How to Use Kanban to Create a Competitive Advantage
As you begin learning more and more about Kanban, you’re probably thinking that this sounds much like Lean business strategies, and how right you would be. In fact, Lean operating procedures naturally evolved from Kanban and so you could easily sum it up by saying, “Like father, like son.” In other words, Kanban is the original Lean methodology.
If you want to gain a competitive advantage in your industry, it would do you well to understand the Kanban method and how to apply it to your business, whatever that may be. Having said that, let’s take a brief look at Kanban from its evolution to 21st-century applications. Only then will you understand just how the basic principles of the Kanban process can give your company a competitive advantage in today’s market.
In the Beginning, There Was Toyota
In the late 1940s, Toyota was using an amazingly effective (and unique) work management system simply referred to as the Toyota Production System, or TPS for short. Car manufacturers around the world envied the efficiency through which Toyota was able to mass produce vehicles and sell them at a lower price than any other vehicle on the market at the time.
It was the original Lean system within the manufacturing arena. The TPS Lean system focused on eliminating waste to gain the competitive advantage. From design to cost, any and all waste had to be eliminated. And that, in its most basic terms, was the birthplace of Lean.
Reduction in Production Costs Gives You the Competitive Edge
The ultimate goal of Kanban is to minimize waste in an effort to cut costs without sacrificing quality. The Lean producer will then have the competitive edge because they will retain high-quality products without raising costs to the end consumer. Another way of explaining this is that profits will be maximized because the cost of production is reduced. Both the customer and the producer gain value for their money.
Cutting Waste with a New Philosophy
So then, what is Kanban? Kanban is a whole new philosophy of production. Instead of stocking up on products which seem to be hot sellers, it is better to pull what customers demand. If there is one thing true in any industry, you can never predict what will trend at any given moment in time.
Instead of producing large numbers of products you believe will sell based on current market movement, you focus on customer demand. Don’t push out products to keep warehouses full only to find that isn’t what customers are asking for. Pull orders which will immediately hit the production lines, thereby eliminating the waste of warehouses full of merchandise no one wants. That’s a huge amount of waste, which can be eliminated if you pull rather than push.
A Brief Overview of the Kanban Method
Briefly stated, Kanban is a work management system designed to increase efficiency based on the pull strategy. Historically, when filling customer orders. you’d see little notes pinned on corkboards detailing the order requirements. Each stage along the way had their little post-it like notes with instructions for what is needed in that part of the production process. Unfortunately, the next person or persons along the production chain had no clue what others before were told and no idea as to the next or final steps in the process.
The Kanban method is a software-based work management system, also based on card and whiteboards, but it is all within the digital realm. That posted note is available within the Kanban software and totally transparent to everyone involved. Each department pulls their card (note) from the digital board (formerly a white or cork board) and the procedure runs smoothly from design to fulfillment of orders.
A Quick Summation of the Kanban Method
Although there is so much more to Kanban, you can clearly see that the objective is to minimize waste and increase profits. This, in turn, allows you to offer high-quality products at competitive prices because it is not costing your company as much to produce products as it costs your competitors. Kanban is a way to improve efficiency in production by accessing a board with cards for each step of the way from design to shipment. Rather than manufacturing goods to push through to market, you will be pulling orders, quickly filling them, and sending them off to customers without overstocking your warehouses.
This, perhaps, is the largest financial waste of all. What can you, after all, do with warehouses full of products no one wants? So yes, Kanban is Lean, but it’s more than just Lean. Kanban is the original method of waste reduction for significantly higher ROI. Kanban is implemented through an accessible cloud-based platform and is the ultimate in work management programs. If you are interested in cutting costs to maximize profits, look to Kanban for the answers you seek.