Understanding the advantages and disadvantages of push vs pull manufacturing is fundamental to grasping the complexities of your supply chain structure, optimal stock, maximum efficiencies, and potential waste. But what is push-pull manufacturing? And which one is most beneficial to your supply chain and product?
In theory, a push-based supply chain is based on forecasted and projected demand, while a pull-based supply chain only produces items equal to demand. But this explanation runs the risk of being too simple as the two systems are often more complex when applied to the real world.
As we delve into the complexities of real-world manufacturing, metrics such as takt time, cycle time, and lead time also come into play. These metrics help manufacturers understand how production can correspond to demand and enable companies to embrace lean manufacturing principles.
When considering push vs pull manufacturing, it’s useful to understand the advantages and disadvantages of both systems. This provides a greater perspective on supply chain solutions and enables manufacturers to incorporate the best features that suit their needs.
Push Manufacturing
A push system can have a few different applications but the idea is relatively the same across the board.
In manufacturing and production, a push system relies on a forecasted or predicted demand. This means that production is accomplished before a customer orders the product.
In material control and distribution, push systems manage inventory through Material Requirements Planning (MRP). This works to ensure that there are enough materials to keep up with the production schedule and strives to mitigate excess inventory.
Push manufacturing is useful to companies that specialize in single item mass-production and/or commodities with long production or delivery times. Examples of this include:
Promotional Items: Products that are associated with a short-lived promotional campaign cannot wait for customer demand. I.e. This month’s featured book, electronics, game, etc.
Clothing: Often seasonal in nature, the items need to be produced before customers demand the items.
Perishable & non-perishable foods: This product has to pass through numerous distribution channels before reaching the intended market, adding more time if shipping the product internationally.
Another well-known example of push manufacturing is Ford in the early 20th century. By implementing the incredible innovations of the assembly line and standardization, Ford was able to significantly increase production speed and reduce costs. Henry Ford was able to push his product onto the market faster and more efficiently than ever before.
However, the Ford Model T was sold only in black from 1914 to 1925. Having only one product with little variations allowed Ford to push their car onto the market from one big proverbial pot. Without the complicated features of mixed-model assembly, there was no worry or risk of stockpiling variations that potentially would not sell. But as you can imagine, this left little choice for the customer and was eventually remedied in 1926.
As we discussed in The Connected Worker Platform and the New Connected Economy, customers are increasingly demanding more varied and customizable products because of the rise of e-commerce.
This is causing issues in push-based supply chains and inventory management. With the sheer multitude of product variations, it is becoming difficult to forecast or predict customer demand.
It is now more useful than ever for manufacturers that deal in mixed-model assembly to base their production on real customer demand rather than only by forecasted predictions.
Pull Manufacturing
The pull system is a Lean Manufacturing principle. As we just covered, in push manufacturing, production dictates the amount of product that is pushed onto the market. On the flip side, pull manufacturing responds directly to customer demand instead. This means that the product is only fabricated and assembled when a customer places an order.
By relying on customer demand, companies can function with a fraction of the inventory, reduce overhead fees, and prevent overproduction.
Take a moment to picture yourself buying tickets at an amusement park. As a general rule, new tickets are printed the moment that you decide to buy some. But if clerks were to spend their entire mornings printing a stack of tickets ahead of time, then this would lead to waste on days when demand is lower. As a result, it's more efficient to wait for the customer to pull the production through their demand.
Although the above example is an over-simplification, the fundamentals are the same in regards to pull manufacturing. But we can add a few more real-world complications to expand this idea.
If relying completely on customer demands for production, items with long production/delivery times could result in longer wait times for the consumer. We can consider this by returning to our amusement park ticket example.
Imagine that the amusement park has replaced the old tickets with new bedazzled bracelets. The only difference now is that these bracelets take 15 minutes for the clerk to make and assemble. In this situation, it would be useful for the clerk to have a certain number of pre-made bracelets. This would then speed up the customers’ perceived production time as their requests could be fed through the small inventory. This also provides a safety net in the event of any unforeseen problems.
With a stock of bracelets that is a mere fraction of the total daily admissions, the clerk can successfully produce bracelets by following customer demands.
Think of pull manufacturing as a vacuum. As a customer places an order or pulls a product, a vacuum is created by the empty space in the small inventory. The space is then filled by production.
The core idea is to have demand dictate production but also maintain a steady flow.
By implementing pull manufacturing, your company can eliminate wasteful overproduction and limit the need for high inventory and storage. A pull manufacturing system enables companies to tune into customer demand that accurately determines the correct production rate and supply.
But how can companies successfully calculate the correct production times that correspond with demand?
Enter takt time, cycle time, and lead time.
Takt Time vs Cycle Time vs Lead Time — What Are They?
These separate metrics help manufacturers measure production times and understand the desired rate of production based on demand and customer experience. Each one concerns an extremely important factor; production time needed to meet demand, actual production time, and production time from the perspective of the customer.
How to Calculate Takt Time (TT)
Takt time is the rate at which production needs to be accomplished to meet customer demand.
“Takt” is a german word meaning “pulse”. A pulse can slow down or speed up based on your body’s oxygen demand. Similarly, a takt time can vary depending on customer demand. By calculating takt time, you can pinpoint the speed at which production will need to flow.
Calculating takt time is fairly simple. Let’s say you’re a small business that specializes in fabricating hand-crafted music-boxes. You have 5 employees that perform active work for 30 hrs each week, equalling to 150 hours of total available production time (TAPT). The average demand (D) is 75 music-boxes for the week. With this information, we can calculate the needed takt time (TT) to keep up with demand.
TAPT [150] / D [75] = TT [2]
As we can see, your takt time is 2, meaning that you will need to produce 1 music box for every 2 hrs of production.
How to Calculate Cycle Time (CT)
Cycle time is defined as the total production time of one item, from start to finish. In a general simplification, the goal of pull manufacturing is to have your cycle time match your takt time so that you can meet customer demand.
Let’s continue the music-box analogy. At the end of the first day of production, after your 5 workers have completed 30 combined hours of work, 12 units or music-boxes (U) have been completed. Your cycle time (CT) would be calculated like this:
TAPT [30] / U [12] = CT [2.5]
Every 2.5 hours, your employees are producing 1 music box. With a takt time of 2 and a cycle time of 2.5, the music-box production is not keeping up with demand.
On the other hand, if the workers had finished 20 units within the first day, we would get a cycle time of 1.25. Though this number indicates a faster time, it is not necessarily any more desirable than a cycle time of 2.5.
This is because if you are producing faster than demand, you will be adding to and creating a larger inventory that will then incur greater storage costs. To mitigate waste, it is ideal to match your takt time with your cycle time so you can avoid under or overproduction.
How to Calculate Lead Time (LT)
Lead time is defined as the time from when the customer places the order to when they receive the order and payment is fulfilled. Essentially, lead time is a measurement of the production process from the customer’s perspective.
Lead time is then calculated by adding delivery time (DT) and cycle time (CT) together.
Your company sells its music boxes online. The customer places the order on the website and then waits for the product. If your music boxes have an astoundingly fast delivery time of 45 minutes, then, using the second cycle time example of 1.25 hrs, your lead time would be calculated like this:
CT [1.25] + DT [.75] = LT [2]
This is unrealistically fast but it highlights an important feature. Even if we could match our lead time to our takt time, it is undesirable because we would still be overproducing with our fast cycle time. Again, this ultimately leads to an inventory of products growing faster than demand can empty, which increases inventory expenses. It is best to match your cycle time with your takt time.
As we discussed before with the amusement park admission bracelets, to speed up the production process from the customer’s perspective, it is best to have a small inventory that can feed demand and be replenished as demand dictates and pulls.
Enhancing Push and Pull Manufacturing with Data
Many cases can be made in the debate between push vs pull manufacturing. It largely depends on the product, market conditions, and supply chain challenges. While pull manufacturing may seem like the smarter and leaner choice, as we listed above, some industries cannot function without advanced production and larger inventories.
But we can incorporate the strengths of each system into our production. Manufacturers can implement push or pull manufacturing variations to create a hybrid system that works best for their company and others in the supply chain.
Whether running push or pull manufacturing, our work instruction software helps you stay on track with demand, measure production times, and correspond with inventory metrics. VKS will work alongside inventory management systems to track material usage and provide real-time data with powerful insight and knowledge. With accurate cycle time tracking, companies can adjust and improve their production schedule and output.
While employees follow their work instructions in VKS Pro, the software is continuously recording useful data and preparing the basis for incorporating better supply chain solutions. This gives manufacturers the opportunity to tailor the best systems and practices according to their needs and challenges.
By giving employees and organizations the knowledge of what needs to be done and when it needs to be done, companies can effectively determine the optimal stock with production times and achieve the ideal circumstances for their production.
