Topic 1: The Two-Bin Kanban Method

There are many “schools” of Lean Manufacturing. Some are closely aligned with the Toyota Production System (TPS), and tend to use a lot of Japanese terms and concepts. Others have Americanized the TPS, and made it more culturally accessible in the United States and other countries. The approach to Kanban will vary depending on which school of thought you were trained in.

When I first embraced Lean in the 1990’s, I was aligned with a version of the TPS called Demand Flow Technology or DFT. DFT took great pains to not use Japanese terms, and to be as American as possible. In fact, the word Kanban was one of the few Japanese words that made it through. And in those days the term Kanban and the term Two-Bin Kanban were virtually synonymous. For years I was under the impression that the two-bin method was the way the Kanban was implemented by everyone. Don’t get me wrong: the two-bin method is still alive and well today, but it has disappeared as an across-the-board method that would be used for all parts, and replaced with what we call the Multi-Bin Kanban method.

Before we get ahead of ourselves, let’s define what is meant by Two-Bin and Multi-Bin Kanban:

Two-Bin Method

1. Calculate the maximum inventory quantity for a given item, based on daily usage and an inventory turnover goal. The item may be stored in various locations, and each location will need to be calculated separately. Typically the quantities in a Kanban Supermarket will be greater than the quantities stored at the Points of Use.
2. Divide the calculated quantity by two, and select a container size that will accommodate these quantities.
3. Consume out of one container at a time, and when the container is empty refill it as a part of routine replenishment process. When the container is being refilled, you have a second container to use so there is no delay. The first container can be returned before the second container is empty.

Multi-Bin Method

1. Calculate the maximum inventory quantity desired, identical to the Two-Bin calculation above. From a calculation view-point the two methods are the same.
2. Select from a group of standardized containers the most logical container size to hold the calculated inventory quantity. The minimum number of containers would be two, but you could have three, four or more containers as needed.
3. Signal for replenishment when a container is empty, or when the first piece is consumed. Allowing a signal when the first piece is consumed initiates the replenishment process sooner, and also potentially adds an additional container to the system for that item.

About six years ago I started teaching public workshops at Toyota, and they have been a wonderful partner in their willingness to open their doors to host these classes. I did notice a certain “deer in the headlights” look when I used the term two-bin Kanban, and learned that this term (which I had assumed was the standard Kanban methodology) was unknown inside of Toyota. Of course Kanban was widely used, especially for common and smaller parts, and sometimes there were two bins, but the idea that two was the right number of bins was not there.

Let’s compare the pros and cons of both methods. Having only two bins as a standard has the advantage of simplifying the challenge of material storage since you will never have more than two bins for every item. The two-bin concept is easy to understand and teach. It starts running into problems if we include in our material management goals the need to standardize container sizes (which we do). If the quantity is variable but the container sizes that we can select from are limited, then it is unlikely that all items will physically fit into two containers. You can reduce the quantities, but then you will be impacting your inventory coverage and increasing the risk of running out.

The alternative, therefore, is to allow more than two containers (within reason), in the interest of standardizing container sizes and allowing better storage shelf organization. Of course you have the challenge of managing multiple containers, but this is not significantly harder than managing two. I see the multi-bin Kanban in use at Toyota, and for many Lean practitioners this has always been the way to do it. I do know of some factories today who are attempting to standardize their Kanban system on two bins only, but they are becoming increasingly rare.