Kanban (Japanese 看板, signboard or billboard) is a lean method to manage and improve work across human systems. This approach aims to manage work by balancing demands with available capacity, and by improving the handling of system-level bottlenecks.
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. Kaban is the Japanese word for sign, so the kaban system simply means to use visual cues to prompt the action needed to keep a process flowing.
The kaban system can be thought of as a signal and response system. When an item is running low at an operational station, there will be a visual cue specifying how much to order from the supply. The person using the parts makes the order for the quantity indicated by the kaban and the supplier provides the exact amount requested. For example, if a worker is bagging product on a conveyor belt, a kanban may be placed in the stack above the last 10 bags. When the worker gets to the card, he gives the floor runner the card to bring more bags. A station further from the supply room might have the kanban placed at 15 bags and a closer one at five. The flow of bags and the placement of cards is adjusted to make sure no station is left bagless while the belt is running.
The kanban system can be used easily within a factory, but it can also be applied to purchasing for inventory from external suppliers. 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. These electronic systems still provide visual signals, but the systems are also usually enabled to automate parts of the process such as transport through the factory or even filing purchase orders.
The Kanban Method is a means to design, manage, and improve flow systems for knowledge work. The method also allows organizations to start with their existing workflow and drive evolutionary change. They can do this by visualizing their flow of work, limit work in progress (WIP) and stop starting and start finishing.
The Kanban Method gets its name from the use of kanban – visual signaling mechanisms to control work in progress for intangible work products.
Kanban is a popular framework used to implement agile software development. It requires real-time communication of capacity and full transparency of work. Work items are represented visually on a kanban board, allowing team members to see the state of every piece of work at any time.
Source: https://www.atlassian.com/agile/kanban
Agile software development teams today are able to leverage these same JIT principles by matching the amount of work in progress (WIP) to the team's capacity. This gives teams more flexible planning options, faster output, clearer focus, and transparency throughout the development cycle.
While the core principles of the framework are timeless and applicable to almost any industry, software development teams have found particular success with the agile practice. In part, this is because software teams can begin practicing with little to no overhead once they understand the basic principles. Unlike implementing kanban on a factory floor, which would involve changes to physical processes and the addition of substantial materials, the only physical things a software teams need are a board and cards, and even those can be virtual.
To ensure a proper setup of Kanban in the workplace, Toyota has provided us with six rules for an effective Kanban system:
Customer (downstream) processes withdraw items in the precise amounts specified by the Kanban.
Supplier (upstream) produces items in the precise amounts and sequences specified by the Kanban.
No items are made or moved without a Kanban.
A Kanban should accompany each item, every time.
Defects and incorrect amounts are never sent to the next downstream process.
The number of Kanbans is reduced carefully to lower inventories and to reveal problems.
Source: https://www.processexcellencenetwork.com/lean-six-sigma-business-performance/articles/what-is-kanban