Pull systems

In a pull system it's customer demand that pulls production through the process. The Just In Time (JIT) system is a classic example. JIT is often explained as a system for keeping stock levels low, but there's much more to it than that. The power behind JIT is the customer. And the customer isn't just the end buyer; it's anyone working to add value inside the process. Each stage in production is the customer of the stage before. So the sleevemaker is the cuffmaker's customer. They order supplies from the cuffmakers, and expect top quality goods to be delivered.

In this factory, when the sleevemaker needs more cuffs they order them from the cuffmaker. They don't actually say, 'I want 50 pairs of cuffs,' but there's a system that makes it crystal clear. On a table between the two sets of workers are two painted squares. Each square holds 50 pairs of cuffs. When a square is empty it counts as an order. The cuffmakers see it, understand what it means and produce the 50 sets needed to fill the square. But all the time there are still cuffs in both squares, they don't make cuffs. They do something else to help out someone who's under pressure.

This operates all the way down through the production flow. So customer demand pulls goods through the process at every stage. There's always just enough going through to let everyone do their job properly, without there being stockpiles, shortages and bottlenecks. Everyone is working far more productively and there are lower stocks sitting around, costing money. There isn't always a table and two squares, but the principle is basically the same across all pull systems.

And companies pull their raw materials from their suppliers as well. Instead of buying huge amounts of raw materials or parts every couple of weeks, they order just enough for a day or a few hours, then order again and expect small and very fast deliveries. It isn't just the overdraft, either. There are all the storage and handling costs to consider as well. However you look at it, it's a very important saving.

Questions to UNIT 16

1. What is push system?

2. What is pull system?