Kanban
Kanban is a method for consumption-driven production and material control based on the pull principle: replenishment is only triggered when a downstream station actually withdraws material. Demand is signaled via cards (Japanese "kanban" = card or signal) that circulate between the consuming and supplying station and cap stock at a defined level.
Kanban is a method for consumption-driven control of production and material replenishment. Instead of planning orders centrally in advance and "pushing" them into manufacturing, in Kanban every station pulls its own replenishment: only when material is actually consumed does a signal arise that prompts the upstream station to resupply. This signal is classically a card – Japanese "kanban" – attached to a container and circulating between consumer and supplier. Kanban is therefore one of the pull methods and a core building block of the Toyota Production System and lean production.
The goal of Kanban is to keep stock and lead times low without the supply breaking down. Because the number of circulating cards is fixed, the stock between two stations can never exceed a defined maximum – the card loop acts like a self-regulating valve. For suitable parts, Kanban thus replaces detailed central fine planning with a decentralized, self-controlling regulation right at the point of consumption.
At a glance
- Pull principle: replenishment only starts on actual consumption
- "Kanban" (Japanese) = card/signal – controls containers and resupply
- Limited number of cards automatically caps stock and lead time
- Core building block of lean production and the Toyota Production System
- Suited to steadily consumed, recurring parts (A/B parts with even demand)
How Kanban works
Kanban organizes supply as a closed control loop between a consuming station (sink) and a supplying station (source). Material is stored in standardized containers of a fixed quantity, each carrying a Kanban card. When the consuming station withdraws a container, its card is released and travels back to the source. There it acts as a production or resupply order: the source refills exactly the container quantity, reattaches the card and provides the full container. As long as no card comes back, nothing is produced.
The stock in the loop results from the number of cards times the container quantity. This card count is deliberately calculated – from the average consumption during the replenishment lead time plus a safety margin. More cards mean more buffer and more stock; fewer cards lower the stock but raise the risk of shortages. The control is therefore purely consumption-driven and needs no daily central planning.
Kanban card, container and control loop
A Kanban card carries all the information for replenishment: item number and description, container quantity, source and sink (storage location or workstation), often a barcode or QR code. A distinction is made between production Kanbans, which prompt an upstream manufacturing station to produce, and transport or move Kanbans, which merely trigger the relocation of a finished container from a supermarket (buffer store). The control loop is stable because the number of cards stays constant – only putting cards into or taking them out of circulation changes the stock level.
Kanban vs. MRP: pull instead of push
Kanban is the practical counterpart to classic material requirements planning (MRP). MRP works on the push principle: from sales forecasts, customer orders and bills of materials, the system calculates requirements, schedules production and purchase orders in advance and triggers production centrally – regardless of whether the downstream station currently needs the material. Kanban reverses the logic: actual consumption triggers the resupply, and control happens decentrally on site.
The two methods do not exclude each other but are often combined. MRP suits irregular, customer-order-specific or expensive parts whose demand can only be predicted by calculation. Kanban plays to its strengths with steadily consumed standard parts that are needed frequently and in similar quantities. In practice, many operations plan the framework quantities via MRP and control the fine supply of selected parts via Kanban – a split that often follows an ABC/XYZ analysis.
Variants and building blocks
The basic principle can be implemented in several forms. Besides the classic card on the container, the two-bin system (Kanban rack) is widespread: once the first bin is empty, it is handed over for refilling while withdrawal continues from the second – the empty bin itself is the signal. For external suppliers there are procurement Kanbans that trigger external replenishment, as well as consignment and vendor-managed inventory models with similar consumption logic.
A central building block of many Kanban systems is the supermarket: a clearly bounded buffer store arranged by item, from which the consuming station helps itself and which is refilled via Kanban. In addition, material flow is often supplied via milk runs (cycled tugger trains) that collect empty containers and bring full ones.
e-Kanban: the digital variant
In electronic Kanban (e-Kanban), digital signals replace the paper card. Consumption is reported by barcode scan, RFID, weighing technology or a posting in the ERP; the system triggers replenishment automatically and reports it – for example via EDI – directly to an upstream station or to the supplier. e-Kanban keeps the pull logic but makes the control loops transparently analyzable, reduces lost cards and allows card counts to be adjusted dynamically to fluctuating demand.
Benefits and limits of Kanban
The main benefit of Kanban lies in low stock combined with high supply reliability. Because only what has been consumed is reproduced, work-in-process and safety stocks fall, capital is freed up and lead times shorten. The control is simple, visible and self-explanatory – every worker sees from the card circulation what needs to be done, without waiting for central planning. Overproduction, one of the central types of waste in lean thinking, is structurally prevented.
The limits arise from the prerequisites. Kanban only works with sufficiently even, recurring consumption; with strongly fluctuating, seasonal or one-off demand, the control loops run empty or overflow. Short, reliable replenishment lead times and stable processes are also a condition – frequent disruptions or long setup times make small lot sizes uneconomical. For make-to-order and job production with high variant diversity, pure Kanban is therefore rarely suitable.
Kanban in the ERP system
Modern ERP and PPC systems map Kanban as a dedicated control method. Control loops with source, sink, container quantity and card count are stored; the system creates and manages the cards, monitors their status (full, in circulation, empty) and automatically triggers resupply or production orders on a consumption report. Consumption is captured via feedback from shop-floor data collection, scans or stock postings, so that stock and card circulation are transparent at all times.
In interaction with the rest of planning, the ERP assigns each part a planning method – for example consumption-driven (Kanban, reorder point) or requirements-driven (MRP). This cleanly separates the two worlds: standard parts run in the Kanban control loop, while the MRP module calculates the plannable and customer-specific requirements. Via interfaces or EDI, the system passes e-Kanban signals through to the supplier and thus closes the chain from consumption to external procurement.
Example
Example: two-bin Kanban in assembly
A mid-sized device manufacturer assembles control boxes and installs a handful of standard screws, terminals and cable ties per unit. These C-parts are supplied via a two-bin Kanban at the assembly workstation: two bins of each item sit on the rack. Once the front one is empty, the assembler puts it in the return lane and continues from the second. The tugger train collects the empty bins on a cycle, scans the Kanban card attached to them and refills them from the supermarket.
The container quantity is sized so that a full bin covers consumption during the refill round plus a buffer. The scan reports consumption to the ERP, which updates the supermarket stock and automatically reorders from the supplier once the card count is undercut. The result: the assembler never has to request material, shortages practically never occur, and the stock at the line stays capped at two bins per item.
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