Lean Production and Kanban Systems: Pull Logic, Kanban Count Calculation, and Implementation

In brief: Lean production is a management approach that aims to speed up flow by eliminating every activity that does not create value for the customer (waiting, excess inventory, unnecessary transport, defective production). Kanban, in turn, is the visual signaling system that applies the pull logic of this approach on the shop floor: a station produces again only when the next station consumes. This article covers the principles of lean production, how kanban works, calculating the number of kanbans, production leveling, products for which kanban is and is not suitable, how it is applied in the automotive supplier industry, and the role of technology. The general framework of production planning can be reached on the What Is Production Planning? page.

What Is Lean Production and What Problem Does It Solve?

Lean production is the general name of the Toyota Production System in the international literature. The basic idea is that production should make only the product the customer actually needs, at the time and in the quantity needed. Every activity outside this is a cost the customer is not willing to pay for. This point of view differs from the traditional understanding that tries to keep capacity full under all conditions; the goal is not for machines to run continuously but for the product to flow continuously.

The problem usually appears on the shop floor as follows: semi-finished goods piled up between lines, long production lead times, frequently changing priorities, work orders waiting in one department and machines stopped for lack of material in another. Despite such high inventory, being unable to meet urgent orders is also part of the same picture. Because semi-finished inventory hides problems, this picture can continue unnoticed for a long time.

A numerical example (figures are for illustration purposes): the total lead time of a product in the shop is 10 days, and only 40 minutes of this time is actual processing. When the time is divided by the value-adding processing time, more than 99% of the lead time turns out to be waiting and transport. The first step of lean production is to make this waiting time visible and to reduce it.

What Are the Basic Principles of Lean Production and the Seven Wastes?

Five principles stand out in lean thinking literature: defining value from the customer's perspective, mapping the value stream, making flow continuous, establishing a pull system, and continuous improvement. Each principle builds on the previous one. Flow cannot be improved without defining value from the customer's perspective; a pull system cannot be sustained without establishing flow.

What Does Value Stream Mapping (VSM) Show?

Value Stream Mapping (VSM) shows in a single diagram all the steps a product family passes through from raw material to the customer, along with the processing time, inventory quantity, and waiting time at each step. The most important output of the map is the ratio of value-adding time to total lead time. Because the map shows between which stations inventory accumulates, the first improvement points are also selected directly from here.

What Are the Seven Wastes?

Lean production classifies activities that do not add value for the customer under seven headings. This classification serves as a practical checklist for recognizing waste on the shop floor.

• Overproduction: Producing before the need or more than the need. It is the most harmful because it gives rise to most of the other wastes; for example, producing a week's requirement in one go so that the line looks efficient.
• Waiting: Periods spent waiting for material, operators, machines, or approvals; for example, a line waiting for quality approval after a setup.
• Unnecessary transport: Material movement that does not add value; for example, a pallet that goes back and forth between two departments several times a day.
• Over-processing: Processing that the customer does not want or require; for example, machining to a tighter tolerance than needed.
• Excess inventory: Material waiting in greater amounts than necessary as raw material, semi-finished goods, or finished goods; it creates space, capital, and obsolescence costs and hides problems.
• Unnecessary motion: Operators walking, reaching, or searching; for example, a tool sitting on a distant shelf from the line.
• Defective production: Rework, scrap, and customer returns; not only the material but also the labor and capacity spent are lost.

What Is the Difference Between Push and Pull Systems?

In a traditional (push) system, production is started according to a plan based on forecast or customer orders, and completed work is passed to the next department regardless of whether it needs it. The gap between plan and actual demand shows up in the inventory that builds up in between. Material Requirements Planning (MRP) works with this logic: it explodes the bill of materials and generates work orders and purchase recommendations according to the requirement date.

In a pull system, on the other hand, a station produces only when the next station consumes the material. The production decision arises not from a central plan but from the signal coming from consumption. Thus, the inventory between two stations cannot exceed a predetermined upper limit; when the limit is reached, production stops by itself. Overproduction is structurally prevented.

The two systems are not rivals. The push system is more suitable for items with high demand fluctuation, long lead times, and a wide variety of products; the pull system for items that are repetitive, fast-moving, and have stable demand. In practice the two are used together: in most facilities, MRP calculates requirements at the bill of materials level, and replenishment of repetitive items on the shop floor is run with kanban (hybrid planning). The relationship between time fences, MRP, and JIT is covered separately in the article How MPS, MRP, and JIT Work Together: Time Fences, ATP, and Hybrid Planning.

What Is Kanban and How Does It Work?

Kanban means "card" or "signal" in Japanese. It is a physical or electronic signal showing when, how much, and which material a station will request from the previous station. The signal can be a card, an empty container, an empty shelf space, or a mark drawn on the floor. The common feature is that the signal appears only when there is consumption.

What Information Do Kanban Cards Carry?

A kanban card typically includes the part number and name, quantity per container, the producing or supplying station, the consuming station, the card's serial number, and the storage location. The card circulates with the container; when the container is emptied, the card returns to the previous station and takes the place of a new production order.

What Are the Main Types of Kanban?

The production kanban tells a station which part and how much of it to produce. The withdrawal (transport) kanban specifies how much material the consuming station will take from the previous station or warehouse. The supplier kanban takes the same logic outside the facility and enables material to be pulled from the supplier periodically in small batches. In the two-bin method, frequently used in small facilities, there are two containers for a part; one is used while the other is replenished.

What Rules Does Kanban Operate By?

The correct functioning of kanban depends on a few simple rules. The consuming station pulls only as much as it needs. The producing station produces only as much as was pulled and produces in the order in which items were pulled. A container without a card is not produced or transported. A defective part is not passed to the next station. The number of cards is reduced over time, so that inventory in the system is lowered gradually. When one of these rules is violated, the system either accumulates excess stock or causes line stoppages.

Example: an assembly line consumes a 40-piece container of a part twice an hour. When a container is emptied, the empty container and card at the line side go to the adjacent department. The adjacent department produces only as much as the container that arrives with this card and sends the full container back to the line. There is never more than two full containers of parts in front of the assembly line; and the department does not produce idly without a card arriving.

How Is the Number of Kanbans Calculated?

The number of cards in the system determines the total amount of material circulating between two stations and is therefore the upper limit of inventory. If the number of cards is too low, the consuming station has to wait; if too high, inventory and lead time increase. The widely used calculation is as follows: Number of kanbans = (Daily demand × Replenishment cycle time × (1 + safety factor)) / Container capacity. The resulting value is rounded up. Replenishment cycle time is the sum of card return, waiting, production, and transport times and is taken in days.

Example (figures are for illustration purposes): suppose a part's daily demand is 480 units, replenishment cycle time is half a day (0.5), container capacity is 40 units, and the safety factor is 20%. The calculation gives 480 × 0.5 × 1.2 / 40 = 7.2; 8 cards circulate in the system. If the cycle time is reduced from one day to half a day, the number of cards required for the same demand falls from 14 to 8. In other words, shortening the cycle time directly reduces inventory.

When determining the safety factor, demand variability, lead time variability, and the defective production rate are considered together. Keeping the safety factor unnecessarily high runs counter to the aim of lean production; the general approach is to start with a high factor and reduce cards one by one as the system settles. For the mistakes encountered in safety stock calculation, the article 5 Common Mistakes in Safety Stock Calculation and the Correct Approach can be consulted.

The number of kanbans is not calculated once and left fixed. It is recalculated when the demand level or cycle time changes; the card inventory is also counted regularly, because losing cards can silently reduce the actual stock level.

Why Is Production Leveling Necessary?

A pull system relies on the assumption that consumption is regular. When only product A is produced on the line one day and only product B the next day, upstream stations are overloaded one day and idle the next. This fluctuation grows at every station going backward and makes it necessary to increase the number of kanbans.

Production leveling (heijunka) means spreading both quantity and variety over time. The monthly plan is first divided into daily quantities, and then products are produced in a mixed sequence within the same day. Example (figures are for illustration purposes): a line with monthly demand of 4,000 units of A, 2,000 units of B, and 1,000 units of C produces 200 A, 100 B, and 50 C per day over 20 working days. Within the day, a repeating sequence such as A-A-B-A-A-C-A-B can be followed; thus, no product waits for a long time and the load on upstream stations stays balanced.

Leveling mostly requires shortening setup times. A line that loses an hour at a product change cannot produce in a mixed sequence. For this reason, quick changeover work (shortening setup times) is a prerequisite for kanban and leveling practices. The logic of creating a leveled plan in sales and operations planning is covered in the article Which Decision in Which Meeting in the S&OP Cycle? Calendar, Decision Logic, and Scenarios.

For Which Products Is Kanban Suitable and for Which Is It Not?

Kanban is not suitable for every product. The system works well for items where consumption is repetitive and relatively regular. The following characteristics support kanban: stable demand, limited product variety, short setup time, small container quantity per part, and short lead time.

For products with irregular demand, rarely ordered, with many variants, or produced to order, MRP or order-based planning is used instead of kanban. For these items, keeping a card for every part means stock waiting continuously. In making the selection, products are classified by demand volume and variability: high-volume and stable items (such as AX and BX in ABC-XYZ analysis) are suitable candidates for kanban, and low-volume and fluctuating items for MRP.

Example: in a supplier facility, 40 of 300 part codes make up 70% of total volume and have stable weekly consumption. These 40 codes are managed with kanban. The remaining 260 codes are planned with MRP recommendations and according to orders. Instead of starting the implementation with all items, the facility gains experience by starting in the first stage with only the ten most stable codes.

How Do Kanban and Customer Call-Offs Work Together in the Automotive Supplier Industry?

The automotive OEM conveys two types of information to the supplier through electronic data interchange: long-term forecast call-offs and short-term firm shipping call-offs. Forecast call-offs determine capacity and material planning, and firm call-offs determine daily shipments. The supplier's own production flow inside the plant can be managed with kanban: the customer's firm call-off triggers consumption in the finished goods warehouse, and this consumption in turn triggers the production kanbans in the shop.

In this structure, the fluctuation in the customer call-off is also taken into account in the kanban count calculation. When the OEM changes the call-off during the day, the shop cards must have a safety factor that can absorb this fluctuation. The higher the fluctuation, the larger the buffer kept, and the factor is updated by regularly monitoring the difference between call-offs and actual shipments. Changes in call-off forecasts that carry into later periods are passed on to material planning; for suppliers, a supplier kanban can be used with the same logic.

What Are the Most Common Mistakes in Kanban Implementation?

• The number of cards staying fixed regardless of demand: If cards are not reduced when demand falls, the system turns into merely a visual inventory management rather than lean.
• Choosing a large container quantity: Large containers mean excess stock with a single kanban. The container quantity should be the smallest meaningful quantity compatible with consumption.
• Ignoring setup times: When setup time is long, small-batch production is not possible; as a result, either the line goes into frequent setups or the batches grow.
• Out-of-rule production: Producing without a card arriving "so as not to sit idle" creates excess stock and makes the system meaningless.
• Ignoring quality problems: With a small stock, a defective part quickly stops the line. Kanban does not leave quality as an independent topic; the quality problem becomes visible.
• Applying it to all products: For products with irregular demand, kanban produces high stock or frequent stoppages.
• Cards being lost or damaged: A missing card silently reduces the actual stock level; an extra card increases stock.

Technology and Digitalization: Electronic Kanban, Data, and Simulation

Kanban works even in its simplest form, with the card carried by hand. The contribution of technology emerges when the scale of the system grows, when multiple plants and suppliers come into play, and when the number of cards must be updated with data. Technology does not replace kanban; it increases the speed and visibility of the signal and the accuracy of the calculation.

Electronic Kanban and Automatic Identification

Electronic kanban (e-kanban) transmits the consumption signal to the system automatically by using a barcode, Radio Frequency Identification (RFID) tag, or a container with sensors instead of a physical card. When a container is emptied, the signal goes directly to the previous station or the supplier; card loss and delay are eliminated. This structure shortens card circulation time, especially in facilities working with distant suppliers. Weight, fill, or position sensors within the Internet of Things (IoT) also monitor container level without human input.

Data Infrastructure and Updating the Kanban Count

The Enterprise Resource Planning (ERP) system is the main source of demand, lead time, and inventory data; the inputs of the kanban count calculation can be taken from here. The Manufacturing Execution System (MES) records the actual cycle time, setup time, and stoppages on the shop floor in near real time, allowing the assumptions used in the calculation to be compared with actual values. Recalculating the number of cards when cycle time shortens or demand changes becomes automatic with this data.

Simulation, Digital Twin, and Planning Tools

The effect of reducing the number of cards on the line carries a stoppage risk when tested on the shop floor. Discrete event simulation and a digital twin show the effect on line utilization and inventory level by trying different card counts, container quantities, and product mixes on a virtual model of the line. Advanced Planning and Scheduling (APS) systems support hybrid planning by combining kanban-managed items and MRP-managed items in a single plan.

The Contribution of Artificial Intelligence

Artificial Intelligence (AI) and Machine Learning (ML) methods can continuously update the recommended number of kanbans for each item by learning demand variability and cycle time fluctuation from consumption data; they can also flag deviation patterns and unusual stoppages. The output of artificial intelligence does not change the basic principle of lean production: implementing the recommended number of cards and accepting the balance between inventory and line continuity remain decisions of the planning and production team.

The card signal triggers the pull, data keeps the number of cards accurate;
the decision remains in the continuous improvement discipline of the team on the shop floor

Implementation: Checklist

• First select a product family and map the value stream; compare value-adding time with total lead time.
• Classify items by demand volume and variability to separate kanban and MRP items.
• Calculate the number of kanbans from demand, cycle time, container quantity, and safety factor; round the result up.
• Reduce the container quantity to the smallest meaningful level compatible with consumption and start work to shorten setup times.
• Apply production leveling (quantity and variety); divide the monthly plan into daily quantities.
• Count the card inventory regularly; record lost and damaged cards.
• Recalculate the number of cards when cycle time or demand changes; carry out inventory reduction steps in a planned way.
• Collect actual cycle time, setup time, and stoppage data from the manufacturing execution system; compare the number of cards with this data.

Related Articles

• How MPS, MRP, and JIT Work Together: Time Fences, ATP, and Hybrid Planning
• 5 Common Mistakes in Safety Stock Calculation and the Correct Approach
• Which Decision in Which Meeting in the S&OP Cycle? Calendar, Decision Logic, and Scenarios
• Campaign Planning and Changeover Times in the Process Industry

Frequently Asked Questions

Are lean production and kanban the same thing?

No. Lean production is a broad management approach aimed at reducing waste. Kanban is the signaling system that applies the pull principle of this approach on the shop floor. Kanban is one of the tools of lean production.

How is the number of kanbans determined?

Daily demand, replenishment cycle time, safety factor, and container capacity are used: number of kanbans = (daily demand × cycle time × (1 + safety factor)) / container capacity. The result is rounded up and recalculated as demand or cycle time changes.

Does kanban replace MRP?

No. Kanban is suitable for items with repetitive and stable demand. MRP continues to be used for irregular, rare, or order-specific items. Most facilities use both together (hybrid planning).

Why is production leveling (heijunka) important?

A pull system works on the assumption that consumption is regular. Without leveling, the line is overloaded one day and idle the next, and this fluctuation grows at upstream stations, increasing the number of kanbans and inventory.

Do electronic kanban and artificial intelligence replace the kanban system?

No. Electronic kanban speeds up the signal and prevents card loss; artificial intelligence keeps card count recommendations up to date. However, the pull principle, applying the rules, and the continuous improvement discipline remain the responsibility of the team on the shop floor.

References

• Monden, Y. (2011). Toyota Production System: An Integrated Approach to Just-In-Time (4th ed.). CRC Press.
• Ohno, T. (1988). Toyota Production System: Beyond Large-Scale Production. Productivity Press.
• Womack, J. P., & Jones, D. T. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation (2nd ed.). Free Press.
• Rother, M., & Shook, J. (2003). Learning to See: Value Stream Mapping to Add Value and Eliminate Muda. Lean Enterprise Institute.
• Sugimori, Y., Kusunoki, K., Cho, F., & Uchikawa, S. (1977). Toyota production system and Kanban system: Materialization of just-in-time and respect-for-human system. International Journal of Production Research, 15(6), 553-564.
• Hopp, W. J., & Spearman, M. L. (2008). Factory Physics (3rd ed.). McGraw-Hill.

Related Optimum Planlama Trainings

Institutions We Work With in Automotive

Some of the institutions to which we provide training and/or consulting services in the automotive sector are listed below. For all sectors, you can visit our References page.

Accuride, 2024

Aemot, 2017

Anadolu Motor, 2018

Birinci Otomotiv, 2017

Bmc, 2010

Brisa, 2011

CMS Jant, 2011–2022

Denso Otomotiv, 2019

Durden Plastik, 2017, 2018

Eczacıbaşı Esan, 2011–2021

Ege Fren, 2018

Farplas, 2010

Federal Mogul, 2025

Fil Filtre, 2013

Filtorq, 2025

Freudenberg, 2019

Gates Powertrain, 2014

Gema OIL, 2017

GKN Driveline, 2017

Hisarlar Makine, 2013, 2014

Honda Türkiye, 2016

HSS Otomotiv, 2010

Hyundai-Assan, 2012

İleri Mekanik, 2010

İmortaş, 2018

Jantsa, 2018, 2019

Kıraça Holding, 2012

Kırpart, 2014

MAN Türkiye, 2021, 2022

Maysan Mando, 2014

Nissan, 2013

NSK Otomotiv, 2014, 2016

Opet Fuchs, 2011–2024

Otokar, 2010–2016

Petrol Ofisi, 2022, 2024

Safkar, 2010

Scattolini, 2018

Sertplas, 2016–2020

SKT Yedek Parça, 2019, 2023

T.K.G. Otomotiv, 2014, 2015

Tirsan Kardan, 2014–2023

Türk Traktör, 2017

Uğurlu Otocam, 2020

VEP Teknik, 2016

Vibracoustic, 2016

VLE Elektronik, 2015

Yiğit Akü, 2011

ZF Lemförder, 2017

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