Imagine having a facility that stocked supplies and products smartly, avoiding the need to store excessive amounts of inventory or halting production because you’ve run out of something vital. Kanban systems makes this possible.
Kanban diverges from older forecasting production methods and instead allows actual demand to trigger resupply. Kanban means that companies don’t run the risk of waste by having too much inventory or supply, which means that there’s less risk of quality assurance issues like defects getting hidden in inventory.
Kanban reduces overproduction and eliminates down time between production process steps. Learn how to change your manufacturing operation from a wasteful push system to a lean pull system.
What Is Kanban? – Definition
Busy workplaces need systems for managing the movement of materials, parts, finished products, and information. Departments, individual employees, customers, and suppliers need simple means for communicating with each other so things get done exactly when they need to.
Kanban can make that happen.
Kanban is a Japanese word meaning signboard, sign, or card. A kanban system uses visual cues to signal when a particular action should occur. In a manufacturing environment, for example, a card listing specific information can be sent from the shipping department to the assembly line requesting a certain number of products. The card triggers the action, so work occurs exactly when it should.
The kanban card in this example serves as a link between two departments. It’s the information that connects the materials and the parts of this business’ work processes.
Examples also exist in the home. A person might have an organized pantry where he keeps canned goods that don’t spoil quickly. In this pantry, there are two cans of each food, one in front of the other. When a can is used, the second can is moved forward. This action—removing the first can from the shelf—is the cue used to signal the need to buy more of that product, so it’s added to the weekly shopping list.
This system is so simple it might not even seem like a system. It uses visual cues, though, and keeps the kitchen running smoothly without requiring the person to store excess canned goods or run to the store at the last minute when things run out.
Systems based on the idea of kanban are used all the time in businesses, hospitals, offices, warehouses, and even homes. Many businesses have found kanban beneficial as a way to reduce inventory and eliminate waste from processes, and they use it as a part of a Lean manufacturing system. Businesses employ kanban systems with very specific rules and planning to ensure they work properly, but they’re based on the same basic idea: visual cues trigger actions.
History of Kanban
Kanban was first used in manufacturing environments by Taiichi Ohno of the Toyota Motor Company in the mid-20th century. Ohno paid attention to the stocking techniques used by American supermarkets and observed these methods allow supermarkets to function without storing excessive amounts of inventory.
As many of the products grocery stores sell must be consumed before an expiration date, only storing the amount of food customers will buy in a given period is essential. To achieve this, supermarkets function much like the kitchen in the example above; when customers purchase an item, the store restocks the shelf. Then they reorder more products.
In this system, customer demand controls the movement and ordering of more products. Ohno thought this idea could be applied to a manufacturing environment, so he developed a way to use visual cues to signal all parts of the manufacturing process at some of the company’s plants.
A very basic version of the kanban system used in a manufacturing environment such as Toyota looks something like this:
The system uses bins to hold products and materials, as well as to signal the need for more of something. Each bin has a card in it describing the materials that belong in the bin. One bin is placed in the shipping department, one at the location where materials and parts are held (often called the store or the supermarket), and one on the factory floor.
When customers order products, the shipping department sends the kanban signal (the empty bin with a card in it) to the supermarket requesting products. The supermarket supplies the products and then sends its own empty bin and corresponding card to the factory floor. This tells the assembly line to produce a specific amount of products.
Kanban in industrial environments functions like a chain; it’s pulled from the end of the process, the customer order.
Kanban and Just-in-Time Manufacturing
Because production is pulled through the workplace by customer demand, a kanban system is often referred to as a pull system. A pull system is the opposite of a push system, which is the traditional way production has occurred in Western countries. A push system involves forecasting what demand will be based on historical data and current market conditions and then scheduling production accordingly. The downside of this method is that if demand changes quickly, a business could be left with a lot of products it doesn’t need.
Taiichi Ohno and the leaders at Toyota were interested in developing a pull system. This system is called Just-in-Time (JIT) manufacturing because it is designed to produce the exact amount of a product needed at the time the customer wants it.
The benefits of this type of system are it can reduce overproduction, eliminate waiting time between processes, reduce inventory of materials (which can be costly to store), and make it easier to respond to changes in demand. A system that uses JIT manufacturing has built-in flexibility.
How does kanban fit into this? Kanban cards, bins, or other visual cues are what control the JIT system. They are the mechanism that prompts the parts of the process to occur. JIT and kanban go hand in hand, and they serve as the basis of what is often called the Toyota Production System.
Kanban and Lean Manufacturing
The system of production practiced at Toyota has inspired many organizations around the world to change the way they do business. In many Western countries, this system is referred to as as Lean manufacturing, which aims to identify and eliminate wastes from work processes. By eliminating waste, a business only spends time on things that actually add value for the end customer.
Lean manufacturing tries to eliminate 3 main types of waste, which are called the 3 M’s: muda, mura, and muri.
1. Muda = Unnecessary Efforts
Muda is the most basic type of waste. It’s anything that doesn’t add value to the end product. Lean names 8 main types of muda:
- Unnecessary transportation
- Extra motion
- Unutilized talent
2. Mura = Unevenness
Mura means irregularity in the production process. Mura occurs when people and materials aren’t allocated appropriately. This often results in spikes in production and frequent stops and starts. Over time, mura can cause machine breakdowns and worker fatigue. It can also cause people to spend time doing nothing while waiting for production to restart.
3. Muri = Overburden
While mura might periodically overburden people and equipment, muri is the consistent overburden of these assets. This overload can cause strain, injuries, defects, and breakdowns, and in the long run it will likely be unsustainable.
Kanban and JIT are important parts of a Lean manufacturing environment for many reasons, but in particular because they can help eliminate many of these wastes. Kanban and JIT can make production more even, reduce inventory, and eliminate overproduction.
When overproduction occurs, there are often too many of a particular part, material, or product in process at once. Having so much work in process can cover up problems with the process itself. It’s more difficult to see imbalances when the production process is overflowing with things. When set up properly, kanban reduces the amount of things in your process, allowing problems to surface.
To illustrate this point, Lean thinkers often use an example involving a river. When the water level is high, it’s not possible to see the rocks below that make the water move the way it does. When the water level is lower, those rocks become visible. In a workplace, by removing extra materials from the process, people can begin to see the mechanisms that are actually making the process work the way it does and more easily see if anything is problematic.
Kanban and the Visual Workplace
Kanban is also an important part of Lean because it helps make the workplace more visual. Instructions are communicated by cards, bins, or other designated signals. Many workplaces set up their kanban system so these signals are very noticeable. For example, cards might be bright colors or be placed in very visible locations.
When people see these signals, they know exactly what to do because the system is set up so that when a signal occurs, a specific set of actions is carried out. This eliminates the need to ask unnecessary questions. Kanban also places the authority to produce things in the hands of line or machine operators. When they see the kanban signals, they can start production without needing to consult a supervisor.
Types of Kanban Systems
There is not just one type of kanban system that works for all organizations. Kanban must be tailored to a specific workplace in order to see the best results. Many basic types of kanban systems can be fit to different workplaces, though. Below are examples of these types.
1-bin or 1-card System
A system that uses a single bin or card to trigger an action is called a 1-bin or 1-card kanban system. This is the most basic type of kanban system. A common example is a mailbox flag; when someone wants the postal worker to pick up a piece of mail, he or she puts up the flag. This tells the postal worker there’s something in the mailbox.
In a system that uses an actual bin, someone might leave an empty bin in a designated location indicating it needs to be refilled. The same could be done with a card. The user could post an order form for more of an item.
Alternatively, if a bin is used for the purpose of reordering supplies that should never run out, a mark could be placed in the bin to indicate at what level reordering should occur.
A 2-bin system is commonly used in storage areas at many types of workplaces. It can be used in warehouses, supply rooms at hospitals, places where ingredients are stored in restaurants or bakeries, and more. (The earlier example about storing canned goods in a kitchen also works like a two bin system, just without the bins.)
This system functions by having two bins of a particular item placed one in front of the other, often on shelves. When the first bin is empty, it is removed and the second bin is pulled forward. Then one of two things can happen. Either the empty bin itself will be placed in a designated location for reordering or a kanban card (usually placed at the back of the bin) that has reordering information is placed in a reordering location.
When the new supplies arrive, the newly refilled bin is placed behind the bin currently in use. This system is fairly simple, but it helps ensure supplies never run out.
A 3-bin system connects different departments or different parts of work processes. In some cases, it even connects a company to its outside suppliers.
A basic 3-bin system could work something like this:
One bin is placed at the factory where products are made, one at the store where parts/materials are held, and one at the supplier. When the factory runs out of parts, it sends its empty bin to the store to be refilled. The store fills the bin and now sends its own newly emptied bin to the supplier. The supplier then sends a full bin to the store. The bins serve as the signal that each downstream part of the process needs more of something. They also give permission to move those things; in kanban, nothing moves without permission.
Most 3-bin systems also keep kanban cards (or some other information sheet) in the bins specifying what the bin contains and in what quantity. As one of these bins is actually leaving the site to be refilled by another company, conveying the appropriate information is important.
Some systems use cards instead of bins. This makes sense for many workplaces, since large items may not easily fit into bins.
These cards may contain:
- Name and part number of item
- Description of item
- Quantity of item needed
- Location of use
- Supplier information
- Number in series (e.g. card 1 of 4)
A 2-card system usually has three main locations and two loops.
When the shipping department needs products, it sends its kanban card to the store. The store provides the products and sends its kanban card to the production line. The production line then begins making more products.
The first kanban card, which moves between shipping and the store, is often called the withdrawal kanban card. The second kanban card, which moves between the store and the production line, is often called the production kanban card.
Advances in technology have allowed many workplaces to transition away from physical cards and bins. In electronic kanban systems, barcodes are placed on items, on materials, or in specific locations. These barcodes are scanned when more of something is needed, which sends a signal to the correct person or department to fill the request.
Some systems even generate emails when certain barcodes are scanned that send orders to external suppliers.
Other Visual Tools
Kanban systems are always adapted to a specific workplace, and some workplaces choose to use additional tools to assist their processes.
Kanban Board – A kanban board makes it easy for people to see work in process. Basic boards might contain columns such as “To Do,” “In Process,” and “Done.” A department might have a board that uses cards to represent all current work orders. Then people can track the orders as they move through the process. Kanban boards are often used in team settings outside of manufacturing, too, to show who is working on what.
Floor or Shelf Markings – Some workplaces or storage areas choose to use color-coded floor or shelf markings to indicate when something needs to be produced or ordered. For example, a warehouse might store all of an item in the same area and then place red, yellow, and green floor marking tape on the floor that reveals when inventory is getting too low. When an item is at the green level, nothing needs to happen. At yellow, production might begin. At red, levels may have gotten too low and steps need to be taken to quickly fix the problem. In this scenario, the colors themselves are the visual kanban cues that trigger actions.
Preparing for Implementation
Is Kanban the Answer?
While kanban effectively reduces inventory and levels production for many businesses, decision makers will have to determine whether it suits their business, and if so, what type of kanban system would work best.
For example, businesses with large fluctuations in demand throughout the year might need to consider whether a kanban system could accommodate these variations without running into product shortages.
The examples of kanban systems described thus far only use a few bins or cards, but in a large manufacturing process, many more signals may be needed. Anyone implementing a kanban system will need to determine how many cards and bins to have throughout the process, as these numbers determine how much of something will be on hand at once.
These calculations are based on considerations such as:
- Lead time
- Changeover time
- Length of shift(s)
- Safety stock
Many resources exist to assist with performing kanban calculations, and Lean and kanban experts can help as well.
Having more kanban signals in a process means there will be more materials in the system, but this isn’t necessarily bad. Most systems need a certain amount of buffer materials to accommodate customer orders.
Ideally, kanbans will be removed over time to limit inventory. Doing this speeds up production, though, so the number of kanbans best for a process will need to be tested out.
The scale of kanban implementation must also be considered. Kanban works best when implemented organization-wide rather than only in certain business processes. When kanban is only used in certain areas, problems may develop between the parts of a business that use the pull system and those still using a push system.
Any organization thinking of using kanban should assess the current state of processes, do some research, and potentially seek advice about the best solutions.
Everyone in the workplace will need to receive detailed kanban training. This training should explain how the system works overall. It should also explain the mechanisms that make kanban work. People must know what types of kanban signals will be used and what they mean. That way, when they see a kanban signal, they can immediately take the appropriate action.
Individuals should make sure they understand which kanban signals they will encounter on a daily basis. They should also know what to do if something goes wrong with the system and who to contact.
Everyone should remember this: Nothing can happen without a kanban signal. Products and materials cannot be made or moved until the system says so.
No two kanban systems are exactly the same, but they all have several important things in common:
- They use visual signals to trigger actions. Nothing happens without a signal.
- They can help prevent wastes such an excess inventory and overproduction.
- They put control of the system into the hands of everyday workers, not just managers.
Kanban sets limits in a system. Actions are limited by kanbans, as is the quantity of work in process. By limiting these things, kanban makes it easier to see what’s actually going on in a work process. This way, problems will more easily surface and can be fixed. Wastes may also surface and then people can work to reduce or eliminate them.
Kanban will most likely require thinking about work processes in new ways. The way production runs or other tasks are scheduled will change. The people responsible for making production decisions will change. The amount of inventory on hand at one time may change, too.
When businesses do decide to use kanban, though, they often see many benefits in the long run. Processes begin to run more smoothly, and issues can be resolved quickly.