This scenario describes production supply using the KANBAN procedure. With KANBAN, material flow is not controlled by means of higher-level planning, but is requested from the previous manufacturing level (supply source) by the demand source exactly when required.

You use this process for controlling production and material flow if:

• Production itself is to control the manufacturing process. By doing so you can reduce lead times and stocks.
• You would like to reduce the manual posting effort as much as possible.

Production supply with KANBAN can also be carried out with additional material requirements planning. In this scenario, the replenishment elements are generated by a material requirements planning run. However, these do not trigger production or replenishment directly, but act as a forecast for the supply source. Now, when kanbans are set to FULL or EMPTY, only the material flow and the production is controlled here. Backflushes and good receipts are posted without reference to the kanban.

The production supply with KANBAN begins when you remove a material controlled by KANBAN from a container in production or in sales. If this action causes the material quantity to fall below a certain limit, the system creates a signal. The replenishment of the kanban is automatically carried out on the basis of a previously established replenishment strategy.

Replenishment by in-house production takes place in two different ways:

• The kanban signal automatically creates a production order or a run schedule quantity, which is used to replenish the kanban. The kanban is transported back to the demand source, the status set back to FULL and goods receipt posted.
• The kanban signal causes the kanban (and the kanban card) to be sent to the supply source. With the kanban card, the supply source produces the material, fills the kanban and sends it back to the demand source. The status is set back to FULL and a goods receipt is posted.

The kanban signal automatically creates a standard purchase order, a schedule line or a stock transfer order (plant to plant). The material manufactured by the external supplier is transported to the demand source. The status of the kanban is set back to FULL and a goods receipt is posted.

The kanban signal automatically creates a stock transfer of a transfer requirement.