In this post, guest Michael writes about Push vs Pull as it relates to inventory control systems.
One way to think about waste is in terms of push and pull systems. A push system, like much of traditional manufacturing, produces as much product as the company can and/or wants to produce and then gets it out to the customer. The result is usually large inventories.
A pull system only produces what a customer needs and has asked for. You want to have as much “pull†in your systems as you can. Toyota has very little excess inventory. That’s why when the Prius was so unexpectedly popular, people found themselves on waiting lists for the car. Seems like a problem, but Toyota is much more profitable as a result of being so lean. You might also hear this concept referred to as “just-in-time production†or JIT (remember?—it came from the supermarkets).
He also comments about having employees documenting their work.
Of course, this was ultimately my responsibility for not making documentation of process a standard procedure during the hiring process.
I commented on both points (one at length) and am re-posting my thoughts here.
—–
I work in a large corporate environment (300,000+ employees)
Process documentation is required by law (ISO 9000) and by corporate policy.
Cross-training is required as well. In large corporations, no one is allowed to be the ’sole go-to person’ because the company must continue when each person is off work. The company has been around for 100+ years, so clearly no one is irreplaceable. In fact, most people feel like cogs in a wheel – or less. But we all have processes and when they are followed, work flows smoothly.
It is up to the management to recognize when they are not pushing hard enough for the processes to be documented or followed. Good on you, Michael, to recognize where the oversight was and for taking the action to correct it. From personal experience, I can assure that if one person in a team “gets away” without having to perform a (perhaps mundane) task then other members of the team will either feel slighted or will stop following the procedures. It’s the ‘bad apple” scenario and it can ruin a small company. It can get a mid-level manager fired or ruin a career.
As for the push vs pull, it is always subjective and situation dependent. In the example of the Prius, the question arises as to how far back does the manufacturer go? Do they stock up on steel and plastic just in case a vehicle sells well? Increasing production when your JIT goes as far back as raw materials can take a year or longer. Contracts are written for X amount of goods over Y amount of time. Adjusting those values – and they are huge values – is expensive and time consuming. For some products there isn’t sufficient profit to respond to small increases in demand. Analyzing and predicting consumer demand in some markets is more art than science. The above vehicle is an example, as are Nintendo’s Wii (very hard to find for a very long time) and Apple’s iPhone 2 (currently sold out and only shipping 45 per day). These should be setup as Pull.
On the other hand, there are many products – mostly consumables – that should be setup as Push. For example, the supplies needed by hospitals, schools, and restaurants can be relatively easily predicted. In as much as ‘consumer actions’ will normalize over time and the cost of having a small local stockpile of these items on site is not overly expensive, a supplier can count on shipping X amount of Y items on a regular basis. For example, a regional manager at McDonald’s can predict very accurately how much supplies are required at each of the local stores and can setup regular deliveries without much input from the local store. Yes, the stores have a feedback system that indicates how much product has been sold recently, but those numbers are not used for planning and distribution purposes as much as they are for trends and sales. And the cost of storing an extra unit of each item at the store isn’t tremendous, so over-pushing isn’t really a concern.
Examples of systems where both push and pull are used about in the retail space. A great example is clothing stores. They are push when the season changes and new styles are released. These are sent out to stores regardless of their local need. Extra / old stock is shipped back. But the pull comes into play after the initial push for product that is selling well. In this industry, pull works at the retail level but is nearly impossible at the manufacturing level. Cloth is cloth, so it can be amassed by the manufacturer. But it is in the manufacturer’s best interest to make as many as may be necessary, then move on the to next product. By the time a product is seen as a ’smashing success’ that would result in a major pull, the manufacturer is on making another product – possibly two more more removed from the in-demand product. To accommodate the increased demand, the pull manufacturing is usually performed by smaller, secondary shops that are more dynamic and have faster setup times – with higher per unit cost and less quantity capability. But by that time in the product cycle, the retailer can either afford to charge a higher price for an in-demand product or the designer has already recovered the initial design / bring-to-market costs and can absorb the increased manufacturing costs. Either way, in this industry, switching from a push to a pull results in increased costs, not less. But it has a value, so it is useful.
As a final item, I want to point out that ‘waste’ isn’t always bad. To a certain extent, excess capacity is waste. But if that waste allows a competitive advantage, then it is a good thing. For example, if the Prius manufacturing process had been designed with sufficient excess capacity such that all consumer demand had been satisfied, the result could have been near-total market control. If everyone wanting a fuel efficient car had been able to get a Prius when they wanted one, the result would have an effect on all of the other car makers. It would have had an impact on their product plans knowing that they would have to ‘break into’ a field that is already dominated by a single product. While not perfect examples, I point to the success of Chrysler in the mini-van market and Ford in the pickup truck market. Their over-capacity and saturation strategies (both ‘push’) resulted in dominance of the area for a long time (in one case, 30+ years). Again, not perfect examples in light of how the auto industry is going right now, but they are examples of how excess is not always waste.
[...] Assurance Plans Guideline wrote an interesting post today onHere’s a quick excerpt—– I work in a large corporate environment (300,000+ employees) Process documentation is required by law (ISO 9000) and by corporate policy. [...]