Efficiently distributing production from a manufacturing facility to retailers is a core principle in lean manufacturing. However, the importance of the push and pull systems in lean manufacturing was significantly highlighted during the pandemic when customers were met with product unavailable prompts while some manufacturers had oversupply of inventories.
A lean push and lean pull system helps avoid such situations by balancing the production processes. Using these approaches, companies can provide the right materials at the right time to manufacturers to ensure accurate and effective production. This excerpt dives deep into the two methods and how you can make them work to maximize profitability.
Push Vs. Pull Systems In Manufacturing: The Major Difference
Push systems indicate that industries manufacture products based on anticipated demand rather than waiting for customer orders. This approach is particularly useful for manufacturing stable-demand products like food, pharmaceuticals, and household chemicals.
In contrast, a pull system responds to real-time customer demands. Pull systems are the backbone of lean manufacturing, ensuring lower inventory levels, reduced waste, and the need to manage unnecessary inventory and quick response time to customer demands. It is also called the Just-in-time (JIT) manufacturing model. Let’s understand both systems with an example.
For instance, in a pull system, production begins when the customer orders and manufacturers only make the desired amount. On the other hand, a push system will already have the needed amount in a warehouse and ship it to the customer. Moreover, the push system puts no limit on the number of products that should be in the system (which increases the chances of product waste and over stocking). Therefore, most manufacturers follow the pull system and run production when there is an actual need.
Push System Principles
- Production aligns with market and consumer demand projections.
- Lessens the risk of product shortages.
- Potential for wasted or overstocked inventory and materials.
- Works best for longer lead times.
Pull System Principles
- Follows a Just-in-Time manufacturing model.
- Production occurs only when there is an actual demand.
- Materials and supplies are ordered only when needed.
- Considerably low risk of waste and overstock situations.
- Relatively higher risk of inventory shortages when demand fluctuates.
- Suitable for shorter time-sensitive shipments.
Push System Overview
. This system ensures that manufacturers always have products to sell without constantly adjusting their production schedules. However, the push system also risks producing more than necessary, leading to higher production and storage costs and ultimately increased waste.
Pros of a Push System
Flexibility: Push systems use predictions to draft their production schedules. It allows flexibility for the supply chain and production team and is incredibly helpful for manufacturers with longer lead times.
Better Time Allocation for Planning and Problem-Solving: Since an adequate amount of production is already present, manufacturing companies can purchase new raw materials and strategize shipping and storage provisions to mitigate supplier delays without rush.
Less Response Time: The company can access a steady and ready-to-use inventory to fulfill customer orders without any delays. The approach is particularly useful in time-restricted demands.
Cons of a Push System
Risk of Inventory Overstock: The approach may lead to overstock inventories as the productions strongly rely on the forecast rather than the actual demands. Many such cases became prominent in the post-pandemic period when there were no orders for the products waiting in warehouses.
Possibility of Wrong Prediction: The consumer market is never static, and it is often impossible to make a prediction that is 100% correct. Thus, push systems may lead to productions that are inappropriate to the market conditions .
More Overheads: Storing unsold inventory incurs unnecessary expenses. And that is not all. Market predictions also require significant investments, which can strain a company’s resources.
Pull System Overview
Pull or make-to-order systems are famous for their efficiency. Manufacturers only produce what is needed and when needed, reducing the risk of unnecessary materials and inventory. It limits the work-in-progress inventory and focuses on just-in-time manufacturing. Many pull systems also use the two-bin cueing method. It involves placing two bins in the sales sector, and when a bin empties, it is sent back to the production section to initiate a new batch.
Pros of a Pull System
Ensures Efficiency: The JIT model maximizes efficiency as the company only produces the needed amount of goods and doesn’t drain its working capital . Moreover, it also ensures better resource utilization as the equipment is allocated based on the current demand.
Better Quality: Since there are a limited number of products to manufacture, it is easier to pinpoint and resolve any production issues. Better-quality products also lead to customer satisfaction.
Less Risk of Overproduction: The manufacturing begins once the order arrives, so there is no chance of overproduction and unused stock accumulation.
Cons of a Pull System
Risk of Stockouts: When demand unexpectedly increases, pull systems can result in stock shortages, leading to unmet orders and unsatisfied customers.
Increased Complexity: Producing goods exactly when needed requires excellent supplier communication and accurate production. Any supply chain or manufacturing disruptions can cause significant issues.
Making the Right Choice
The choice between push and pull systems depends on various factors, including product type, supply chain reliability, customer order size, budget, and organizational goals. Each system has its advantages and drawbacks, and the right choice is unique to each manufacturer.
Push systems are common as they can prevent stockouts, but they often result in increased costs and waste. In contrast, pull systems focus on efficiency and sustainability, requiring robust planning and supplier relationships to avoid unmet demand.
Final Thoughts
Choosing between a push and lean pull system is about understanding and meeting customer demands. Each system has its positive and negative impacts, but the ideal decision depends on the organization’s specific needs. The objective is to produce goods at the lowest cost while maintaining good quality and meeting customer demands with minimum delay. The right system must best align with these goals to ensure competitiveness and efficiency in the manufacturing process.
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