In this article, we explore what kanban inventory cards are and what you can typically find in them. We also share our simple 5-step framework to help you use them effectively, with real-world examples. Read on to learn more.
Kanban inventory cards are visual tools used in the manufacturing and service industry to signal the need for inventory replenishment. They operate within a pull system, ensuring that only the necessary amount of stock is on hand, reducing excess inventory and waste.
Example: For instance, Tech Gears Inc. might use a kanban card to signal when only 50 units of a specific component remain, indicating it's time to reorder.
Kanban inventory cards are meticulously designed to convey all essential information at a glance. Below are what you'll typically find on one:
Part Number: A unique identifier for each item or component. It ensures accurate tracking and ordering.
Part Name: The common name or description of the item. This helps staff quickly identify items without decoding part numbers.
Quantity: Indicates how many items are in the associated bin or container. For example, if a bin holds 100 widgets, the card will specify "Quantity: 100."
Location: Helps workers locate where the item is stored, streamlining the retrieval process.
Supplier Information: Details of the provider or manufacturer. It aids in quick reordering or any query-related processes.
Kanban inventory cards play a pivotal role in modern inventory management, acting as a bridge between demand and supply. Their significance can be understood through the following points:
Visual Management: Kanban cards provide an immediate visual cue about inventory status. This visual system allows for quick comprehension, reducing the time spent deciphering inventory levels and ensuring everyone is on the same page regarding stock requirements.
Reduced Overstock and Wastage: By signaling when replenishment is needed, they prevent excessive stock and overordering. This minimizes waste, optimizes storage space, and ensures that resources are used efficiently.
Improved Cash Flow: With a pull system in place, companies only invest in inventory when necessary. This means less capital is tied up in unused stock, improving liquidity and aiding better financial management.
Increased Production Efficiency: Kanban cards ensure that parts or materials are available precisely when needed. This streamlines production processes, reduces downtime due to lack of inventory, and ensures that operations run smoothly.
Enhanced Supplier Relationships: Regular and predictable reordering, guided by kanban cards, can foster better relationships with suppliers. With consistent and clear communication on inventory needs, suppliers can better plan their production and deliveries.
Adaptability to Demand Fluctuations: The dynamic nature of kanban inventory cards allows businesses to adapt quickly to changes in demand. By constantly updating based on actual usage, they offer a system that can flex and evolve with changing market conditions.
Implementing kanban inventory cards demands a meticulous and systematic approach to achieve optimal inventory management results. Here’s how we do it.
Simply follow the steps below:
Begin by analyzing and calculating the average consumption rate of the specific item over a given period, such as a month or week. This step is crucial to ensure that stock levels are aligned with actual usage, preventing overstocking or stockouts.
Example: Auto Parts Corp. determines that they utilize 500 brake pads every month. This figure becomes their baseline demand, crucial for aligning stock levels with actual usage and preventing overstocking or stockouts.
This step involves deciding the threshold at which a new order should be triggered, typically based on consumption rate and lead time. This proactive approach guarantees inventory continuity.
Example: Kitchen Equip Ltd. finds that they use 100 stainless steel spatulas daily. Considering a lead time of four days for new stock, they set a reorder point at 400 spatulas to ensure they never run out.
Draft the kanban card with all pertinent details in a clear and legible manner. A clear design ensures that anyone handling the item knows its status instantly.
Example: Fashion Fabrics Ltd.'s card reads "Part Number: FF234, Part Name: Cotton Blend, Quantity: 50 yards." This immediate clarity expedites processes and reduces chances of error.
Attach or place the kanban card with the corresponding stock or bin. As the stock diminishes, the kanban card will become more evident, signaling its status.
Example: At Tech Gears Inc., as their stock of microchips reduces, the associated kanban card becomes increasingly visible. When only 10 out of the initial 50 chips remain, the card alerts staff of the nearing reorder point.
The full visibility of the card indicates it's time to reorder that specific item. It's a simple yet effective visual cue that ensures timely restocking.
Example: At Craft Corner Enterprises, when their premium acrylic paint stock nears its end, with just 5 out of 40 bottles left, the fully exposed kanban card signals the need for immediate replenishment.
At Mountain Bike Innovations, a leading bicycle manufacturer, the management decided to optimize their inventory process by implementing the kanban inventory card system for their bike components.
Here’s how they followed our 5-step framework for using their kanban inventory cards effectively:
Mountain Bike Innovations establishes that they require 800 bicycle tires every month to meet their consistent demand.
Noting a weekly consumption of 200 tires and a week's lead time for fresh stock, Mountain Bike Innovations sets a reorder point at 200 tires.
Their card clearly states: "Part Number: MTB123, Component: Mountain Bike Tire, Quantity: 40 units."
In one of their main warehouses, as the stack of a specific tire model reduces, the kanban card becomes more visible. By the time only 10 out of the initial 40 tires are left, the need for a reorder is evident.
When the stock of a specific tire model in the main warehouse reaches its last 10 units, the fully visible kanban card cues the procurement team to place a new order.
We hope you now have a better understanding of what kanban inventory cards are and how to use them effectively. By understanding and implementing them correctly, you can ensure a more efficient and cost-effective operation.
If you enjoyed this article, you might also like our article on kanban inventory or our article on raw materials inventory.
