Kanban Stockouts: Why They Occur and How to Prevent Them

A kanban system should help you produce, move, or purchase only what is needed, when it is needed, and in the required quantity. Yet even companies that have been using kanban for a long time may still face two seemingly opposite problems: missing materials and frequent stockouts, as well as inventory levels that are higher than necessary.

These situations are often caused by kanban sizing that is no longer right. This can happen because calculations are not updated frequently enough, because reliable and up-to-date data (such as actual consumption) is not available, or because, even when the sizing is correct, the manual activities required to change the number of kanban cards in circulation are complex or repeatedly postponed.

In other cases, the problem is not the sizing itself, but the day-to-day management of kanban cards. For example, a replenishment signal may be sent late, a card may be lost, or it may not be handled correctly.

Let’s look at how to address these issues.

When stockouts or excess inventory are caused by incorrect kanban sizing

A kanban system works properly when the number of kanban cards within a loop (i.e. the individual replenishment flow for a specific item from a specific supplier process to a specific customer process) is consistent with actual consumption and the time required to replenish the material.

The problem is that these parameters are almost never constant over time.

Demand may increase or decrease. A supplier may change its lead time. Production batch sizes, container quantities, transportation times, or delivery frequencies may also change.

If kanban sizing is not updated, the system continues to operate based on conditions that no longer reflect reality. This can lead to the following situations.

What changes	Possible consequence
Consumption increases	The number of kanban cards may become insufficient, increasing the risk of stockouts
Consumption decreases	More kanban cards than necessary remain in circulation, increasing inventory
Lead time increases	Material may run out before replenishment arrives
Lead time decreases	It may be possible to reduce the number of kanban cards
Container quantity changes	The previous sizing may no longer be correct
Demand variability increases	The safety factor may no longer be adequate
Some cards are lost or handled late	Consumption information does not trigger replenishment at the correct time

The key point is simple: kanban sizing that is correct today may no longer be correct two weeks from now.

Questions to ask to determine whether the problem is related to kanban sizing

Stockouts and excess inventory are not always caused by incorrect sizing. Before changing the number of kanban cards, it is therefore useful to check a few conditions.

Ask yourself:

Has actual consumption changed since the kanban loop was sized?
Does the actual lead time still match the lead time used in the calculation?
Does the supplier consistently meet the agreed lead time?
Has the quantity per container remained unchanged?
Are there duplicated, lost, or unnecessary kanban cards?
Are there obsolete materials that are still included in the system?
Is the kanban card delivered to the supplier process without delays so that replenishment can be triggered on time?

This analysis is important because simply increasing the number of kanban cards every time a stockout occurs may hide the real problem instead of solving it.

A supplier delay, for example, requires a different corrective action than a structural increase in demand.

How to manage kanban sizing with Excel

For companies managing a limited number of items, a first step may be to create a simple Excel file for kanban sizing.

For each item, you need to record:

Data	Example
Item code	ABC123
Average daily consumption	40
Lead time	3 days
Safety factor	20%
Quantity per container	20
Kanban cards currently in the loop	8
Optimal number of kanban cards	8

A formula can automatically calculate the theoretical number of kanban cards required and compare it with the number currently in the loop.

[We explained the formula for correctly sizing kanban loops in this article]

The company can then identify situations such as:

current kanban cards: 10; calculated kanban cards: 6; possible oversizing: 4 kanban cards

or:

current kanban cards: 5; calculated kanban cards: 8; possible undersizing: 3 kanban cards

This is already a major improvement compared with sizing the system once and never reviewing it again.

Keep in mind: Excel solves the calculation, but it does not eliminate the need to collect data

Excel is an extremely useful tool that, when set up correctly, can make it easy to identify potential oversizing or undersizing. However, it only solves part of the problem: the real challenge is how the data reaches the formula and what needs to happen after the result is calculated.

For the calculation to be reliable, someone must periodically update data such as:

Consumption
Lead time
Quantity per container
Safety factor
Active item codes
Any supplier changes

If this data is entered manually, the result is only accurate when the source data is up to date.

In addition, an Excel file may correctly show that an item should move, for example, from 12 to 8 kanban cards. But someone will still need to physically update the kanban loop: remove cards, create new ones, print them, laminate them, put them into circulation, and make sure old cards are no longer being used.

The more items are managed, the more demanding this activity becomes.

Beyond sizing and data collection: problems in the day-to-day management of a kanban system

Sizing and data collection are only part of the problem. A functioning kanban system also requires effective day-to-day management of the signal.

When a container is depleted, the related kanban card must be collected and delivered to the supplier process so that the next action can be triggered (producing, moving, or ordering the material).

This physical movement of kanban cards introduces several risks. A card may be:

Moved too late
Forgotten
Lost
Duplicated
Delivered to the wrong person
Recorded only several hours later
Difficult to track during the replenishment process

In these cases, even a correctly sized kanban loop can still generate delays and stockouts, because a lost card or a late replenishment signal prevents the system from reacting within the expected timeframe.

The problem becomes especially noticeable when the kanban system grows to include hundreds or thousands of items, multiple departments, multiple warehouses, or external suppliers.

This makes one thing clear: correctly calculating the number of kanban cards is not enough. The entire system also needs to be kept continuously up to date in its day-to-day operation.

This is where electronic kanban comes in.

How electronic kanban helps prevent stockouts and excess inventory

Electronic kanban, or e-kanban, is the result of the integration of dedicated software into a traditional kanban system. The basic kanban principles remain the same, but replenishment signals and data collection are digitized.

In a traditional system, the kanban card must be physically transferred from the customer process to the supplier process to signal the need for replenishment. With e-kanban, instead, the operator simply scans the barcode on the kanban card when the material is depleted.

The replenishment request is immediately recorded in the software and digitally sent to the supplier process, which can start working on it without waiting for the physical card to be moved.

At the same time, the system records every consumption event, creating a historical database that can be used to monitor kanban performance and verify over time whether inventory sizing is still appropriate.

How electronic kanban effectively addresses stockouts and kanban oversizing

1. E-kanban automatically collects the data required for sizing

The software records consumption, replenishment times, and other useful data directly as the kanban system is used. This means sizing can be based on real, up-to-date information rather than manual data collection.

2. E-kanban automatically calculates the optimal kanban sizing

Using the collected data, the system can calculate how many kanban cards are actually required for each loop and suggest whether and when the number of cards in circulation should be increased or reduced.

3. E-kanban simplifies increasing or reducing the number of kanban cards in circulation

In an electronic kanban system, each kanban card is unique and individually identifiable. This makes it much easier to physically add or remove cards from a loop and correctly manage the physical cards as well. We covered this topic in more detail in this article.

4. E-kanban reduces the risk of losing kanban cards

The replenishment request is transmitted digitally, so the physical card no longer needs to be moved from the customer process to the supplier process to communicate the signal. This eliminates one of the main risks of traditional systems: a card being lost, forgotten, or delivered late.

5. E-kanban always shows how many kanban cards are in circulation and their status

The software provides an up-to-date view of all kanban cards in circulation and their current status, for example, waiting for replenishment, in process, or available. This makes it easier to identify anomalies and take action before they result in a stockout.

6. E-kanban enables integration with other systems

E-kanban software can be used in standalone mode or integrated with systems such as ERP, WMS, MES, and other business software. Integration further reduces the need to manually enter information that is already available in other systems.

Manual kanban, Excel, or e-kanban: what changes in kanban loop sizing and management?

Aspect	Manual kanban	Kanban + Excel	E-kanban
Kanban sizing calculation	Manual	Can be automated	Automated
Data updates	Manual	Manual	Automated
Consumption recording	Limited	Must be imported/entered	Automated
Signal transmission	Physical	Physical	Digital
Kanban tracking	Limited	Limited	Real-time
Process history	Difficult	Partial	Centralized
Managing large numbers of items	Becomes progressively more complex	Manageable up to a certain scale	Designed for very large systems
ERP, WMS, MES integration	No	Through import/export	Available
Integration with automated warehouses, AGVs, RFID	No	No	Available

From kanban sizing to continuous kanban management

If you use a traditional kanban system, with or without Excel spreadsheets, and you are struggling to keep the system correctly sized, the first step is to understand where the problem originates: in the calculation or in the day-to-day management of information.

KanbanBOX helps address these and other common issues, including:

Want to understand how your current kanban system could be digitized? Contact us to review your existing process together and determine the best place to start.

Frequently Asked Questions About Kanban Sizing and Digitalization

Why do I still experience stockouts even though I use kanban?

There can be several causes. Some of the most common include increased consumption, a longer-than-expected lead time, outdated kanban sizing, or delays in managing the kanban signal. Before increasing inventory, it is therefore important to identify the actual cause.

How can I tell if I have too many kanban cards?

You can recalculate the required number of kanban cards using actual consumption, lead time, quantity per container, and the safety factor, and then compare the result with the number of kanban cards currently in the loop.

Can I size kanban loops using Excel?

Yes. For relatively simple systems, Excel can be used to automate the calculation of the required number of kanban cards. Its main limitation becomes apparent when the underlying data needs to be updated frequently or when the number of items makes maintaining the file and the physical kanban cards too time-consuming.

How often should kanban loops be resized?

There is no single frequency that applies to every process. Reviews should be frequent enough to capture significant changes in consumption, lead time, container quantity, or other operating conditions. Items with higher variability may require more frequent reviews than items with stable demand.

What is the main advantage of e-kanban over Excel?

Excel can automate calculations very effectively. E-kanban can also digitize what happens before and after that calculation: consumption data collection, signal management, kanban card status tracking, communication with other stakeholders, and, when applicable, integration with other business systems.