word Kanban written with loosely arranged tiles on an isolated background.Kanban is a Japanese word that translates as signboard or billboard. In a manufacturing setting we interpret it as “signal”.

Taiichi Ohno is credited with developing the idea in Toyota, after observing how high street supermarkets worked.

He noticed that a shopper only buys what they need, when they need it. In turn the supermarket only stocks what it can sell at any given time. The store maximises its sales for the area it has, and maximises profit by ensuring there is little waste like unsold and out of date goods.

In a similar fashion, kanbans in our factories are used to align the supply of goods with downstream customer demand and eliminate waste.

The kanban is a visual signal that gives permission, or instruction, for the receiver to do a specified action. Originally produced on cards, kanbans can also be small objects or even product bins.

How can it help you?

Kanbans are primarily used as part of a pull system. They:

  • Prevent overproduction, one of the 7 Wastes. Without a kanban you can’t produce!
  • Help keep the flow of product at a steady rate. This is very useful where a single resource, like a press, is used for multiple products, resulting in batching.
  • Reduce the amount of inventory (another waste) needed to keep a system flowing. This reduction releases cash and helps us to complete the cash flow cycle more quickly.
  • Control the amount and movement of inventory.

How does it work?

This is best explained using the diagram and starting at process G.


simple kanban


G receives an order to produce in the form of a “withdrawal kanban”. This gives permission for a person to take a specified quantity of named parts out of the supermarket.

The withdrawal triggers a “production kanban” that travels upstream to process F. It gives permission for F to make a specified quantity of the parts. These replace what was taken from the supermarket.

Rules and conditions

Kanbans have to have rules to work and these must be strictly followed.

  • No items are made or transported without a kanban.
  • Pull don’t push. The downstream process always starts the flow.
  • Only make the number of items specified on the kanban.
  • Do not pass on defective units.

To set up a successful kanban system, you need a stable production process to start with. If you have high unplanned downtime, poor right first time or lengthy and unpredictable lead times you will end up planning in excessive inventory.

If there are any flow issues with your kanban system, like you run out of parts, then treat it as an opportunity for improvement. Identify the root cause and countermeasure it.

Electronic kanbans

Electronic kanbans are used for real time signalling across the supply chain. Instead of the kanban cards being moved by people, the information in bar code form is scanned using a card reader.

It is sent through an Electronic Data Interchange (EDI), or over the web, to the upstream supplier, who prints them out for use.

Other uses for kanbans

Kanbans are so useful at waste elimination that they are also used outside the world of automotive manufacturing.

Have a look at the four case studies in Mattias Skarin’s book Real-World Kanban. In one, kanbans are used to pull software development through the design and development stages.

For help in designing and deploying kanbans or pull systems, contact the team.