Toyota’s Six Rules for Kanban

Simple Kanban LoopThe kanban system is the most famous way to establish a pull system. As part of their guidelines for kanban, Toyota has established Six Rules for Kanban. They can be found, for example, in the 1973 Toyota Production System Handbook. This blog post describes these six rules, based on the Toyota handbook. While these rules are all true, they are in themselves not sufficient to establish a kanban pull production. Nevertheless, this post will show you these six rules.

Introduction

Toyota LogoThe Toyota handbook lists six rules as prerequisites for a kanban system. These rules are as follows:

  1. Don’t Send Defective Products to the Subsequent Production Process
  2. The Subsequent Production Process Comes to Pick Up
  3. Only Produce the Amount Picked Up by the Subsequent Process
  4. Reduce Fluctuations
  5. Kanban Is a Means of Fine Tuning
  6. Stabilize and Rationalize the Production Process

Please note that often, anything from Toyota is seen as an ironclad rule that must not be violated. These rules do indeed make sense to me. However, I feel that here Toyota mixes up prerequisites with other factors like performance and maintenance of the system. Similarly, there also seems to be some gaps in their rules. An important rule I am missing is, for example, that “any material in the system must have a kanban card attached.” Hence, these rules are here more for inspiration, and less a step-by-step guide to establish a kanban system. Anyway, here are these rules and their explanation.

1 Don’t Send Defective Products to the Subsequent Production Process

Broken Machine in JidokaThe first rule is pretty much a no-brainer. Defects are one of the seven types of waste, since effort goes into production that brings no benefit. The later you find a defect, the more expensive it is. Hence, the goal is to catch defects early. Only good products can be added to the supermarket. This avoids costly subsequent mistakes, and also allows earlier detection of systematic errors. Ideally, every machine at every step should be able to detect defects. This is also known as Jidoka.

2 The Subsequent Production Process Comes to Pick Up

The kanban system needs to know how many parts it has in the system to reproduce more items. Therefore, the supermarket with completed goods is the responsibility of the supplying kanban process. The subsequent process knows best when it needs more material. Hence, it makes sense for the subsequent process to come and pick up the items as needed, so that they can be reproduced by the kanban system. If the supermarket would be the responsibility of the subsequent process, then there would be a risk of information for reproduction coming too late.

3 Only Produce the Amount Picked Up by the Subsequent Process

Female workers pose with trolleys laden with sacks of flour in the grounds of the mills of Rank and Sons, Birkenhead, Cheshire, in September 1918.This rule is one of the key elements of the kanban system. The idea is only to reproduce or replenish what was consumed. If the next process takes four parts, you produce four more of these parts – not more, not less. This allows you to maintain an upper limit on inventory, which for me is the key feature to obtain the benefits of a kanban system. The combination of rule 2 and 3 makes the material in the value stream flow smoothly.

4 Reduce Fluctuations

Source Make Deliver FluctuationsThis step is an important part of lean, often underestimated in the West. The kanban system should be able to reproduce parts reliably within the replenishment time. The kanban system assumes that there is always material in the supermarket for the subsequent process. Large fluctuations mean either occasional lack of material in the supermarket, or much larger inventory levels to cover these fluctuations. Both are not good. The first causes stoppages and subsequent lack of material downstream. The second increases the negative effects of inventory.

Hence, reduced fluctuation, or even some form of leveling, allows for cheaper and more efficient production. Please note that leveling can come in different forms, not all of which are really well suited for your average production system. Especially a longer term pattern is, in my view, one of the hardest things to do in lean.

5 Kanban is a Means of Fine Tuning

Kanban cardOver time, the demands on your system will change, as will the system itself. Therefore, you have to adapt the system. Adjusting the number of kanban is an approach to fine-tune your production. If your demand or your replenishment time increases, you need more kanban to cover for this demand (assuming that you do have the capacity to satisfy this increased demand). If your demand or your replenishment time decreases, you may get away with less kanban. This can be easily tracked by monitoring the inventory in the supermarket. If you are often empty, you may need more kanban. If you are never empty, you may get away with less kanban.

6 Stabilize and Rationalize the Production Process

The last rule aims to stabilize the system. When you establish your kanban loop, you must put forth the effort to debug the newly implemented kanban system, create the standards for the new system, make sure the new standards are actually good, and find problems and resolve them. This is actually the Check and Act of the PDCA circle. See if it actually works; fix it if it doesn’t.

The success of a kanban system depends on such good standards. For example, the transport of the kanban back to the beginning of the loop must happen regularly at fixed intervals. If it happens randomly, your replenishment time will fluctuate, and you will either need more cards or run out of material.

What Is Missing

While these rules are all good, they are in my view not well structured. They are also missing some points I thought would be important. For example, I have learned at Toyota that “any material in the system must have a kanban card attached.” If there is material that does not have kanban attached, it is not limited by the number of kanban. The possible overproduction could turn the pull system into a push system.

Lots of other information would be helpful. What has to go onto a kanban card? How should a supermarket look like? How do I determine the number of kanban? Hence, again, these six rules are in my view more of an inspiration and much less actual “rules” as claimed by Toyota.

In any case, I hope this gave you more inspiration and ideas on how to establish a kanban system. Now, go out, turn your material flow in a pull system, and organize your industry!

Source

Toyota Motor Corporation. Toyota Production System Handbook. Translated by Mark Warren, 1973. Many thanks to Mark Warren for translating this document.

4 thoughts on “Toyota’s Six Rules for Kanban”

  1. Interesting, mostly we now work on the build ratio and the daily plan. But of my plant it is easy since we have so many on site suppliers they feed straight into our lines.

  2. Hi Christoph Roser,

    My name is Evan and I am a senior in college where I study Business, Computer Science, and Spanish. I am currently pursuing my Green Belt certification which led me to stumble upon your blog post here.

    I really enjoyed your article and how it brought us back to the fundamentals of Lean by analyzing the key guiding principles of the Kanban system used by Toyota in the 1940s. I have enjoyed my studies of JIT production via “The Goal” by Eli Goldratt, and I was very excited to read your post.

    As for the first rule, I think it is common sense to pull defective products out of the production line as fast as possible. I never knew of the term Jidoka though, yet its principle is extremely important and something I would implement if I had my own process. I am curious though, why does allaboutlean.com veer towards an idea of 7 wastes? In my education, we learn about the “8 wastes,” where Non-Utilized Talent is a waste in addition to your seven. Is there a reason non-utilized talent isn’t considered a waste in your post?

    The second rule I think is interesting, and it is not something I would have guessed. A lot of the time, when we finish a task, we like to get it out of our area as fast as possible to get it off our minds so we can focus on the outstanding items. The idea of the next step coming to you when they are ready is new to me, and I would be more interested to see the math that supports this rule so I can understand it further.

    I like the third rule you posted. Inventory is one of the wastes, and ensuring you are not overproducing certain items, while meeting the minimum production demand, it extremely important. During my experience as a retail manager, we had what we called “minimum on-hand presence,” where whatever was sold was replaced on our next delivery so that we always maintained the same MOHP. Although slightly different, I think the principle is still the same- have enough to satisfy demand but not too much to create inventory waste.

    For your fourth rule, I find the concept of leveling interesting. From what I have learned, smaller batch sizes are usually more efficient. However, the engineering and planning that goes into each station to achieve small batch sizes and SMED changeovers intrigues me. What advice do you have to someone who wants to reduce fluctuations in their production process?

    While the first four rules aim to “improve” the system, I enjoyed the last two rules’ suggestions for how to “control” the system, an important step of the DMAIC process. A lot of Lean Six Sigma projects fail because once the changes are implemented, there is no regard given to continuous monitoring and tweaking of the system to maintain its efficiency. I was wondering, what measures do you use when you are controlling a system and determining what fine tuning, stabilizing, and rationalizing need to be done to ensure your Kanban pull system functions effectively?

    Thank you for reading my comment here. If you get a chance to answer my questions, I would love to learn more from you.

    Sincerely,
    Evan

  3. Hi Evan, at Toyota they use 7 wastes. The 8th one is a western invention. While also somewhat true, the problem with this 8th waste is that you cannot measure it. You can measure all the other 7 wastes, but not “lack of human creativity”. That makes it hard to act on.

    As for fluctuations, I am pondering a series of blog post, but for now you can read my Three Fundamental Ways to Decouple Fluctuations.

    Thanks for the long comment!

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