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How Do Kanban Cards Work

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Kanban, one of the primary Lean tools, is an inventory management system that relies on real-world inventory consumption (demand) to trigger replenishment signals (supply). Click here to read more about kanban.

When a kanban bin is opened (break a bin) or emptied (empty a bin), a replenishment signal is sent to the supplier to order the standard quantity at the standard lead time. Click here to read about kanban timing, e.g., empty a bin or break a bin, along with kanban types (1-card, multi-card, and 2-card solutions.)

3 Status choices for kanban cards

A kanban card spends its life in one of 3 states.

  1. Kanban cards are linked to on-hand inventory. For break-a-bin items, the card stays with inventory until the first piece is removed from the bin. For empty-a-bin items, the card stays with inventory until the last piece is removed from the bin.
  2. Kanban cards hang on a kanban board while waiting for a supplier shipment. Click here to read about kanban boards.
  3. Kanban cards are in limbo for a short time between when they are delinked from inventory, or turned in to be processed, and when they are linked to a new replenishment order.

HINT: It should take no more than 4 hours from the time a card is turned in until it is processed to generate a replenishment order.

How kanban cards work

  1. As inventory is consumed, kanban cards are triggered. Some sites use break a bin, where the first piece out of a kanban bin triggers an order, and other sites use empty a bin, where the last piece out of a bin is what triggers an order triggered. Click here to read about trigger timing.
  2. Kanban signals are transmitted to the item’s supplier, which can be an internal manufacturing cell or an external supplier. For internal suppliers, sometimes the card actually travels to the supplying work cell, but the signal can also be electronic, such as an open purchase order or an email request.
  3. While waiting for material from the supplier, the kanban card hangs on a kanban board, seen in picture below. Each card hangs on the numbered peg that stands for the due date for that order. Click here to read about kanban boards.

  1. When replenishment material arrives, the associated card is taken from the board and placed with the material in the correct storage location.

This trigger-and-receipt process is repeated over and over for every kanban item.

Design your kanban cards

A kanban card is a signal to order material and therefore it should include the basic information about the item and its kanban solution.

  • Part number
  • Description
  • Supplier
  • Lead time
  • Kanban order quantity (KOQ)
  • Standard package quantity (SPQ)
  • Number of containers per card
  • Total number of cards
  • Storage location
  • Reorder point (only required for 1-card solutions)

This is an example of a kanban card.

Several other items can be included on the card to help with processes on the floor or when processing the card.

  • Barcode, if the card is scanned to generate a new order
  • Revision date of the card, to make it easier to sort old cards from new cards when deploying updated cards to the floor
  • ABC classification
  • Supplier part number, if different from the in-house identifier
  • Planner or buyer, the person who manages this item

Cards should be no smaller than about 2” x 3” (picture a business card or credit card) and no larger than ¼ of a sheet of paper. Card size has a direct impact on the amount of space required for kanban boards, so don’t make cards too large!

Spike cards

Sometimes an item or work cell experiences a temporary increase in demand that doesn’t justify resizing kanban solutions, but supply must increase for a while to support the higher demand. The most common driver for spike cards is past-due shipments that must be accelerated through the plant, necessitating an increase in daily output.

Spike cards are handled differently than regular kanban cards. When spike cards are deployed, the “spike” inventory always goes at the back of point-of-use storage, to ensure that regular inventory is consumed first. This ensures that regular kanban cards continue to be processed at the regular cadence.

Spike cards are turned in just like regular cards, but they should not be automatically processed to place new orders, since the increase in demand is not a permanent condition. Remember, if the increase in demand is permanent or for an extended period of time, kanban solutions are resized “up” to provide a high level of supply.

Card material & color

Most kanban cards are paper or plastic.

  • Plastic cards are the best because they’re durable, easy to print, they require no secondary processing (no cutting, laminating, or sleeves), associates can write on back with grease pen, the card-type can be used for other purposes (employee or visitor badges), and they come in different colors. The disadvantage is that they require special card stock and a printer.
  • Paper cards must be modified to make them durable, such as laminating or putting them in plastic sleeves. The advantages for paper cards include the ease of using different colors and the ability to size cards to match desired layout. The disadvantages are significant. They require additional processing (cut printed sheets into individual cards then laminate them or put in clear plastic sleeves), they are not easy to print because printing requires the user to create sheets of cards to print, but different part numbers require different numbers of cards. Most people are surprised just how much work it takes to print paper cards and get the ready to deploy – even a couple hundred cards can take a day to prepare.
  • Some sites attempt to use electronic or virtual cards, and this generally doesn’t work because it removes the process and employee-engagement benefits that are gained from the visual aspects of kanban.

It is beneficial to use different colors to indicate various card categories.

  • Purchased items are often a different color than manufactured parts. This makes it easier to find cards as orders arrive at the work cell, because a stack of cards on a specific due-date peg is easily divided into external and internal cards. This is also helpful if different people manage internal versus external items.
  • Spike cards should be a bright color that stands out from a distance. Since they are not automatically reordered, they don’t need a barcode.
  • Material that goes to an external process, like plating or heat treat, or material from specific suppliers can be a designated color to help track those items throughout the site.
  • Material for a particular work area or product family can be a specific color, particularly if kanban contacts are assigned by work cell or value stream.

A purchased item might have a pink card for regular kanban and a yellow card for spike inventory.

Kanban cards are the most common replenishment signal because they’re easy to use, they have visual-management advantages, and they can provide instant access to item data and kanban insights with the right card content.

Need more info? Keep browsing this blog. Want specific expertise implementing kanban solutions in your organization? Contact Josette Russell today.

How Does a Kanban Board Work

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Kanban, one of the primary Lean tools, is an inventory management system that relies on real-world inventory consumption (demand) to trigger replenishment signals (supply). Click here to read more about kanban.

A kanban board manages kanban cards that are waiting for an order of replenishment parts. Click here to read about kanban cards.

Carefully design your kanban boards

A kanban board has about 3 dozen pegs, hooks, or other ways to hold kanban cards.

  • 31 pegs labeled 1 to 31, for the 31 dates that can occur in a month
  • Additional pegs for other circumstances
    • “Stock out” – cards that have zero on-hand inventory, even if a supplier order is not late
    • “Past due” – cards that were due prior to today
      • Items that are out of stock should be on the “Stock out” peg
    • “Next Month” – cards that are due in more than one month
    • “2+ months out” – cards due in more than two months, if lead times approach 8 weeks or more
    • “Waiting to be scanned” – this is only required if cards are not scanned at the board

In keeping with kanban’s mission to be a visual system, kanban boards are located where the cards live, and cards live where items are used, at point of use.

  • Boards should be easy to access, easy to reach, and in good lighting
  • If possible, process kanban cards at the board (i.e., put a scanner there) so they don’t leave the area
  • Kanban boards are “sized” to handle the number of cards expected to be hanging at any given time. Break-a-bin cards spend a large portion of their life on the kanban board, while empty-a-bin cards spend more time on the shelf. Click here to read about trigger timing.
    • For EaB items
      • For 2-card solutions, expect about half of the cards to be on the board
      • For multi-card solutions, expect all but 1 or 2 cards to be on the board, unless the item has a really high card count
      • For 1-card solutions, the card will be randomly on the board based on each item’s characteristics
    • For BaB items
      • For 2-card solutions, expect both cards to be on the board a good percentage of the time
      • For multi-card solutions, expect all but 1 card to be on the board
      • For 1-card solutions, the cards will be randomly on the board, as described above

Board count & location

In order to know how many boards we need and where tey should be placed, weneed to estimate how many cards a particular board needs, versus how many it can physically hold.

  1. 31 date pegs equates to ~22 workdays and 9 weekends, so 22 pegs hold all the cards for a 5-day workweek cell.
    • Adjust the number of “active” pegs if the cell works more than 5 days per week.
  2. Determine how many cards fit on one peg. Don’t overload the pegs! Please minimize the risk that cards will fall off.
  3. Calculate how many cards belong to this board’s span of control, which is the sum of card count for all kanban items assigned to this board.
  4. Estimate how many cards could be on the board at one time, based on card count and break-a-bin or empty-a-bin trigger timing.
  5. Divide the number expected cards on the board by 22 pegs to see if the count per peg is less than how many can fit on a peg.

Kanban board process

  1. When a kanban card is scanned or processed, the due date for the new order is determined by [today’s date + standard lead time in workdays], skipping any holidays (“H”) during that period. Write the due date in some kind of erasable marker on the back of the card, so that date is available when the kanban board is audited.

HINT: Lead times are always in workdays. Why? Think about an order that is placed on a Thursday. If the plant works 5 days per week, a 3-day lead time that is processed on Thursday is due on Tuesday because three days from Thursday is [Friday-Monday-Tuesday]. If we use calendar days instead of workdays, an item with a 3-day lead time that is processed on Thursday is due Sunday [Friday-Saturday-Sunday], but Sunday is not a work day for many plants. Therefore, putting lead times in calendar days only works if 1) the site works 7 days per week and so do all external suppliers, or 2) every lead time is an even number of weeks. Since these conditions are rarely true (I’ve never seen it), lead times must be in workdays.

  1. Each of the numbered pegs from 1 to 31 stands for a date. Place the card on the board based on its calculated due date.
  • If today is May 5thand card is due on the 12th, the “12” peg on the kanban board stands for May 12th so we hang it on the 12 peg.
  • If today is May 5thand the card is due June 1st, hang it on the “1” peg.
  • If today is May 5thand the card is due on June 14th but “14” stands for May 14 so it goes on the “Next Month” peg.
    • For really long lead times, there is a peg for due dates that are farther out than one month. If today is May 5thand the card is due on July 12th, the “12” peg is May so one month out is June and July is 2 months out – hang it on “2+ months out.”
  1. The kanban board is updated at the beginning of every workday. The “Today” marker is moved to today’s date and cards that were due yesterday that did not arrive are moved to the “Past Due” peg.
  1. Throughout the workday, the board is kept in sync with card activities. Items that drop to zero are moved from the numbered peg to the “Stock Out” peg. Cards that are processed to place a new order are hung on the appropriate peg, as described above.

HINT: Cards on the pegs labeled Past due, Stock Out, or To Be Scanned are acted on at least twice per shift. Cards never wait more than 4 hours!

  1. Instruct external and internal suppliers to put the due date on the packaging for the order, so the associated card can be quickly located on the board Match the correct card to incoming parts and put both in the correct storage location.

Need more info? Keep browsing this blog. Want specific expertise implementing kanban solutions in your organization? Contact Josette Russell today.

kanban calculator

What Exactly Is Kanban?

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Kanban, one of the primary Lean tools, is an inventory management system that relies on real-world inventory consumption (demand) to trigger replenishment signals (supply). Since kanban signals are based on actual consumption, it is considered a visual “pull” system. The opposite of pull is push, in which material is delivered to the recipient based on the supplier’s scheduling preference and not on the customer’s need.

At its most fundamental level, kanban performs two functions

Kanban calculates replenishment solutions based on the characteristics of each item, specifically lead time, demand, and supply and/or demand volatility. Kanban solutions balance the need for meeting customer delivery requirements, specifically high on-time delivery plus short lead times, with the need for low on-hand inventory levels to boost cash flow and minimize required space. Be very clear: kanban’s primary goal is to protect delivery performance, and inventory performance is a secondary goal that is only pursued after delivery performance is successful.

Kanban initiates replenishment orders in response to material consumption, using the calculated kanban solution to trigger an order for a standard order quantity at a standard lead time, such as 100 pieces due in 2 weeks.

Unlike kanban, MRP (materials requirements planning) exists in a Big Computer System, which relies on system values for on-hand balance, expected incoming material, and upcoming demand.

Kanban utilizes visible signals such as kanban cards or empty inventory spots to manage replenishment signals. Associates can quickly and easily check kanban cards or boards to determine what is ordered, when it is due, how many will arrive, etc. This puts a significant amount of inventory management intelligence in the minds of the people who do the work, versus in the hands of a few people with access to MRP.

Kanban is a repetitive loop

Kanban can be compared to the Plan-Do-Check-Act cycle.

Plan = Size, or calculating kanban solutions

Do = Execute, the processes that manage kanban signals, cards, orders, and boards. Click here to read about kanban cards, or click here to read about kanban boards.

Check = Audit, the regular review cadence that verifies the health of the kanban system

Act = Respond, addressing anything discovered during the prior 3 steps that can be repaired or improved

Once kanban solutions are calculated and deployed, kanban is a repetitive loop that triggers replenishment orders based on consumption.

  1. As inventory is consumed, kanban replenishment signals are triggered. In many kanban systems, the physical or observable kanban signal is a kanban card, like the cards in front of the plastic inventory bins in this picture.

  1. Kanban signals are transmitted to the item’s supplier, which can be an internal manufacturing cell or an external supplier. For internal suppliers, sometimes the card actually travels to the supplying work cell, but the signal can also be electronic, such as an open purchase order or an email request.
  2. While waiting for material from the supplier, the kanban card hangs on a kanban board, seen in picture below. Each card hangs on the numbered peg that stands for the due date for that order.

  1. When replenishment material arrives, the associated card is taken from the board and placed with the material in the correct storage location.

This trigger-and-receipt process is repeated over and over for every kanban item.

Basic elements define a kanban system

First, we need a kanban calculator, or a spreadsheet to generate kanban systems. This work is essentially invisible to associates who manage kanban cards and boards, but it is the most critical element of a kanban system. The calculator is usually a spreadsheet with formulas that assign kanban solutions to accommodate demand, lead time, safety stock, and order-quantity requirements. Click here to read about safety stock. Since replenishment signals are issued based on consumption, the calculation process has to accurately trigger replenishment orders at the right time and for the right quantity. Therefore, a kanban solution that is “under-sized” results in too little inventory, which puts delivery at risk. On the other hand, a solution that is “over-sized” results in too much inventory, which eats up cash and space.

Lead-time demand equals [daily demand * actual lead time], or how much consumption occurs in one lead-time period. This is an important number to know when designing kanban solutions because every kanban solution has to order a quantity greater than or equal to the lead-time demand.

As simple as this sounds, calculating kanban solutions is by far the most difficult part of designing a kanban system. For an in-depth review of kanban, get a copy of my book Banking on Kanban: Mastering Kanban to Boost Cash Flow, Minimize Inventory, and Maximize Delivery Performance. Click here to see Banking on Kanban on Amazon.

Next, we need signaling methods, something to trigger replenishment orders wherever inventory is consumed. As stated before, this is usually kanban cards but it can be empty spots on the floor, empty containers, or anything that can serve as a visual indicator. For any type of signal, its form and function must be easy to interpret on the floor. For example, a kanban card should include part number, description, lead time, supplier, order quantity, storage location, and other information that tells associates how to manage the card and the associated inventory. Similarly, an empty spot on a shelf might be labeled with part number, type of container (e.g., box, tote, bucket), supplier, and the quantity per container.

Finally, we need processes to manage kanban orders with accuracy and urgency. Kanban boards store cards that are waiting for orders. Deploy kanban boards where triggers are generated or where they are fulfilled, depending on the defined path of the card from signal to fulfillment. In conjunction with kanban boards is the task of receiving material and putting it away. As material arrives at point of use, the correct card must be taken from the kanban board and put with the material in the correct storage location.

Need more info? Keep browsing this blog. Want specific expertise implementing kanban solutions in your organization? Contact Josette Russell today.