Kanban System

A kanban or “pull” production control system uses simple, visual signals to control the movement of materials between work centers as well as the production of new materials to replenish those sent downstream to the next work center.  Originally, the name kanban (translated as “signboard” or “visible record”) referred to a Japanese shop sign that communicated the type of product sold at the shop through the visual image on the sign (for example, using circles of various colors to indicate a shop that sells paint).  As implemented in the Toyota Production System, a kanban is a card that is attached to a storage and transport container.  It identifies the part number and container capacity, along with other information, and is used to provide an easily understood, visual signal that a specific activity is required.

In Toyota’s dual-card kanban system, there are two main types of kanban:

1. Production Kanban: signals the need to produce more parts

2. Withdrawal Kanban (also called a "move" or a "conveyance” kanban): signals the need to withdraw parts from one work center and deliver them to the next work center.

In some pull systems, other signaling approaches are used in place of kanban cards.  For example, an empty container alone (with appropriate identification on the container) could serve as a signal for replenishment.  Similarly, a labeled, pallet-sized square painted on the shop floor, if uncovered and visible, could indicate the need to go get another pallet of materials from its point of production and move it on top of the empty square at its point of use.

A kanban system is referred to as a pull‑system, because the kanban is used to pull parts to the next production stage only when they are needed.  In contrast, an MRP system (or any schedule‑based system) is a push system, in which a detailed production schedule for each part is used to push parts to the next production stage when scheduled.  Thus, in a pull system, material movement occurs only when the work station needing more material asks for it to be sent, while in a push system the station producing the material initiates its movement to the receiving station, assuming that it is needed because it was scheduled for production.  The weakness of a push system (MRP) is that customer demand must be forecast and production lead times must be estimated.  Bad guesses (forecasts or estimates) result in excess inventory and the longer the lead time, the more room for error.  The weakness of a pull system (kanban) is that following the JIT production philosophy is essential, especially concerning the elements of short setup times and small lot sizes, because each station in the process must be able to respond quickly to requests for more materials.

Dual-card Kanban Rules:

1. No parts are made unless there is a production kanban to authorize production.  If no production kanban are in the “in box” at a work center, the process remains idle, and workers perform other assigned activities.  This rule enforces the “pull” nature of the process control.
2. There is exactly one kanban per container.
3. Containers for each specific part are standardized, and they are always filled with the same (ideally, small) quantity.  (Think of an egg carton, always filled with exactly one dozen eggs.)

Decisions regarding the number of kanban (and containers) at each stage of the process are carefully considered, because this number sets an upper bound on the work-in-process inventory at that stage. For example, if 10 containers holding 12 units each are used to move materials between two work centers, the maximum inventory possible is 120 units, occurring only when all 10 containers are full.  At this point, all kanban will be attached to full containers, so no additional units will be produced (because there are no unattached production kanban to authorize production).  This feature of a dual-card kanban system enables systematic productivity improvement to take place.  By deliberately removing one or more kanban (and containers) from the system, a manager will also reduce the maximum level of work-in-process (buffer) inventory.  This reduction can be done until a shortage of materials occurs.  This shortage is an indication of problems (accidents, machine breakdowns, production delays, defective products) that were previously hidden by excessive inventory.  Once the problem is observed and a solution is identified, corrective action is taken so that the system can function at the lower level of buffer inventory.  This simple, systematic method of inventory reduction is a key benefit of a dual card kanban system.