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Many manufacturers are moving from traditional Kanban, which is based on physical cues, to a system of eKanban, or electronic Kanban. Before we explore this trend, it's helpful to understand the history of Kanban more generally. Developed in Japan and widely associated with lean manufacturing (although it has been adopted in other areas), Kanban is used to streamline processes and create just-in-time delivery. One of the principal tenets of lean manufacturing is to "pull" materials and work through the plant; in other words, to not make or buy anything until it's needed. A Kanban acts as the signal of that need -- the Japanese word Kanban roughly translates to a "card you can see" -- and functions as a request for the specified material.
Traditionally, the Kanban is a physical signal in the form of a tag or label, an empty bin or rack position, a marked space on the floor or other physical signal. In the case of a tag, Kanbans can be attached to finished goods, for example. When an item is sold, the Kanban tag is removed and sent back to the final assembly area where it acts as authorization to make another item to replace the one just sold. A Kanban can also trigger parts replenishment to the final assembly line, acting as a signal to move the replacement parts to the plant floor from the warehouse or from the supplier to the warehouse. Kanban is most effective where demand is relatively steady and continuous and is often implemented in conjunction with continuous, or flow, production lines.
Physical Kanban is hampered by any delay in signal recognition and communication. For example, Kanbans often sit until a floor worker who circulates through the plant picks them up and delivers them. Of necessity, Kanbans destined for off-site suppliers experience even more delays. Subsequently, the trend today is for ERP systems to incorporate an electronic version of Kanban, or eKanban. With the new technology, a replenishment signal can be triggered in real time by an inventory transaction, such as an item sold or issued to production, and communicated directly to the production area, warehouse or supplier, avoiding the aforementioned delays.
The additional benefit of eKanban is its ability to adjust to changing demand. When using a physical Kanban system, the number of tags is set according to demand and lead time to replenish. When demand changes, it is necessary to add or remove Kanbans from circulation to adjust to the change. This is difficult to accomplish and is usually not done until there is a problem -- too much inventory or shortages. In contrast, the programming within an eKanban system can adjust the number of virtual Kanbans dynamically as conditions change.
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