Unit 1

Pull and Push Strategy

Pull production systems differ from push production systems in that pull systems produce based on what
the customer orders, whereas push systems produce based on a best guess about what the customer will
order.

Push Strategy Production System:

Push production systems are typically used when a business feels safer if it stocks inventory ahead of
when the customer orders. Many businesses don’t believe they can produce customer orders quickly
enough to fill them as they come in, so they produce their goods up front and hope to sell them all.

Push Strategy Production System:

Pull systems, on the other hand, are typically used when a business knows it can produce what the
customer orders quickly enough to maintain good service levels. Then the business does not have to guess
how many orders will be placed. They can simply wait until they get orders to begin production. This
reduces wasted inventory and allows the business to operate more efficiently while satisfying customer
demands.

Just in Time Manufacturing System

“Just in Time Management is a production management system in which goods are received from
supplier only as and when required”.
Just-in-time (JIT) manufacturing, also known as just-in-time production or the Toyota Production System
(TPS), was first developed and perfected within the Toyota manufacturing plants by Taiichi Ohno, is a
methodology aimed primarily at reducing cycle times of various activities within production system as
well as response times from suppliers and to customers. JIT is a common inventory management
technique and type of lean methodology designed to increase efficiency, cut costs and decrease waste by
receiving goods only as they are needed. Its origin and development was in Japan, largely in the 1960s
and 1970s.

JIT is seen as a more cost efficient method of maintaining stock levels. Its purpose is to minimize the
amount of goods you hold at any one time without compromising the production volumes. And this has
numerous advantages such as less space needed, with a faster turnaround of stock; we don't need as
much warehouse or storage space to store goods. Less stock levels also means lesser investment.

Some of the advantages of JIT:

1. JIT aims at keeping the stock holding to bare minimum leading to much lower inventory cost and
much lower storage and warehouse cost.
2. Minimum inventory at all stages of the supply chain means lesser expiry and lesser wastage for
the organization
3. Lower inventory means lower investment for the same level of production. This reduces working
capital investment to a greater extent. This in turn leads to better ROI and profitability for the
organization
 4. JIT manufacturing aims at producing items based on demand. Hence all items produced will be
sold. So no obsolete items in the finished goods section. It helps the organization to adapt well
to any changes in product specification from the market without the fear of having any kind of
waste and obsolete stocks.
5. In JIT, immense focus is on quality of the final product and companies work to achieve “first
time right” for all goods.

Disadvantages of JIT (Just-in-Time):

1. IT production can be very sensitive to any kind of error. Since bare minimum inventory levels are
maintained, there is no room for any kind of error.
2. JIT production will not be able to adapt well to sudden increase in volume of demand from the
market, since the inventory levels are maintained at much lower level.
3. Just-in-time manufacturing is a philosophy which is achieved only when all the parties involved
in the whole supply chain will work in great tandem and coordination. JIT may fail sometime if
any of the suppliers will fail to fulfil their obligations and respond to the requirements in a
timely manner.
4. JIT focuses on lean inventory; hence there is not much buffer in stock levels. For any reason, if
there is any kind of failure that happens in the supply chain, that can lead to sudden downtime
in production leading to huge losses for the organization.

KANBAN SYSTEM

The Japanese word “kanban”, meaning “visual board” or a “sign”, has been used in the sense of a
process definition since the 1950s. It was first developed and applied by Toyota as a scheduling
system for just-in-time manufacturing. On the other hand, the capitalized term “Kanban” is known
and associated with the emergence of the “Kanban Method,” which was first defined in 2007.

“KANBAN is a workflow method for defining, managing & improving services that deliver
knowledge work.”
KANBAN helps to visualize the work as it provides transparency, improves the efficiency and also
provides continuous improvement in the process.

Its literal meaning is that of a flag or sign, when you see that flag you know that it is time to
manufacture the next part. Kanbans can take many forms but in most production facilities they
will use Kanban cards or bins to control the process, although there are no limits to how you can
control and design kanbans; only your imagination.

How Does Kanban Pull Production Work?

In its simplest format a kanban is just a signal back to the proceeding operation to make the next part.
So for a simple process that has single piece flow it would operate just as the simple diagram below:
Of course production is rarely as simple as this. Many processes just could not manufacture 1 product at
a time economically and quickly enough even with rapid change overs. We also have many production
lines making multiple products for the customer. All of these things complicate things and require a little
more thought to be put into designing the system.

Kanban Rules

 The later process collects product from the earlier process.

 The later process informs the earlier process what to produce.
 The earlier process only produces what the later process needs.
 No products are moved or produced without Kanban authority.
 No defects are passed to the later process.

Kanban Cards

These are usually simple cards or sheets of paper that are attached to a batch of material. Usually there
are just two or three cards for each product in the system although there may be more if you have to
handle larger batches of if the product size itself is large. These cards will typically detail what the product
is, where it is used, and the quantities that should be there. When a process finishes using the materials
to which the Kanban card is attached the card is returned to the previous process. This is then used as
authority for that previous process to manufacture replacement parts. In multiple card systems, the
process will typically have to wait for a set number of cards to be returned before they start to
manufacture the next batch.

Kanban board

A Kanban board is one of the Kanban method's key components and is where you visualize all work items.
It should be divided into a minimum of 3 columns – Requested, In Progress, Done, representing different
process stages.
 Lean Manufacturing System

Lean manufacturing is a methodology that focuses on minimizing waste within manufacturing systems
while simultaneously maximizing productivity. Waste is seen as anything that customers do not believe
adds value and are not willing to pay for. Some of the benefits of lean manufacturing can include reduced
lead times, reduced operating costs and improved product quality.

Lean manufacturing, also known as lean production, or lean, is a practice that organizations from
numerous fields can enable. Some well-known companies that use lean include Toyota, Intel, John Deere
and Nike.

Five principles of lean manufacturing

1. Identify value from the customer's perspective. Value is created by the producer, but it is defined
by the customer. Companies need to understand the value the customer places on their products
and services, which, in turn, can help them determine how much money the customer is willing
to pay.
2. Map the value stream. This principle involves recording and analyzing the flow of information or
materials required to produce a specific product or service with the intent of identifying waste
and methods of improvement. Value stream mapping encompasses the product's entire lifecycle,
from raw materials through to disposal.
Companies must examine each stage of the cycle for waste. Anything that does not add value
must be eliminated. Lean thinking recommends supply chain alignment as part of this effort.
3. Create flow. Eliminate functional barriers and identify ways to improve lead time. This aids in
ensuring the processes are smooth from the time an order is received through to delivery. Flow
is critical to the elimination of waste. Lean manufacturing relies on preventing interruptions in the
production process and enabling a harmonized and integrated set of processes in which activities
move in a constant stream.
 4. Establish a pull system. This means you only start new work when there is demand for it. Lean
manufacturing uses a pull system instead of a push system. Lean manufacturing is based on a pull
system in which nothing is bought or made until there is demand. Pull relies on flexibility and
communication.
5. Pursue perfection with continual process improvement, or Kaizen. Lean manufacturing rests on
the concept of continually striving for perfection, which entails targeting the root causes of quality
issues and ferreting out and eliminating waste across the value stream.

The eight wastes of lean production

The Toyota Production System laid out seven wastes, or processes and resources, that don't add value
for the customer. These seven wastes are:

 unnecessary transportation;
 excess inventory;
 unnecessary motion of people, equipment or machinery;
 waiting, whether it is people waiting or idle equipment;
 over-production of a product;
 over-processing or putting more time into a product than a customer needs, such as designs that
require high-tech machinery for unnecessary features; and
 Defects, which require effort and cost for corrections.

Production Function
The production function of an enterprise is an association between inputs utilized and output
manufactured by an enterprise. For various quantities of inputs utilized, it gives the utmost quantity of
output that can be manufactured.
Four major factors of production are –
1) Entrepreneurship (H),
2) Labor (P),
3) Land (L),
4) Capital (K).
They form an integral part of inputs in this function.
 The production function is a mathematical function stating the relationship between the inputs
and the outputs of the goods in production by a firm.
 Entrepreneurship, labor, land, and capital are major factors of input that can determine the
maximum output for a certain price.
 Analysts or producers can represent it by a graph and use the formula Q=𝒇(𝑳, 𝑷, 𝑲, 𝑯)