Procurement Glossary
Kanban system: Efficient inventory control and material flow optimization
November 19, 2025
The Kanban system is a proven method for demand-oriented control of material flows and inventories in procurement. This method, which originated in Japan, enables companies to optimize their stock levels and ensure delivery capability at the same time. Find out below what a Kanban system is, which methods are used and how you can increase the efficiency of your procurement processes.
Key Facts
- Visual control system for demand-oriented material provision
- Reduces stock levels by up to 30% while maintaining delivery capability
- Based on the pull principle: replenishment only takes place when actually needed
- Uses Kanban cards or electronic signals to trigger orders
- Integrates seamlessly into lean management concepts and just-in-time strategies
Contents
Definition: Kanban system
The Kanban system is a visual control method for demand-oriented material supply that was originally developed by Toyota.
Basic principles of the Kanban system
A Kanban system works according to the pull principle and controls the material flow using visual signals. The most important elements include:
- Kanban cards as information carriers for purchase orders
- Defined container sizes and order quantities
- Fixed number of Kanban cards per item
- Clear rules for card management and reordering
Kanban system vs. traditional ordering methods
In contrast to conventional material planning methods, Kanban works without complex forecasts. While traditional systems are based on demand planning, Kanban reacts directly to actual consumption and thus significantly reduces obsolete stocks.
Importance of the Kanban system in Procurement
For procurement, the Kanban system offers an efficient way of optimizing stock levels. It enables close cooperation with suppliers and supports just-in-time strategies through automated ordering processes.
Methods and procedures
The implementation of a Kanban system requires structured procedures and proven methods for optimal design.
Kanban dimensioning and parameter definition
Correct dimensioning is crucial for the success of the system. Minimum stock levels and Kanban quantities are calculated based on consumption data. The formula takes into account throughput times, consumption quantities and desired safety buffers.
Electronic Kanban (E-Kanban)
Modern Kanban systems use digital technologies for automation. E-Kanban solutions integrate into ERP systems and enable automatic scheduling. Sensors and barcode scanners record stock changes in real time and trigger ordering processes.
Supplier integration and consignment warehouse
Successful Kanban implementations require close cooperation with suppliers. Consignment stock and Vendor Managed Inventory (VMI) optimally complement the Kanban system and further reduce capital commitment.
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Key figures for controlling Kanban systems
Measuring the success of Kanban systems requires specific key figures for continuous optimization and performance monitoring.
Inventory key figures and turnover rate
The average stock level and stock range are key indicators of Kanban efficiency. A high inventory turnover rate combined with low shortages indicates the optimum system design. Target values vary between 12-52 turnovers per year, depending on the industry.
Service level and delivery capability
The delivery service level measures the availability of materials when required. Kanban systems should achieve service levels of at least 98%. Backorder rates below 2% are considered the benchmark for well-functioning systems.
Cost efficiency and process quality
The reduction of ordering costs and capital commitment are important indicators of success. Kanban systems typically reduce procurement costs by 15-25%. In addition, process times for order proposals and administrative activities are used as measures of efficiency.
Risk factors and controls in Kanban systems
Despite the advantages, the implementation of Kanban systems involves specific risks that must be minimized by suitable control mechanisms.
Supplier defaults and supply risks
The high level of dependence on reliable suppliers represents a critical risk. Supplier failures can quickly lead to production stoppages if stocks are low. Risks are minimized through supplier diversification and the definition of safety time buffers for critical components.
Fluctuations in demand and planning inaccuracies
Strong fluctuations in demand can overload Kanban systems, as they are primarily designed for stable consumption patterns. Consumption forecasts and regular parameter adjustments help to control these risks. An ABC-XYZ analysis identifies suitable items for Kanban control.
System complexity and maintenance effort
Complex Kanban systems require continuous maintenance and monitoring. A lack of MRP parameter maintenance leads to suboptimal stock levels. Regular audits and warehouse KPI monitoring ensure system efficiency.
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Practical example
An automotive supplier implemented an electronic Kanban system for C-parts in assembly. By installing sensors in storage containers, stock changes are automatically recorded and electronic orders are triggered when the reorder level is reached. The system reduced stock levels by 35% while improving material availability to 99.2%. The implementation was carried out in three phases:
- Analysis of consumption data and ABC classification of articles
- Installation of IoT sensors and integration into the ERP system
- Employee training and continuous parameter optimization
Current developments and effects
The Kanban system is constantly evolving and integrates modern technologies to increase efficiency.
Digitalization and AI integration
Artificial intelligence is revolutionizing traditional Kanban systems through predictive analytics and machine learning. AI algorithms automatically optimize Kanban parameters based on historical consumption data and external factors. These intelligent systems dynamically adapt safety stocks to market changes.
IoT and smart manufacturing
Internet of Things technologies enable complete automation of Kanban processes. Intelligent containers with integrated sensors automatically report stock changes and trigger replenishment processes. This development leads to seamless integration into Industry 4.0 concepts.
Sustainability and Green Kanban
Environmental aspects are becoming increasingly important in Kanban design. Green Kanban concepts take CO2 emissions into account when making transport decisions and optimize order cycles from a sustainability perspective. Digital Kanban cards significantly reduce paper consumption.
Conclusion
The Kanban system is a proven method for efficient inventory management that is being continuously developed through digitalization and AI integration. Successful implementation requires careful article selection, reliable suppliers and continuous parameter optimization. Companies can use Kanban systems to significantly reduce their stock levels and improve their ability to deliver at the same time. The strategic importance lies in creating lean, responsive procurement processes that can react optimally to fluctuating market requirements.
FAQ
What is the difference between Kanban and min-max control?
Kanban works with visual signals and fixed container sizes, while min-max control is based on stock limits. Kanban is self-regulating and requires less administrative intervention. Min-max systems require regular stock checks and manual order triggering if the minimum quantity is not reached.
For which items is Kanban best suited?
Kanban works best for items with regular, predictable consumption and short delivery times. C-parts with a high turnover rate and low value are ideal candidates. A-parts with a high value or irregular demand should rather be managed using traditional MRP processes.
How do you calculate the optimum number of Kanban cards?
The Kanban number is calculated from the formula: (average consumption × replenishment time + safety stock) ÷ container size. The delivery time, transportation time and desired service level must be taken into account. The parameters must be checked and adjusted regularly.
What requirements must suppliers fulfill?
Suppliers need reliable delivery performance with low delivery time variance and high quality. They must be prepared to accept smaller batch sizes and possibly invest in consignment warehouses. An EDI connection or electronic order processing is essential for e-kanban systems.
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