Kanban is a signaling system. As its name suggests, Kanban uses cards to signal the need for an item. Other devices such as plastic markers (Kanban squares) or balls (often golf balls) can also be used to trigger the movement, production, or supply of a unit in a factory.
For example, in the production of a Widget, the operator has two shelves, one on either side of the workplace. The raw materials arrive on one shelf and the finished article on the other. These shelves act as kanbans.The outgoing kanban signals the customer's need so that when it is empty, the operator must produce one more widget.
The Kanban is sized so that it can only hold however many the customer needs (usually one). When the operator begins work, he takes the raw material from the incoming kanban, thus signalling to the supplier that he needs more.
Kanban is in a way a reactive system and very little is planned ahead. This can work to its disadvantage in case of environment with high volatility like quickly changing products, changing customer demands, extensive and frequent changes in product design.