16. Jun 2016
The proven technique to avoid stock excesses and shortages
by Kaizen Institute Malta
Purchasing supplies for companies – from raw material, to consumer goods and even the office supplies – should be a natural process, simple and agile. However, we frequently find organisations where the management of this area is made empirically and very dependent on people – which normally leads to two unwanted situations: excess stock and registered breaks in it. Sometimes we reach a limit where we have a lot of what we don’t need and not enough of what we do need at a specific moment. The good news is that managing this process can be simplified in any scope and regardless of the sector of activity of an organisation.
The KANBAN system – Japanese word that means “card” – is an excellent way to standardise the purchasing process. This element can be physical or electronic, and represents the need to make a purchase order from a specific supplier. With a residual implementation cost (in the case of having physical KANBANs), this system can be applied to different sectors: factory plants, warehouses, hospitals, offices and even at home.
To implement this system, there is basic information that have to be on the KANBAN, for example: identification (and code) of the supply needed, identification of the supplier, order point and quantity/amount to order. The supply in question should be ordered when the stock approaches the moment of resupply, when there needs to be a security stock that will secure that the product is still available while the order does not arrive.
As a result of this process – which is simple, secure, transparent and does not depend on people -, a state of synchronisation between demand and supply, registering a continuous cycle of logistical replenishment. The standardisation of the stock makes it so that the product is always available at the point of use.