The idea of Kanban refers to the visual management of inventory and work in progress. It was widely used by Toyota and many people think of it as something that was developed for and by auto manufacturers, but the story is much bigger than that. Kanban isn’t really something that was invented, it is something that evolved.
The word itself means “billboard” or “signboard” in Japan. Toyota executives actually borrowed from what they saw in grocery stores, but I suspect the practice is even older than that. Many businesses are run on schedules. Process X starts at a certain time on a certain day. Imagine if your grocer ordered inventory that way. Every Tuesday, she orders 100 cartons of eggs. That could go wrong in a couple of ways, of course. She could run out of eggs, or have more than she could sell, wasting the opportunity to make a sale (and possibly loosing the customer's business alltogether), or wasting storage space and money.
But that’s not how grocery stores are run, of course. Grocers keep a certain amount of inventory on the shelf, and some additional items in the back. When the shelf is low, it is replenished from the stored inventory. Only when the stored inventory is low, is more of an item ordered. The empty shelf provides the visual clue that an inventory shift is needed.
Toyota executives realized that this approach could be used in manufacturing to avoid the wastes of excess inventory and movement. To support their effort to create a just-in-time supply chain, they introduced the idea of Kanban cards. Kanban cards are a key component of Kanban and they signal the need to move materials within a production facility or to move materials from an outside supplier into the production facility. The Kanban card is a visual signal of the depletion of product, parts, or inventory. When received, the Kanban card triggers restocking of that product, part, or inventory. In this model, only consumption drives demand for more production.
The use of this type of management is not limited to manufacturing or retailing. It can be used for knowledge work as well. Instead of parts or inventory, projects or ideas for improvement move from one state to another. Physical or digital Kanban boards provide a way to visualize any type of work as it moves from one stage of completion to another. Software development is a good example. Many teams use visual indicators to watch a feature enhancement move from requirements, to development, through testing, and into production.
While physical Kanban boards, such as post-its on a whiteboard, visualize work, a digital approach can make the technique even more effective. With digital Kanban boards, teams can watch the progress of projects even if they are distributed. Executive leaders can follow multiple boards all at once. And active alerts and notifications can ensure that forward progress is maintained.
Whether it is used to manage inventory, parts, or ideas, Kanban is an effective method for tracking and communicating the current state and ensuring that demand drives production.