Push Vs. Pull Production Systems
All manufacturing can be divided into two large groups or styles, push style production and pull style production. What is the fundamental differences between them, and why would you value one over the other?
Push System :
In the push system production is scheduled based on estimated future demand (Lister, 2017). So a factory produced 200 chairs this month, based on projections that 200 chairs will sell this month.
Materials are purchased in large amounts to reduce unit cost, and kept in storage. Products move from station to station in large batches, and then are put into storage until they can be sold (Wilson, 2019).
The Pull System :
In the pull system production is scheduled based on customer orders. So an order of chairs triggers material being released from a supplier, and the job is scheduled in for completion (Wilson, 2019).
The chairs flow in individual units through the production process and are then shipped to the customer.
Pros/cons of Push system:
The pull system can reduce individual unit cost, as the price per unit goes down when materials are purchased in larger quantities (Baldwin, 2020). The push system was partially responsible for the allied victory in World War II, as it allowed them to produce large volumes of military supplies at a low individual cost.
The other advantage of the push system is that an end user has a shorter time to wait before receiving a finished product. For instance it may only take 24 hours to pick a chair off a warehouse shelf and ship it to the consumer, as opposed to three weeks for actually manufacturing the chair to order.
However the push system is wasteful and risky. Pushing materials through before they convert into sales means that you risk unsold inventory rotting in storage for years to come.
A large amount of capital is held up in the form of finished goods in storage, unfinished inventory along the production process, and raw material waiting to be consumed (Wilson, 2019).
The large batch style of the push system means that there are no real limits on work-in progress and that cycle times are often inaccurate (Wilson 2019)
Pros/cons of Pull System:
The push system results in less inventory along the production process, and heavily reduced inventory in finished goods.
The easy flow of materials through production means reduced cycle time, and far less waste in the manufacturing processes. Waste is heavily reduced as inventory no longer has to be stored, heated, tracked, counted, inspected, etc.
As a result less capital is tied up in inventory, resulting in better overall cashflow.
You no longer have the threat of unsold goods hanging over your head should demand fall below your expectations (Baldwin, 2020).
The disadvantage of the pull system is that an individual consumer has to wait for an individual product for a longer period of time than a stocked push style system, where fulfilling an order means locating the correct product and picking it off of a shelf to be shipped (Lister, 2017).
In conclusion is seems that perhaps the best system is a hybrid approach. Those versed in lean may know this as the Kanban system.
The Kanban system is simply a system of visual controls used for determining when to replenish a small bank of inventory.
A very small amount of inventory, for instance maybe enough chairs to meet the projected demand for a week, is kept in stock for the immediate fulfillment of customer orders. As soon as stock reaches three quarters deplenished, or some other agreed-upon metric, a signal is sent to begin production on the next Kanban of chairs.
Thus, the capital tied up in inventory is reduced, while the safety net provided by inventory for the immediate fulfillment of orders is retained.
Baldwin, B., 2020. Push vs Pull Manufacturing: Which is Best for You?. [online] VKS | Visual Knowledge Share Ltd. Available at: <https://vksapp.com/blog/push-vs-pull-manufacturing> [Accessed 16 June 2022].
Lister, J., 2017. The Advantages of an Aggregate Production Plan. [online] Bizfluent. Available at: <https://bizfluent.com/about-5070710-advantages-aggregate-production-plan.html> [Accessed 16 June 2022].
Wilson, M., 2019. Going Lean: Push vs Pull Production – Kaizen News. [online] Kaizen-news.com. Available at: <https://www.kaizen-news.com/going-lean-push-vs-pull-production/> [Accessed 16 June 2022].