What is Kanban – and Why Is It Gaining Importance Again?
Kanban is a visual, consumption-driven pull system that authorizes replenishment only in response to actual usage, thereby limiting work in progress, reducing overproduction, and supporting a stable flow of materials or work. Instead of relying on centralised planning and forecasts, Kanban uses explicit, demand-driven signals, such as cards, containers, electronic triggers, or digital Kanban boards and labels to authorise replenishment or the release of work. These signals ensure that production, logistics, and service activities are synchronized with actual consumption, whether the item being replenished is a physical component, a spare part, or a unit of operational work. The result is a provisioning process that becomes more stable, simpler, and more responsive. By aligning replenishment closely with real demand, organisations can keep inventories and work in progress as low as practicable, while still improving availability and lead-time performance across manufacturing, maintenance, and service-driven environments. Whereas Kanban was historically associated almost exclusively with mature manufacturing environments, such as automotive production, its core principles are not industry-specific and have increasingly been applied across other industrial, maintenance, and service-driven settings.
Efficiency: Less Waste, Shorter Lead Times
Kanban increases efficiency across the entire value chain by enforcing clear limits on work and inventory, with effects that are directly observable and measurable:
- Reduced inventories and work in progress: Only materials, parts, or work items that are actually required are authorized, reducing excess stock and hidden queues.
- Less searching and waiting: Visual signals and explicit limits make bottlenecks visible early, before they escalate into production stoppages, service delays, or maintenance backlogs.
- More even resource utilisation: Equipment, systems, and people are loaded more consistently, avoiding peaks and troughs that lead to inefficiency and stress.
- Shorter and more predictable lead times: By limiting WIP, Kanban supports smoother flow and faster throughput across both physical and operational processes.
The combined effect is lower operating costs, greater process stability, and a higher ability to respond quickly to demand fluctuations — whether in manufacturing, maintenance and MRO, logistics, or service-driven environments.
How Can JAGGAER Support?
Whether new or existing customer – JAGGAER Purchase Order Management (POM) offers flexible options to map Kanban processes with your suppliers efficiently. The solution can be tailored to different Kanban requirements and helps your company organize material flows more stably, quickly, and digitally. Examples include:
- Special Kanban view in the supplier dashboard: Kanban orders are clearly displayed in their own box.
- Elimination of traditional order confirmation: Suppliers can work directly with Advanced Shipping Notices (ASN notifications), reducing administrative effort and latency.
- Automated monitoring of time-critical signals:: Short-lead-time Kanban requirements are proactively tracked, with alerts generated when intervention is required.
- Kanban cards and label printing directly in the system: Physical or digital Kanban identifiers can be generated and printed directly from the system, supporting both manual and automated replenishment loops.
What Are the Critical Success Factors for a Kanban System?
A digital and ERP-integrated Kanban system only unfolds its full potential when the organizational and process foundations are clearly defined. Today, the success of a Kanban system depends less on strict adherence to ‘Lean’ doctrine than on a small number of operational fundamentals: clear and trusted signals, correctly sized buffers, disciplined respect for WIP limits, and transparency around lead times and constraints. When these conditions are met, Kanban provides a robust and adaptable execution model across a wide range of industrial and service environments. The most important success factors include:
- Clear and trusted pull signals: Kanban must function as the execution layer, with replenishment triggered by actual consumption rather than overridden by forecasts or ad hoc expediting.
- Appropriately sized and adjustable buffers: Buffer levels must reflect demand and lead-time variability and be reviewed regularly as conditions change.
- Explicit and respected WIP limits: Limits on work and inventory must be visible, enforced, and supported by leadership when exceptions are requested.
- Reliable and transparent lead times: Replenishment lead times need clear ownership, basic stability, and early visibility when deviations occur.
- Operational discipline over continuous redesign: Kanban systems perform best when rules are applied consistently rather than constantly “optimized.”
- A culture that accepts transparency: Bottlenecks and queues must be treated as signals for improvement, not as triggers for blame.
- Supportive digital tools, not tool dependence: Systems should automate signals and monitoring while remaining understandable and controllable by the people using them.
Why Now?
Flexibility & Responsiveness to Market Fluctuations
Kanban allows manufacturing to quickly adapt to actual demand (less “produce for stock,” more “just-in-time / on demand”). This prevents overproduction and inventory risks. However, companies are now taking a more nuanced approach to Kanban. Lean principles remain highly relevant as guiding heuristics for reducing waste, improving flow, and exposing inefficiencies. But when applied rigidly or “religiously”, they can introduce operational risk, particularly in today’s operating environment, where supply chains are increasingly exposed to demand volatility, customer-specific wishes, extended global dependencies, and limited redundancy.
Cost and Resource Efficiency, Reduced Risk
ess inventory means less tied-up capital and lower storage and maintenance costs. At the same time, material waste is reduced; raw materials and components are procured only when they are actually needed. But this brings risk. Optimizing the trade-off between inventory efficiency and operational resilience increasingly depends on advanced software capabilities. By combining real-time consumption data with lead-time and variability analysis, modern Kanban systems can be continuously adjusted to reflect changing risk conditions.
Shorter Lead Times and Faster Delivery Cycles
Through clear process control and the pull-based mechanism, material flow is optimized. Bottlenecks and waiting times are reduced, enabling products to be completed and delivered more quickly. This increases competitiveness, particularly in industries characterized by high speed, short delivery times, and intense competitive pressure, such as electronics, pharmaceuticals, industrial maintenance and spare parts (MRO), and advanced manufacturing.
Transparency, Better Coordination & Collaboration
Kanban makes the flow of materials and work visible across key process interfaces — from procurement and material supply through to production or service execution — helping to surface bottlenecks, overloads, and emerging shortages early. When integrated with existing operational systems, this shared visibility supports faster coordination between internal teams and external partners. As a result, communication with suppliers becomes more focused and event-driven, enabling quicker and more proportionate responses to deviations without relying on excessive manual escalation.
Ready for the Next Step?
Contact your JAGGAER Account Manager and find out how digital Kanban approaches can make your production more efficient and resilient.
