The importance of Pull in a VUCA context
In the current reality of travel restrictions and curfew, all of us, in one way or another, have felt the disruptions caused in value streams by the pandemic. Be it as consumers (that package that had the delivery delayed twice…) be it at a professional level with trouble getting raw materials and components, challenges to meet customer demand, difficulties to obtain PPE, from a long list of examples we could identify.
In this context, it is important to grasp the opportunities presented by the current situation, especially in terms of value stream management and organization.
Just-in-Time (JIT) is one of the pillars of Lean / Toyota Production System (TPS). It can be described, rather simplistically, as the ability to manufacture, at the right moment and in the right quantity, the product the customer needs. The Pull Flow concept is part of JIT.
Pull was developed to overcome the limitations of conventional production scheduling systems, such as:
• Considerable differences between the customer daily needs and the schedule;
• Lots of Work in Process, but not always what is needed;
• Poor communication of the demand to upstream processes.
These limitations were thoroughly demonstrated in Jay Forrester’s studies, whose results were published in his book Industrial Dynamics. In this publication the term “Whiplash Effect”, later known also as “Forrester Effect”, is used to illustrate the phenomenon where a small demand variation at the end of a supply chain can be amplified upstream by 50% or higher.
One of the ways to minimize this effect is to implement Pull Flow. Instead of scheduling each step of the process in a centralized way, only one step (the pacemaker) is scheduled. The consumption of parts and materials by the pacemaker will trigger its replenishment by the upstream processes.
The downstream process sends to its providers (either internal or external) the information of its needs: which products, in which quantity, when and where they are needed.
This information is, usually, in the form of a kanban card and sticks to the heijunka (levelling) principle to protect the production activities from the effects of variation.
As so, the upstream process (provider) only transforms and delivers what is needed by the downstream processes. This is the opposite of Push Production, in which the upstream processes produce in large lot sizes according to a centralized planning, pushing the goods to the downstream processes, regardless of their real needs and consumption.
PULL MODELS IN VOLATILE CONTEXTS
The current context of volatility, uncertainty, complexity and ambiguity, results, in practical terms, in greater perceived variation, in the necessity of increased flexibility and, above all, in less time to plan and decide.
All this makes it even more relevant to have agile and flexible value streams and supply chains, incorporating Pull concepts. The examples used previously come from manufacturing, but these concepts can be applied to most processes.
For a successful application of the Pull concepts the organizations need to have the knowledge and be prepared to new ways of designing the processes and updating their parameters. Until not long ago many value streams followed an annual improvement pace, with analysis, definition of improvement activities and calculation of parameters (for standardized levels of inventory, for Kanban, for example) occurring with that frequency and based in spreadsheets. With the current rhythm of change (which was already speeding up pre-pandemic) all this effort must be multiplied. If the complete process is slow and time consuming, we risk obtaining results that are already out of date.
Because of all this, it is very important to implement:
Automatic parameter calculation processes (inventory levels, order signals, batch size, order size) connected to the management software systems.
Warning and monitoring systems to support decision making:
Real time inventory level control.
Delivery lead time monitoring.
Inventory shortage monitoring.
Reorder level and automatic orders.
Electronic Kanban (internal or external).
Simulation models of the processes to accelerate the value stream design/improvement process:
Explore possibilities – Test the impact of process alternatives, procedures of resource allocation, without disrupting the operations.
Evaluate the impact of changes in the process parameters.
Expose the model to variation in demand, in equipment performance, in resources, in order to assess the process robustness.
Validate the expected results and anticipate risks.
Pull Flow, although being practiced, in some environments, for decades, still has to unleash all of its potential. Its implementation requires clear and easily accessible data, solid knowledge and experience, clearly structured communication channels, and discipline. For sure, uncertainty has come to stay, requiring continuous adaptation and reorganization of values streams.
The newest digital tools (to capture and visualize data, to simulate, to collaborate remotely, among others) open new possibilities to speed up the supply chain transformation.
Toyota Motor Corporation: The TPS concept
Toyota Motor Corporation: Basic concept of the Toyota Production System