DEFINITION of 'Kanban '
A specific type of inventory control system. The kanban system is based upon a series of colored cards. These cards denote such factors as quantity, the type of part and the manufacturer. A card is placed in the bin or other container with each group of manufactured items as an identifier for those involved with the next phase of production or distribution.
BREAKING DOWN 'Kanban '
Kanban is a Japanese term meaning signboard or graphic. Cards appear as the container of goods or materials is emptied, allowing the production and delivery of more before a hold-up or shortage develops. These cards may have several colors that are ordered according to priority. Frequently a two-card system is employed where "move" cards are employed to move goods from one area of production to another, while "production" cards that replace materials after they are sold or used.