Kanban, meaning "visual signal" in Japanese, is a pull-based production control method developed as part of the Toyota Production System. Instead of producing based on forecasts pushed through MRP, kanban triggers production or material replenishment only when downstream processes actually consume inventory. The signal is typically a card, bin, or electronic notification.
A simple two-bin kanban system works like this: parts are consumed from Bin A on the production line. When Bin A is empty, it becomes the signal to replenish — either by producing more parts or ordering from a supplier. Meanwhile, production switches to Bin B. The number of kanban cards or bins in circulation controls the maximum inventory level, making overproduction physically impossible.
Kanban works best for repetitive, stable-demand items where consumption rates are predictable. It is less suited for engineer-to-order or highly variable demand. Many manufacturers use a hybrid approach: MRP for long-lead or custom items, and kanban for consumables, fasteners, and high-runner components.