Kanban Inventory Management: How to Run a Kanban System

ProjectManager.com

Kanban is a visual tool that is ideal for managing inventory flow. It was developed about three-quarters of a century ago by Taiichi Ohno, an industrial engineer at Toyota. Kanban boards helped the car company restock its inventory only when it was needed, and it was the revolutionary approach that helped Toyota grow so quickly.

Essentially, kanban inventory management is a way to have only the minimum amount of stock on hand that is necessary at that time. This avoids purchasing more than you need and having to allocate space to warehouse that extra inventory. More than that, kanban is a way to avoid bottlenecks in your workflow.

Customers expect faster fulfillment than ever, especially with mobile access, yet supply chains are increasingly complex and often distributed across facilities. Having an efficient inventory management system in place is a competitive edge that few can afford to ignore, and a kanban inventory system can shave costs off your bottom line and give you that edge.

Common Challenges in Inventory Management and Supply

There are many stress points that can cause a supply chain to slow down. For example, if you’re being supplied from multiple warehouses or, worse, multiple countries. However, kanban cards can represent each of these various links in your supply chain and make it easier to know where everything is so you can coordinate delivery.

Inventory management can also suffer from inaccurately identifying and evaluating your business needs. It’s important to know the gaps in your system, so you can prioritize filling those gaps. A kanban inventory system offers a clear visual map of what you need, when you need it and where. You can then align that with your business plan to make sure both sides are realistic.

That said, if your inventory system is not optimized, then you don’t know what you need or when you need it, which makes forecasting future inventory needs impossible. The cards on an kanban board are capturing your inventory and identifying where it is in the pipeline. This makes it easier for you to see opportunities, so you can act and add more efficiencies to the supply chain.

Kanban Inventory Guidelines

According to how it was implemented in the Toyota factory, there are six rules guiding for a kanban system:

  1. Never Pass Defective Products: Upstream processes must meet the level of quality and standards that are expected of them. Remove all defective products; they are dealt with outside the production line.
  2. Take Only What’s Needed: Downstream processes only take what is needed to prevent overproduction. This also lowers costs and makes operations reflect market demands.
  3. Produce Exact Quantity: Avoid overproduction, which leads to excess inventory and more costs.
  4. Level the Production: Keep production to capacity to achieve a steady flow of work.
  5. Fine-Tune and Optimize Process: After implementing kanban, continue to explore ways to add efficiencies.
  6. Stabilize the Process: Maintain quality, level production and optimize processes to gain stability, so you can standardize.
why kanban inventory management is useful

Why Use Kanban Inventory Management?

Monitoring and optimizing your inventory levels, while meeting customer needs, is an equation for a successful business venture. For one thing, this reduces the level and cost of your inventory. You can avoid unnecessary storage fees by only stocking what is needed, when it’s needed, and resupplying the stock in a timely fashion.

It’s like the old cartoon of the steam engine moving across a virgin landscape, with workman tearing up old track behind the train and laying it down before the train as it moves forward. It’s a joke, but it also makes sense: use what you need, when you need it. That track miles ahead or behind is not doing anything for you right now. Imagine if you needed to pay for storing those materials?

Meet Customer Demands

But kanban does more than maintain minimum inventory levels, it also responds to customer demands. By identifying what products are selling and therefore must be restock before depleted, you have on hand only what is needed. The customer is the one driving inventory, which is as it should be, for the customer is the one who is going to purchase that inventory.

Quick Status Reports

There is also the added benefit for managers of having easy access to progress reports. They can see what’s been started, where it is in the production cycle and when it’s been completed. This is all laid out in a simple and visual way on the kanban board. Plus with ProjectManager.com, your kanban board can be uploaded into the real-time dashboard, which creates easy-to-read and share charts and graphs of various project metrics.

dashboard for tracking inventory

Cleaner Warehouse

Kanban also keeps the production area clean of unnecessary storage. It makes sure you’re only delivering the parts to the production line when needed. This makes the production space focused on what it should be focused on: production, not storage. This all dovetails nicely into lean manufacturing, which is a philosophy of continuous flow of product through the manufacturing process.

Using ProjectManager.com for Kanban Inventory Management

ProjectManager.com has all the kanban and tracking features you need to implement a kanban inventory management at your business. Here’s how to setup a functioning kanban system with our tool.

Make Specific Kanban Projects by Inventory Type

One way to get started with kanban inventory is to use our project management software to create projects for each inventory type. That way, you can quickly see how much inbound and outbound inventory you have for a specific product type. Let’s say you’re stocking shoes for your company. Make a new project in the software, and then set up your kanban board to start tracking your shoe inventory.

A traditional kanban board is divided into three columns (though you can edit their names to suit your business needs). There is a “To-Do” column, which is where identified tasks are collected. There is a “Doing” column for those tasks that are being worked on currently. And, finally, there is a “Done” column to place tasks that have been successfully completed. These tasks move across the column boards as they are being worked on, which provides an easy way to track your work.

kanban boards for inventory management
Kanban boards for inventory management—Click to try it now!

Kanban Cards for Specific Inventory Items

With the kanban inventory system, the production is broken down into tasks, so a manager can control and track the work as it goes through the production cycle. Each inventory item, shipment or whatever tracking metric you want, is placed on an individual card. These are then moved from column to column on the board as they’re worked on.

Each card in turn has the specific information that is required for that task in each stage of production, such as supplies and materials that will be required further on down the line. These can be attached to the kanban card in ProjectManager.com in the form of comments, files and task descriptions.

Of course, the more complex your production and inventory, the more detailed your kanban can be to accurately reflect the process. Fortunately, ProjectManager.com gives you the means to make your projects as complex or as simple as you want. As you’re working to develop a kanban system to meet your needs, don’t forget to go back to the six rules above to guide you.

Kanban inventory management is an elegant solution to managing and tracking workflow. ProjectManager.com is a cloud-based project management software that helps you visualize your workflow with simple-to-use kanban boards, which feed into a real-time dashboard or online Gantt chart to help with reporting and scheduling. See how ProjectManager.com can help you manage inventory more effectively by taking this free 30-day trial.

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