Kanbans are a tool for structuring how work flows into the work-in-progress queues so that workers do not get overloaded and can use their time most effectively. Kanbans, and variations on them, are widely used in software projects (e.g. Scrum and Agile) and manufacturing (e.g. Lean and Six Sigma).
The fundamental principle of Kanban is to only produce something when it is required by a downstream step. This minimises the amount of inventory that builds up after a work station and ensures that it is only doing productive and on demand work.
The upstream station needs some sort of flag/signal to produce the next unit of its production. There are various ways of signalling that have been developed and some of which may be relevant to your system.
The topic of flags/signals is reasonably large but, by way of example, it could be an empty space on the factory floor or our office in-tray.
Staff are trained to respond to that empty space by immediately producing some unit of work to fill the space up again. Therefore, as the downstream stations draw product from the upstream stock pile the empty space automatically indicates the need to begin production again.
Although it is ideal to have batches as small as possible (see Small Batches Tool) it is not always feasible or possible to do just one unit at a time. Therefore, a Kanban System may have a process for drawing product steadily from a supply until a trigger point is reached, a flag/signal is sent and a new batch of x units is produced by the upstream work station.
For example, a Kanban may have a tray with several slots in it where the number of slots is equal to the optimum batch size of the upstream system. As units are drawn from the upstream inventory, a card is put into the slot and a staff member is trained to trigger a new batch from the upstream station as soon as all the slots are filled.
The Kanban's will also need to take into account such thing as the lead time for producing the product and even further lead times for getting inputs from even further upstream stations or raw materials.
There are several standard rules for the operation of a Kanban. These are:
1. That the following process collects from the upstream only as the downstream needs.
2. That the upstream only produces what is being withdrawn by the downstream unit - allowing for some batching as necessary.
3. That the withdrawal of a production input by a downstream unit must trigger an appropriate Kanban signal so that the upstream is aware that the withdrawal has been made.
4. That there is no production or inventory produced by the upstream station without a Kanban card to justify it.
5. That there must be zero defects in whatever the upstream station produces so that there is no disruption downstream. We do not want a downstream unit drawing down the next input item only to find that it has a problem and cannot be used. Then the whole production cycle comes to a halt until the defective item can be replaced.
6. Over time the goal is to reduce the number of units in a Kanban batch by continually shrinking the batches. This has been likened to lowering the water level in a lake. As the water level falls, more rocks show and therefore more problems can be resolved. While there is a lot of water in the lake, the impact of these existing problems is disguised and may never come to the attention of the operators. Smaller batches mean more efficient work and therefore the need to remove problems.
In any system, there will always be some variation and uncertainty. There is a way of measuring the seriousness of uncertainty, the Kanban can have a "fever chart" attached to it using a colour coded scheme to immediately identify whenever a problem is becoming serious (see Fever Chart article).
Wikipedia article https://en.wikipedia.org/wiki/Kanban
For an interesting example of a kanban system operating in a a warehouse environment, what this real-life video of a kanban at work