Kanban represents a production control technique in which the material flow is controlled by events. The advantages offered with this technique are, on the one hand, that production is controlled directly on the shop floor and, on the other, processes are kept short and simple. The aim is that the production process becomes autonomous and, it is also to keep planning and posting activities to a minimum. The result of this automomation is a shortening of the lead times and a significant reduction of inventory.
Kanban is based on linking operations backwards in production. The material is replenished according to the PULL principle. The replenishment frequency is based on actual consumption, that is, one production level only triggers the production of more parts if a requirement exists in the next higher production level. The lot size is not determined using the optimum procedures or period-grouping procedures, instead, it is determined once, as a so-called container quantity. Information on requirements is passed on using kanbans (Japanese = card).
In kanban, the relationships between the production levels are represented by the demand source - supply source relationship. This relationship is defined by the so-called control cycle. The control cycles contains infomation on the container number, the container quantity, the replenishment strategy as well as the print strategy for the kanban. The demand source informs the supply source of his material requirements by means of a signal. In Kanban procedures, it is the physical inventory and not the logical inventory that is taken into account for replenishment. Three strategies are then available for organizing replenishment, in-house production, external replenishment, and stock transfer.
For more information, please refer to the online documentation, "Kanban".