Criteria for determining the push – pull boundary - CiteSeerX

Criteria for determining the push – pull boundary Kartik Ramachandran, Larry Whitman & Ashok Babu Ramachandran Department of Industrial and Manufacturing Engineering Wichita State University, Wichita, Kansas. 67260- 0035, USA. Abstract Manufacturing organizations operate in an environment where there exists a tradeoff between two different control strategies; Push and Pull. The objective is to develop a methodology that determines stages in a production system that should work in pull and those that should work in a push environment.

Keywords: Push, Pull, Hybrid, Methodology, Boundary 1.0 Introduction The million-dollar question for any production manager today is the selection between a push and a pull production system. Push and pull systems determine when and where to move material in a production process. A push system is characterized by a make to stock environment and a pull system is characterized by make to order. An appropriate system that would cater to the requirements of the company has to be selected. A distinction is made between push and pull production systems based on the trigger point. The push system is based on customer orders, while a pull system is based on forecasts. In short, push systems can be compared with MRP systems that utilize past information to forecast the future customer demands. In the case of a pull system the difference between the safety stock point and the state of current inventory is similar to just-in-time which controls the order quantities. The block diagram in figure 1 and 2 gives a simple working of a push and a pull system. The fluctuations in inventory levels in a push system are affected by forecasting errors, while the fluctuations in customer demand affect the pull system. Most of the production problems can be solved by using an appropriate push and/or pull system. It is evident that neither one is always better than the other. In fact, a hybrid approach is more superior, depending upon the manufacturing system. However, it is not known whether any particular characteristics of the manufacturing system affect the performance of different strategies. The main objective of a hybrid system is to combine the best features of both worlds, rather than differentiating between the two. There is an overwhelming need to develop integrated manufacturing processes, which can correspond flexibly to market demands and still maintain high productivity. This paper proposes a methodology to determine the push - pull boundary in a manufacturing system.

2.0 Literature Review In the 1990s, companies came up with new manufacturing philosophies that enabled them to reduce costs and compete in volatile markets. Manufacturing operations need to cultivate capability to deal with unanticipated events. In other words, manufacturing operations need to be agile. One can analyze flexibility in manufacturing operations in three levels: firm, function and operations. “Flexibility is always studied in context of resources or labor but never as manufacturing planning and control” [11]. “In a hybrid push/pull system the system is operated in a push type fashion that uses forecasts for the initial period and then in a pull type fashion that uses the replenishment level for the remaining period” [6]. By considering a specific demand model and a forecasting model in which some levels of variance of demand and forecast errors are defined, clear behaviors of inventory for push, pull and hybrid systems have been made. When the variance of the total forecast error is greater than the variance of the total demand itself, pull type systems, which utilize the real demand, are effective in minimizing variance in the inventory levels. The variance of production level on pull type systems is the same as the variance of total demands. “In the reverse case, push type systems, which utilize the forecasts of demand, are effective but the variance of production level

increases”[6]. Due to the variability in forecasting errors a hybrid push/pull type system with a minimum push horizon is effective in minimizing the level of variance of WIP inventory at the period end. The objective of these systems is to get the required part to the appropriate place at right time. “It combines planning and scheduling strategies into a single structure” [7]. The hybrid system incorporates the best planning features of MRP along with the finest execution features of JIT by focusing on a cellular layout. When operating with a hybrid approach, a tradeoff arises as to the extent that the product-oriented line gains from the product-specific features to reduce swapping and production time. The extent of capacity built up in a flexible system should be able to manufacture a broad range of products. In a hybrid factory products are manufactured partly in a process-oriented flow and some in a product-oriented flow. Both of these function independently. The strategic justifications for hybrid factories depend on the production requirements of that particular company and that particular product it makes. In a product-oriented system, resources are allotted based on the customer order and the importance of the customer. In a process-oriented system, the tracking and controlling of the resource requirements, and other aspects are difficult in a company. In this condition, the upstream stages of the line operate in a push based environment, whereas the downstream stages operate under a pull based environment.

Information Flow

W/S 1

W/S 2 WIP

W/S 3

Customer demand forecast

WIP Material Flow MRP schedule triggers production

Figure: 1 Push System

Information Flow Withdrawals trigger

W/S 1

W/S 2 WIP

production

W/S 3 WIP Material Flow

Figure: 2 Pull System

Customer Demand

3.0 Methodology 3.1 Product: In this case we consider a hypothetical company that manufactures office partition panels. The general make up of these panels involves a framework of horizontal and vertical components. Further it has an aluminum extrusion on the top and wooden panels fitted to the frames. It further consists of miscellaneous accessories like nuts, bolts and clips. These frames are available in different sizes, which include three dimensions of height and width. These frames are fabricated as per customer requirement. The bill of material for our product is seen in figure 3 and the process flow can be seen in figure 4. The operations involved in manufacturing the horizontal and vertical components involves punching, bending and drilling. These horizontal and vertical components are manufactured in optimal lengths that are then cut to size as per customer requirement. Then these components are welded on a CNC welding machine, after which they go for pre-treatment. After pre-treatment the last operation involves powder coating. The aluminum trims, the wooden panels and miscellaneous accessories are purchased from different suppliers. Finally, the minor assemblies take place after which the frames are packed and delivered to the customer. The production schedules were erratic and a big chunk of capital was tied up in inventories. After conducting a detailed analysis the four prime problems that surfaced were a) lead times b) machine loads c) raw material inventory and d) work-in-process. The proposed solution to these problems involved implementing an integrated push-pull system.

Office Partitions

Frames

Horizontal Member

Level 0

Wooden panels (OS)

Medium density Board (OS)

Vertical Member

Aluminum Trims (OS)

Level 1

Aluminum (OS)

Clips (OS)

Accessories (OS)

Level 2

OS – Out-sourcing

Figure: 3 Product Structure

3.2 Criteria for determining the boundary: This production control system, which combines the benefits of both push-type and pull-type systems has its own pros and cons. We propose an integrated system that combines the merits of customization point, bottleneck resources and product structures. In a push system the information about customer orders are visible to all production stages, whereas in a pull system they are processed to the finished goods inventory stage.

Raw-Material

Push-Pull boundary (ABC analysis)

Press-Shop

Drilling Shop

Push-Pull boundary (Customization point) Cutting

CNC - Welding

Push-Pull boundary (Bottleneck entity) Pre-Treatment

Powder Coating

Assembly

Figure: 4 Process Flow for Fabrication of Frames The customization point is defined as that point from where the production of the product is continued as per the customer’s specification. An incorporation of push and pull implies that a part of the lead-time is pushed while the other is pulled. This reduces the waiting time of a customer order and as the value added to the product in the earlier stage is limited, the cash value of the work in process inventory is reduced. The next consideration is that of a bottleneck. A stable bottleneck normally means a stable lead-time to the point of delivery. If the bottleneck is the first resource then the remaining production stages need to be precisely planned for over and under capacity. This implies a push strategy from the bottleneck onwards. The junction between the two production environments need buffer for smooth operations. For the push pull distinction to be clear-cut the bottleneck needs to be fixed, a moving bottleneck would cause complexities. In view of the product structure, a complex part of the structure can be pushed, whereas the balance can be pulled. It would be worthwhile to push the critical part of the structure and pull the balance. In a make to order (MTO) situation the delivery lead-time relies upon the juncture where the customized features need to be incorporated in the product. “A push system would perform all right in this situation, while a pull system needs a modular product or else the delivery lead-time would increase”[9] Nevertheless taking advantage of the product structure and the location of the bottleneck resources, a section of the material flow can be pulled. 3.2.1 Customization Point: The customer order point is the stage where the production environment shifts from make- to -stock to make- toorder. The total lead-time in the manufacturing of a product can be split up into two parts: a customer specific part and a non-customer specific part. The variance pertaining to the two parts is made at the customization point. The customization point is located in a manner that would maximize the customization. This implies the introduction of a stocking point at the customization point, in order to decouple the manufacturing of common items from the customized items. An incorporation of push and pull systems implies that one component of the lead-time is pushed and the other component is pulled. The point of assimilation at the customization point can correspond to the maximum part of capital tied up in inventories. Thus, it is natural to use the customization point as the center of attention from a planning point of view.

In our case, the size of the frames depends on the customer orders. As the customer places the order, the marketing department forwarded the requirement to the manufacturing department. The horizontal and vertical components are manufactured as per the forecasts received from the marketing department. From here, the order is transferred to the manufacturing department; these horizontal and vertical components are taken from stock and cut to the customer requirement. Then, they follow the next sequence of operations. Therefore, up to the cutting operation we operate in a push-based environment, and from the cutting operation on we follow a pull-based environment. Hence, by considering the customization point we determine the push-pull boundary. 3.2.2 Bottleneck Entity: A constant bottleneck means that the lead-time is constant from the bottleneck to the point of delivery therefore this part can be considered as a single planning unit. Then, a normal lead-time can be set assuming some over-capacity at succeeding workstations. This is especially true if the bottleneck is close to the last production stage. Should the bottleneck be one of the first resources, the remaining production stages need to be carefully planned if overcapacity at these workstations is not sufficiently large. This implies a push strategy from the bottleneck onwards. The planning objective for pre-bottleneck stages is to serve the bottleneck with parts, keeping the bottleneck busy. These manufacturing stages can be either pushed or pulled independently upon how the stages after the bottleneck are managed. The point of integration is, on the one hand, the bottleneck resources and succeeding workstations and on the other, all other workstations preceding the bottleneck. “At the borderline between networks, some buffer may be necessary to decouple the planning and production of the two network parts” [9]. The buffer may be either safety time or physical stock for common items. However, only safety time is applicable to customer specific parts. This would suggest that a push system would operate from the bottleneck and onwards and a pull system would operate to replenish parts for processing at the bottleneck. In our case the CNC-welding machine is the bottleneck operation. In this operation the quantity of frames manufactured per day is a constraint. One cannot exceed this quantity. Moreover, the investment for a new machine is very high. Even if a new machine is purchased it will lead to over-capacity. It is absolutely necessary that the bottleneck is not starved, for this reason we need to constantly feed the bottleneck. So the operations prior to the bottleneck need to operate in a push system and the later operations in a pull system such that we have a shorter and constant lead-time to serve the customer. Hence, the bottleneck becomes the push-pull boundary. 3.2.3 ABC Analysis: A product structure can be broken down into different parts depending upon the cash value of every item involved in it. The items that make up 70% of the inventory and 10% of the cash value are called as ‘C’ class items. The items that make up 20% of the inventory and 25% of the cash value are called as ‘B’ items while those with 10% of inventory and 65% cash value are called as ‘A’ items. A number of structure branches can be pushed, whereas others have to be pulled. So when deciding which has to be pushed and what has to be pulled we consider that the ‘C’ class items of less value need to be pushed. These items can be stocked depending on forecasts. The ‘B’ class items can be manufactured in a push or pull system depending on the criticality of the part. ‘A’ class items need to be operated more in a make to order i.e. is the pull system. This implies that as we move from ‘A’ class to a ‘C’ class item the push-pull boundary in an ‘A’ class item has to be placed closer to the initial stages of production than the C class items. In this case we have various components making up the office partition. The wooden parts are termed as ‘C’ class items. The aluminum trims are classified as ‘B’ class items and the frames are classified as ‘A’ class items. In the frames the raw material for the horizontal and vertical components needs to be stocked and the operations to be performed on it will depend on the customer requirement. Hence, raw material procurement will be a push and from there onwards the remaining will be a pull. In the case of wooden panels the raw material would be procured and cut to different sizes depending on the forecasts. The final operations of lamination and fabric cladding would be performed in a pull-based system. The ‘C’ class items would be purchased on basis of forecasts and stocked. Hence, they would follow a push system. So, in this way we could decide placing of the boundary based on the cash value of the components.

4.0 Conclusion The complexity associated with today’s manufacturing methods is increasing day by day. Variability and uncertainty coupled with increasing expectations in customer demand and global competitions have lead to most of the practical

problems in managing a firm effectively. This stresses the importance of considering variability as well as techniques to address these problems in an efficient way. Successfully implementing the best manufacturing technique has helped companies to a great extent in providing more value to the customer and improving its bottom line. Integration of the existing manufacturing technique methods is the cure for alleviating the problems due to the complexity and variations in the system. In this paper we have presented three criteria, the customization point, the bottleneck operation and the ABC analysis as a method to determine the push-pull boundary in a hybrid system. Any one of these three criteria that is more applicable to the manufacturers convenience can be implemented for efficient operation of the factory. Companies should not just stop with implementing various manufacturing techniques but should also find ways to improve it to compete in this global market. The rationale is not whether MRP or JIT is better; it is how they complement each other in a hybrid system.

References: 1. Cochran, J. K., and Kim, S. S., 1998, “Optimum junction point location and inventory levels in serial hybrid push/pull production systems”. International Journal of Production Research, 36(4), 1141-1155. 2. Doerr, K., and Magazine, M. J., 2000, “Design, coordination and control of hybrid factories”. International Journal of Operations & Production Management, 20(1), 85-102. 3. Flapper, S. D. P., Miltenburg, G. J., and Wijngaard, J. (1991). Embedding JIT into MRP. International Journal of Production Research, 29(2), 329-341. 4. Grosfeld-Nir, A., Magazine, M., and Vanberkel, A., 2000, “Push and pull strategies for controlling multistage production systems”. International Journal of Production Research, 38(11), 2361-2375 5. Hirakawa, Y., Hoshino, K., and Katayama, H. (1992). A hybrid push/pull production control systems for multistage manufacturing processes. International Journal of Operations & Production Management, 12(4), 69-81. 6. Hirakawa, Y., 1996, “Performance of a multistage hybrid push/pull production control system”. International Journal of Production Economics, 44, 129-135. 7. Lee, C. Y. (1993). A recent development of the integrated manufacturing system: A hybrid of MRP and JIT. International Journal of Operations & Production Management, 13(4), 3-17. 8. Lee, L. C. (1998). A comparative study of the push and pull production systems. International Journal of Operations & Production Management, 9(4), 5-18. 9. Olhager, J., and Ostlund, B., 1990, “An integrated push-pull manufacturing strategy”. European Journal of Operational Research, 45, 135-142. 10. Pandey, P. C., and Khokhajaikiat, P. 1996, “Performance modeling of multistage production systems operating under hybrid push/pull control”. International Journal of Production Economics, 43, 17-28. 11. Slack, N., and Correa, H. (1992). The flexibilities of push and pull. International Journal of Operations & Production Management, 12(4), 82-92. 12. Thesen, A., 1999, “Some simple, but efficient, push and pull heuristics for production sequencing for cerain flexible manufacturing systems”. International Journal of Production Research, 37(7), 1525-1539