Kanban Principle in Comparison with Traditional MRP

In traditional MRP procedures, the production quantities and dates are calculated on the basis of current customer or planned independent requirements and the input quantities and staging dates of the components are determined by exploding the bill of material. The production quantities can be consolidated to form lots for different requirements. Lot-size creation is orientated on the selected lot sizing procedure. At each manufacturing level, lots are usually produced completely before being used further at a subsequent level. The dates calculated in MRP are the basis for detailed planning for the current manufacturing level even though it is often not known exactly when the material is required for the follow-on manufacturing level at the time of the planning. The material is pushed through production on the basis of these dates ("Push" principle). This often results in wait times until production starts or until the material is processed further. These wait times are included in the planning as increased lead times or floats (safety times) and are rarely undercut. The result can be large stocks of material and long lead times in production.

When Kanban is employed, the material is not pushed through production by means of a higher-level planning, but pulled from the preceding manufacturing level (supply source, supplier) by the next manufacturing level (demand source, consumer) as and when needed ("Pull" principle). For this purpose, a control cycle with a fixed number of kanbans is established between the supply source and the demand source. Each kanban represents a certain quantity of material and can correspond to a container (however, this is not mandatory). When the quantity of material belonging to a kanban has been consumed, the kanban acquires the status "Empty" and the card is sent to the supply source, which then produces the prescribed quantity of material and supplies it to the demand source (consumer). The consumer acknowledges receipt of the material by resetting the status to "Full". Thus the lot size to be produced by the supply source at one time is quasi defined by the kanbans. The total production quantity results from the number of kanbans sent to the supply source within a certain period. The replenishment frequency is orientated on actual consumption. This means: If more material is needed, the kanbans circulate between the supply source and the demand source more quickly. If less material is needed, the kanbans circulate more slowly. If no material is needed over a certain period, all kanbans with the material are with the consumer, who thus has the components at his immediate disposal when he wants to start production of the relevant assemblies. There is never more material in circulation than is defined by the number of kanbans in the control cycle and production can be started at any time at each of the manufacturing levels supplied via Kanban.