The Lean Philosophy vs. the Kanban System

Instructor: Noel Ransom

Noel has taught college Accounting and a host of other related topics and has a dual Master's Degree in Accounting/Finance. She is currently working on her Doctoral Degree.

This lesson reviews and compares the lean philosophy to the kanban system. The lesson also describes the use of each methodology in business organizations.

The Lean Philosophy vs. the Kanban System

What is the Lean Philosophy

Lewis owns a business that produces tires for several car manufacturers. Lewis wants to ensure his company operates efficiently and provides quality tires to his customers promptly. He wants to make sure his workers use company tools and materials wisely. Lewis begins to research ways to make his organization run more efficiently and discovers the Lean Philosophy.

Lewis learns the Lean Philosophy is a way to eliminate waste within a process. The philosophy involves a strict focus on the customer and what the customer is willing to pay for, which is considered to be the value a customer receives. Any process or step that does not contribute to value is considered waste. According to the lean philosophy, there are seven types of waste:

Overproduction - producing a product or service faster or sooner than the customer's needs

Over Processing - Processing more than what the customer requires

Rework - correction or repair of a product or service not done right the first time

Inventory - raw material or finished goods that do not add value to the customer or sit in storage for long periods of time

Waiting - people that wait for a process to complete before they can perform their part of the work

Motion - movement of people that take up time and do not add value to the process

Transportation - Movement of products or people between one step or process

Lewis has found a method to use throughout his company that will help him minimize waste, increase production time and deliver his product to the customer on time. Before he completes his research, Lewis stumbles on another concept that can also help him manage his inventory!

The Kanban System

The Kanban System is a type of lean technique that involves management of inventory to eliminate unnecessary storage of inventory. When inventory is sitting in a warehouse, it is not in demand and the business is not selling the product. Unnecessary inventory storage is a type of waste. The Kanban System is a method by which a company pulls inventory based on customer demand instead of trying to guess how much inventory a customer needs at any given period. This method is called the pull system.

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