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Kanban Inventory Management: Basics and Tips

08 May 2020

In this day and age, customers are annoyed by delays and the pressure to quickly fulfill orders is mounting. 

The additional problem is supply chains tend to be quite complex and distributed across geographic locations. That’s quite a tall order businesses have to meet. 

Well, the good news is Kanban equips us with amazing visual tools for managing inventory and the related workflow. It encourages us to rethink our approach and break complex projects down into bite-sized, manageable bits. 

This is a way to boost efficiency, keep up with demand, prevent overproduction, and trim costs. We can also add various efficiencies to our supply chain over time and outmaneuver the competition.

Lessons from Business Champions 

Kanban was pioneered on factory floors of the Japanese automobile industry giant - Toyota. 

Namely, Kanban originally helped Toyota closely monitor and then restock inventories in a timely manner. The chief objective was to achieve a smooth flow of products throughout all stages of the production cycle. 

The management system hinged on a set of main principles:

  • Never deliver defective products
  • Take only what’s needed
  • Produce just the right quantities 
  • Level the production 
  • Optimize the process
  • Stabilize the system 

Most of these ground rules are rather self-explanatory. They set superior quality standards and are geared toward optimal levels of production. Their effectiveness launched the trend of Kanban tools and practices into the mainstream, spreading it to other industry sectors. 

Indeed, the value proposition of Kanban inventory management is clear. We have the opportunity to rely on a comprehensive visual map of our business needs and consumer wants. This monitoring process holds the key to optimal resource allocation and management efficiency. 

Getting Management Down to Fine Art 

The basic logic underpinning Kanban inventory management is simple. 

One aims to always have a minimum amount of stock in storage. The amount is supposed to reflect the market demand and be in line with current capacities.  

In that manner, it’s possible to avoid extra expenditures related to purchasing, manufacturing, and storing excess goods. At the same time, you can prevent your inventory from depleting. 

This goes to show that inventory cost and level are always mutually dependent.  

What is more, Kanban management enables organizations to do away with workflow bottlenecks and slowdowns. With Kanban cards, which should accompany every product, you can address any weak links and stress points in your supply chain. 

These visual tools designate individual links in the chain and give you a clear overview of what is happening at any given moment. In other words, they identify where your inventory is in the pipeline. It becomes much easier to make sound decisions regarding item delivery. 

Likewise, management can rely on progress and status reports and make adjustments as necessary. This is another illustration of how Kanban lays everything out in an easy-to-understand way. The learning curve is minimal because the human brain processes visual cues way faster than words. 

The Big Kanban Picture  

Furthermore, if you choose to leverage dedicated software tools, you can integrate Kanban boards with your management dashboard. This is to say you may engage in real-time inventory monitoring and create charts and graphics that showcase key project metrics. 

In practice, many businesses decide to create separate projects for each inventory type. This setup streamlines the process of tracking inbound and outbound inventory across different categories. 

It’s important to notice here traditional boards are typically divided into three columns. 

These are: 

  • To-do Column — holds all identified tasks
  • Doing Column — lists tasks that are in progress 
  • Done Column — is reserved for completed tasks 

Of course, you can modify your Kanban board any way you see fit so that it best suits your actual process. 

The tasks move from one column to another as workers tackle them. 

The management system can also be broken into different tasks for easier overview. You basically place an inventory item on an individual card. Every card includes information relevant to the position in the cycle. 

Again, the trick is to move the item according to what is taking place “in the field”. Here, the participation of and tight collaboration of employees is encouraged via software platforms. Ideally, they can leave comments, write task descriptions, and attach files. 

They make managing and tracking the workflow elegant and fuss-free. 

A Roadmap for Businesses Success 

Ultimately, Kanban establishes clear lines between production and storage, keeping both your production floors and warehouses clutter-free. 

The end result is the process of gradual, company-wide transformation and fine-tuning. That being said, Kanban inventory management also benefits organizations that don’t deal with production. 

After all, stock surpluses and deficits can always adversely affect operations.

For instance, online retail and eCommerce brands can use it to respond to consumer needs better and reduce wasted money and shipping stalls. Proper inventory optimization also allows them to accurately predict future inventory needs. 

If you do actually run an eCommerce business, you may want to start putting together a Kanban Inventory management system. Things will be difficult at the beginning, but Kanban is all about ongoing learning and incremental improvement.

As time rolls by, you should be able to boost efficiencies and standardize the whole system. Just make sure to embrace a holistic approach to management and align management systems with your business plan. 

It’s time to gain an edge in the crowded market.  

Take the Workflow to the Next Level

Kanban inventory management lets you visualize exactly what you need, as well as figure out when you need it. You can finally stop playing catch-up with orders. The only issue is this kind of mastery isn’t easy to accomplish in practice. 

What you need to do is create a plan on how to put an efficient management and monitoring system in place.  Find ways to plug the gaps in your supply chain and discover efficiency-boosting opportunities as soon as they emerge. 

Refine the workflow and supercharge your operations according to market demand and your own capacities. 

Following these steps, you will avoid inflated overheads due to overproduction and excess inventory. Not only that but you will delight your customers with speedy delivery and stay afloat even in times of great uncertainty.