated configure-to-order
assemblies are planned and stocked according to a forecast.
The configurator captures customer specifications and quoting system led to improved service levels,
generates the production or assembly work order for quick faster quote delivery, and quicker new hire
completion and shipment. Planning systems coordinate training
replenishment of components used in accordance with • Able to handle increased business with
minimum inventory/maximum availability objectives. Such
previously publicized lead times; improved lead
a system is not hampered by the variation in demand of
products and configurations. In fact, it is designed to operate
times in some instances
in this environment and generate minimum inventory • Offered self-service features via the Web
consistent with availability and customer service objectives.

BECOMING LEAN
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Lean is all about eliminating waste—cutting unnecessary • Good procedural control of production and inventory.
costs like excess inventory levels, reducing lead time and
• A focus on process improvement and waste elimination,
handling, and focusing on doing things right the first time.
heavily reliant on empowered workers and responsive
A variety of techniques and tools can be applied across the
(and responsible) management.
wide range of manufacturing situations to control material
flow, reduce inventory, and shorten lead-time. • Automation where it makes sense—shop floor data
collection, RFID, electronic ordering, self-service web, and
For materials and parts with relatively steady usage, kanban more.
offers a paperless- and orderless-approach. For custom • An open mindedness toward new and innovative
manufacturing, a configurator integrated with a full-function approaches like Theory of Constraints, demand-
ERP system is the answer. In the vast area between these two driven strategies, and collaboration—consistent with
extremes, the following provide the best tools for reducing the company’s position, products, customers, and
waste, lead-time, inventory, handling, scrap, rework, and capabilities.
other non-value-adding activities:
In today’s highly competitive world, success is all about
• Integrated ERP system with comprehensive applications satisfying the customer, controlling costs, and maximizing
that address the full range of a manufacturer’s activities,
profits. Every improvement program can achieve these goals
including customer service and supplier relationships.
when capitalizing on the best of lean manufacturing and
• Solid forecasting and master scheduling processes that overall best practices.
keep close track of demand and ensure that execution is
fully in sync with customer needs.

3
 NEXT STEPS
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A textbook Lean implementation can be quite daunting—

value stream mapping, intense training and implementation, “A modern, integrated ERP suite that supports
radical changes in processes and company culture. But you not only manufacturing, but also financials,
don’t have to do all that to take advantage of Lean thinking
supply chain, and customer management—and
and gain Lean benefits. All it takes is openness to new ideas,
trust in the knowledge and experience of the workers, and a is supported by functionality for tracking a
willingness to make changes. You can adopt Lean practices company’s performance—can help support the
incrementally and continuously in a gradual, extended proliferation of lean throughout the enterprise.”
journey toward improvement.

Excerpt from
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management team and deep financial resources, combining
Intuitive offers rich functionality for a broad range of high-fit solutions, solid customer relationships, and a strong
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“casual” bill-of-material for making complex products, while today’s rapidly changing market environment.
continuing with design and engineering activity.

4
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Intuitive
A Consona ERP Solution
Made2Manage
A Consona ERP Solution
Consona ERP, is a business unit of Consona Corporation—a worldwide leader in
12131 113 Ave. NE Suite 101 450 East 96th Street Suite 300 providing enterprise resource planning (ERP) and customer relationship management
Kirkland, WA 98034 Indianapolis, IN 46240 (CRM) software and services. Consona ERP includes two leading products that enable
TEL (425) 250-5900 TEL (317) 249-1200 over 2,500 customers to continuously improve their business processes. Intuitive ERP
FAX (425) 814-7383 FAX (317) 249-1999 offers rich functionality for a broad range of manufacturing environments, including
Toll Free (877) 549-2149 Toll Free (800) 626-0220 electronics, medical devices, aviation and others, and makes implementation easy
info@intuitivemfg.com info@made2manage.com for small to midsized companies. Made2Manage ERP provides full ERP system
www.intuitivemfg.com www.made2manage.com capabilities for custom manufacturers centered on a “casual” bill-of-material for
making complex products, while continuing with design and engineering activity.

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