December 29, 2014

What is Kanban and How Did It Change Management?

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If you’ve shopped for project management or enterprise resource planning (ERP) software recently, you’ve likely come across the term ‘Kanban.’ If you’re like most software buyers, you might not be familiar with what that means. Below, we explain the history and business uses of this system.

What is Kanban and Where Did It Come From?

Kanban is a Japanese word that literally means “card” or “billboard.” In terms of project management, Kanban is a way of visually organizing production using cards, each of which represents a task or step in the production process. The system was born in the late 1940’s by Toyota engineers who drew inspiration from the “just-in-time” delivery model of supermarkets. Instead of ordering product to restock shelves based upon vendor availability, supermarket clerks ordered based upon the current store inventory. The engineers used this idea as a model to develop a manufacturing process that relied on matching inventory with demand in order to increase both quality and throughput. The result? Kanban.

On the manufacturing floor, workers would use a Kanban, or card, to represent steps in the manufacturing process. Adjacent up-and-downstream workstations communicated with one another via the Kanban cards. A container at each station would contain a Kanban that, when received, authorized the station to produce parts or ship the full container to the next workstation. The visual nature of using a card or billboard allowed teams to better communicate with one another, which maximized productivity. The result? Toyota became the largest, most profitable auto manufacturer in the world.

Kanban Goes Mainstream

Kanban was only used for manufacturing until the early 2000s, when David J. Anderson, Corey Ladas, and others developed the Kanban method for software development. It was centered around the idea of making incremental changes to processes and systems, and could be used by corporations in any industry, not just manufacturing. It is a “pull” system, where work in progress is limited in order to reveal bottlenecks that prevent supply from matching demand.

Of course, the introduction of the Kanban manufacturing process to software development resulted in the development of e-Kanban, or electronic Kanban systems. Instead of physical representations of work, e-Kanban systems, like those found in Kanban-based project management and ERP software, use electronic cards that may or may not contain barcodes, attachments, or other electronic messages.

Whether used for development or manufacturing, Kanban has six rules, developed by Toyota, that help ensure a successful implementation.

  1. Downstream processes use items only in amounts specified by the Kanban card.
  2. Upstream processes produce items only in amounts specified by the Kanban card.
  3. Nothing is made, moved, or altered without a corresponding Kanban card.
  4. If an item is produced or shipped, it must have a corresponding Kanban card.
  5. Errors, defects, or shortages are never sent downstream
  6. The total number of Kanban cards are limited to reduce inventory or work-in-progress and reveal bottlenecks or other problems.

Do You Need Kanban?

While the benefits of Kanban/Lean processes to manufacturing and development are relatively well-known, a Kanban system can be used with great effect in a myriad of industries. Any team that generates a product can use Kanban. We even use Kanban software on several teams here at TechnologyAdvice. While Kanban takes some getting used to when transferring from a traditional waterfall system, once your team becomes more comfortable with the process it will help reduce lead times, and increase team communication and output. 

To find out more about Kanban-based project management and enterprise resource planning systems, call, click, or email one of our Technology Advisors for a no-cost, no-obligation consultation on how Kanban can benefit your business.

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