18 Must-Have Negotiation Skills For Procurement Professionals

Kanban System Everything You Should Know

Kanban System is gaining popularity and has spread to many industries from construction to procurement to optimize workload. However, what is it? 

In this article, we will tell you what the Kanban System is and the Kanban Board. We will discuss how the Kanban system works and why you should use it to optimize and monitor your inventory. Additionally, we will tell you the best practices of Kanban. 

Once you are done reading this article, you will know how to use the Kanban System effectively. Thus, optimizing your inventory and procurement processes

Kanban System: What is it? 

The Kanban system, initially created by Taiichi Ohno at Toyota in the 1940s, is an inventory control technique employed in just-in-time (JIT) manufacturing. 

Its name is derived from the colored cards used to monitor production and reorder supplies as they run out. Kanban, a Japanese term meaning “visual card,” refers to the concept of utilizing visual cues to prompt necessary actions in order to maintain a smooth workflow.

It is a system that helps you keep just the right amount of stock, avoiding unnecessary purchases and storage space. It also prevents workflow delays and keeps things running smoothly.

To improve communication and coordination in supply chains, electronic Kanban systems have become popular. 

These systems, known as e-Kanban, can be integrated into enterprise resource planning (ERP) software. They utilize digital boards, lists, and cards to convey the status of processes across different departments.

Major manufacturers like Toyota, Ford Motor Company, and Bombardier Aerospace have adopted e-Kanban systems. 

These electronic systems still use visual signals, but they often automate certain aspects of the process, such as factory transportation or generating purchase orders.

Kanban Boards

The Kanban process uses special boards to organize and visualize a workflow. These boards have three main parts: boards, lists, and cards.

Kanban boards are like big pictures that show the overall structure of a process. They help organize different aspects of work, such as finance or marketing, in one place.

Kanban lists are like to-do lists within each board. For example, in manufacturing, each stage of production can be a separate list. Lists can flow from one task to another, with each task building on the completion of the previous one.

Finally, Kanban cards are the smallest and most detailed tasks within the lists. These cards represent specific action items that need to be done in a specific order to complete a list.


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How Does the Kanban Work? 

Kanban is a system that uses visual signals to ensure each production area only takes the right amount and type of materials it needs, precisely when it is needed. This eliminates the need for companies to have excessive stock on hand. However, for Kanban to work effectively, accurate inventory management is crucial. It is important to integrate other tools like cycle counting and physical inventories to maintain inventory accuracy. The trigger for pulling materials in the Kanban system is the Kanban card, which can be a physical card, an electronic signal, or other visual indicators. Nowadays, many Kanban systems use electronic methods like scanning barcodes instead of physical cards to avoid mistakes and lost cards. A key aspect of an efficient Kanban system is regularly calculating and adjusting the size of Kanban bins (the number of units in each Kanban) and the overall number of Kanban bins.

Why Should You Use Kanban?

Kanban operates based on the principle of replenishing inventory according to actual demand signals rather than relying on predicted inventory levels.  This approach ensures that inventory is not overstocked and reduces the risk of obsolete inventory. Moreover, Kanban goes beyond maintaining minimum inventory levels and directly responds to customer demands.  By identifying which products are selling and need to be restocked before depletion, you only keep the necessary inventory on hand. In this way, the customer’s needs drive the inventory management process, aligning with the ultimate goal of satisfying customer demand. Additionally, Kanban provides a visual representation of work, enabling a quick understanding of task status.  This visual clarity helps in comprehending the flow of work, identifying areas of congestion, and making well-informed decisions.

    Best Practices of Kanban

    Here are some of Kanban’s best practices to help you optimize your processes:

    1. Make everything clear from the start 

    Before you start your initial board, you should establish a well-thought-out Kanban strategy for your team. 

    Avoid the temptation to create a workflow column for every possible aspect. Instead, dedicate some time to sketching out your team’s workflows on paper and contemplate the movement of each task through different stages.

    Ensure that all team members understand how tasks enter the workflow and when they are ready to progress to the next phase. This clarity will facilitate the proper utilization of the board by team members.

    2. Add due dates

    In Kanban Boards, it can be a little harder to see when tasks are due because the main focus is on tracking their progress. 

    To ensure that you do not miss any deadlines, most online Kanban tools let you set due dates for each task. 

    They will even highlight tasks that are coming close to the deadline or have already passed it. This way, you can easily keep track of when things need to be completed.

    3. Limit tasks per workflow

    Decide in advance how much work your team can handle at each stage of the workflow and set a limit for each column. 

    This limit determines the maximum number of tasks allowed in each column at any given time.

    Having a Work in Progress (WIP) limit helps your team prioritize and complete important tasks efficiently, leading to quicker project completion. 

    It also prevents them from being overwhelmed by new tasks, as once the limit is reached in a column, no additional tasks can enter that stage until existing tasks are finished.

    4. Optimize and assess your workflows

    Monitoring your WIP limits is only one aspect of identifying bottlenecks and enhancing your workflow. There are other key metrics you should track, including:

    • Cycle time: This refers to the average duration it takes for a task to move through the workflow and be completed.
    • WIP-to-Finished Work Ratio: Keep an eye on the proportion of work in progress (WIP) compared to the amount of finished work within a specific timeframe.
    • Phase Duration: Analyze how long tasks remain in each phase of your project’s Kanban Board.

    Improving the workflow is not solely your responsibility. Kanban encourages every team member to actively identify potential improvements and report any issues as they arise.

    Frequentlyasked questions

    + What is the Kanban system?

    It is a system that helps you keep just the right amount of stock, avoiding unnecessary purchases and storage space.

    + How does Kanban work?

    Kanban works by using a Kanban board, which consists of columns representing different stages of the workflow. Tasks or cards are moved across the board from one column to another as they progress. It provides a visual representation of work and helps teams prioritize tasks, reduce bottlenecks, and improve productivity.

    + Can I use Kanban in other industries?

    Yes, Kanban is a versatile methodology that can be applied to various industries and domains, including software development, project management, marketing, manufacturing, and personal task management.

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