Three-Bin Kanban System

Instructor: Olga Bugajenko

Olga is a registered PRINCE2 Practitioner and has a master's degree in project management.

How can a supermarket never run out of chocolate bars? Explore the components of a three-bin Kanban system which is aimed at controlling inventory. Learn how this is also used to optimize the production process.

What is Kanban?

Many companies across a number of industries are constantly trying to optimize their supply chains and manufacturing processes. A supermarket selling 50 gallons of milk a day doesn't need to keep 1,000 gallons on the shelves. A factory assembling 1,000 cars a day doesn't need to store parts enough for a million. By reducing the amounts stored in the shop or on the production floor, the companies can save space and money.

Kanban is a Lean manufacturing tool aimed at improving the efficiency of the manufacturing processes. It relies on the just in time concept for inventory and production. The engineers from Toyota Production Systems created it back in the 1950's after observing the workflow of a supermarket. 'Kanban' translates to 'visual card' from Japanese, and literally relies on cards as signals exchanged between different production stages. A card is attached to every product, and once the product is purchased by a customer or used in the assembly line, the card is removed and sent back to the supply center.

Three-Bin Kanban System

The three-bin Kanban system allows for controlling inventory and ensuring smooth product supply at the different stages throughout the production process.

In the supermarket, one bin is placed on the shop floor, the second one at the back store, and the third one at the supplier warehouse. Every bin has a Kanban (visual card) attached to it with the item description and the amount currently available, along with additional information, such as date received. Let's track the supply of Really Good chocolate bars in the supermarket. Once the customers purchase all bars available on the shop floor, the first bin becomes empty and a signal in form of a Kanban is sent to the back store, requesting the staff to fill the shelves with more Really Good chocolate bars. The staff takes the candy bars from the back store to the shop floor. As this reduces the supply of chocolate at the back store, a Kanban is sent from the second bin to the third - from the back store to the supplier - asking for more chocolate bars to be delivered. As the supply in the third bin is reduced, the supplier has to manufacture more Really Good chocolate bars.

Each of the bins doesn't have to be completely empty before a signal can be sent down the line, requesting for a refill. Instead, each shop can decide on the supply level at which a signal will be sent - perhaps, once only a hundred bars are left. A separate Kanban is used for every product available.

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