Kanban Calculation: How to Calculate Kanban Numbers

In any Kanban system, calculating the right number of Kanbans is essential to keeping operations running smoothly. Kanban signals manage the flow of materials and products throughout a process, ensuring production continues without interruptions. But how do you determine how many Kanbans are required to maintain a balanced process? This is where Kanban calculation comes in.

Why Kanban Calculation is Important

Kanban calculation plays a vital role in ensuring the efficiency and effectiveness of the system. It helps establish the right supply levels so that the process doesn’t suffer from overstocking or stock shortages. The key idea is straightforward: the more Kanbans in circulation, the more stock you will need to handle. Conversely, fewer Kanbans mean less stock, but this also risks running out of materials if not carefully managed.

A well-balanced number of Kanbans allows your production line to operate efficiently, without excess inventory piling up or waiting for parts or materials. This balance is the cornerstone of a lean manufacturing process, where waste is minimised, and productivity is maximised.

At a Lean manufacturing factory in Japan, they say: The less stock on the shop floor, the leaner we are.

How to Calculate the Right Supply Levels

There are different methods to calculate optimal supply levels in a Kanban system. The aim is to maintain a continuous workflow while avoiding production halts. To achieve this, the number of Kanban cards or signals must be calculated accurately.

Kanban cards represent the demand for materials or products, and the system only works effectively when the right number of Kanbans are in circulation. Too many Kanbans could result in overproduction, while too few could lead to delays and interruptions.

The Kanban Calculation Formula

To calculate the number of Kanban cards needed, four main factors are considered:

1. Daily Demand (DD) – How much material or product is consumed per day.
2. Lead Time (LT) – The amount of time it takes to replenish supplies, usually measured in days.
3. Safety Stock (SS) – A buffer to accommodate any unexpected delays in supply.
4. Container Capacity (Q) – The amount of material or product that fits in one container.

Using these variables, the formula for calculating the number of Kanbans is as follows:

Number of Kanbans = [ (DD * LT) * (1 + %SS) ] / Q

This formula ensures that the system maintains a steady flow of materials, taking into account daily demand, lead time, safety stock, and the size of the containers in use.

Breaking Down the Formula

• Daily Demand (DD): This represents how much of a particular product or material is used or needed each day.
• Lead Time (LT): This is the time taken for materials to be delivered or for the upstream process to produce and make them available to the downstream process. Lead time is typically measured in days.
• Safety Stock (SS): A percentage that acts as a buffer to cover any unexpected fluctuations in demand or supply chain disruptions. It’s added to ensure the system can handle delays or spikes in production demand without running out of stock.
• Container Size (Q): This refers to the quantity of material or product that fits into one container. It could be a box, batch, or another form of storage unit that your process uses.

Example of Kanban Calculation

Let’s consider an example to make the calculation clearer. Suppose the downstream process uses 100 products per day, and it takes 5 days for the upstream process or supplier to deliver the required products. You decide to keep a safety stock of 20% to account for any unforeseen delays. Each container can hold 50 products.

Using the formula:

• Daily Demand (DD) = 100 products per day
• Lead Time (LT) = 5 days
• Safety Stock (SS) = 20% (or 0.20)
• Container Size (Q) = 50 products per container

Now, let’s apply these values to the Kanban formula:

Number of Kanbans = [(100 * 5) * (1 + 0.20)] / 50

Number of Kanbans = (500 * 1.20) / 50

Number of Kanbans = 600 / 50 = 12 Kanbans

What Does This Mean?

In this example, the calculation reveals that 12 Kanbans (or containers) are needed to keep the process flowing without interruption. These 12 Kanbans will ensure that even if there is a delay in delivery or an increase in demand, the production line will not stop.

Without enough Kanbans in the system, the downstream processes could run out of materials, causing production delays. On the other hand, too many Kanbans could lead to overstocking, tying up resources and space unnecessarily.

Fewer Kanbans, Less Stock

One important insight from this calculation is that fewer Kanbans in circulation means less stock is required. This is especially useful when deliveries can happen frequently or lead times are short. In such cases, you can reduce the number of Kanbans in circulation, which in turn reduces the amount of stock that must be kept on hand.

By having fewer Kanbans, you avoid excessive inventory, which is one of the key principles of lean manufacturing. A lean process aims to reduce waste by only producing or stocking what is necessary at any given time. This efficiency not only saves space but also minimises the costs associated with storing surplus materials.

However, reducing the number of Kanbans should be done carefully. If Kanbans are reduced too much, it can create a risk of running out of materials, leading to production halts and inefficiencies. The key is finding the right balance where you minimise stock without disrupting the production flow.

Adjusting for Changes in Demand

Kanban systems are dynamic, and as demand fluctuates, the number of Kanbans may need to be adjusted. For instance, if daily demand increases, you might need more Kanbans to ensure that the system can handle the higher consumption rate.

Let’s say that instead of 100 products per day, the downstream process now needs 150 products daily. Using the same lead time, safety stock, and container size as before, the Kanban calculation would be:

Number of Kanbans = [(150 * 5) * (1 + 0.20)] / 50

Number of Kanbans = (750 * 1.20) / 50

Number of Kanbans = 900 / 50 = 18 Kanbans

In this case, an increase in daily demand results in a higher number of Kanbans being required, demonstrating how the system adjusts to changes in consumption.

Conclusion

Kanban calculation is a powerful yet simple tool that ensures your production line operates smoothly. By using a straightforward formula, you can calculate the exact number of Kanbans needed to balance your supply levels and keep everything running efficiently.

Whether you use physical Kanban cards or an electronic system (e-Kanban), the principle remains the same: the right number of Kanbans guarantees that you have enough stock to meet demand without overstocking.

Always remember that the goal is to maintain a smooth flow of materials, with just enough stock to avoid delays but not so much that resources are wasted on excess inventory. By calculating and adjusting your Kanban numbers based on actual demand, you can optimise your production process, minimise waste, and ensure that your business operates like clockwork.