Contrary to what Toyota does, many companies and organizations work according to their internal planning. According to plan, they do what is best for them and produce parts, goods and services according to their planning or they plan and impose products on their customers, who have to stockpile them in inventory.
As already explained in principle 2,
[bctt tweet= “The Toyota model is not about managing inventory; it is about eliminating it.” username=”ActioGlobal”]
From the beginning, Toyota has thought in terms of pulling inventory based on customer demand, rather than using a push system that anticipates customer demand.
[bctt tweet=”In the Toyota Way, pull means the ideal state of just-in-time: delivering to the customers what they want, when they want, and how much they want.” username=”ActioGlobal”]
The purest form of pull is the continuous, one-piece, pre-determined flow. To select one order and make a single product for this order – using a production cell with one-piece flow – this would be the most lean system possible, meaning it is 100% on-demand and inventory is zero. But because there are natural flow disruptions from raw material processing to finished goods delivered to the customer, some inventory needs to be created. Levelling the planning means holding some items in inventory.
As a compromise between the ideal one-piece flow and a push system, Ohno decided to create small “stores” of parts between operations to control inventory. If the customer takes a particular item, they will replenish it. If the customer does not use an item, it will lie in the warehouse, but will not be replenished. There is no more overproduction except the small amount on the shelves, and there is at least some direct connection between what the customers want and what the company produces. But since factories can be large and spread out and parts suppliers can be far away, Ohno needed a methodology to indicate that the assembly line had used the parts and needed more. He used simple signals like cards, empty containers, or empty carts called “kanban”.
“Kanban” means sign, banner, doorplate, poster, billboard, card, but is generally taken as a signal of any kind. Send back an empty container – a kanban – and it will be understood to be the signal to fill it with a specific number of pieces or send back a card with detailed information regarding the part and its location. The whole operation of using kanbans at Toyota is known as the “kanban system” for managing and securing the flow and production of materials in a just-in-time production system.
A true one-piece-flow system should be a system to make goods appear when required by the customer. The closest system that Toyota has devised to achieve this ideal is the one-piece flow cell that manufactures on-demand only at the precise moment the product is required.
[bctt tweet=”When pure flow is not possible because the processes are too separated or the cycle times for performing the operations are too different, the second best choice is the Toyota kanban system. ” username=”ActioGlobal”]
In a widely recognized book about the Toyota Production System called Leaming To See, Rother and Shook (1999), comment: “Flow where you can and pull where you must.” If you want to design lean systems, repeat this phrase every day when you get up to start your day. You can go far with this simple principle. Where it is not possible to create a one-piece flow, the second best option is to design a pull system with some minimal inventory.