What Is Kanban Scheduling
Kanban scheduling systems are among the most simple, effective and inexpensive means for manufacturing production and inventory control.
The concept is proven. From Nagoya to Wichita Falls; from Windsor to Geelong; from microelectronics to heavy steel– Kanban scheduling systems reduce inventory, eliminate stockouts, displace massive computers and slash overhead. They improve both service and quality.
So why doesn't every manufacturer employ this miracle In many situations, it is inappropriate–– other methods work better. Even When Kanban is an excellent choice, firms may ignore it. Kanban scheduling often evokes strong emotional responses from both proponents and detractors and sets a variety of organizational phenomena at work against it.

Kanban scheduling systems operate like supermarkets. A small stock of every item sits in a dedicated location with a fixed space allocation. Customers come to the store. They visually select and purchase their items. An electronic signal goes to the supermarket's regional warehouse which details which items have sold. The warehouse prepares a (usually) daily replenishment delivery of the exact items sold.
In large, modern supermarkets Kanban signals come from checkout scanners. They travel electronically (usually once each day) to the warehouse. Some stores still use a visual system. Here, a clerk walks the aisles daily. From empty spaces he deduces what sold. The clerk then orders replacements. This signal might go by telephone, FAX or courier. Often it travels on the returning delivery truck.
Another variation is the bread truck. Here drivers follow a fixed route from store to store. They have a supply of bakery items in their truck. At each stop, they examine the stock and replenish what has been sold.
A Manufacturing Example
Kanban scheduling in manufacturing works in the same way. The essential elements of a system are:
Stockpoint(s)
Withdrawal Signal
Immediate Feedback
Frequent Replenishment
In the manufacturing kanban system shown below, a machine shop supplies component parts to final assembly. Assembly is a manual operation with little setup. Assembly produces in lot sizes of one according to customer requirements.
Machining is more automated than assembly and has significant setup costs. Machining must produce in batches to amortize the setup and sequence parts to minimize tool changes.

A small quantity of every part is maintained at the machine shop. By observing the remaining quantities, the machinists know what products need to be made next.

Kanban and Other Methods
Production Control coordinates multi-step processes, often with multiple products. Kanban is just one of several ways to achieve this coordination.
Physical Linking is another way to coordinate. Here, each part in the process moves in synchronization and each step starts simultaneously. Processes must have the same lot size and co-location.
In Broadcast, a final assembly operation builds directly to schedule. The schedule is simultaneously Broadcast to upstream subassembly and supply operations. They build the needed parts in Line-Set Order with a small time offset for delivery. This system does not require co-location. It does require identical lot sizes (usually one) for all processes.
Kanban scheduling systems are useful when lot sizes differ between process steps, processes are unbalanced or when distance introduces time lag or variability. These systems slightly de-couple the processes.
Materials Requirements Planning (MRP) works from Bills Of Material (BOM), routings, inventory records and forecasts. It plans each process step for each product, subassembly and item. The system accumulates demand for each work center and each time period. MRP allows effective scheduling under the most difficult conditions.
This ability to connect a disjointed production comes with a price. MRP permits some forms of sloppy engineering. The administrative costs are high. Throughput times are long and inventory turns low. Errors in inventory, BOM's or lead times disrupt the system. About 50%-80% of installed MRP systems do not meet their user's needs.
Re-Order Point (ROP) systems store each item and issue to downstream work centers on request. ROP signals a resupply when the inventory is just sufficient to cover the resupply time.
ROP systems are simple. They require steady and predictable withdrawal rates and predictable replenishment times. But, these conditions are rare. Typical systems have very high inventories and experience frequent stockouts.

Kanban Cart
A Hierarchy Of Methodology
The figure below shows how the methods form a hierarchy of simplicity and flexibility. The best system is the simplest.
Where the process allows, Physical Link is the system of choice. Broadcast, Kanban, MRP and ROP follow in desirability.
A system designer would examine each process and each product group in turn. He/she attempts to apply physical linkage. If the necessary conditions do not exist and process change is impractical, Physical Linkage is rejected and Broadcast is considered. This process follows down to the least desirable system, ROP.
In practice, Kanban scheduling systems are often a good choice. They can be a transition between MRP and ROP approaches and Physical Linkage.