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Kan Ban Supply Agreements

Bull Metal Products offers Kan Ban Supply Agreements to our customers as an efficient way to assure on-time delivery and minimize dollars tied up in inventory.  The starting premise is essentially a customer vender partnership with the Kan Ban Supply Agreement being the instrument detailing the responsibilities and commitments to each other.  At the core of the agreement is a mutual trust by each party.  The agreement is flexible to accommodate changes, and can be terminated by either party at any time, subject to specific terms of the agreement.

It starts with identifying which products will work well for this type of agreement.  Some things to consider beyond the particular details of the products specifications are; annual requirements, on-going demand, seasonality of demand, inventory space requirements, and dollar value of the product.

Kan Ban is a pull system that we set up within our facility to manufacture your product cost effectively in smaller production lots.  In order to do this we have to make some changes to our procurement and production that include things like an extensive review of and adjustments in our set up costs, and negotiating smaller lot long-term Kan Ban purchase agreements with our venders.  The details are all based on both the customer’s open ended rolling commitment quantity and the previously determined release (pull) quantity.

When the customer releases product for shipment (pulls it), it exerts internal pulls thru each production department in our shop and pulls raw material from our venders.  Some Kan Bans are set up with actual finished safety stock of the customer’s product in our warehouse; others are set up with direct pulls to department’s further back in the production process.  The details of each agreement are tailored to the specific needs of each customer taking into account the specific details of product being manufactured.

The benefits to both the customer and the vender are tremendous.  Our customers have shorter lead times from release of product to delivery, and a very pre-defined delivery window that allows some flexibility to accommodate spikes in demand.  We the vender have an on-going commitment from you our customer, with smaller production/ release quantities which allow us to service more customers per week.  It is a customer/ vender win/win.

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