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Transitioning from Push to Pull Manufacturing

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					Transitioning from
   Push to Pull
  Manufacturing




                     Rea Buchanan, QAD
                         March 20, 2006
       Objectives
       Provide a base of understanding about the two
        styles of manufacturing execution
                  – the mechanics
                  – the implications
       Take the mystery out of the terms
       Provide an understanding of how QAD supports
        pull principles



QAD Proprietary                                         2
       Planning vs. Execution
   Planning is the activity of preparing to
         manufacture
           – Forecasting sales volume and mix of products
           – Determining when and how much material to procure
           – Calculating internal build requirements and the impact on
             resources
   MRP / CRP process
   MPS process
   Medium to long term

QAD Proprietary                                                          3
       Planning vs. Execution
   Execution is putting into action:
           – Material deliveries
           – Internal manufacturing of component parts / sub-
             assemblies
           – Assembly of end product
   Work Orders, Repetitive, Purchase Orders, Firm
    Schedules
   Scheduling process
   Short term


QAD Proprietary                                                 4
   What is “push” based manufacturing execution?

       Procurement, fabrication and assembly of
        products based upon anticipated customer
        demand
       Orders are “launched” to suppliers and internal
        production centers
       Work is “pushed” through the shop from one
        work center to the next until final assembly is
        completed
       Often associated with mass production

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 Implications of push based manufacturing

  Products being assembled may/may not meet true
   customer demand
  Imbalance of finished goods inventory
  Higher finished goods inventory
  Expediting product to satisfy customer orders
  Overtime, extra set-ups, premium freight




QAD Proprietary                                     6
  Implications of push based manufacturing

       Work is scheduled in large lot sizes to promote
        efficiencies
       Materials queue in front of the next production
        process leading to larger WIP inventory
       Priorities are difficult to distinguish; “hot lists”
        set priorities
       Leadtimes lengthen
       Quality risk and obsolescence increase



QAD Proprietary                                                7
           What is “pull” based manufacturing?
   A method of production where the decision to
    assemble, fabricate and procure more of an item is
    based on actual consumption by the
    downstream “customer”
   Downstream “customer” signals authorization to re-
    supply via card (kanban), container, empty space
    on floor
   Re-supply may be units of one or small batches
   Associated with lean manufacturing


QAD Proprietary                                          8
       Implications of pull manufacturing
   Products are made only when consumption signals
    are received
   Product inventory is more balanced to recent
    customer consumption patterns
   Inventory decreases
   Supply chain priorities become clearer
   Scheduling activity lessens; replenish kanbans on
    FIFO (First In – First Out)
   WIP inventory decreases
   Floor space is “freed-up”
QAD Proprietary                                         9
       Implications of pull manufacturing
       Manufacturing processes need to be predictable
        and available
       High quality levels becomes more important
       Manufacturing capacity needs to be managed
       Set-up times must be reduced in order to make
        smaller quantities more often
       Product lead time collapses
       Production and supply problems are exposed
       Conventional manufacturing measurements
        need to be re-thought and altered
QAD Proprietary                                          10
      Does pull manufacturing make MRP go away?

       Don’t confuse Planning with Execution !!
       Both execution methods need Planning
                  – A supplier cannot be expected to quickly respond to
                    a pull signal unless they have an expectation of
                    future need
                  – A manufacturing plant cannot be properly facilitized
                    and staffed without some idea of volumes and mix
       MRP is no longer used to launch orders
       Does MRP go away?
       NO, emphatically, NO!
QAD Proprietary                                                            11
                  So, how Does QAD support pull
                       based manufacturing?

                            With the

                    Lean product offering


QAD Proprietary                                   12
       Lean Building Blocks
    Quick Changeover
     Setup Reduction                                             Value Stream
                                                                   Analysis
                                         Workplace
                                        Organization
                                           5 “S”
                  Total Productive        System                Cellular
                    Maintenance                               Manufacturing
                        TPM



                                 SUPPORTING CONCEPTS
                     One Piece Flow     Visual Controls       Takt Time
                       Team Building         Equipment Replacement
                         Balanced Flow       Quality at the Source
                                  Employee Involvement
                     Stabilized Operations    Continuous Improvement
                         Kanban          Kaizen          Six Sigma
QAD Proprietary                                                                 13
                  VSM – The Language of Lean   Source: Bill Kerber, SIG




QAD Proprietary                                                       14
                                                                     14
     MFG/PRO Lean Manufacturing includes …

            Transformation of value-stream models to data
             structures leveraging existing MFG/PRO data

            Kanban (pull) transaction system

            Kanban planning and analytics using MFG/PRO
             data to calculate kanban loop size

            Level loading and flow support

            Fully integrated and part of MFG/PRO
QAD Proprietary                                              15
             Mixed-Mode Manufacturing Support

                       Inventory Stores
                                               Receive Sub-Assemblies




                                   Issue      Issue                 Work
                                   (push)     (push)                Order
     Receive                                                                                     Ship
                                                                                    Finished
      from                                    Backflush                              Goods
                                                                                                  to
     Supplier                                                                                  Customer
                                                                         Receive
                                                                        End Items
                                          Kanban
                                           (pull)
                                                    Backflush
                    Kanban                                      Repetitive          Kanban
                     (pull)                                                          (pull)
                                                                 or Flow
        Receiving             Point of Use Locations            Schedule                       Shipping
          Dock                                                                                  Dock


QAD Proprietary                                                                                           16
                  Transforming the Value Stream to
                          Data Structures
Define kanban items/steps, processes, supermarkets
Associate items/steps with processes
Define kanban loops combining items/steps,
 supermarkets and supplying sources
Supplying sources may be processes, suppliers,
 other supermarkets, other sites
Specify time or quantity accumulator for the loop
Set average demand calculations
Define safety stock parameters
QAD Proprietary                                       17
              KANBAN Master – Loop Data Make Item




QAD Proprietary                                     18
               KANBAN Master – Supermarket




 Safety stock method can be manual, simple or peak (both statistical
 calculations)
 Safety stock quantity and days can both be used
  Safety stock template, service level and peak average days are used with
  statistical methods
QAD Proprietary                                                              19
               KANBAN Master – Card Control




Accumulator type may be quantity, time or schedule
Card reporting may be standard, add one or subtract one
FIFO time for internal and external processes
QAD Proprietary                                           20
       Kanban Transactions
   Provides transactional support for Kanban
   Inventory movement (purchase receipt, inventory
    transfer, production completion & back-flush) and
    financial transactions automatically created
   Scan or manually enter Kanban ID’s
   Generate limited use kanban cards
   Print/reprint Kanban cards on demand with barcodes
   Manage cards: deactivate, create, re-activate
   Empty authorized kanbans generate replenishment
    signals
   Transaction sequence enforcement; audit reports

QAD Proprietary                                          21
           Kanban Transactions




QAD Proprietary                  22
                  Supply Visualization
                    KANBAN Board View




                     Graphic representation of a
                          Kanban board


QAD Proprietary                                    23
                           Order
                   Empty     Point
                  KANBANs

                             Safety
                             Stock




                
              Shipped
             KANBANs        Acknowledged
                               Kanban


                 
               Filled
             KANBANs         Accumulate


QAD Proprietary                            24
                  Kanban Dispatch for SubA




QAD Proprietary                              25
   KANBAN Planning
 Multiple Average Demand
   Calculations
         Average historical demand (over n
          days, from inventory transaction
          history)
         Projected future demand (over x days,
          from independent demand and
          dependent demand calculated from bill
          of material explosion)
         Blended historical and future
         Set manually

 Multiple Demand Templates

 Multiple Safety Stock
   Mechanisms
         Manual safety stock quantity
         Days or fractions of a day
         Statistical based on desired
          service level
         Peak demand
QAD Proprietary                                   26
          KANBAN Loop Sizing Workbench
   Kanban loop sizing based on average daily demand,
    replenishment time, buffer stock, packaging and logistics
    constraints, EPE Interval (lot sizing) and variability factor
   Iterative Excel-like calculations to determine loop sizing
            – Lot sizing based on EPE I for internal manufacturing
                processes
            – Validates manufacturing capacity based upon demand, cycle
                & set-up times (EPE I calculation)
            – Lot sizing for variable quantity/fixed interval, variable
                quantity/scheduled interval, fixed quantity/variable interval
            – Sizing calculations consider defined kanban container size
            – Simulation capability to evaluate different scenarios
            – Inventory impact evaluation
            – Add & remove kanbans automatically based on resizing
QAD Proprietary
                calculations                                                    27
                        EPE Interval Calculation
  Basic
   calculation:
   One Production Day

      Time Left For                          Time Available
      Changeover         Time Required      For Changeover,      Time Required To
                        To Changeover            Day 1            Changeover All
                        All Items, 1 Time    Time Available        Items, 1 Time
                                            For Changeover,
                                                 Day 2
                                             Time Available
            Total                           For Changeover,
                                                 Day 3
             Run
                                             Time Available   By inspection you can see
            Time
                                            For Changeover,   that if you run lot sizes
             (All
                                                 Day 4        approximately equal to 2.5
           items)
                                             Time Available   days of demand (changing
                                            For Changeover,   over every 2.5 days) for each
                                                 Day 5        item, you will be able to
                                                              support the anticipated
                                                              demand and not overload the
                                                              process. You will also not
                                                              generate any excess
                                                              inventory!
QAD Proprietary                                                                          28
   Why Smaller Intervals?
                   Reduces lead time
                   Increases flexibility and responsiveness
                   Reduces in process inventory
                   Reduces space
                   Improves quality
                   Fewer “surges” upstream
                   Increased opportunities to ship on demand

                  Will mean more trips by material handlers – which is
                    why equipment needs to be close together
                  Goals must include smaller and smaller
QAD Proprietary
                   EPE Intervals                                         29
KANBAN Workbench




                   The Kanban Workbench
                   calculates the EPE Interval for
                   the process.
                   You can override the EPE
                   Interval on an item by item
                   basis. The overall EPE I will
                   take into account any
QAD Proprietary    overrides you’ve specified. 30
KANBAN Workbench




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QAD Proprietary   34
       Objectives
       Provide a base of understanding about the two
        styles of manufacturing execution
                  – the mechanics
                  – the implications
       Take the mystery out of the terms
       Provide an understanding of how QAD supports
        pull principles




QAD Proprietary                                         35
                  Questions?




QAD Proprietary                36
Transitioning from
   Push to Pull
  Manufacturing




                     Rea Buchanan, QAD
                         March 20, 2006

				
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