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Kanban system: definition & important aspects for buyers
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Kanban system in a nutshell:
The Kanban system is a pull-based method of production and material control in which materials are only reordered when the actual demand arises through consumption. For purchasing, this enables needs-based procurement with minimized stock levels while ensuring material availability.
Example: An automotive supplier uses a two-stage Kanban system for C-parts, in which the removal of a container with 100 screws automatically triggers a reorder card, which is collected by the supplier three times a week and leads to replenishment within 24 hours.
Contents
What is the Kanban system?
The Kanban system is a method for controlling processes in production management and material flow that is based on the "pull principle". Originally developed in the Japanese automotive industry, it is used to supply materials in line with demand. The consumption of an item signals the need for replenishment, which avoids overproduction and increases efficiency. Visual aids such as Kanban cards are used to control stocks and make processes transparent.
Core elements of the Kanban system
Importance of the Kanban system in purchasing
In procurement management, the Kanban system enables efficient control of material flows and a reduction in stock levels. Through close coordination with suppliers, orders can be automated and requirements covered in real time. This leads to a reduction in throughput times, costs and increased flexibility to react quickly to changes in the market.
Kanban system: From traditional production control to digital Kanban
Building on the foundations of the Kanban system as an efficient control instrument for materials management, its practical application has evolved considerably over time. Originally, companies used physical Kanban cards to signal replenishment requirements and control production processes. With the increasing need for flexibility and the acceleration of production cycles, there was a need to rethink traditional methods. The transformation to digital approaches makes it possible to increase process costs and meet the requirements of modern supply chains.
Old: Traditional production control
Traditional approach: In traditional production control, material flows were controlled by manual intervention and planning. Companies used physical Kanban cards made of paper or plastic, which were exchanged between production stages to request replenishment. These cards had to be moved and updated manually by employees. The transfer of information was slow, prone to errors and provided little visibility into the actual status of production. Challenges arose from delayed response times, high stock levels to hedge against uncertainty and limited adaptability to fluctuations in demand. In addition, a lack of real-time data led to inefficient decisions and increased operating costs.
New: Digital Kanban
Digital Kanban: The modern implementation approach relies on digital technologies to overcome the limitations of the traditional system. By integrating RFID tags, sensors and networked software solutions, Kanban signals are transmitted electronically in real time. Key innovations include the use of cloud-based platforms, mobile devices and IoT (Internet of Things), which enable seamless communication between production facilities, warehouses and suppliers. Practical improvements can be seen in a significant reduction in lead times, increased data accuracy and the ability to proactively respond to changes in demand. Companies benefit from increased transparency, optimized inventories and an overall higher competitiveness.
Practical example: Digital Kanban in the automotive industry
A leading automotive supplier implemented a digital Kanban system to optimize its production processes. By using RFID technology and a networked software platform, material replenishment could be automated and controlled in real time. Within a year, stock levels were reduced by 35% and production flexibility increased significantly. The delivery capability increased to 98%, which led to an improvement in customer satisfaction. In addition
Conclusion on the Kanban system
The Kanban system is revolutionizing modern purchasing with its efficient pull control and transparent process design. It not only significantly reduces stock levels and costs, but also enables a more flexible response to market changes. Despite initial implementation challenges, the long-term benefits outweigh the costs: optimized supplier relationships, increased process efficiency and improved competitiveness. With advancing digitalization and AI integration, the Kanban system will remain a key tool for successful procurement management in the future.
