Pull vs Push: a Discussion of Lean, JIT, Flow, and Traditional MRP Part 1: Tutorial

Flow Manufacturing

The lean manufacturing support philosophy has recently received increased interest, potentially allowing it to break like a huge wave across industry. The Enterprise Resource Planning (ERP) systems of the 1990s have been burdened with the liability of carrying on some well-publicized Material Requirements Planning (MRP) problems like complex bills of material (BOMs), inefficient workflows and unnecessary transactions, activities, and data collections. While several years ago prospects were tentatively inquiring about lean capabilities, now they seem to be increasingly requesting them.

Companies such as John Costanza Institute of Technology (JCIT) have been the pioneering source of the philosophies and techniques behind flow manufacturing, which replaces shop-floor silos, such as machines grouped by their function, and traditional scheduling and forecasting with process or product family-based production lines (often referred to as cells) designed to fill orders based on actual daily demand. The idea is to be flexible enough as to keep work-in-progress (WIP) moving smoothly and continuously, eliminating bottlenecks and underutilizing capacity. This particular flow derivative of the lean philosophy was developed and refined by John Costanza, who leveraged what he learned from his exposure to the Toyota Production Model and what he had subsequently applied while working at Hewlett-Packard. He developed specific disciplines and mathematical techniques to implement "demand pull" and "continuous flow" concepts. He named this methodology Demand Flow Technology (DFT), and in 1984, started JCIT, an Englewood, Colorado, (USA) based company, to educate thousands manufacturers ever since.

The term flow manufacturing is closely related to and thus often confused with other demand-driven manufacturing strategies, such as agile, just in time (JIT), and lean manufacturing. They also streamline processes, eliminate waste, use kanban signals to replenish supplies and are subject to continuous improvement. (The Japanese word kanban, according to the APICS Dictionary, loosely translated, means card, billboard, or sign, and the term is often used synonymously for the specific JIT scheduling system developed and used by the Toyota Corporation in Japan. It is a pull system where workstations signal with a card or something similar when parts are to be withdrawn from feeding operations or suppliers.) For more detail on JIT and lean manufacturing and on their impact on ERP, see Trends Affecting Manufacturers and ERP.

However, flow manufacturing leverages some additional techniques helping manufacturers create any product on any given day and quantity, including the "quantity of one" (i.e., through the so-called mixed-model production), while keeping inventories to a minimum and shortening cycle times to fill customer orders quickly. In particular, flow manufacturing leverages mathematical tools to automate some of the aspects of lean manufacturing. For example, a mathematical model corresponds daily production with actual demand, defines line designs to allow materials to flow at a steady rate to meet that demand, and uses proper sequencing to improve throughput. The idea is to synchronize product assembly to make each like product unit at a consistent rate and meet the particular day's demand. The takt time (i.e., the available production time divided by the rate of customer demand) and total product cycle time are used to determine how to sequence the flow of products, decide what type of kanbans to use, what resources are needed, and what other decisions related to line design need to be made.

This is Part One of a two-part tutorial.

Part Two will discuss challenges and make user Recommendations.

How Flow, Lean and JIT Differ From The Traditional Methods

Flow, like its other lean manufacturing siblings, differs from traditional manufacturing through a pull vs. a push strategy to move goods. Namely, traditional manufacturing methods rely on the movement of materials through functionally-oriented work centers or production lines, and are designed to maximize efficiencies and lower unit cost by producing products in large lots. Production is planned, scheduled, and managed to meet a combination of actual and forecasted demand, and thus, production orders stemming from the MPS (master production schedule) and MRP planned orders are "pushed" out to the factory floor and in stock. External suppliers also work to support planned production, while materials management often relies on maintaining sufficient inventory, using a make-to-stock (MTS) rather than make-to-order (MTO) or assemble-to-order (ATO) approach.

In traditional manufacturing, the time and cost of changeover to produce different products is high, as are the costs of inventory, planning, and expediting. To recap, in traditional manufacturing, goods are pushed through production at levels determined by often inaccurate scheduling and forecasting tools common in MRP II (material resource planning)/ERP systems. These levels often exceed demand, resulting in building excessive finished inventory, while in a flow/lean/JIT environment orders are pulled through the process, based on actual demand.

By contrast, rather than emphasizing planning like ERP, lean manufacturing and JIT concepts emphasize the continuous improvement of processes that lead to things such as reduced inventory throughout the supply chain, shorter lead times, and faster cycle times enabling improved response to customer demands. Many vendors have consequently bolstered their commitment to lean manufacturing practices with functionality designed to promote rapid response to customer orders based on demand "pull". This includes kanban, mixed-mode manufacturing (i.e., building a new model every day, according to daily demand in order to make several different parts or products in varying lot sizes allowing a factory to produce close to the same mix of products that will be sold that day), and the flexibility to schedule, and manage flow orders for products within product families, with or without using MRP. Again, the idea is for products to arrive exactly when they are needed in the mix and in required quantities to allow production to begin immediately after a customer order is confirmed without having to run MRP or create and release a work order.

Materials are consumed from point-of-use locations or raw-in-process (RIP) locations, whereby both internal and external material suppliers receive replenishment signals at point-of-use locations, RIP, and build or supply materials when location needs to be replenished. These features are attractive at least to existing ERP users and particularly automotive suppliers, who have been pinched by a tightening economy and are under pressure to speed up operations and adopt JIT and lean manufacturing practices. The requirements for the automotive industry, which is particularly conducive to the deployment of lean concepts, are critical even in the accounting arena where evaluated receipt settlement, release accounting, self-billing, and retro-billing speedup processes while helping suppliers optimize their limited resources.

Underlying Concept of Flow Manufacturing

The underlying concept of flow manufacturing is further based on the premise that by properly designing production lines, determining and balancing the optimal mix of products to a daily demand rate, in combination with workers' all-round skills and self-inspection, high-quality goods can be produced as ordered, at a rate that falls within the required order-to-delivery response lead time (for those that might be confused with the term "design", line-design tools are statistically based methods of designing production lines that will turn out a mix of products with maximum efficiency and minimum waste). As a result, the entire supply process is pulled and sequenced from the actual demand, and it is by no means pushed or rescheduled to meet scheduled due dates.

Line design synchronizes work activities and the consumption of raw materials and components while eliminating unwanted queue times and WIP. Furthermore, a cellular production line layout is a practical approach to continuous flow and is fundamental to flow principles and lean concepts because it simplifies the management of the plant floor by grouping products into product families. In this environment, often there is no need to master schedules and to explode forecasts through MRP (which in turn utilizes BOMs) to generate planned component usage since the kanbans are already set for simplified visual replenishment of those components. Still, one should note that kanbans are mostly used at the purchased components or raw material level, and not at a stocked finished goods or lot-sized subassembly level, since they are not subject to volatile recalculations that respond to daily finished goods product mixes.

Demand Flow Technology (DFT) calls for the complete transformation of production facilities into flow lines and cells, and proposes that the best schedule is no schedule at all. Visual and user-friendly software (e.g., with drag-and-drop facility to design production lines or routings) has the potential of simplifying these complex calculations, going beyond what people can do manually or via spreadsheets.

This concludes Part One of a two-part tutorial.

Part Two will discuss challenges and make user recommendations.

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