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Kanban is a scheduling system for lean and just-in-time (JIT) production. According to its
creator, Taiichi Ohno, kanban is one means through which JIT is achieved.[2][3]

Kanban is not an inventory control system; it is a scheduling system that helps determine what
to produce, when to produce it, and how much to produce.

The need to maintain a high rate of improvement led Toyota to devise the kanban system.
Kanban became an effective tool to support the running of the production system as a whole.
In addition, it proved to be an excellent way for promoting improvements because reducing the
number of kanban in circulation highlighted problem areas.
Kanban cards

Kanban cards are a key component of kanban, signalling the need to move materials within a
manufacturing or production facility or move materials from an outside supplier to the
production facility.

The kanban card is, in effect, a message that signals depletion of product, parts, or inventory
that when received will trigger the replenishment of that product, part, or inventory.
Consumption drives demand for more. Demand for more is signaled by the kanban card.
Kanban cards therefore help to create a demand-driven system. It is widely espoused [citation
by proponents of lean production and manufacturing that demand-driven systems lead to
faster turnarounds in production and lower inventory levels, helping companies implementing
such systems to be more competitive.

Kanban cards, in keeping with the principles of kanban, should simply convey the need for
more materials. A red card lying in an empty parts cart would easily convey to whomever it
would concern that more parts are needed.

In the last few years, systems that send kanban signals electronically have become more
widespread. While this trend is leading to a reduction in the use of kanban cards in aggregate,
it is still common in modern lean production facilities to find widespread usage of kanban
cards. In Oracle ERP, kanban is used for signalling demand to vendors through e-mail
notifications. When stock of a particular component is depleted by the quantity assigned on
kanban card, a "kanban trigger" is created (which may be manual or automatic), a purchase
order is released with predefined quantity for the vendor defined on the card, and the vendor
is expected to dispatch material within lead time.[citation needed] This system is also available
in enterprise resource planning software such as Infor ERP LN, SAP ERP orMicrosoft Dynamics

Three-bin system
A simple example of the kanban system implementation might be a "three-bin system" for the
supplied parts (where there is no in-house manufacturing) one bin on the factory floor
(demand point), one bin in the factory store, and one bin at the supplier's store. The bins
usually have a removable card that contains the product details and other relevant information
the kanban card.
When the bin on the factory floor becomes empty (i.e., there is demand for parts), the empty
bin and kanban cards are returned to the factory store. The factory store then replaces the bin
on the factory floor with a full bin, which also contains a kanban card. The factory store then
contacts the suppliers store and returns the now-empty bin with its kanban card. The
supplier's inbound product bin with its kanban card is then delivered into the factory store,
completing the final step in the system. Thus, the process will never run out of product and
could be described as a loop, providing the exact amount required, with only one spare so that
there will never be an oversupply. This 'spare' bin allows for the uncertainties in supply, use,
and transport that are inherent in the system. The secret to a good kanban system is to
calculate how many kanban cards are required for each product. Most factories using kanban
use the coloured board system (heijunka box). This slotted board was created especially for
holding the kanban cards.

Electronic kanban systems

Many manufacturers have implemented electronic kanban systems [8] or e-kanban systems.
These help to eliminate common problems such as manual entry errors and lost cards. [9] E-
kanban systems can be integrated into enterprise resource planning (ERP) systems, enabling
real-time demand signaling across the supply chain and improved visibility. Data pulled from e-
kanban systems can be used to optimize inventory levels by better tracking supplier lead and
replenishment times.[10]