We see in all the Lean training material that Lean is based on “pull” and we know that it is based on the principle of building to the demand of the customer, but what is pull system in lean manufacturing, how do you obtain it and what are the benefits?
Actually the term “Lean” came from this very concept. The idea is to keep inventory levels, which includes raw materials, in-process stock and finished goods, to as low a quantity as possible. The reasons are that materials and stock cost money to purchase, money to provide storage, risk obsolescence or damage and can become a safety risk due to overcrowding workplaces.
The traditional way of thinking was that more is more efficient therefore let’s build in large batches as that will improve the productivity of the process and let’s also keep lots of finished goods so that stock will be ready to go for the next customer order.
For excess finished products the problem is that as well as the problems discussed above, the customers might not purchase the products for some time due to a downturn in their business or they purchase from someone else due to price, quality or a new innovation. All those products, the material used in them and the time involved then becomes an unrecoverable cost.
Likewise the processing of large batch lots results in large quantities of in-process stock which could all be defective and not found until the next process. Batch production also hides other wastes and inefficiencies such as down time due to the fact that the lost time is not noticed until the batch is consumed. Another issue is the time spent producing this large lot prevents other jobs to be produced in a timely manner which increases your overall lead time.
The correct process then is to manufacture products according to your customer’s demand and not your prediction, unless that has been qualified. Each preceding process should then be aligned to this build schedule with minimal in-process stock being kept between processes. The ideal is that each process completes one unit and hands it to the next process in a seamless shuffle of parts. This is the “Just-in-time” process. Obviously this works well in standardised product ranges but requires some modification to suit jobbing type scenarios where products vary according to customer’s specific needs. The principles however should still be followed for each of those jobs.
We have found, our customers pursue the SER® as a vehicle to look at their business in a different way to make some small changes to reap big rewards. The Steel Efficiency Review® aims to provide recommendations to support our customer’s business and at the same time improve our product and service offer.
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