Kanban is a progress-monitoring method that was developed in “just in time” manufacturing (especially at the Toyota motor company). It is now being adopted as a project management tool for software projects. It creates a visual display of how the project is progressing, thus allowing progress to be tracked easily and actual or potential bottlenecks to be dealt with. For example, a kanban system might be made from index cards, each representing a particular software feature being worked upon. The cards are pinned to a board, and are moved across the board to represent how the work is proceeding. Kanban is being adopted particularly by projects that use Agile methods, as it goes nicely with the agile manifesto aim of simplifying and reducing processes, tools, documentation, and plans. However, kanban could readily be used in the production-line-like situations that occur in many projects, regardless of the project management methodology the project is using.
[Note added 4th August 2009: I have updated my kanban example,making use of helpful criticism and advice from David Anderson - thanks David!]
Thinking about the quick visual display that kanban gives you about a project reminds me of an anecdote I read about the author P.G Wodehouse. Apparently, when he was writing a story he would assess each finished page and stick it to the wall of his room. The pages would go in order around the room, like paintings in an art gallery. If he thought a page was good, he would stick it higher up the wall; if it wasn't yet satisfactory, he would stick it lower down. As work progressed, this of course gave him an easy method of finding pages needing more thought or work. When the whole story was up to the height of the dado rail (i.e. nearly to the top of the wall), it was ready for his publisher.