Adding to the comments here in..
Kanban is a lean management technique specifically used for Inventory control as part of Just in Time (JIT) "Pull-System" framework.
A typical implementation model is a Two Bin system, where parts/items/sub-assemblies that are being used in a manufacturing assembly process are stocked in two bins.
When the first bin gets empty, there is a re-order card at the bottom of it, which is picked up and replenishment of parts is initiated. During the lead time taken for replenishment, the parts available in the second bin is used to feed into the manufacturing / assembly operations, which also has similar re-order card at the bottom. By the time second bin gets empty, the first bin is replenished and the cycle goes on.
This mechanism helps in keeping tight control of inventory (Stock) of parts so that excessive stock is not carried. At the same time, the bin size (quantity of parts to be kept in the bin) is decided in a scientific manner based on production demand, supply lead time and delivery quality so that there is no stock out (parts not available to feed into manufacturing).
A very simple example of Kanban is the 15 litre Mineral drinking water containers that are used in companies (now a days in many houses too!!) where one container is kept on top of the other.
As the bottom containers (with the tap) gets emptied, water from the top one flows. When the top one becomes empty, it is sent for replenishment so that the replenishment comes in by the time the lower container also gets empty. This is not the perfect example of Kanban, but serves to illustrate the point in a simplified manner.
Kanban is widely used in Japanese (and many Indian) mfg organizations to control inventory at an optimum level and only source what is needed for daily operations thereby avoiding waste of money, space, resources and organizational energy just to manage excess stocks. Kanban looks simple as a concept, but it needs a tight co-ordination between supplier and customer functions, a strong reliability in terms of lead time to delivery, quality level of items/parts among other factors.
eXample Consulting Group www.examplecg.com 8th April 2008 From India