Manufacturing Methodologies

There are only two basic foundations under the manufacturing enterprise. One is the Demand Driven (pull) corporation and the other is a schedule-based (push) corporation. Either can be make-to-stock or make-to-order, high volume or low volume, high tech or low tech, process or discrete production; it doesn’t matter. Neither industry nor volume should be a deciding factor in the transition from push to pull.

In schedule-based (push) manufacturing companies, production is controlled according to a scheduled quantity or batch. Quantities of fabricated parts are scheduled to completion based on their consuming (higher-level) assemblies’ start date.

The time between the start date and due date is referred to as manufacturing lead time. The unit of measure for manufacturing lead time is days; days into weeks, and weeks into months. During this lead time, the actual production work content time (minutes and hours to produce a product) is completed. You can see why it takes a schedule-based company four days to build a lot, or group, of server computers with only twelve minutes of actual machine and labor work content in each unit. The same applies to the clothing manufacturer that takes three weeks to produce a lot of jeans with only ten minutes of work content in each pair, or to the chemical manufacturer that processes the compound/batch in less than a day but takes three weeks to plan and schedule production. The vast majority of time in the part or assembly’s lead time is attributed to planning and scheduling!

Scheduled Batch and Push ERP Systems Schedule-based companies forecast their products. Based on the forecasted completion dates, they back up the manufacturing lead time of the assemblies and fabricated parts to arrive at the start date for each manufactured part or assembly in their product. The lower level part and assemblies are due before the higher-level part or assembly can be started. The scheduling process is typically managed by an ERP computer system. The computer tells production when to start and when to finish the production parts, assemblies, and final products. Production is scheduled days and weeks into the future. Production can be scattered around the plant, and computer routing transactions are reported to track production and inventory throughout the plant. These ERP scheduling and tracking systems were designed in the ’60s and ’70s and are typically still used in schedule-based manufacturing today.

It takes the schedule-based manufacturer days and weeks to produce a product that only has a few minutes and hours of work in the unit. However, inventory must be in the process during the entire manufacturing lead time. Their inventory turns are typically in the 3 to 10-turn range, and they carry inventory in the millions, and in some cases, billions of dollars. This scheduling methodology requires unnecessarily high working capital levels associated to push production and scheduling systems.

Flow Manufacturing With Pull Production and Material Systems The second manufacturing foundation is the pull production system. The design of the pull system establishes a Flow process where production steps are chained together into a continuous and balanced process. Fabricated parts or assemblies are ideally pulled thru production as a single piece Flow. The consumption of parts or assemblies triggers their replacement. Products go through the Flow process in minutes and hours of work content time, instead of the days and weeks it takes using the scheduling (push), kitting, and tracking methodology.

Pull production is easy to relate to if you have ever been in a supermarket. As an example, let’s follow the manufacturing and sale of bread to the grocery store and then to the customer. The bread sits on the shelf in the grocery store and consumers pull the bread as they need it. The bread supplier restocks the grocery shelf by filling the empty spaces where the bread was pulled by the customer. Based on the demand created at the grocery store, the bread manufacturer produces additional bread and supplies the fresh bread to the grocery store the next day, (just-in-time to the observers and philosophic bench markers). Since the demand and mix of bread products can change every day, the bread manufacturer will carry some raw material to make the various bread products that they sell.

If you ask a bread manufacturer what bread will be produced tomorrow or next week, their answer would typically be, “We have no idea. It depends on what the customers are demanding and pulling.” Their production is designed to be a Flow pull process that can easily change volume and mix every day in the direction of customer demand. They carry minimal finished goods, but they also carry some raw material. Their inventory turnover would be extremely high, and they would have little need for an ERP scheduling system to control and track production. The natural result of the pull manufacturing technology is high-inventory turnover and minimal working capital in process or in finished goods. Welcome to DFT and Demand Driven Flow manufacturing.

6151 Lake Osprey Drive, Suite 300, Sarasota FL 34240

Demand Flow Technology, Presented by John R. Costanza

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