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Using Kanban in Lean Six Sigma

written by: Heidi Wiesenfelder • edited by: Michele McDonough • updated: 4/3/2013

Lean Six Sigma combines elements of the Lean and Six Sigma methodologies to improve processes, address customer requirements, and minimize waste. Kanban is a Lean tool that businesses use to limit physical inventory and streamline manufacturing processes.

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    The Kanban Technique for Lean Six Sigma

    The Kanban Technique One key concept of Lean methodology is that production should be driven by demand; this is known as demand scheduling or "just-in-time" (JIT) production. Earlier steps in a manufacturing process do not operate continually; they occur when demand from customers requires that more product be made. A company that follows this principle reduces excess inventory and its storage needs.

    Taiichi Onho developed the Kanban technique in the middle of the 20th century as part of Toyota's JIT implementation. In fact, the JIT concept itself came from Kiichero Toyoda, founder of Toyota Motor Company. A kanban is a sign or visual signal that manufacturing operators use to indicate that more of a part or supply is required. The sign can be an actual written sign, an empty container that is delivered when a part or supply is needed, or even an electronic message. The type of signal used is not critical and varies with the type of process and even the step in the process for which it is used.

    For instance, if a company manufactures refrigerators, under traditional manufacturing it produces new refrigerators in large batches according to a pre-planned schedule. The parts and supplies needed for creating refrigerators arrive on a regular basis, depending on the planned manufacturing schedule. If production slows down unexpectedly, the parts and supplies are stockpiled, taking up space and increasing costs. Building or obtaining more refrigerator doors isn't useful if there are no refrigerator cases yet to attach them to. And if too many refrigerators are produced relative to the demand from distributors and retailers, they sit in storage representing excess inventory and unnecessary expenses.

    Under Lean principles, the manufacturer tracks its production and rate of use of each part and supply. It determines at what level of depletion it is best to place the order to replenish the component, and sets up a system to signal when that level is reached. The Kanban technique dictates that at that time operators send a signal indicating that more of a component is needed, and only at that time does an order get placed for more of the part or supply. SImilarly, it is only when demand from distributors or retailers reaches a certain point relative to inventory on hand that production resumes.

    In Lean Six Sigma, Kanban is one of the solutions that project teams should consider in the Improve phase of DMAIC for addressing problems with inventory and with production scheduling. A similar concept can even be used in service industries; for instance call centers could set up their phone agent resource management based on the Kanban principle.

    The challenge in implementing Kanban is that business leaders must determine how to manage human resources and equipment schedules differently than they are used to doing. Many strongly believe that doing large production batches is the most efficient production method, and thus the benefits of switching to a JIT framework incorporating Kanban will not be immediately apparent. Likewise, managers accustomed to traditional methods of scheduling phone agents will not immediately accept that there is even the possibility of a better way. In these cases, change leadership skills come into play, as well as helping leaders to unlearn what they believe to be solid truths about running a business so that they can see the benefits of alternatives.

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    Sources & Resources

    Kanban Made Simple: Demystifying and Applying Toyota's Legendary Manufacturing Process, John M. Gross & Kenneth R. McInnis