Kanban is a visual signal that’s used to trigger an action. The word kanban is Japanese and roughly translated means “card you can see.”
Toyota introduced and refined the use of kanban in a relay system to standardize the flow of parts in their just-in-time (JIT) production lines in the 1950s. The approach was inspired by a management team's visit to a Piggly Wiggly supermarket in the United States, where Engineer Taiichi Ohno observed that store shelves were stocked with just enough product to meet consumer demand and inventory would only be restocked when there was a visual signal -- in this case, an empty space on the shelf.
In manufacturing, Kanban starts with the customer’s order and follows production downstream. At its simplest, kanban is a card with an inventory number that’s attached to a part. Right before the part is installed, the kanban card is detached and sent up the supply chain as a request for another part. In a lean production environment, a part is only manufactured (or ordered) if there is a kanban card for it. Because all requests for parts are pulled from the order, kanban is sometimes referred to as a "pull system."
There are six generally accepted rules for kanban:
1. Downstream processes may only withdraw items in the precise amounts specified on the kanban.
2. Upstream processes may only send items downstream in the precise amounts and sequences specified by the kanban.
3. No items are made or moved without a kanban.
4. A kanban must accompany each item at all times.
5. Defects and incorrect amounts are never sent to the next downstream process.
6. The number of kanbans should be monitored carefully to reveal problems and opportunities for improvement.
The concept of providing visual clues to reduce unnecessary inventory has also been applied to agile software development. In this context, the inventory is development work-in-progress (WIP) and new work can only be added when there is an "empty space" on the team's task visualization board.
Robert Krause demonstrates a two-bin kanban system in a small production plant.