What supplier kanban is
Supplier kanban extends the pull signal beyond your plant: when the customer consumes a container, a card (or electronic signal) goes back to the supplier, who replenishes only what was used. Instead of weekly orders driven by a forecast, deliveries follow real consumption.
The math is the same as for internal kanban, but the replenishment time now includes card return, picking or production at the supplier, transport and receiving. If the base calculation is new to you, start with how to size a kanban loop.
Visual map of supplier kanban
The map shows the replenishment loop, the card formula and the effect of container size in the 400-pieces-per-day example.
Signal types between customer and supplier
The signal must be simple, visible and unique per container. Four formats are common:
| Signal | How it works | When to use |
|---|---|---|
| Physical card | The card travels with the container and goes back to the supplier on the delivery route when it is emptied | Few items, nearby supplier, daily deliveries |
| Electronic card (e-kanban) | Scanning the card barcode alerts the supplier through a system or portal | Distant supplier, many items, need for traceability |
| Two-bin | When the first bin empties, the second becomes the working stock and the empty bin is the replenishment signal | Cheap, small items such as fasteners |
| Colored-zone board | Green, yellow and red zones show the item level at the customer | Irregular consumption with fixed delivery routes |
Stable, low-variety items are the best candidates. For the pickup route and frequent small deliveries, a milk run usually carries both signal and material.
Card quantity formula
N = D × T × (1 + S) ÷ C
D is daily demand, T is the total replenishment loop time in days (from the container being emptied to its return full), S is the safety allowance (%) and C is the container quantity. Always round up. Maximum stock of the part is N × C.
Worked example: a fastener at 400 pieces per day
Fictional example: a line uses 400 pieces per day of a purchased item, packed in containers of 50. The supplier is 120 km away and delivers twice a day. The loop time was measured on the floor:
| Loop step | Time (days) |
|---|---|
| Empty container becomes a signal and the card reaches the supplier | 0.25 |
| Picking or production at the supplier | 0.75 |
| Transport to the plant | 0.50 |
| Receiving and delivery to the point of use | 0.50 |
| Total (T) | 2.00 |
With a 10% allowance (S = 0.10):
N = 400 × 2.0 × 1.10 ÷ 50 = 880 ÷ 50 = 17.6 → 18 cards
Maximum stock is 18 × 50 = 900 pieces. Consumption is 8 containers per day (400 ÷ 50), so with two deliveries each trip brings 4 containers. With traditional weekly buying, the same item would arrive in lots of 2,000 pieces (5 days × 400), and maximum stock would be at least 2,000, more than twice the kanban level.
Effect of container size
The same demand and the same T give different results by container size. Rounding up can inflate stock when containers are large:
| Container (pcs) | Calculated N | Cards | Maximum stock (pcs) |
|---|---|---|---|
| 25 | 880 ÷ 25 = 35.2 | 36 | 900 |
| 50 | 880 ÷ 50 = 17.6 | 18 | 900 |
| 100 | 880 ÷ 100 = 8.8 | 9 | 900 |
| 200 | 880 ÷ 200 = 4.4 | 5 | 1,000 |
Small containers give finer response but need more trips and handling. Pick the smallest container the supplier can pack and the carrier can move without raising freight cost per piece.
How to roll out with one supplier, step by step
- Select items: A or B class from the ABC analysis, with stable consumption and a dependable supplier.
- Measure the real loop step by step and use the recurring worst case, not the ideal average.
- Set the standard container: fixed quantity, packaging, labeling and a weight the operator can handle.
- Calculate N and print it on the card with part number, description, quantity, delivery point and supplier.
- Agree on written rules: deliver only against a card, never more than the card authorizes, quality checked at source.
- Run a pilot of 4 to 8 weeks with one or two items and track card return and shortages.
- Review N whenever demand or loop time changes, and remove cards gradually to expose problems.
The discipline follows the general rules of kanban: see the golden rules of kanban. If the supplier manages stock inside your plant, compare with VMI and consignment stock.
When it works and when it does not
- Works: stable demand, short and predictable loop, few items per supplier, long-term relationship.
- Works with adjustments: distant supplier, with a buffer stock or e-kanban and consolidated deliveries.
- Poor fit: make-to-order items, very irregular demand, a minimum order quantity above the calculated maximum stock, imports with multi-week lead times.
For those items, MRP remains the better method. Before scaling up, rate the supplier with objective criteria such as a supplier quality index.
Common mistakes
- Using contractual lead time instead of the real one: the promised time ignores recurring transport and picking delays.
- Ignoring demand variation: with no allowance any peak causes a shortage; too much and stock grows. Calibrate with data.
- Non-standard containers: variable quantities break the math and the visual control.
- Lost or duplicated cards: without an owner of the loop, the number of cards in circulation drifts unnoticed.
- Imposing the system on the supplier: without agreeing on freight, packaging and price, they replenish in larger lots and the gain disappears.
- Treating it as a one-off project: N must be reviewed whenever demand or loop time changes.
Frequently asked questions
What is supplier kanban?
It is pull replenishment applied to purchased materials: the supplier receives a signal when a container is consumed and delivers only the matching quantity.
How do you calculate the number of cards?
N = D × T × (1 + S) ÷ C, rounded up. In the example, 400 × 2.0 × 1.10 ÷ 50 = 17.6, so 18 cards and at most 900 pieces.
Which is better, physical cards or e-kanban?
Physical cards suit a nearby supplier and few items. E-kanban pays off with distance, many items or a need to trace every signal.
Must the supplier be close to the plant?
No, but the loop time grows with distance and stock grows with it. Distant suppliers call for consolidated deliveries or a small buffer stock.
How is it different from VMI?
In kanban the customer controls the signal and stock sits in the plant. In VMI the supplier monitors and decides replenishment of the customer stock.
Can I use kanban for every purchased item?
No. It fits repetitive items with stable consumption. Make-to-order or highly irregular items are better planned with MRP.
Sources
- Taiichi Ohno. Toyota Production System: Beyond Large-Scale Production. Productivity Press.
- Yasuhiro Monden. Toyota Production System: An Integrated Approach to Just-In-Time. CRC Press.
- James Womack and Daniel Jones. Lean Thinking. Free Press.
- Mike Rother and John Shook. Learning to See. Lean Enterprise Institute.
- Jeffrey Liker. The Toyota Way. McGraw-Hill.
Keep studying: trusted sources and links
- Lean Enterprise Institute: Lean Lexicon, Kanban
- Lean Enterprise Institute: What is Lean?
- Wikipedia: Kanban
Save this address: Manufatura Enxuta is your school for lean manufacturing. Come back whenever you need to study, with a complete article, a visual map and trusted sources. Follow one of the learning paths or check the A–Z glossary.
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About the author
Lean Manufacturing & Behavioral Management Specialist
Over 20 years in the automotive and metalworking industries (GM and Dana), Lean Manufacturing practitioner since 2006. SENAI instructor and mentor in Brazil’s Brasil Mais Produtivo program, delivering consulting, training and audits for 50+ companies, combining quality, productivity and people development.
