Kanban is a signaling system to trigger action: As its, name suggests, kanban historically uses cards to signal the need for an item. “Kanban” uses the rate of demand to control the rate of production, passing demand from the end customer up through the chain of customer-store processes. In 1953, Toyota applied this logic in their main Machine shop.
The time-based approach to inventory-Management came into focus when Toyota Motors Company came out with the concept of kanban in 1950. This lead to the dramatic reduction in WIP quantities tying the inventory closely to the demand from subsequent process or internal customer. Kanban is conceptually a two-bin system, a signal being raised to warrant replenishment.
American disappointment with the attempts to incorporate Japanese methods lead to other concepts like DRP.
Quick response [QR] :- When a retailer places an order for replenishment, the supplier with the help of EDI [Electronic data interchange] finalizes the delivery details and communicates them to the customer in advance. This facilitates scheduling labor and other facilities. This reduces inventories as uncertainties are reduced and total cost resulting into better performance.
Continuous replenishment strategy [CR] :- Also known as vendor managed inventory. This approach eliminates the need for placing an order. A supply chain relationship is established that ensures continuous replenishment of stock at customers place by the vendor.
There are two basic needs in CR:
Effective communication system to provide key information between customer and supplier Sufficiently large volumes to make transportation viable
Finally customer should honor the shipment from the supplier for payment
Automatic or profile Replenishment or[AR] :- AR enables the supplier to anticipate the customers’ requirement in advance to make replenishment. The responsibility for inventory management is placed squarely on the supplier. There should be information flow between customer & supplier that makes, inventory visibility possible. While this takes away the inventory management from the customer and gives it to the supplier, supplier gets the benefit of inventory visibility and more effective management to reduce total costs.
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