What kanban inventory is
Kanban ("signal" or "visual card" in Japanese) is a replenishment method where the signal to reorder comes from actual stock consumption, not from a forecast. In its original physical form, a card sits with a batch of stock; when that batch is used up, the card gets returned (to a board, a supplier, or a planner), and that returned card is the order trigger.
The core idea generalizes beyond physical cards: an empty bin, a scanned barcode at the point of use, or a digital dashboard alert can all serve as the same kind of pull signal. What defines a kanban system is not the card itself but the logic — reorder because something was actually consumed, not because a calendar or forecast said to.
The two-bin kanban system
The most common physical implementation is a two-bin system: each SKU has two identical bins, sized so one bin's worth of stock covers expected demand during the supplier's lead time. Staff draw from the first bin until it is empty, then start drawing from the second bin while triggering a reorder for the first. By the time the second bin empties, the reorder for the first should have arrived — assuming lead time and bin size were sized correctly against real demand.
The strength of this approach is its simplicity: no one has to run a calculation to know when to reorder, because an empty bin is the calculation, made visible. Its weakness is the same simplicity — if demand or lead time shift meaningfully, the bin size that used to work no longer covers the gap, and nothing in the system itself will flag that until a stockout actually happens.
Digital kanban vs. physical kanban
A digital kanban trigger replaces the physical card with a barcode scan, a threshold alert, or an automatic reorder rule fired at a set on-hand quantity — the pull logic (reorder because stock was consumed) stays the same, but nobody has to walk the floor to notice an empty bin or misplace a card.
Digital kanban also makes it far easier to review and adjust bin sizes or trigger points against real usage data over time, rather than relying on the original physical setup staying correct indefinitely.
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