Only the amount needed.

Kanban is meant to help deliver items only when they are being sold or used by the next customer, so that there is no excessive pileup of inventory or finished products on the floor or in the warehouse. Using kanban is a way to regulate product flow through the factory. Think of it as a system of pipes that you control so you can increase or reduce how much material heads to a certain place.

Kanbans: backup batteries for production

When you are worried about running out of battery life on your phone, on a cordless drill, or anything else, you keep a backup battery handy. When your drill runs out of power, you grab the backup battery and plug in the dead battery. This way, you keep moving on your project while the extra battery recharges. Having multiple kanbans means you never run out of product at the wrong time. When you reach the bottom of a kanban, you start working on the next one while the empty kanban is refilled.

Practical Pull System: adjustable kanban

A Kanban system keeps a very small amount of inventory on hand, so as soon as a customer places an order, they receive an item from the inventory. Then the factory builds more of that item, builds work in process needed for the item, and reorders any raw materials needed, working all the way backwards through the system to ensure the entire system will be ready to go for the next customer order. The exact amount of product moved depends on the batch sizes and the customer demand. This system can change over time as the business adjusts batch sizes and has changes in sales volume.

Kanban makes your pull system happen

The pull system is the strategy behind how you make products, and kanban is the day-t0-day tactics for executing the strategy. In a pull system, everything starts with a customer order. Using kanban helps to control the flow of production so that product can quickly be moved to fill orders, then the Work-In-Process and inventory levels can be restocked back to the appropriate levels. A working Kanban system works to strike the balance between two extreme versions of a pull system.

Two Extreme Pull Systems

A Pull system describes how product moves in your studio, but not necessary how much to have at each step. Here are a few examples of the extremes: 

Extreme Pull System: Grow-To-Order

In a totally made-to-order setup, you wouldn’t stock any finished product or order any raw materials before receiving a customer order. If you are a brewery, you’d wait until someone came in to order a beer before heading in the back to start brewing. Then you’d start growing the hops and grain for the beer, so your customer sits at the bar for a few months before they can enjoy a drink.

Extreme Pull System: Super-Stocked Warehouse

In this opposite example, your orders are ready to ship in a heartbeat. You’ve pre-packed every possible combination of different products and have them sitting in inventory. When a customer buys a red size medium shirt and a black handbag, you’re ready to go and find the box with that combination of products in it from your warehouse, which is millions of square feet to hold every possible product combination.

What is kanban?

Like many manufacturing terms, the work “kanban” comes from Japanese production systems. The direct translation of kanban is a billboard or a sign. Using kanban means that you will use some type of physical sign to tell the production team what to make. This can be done with by moving a written card, writing on a whiteboard, or physically moving an empty cart or bin in the studio.

Order Fulfillment: Benefits of Using Distributors

Distributors provide services such as warehousing and shipping product to stores. They are convenient for stores, since the buyer can purchase stock from a single catalog rather than individual manufacturers. Many stores prefer this convenience, so using a distributor increases the number of stores that are willing to carry your product. They also provide support such as product information, sales support, and demo/sampling services. Using these services can be a simple way to expand the capabilities of the sales function at your company without adding more people to your company.

Order Fulfillment: Costs of using Distributors

Distributors require an existing customer demand for your product. The distributor will charge various fees, either directly or as a percentage of sales cost, for the services they provide such as warehousing and shipping. Sales support is typically not included in the percentage fees taken by distributors, so a brand must provide its own sales staff or pay the distributor for this additional service. Distributors in different industries will work differently and have different requirements and costs, so the best way to learn more is to try to contact the distributors used in your industry.

Order Fulfillment: Distributors are Logistics Partners

Distributors warehouse products and ship them to stores. When you sell product to a retail store that in turn sells to customers, you can either manage each store’s inventory and fill orders yourself or use a distributor. A distributor is essentially an outside fulfillment company that specializes in sending products to businesses for resale. If you aren’t sure what distributors would potentially carry your products, ask the buyer at a retail store where your products are sold or where you want your products to be sold. The buyer will know the commonly used distributors in your industry.

Order Fulfillment: Using Third Party Fulfillers

There are many services available to store your products and fill customer orders on your behalf. Rather than hiring someone to come to your studio and fill orders, you hire the fulfillment service to accept large shipments of your product and pick, pack, ship, and send notifications to your customers from a separate warehouse location. There are a growing number of ecommerce fulfillment companies offering such services. Because fulfillment companies hire dedicated workers to pick and pack orders and receive volume discounts on shipping costs, they can potentially fulfill orders more efficiently than each individual business can. However, after considering the markup of these costs, the final cost to you is often the same or more than fulfilling directly. Some popular fulfillment services in the USA are ShipBob, FedEx Fulfillment, Amazon, and WhiteBox.

Fulfillment service costs

The direct monetary cost of using a fulfillment service includes setup fees, storage fees, per-order costs, inventory receiving fees, and more. There is also the cost of losing an opportunity for you to interact with your customers through the ‘unboxing’ experience. Because of the time needed to send product to the fulfillment service, you would need to keep more inventory on hand at the fulfillment center than you would when filling orders directly from your studio.

Fulfillment service benefits include the removal of a large space-consuming and time-consuming activity from your operations so you can focus on other items. If you are low on space at your studio, you can send product as it’s produced and use all the available space for production activities. If you don’t yet have a production facility, you can rent temporary space (at a shared commercial kitchen perhaps) and produce enough inventory to send to the fulfillment center, then manage your business from home. This would allow you to scale up without any dedicated studio space at all.

Pick and Pack: Ship The Order

The outside of the package should contain enough information to get the order to the right place and avoid confusion with other orders. For shipping using a common carrier such as UPS, USPS, FedEx, or DHL, the shipping label will contain this information. If using a trucking company, delivering yourself, or having customers pick up, then include at a minimum the customer name and order number.

Pick and Pack: Pack Second

To Pack, take a completed picked order and check it against the packing slip. Ideally, one person picks the order and a second person checks it while packing. You can also pick orders in the morning and pack in the afternoon, checking them yourself. Seeing each order twice gives you a chance to catch any mistakes in product quantity or type. When checking and packing, place your initials on the “packed by” location on the packing slip.

Pick and Pack: Flag Orders That Aren't Ready

Use a visual flag/alert system to identify any orders that are not ready to ship. The orders might have special requirements like samples to be added, a personal note to write, or product that needs to be made before the order ships. The needs-attention flag should be something simple yet visually out of place, such as a brightly colored gift-wrapping bow, a mini traffic cone, or a yellow rubber ducky. By easily identifying any order that needs special attention, you can focus on moving out all the other orders without worrying that you will accidentally pack an order before it is complete.

Pick and Pack: Separate Orders Visually

The picked order is laid out on a table, in a box, on a tray or other contained area along with the packing slip. Using a physical space like a piece of paper or the sides of a tray helps to visually separate orders from one another.

Pick and Pack: Pick First

Separating out the two steps of Picking and Packing helps to double-check the order and make sure it is correct. Using the packing slip as a checklist, the order is collected from storage/warehousing. The person that picks the order should initial the “picked by” line on the packing slip.