In my last article (Which you can find here) I discussed KanBan, and in particular, I looked at production KanBan. Now I want to take a deeper look into purchase KanBan.
There are really two cases that might occur. The first is one in which the company is to be a provider of product to a customer using a purchase KanBan system. The second case is where a company wants to use purchase KanBan to buy product. Each one is quite different.
In the first case, there isn’t as much to worry about. Your customer will be sending you some kind of KanBan “signal”. This might be a purchase order, or even just an email. In some cases, the customers truck visits you with empty bins and your job is to replace them with matching parts. Often the bins are marked with the part number that goes in them.
Usually, this process is dealt with via a safety stock, which defines the minimum quantity to keep on hand. Safety stock needs to be enough to handle any expected demand. Once the customer pulls an order, an MRP system will immediately create a replenishment order. An alternate way to handle this is with a reorder point and an order up to quantity. Either way should work if your lead times are short enough.
The second case is a little different.
In this case, you are purchasing parts using a KanBan system. You likely have shelves of material, perhaps in bins, most likely labeled with barcodes or with KanBan cards that are barcoded. The ideal system for this arrangement is one in which you scan the empty bin or shelf, or the KanBan Card. Wireless but relatively inexpensive Bluetooth scanners can be used for this purpose. Each time a bin, card or shelf is scanned the system should accumulate a requisition for parts. Ideally, we can scan all the empty spots that need to have an order sent out, and this will accumulate.
I have seen an arrangement where the system automatically starts a Purchase Order from the suppliers and adds the items to them. I have also seen a system where the scan adds a row to a requisition form. In either case, the buyer acts by generating the purchase order and sending it to the suppliers at the end of the day.
With a modern ERP like Microsoft Dynamics 365, it is even possible to provide the supplier with a portal where they can see these orders as they are created. There is no need to email or send these purchase orders. The supplier checks the portal daily, and in a perfect world will mark finished deliveries as they are processed, so your receiving department knows in advance the parts are coming.
If you’re interested in learning more about KanBan or other Lean manufacturing techniques, you can read our previous blog on Production KanBan, or check out our latest Youtube video here. We also have a webinar series focused on helping manufacturing companies improve through lean best practices. Check out our upcoming webinars here.