Executives and managers in manufacturing have been subject to a great diversion ever since the advent of the Toyota Production System. In an effort to improve performance, many have wasted inordinate amounts of time and money in organizational struggles over push systems versus pull systems.
- If you are discussing the benefits of push vs. pull in your organization, stop.
- If you are implementing pull systems and focusing on achieving one-piece flow, know that you are in danger of leading your organization to decreased throughput performance, poor customer service performance, or both.
Companies that are leading their industries are moving beyond the folklore approach of push versus pull and one-piece flow to achieve excellent bottom-line results by focusing on the practical science behind manufacturing supply chain management. One of the benefits of taking this approach is advanced understanding and implementation of work-in-process (WIP) control, a fundamental determinant of manufacturing supply chain performance. Understand that whether WIP is pulled or pushed is not the point and that too little WIP is as bad as too much WIP. Realize that ignoring the practical, scientific relationships that describe the effect of WIP control on performance will put your organization's performance and profitability in peril.
Why all the diversion caused by the push versus pull focus? Much of the counterproductive time and energy spent on push versus pull diversions is the result of confusion surrounding their definitions. Ask a room full of manufacturing executives to define push and pull and there will be many different definitions.
Popular lean manufacturing texts are no better. Womack and Jones in Lean Thinking state that pull "means that no one upstream should produce a good or service until the customer downstream asks for it" and they describe the quintessential pull system, kanban, as a supermarket. We have yet to see a supermarket where the grocer will wait for the customer to request items before the grocer will order the items. A clear definition states, "A push system schedules the release of work based on demand while a pull system authorizes the release of work based on system status."
Forget Subjective Definitions, Think Science
Eliminate unproductive efforts fueled by subjective definitions. Approach control of your operations' performance using the practical science that describes the natural behavior of your operations.
For instance, application of Little's Law (WIP = Throughput x Cycle Time) and other Factory Physics principles --a fundamental, comprehensive framework of the practical science governing manufacturing supply chains --demonstrate that there are three regions of performance for any system.
- The WIP Overload Zone -- throughput is essentially independent of WIP so increasing WIP in the system only increases cycle time and has little or no effect on throughput.
- The WIP Starvation Zone -- cycle time is reduced to a minimum limit by reducing WIP, but throughput is also reduced drastically.
- The Optimal WIP Zone -- WIP levels provide best possible performance -- maximum throughput with minimal cycle time. This takes into account the levels of variability in a process whether that process be discrete manufacturing or continuous flow. (For further detail and illustrations on these concepts refer to: http://www.factoryphysics.com/custom_page.cfm?category=2&page=281&active=281 and to the textbook Factory Physics)
In blind pursuit of one-piece flow, many companies have driven throughput levels down to unprofitable levels. Since true one-piece flow is only possible with zero variability, and the laws of nature do not allow zero variability, true one-piece flow is an impractical ideal. Consider the following examples:
- A plant designed for one-piece flow at a major medical equipment company managed WIP in the WIP starvation zone for more than 15 years. By implementing optimal WIP levels, the plant saw a 30 percent increase in throughput nearly overnight.
- An operations executive at a major automotive supplier determined his operations had the correct amount of WIP in place and he could not safely reduce WIP despite pressure from his organization's finance department to do so. Through practical, scientific analysis, he was able to demonstrate to finance that a small reduction in WIP would reduce working capital slightly but only at the expense of decreased throughput and an increased likelihood of incurring $10,000 per minute penalties from OEM assembly plants for line stoppages.
- Boeing's 777 assembly processes (a classic one-piece flow pull system) show WIP levels so low as to impose large reductions in throughput. Whether the cycle time reduction is worth the tradeoff is a strategic decision on Boeing's part but the end result is a reduction in revenue.
A large reason for the success of the great push versus pull diversion is that describing something as a pull system is relatively easy and sounds logical. This is especially important to consultants and executives who want to make something happen but do not have a firm grasp on the science behind the supply chains or operations they are trying to manage. Telling employees that they should "pull to demand" or "pull work only as needed" has a nice intuitive ring to it. Unfortunately, as we have discussed, intuition that is not fact-based can go badly wrong.
- Do not be diverted by underproductive discussions of push versus pull. The practical science that governs your operations performance is not as simple as push versus pull.
- WIP control is a strong determinant of performance and, in the real world, less WIP is not always better.
To get best possible performance from your organization, understand and apply both the mechanics of advanced WIP control and the scientific principles that provide predictive descriptions of the interactions between WIP, throughput, cycle time and variability.
Factory Physics Inc. is a management consulting company that provides a scientific framework, software, and training to optimize performance of manufacturing supply chains. Factory Physics principles and applications provide executives and managers the practical science to cut through complexity, reduce conflict and establish predictive control and direct accountability to accelerate performance of manufacturing supply chains. Factory Physics Inc. is the leader in bringing the power of this practical science to industry. For more information, contact Ed Pound at [email protected] or by phone at 630.870.1163. Their Web site is www.factoryphysics.com