Kanban is often seen as a central element of lean manufacturing and is probably the most widely used type of ‘pull’ signalling system. Kanban was derived from the Japanese language and means 'card-signal'.

There are two fundamentally different approaches to controlling how downstream activities signal their needs to upstream activities. In Pull Production, authorisations to produce more (or replenish inventories of purchased materials) are based on the consumption of the material from controlled inventory locations. 'Use one, make one' is the simplest form of this method. In Push Production, however, the authorisations to produce more or purchase more of an item are based on the anticipation of its use. A push system attempts to predict when the item or material will be needed and launch authorisations in anticipation of this need.

The concept of Kanban cards (or other indicators) has been around for many years. In fact the ‘two bin system’ was used in the UK long before Japanese manufacturing methodologies started to become popular in the 1970s. Whatever the origins or inventors, a Kanban system is generally easy to understand, simple to visualise and comparatively easy to set-up. Kanban systems are commonly used within the automotive industry where there is a stable demand and flow. Other such stable manufacturing environments will also likely benefit from a Kanban system.

The manufacturing operations of some companies does not experience stable demand within any particular product. In fact, the opposite is quite often the case—high product variety and low volumes. In these circumstances a Kanban system may not be suitable for the entire production process but there are probably sub areas where a Kanban system of one form or another will aid production planning and material control.

Once the proper manufacturing environment has been identified, there are number of critical rules that apply to all Kanban systems, including

• customer processes order goods in the precise amounts specified on the Kanban
• supplier processes produce goods in the precise amounts and sequence specified by the Kanban
• no items are made or moved without a Kanban- all parts and materials always have a Kanban attached
• defective parts and incorrect amounts are never sent to the next process

The number of Kanbans is reduced carefully to lower inventories and reveal problems.