Two-bin kanban systems are a good tool to simplify material control. They make it possible to issue small items to the shop floor and basically "ignore" them until the pull signal (an empty bin) returns. This technique is especially useful in operations with a large number of parts. With a two-bin system you can place the small, inexpensive components into a two-bin kanban system. You can then focus your attention on managing the more expensive components (it is not unusual to find that 10 percent of your parts make up over 90 percent of your inventory dollars).

The first step to implementing an effective two-bin kanban system is to sort your raw materials by cost. A simple way to do this is to multiply the cost of each item by your average daily or weekly usage. Table C-1 shows a fictional product's parts list sorted in descending order by weekly usage in dollars.

The next step is to calculate the percentage of inventory value represented by each item, as shown in Table C-2. Once this is done, it is easy to identify which parts are valuable enough to merit significant management attention, and which are candidates for a two-bin system. In our example, the top fourteen items represent over 94 percent of the entire inventory cost. Our decision to take the top fourteen items was based on a simple visual analysis of the data there is no need to develop complex rules for this type of analysis. A similar analysis of...