The subject of electronic kanban (eKanban) often triggers deeply polarizing responses in managers. Some people intuitively perceive huge advantages of the concept while others are vehemently opposed to the concept. That said, it’s vital for us to define what we mean and don’t mean by eKanban before we proceed.
To start, eKanban is not a plan-driven MRP system necessarily meant to replace all physical kanban elements with electronic elements. Rather, eKanban complements some of the physical Kanban’s elements with automation designed to eliminate errors and improve productivity by utilizing real-time replenishment data and analysis.
Electronic Kanban (eKanban) Functions
Consider the series of maintenance tasks that must be conducted on a regular basis as we implement kanban and continued long after it’s deployed. We must routinely size orders, audit kanban, and inventory performance, and adjust our kanban plans in response to a new analysis. Thus, for a kanban system to work most efficiently, it needs the most precise and timely data, followed by prompt action.
An eKanban system supports various kanban management tasks with a repository of real-time data that can be sorted, searched, analyzed, and applied through automation. With automated kanban data services, the effectiveness and efficiency of kanban management tasks related to managing orders, cards, and audits are vastly improved.
- Kanban Planning
The first-and most important-phase in the kanban cycle is kanban planning. The success or failure of a kanban initiative largely depends on the effectiveness of the kanban planning phase. Kanban planning is also the most data-hungry phase of kanban. During planning, you must collect an array of part data or plan-for-every-part (PFEP). That data then informs replenishment decisions made with the assistance of an array of logic trees and complex formulas for determining optimal replenishment approach, replenishment trigger timing, replenishment quantities, number of kanban cards, and more.
Additionally, in order to review and adjust kanban plans in future cycles, current and accurate plan data must also be referenced.
Thus, workflow and inventory data must be as current and accurate as possible. Unfortunately, for many organizations, the requisite data collecting, if conducted manually, is a monumental endeavor that often returns a hodge-podge of incomplete and inaccurate data, causing inefficient or ineffective kanban plans or excessive data-collection rework.
This is where eKanban shines. An eKanban calculator can automate much of the mathematics and decision-making for the user. Sophisticated eKanban automation is designed to handle any number of different situations that the user can define.
At its most basic, electronic kanban delivers the benefits of accurate data by utilizing real-time data repositories. However, eKanban calculators facilitate additional versatility of a kanban process by enabling more frequent kanban sizing calculations than is possible with manual data collection and analysis. Depending on how complex a facility’s resizing process is, planners may be able to execute resizes monthly or even weekly, instead of quarterly.
eKanban tools should be able to create solutions rounded to minimum order and package limits while accommodating daily demand and lead times. These might sound like features every eKanban tool would include. Unfortunately, many do not handle minimum order rounding or limited packages.
Another critical feature that an eKanban tool should include is the ability to evaluate current solutions and trigger a red flag when there’s a risk of a part stockout. This helps planners and buyers stay on top of their deployment plans and avoid any risks to delivery schedules.
A good eKanban tool will also show the actual on-hand figures for each part and make comparisons as needed. This makes it possible for buyers and planners to quickly recognize where resizing efforts can produce the most significant payoff. Optimal eKanban systems can be configured to determine part and project, and negotiation priorities by considering their impacts on inventory and workflow.
Of course, eKanban tools can also help with deploying a kanban solution with features for creating and printing kanban cards, configuring cards when a solution uses several formats and assisting card design.
Electronically controlled kanban cards can be a boon for facilities that frequently need to resize their kanban plan in response to variable demand. Of course, issuing cards by hand is not difficult. Kanban cards can easily be scanned and hung on a kanban board as necessary. However, what can be difficult, is removing cards once they are circulating. eKanban systems can make it possible to deactivate cards from a computer terminal rather than chasing them down manually. When a card is deactivated in the system, an error will come up when a user attempts to scan the card that informs them that it needs to be removed from the production floor.
- Card & Order Management
The processes followed for card management and orders are executed daily by employees who work in a production facility. When errors occur, they can have ramifications for the entire production process for that order. Automation’s chief advantage is its ability to remove the human error that can occur and speed up the time it takes to cycle through each process. Barcode scanning is a feature common to all eKanban tools. It is faster than typing at a terminal and eliminates the possibility of mistyping part numbers or quantities.
Many eKanban tools have the ability to generate orders or releases when a card is scanned with quantities, suppliers, and lead times dynamically determined based on the most current data parameters. This allows planners to adjust the order that a card generates without changing the physical card itself. This helps facilities resize quantities based on demand by using generic cards with no printed quantities on them. Rather, the quantity can be stored in a record tied to that card’s barcode.
Order confirmation, whether for internal or external clients, is another function that an eKanban tool can provide. A supplier can confirm orders, change their due dates, or alter the quantities ordered electronically. This significantly reduces the labor spent on phone calls, emails, and paper trails, and eliminates time spent waiting for an employee to be available. Automating the confirmation process can lead to large labor savings for suppliers that mandate acknowledgments.
Automating receipts for orders completed can also be accomplished electronically via barcode scanning, such as when shipments are received on the loading dock. A single scan can record the date and quantity received. This can save time for a facility’s shipping and records departments.
- Kanban Audits
Another major function of most reliable eKanban tools is order tracking. Kanban systems that are mature and well-designed will have processes that correct errors when they happen so that production flows and deliveries aren’t impacted. Electronic kanban systems help eliminate the sources of those errors, and they make it much quicker to find and correct them. For example, order tracking in an eKanban system makes it possible for planners and buyers to discover through automated reports that an order is a past due, still open or was recently opened.
Audits are supported with automated reports that can be organized by part number, the number of cards that are active and open orders. Due dates, lead times, and receipt dates are other ways to sort and format kanban data. The possibilities realized by combining these criteria in various ways make eKanban a time-saving tool when conducting complex audits in large facilities. Common errors like duplicated orders or orders that were never closed can be found in a fraction of the time it would take for auditors to find them by inspecting records and kanban cards.
Visual Management and Beyond
It might be tempting to think that the physical aspects of a kanban system become unnecessary after moving to an eKanban tool. However, visual management is key to the success of any Kanban system, so kanban cards, physical audits, and boards are still valuable. Keep in mind that a purely virtual kanban system that uses electronic cards is not much different than a traditional MRP application. Kanban relies on employees in the production process to see a representation of the workflow using cards and boards. eKanban tools are best thought of as a way for planners to efficiently manage large or complex operations.
That said, visual communication can be achieved in non-traditional ways as well. For example, Falcon’s SmartStock solutions utilize a network of digital scales with an array of corresponding digital lights and optional graphical monitors to visually communicate replenishment status, along with thousands of other potential messages. Another feature of Falcon SmartStock is optional auditory management.
Electronic Kanban (eKanban) Benefits
- Productivity Gains
The productivity gains that come from the automation of manual tasks can seem inconsequential, but even if a minute amount of labor is consistently saved doing repetitive tasks, the savings multiply over time. For example, implementing barcode scanners for a process might save workers and planners only 15 seconds for each order, but if you process 100 orders a day, that becomes a savings of 1,500 seconds a day or 7,500 seconds each workweek. By the end of a year, you’ll reclaim over 100 hours of labor.
Consider order confirmation tasks. If a facility processes thousands of orders a month, shaving time from the task of confirming each order can result in major savings of time and labor costs. Tasks that involve two or more people like phone calls and emails effectively double the time saved if the confirmations are automated with an eKanban system. Large organizations can reduce the number of employees dedicated to these tasks by automating their responsibilities, and those employees can be moved to more productive work.
- Resizing Order Flows
One of the greatest features of an eKanban tool is a kanban solution calculator. The series of formulas behind developing comprehensive kanban solutions are complex and error-prone when performed with semi-automated tools like Microsoft Excel spreadsheets. Spreadsheets can be extremely time-consuming to update when changes to the formulas or data are necessary.
Spreadsheets can also be difficult to replace if the file becomes corrupt. eKanban tools can use more robust technologies like dedicated applications and relational databases to fully manage and automate kanban solution resizing calculations. A robust calculator can save planners and buyers significant time, provide them with more flexibility, and make it possible to perform resizes of orders more often.
All of this adds up to fewer stockouts and the ability to calculate the most accurate order size at any given time. Kanban calculators can also be tied to card activation and deactivation functions so that resizing can be done as orders are moving through the production process. This makes a production facility far more agile in responding to rapidly changing client needs.
- Error Elimination
In any production system, human error happens more often when standard work is inadequately defined. Depending on where human errors take place, eKanban systems can greatly reduce their frequency. For instance, most production errors begin with data entry mistakes related to new creating new items or orders. If part numbers are entered manually by a planner for individual orders, for instance, orders placed for the wrong parts will be more common than when a database is used to select a part number from a list.
eKanban systems reduce these types of errors by utilizing barcode scanning and databases. When workers can scan items at point-of-use, and don’t need to manually key part numbers or order quantities, the potential for data entry related errors is greatly reduced. The result is that buyers and planners can manage larger operations with greater precision.
- Data Quality
Data quality is both a requirement and a benefit of automating manual tasks with electronic kanban tools. They improve data quality by eliminating the ways mistyping and faulty memory introduce inaccurate data into a production system. They also rely on accurate data from direct sources, such as data received from suppliers and data repository records created by planners. Data quality also represents timeliness and breadth of data. Many ERP systems don’t capture order entry and receipt dates, for example, leaving planners in the dark about lead times.
Many facilities lack good capture of SPQs, MOQs, and custom requirements from their suppliers, and daily demand figures can be difficult to extract from traditional ERP applications. When these types of data are buried behind technical walls, the employees tasked with analyzing problems can be left without access to the data needed to solve them. eKanban tools understand the data needs of planners and production workers and make these types of data readily available.
Variation analysis is another example of this: ERP systems aren’t designed with this kind of data-intensive, long-term analysis in mind. Good eKanban systems, however, give planners the tools to assess how seasonal cycles can be accommodated by adjusting lead times and order sizes.
While electronic kanban (eKanban) is often perceived by many people as antithetical to kanban (a glorified MRP plugin), it is a particular kind of software solution that both facilitates and complements traditional kanban, making kanban far more effective and efficient than it would be otherwise. So, while traditional kanban can significantly reduce over-ordering, reduce on-hand inventory, boost cash flow, and improve delivery performance, eKanban can even improve on those results while also additionally reducing the administrative resources necessary to manage kanban.