March 1, 2005
By Darren Dolcemascolo
Toyota believes that level pull is one of the most important elements of its Toyota Production System (TPS). However, this key element is lacking in the typical American “lean” factory. The reason is that successful pull systems, though seemingly simple in concept, are often difficult to achieve in practice. The question this article will attempt to answer is, “What are the generic steps to implementing level pull in a factory?”
Begin by determining if you are ready for level pull. Many lean proponents promote level pull before it is feasible; this is a sure recipe for failure. A proper foundation for level pull is process stability; we generally recommend 90% or better uptime for individual processes. With too many unpredictable processes, implementing level pull can be a great source of frustration. One should not give up on level pull in this case; however, one should first go back to value stream mapping, identify those issues, and develop and implement a plan to create a good foundation for level pull. Generally, you should have implemented continuous flow and some supermarket pull systems prior to attempting true level pull.
Next, decide which products should be make-to-stock v. make-to-order, and then decide how much of each item to hold in finished goods (if any). This decision is based on the distribution of demand, degree of customization, and internal lead times. Generally, begin by breaking products into high, medium, and low in terms of units demanded. Then, examine the options:
Option A: Hold FGI for all products. This generally requires the most space and the most inventory, but the customer lead time would be the shortest. This would likely be impractical for those of you that have large numbers of finished goods sku’s.
Option B: 100% Make to Order. This is the best case possible; however, this is not feasible for most companies due to internal lead times and variation of customer demand.
Hybrid: Hold a mix of FGI and make-to-order. We usually recommend that the higher volume products be held in inventory; this results in a moderate amount of FGI.
For those products that are in finished goods, the quantity of finished goods is calculated as follows: FGI = Cycle Stock + Buffer Stock + Safety Stock where:
Cycle Stock: Average Daily Demand X Replenishment Lead time
Buffer Stock: Demand Variation as a % of Cycle Stock
Safety Stock: Safety Factor as a % of (Cycle Stock + Buffer Stock)
Then, identify the point or points at which you should schedule, often called the “pacemaker process.” This should be familiar to most of our readers; it is a key step in the process of value stream mapping. Therefore, if you are creating level pull, you should have already done this. However, for those of you opting for mixed FGI and make-to-order, there are often two scheduling points in a given value stream. This is because for make-to-stock products the scheduling point is often the last step in the process (e.g., final assembly, final packaging); however, for make-to-order process the scheduling point must be further upstream.
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