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Thomas R. Cutler

Quality Insider

Kanban, e-Kanban, Digital Kanban

There really is a difference

Published: Monday, April 3, 2006 - 21:00

Kanban, e-kanban and digital kanban aren’t the same. Kanban is a Japanese term that means "signal." It’s one of the primary tools of just-in-time (JIT) systems. It signals a cycle of replenishment for production and materials, and it should maintain an orderly and efficient flow of materials throughout the entire manufacturing process. Until the development of e-kanban, kanban was usually a printed card that contained specific information such as part name, description or quantity. Production control managers are discovering the limitations of a manual card kanban system. At its best, an integrated digital kanbanbrings high-volume production under control, cuts inventory by half and links data across locations.

When a kanban system is purely manual, cards are placed on products when they come in, pulled as the items are used and then put back in the receiving area to be recycled for new shipments. Deciding what to order and granting a release are based on counting the pulled cards, and this process can be frustrating.

A production control manager of a leading manufacturer of steering columns and rack-and-pinion gears expressed the frustration of a manual kanban, “How did I find out what we had? There was no report I could run that would tell me that we had 22,133 pieces of Part A. We actually had to go out and count the parts on the floor.” When the automotive supplier discovered that what was ordered wasn’t available in the right amount, then a new delivery had to be expedited, with all of the headaches and expense involved in a last-minute rush.

Manual kanban, no matter how lean in concept, results in a lack of reliable information and in inventory being carried as safety stock. JIT often means “Just isn’t there.”

e-Kanban vs. digital kanban
The distinctions between e-kanban and digital kanban are more subtle than those between manual and electronic kanban. One of the key distinctions in the digital kanban process is integration, often with enterprise resource planning (ERP) software. Once component part numbers are entered into an e-kanban system there’s no guarantee of integration to the back-office ERP or accounting system. This lack of integration in standard e-kanban can result in a disconnected system that often lacks a paper trail to ensure continuously accurate data on received parts, parts on hand and parts needed. This information in a digital kanban process allows the data to link to invoicing and payment and eliminates double data entry. Simultaneously, production control managers can establish a receiving department that will perform the check-in of incoming orders. Blanket purchase orders can be entered into the ERP system purchasing database on the same page as a digital kanban system, using the same core data.

At present, only a few companies offer digital kanban. The landmark, Internet-based system Signum is central to the notion that the most effective kanban system must include full integration. Datacraft Solutions is one of the few companies offering e-kanban. Signum ERP integration includes automatic monitoring of communication between the two systems,” says Justin Diana, chief technology officer for Datacraft Solutions. “If a discrepancy arises, Signum sends an alert, providing an integration gateway where the user can check the error and, if needed, resubmit the record for processing. The gateway can also be checked proactively several times a day to verify that values remain at zero—no errors—and to resolve any gaps.”

Although manual kanban was developed out of the lean manufacturing principle of continued process improvement, its limitations have become antithetical to the concept of generating waste rather than eliminating it. Shifting to electronic kanban was the logical next step toward achieving just-in-time inventory levels. However, without integration to the ERP systems, e-kanban also suffers elements of waste, with duplicate data entry commonplace.

The benefits of digital kanban vary by manufacturer, yet typical lean manufacturing effects include:

• Elimination of a 30-day safety stock
• Elimination of expedited-order expenses
• Consumption-based replenishment reduces on-hand inventory
• Integration eliminates production control and accounting departments working off two different sets of data
• No additional production control staff required to support purchasing growth
• Production control manager’s expertise is used in strategic supplier issues rather than crisis management.

At a time when catch-phrases, buzzwords and sound bites are the norm, there’s a true distinction in the functionality and integration of kanban, e-kanban, and digital kanban.


About The Author

Thomas R. Cutler’s picture

Thomas R. Cutler

Thomas R. Cutler is the President and CEO of Fort Lauderdale, Florida-based, TR Cutler Inc., celebrating its 21st year. Cutler is the founder of the Manufacturing Media Consortium including more than 8000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. Cutler authors more than 1,000 feature articles annually regarding the manufacturing sector. More than 4,500 industry leaders follow Cutler on Twitter daily at @ThomasRCutler. Contact Cutler at trcutler@trcutlerinc.com.