What is Kanban? History, Application & Example

Kanban_Knowledge Center

What is Kanban?

The term Kanban came into existence almost 50 years back when Taiichi Ohno, an engineer at Toyota Automotive, developed the first Kanban system to improve manufacturing efficiency.

The idea of Kanban was taken from an unlikely inspiration, a supermarket. They noticed that supermarkets re-stocked an item according to the store’s supply and not the vendor’s supply.

Supermarkets replenished items only when they were nearly out of stock. The ‘just-in-time’ inventory management and delivery process of the grocer’s sparked an interest in Toyota to adopt a similar approach where inventory matched to demand.

The four core principles of Kanban are:

  1. Visualize work
  2. Limit work-in-progress
  3. Focus on flow
  4. Continuous improvement

How Toyota applied Kanban?

Toyota Kanban

Kanban is ‘visual sign’ or ‘card’ in Japanese. It is a visual scheduling system, and one of the methods for Just-in-Time and simplifies the process of knowing what and how much to produce.

Toyota adopted Kanban to visualize steps in the engineering process. It is important to remember that Kanban is applied to an existing system. It does not add any functionality to your system, it simply optimizes the workflow by visualizing both the workflow and work passing through the flow.

The aim behind Toyota’s adoption of Kanban was to align their inventory levels with actual demand. Think of Kanban like an empty box. Every time a bin of materials was emptied, a card or ‘kanban’ was passed to the warehouse to know how much stock was needed. This way kanban cards are passed right from the suppliers to the sellers. The goal of Kanban is to limit excess inventory at any point in the production line.The highly visual nature of this system enables smoother communication between teams and keep track of pending work in real-time, thereby reducing delays and maximizing productivity.

A typical Kanban system will include the following stages-

  1. ‘To do’
  2. ‘In progress’ or ‘Doing’
  3. ‘Done’

Six Rules of Toyota for Implementing Kanban

Toyota has formulated six rules for the application of Kanban

  1. Each process issues a request (kanban) to its suppliers when the previous supply is consumed
  2. Production is according to the quantity and sequence of incoming requests.
  3. No items are made or transported further on the supply chain without a request.
  4. The request associated with a product is always attached to it.
  5. Processes must not manufacture defective items, to ensure that finished products are defect-free.
  6. Limiting the number of pending requests in the workflow makes the process more sensitive and reveals inefficiencies.

Industrial Applications of Kanban

The Kanban system can be implemented in the varied business processes to streamline workflow management.


Sales kanban

A sales team might use a kanban model with these stages-

  1. First Contact
  2. Meeting
  3. Ideation
  4. Estimate
  5. Proposal Presented

Kanban in sales is useful as it helps salespeople focus on the task at hand, as kanban prioritizes only work in progress.

With a more organized approach towards work, sales professionals enjoy it even more without distractions.


Manufacturing Kanban

Kanban systems in manufacturing communicate the need to replenish stocks or produce an item. Kanban is extremely popular as a lean manufacturing technique it serves to eliminate wastes and excess inventory.

Some of the common stages of a kanban inventory system in a manufacturing facility would be-

  1. Withdrawal
  2. Supplier
  3. Production
  4. Through

Software Development

Software development teams will usually have workflow consisting of many functional steps with sub-steps. Some of the kanban cards for a Devs team could be-

  1. Business / Client Requirements
  2. Ready to Start
  3. In Progress
  • Development
  • Verification
  • Deployment
  1. Done

Supply Chain Management

Kanban plays a significant role in supply chain and inventory management as it was mainly developed to match production with demand. By adhering to the technique of just-in-time, Toyota developed kanban to manage workflow organization and inventory replenishment. Kanban was initially used in manufacturing to manage material flow on the production assembly line. As mentioned before, Kanban does not add additional features, thus, setting up kanban inventory system requires visualizing workflow in kanban view within your existing inventory management system. Though kanban may not directly impact inventory management, its principle of production according to changing consumer demand facilitates greater inventory control along the way.

Benefits Of Kanban

Optimized Inventory levels

Since inventory of components is not replenished until it is absolutely needed, there reduces the need for additional storage space and prevents cash flow to be tied up in excessive inventory. Kanban enables maintaining accurate inventory levels in real-time.

Prevents Product Obsolescence

Even if a product or component design needs upgrades, it is incorporated in the final product as soon as possible. There is no component or inventory that goes wasted or becomes obsolete.

Reduced Over-production

Kanban is a demand pull system meaning work is pulled from the previous stage according to the designated need for production. Kanban adheres to Just-in-Time inventory principles which is why it eliminates the need to keep too much safety stock to deal with unexpected delays during the production line.

Flexible Production

Kanban inventory control system focuses on current demands, therefore, production capacity is set accordingly. If there is a sudden surge in demand for a product, Kanban ensures the minimum possibility of excess inventory. This gives the production process some flexibility in responding to dynamic demands.

Kanban also provides adaptability to the production line as it can be easily switched to different products depending as the demand keeps changing for products.