Simple approach to reduce inventory, shorten lead times, and eliminate stockouts with minimal manual supervision
Choosing the right planning method in Oracle Inventory is critical for balancing cost and service level. While methods like Min-Max planning ensure critical items are always in stock, they can lead to overstocking for other item types.
Kanban planning in Oracle Inventory offers a powerful, lean alternative for high-cost items with short lead times, enabling you to reduce inventory carrying costs and eliminate stockouts with minimal manual intervention.
Kanban is a visual, pull-based replenishment system. Originating from the Toyota Production System, the term "Kanban" means "signboard" or "card." In Oracle Inventory, it digitally replicates this concept.
Instead of a system like MRP "pushing" planned orders based on forecasts, Kanban planning "pulls" materials through the supply chain only when there is actual consumption. This creates a demand-driven flow that is highly responsive and efficient.
Oracle Inventory offers multiple planning methods but not all are suited for every item. Choosing the right one depends on factors like item criticality, cost, and lead time.
For example:
Min-Max Planning works best for critical manufacturing components. It maintains minimum stock levels at all times to avoid production bottlenecks and ensure uninterrupted operations.
Kanban Planning, on the other hand, is ideal for high-cost items with short lead times, which can be replenished quickly when required rather than stored in large quantities.
Using Kanban for the right set of items allows organizations to optimize working capital while maintaining operational efficiency.
If you're interested in broader inventory strategies, check out our guide on maximizing Oracle solutions for more insights.
By design, Kanban minimizes excess stock. You only replenish what has been consumed, which is ideal for high-value items. This frees up working capital and reduces storage costs.
Since Kanban items are defined by their short lead times, the replenishment cycle is quick. This makes your supply chain more agile and better able to respond to real-time demand changes.
Kanban ensures a continuous flow of materials. When inventory at a point-of-use drops to a predefined level, a replenishment signal is automatically triggered, preventing bottlenecks on the shop floor.
Once configured, the Kanban system runs with minimal oversight. Replenishment is automated based on actual usage, freeing your planners to focus on more strategic tasks.
Understanding the difference between these two methods is crucial for effective Oracle inventory management.
| Feature | Kanban Planning (Pull System) | MRP (Push System) |
|---|---|---|
| Trigger | Actual demand/consumption | Forecasted demand & sales orders |
| Principle | Replenish what was used | Plan what will be needed |
| Inventory | Low, controlled by Kanban size | Can be higher, based on forecasts |
| Flexibility | High, responsive to change | Lower, reliant on accurate forecasts |
| Best For | Repetitive, high-volume items with short lead times | Complex products with long lead times & variable demand |
The Kanban process in Oracle follows a clear, automated cycle:
Consumption: A material is consumed from a Kanban location (e.g., the shop floor).
Signal Trigger: The system detects the drop in inventory below the threshold and generates a replenishment signal (e.g., an electronic Kanban card).
Replenishment: Based on the source defined in the pull sequence, the system creates a purchase order (for external suppliers) or a internal requisition/production order (for internal organizations).
Receipt: The replenished quantity is received into the Kanban location, making it available for consumption again.
Oracle Inventory provides four source types for Kanban replenishment, each with its own workflow:
Inventory: Replenished from a predefined subinventory within your organization.
Supplier: Replenished directly from an external vendor via a purchase order.
Production: Replenished through an internal manufacturing process via a discrete job.
External Processing: Replenished by an external supplier who performs a specific processing operation.
Choosing the correct source type in the item's pull sequence is essential for an efficient workflow.
Replenishable Kanbans: These are the standard, cyclical Kanbans. They continuously move from "Full" to "Empty" and back to "Full," forming the backbone of your pull system.
Non-Replenishable Kanbans: These are one-time signals used to handle sudden, unplanned spikes in demand without disrupting the standard replenishment cycle.
Oracle's Kanban system supports external devices like barcode readers to scan Kanban cards and automatically trigger replenishment signals.
Benefits of using barcode integration include:
Faster transactions
Accurate inventory tracking
Reduced manual errors
Real-time visibility into material movement
This helps companies keep inventory levels lean but reliable, especially for high-cost, short-lead-time items.
Oracle supports integration with external devices like barcode scanners and RFID readers. This allows shop floor operators to quickly scan a Kanban card to trigger a replenishment signal, further reducing manual data entry and potential errors.
For a deeper dive into modern supply chain trends, explore our article on Connected Supply Chains: navigating the future of logistics in a digital world.
Mastering Kanban planning can transform your inventory management, leading to significant cost savings and operational efficiency. The setup requires precise configuration, but the long-term benefits are substantial.
Get a complete, step-by-step guide to implementing and optimizing Kanban planning within Oracle E-Business Suite. Our detailed white paper covers advanced setup scenarios, common pitfalls, and best practices.
Kanban Planning in Oracle Inventory is a pull-based replenishment system that uses signals (like cards or barcodes) to trigger material movement only when needed. Unlike push systems such as MRP, Kanban helps maintain lean inventory levels, shorten lead times, and reduce manual intervention.
The key difference is when and how replenishment happens.
Min-Max Planning maintains a minimum stock level at all times and triggers replenishment when inventory drops below a set threshold.
Kanban Planning, however, relies on real-time consumption signals to pull stock as needed, making it ideal for high-cost, short-lead-time items.
Kanban works best for items that you don’t want to overstock but still need readily available. These are typically items that are:
High cost but low lead time
Used frequently in production
Easy to replenish quickly
Commonly found as processed parts, components, subassemblies, or certain finished goods
Yes, it can. Oracle supports multiple replenishment sources, including external suppliers. When stock reaches the trigger point, the system can automatically generate a purchase order or send a replenishment signal to the supplier. This ensures faster response times and reduces the need for manual follow-ups.
To set up Kanban Planning in Oracle EBS, you first identify items suitable for Kanban replenishment, configure Pull Sequences, and define the replenishment source such as a supplier, internal org, or production. Then you create Kanban cards or electronic signals that trigger replenishment and test the workflow to ensure it runs smoothly. Many teams also use barcode scanning to automate signal generation.
