Pull Production - Kanban

Introduction

In business you aim to please. You want to make a product that fills a need. You are looking to produce something that people want. But most importantly, your goal is to make money from selling what you can make to as many people as will buy it. Every product that you make but do not sell, costs you money. The laws of supply and demand are such that efficiency becomes maximized when what is supplied and what is demanded balance out. The customer wins by always being able to satisfy his demand for a product and the business owner benefits by having just enough to fill that demand, without so much left over that he is loosing money because of over producing. This fundamental economic struggle is the basis for a lean manufacturing system that has not only been in use for centuries but that is gaining popularity through the ability to implement technological advances to make this process work better. This method of production has been assigned the name of "Pull Production" or "Kanban" in Japanese.

What is Pull Production?

Originating from the infamous Toyota Corporation, pull production is a process that aims to arrange an organization so that customer preference or orders are what cause materials to be "pulled" through a system. The idea is that the manufacturer only produces what the consumer wants when the consumer wants them. In other words, a product need only be produced at the same rate that they are being sold. In a pull production system inventory is reduced, work in progress is not exceeding demand, and the need for raw materials is comparable to the demand for the product.

What is Kanban?

One of the most common tools used in the pull production system is referred to as "Kanban." Although the terms "pull production" and "kanban" are often used interchangeably, kanban actually refers specifically to a signal card production system. This system utilizes cards or containers to pull materials or products through the production system. It relies on a simple rule of only producing or delivering when a card or empty container is passed to the workstation. When at work the kanban system would work thusly:

"A worker goes to collect parts from the previous process leaving a kanban card signifying the delivery of a given quantity of specific parts. Having all the parts funneled to the line and used as required, the same kanban is returned back to serve as both a record of work done and an order for new parts. Thus kanban coordinates the inflow of parts and components to the assembly line, minimizing the processes." (source: http://www.strategosinc.com).

An example of the Kanban system at work

The most popular and common example of the kanban system at work can be seen in the operation of supermarkets. In a supermarket you have a small number of a variety of items that sit in their own designated areas in the isles of the market. Customers enter the market and select the items from the shelves that they would like to buy. When those items are rung up by the cashier, an electronic signal goes to the supermarket's regional warehouse detailing which items have sold. The warehouse then prepares a replenishment of the exact items that were sold and ships those items to the market. This process can take place as quickly and often as every 24 hours, depending on the resources and proximity of the warehouse to the individual market. As you can deduce, this system is much more efficient than having a clerk walk up and down the isles of the market, multiple times a day, to visual record what and how much product is missing from the shelves. In kanban there are several basic principles:

1. Only produce products to replace what has been consumed.

2. Produce products based on the purchasing actions of the consumers.

3. Shipments must be made in containers that hold the number of parts identical to what needs to be replenished.

The basic types of pull production systems

The concept of pull production is simple enough, but implementing these principles to numerous types of businesses is not as easy as it may seem. The reason for this is that many managers fail to recognize that there are different types of pull production system to choose from and that the best system for their own manufacturing company will depend on the type of environment that they function in. Here is a brief summary of the three basic types of pull production systems:

• Supermarket Pull System

You have just read about the supermarket pull system in the paragraphs above. This system is the most basic and widespread of all the pull production systems. In short this is a process that produces to replenish a product that has been withdrawn (in this case from a supermarket). This process makes for easy daily management of the workplace because the process is responsible for the replenishment and the process is relatively easy to use. The advantage of this system is that products can be made ready to ship at a moment's notice. The advantage is that this system requires that there be an inventory held at the warehouse for each product to be replenished and that inventory number may not match up with the number of products being requested for replenishment.

• Sequential Pull System

A sequential system creates pressure to maintain short and predictable lead times. Lead times represent the time that a product waits in inventory before being shipped off to fulfill a need. For this system to work effectively, the pattern of customer orders must be well understood or predictable. If orders are hard to predict, production lead time must either be very short (less than order lead time) or an adequate store of finished goods must be held (and holding inventory costs money). A sequential system requires strong management not only to maintain it but to take on the challenge of improvement.

• Mixed Supermarket and Sequential Pull System

Mixing supermarket and sequential pull systems can be particularly effective when there are lots of repeated orders and infrequent items are needed. Each of the two methods can be applied as the situation warrants, maximizing the benefits that can be obtained. This combination system is not ideal in situations that require for equipment to perform a stable function or for the control of a mixed production line.

How are pull manufacturing and push manufacturing different?

In speaking of pull manufacturing it is difficult to accurately explain this methodology without also introducing the manufacturing control strategy of push manufacturing. Push manufacturing is manufacturing that focuses in forecasts or anticipation of sales numbers to determine what materials will be needed to be pushed through the production system. Push manufacturing is all about optimum quantities and re-order numbers. On the other hand, pull manufacturing deals with the visual replenishment of a product or series of goods. In this process the only things that are produced are those products that are being demanded. The American grocery store businesses provide an excellent example of pull production when the only products that were re-ordered and produced were the ones that needed to be replaced on the shelves.

The main difference between push and pull production is the direction in which the information flows. In the push system, information flows in the same direction as production, whereas in the pull system, information flows in the opposite direction, starting with the consumer and ending on the production line. In pull production it is the consumer that decides when the production process starts rather than the manufacturer deciding when to produce and then hopping that the consumer will respond with an interest in purchasing equal to the amount being produced.

Implementing a pull production system

Implementing a pull production system means brainstorming and planning to accomplish the following three goals:

1. To identify the value - recognize the value or benefits of implementing a pull production system and what such an implementation can do for your company.

2. To improve the value stream - Take a hard look at the actions necessary to make a change in the way that you stream production and how pull production principles can be implemented taking into account specific company employees, machinery and all other production line processes.

3. And to smooth out the flow of value - When errors or setbacks occur, have a plan for how such interruptions to the flow can be quickly identified, resolved and prevented from re-occurring.

In today's technological workplace almost all companies hopping to implement a pull production system are looking to do so through the implementation of a computer software program designed to take all of the busy work out of the process. Kanban or pull production software can be created to fill the unique requirements of your production operation. A good software program should be able to instantly processes raw data and provide the user or owner with valuable information in a variety of forms. A good pull system software program should also be instrumental in the managing of capacity requirements, inventory levels, manpower requirements, hypothetical scenarios, estimation of dollar impact, Kanban quantities, and constraint areas.

Anyone in any type of business can benefit from the implementation of the pull production system and corresponding software. Here are just a few examples of how different business types can benefit from pull production at work in their organizations:

• Materials management- Scheduling and inventory control.
• Production schedulers - Capacity planning, scheduling, etc.
• Production - Manning Requirements, managing overtime, managing downtime Engineering - Rationalization of capital investments, establishing Kaizen (continuous process improvement) goals
• Accounting - Estimating inventory dollar amounts, labor cost, etc
• Sales & Marketing - Determining capacity for new business.