Operations Notes – Push/Pull

Push system – a push system attempts to forecast demand and then produces to meet that demand. (e.g. catering service)

MRP (Materials Requirement Planning) – primary method of implementing push systems. Given a demand forecast, MRP “explodes” and order into its component parts and then schedules production and delivery of raw materials to meet the due date. MRP has 3 key components:

1. Bill-of-Materials (BOM) – what and how many components make up the final product
2. Precedence Diagram – which tasks must be completed before another can begin
3. Setback Times – an estimate of the lead time required to receive a part after it has been ordered. Setback time most problematic b/c it must suffice for all situations. (i.e. regardless of factory load)

*Fundamental problem with MRP is that its an infinite capacity scheduling tool. If each department gives conservative promised dates, effect is additive and may not be accurate at all.

Pull system – a pull system simply reacts to current demand by producing to replace the number of units withdrawn from a buffer. (e.g., McDonald’s) (looks like (Q,r) replenishment system with small Q and r.

Argument for pull system – leads to just-in-time (JIT) production mentality that reduces WIP to extremely low levels, promotes short flow times, and highlights quality problems very quickly. Has tight linkages and absence of safety nets.

Problem with pull system – cannot respond rapidly to fluctuations in demand, no matter how predictable. (i.e. requires stable demand); not well suited for processes with long setup times (capacity crunch – Japanese deal with this problem by always trying to reduce setup times); variable costs can skyrocket.

Kanban – the Japanese implementation of a pull system; replaces setback times and forecasts with buffers – an empty buffer signals upstream process to start production required to fill that slot.
Problems with Kanban

1. Determining buffer sizes
2. Determining how far to pull back to (e.g., back to raw materials?)
3. Determining risks associated with a pull system (e.g. strike)
4. Handling multiple product processes.

*Most systems require elements of both planning and control – neither pull nor push systems dominate both categories; a hybrid might be the best solution – i.e. schedule RMI with MRP and control the factory with Kanban (Push the Plan, Pull the Work). Example is Toyota Production System (TPS).

Toyota Production System (TPS): {“Eliminate Waste”}
Pluses

• Faster response
• Quality benefit (less rework)
• Variety in work
• Implications for other core processes
• No artificial bottlenecks
• Utilizes 5 Why’s process

Minuses

• Changeover time
• Need better trained workers
• Problems associated with lack of inventory
• Lower learning benefits
• Loss of scale buying (sometimes)
• Need more capable suppliers

Heijunka

• Production mirrors the demand variety
• Spread out the production (even out) vs. Building in large batches
  • e.g. 1 out of every 4 cars without A/C vs. 3000 cars with A/C and 1000 without.

Jidoka

• Making problems apparent very quickly
• Uses andon cord pulls to signal problems

Risks if not used appropriately

• Rsk of shipping defective products
• Cost of fixing many more than necessary

Take-aways
Use planning for long lead time items, deciding buffer sizes (x), managing transition & changes. Use pull for normal production of one particular product in set volumes.

Lean plants are capable of simultaneously achieving quality, productivity, and variety much more easily than non-lean (buffered) plants. A lean enterprise is characterized by low (but not zero) inventory levels, quality as a part of the process, and broad spans of worker control.

A well-trained flexible workforce, product designs that are easy to build, and a high performance supplier network are far more important than technology to operating performance.