Leveled pull system: adaptability for uncertain times
The word of the moment is uncertainty. Business environments were already showing ever faster dynamics of change. With the pandemic, volatility accelerated. Companies face a real roller coaster in terms of predictability. Months alternating between shutdown and restart; optimism and frustration. Some sectors growing as never before; others with their ways of operating nearly extinct, requiring drastic changes in “what” to offer the market and “how.”
After a long period of low production, several sectors suffered, or are still suffering at the start of this year, from a shortage of inputs, the result of suppliers’ inability to meet the resumption of demand in some areas.
Whenever these disruptions occur in supply chains, discussions resurface about how to organize production: with the traditional view of a push system, trying to protect oneself with large batches and more inventory? Or by reinforcing a pull system and just-in-time (JIT) production?
This discussion is important not only in production environments, but also in service companies, where the push system is less visible but also occurs through processing that is held back until specific dates and through mismatches in pace between areas.
The lean philosophy clearly embraces JIT, which is one of its pillars. However, incredible as it may seem, after so many years of this system being used with results in the most varied environments, many companies still use the push system wholly or partially.
It is therefore worth recalling the differences between push and pull systems and the importance of the latter, especially in scenarios of growing uncertainty.
The push system is one in which the organization processes large batches of services or products, usually at maximum capacity, based on a demand forecast, without taking into account the real variations of the next process.
That is where the danger lies: the difficulty of forecasts, which are increasingly uncertain. Imagine a company that has hundreds of product variations within a given category.
The growth of the category as a whole did show a certain degree of forecast accuracy (today not even that), but the insanity of the push system is trying to “guess” how much of each specific type of product will be sold and, worse, ordering those expected quantities to be produced in large monthly batches.
Of course this never works, generating high inventories of products that sold less than forecast and losing sales of others that ran out. Part of the production capacity was wasted making products that were not the ones customers wanted. The response of the push-system culture is to increase inventories even further, whether of finished goods, work in process or raw materials, generating additional waste.
These ills of the push system have always been known, but it is important to remember them. If these difficulties already occurred in markets with some predictability, imagine them in the face of growing uncertainty!
The lean philosophy, on the other hand, adopts completely different assumptions through JIT production, which has three elements.
The first of these elements is the concept of takt time, that is, the pace at which the customer demands products of a given family. More than a forecast, it is a commitment between sales and production. And it serves mainly for planning production capacity and for aligning the paces of manufacturing, material movement and delivery throughout the value chain, inside and outside the company.
Continuous flow is the second element, which means production in flexible cells that make different types of products of that family, in small batches and with short lead times. This is a fundamental change, achieved through the application of several lean tools, such as quick setup, which give the system the flexibility to respond promptly to variations in demand.
Still within JIT, the third element is the pull system, through which a process signals to its suppliers exactly what it needs, based on the actual consumption of its customers, internal or external. The pull system concept is complemented by the principle of leveling, or heijunka, which seeks to align mix and volume, providing stability and high productivity.
These are technical concepts, widely available in the literature (for example, in the book Creating Level Pull, by Art Smalley), and they can be applied in any business environment.
The essence is quite simple: something is only produced or moved if actual consumption occurs. This applies to replenishing finished goods, between processes and in the supplier chain. In this way, the system adjusts to real variations in demand and is much closer to what its customers want.
Of course, sudden swings in the economy as a whole will also affect companies that adopt pull and level production, but their ability to adapt to change will be much greater and will happen more quickly. This is the essence of what can be called an “agile” company.
We learn every day that unexpected and rapid social changes radically transform markets. Degrees of uncertainty increase on a daily basis. Audiences diversify, transform themselves and change their needs, preferences and desires at speeds never seen before.
Thus, being an increasingly “adaptable” organization, in every sense, is one of the most strategic qualities one can have.
Perfecting a pull and level system for producing and delivering products and services, along the entire supply chain, is undoubtedly a key element for this goal. And it has become even more important in current times.
