Kanban guide · Lean foundations
Kanban Inventory Management: The Two-Bin System and More
In inventory management, kanban is a signalling system that triggers replenishment only when stock is used. It keeps inventory low and stock-outs rare, without complex forecasting.
Key takeaways
- Kanban inventory replenishes only what has been used.
- The two-bin system is the simplest form.
- Size kanbans from demand, lead time, safety factor and container size.
The two-bin system
- Stock for a part is split into two bins.
- Workers use parts from the first bin.
- When the first bin is empty, its kanban card is sent to purchasing or the supplying process.
- Workers continue using the second bin while the first is refilled.
- The refilled bin returns before the second runs out.
Kanban cards
A kanban card shows the part number, description, quantity per container, supplier or source process, and delivery location. Production kanbans authorise making more; withdrawal kanbans authorise moving parts from one area to another. Many companies now use electronic kanban (e-kanban) triggered by scanning.
How many kanbans?
A common formula is:
Number of kanbans = (daily demand × lead time in days × (1 + safety factor)) ÷ container quantity
Benefits and limitations
| Benefits | Limitations |
|---|---|
| Lower inventory and storage costs | Needs reasonably stable demand |
| Simple, visual and self-regulating | Relies on reliable suppliers |
| Fewer stock-outs and less overstock | Less suited to one-off or highly seasonal items |
Frequently asked questions
Is kanban inventory the same as Just-in-Time?
Kanban is the signalling method that makes Just-in-Time inventory work.
Can small businesses use kanban inventory?
Yes. A two-bin system is cheap and effective for consumables, spare parts and small retail stock.
What is kanban inventory management?
Kanban inventory management uses signals, such as cards or empty bins, to trigger replenishment only when stock is used, keeping inventory low and matched to demand.
What is a two-bin system in kanban inventory management?
Stock is split into two bins. When the first is empty, it signals a reorder while the second bin covers demand until the replacement arrives.
How do you calculate the number of kanbans in kanban inventory management?
A widely used formula is: number of kanbans = (demand during lead time + safety stock) ÷ container size. Round up to a whole number.
What is an inventory kanban card?
A card attached to a container that shows the part, quantity, location and supplier. When the container is used, the card is sent back as a signal to replenish.
What are the benefits of kanban inventory?
Lower inventory and storage costs, fewer stock-outs of fast-moving items, simple visual control and less time spent on manual stock checks.
What are the limitations of kanban inventory?
It works best for steady demand and reliable suppliers. Highly seasonal, one-off or very long lead-time items need a different approach or extra safety stock.
What is e-kanban inventory management?
An electronic kanban sends replenishment signals digitally, for example via barcode scans or an ERP system, instead of physical cards.
In kanban inventory management, what is the difference between a production kanban and a withdrawal kanban?
A production kanban authorises a process to make more parts. A withdrawal, or conveyance, kanban authorises moving parts from one process or store to another.
How is inventory kanban related to Kanban for projects?
Both use visual signals and pull. Project Kanban boards adapted the idea to knowledge work, with WIP limits playing the role of a fixed number of cards.