What is 'Kanban '

Kanban is an inventory control system used in just-in-time manufacturing. It was developed by Taiichi Ohno, an industrial engineer at Toyota, and takes its name from the colored cards that track production and order new shipments of parts or materials as they run out.

BREAKING DOWN 'Kanban '

The Kanban system creates extraordinary visibility to both suppliers and buyers. One of its main goals is to limit the buildup of excess inventory at any point on the production line. Limits on the number of items waiting at supply points are established and then reduced as inefficiencies are identified and removed. Whenever a limit of inventory is exceeded, it points to an inefficiency that needs to be addressed.

As containers of parts or materials are emptied, cards appear, color-coded in order of priority, allowing the production and delivery of more before a hold-up or shortage develops. A two-card system is often used. T-Kanban transportation cards authorize the movement of containers to the next workstation on the production line, while P-Kanban production cards authorize the workstation to produce a fixed amount of products and order parts or materials once they have been sold or used.

To enable real-time demand signaling across the supply chain, electronic Kanban systems have become widespread. These E-Kanban systems can be integrated into enterprise resource planning systems. Toyota, Ford Motor Company and Bombardier Aerospace are among the manufacturers that are using E-Kanban systems.

One kind of Kanban system that is easier to implement and adjust is CONWIP. In this pull-oriented production-control system, the start of the assembly process is triggered when a finished product rolls of the end of the line.

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