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Origins of Kanban at Toyota: A Response to Market Conditions
Japanese engineer Taichi Ohno first developed the Kanban method for the Japanese automobile company Toyota, which has been using the method since the 1950s. Taichi Ohno was an industrial engineer and, due to his contribution to the company's development, eventually rose to the position of chief executive.
Until the end of the 1940s, like most car manufacturers, Toyota still followed the Henry Ford method of producing large quantities of parts (doors, engines, etc.) stacked next to the assembly line for use as needed. But such an approach required huge upfront capital, to which access was severely restricted in post-World War II Japan.
The goal of the new approach was to optimize production capacity, increase competitiveness by reducing inventory and therefore associated costs, and in this respect outperform American competitors.
It sought to eliminate overproduction by introducing new stocks only when necessary. Factories were reorganized so that the production and assembly of parts proceeded at the same speed, with assembly workers taking parts only as needed.
The Principles Behind “Just in Time” Production
Since the late 1940s, The automotive concern Toyota has introduced the principle of “just in time” (JiT) into production at its production bases everywhere. The innovation was that the approach was a pull system.
In the 50s. In the 20th century, Toyota's automobile factories continued to change their production methods. At that time, wholesale orders for cars were placed after the release of the main batch, the volume of which was based on high sales forecasts. When actual demand fell short of these forecasts, factories placed surplus stocks until sold; otherwise, unsold cars were stripped for components for future products. This method was inefficient, so developing a way to match inventory levels with consumption became an urgent task.
The material flow management system of American supermarkets was studied to solve it. Stores stockpiled and held stock based on how much they could sell at a given time. Customers bought what they needed because they knew they could buy more later.
The research made Toyota consider consumer demand as part of the manufacturing process and a necessary precedent for launching production. Henceforth, production was based not on standard practices for producing goods and their promotion to the market but on existing consumer demand.
During the research, T. Ohno realized that there must be some kind of exchange of information that would lead to the replenishment of the shelves. So he introduced paper cards called "kanban" so workers could report the plant's capacity utilization in real time. Whenever materials and supplies ran out, they would send a kanban to the warehouse to order a new supply. The warehouse sent the requested parts to the factory floor with its kanban to the supplier to notify him of the need for a new supply. After receiving the warehouse's kanban, the supplier shipped more materials to the warehouse, smoothing out the flow.
Kanban Cards: A Real-Time Solution to Inventory Management
While modern Kanban is no longer physical notes sent between workstations, the communication chain to deliver and maintain just-in-time inventory levels remains the same.
A Brief History of Kanban Methodology Thus, using Kanban was associated with an attempt to implement a lean production planning system within the famous Toyota production system (TPS). Toyota's unique manufacturing system laid the foundation for lean manufacturing. Its concept was to minimize waste without sacrificing performance.
Over time, Kanban has evolved to support many different supply chains. The influence of Kanban gradually spread worldwide and inspired the development of the lean manufacturing system in the United States.
The next evolution of Kanban started in the early 2000s when software and IT teams adopted the method as a project management tool.
Since 2004, Kanban has been used in Microsoft software development projects. A case study conducted by Microsoft IT teams proved the effectiveness of the Kanban concept in managing change requests and work in progress. Therefore, Kanban is enthusiastically adopted by IT, operations, DevOps, and application/software development teams.
One of the authors of this project, former Microsoft engineer David J. Anderson, is considered the first to apply this concept to IT, that is, software development and work with knowledge in general.
To interpret the Kanban method and relate it to such concepts as "pull systems", "queue theory," and "flow", David J. Anderson drew on the work of Taichi Ohno, Eli Goldratt, Edward Demmings, Peter Drucker, and other classics of economics and organizational thoughts.
Today, David J. Anderson has written many books on agile and lean methodologies. His first book, "Kanban: Successful Evolutionary Change for Your Technology Business", published in 2010, is the most comprehensive definition of the Kanban method for working with knowledge. He opened a Kanban "university" and his management school of the same name.
Thus, Kanban is the basis of any customer-oriented structure. In a broad market context, the main goal of Kanban is to create more value for the customer without creating additional costs.
