Kanban System
Case Study - Can Information Systems Help Danaher Work Leaner?
Danaher Corporation designs, manufactures, and markets industrial instruments for measurement, display, and control. Danaher divides its $6 billion business into three segments: Professional Instrumentation, Industrial Technologies, and Tools & Components. One of the three focused niche businesses in the Industrial Technologies segment is Danaher Sensors and Controls, a leading manufacturer of process/environmental controls and tools and components. Danaher is a believer in lean manufacturing, which focuses on continuous improvement of the manufacturing process and elimination of nonproductive time. Lean manufacturers use waste reduction and improved processes to keep inventory levels low, reduce working capital, and fulfill orders faster. Tom Mathis, vice president of supply chain management for Danaher Sensors and Controls, is in charge of keeping his division lean. Danaher employs the Japanese kanban method of supply chain management instead of relying on a manufacturing resource planning (MRP) system. An MRP reorders parts based on projections of need from the factory floor. The kanban method uses actual need, as observed on the factory floor, to replenish parts just before they run out. Kanban is the Japanese word for “sign” or “signboard.” Manufacturers who use a kanban system for material or parts replenishment affix kanban cards to the fronts of the their storage bins. When a storage bin is low in supply, a worker transports the card to the appropriate storage area to signal the need for more parts. At Danaher, the worker who collects kanban cards from bins is called a pacer. The pacer hand delivers stacks of cards to the factory’s buyers, who in turn initiate orders based on the supplier, part number, and quantity information printed on the cards. Each factory in Danaher’s Sensors and Controls division requires between 30,000 and 40,000 parts, so the process is taxing. Still, this traditional
Danaher Corporation designs, manufactures, and markets industrial instruments for measurement, display, and control. Danaher divides its $6 billion business into three segments: Professional Instrumentation, Industrial Technologies, and Tools & Components. One of the three focused niche businesses in the Industrial Technologies segment is Danaher Sensors and Controls, a leading manufacturer of process/environmental controls and tools and components. Danaher is a believer in lean manufacturing, which focuses on continuous improvement of the manufacturing process and elimination of nonproductive time. Lean manufacturers use waste reduction and improved processes to keep inventory levels low, reduce working capital, and fulfill orders faster. Tom Mathis, vice president of supply chain management for Danaher Sensors and Controls, is in charge of keeping his division lean. Danaher employs the Japanese kanban method of supply chain management instead of relying on a manufacturing resource planning (MRP) system. An MRP reorders parts based on projections of need from the factory floor. The kanban method uses actual need, as observed on the factory floor, to replenish parts just before they run out. Kanban is the Japanese word for “sign” or “signboard.” Manufacturers who use a kanban system for material or parts replenishment affix kanban cards to the fronts of the their storage bins. When a storage bin is low in supply, a worker transports the card to the appropriate storage area to signal the need for more parts. At Danaher, the worker who collects kanban cards from bins is called a pacer. The pacer hand delivers stacks of cards to the factory’s buyers, who in turn initiate orders based on the supplier, part number, and quantity information printed on the cards. Each factory in Danaher’s Sensors and Controls division requires between 30,000 and 40,000 parts, so the process is taxing. Still, this traditional