Framework for the implementation of a supplier Kanban System in a small and medium scale industry

In the competitive environment of the automotive components industry, where the survival of a company is highly dependent on its ability to keep cost manageable and selling price low, an efficient inventory management system will reduce the cash tied down in inventory and improve the financial cost associated with it.This paper provided a step by step framework for small and medium scale industries (SMI) within the automotive component industry to implement a Supplier Kanban System (SKS) for managing and controlling the volume of stocks housed in their respective warehouse.The main benefit to be gained from implementing the Supplier Kanban System (SKS) is the reduction of inventory and manpower required to manage this inventory.When effectively implemented, the company will hold only three days inventory and the supplier will continuously replenish the inventory to sustain a three day stock level.The three day stock level is necessary because of the volatility of demand within the automotive industry in Malaysia and is designed to strike a balance between keeping Just in Time (JIT) stock and overstocking. The framework is divided into three levels and the first level evaluates a company‟s suitability to implement the Supplier Kanban System, the second level guides the company towards the preparation for the implementation and third level guides the company on the implementation and sustainability.Each of these levels has a series of steps, which has to be executed sequentially and one can move to the next level only when the current level has been successfully implemented.