Toyota Stays Lean and Green with Kanban... Kan-who?

Last Updated Aug 20, 2007 8:38 PM EDT

No Kanban, No ToyotaToyota is number three on Fortune's 2007 Most-Admired Companies list, largely because of its reputation as a super-efficient manufacturer with an eco-consciousness. But, despite all the talk of Toyota's sophisticated just-in-time (JIT) inventory system, the company actually relies on a more basic practice to stay lean and green -- kanban -- which means shop sign or sign of authority in Japanese. Kanban is a signaling system Toyota developed in the early 1950s to make sure that materials aren't ordered too soon in the production process. And there's a funny story behind the way it came to imply lean production.

In an article from FredHarriman.com, ex-Toyota Group manager Chihiro Nakao relates his experience with Taiichi Ohno, who originated Toyota's Lean Production in collaboration with Shigeo Shingo. Here's the punchline:

As Mr. Taiichi Ohno drove deeper and deeper in the effort to achieve Just in Time ideals among the companies of the Toyota Group, [...] the struggle was to keep people from [ordering] too much too soon from their upstream process.
In once incidence remembered by Chihiro Nakao, Mr. Ohno caught someone he knew was about to pull his materials too soon and thundered: "Who are you and where did you come from?! What makes you think you have any right to this material? Show me your kanban!!" [i.e. prove your authority!]

Such incidents demonstrated the need to "show one's kanban" when procuring material or parts. They needed some way to prove that they had followed all the rules put in place to achieve Just in Time. Since Mr. Ohno's demand for a "kanban" left a lasting impression, the name for the cards that were issued to limit in-process inventory [...] became "kanban."
Manufacturers all over the world now copy Toyota's kanban system to control their JIT inventory practices and stay competitive. But Toyota remains on top, lean and green as ever.

(Image of Toyota Logo by Ian Mutoo, CC 2.0)