Kanban

What Is Kanban?

Kanban is an inventory control system used in just-in-time (JIT) manufacturing. It was developed by Taiichi Ohno, an industrial engineer at Toyota, and takes its name from the colored cards that track production and order new shipments of parts or materials as they run out. Kanban is the Japanese word for sign, so the kanban system simply means to use visual cues to prompt the action needed to keep a process flowing.

Understanding Kanban

The kanban system can be thought of as a signal and response system. When an item is running low at an operational station, there will be a visual cue specifying how much to order from the supply. The person using the parts makes the order for the quantity indicated by the kanban and the supplier provides the exact amount requested.

For example, if a worker is bagging product on a conveyor belt, a kanban may be placed in the stack above the last 10 bags. When the worker gets to the card, he gives the floor runner the card to bring more bags. A station further from the supply room might have the kanban placed at 15 bags and a closer one at five. The flow of bags and the placement of cards are adjusted to make sure no station is left bag-less while the belt is running.

The kanban system can be used easily within a factory, but it can also be applied to purchasing inventory from external suppliers. The kanban system creates extraordinary visibility to both suppliers and buyers. One of its main goals is to limit the buildup of excess inventory at any point on the production line. Limits on the number of items waiting at supply points are established and then reduced as inefficiencies are identified and removed. Whenever a limit of inventory is exceeded, it points to an inefficiency that needs to be addressed.

As containers of parts or materials are emptied, cards appear, color-coded in order of priority, allowing the production and delivery of more before a hold-up or shortage develops. A two-card system is often used. T-kanban transportation cards authorize the movement of containers to the next workstation on the production line, while P-kanban production cards authorize the workstation to produce a fixed amount of products and order parts or materials once they have been sold or used.

Electronic Kanban Systems

To enable real-time demand signaling across the supply chain, electronic kanban systems have become widespread. These e-kanban systems can be integrated into enterprise resource planning (ERP) systems.

Toyota, Ford Motor Company and Bombardier Aerospace are among the manufacturers that use e-kanban systems. These electronic systems still provide visual signals, but the systems are also usually enabled to automate parts of the process, such as transport through the factory or even filing purchase orders.