Kaizen
Kaizen is broadly interpreted as the Japanese term for continuous improvement, although it is perhaps more accurately translated as a form of control. It applies to all aspects of organisational output, and can thus be linked to both Toyota Production System (TPS) and types of waste, as well as the means of introducing and managing basic employee working conditions. One of the most popular tools of Kaizen is a Kanban, which of itself translates to differing types of organisational process control, which collectively lead to greater organisational production efficiency.
The overarching principle of Kaizen, and Kanban within that, is to create a ‘pull through’ organisational process, as opposed to push through. Historically, for many manufacturing organisations, understandably, they would place the manufacturing process itself at the heart of operations, and would strive to make this element as efficient as possible working towards metrics such as overall equipment efficiency. In practice this typically translates to producing as much as possible as quickly as possible because it reduces individual unit cost. It is an example of the cost / efficiency trade-off in practice. Understandably, employees involved in manufacturing will work towards achieving their efficiency targets if this is what they are encouraged to do, giving no thought to wider impact and the production of waste in the process.
To illustrate, working on producing widgets at the lowest possible unit cost by mass-producing them as quickly as possible, not only results in waste in terms of overproduction but also waste in terms of unnecessary inventory, unnecessary transportation, and unnecessary storage. By driving overall processes from one single manufacturing point, an organisation may well meet its targets, but not only is likely to be ignoring what the competition is doing, it is not even listening to what customers are asking for (a lost opportunity). In the long term this could result in obsolete stock which is also very costly and wasteful.
To reach the process of continuous improvement, therefore, a degree of control is necessary which accommodates some measure of apparent inefficiency in different parts of the organisational process to give overall greater production and supply chain efficiency. Much like the principle of Andon, where Toyota recognize that a small degree of inefficiency in one part of the production line is better than waste throughout the entirety of the production line, balancing efficiencies with sensible organisational control metrics is much better in the long term. It can be, however, a very challenging way for organisations to think unless they are familiar with the process. This is why we talk about lean being a philosophy as much as a set of actions or behaviors.
Kanban
A Kanban is a way of controlling organisational procedures. It typically controls the flow of inventory through an organisational process. In some ways it can be seen as deliberately limiting, but the idea behind Kanban is that an organisation only works with what it needs to, no more and no less. This reduces clutter and unnecessary inventory, increases transparency, and reduces the various types of less obvious waste such as those hidden in the sea of inventory.
Various types of Kanban signal the movement of goods through the process, and examples are likely to include movement of component parts to the next stage in manufacturing, or calling for raw materials to begin the process of manufacturing. Some organisations choose to deliberately and physically inhibit the opportunity for holding inventory by significantly reducing stock holding capacity. In a retail example, small city center shops, such as express supermarkets, often hold little to no inventory other than what is on sale on the shelves. When it is sold it is gone and there is no replenishment until the following morning, but this prevents any form of food waste. It also means that as much of the costly city centre retail space is available for generating profit from sales rather than serving as a very expensive form of short-term warehouse.
Other types of Kanban might include those outside of the organisation, for example signalling to vendors or suppliers that it is time to replenish stock or raw materials. This is now often possible with software such as Vendor Managed Inventory (VMI) whereby there is transparency between the retailer and supplier as to accurate real-time stock levels which trigger the next delivery and order point on an automated basis. EPOS (Electronic Point of Sale) is another way of achieving this, when suppliers update their own order records on the basis of scans barcodes at the point of sale. This provides accurate real-time information of consumer demand and drives a pull through supply chain, thereby reducing unnecessary waste in the process of ordering, and preventing organisations from ordering stock which they may not be able to sell.