The word kanban means "sign" or "signboard." Kanbans are the signals that regulate the just-in-time system of production. They can be physical cards, electronic signals, empty bins, or other visual cues that alert people that they need to take action.
In a manufacturing environment, when a customer orders a product, a kanban might be sent from the sales department to the production line telling them to start making more products. The production line would take action and then send a kanban upstream requesting additional materials. And so on throughout the process.
Work can't be performed without the proper signal, so this kanban system prevents overproduction and can help reduce excess inventory.
Many types of kanban systems exist including a 1-bin system, 3-bin system, 2 card-system, and more. And example of a 3-bin system is below:
In this example system, an empty bin serves as the signal to request more of something.
Some kanban systems expand beyond a business itself to its suppliers. An electronic kanban system, for example, might send an automatic email request to a supplier when more of a particular part is needed.