Two vital pieces of information can turn a simple visual kanban system into a powerful inventory management tool that can achieve excellent results:
- Replenishment quantity
- Number of releases in a period of time
As replenishment starts, based on visual signals, the system tracks the number of replenishment signals. Since the kanban quantity is set and fixed (to start with), the total quantity consumed is known. That quantity becomes the numerator in the calculation of inventory turns, using the on-hand average.
By monitoring fast and slow moving items, the replenishment quantity can be changed to achieve desired turns. Fast moving items with reliable and short lead-times can remain at the same replenishment quantity, or the replenishment quantity for slow moving items can be reduced to achieve higher turns. The supplier’s on-hand inventory buffers variation in the supply chain lead-times.
Source One has helped manufacturers increase inventory turns and reduce costs using Intelligent Inventory Management. Learn More
Re-posted with permission from Source One Alliance. Orginailly posted Monday, April 02, 2012