A kanban is an authorization to produce goods. It is used in an environment where the consumption of goods is the trigger to produce more goods, rather than a forecast of possible consumption that may never occur. A kanban can take many forms, such as a colored card, a bin, an e-mail, or some alternative form of visual signal. A colored card is perhaps the most common form of kanban now in use, though electronic notifications are increasing in importance. A kanban card typically contains information about the item that requires replenishment and the amount to be replenished. The back of the card may also be used for logging start and stop dates and times, which can be useful for establishing a record of the process flow.
Here is an example of how a kanban card might work:
- There is a bin full of parts on the production floor, to be used by the workstation to which it has been delivered. The bin contains a kanban card.
- When the bin is empty, it is sent to the upstream workstation that provides the original workstation with parts. The upstream workstation immediately sends one full bin of parts back; this bin is the only amount of inventory that the upstream workstation has thus far been authorized to produce.
- The upstream workstation is now authorized to fill the empty bin to the extent of the quantity stated on the kanban card.
- The filled bin is then held, pending the return of an empty bin from the downstream workstation.
Kanbans are employed in conjunction with a pull system, so that each downstream workstation authorizes an upstream workstation to produce a certain additional amount of parts that are then sent to the downstream workstation for further processing. In essence, the concept is used to ensure that only enough parts are manufactured to fulfill a customer order. Once that order has been completed, no additional kanbans are issued, so no upstream workstations are allowed to produce any more goods. The result is an extremely low investment in inventory, as well as a reduced risk of having obsolete inventory.
A kanban system may be incorporated into a computer-controlled production system, or it can be an entirely manual notification system. The use of kanbans can also be extended to suppliers, so that suppliers, in effect, become the upstream workstations of a business.