A common concern of most operations managers is making sure material and supplies get to the right work area at the right time and that no one runs out of what he or she needs to do his or her job. This is true whether that manager is running a hospital, a warehouse, a service operation, or a manufacturing facility… having the right amount of inventory is critical to success.

Kanban is an effective tool to ensure everyone in the supply chain is signaled when to supply more material and exactly how much to deliver. In fact, the word Kanban in Japanese means “signal or signpost.” Taiichi Ohno developed the concept of Kanban as part of the toolset he created for the Toyota Production System in order to facilitate JIT (Just-in-Time) applications. Kanban is the mechanism to create pull and flow in a supply chain process. It prevents stock-outs and over-supply.

Kanban image

Kanban is commonly used in materials management of purchased components in manufacturing, warehousing and hospitals. In factories, flow manufacturing or kanbanflow manufacturing uses kanbans within a flow cell, creating a pull system within the production process. However, the concept of pull has applications beyond materials and Ohno’s Kanban methodology has since blossomed to have applications in Kanban project management.

Based on the scope of the Kanban project, an implementation can take several weeks to several months. After we conduct hands-on training with the team, the first step is to gather data on demand, lead-times and capacities. Kanban quantity calculations are based on having sufficient quantity in the kanban to fulfill demand during the replenishment time. Replenishment time can be internally based or based on lead-time of vendors. After calculating kanban quantities, the team will decide which Kanban storage method is the most applicable. These include two-bin systems, multi-cards, one-bin, Kanban boards, and line balancing Kanbans. We work with the team to help them calculate appropriate Kanban quantities for each of the part numbers and products involved. In fact, Kanban implementation will often lead to important SKU rationalization decisions.

One of the added benefits of a Kanban implementation is that your team will manage by exceptions focusing on the vital few areas (production cells, departments, vendors) where you can clearly see you have problems. People involved with Kanban systems report improved supply, better communication and less stress.

Kanban Implementation Outline

  1. Determine if application is for purchased materials, work-in-process or finished goods
  2. Gather kanban data (demand, capacities, lead-time)
  3. Calculate kanban quantities
  4. Choose the appropriate application (two-bin, multi-bin, one-bin or line balancing kanban)
  5. Develop the signal mechanism (empty bin, kanban card, Andon light)
  6. Work with suppliers (internal and external) on kanban supply set-up
  7. Test the Kanban system and adjust quantities as needed

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“C&R was struggling with labor productivity. The construction crews were often missing materials that they needed to do their work. This caused significant idle time. Supply Velocity, Inc. and C&R used value stream mapping and visual management tools to make dramatic improvements in operations. Most importantly, two years later C&R is sustaining and improving on the implementation. C&R’s return on investment was 11:1. C&R had a record year last year in both sales and profits and would not have been able to pull it off without the changes Supply Velocity, Inc. helped us make.”
Tom Kuthe, V.P. Construction Operations, C&R Mechanical
“Myerson engaged Supply Velocity, specifically Ray Davis to visit our plant in Trinidad to conduct a two day assessment of our production procedures and provide us feedback on areas for improvement and where applicable, areas for future analysis.

Put simply, we got everything we paid for and in addition to more in depth analysis, we got specific tasks that were immediately actionable. Our local management team found Ray to be engaging, highly credible and insightful based on his wide experience. In other words the cultural differences and lack of specific industry knowledge weren’t impediments to things we could implement immediately and on our own. In a nutshell it was money well spent and will pay itself back many times over.”

Lee Hartwell CPA, Plant Manager, Myerson Tooth
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We are now using Supply Velocity to help us rethink our entire Strategic Plan.”

Jeff Reitz, Vice President, Central States Bus
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Haris Tokalic, President, Grand Rock, Inc.

“Your process encourages this group to work together, better communicate and have fun doing it.”

George Edinger, President, C&R Mechanical

“I am thrilled to provide this testimonial for Supply Velocity and their outstanding work in implementing Lean Warehouses and processes at Crescent Parts & Equipment through the COVID pandemic. With their data-first focus and Mitch’s exceptional coaching and experience, they transformed our business into a more supply chain-oriented organization, enabling us to grow while prioritizing employee safety and creating a better work environment. Supply Velocity’s expertise in Lean methodologies and their comprehensive evaluation of our customers have been instrumental in optimizing our operations and increasing customer satisfaction. We highly recommend Supply Velocity to any company seeking to implement Lean processes and enhance their supply chain efficiency.”

Josh Cole, Director of Supply Chain, Crescent Parts & Equipment

“Supply Velocity created visibility within our Assurance Services Group… visibility of performance, Client-service, employee satisfaction and processing time. Using the Supply Velocity System, Audit Report Cycle time is down over 50%. We are using his strategies to create greater Client loyalty.”

Fred Kostecki, Partner-In-Charge, Assurance Services, Rubin Brown
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Mark Holdinghausen, VP of Operations, DEMA Engineering
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Jeff Lazaroff, Senior Vice President, Clean Uniform
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Mike Howard, CEO, Aspeq
“In thirty years of hiring consultants, Supply Velocity, Inc. was the first to tell me what they were going to do, set a price they stuck to and substantially exceed my expectations. I have recommended them to friends and acquaintances. They were true partners in assisting with the turnaround of an acquisition we had been struggling with for two years.

Their math-based technology, solid down-to-earth facilitation skills, and positive, patient and enthusiastic attitude combined to make our implementation of Lean a very rewarding experience.

We increased our production by 50% in the first month of implementation and continue to see improvements. Improvements have not only been realized in productivity, but also in quality and morale. We have increased profitability by $2M on flat sales of $10M.

Based on Supply Velocity, Inc.’s integrity and our results, I will continue to refer them to others and utilize them in the future as we expand our company through acquisitions.”

Bill Gilbert, President, Fusion Coatings
“Supply Velocity is driving instrumental change in our inventory management processes. This is critical for us to be competitive in a supply chain environment with numerous disruptions. They are making change happen, which can be challenging in a 182 year old organization.”
Jim Carroll, Executive Vice President Operations, Schaeffer Manufacturing

“In a time of volatile supply chain disruption, Supply Velocity is helping us develop Demand and Supply Planning processes to proactively tackle these new challenges. They are genuine partners, working with our team, facilitating and teaching.”

Jane Thrasher, Vice President of Supply Chain, Horizon Hobby
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Rich Lavosky, General Manager, Anheuser-Busch Precision Printing
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David Walters, President, Hy-C
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Rob Bowers, Vice President of Strategy, Total Hockey
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Lorenza Pasetti, CEO, Volpi Foods
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Participants included the Promotions, Market Research and Agency Licensing sections of the Marketing Department.

We learned valuable tools to help us to prioritize based on the voice of the customer.

I firmly believe these skills made a difference in how we work every day. We are moving new projects forward, eliminating or changing ineffective processes, and we are a much stronger department. We continue to use the tools to help us with our highly-complex and time-consuming projects. Supply Velocity helped us to accomplish our goals.”

Karen Rugare, Director of Marketing, Erie Insurance
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Terry Etter, Vice President of Operations , Essex Medical Systems
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The project turned out to be very significant to the company and most importantly, our customers. We reduced our customer wait times by 40%, and cut in half the labor cost to fulfill customer orders.

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Dionne Dumitru, COO, Weekends Only

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The get-into-action approach was good for our culture.”

Ned Lane, President, CeeKay Supply
“In the spring of 2003, the St. Louis Area Chapter of the American Red Cross engaged Supply Velocity, Inc. to perform a study and make recommendations to streamline office processes, maximize cash flow in purchasing and warehousing and restructure and enhance our maintenance department. Supply Velocity, Inc.’s process was methodical, flexible, staff-oriented, inclusive and, above all, trackable.

In the last six months, our Chapter has realized expense savings of over $380,000 annually, and significant improvement in intra-company service levels has been attained. Supply Velocity, Inc. will return to the Chapter periodically throughout the next 18 months to audit our newly implemented processes. We have been pleased with our results and Supply Velocity, Inc.’s professionalism.”

Joe White, CEO, American Red Cross – Saint Louis Chapter
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Rachel Andreasson, Executive Vice President – Marketing, Wallis Companies
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Mark Kelso, Director of Process Improvement, Save-A-Lot
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Gabe Szabo, Vice President, Product Development, Closure Medical – A Division of Johnson & Johnson
“Mitch Millstein and his team helped guide our shop fabrication division in the re-layout of our custom pipe and steel fabrication facility when we moved into a new building. It is not only the results but how he helped. We were involved in every step. I personally did time studies and was able to see the non-value added steps required to manufacture in our old layout. When we created our new layout, everyone was involved, from the executive team to our direct labor force. With Mitch’s help we increased our throughput by a 3x multiple, while providing more competitive prices to our clients as a result of the efficiency improvements.

This has enabled us to not only make more money but also to expand our commercial reach and serve more, and larger customers. I would recommend Supply Velocity to any company that wants to make improvement in supply chain and operations.”

Geoff Gross, President, Gross Mechanical