Scheduling of Push and Pull System

PEMP EMM2506
Push and Pull Scheduling
Lecture by :
Prof. P.S.Satish
M.S Ramaiah School of Advanced Studies - Bangalore 1

PEMP EMM2506
Push & Pull Scheduling

Contents
• What is push & Pull ?

• Difference between these two ?
• When to use what ?
• Case studies

PEMP EMM2506
Effective SCM Pre-requisites

• Efficient integration of suppliers, manufacturers,
warehouses, and stores.
• Coordinating activities across the supply chain
• Improve performance through

• cost reduction,
• increasing service level,
• reducing the bullwhip effect,
• better utilization of resources
• effectively responding to changes

PEMP EMM2506
Challenges can be met by Integration
– Linking front-end customer demand and back-end

production and manufacturing portion of the supply chain.
• Various supply chain integration strategies:

– Push, pull, push–pull strategy.
– Matching products and industries with supply chain strategies.
– Demand-driven supply chain strategies.
– Usage of the Internet on supply chain integration.

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Push & Pull concept

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Push and Pull Systems

Machines
1 2 3 4
Parts Orders
6
Source : : T.G.Gutowski
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Push system
Time = 0
Time = 1
Time = 2
Economical order quantity
is produced when order Time = 3
arrives at the front
7
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Pull Systems
Order is at the end

and is pulled.
Small inventory in
between for flow
8
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Comparison – Push & Pull

If the process time per part is “t”, and the batch
size is “n”, & batch going through “N” steps.
To deliver one part it takes;
“Nnt” time from a push system

and
“t” for a pull system
+ set up cost & transportation delays
9
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Concept of Push system

Procurement + manufacture + Delivery (manufacturing lead time)
Customer order cycle
Lead time gap
Customer order cycle is the time between customer order

and receipt by him
Normally he wants this to be reduced. But to reduce lead
time gap, supplier wants this to be more. How is it
managed ?

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Concept of push system

• To reduce lead time gap companies build inventory by
forecasting the demand
• By mistake in fore-casting,they end up either high or low
inventory
• When both are matched there is no need of inventory or
forecast
• The company has 2 choice to reduce lead time :
– Reduce manufacturing lead time (through put time)
– Increase customer order cycle

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 Reducing through put time :
 Eliminate bottleneck
 Reduce set up time
 Reduce cycle time
 Eliminate waste of waiting, movement etc.
 Increasing customer order cycle :
We can not ask customer to wait more. To
check for early visibility of requirement like
info on POS
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• Customer order quantity may not reflect the
actual consumption
• Order cycle is visible and consumption is not
visible.
• The customer consolidates consumption into
a single order ( economic order quantity or to
suit a pallet/box). This happens at each point
of ordering causing uneven demand ( Bull
whip)
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Production control system
• The purpose of production control system is

to ensure that products are made in the
required quantities,at the right time,with right
quality keeping least non-value added
activities

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Pull System
• Taiichi Ohno of Toyota in 1950s got inspired
by supermarkets in America
• He observed that Americans instead of
stocking at home buy from supermarket as
needed by frequent visits
• Supermarkets would replenish things as and
when sold avoiding large inventories
• He extended the concept to Industry which
came to be known as pull system
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Pull System in SC
• Applied to that portion of the supply chain where
demand uncertainty is high
• Production and distribution are demand driven
• Low Inventory
• (POS) data comes in handy when shared with
supply chain partners
• Decrease in Lead time
• Challenge to implement
• Problems are exposed – creates urgency
• Visible indication of problem – production stops
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Pull System in SC
Example :
• When child wants to drink milk, it goes to Refrigerator
• Mother takes care that there is always minimum amount of
milk in Refrigerator
• When the quantity of milk goes below a level mother buys
milk in specified quantity to replenish
• She should not worry in normal situation except when
Child’s friends come together to drink together or when Milk
is not available for some reason
• Above 2 stage concept can be extended to any number of
stages

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“Pull” system to avoid overproduction

• Milk example – weekly batch or daily purchase?
• Next purchase triggered when you start using the only bottle
of milk you have.
• Not an example of zero-inventory, but still a pull system.
• Because of demand uncertainty and lead-times, in many
cases inventory is necessary to allow for smooth production.
• Pull system uses the supermarket model or keeping a small
amount in stock. As soon as customers take products away,
they are replenished.
• Each demand instance triggers a part being pulled from
upstream.
• The triggering mechanism is called “Kanban” which means
cards, signboard or a poster.
18
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Pull system in SC
• In multi stage productions, small buffer as
inventory is kept in between to offset small
imbalance between them in terms of
production rate or demand rate
• Typically this buffer is a standardized size of
containers
• There will be flow of materials and order
signal information

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Pull System
• One of method to trigger a pull is kanban
• Kanban means ‘sign’ or ‘instruction card’ in
japanese
• Options for kanban
– Kanban cards
– Kanban squares marked on floor
– Container system – Empty container signals
– Colored golf ball as used in Kawasaki – Colored
ball tells another station which part to make
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Pull system
OP=3 FG
OP=1 OP=2
Kanban Flow
Material Flow

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Pull system
• Kanban can be used
 Within manufacturing facility

 Between manufacturing facilities
 Between manufacturer and external suppliers

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Pull System
• Kanban with external Suppliers
What factors to be reckoned in establishing

Kanban with external suppliers ?

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Pull system
• In Pull many varieties of product need to be
handled.
• For this, set up time should be as less as
possible. SMED (Single minute exchange
Die) word is used for this.
• 2 types in SMED – Internal (change when
machine is stopped) & external ( changes
when machine is running)

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Pull System
• Pull production is also called stockless
production though some stock is inevitable.
Efforts are to minimise this
• Why do you think some stock is required in

between operations ?

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Pull System
• Upstream
Flow from Customer end to supplier end
• Downstream
Flow from supplier end to customer end

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Types of Pull
• ETO (Engineer To Order)
– Architectural marvels
– Special air crafts
• BTO (Build To Order)
• MTO (Make To Order)
• ATO (Assemble To Order)
– computers by Dell Inc.
– production of sports bicycle by National Bicycle
Industrial Co., Ltd.

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Push system
• Applied to that portion of the supply chain where demand
uncertainty is relatively small
• Production & distribution decisions are based on long term
forecasts
• Based on past orders received from retailer’s warehouse
(may lead to Bull Whip effect)
• Inability to meet changing demand patterns
• Large and variable production batches
• Excessive inventories due to the need for large safety stocks
• less expenditure on advertising than pull strategy
• Problems can be hidden
• Visible indication of problem - Inventory
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What is Push and Pull?

• MRP is the classic push system. The MRP system
computes production schedule for all levels based on
forecasts(Demand forecasting) of end items sale. Once
produced, subassemblies are pushed to next level
whether needed or not.
Typical PC Manufacturing
• JIT is the classic pull system. The basic mechanism is that

production at one level only happens when initiated by a
request at the higher level. That is, units are pulled
through the system by request.
Dell’s PC Manufacturing

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Comparison-MRP & JIT

• Main Advantage of MRP over JIT: MRP takes
forecasts for end product demand into account. In
an environment in which forecast can be done
accurately, MRP has a substantial advantage.
• Main Advantage of JIT over MRP: JIT reduces

inventories to a minimum. In addition to saving
direct inventory carrying costs, there are substantial
side benefits, such as improvement in quality and
plant efficiency.

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Push versus Pull

Push – Producer centric
Tactics :
• Trade show promotions to encourage retail
demand
• Direct selling to customers in showrooms or
face to face
• Negotiation with retailers to stock your
product
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Push versus Pull

Pull – Customer centric
Tactics :
• Advertisement, media promotion and sales
promotion
• Word of mouth referrals
• Customer relationship management

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Push Vs. Pull Scheduling in SCM

• Push Scheduling
- Traditional Approach
- Move the Job when finished
- Creates Excessive Inventory
• Pull Scheduling
- Coordinated Production
- Driven by Demand( Pulled thru system )
- Extensive use of visual triggers

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MRP=Push
Advantages :
 Managers can control things
 Economies of scale in purchase and production
 Can plan better
Disadvantages :
 Can lead to large Inventories
 Can generate scrap till quality issue is identified
 Needs maintenance of Database

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JIT=Pull
Advantages
 Limited & known final Inventory
 Worker consume time & material on what is needed
 Feedback on quality or stoppage is given
immediately
 Possible co-operative problem solving
Disadvantages
 Every job is a high rush order
 Balanced system must be in place
 Set up time to be of high focus
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Finished
Demand Customer products,
Pull Demand
forecast level
D1 D4
D2 D3
Finished
RDC1 RDC2 products
Factory Warehouse
Finished
products
Factory Warehouse WIP
Sub
Assemblies
Product
Push Vendors/Suppliers Components

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Push-Pull Scheduling in Supply Chain
A Hybrid Approach in Todays

Scenario

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Push-Pull Supply Chain
• Initial Stages are operated in a push based manner whereas

the remaining stage are operated in a pull based manner.
• Interface between the push based stage and pull based stage
is known as the push-pull boundary

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Supply Chain Timeline
Push-pull supply chains

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Supply Chain Processes : Cycle View
Customer

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General Framework for Time Line
• Make a part of the product to stock – generic product
• The point where differentiation has to be introduced is the

push-pull boundary
• Based on extent of customisation, the position of boundary

on the timeline is decided

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Matching Supply Chain Strategies with

Products
Push-pull supply chains

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Characteristics of Push & Pull in Supply
Chain
Push Pull
Objective Minimize Cost Maximize Service
Level
Complexity High Low
Focus Resource Responsiveness

Allocation
Lead Time Long Short
Processes Supply chain Order Fulfillment

Planning
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Implementing a Push–Pull Strategy
• Achieving the appropriate design depends on

many factors:
– product complexity
– manufacturing lead times
– supplier–manufacturer relationships.
• Many ways to implement a push–pull strategy
– location of the push–pull boundary.
• Dell locates boundary at the assembly point
• Furniture manufacturers locate the boundary at the
production point

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Impact of the Push-Pull Strategy
• Push portion
– Low uncertainty
– Service level not an issue
– Focus on cost minimisation.
– Long lead times
– Complex supply chain structures
– Cost minimisation achieved by:
• better utilising resources such as production and
distribution capacities
• minimising inventory, transportation, and production
costs.

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Impact of the Push-Pull Strategy
• Pull portion
– High uncertainty
– Short cycle time
– Focus on service level.
– Achieved by deploying a flexible and responsive supply
chain
– Order-fulfillment processes are applied

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The Impact of Lead Time
• Longer the lead time, more important it is to

implement a push based strategy.
• Typically difficult to implement a pull strategy when

lead times are so long that it is hard to react to
demand information.

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Impact of Lead Time
Matching supply chain strategies with products: the impact of

lead time and demand uncertainty
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Push or Pull based on products

• Functional products e.g.soup,milk, tyres etc.
oPredictable demand
oLow profit margin
oSlow product technology clock speed
oAverage stock out low
oVarieties low
oForecast error - low

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• Innovative products e.g.Fashion items, High-
tech products,cosmetics etc.
oUnpredictable demand
oHigh profit margin
oFast product technology clock speed
oAverage stock out high
oVarieties high
oForecast error - high

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Which supply chain strategy works best here ?
Functional products – push

Focus : efficiency,cost reduction,supply chain
planning
Innovative products – pull
Focus : Responsiveness,maximize service level and
order fulfillment

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Cases

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Grocery Industry
• Typical supermarket employs a push-based strategy
• Peapod was built on pure pull strategy with no inventory and
no facilities.
– Significant service problems with high stock-out rates
– Changed to a push–pull strategy by setting up a number of warehouses
– Warehouse covers a large geographical area
• Aggregated demand
• Other challenges:
– Reducing transportation costs
– Short response time
– Low customer density
• Products having low demand uncertainty were treated with
– high economies of scale in transportation cost
– push-based strategy more appropriately.

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Book Industry
• Initial model of Amazon.com a pure pull system with no
warehouses and no stock.
– Ingram Book Group supplied most of Amazon’s customer demand.
• As volume and demand increased:
– Amazon.com’s service level was affected by Ingram Book’s
distribution capacity
– Using Ingram Book in the first few years allowed Amazon.com to
avoid inventory costs but significantly reduced profit margins.
• As demand increased distributor no longer required.
• Current Amazon.com:
– Several warehouses around the country where most of the titles are
stocked.
– Inventory at the warehouses is managed using a push strategy
– Demand satisfied based on individual requests, a pull strategy.
• Slow moving low volume books and CDs are not stocked at
Amazon distribution centers
– Amazon orders those when demand arrives.
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Session Summary
• Concept of Push & Pull production explained
• influencing the make or buy decision has been explained.
• Cases with respect to Push-Pull supply chain have been

discussed.

PEMP EMM2506
Push & Pull scheduling

References
1. Operations & Supply chain Management –
Richard B.Chase ,TMH publication,12th
edition
2. Operations Management – B.Mahadevan,
pearson publication,2nd edition

Scheduling of Push and Pull System

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PEMP EMM2506

Push and Pull Scheduling

M.S Ramaiah School of Advanced Studies - Bangalore 1

Push & Pull Scheduling

• What is push & Pull ?

M.S Ramaiah School of Advanced Studies - Bangalore 2

Effective SCM Pre-requisites

• Coordinating activities across the supply chain

• Improve performance through

M.S Ramaiah School of Advanced Studies - Bangalore 3

Challenges can be met by Integration

– Linking front-end customer demand and back-end

• Various supply chain integration strategies:

M.S Ramaiah School of Advanced Studies - Bangalore 4

Push & Pull concept

M.S Ramaiah School of Advanced Studies - Bangalore 5

Push and Pull Systems

Order is at the end

Comparison – Push & Pull

“Nnt” time from a push system

Concept of Push system

Customer order cycle

Lead time gap

Customer order cycle is the time between customer order

M.S Ramaiah School of Advanced Studies - Bangalore 10

Concept of push system

M.S Ramaiah School of Advanced Studies - Bangalore 11

Concept of push system

Concept of push system

Production control system

• The purpose of production control system is

M.S Ramaiah School of Advanced Studies - Bangalore 14

M.S Ramaiah School of Advanced Studies - Bangalore 17

“Pull” system to avoid overproduction

M.S Ramaiah School of Advanced Studies - Bangalore 19

M.S Ramaiah School of Advanced Studies - Bangalore 21

 Within manufacturing facility

M.S Ramaiah School of Advanced Studies - Bangalore 22

What factors to be reckoned in establishing

M.S Ramaiah School of Advanced Studies - Bangalore 23

M.S Ramaiah School of Advanced Studies - Bangalore 24

• Why do you think some stock is required in

M.S Ramaiah School of Advanced Studies - Bangalore 25

M.S Ramaiah School of Advanced Studies - Bangalore 26

M.S Ramaiah School of Advanced Studies - Bangalore 27

What is Push and Pull?

• JIT is the classic pull system. The basic mechanism is that

M.S Ramaiah School of Advanced Studies - Bangalore 29

Comparison-MRP & JIT

• Main Advantage of JIT over MRP: JIT reduces

M.S Ramaiah School of Advanced Studies - Bangalore 30

Push versus Pull

Push versus Pull

M.S Ramaiah School of Advanced Studies - Bangalore 32

Push Vs. Pull Scheduling in SCM

M.S Ramaiah School of Advanced Studies - Bangalore 33

M.S Ramaiah School of Advanced Studies - Bangalore 34

Factory Warehouse WIP

M.S Ramaiah School of Advanced Studies - Bangalore 36

Push-Pull Scheduling in Supply Chain

A Hybrid Approach in Todays

M.S Ramaiah School of Advanced Studies - Bangalore 37

Push-Pull Supply Chain