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Pull Scheduling Overview
Pull Scheduling Overview
By David Hallett
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II.
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III.
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IV.
In Conclusion
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Appendix
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The measures and incentives we often use in business support these concepts. Typically, workers and departments will have measures and incentives for units per day, units per person, schedule attainment, etc.
Out-Box In-Box
Schedule
Move to Next
Figure 1
Lets look at a typical business scenario. A worker works at a desk with a computer on it. The worker is given a schedule of what work should be done when. Jobs arrive at the desk and go into an In-Box. The worker reviews the schedule, takes the next scheduled Job from the In-Box, processes it using the computer, and puts it in the Out-Box when completed. Periodically, the worker will get up and move any Jobs currently in the Out-Box to the In-Box of the next step in the process. Each week, the workers supervisor reviews the number of Jobs completed and whether the Jobs were completed per the schedule. If targets were not met, the supervisor follows up with the worker to take corrective action. Based on the measurements in place, and the workers focus on Work Hard, Go Fast, Get Ahead, the worker tries to stay busy. As soon as a job goes to the Out-Box, the next job on the schedule is gathered from the In-Box and started. If the next job is not available, but a later job is, the worker starts that job instead. Whats wrong with Push? There are two assumptions we often make when managing businesses:
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Figure 2
The diagram in Figure 2 shows a Business Circle. Every business has a series of processes that ultimately link together to form a circle. The names and capabilities of each box will be different for each business, but the general concept will always be the same. Lets say that the Engineering box represents the worker in the Push System we described previously. If the worker is meeting the 15 per day goal and is following the schedule exactly, how many Jobs will
Copyright David Hallett 2010 www.PullScheduling.com 6 rev 05/03/10
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Cost
10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Time
Figure 3
However, applying Henry Fords philosophy of LT=Cost yields a graph that looks like this:
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Cost
10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Time
Figure 4
Goldratt, who created the Theory of Constraints, once said: Tell me how you measure me and Ill tell you how Ill behave. If our measurements drive our behaviors, what type of behavior is traditional cost accounting driving? Instead of focusing on lead-time, traditional cost accounting causes us to focus on the small portion of time when labor and material are applied to the product. The benefits of reducing processing lead-time are too numerous to list here. Insyte Consulting, which is the MEP Center in Buffalo, NY, has a spreadsheet on their website that documents 31 benefits of reducing lead-time. Click here for a link to this spreadsheet. These benefits generally roll up into 6 categories: 1. 2. 3. 4. 5. 6. Increased sales Improved quality Reduced operating costs Increased capacity and throughput Reduced invested assets Increased employee satisfaction (morale)
Lets use a production work center at a manufacturing company as an example. The work center is located half way through the overall product routing. Say the work center has 1 month of WIP valued at $100,000 stacked up in front of it.
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In-Box
Move to Next
WIP = $100,000
Work Center
Figure 5
According to the Traditional Cost Accounting system, this WIP is not costing the company anything. In fact, it is included as an asset on the balance sheet. Also, if aggregate WIP grows during any particular year, it will appear to make the company more profitable on an accrual accounting income statement. According to Lean Cost Accounting, which is a more correct way of looking at this, this WIP is costing the company money. Why is that? The following are a few of the reasons why: Cost of capital A typical company will have a line of credit and / or wish to lease or purchase equipment. If the $100,000 was not sitting here, the company could reduce its credit line by that amount or invest in new equipment or other assets. Cost of space That months worth of WIP will take up space. Manufacturing space costs money. We also have costs associated with heating, cooling, and lighting that space. Cost of handling During the month that these products sit waiting to be worked on, they will usually get moved, stocked, re-sorted, split, combined, etc, numerous times. The cost to do this includes not only the labor, but the resulting damage to the products and the potential for injuries. Cost of quality If we discover that something is wrong with a product in this WIP inventory, how many might be bad? Potentially all of them! These will have to be re-worked or scrapped and re-made. Since the previous manufacturing steps occurred a month or more ago, our chances of identifying the root cause of the problem and taking effective corrective action are low. Lost throughput The presence of random WIP all over the place effectively masks where our slowest operation is. Without knowing where this is and focusing our efforts on it, we loose overall throughput in the system Lost sales opportunities Many customer orders are awarded based on supplier lead-time. In general, customers are poor planners. Since LT=WIP/Rate, this WIP is adding to lead-time, which is taking away this market opportunity. Reduced on-time delivery The longer your processing lead-time, the harder it is to deliver ontime. Also, the more likely it is that customers will change designs, quantities, due dates, etc.
A full introduction to Lean or TOC cost accounting is beyond the scope of this document. However, a good general rule when making business decisions is to focus on the decisions effect on Cash Position and Cash Flow versus accrual accounting profit. Decisions that improve overall Cash Position and / or
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Pull systems address both scheduling and batching. The application of a few relatively simple pull techniques can quickly reduce processing lead-times by 50% or more. Many Lean practitioners consider Pull System to be advanced techniques to be applied late (if ever) in an overall Lean implementation. TOC practitioners consider Pull Systems to be a foundational step that is usually applied first in any improvement initiative. I strongly agree with the TOC approach. If lead-time is the main focus, and if Pull Systems are a method of addressing the major contributors to long leadtime, then lead-time improvement initiatives should start with the application of Pull Systems. You will find that once you have implemented Pull Systems and your lead-times are reduced, the other critical issues in your system will become painfully obvious and easier to address. You will also have a tool to focus your limited improvement resources on initiatives that will really make an impact and not waste them on initiatives with no (or negative) return on investment.
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This chapter will review how each works and appropriate application for the method. Note Appendix A includes a table that compares these Pull Methods. Supermarket Replenishment As we have seen, traditional manufacturing scheduling systems require large investments in capital to support inventories. When Toyota was rebuilding after World War II, they were cash poor and could not afford to utilize these traditional manufacturing systems. They looked around the world at the time and asked: What industry utilizes inventory the best? The answer was supermarkets! Today, typical supermarkets turn their inventory over 50+ times per year. Typical manufacturing companies running Push Systems turn their inventory over 1-10 times per year. Using Pull Systems and other Lean Manufacturing techniques, Toyota is able to achieve 50-100 inventory turns per year in manufacturing facilities! So lets see how Supermarket Replenishment systems work.
Supplying Process
Replenishment Order
Withdrawl Order
Customer Process
Supermarket
Figure 6
Figure 6 illustrates a basic Supermarket Replenishment system. This works as follows: The Customer Process withdraws product from the Supermarket Shelf as needed. A re-order point is established for each part number. Whenever the Supermarket inventory plus the open Replenishment Order quantity drops below the re-order point, a new order is generated for the Supplying Process. A container, kanban card, light signal, empty space, etc can
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Only the Customer Process would work to a formal schedule in this example. The Supplying Processes schedule will automatically fall out of the Pull System. This is a very critical aspect of Pull Systems. No matter how many processes are in a Pull System, there will only be one scheduling point! Single Schedule Point Single process in a Pull System where the entire Pull System will be independently scheduled. All other processes are scheduled by the Pull System itself. Think of how simple and effective this is versus scheduling every process in the system separately, which is what most companies try to do either manually, or using traditional MRP / ERP systems. The following variables affect the calculated Re-Order Point and the Total Potential Inventory in the system for each part number: Average Demand per period. Variability in Demand per period. Lead-time from when an order is released to the Supplying Process until the completed order is received at the Supermarket Shelf. Re-Order Quantity. Service Level, which is the desired percent of time that the Supermarket Shelf will have at least some product available for the Customer Process. Note By design this is never 100%, which would be too costly and may not even be statistically possible.
An increase in any of these will require the Total Potential Inventory in the system to be increased. When this system is in use, the inventory on the Supermarket Shelf will rarely equal the Total Potential Inventory, which also includes withdrawals that do not add up to the Re-Order Quantity, orders waiting to be processed by the Supplying Operation, orders in-process at the Supplying Operation, and orders in-transport from the Supplying Operation. The actual average Supermarket Shelf inventory in a well designed system will often be 10-50% of the Total Potential Inventory. Multiple Supermarkets can be utilized in a Pull System to link several processes:
Figure 7
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Capped FIFO
Capped FIFO
Figure 8
Figure 8 shows a pull system that links a Supermarket Replenishment System with Capped FIFO Lanes. The Single Schedule Point is located at process 2 because that is the process immediately after the last Supermarket in the system. Between process 2 and process 3 is a Capped FIFO Lane. The best way to visualize a Capped FIFO Lane is to think of feeding tennis balls down a pipe.
Process 2 A Z F Process 3
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The diameter of the pipe is slightly larger than the diameter of the tennis balls. The balls can freely travel through the pipe, but there is no way to change the sequence of the balls in the pipe. Essentially, there is no passing lane. Also, the length of the pipe is fixed so that only 3 balls will fit in the pipe at any one time. What will process 3 work on next? Product F there is no other choice! This is why an independent schedule is not needed for process 3. The schedule at this process is dictated by the Pull System. The same will be true for process 4. What will process 2 do if it completes a product and the FIFO lane is full? Process 2 will stop working! This signal is telling process 2 that it is currently working faster than the rest of the system. We learned earlier why we dont want process 2 to continue working in this situation. Similarly, if process 3 goes to get the next product from the FIFO Lane and it is empty, what does it do? Process 3 stops working! This system will clearly show which process is the slowest in our system at any given time.
Cap = 3 FIFO
Cap = 3 FIFO
Inv = 1
Inv = 12
Inv = 1
Inv = 3
Inv = 1
Inv = 0
Inv = 1
Figure 10
In figure 10, the current inventory in each area is indicated. Which process is currently the slowest? Process 3 is currently the slowest. This is called our current Constraint. We can easily determine where this is by locating the process where the ratio between the quantity in the upstream FIFO Lane and the downstream FIFO Lane is the greatest. More simply, the slowest operation will usually be found immediately after the biggest pile of WIP. I like to call this Management by Piles. If we want to make an immediate impact on the output of our system, where do we need to focus our energies? We need to focus on the Constraint! If you utilize a pull system, monitor it to determine where the constraint is, and focus resources on the Constraint, you will continuously improve the output and overall performance of the system. Since all non-constraints will run out of work at times, you will also need to determine what you want these resources to do during these times. If each work station in this example is limited to working on 1 product at a time, the FIFO lanes are limited to 3 products at a time, and the system is capable of completing 1 product per day, what will the maximum manufacturing lead-time be to complete an end customers order for a quantity of 1? Manufacturing LT = WIP / Rate = (1+3+1+3+1)/(1 per day) = 9 days
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Capped FIFO Lanes tend to work well when: Output volume is high Process routings are consistent for the applicable family of parts
The following attributes must be determined to implement Capped FIFO Lanes: Transfer batch sizes FIFO Lane Caps at each process Visual controls to indicate cap status
Drum Buffer Rope Drum Buffer Rope (DBR) is the original Pull System designed to be used in Theory of Constraints applications. It is very similar to The Capped FIFO Lane system, except the FIFO Lanes arent capped.
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Customer Order
End Customer
Figure 11
Instead, there is an overall cap between the Single Schedule Point and the Constraint. Every time the Constraint completes 1 unit of work, the Single Schedule Point can release 1 unit of work to the system. This cap is the Rope. Since the Constraint dictates the pace of the system, this is the Drum. The cap is designed so that the Constraint always has at least some work waiting in front of it. This is the Buffer, which is needed to make sure the Constraint is busy at all times. Notice that the FIFO Lanes downstream from the Constraint are not capped. This is not necessary in this system because the downstream processes are all faster than the Constraint. WIP should never accumulate in these FIFO Lanes. To utilize DBR, the Constraint must be consistently located at the same process. In many systems, this is clearly the case. In TOC implementations, we strategically decide where to locate the constraint and implement policies to assure it stays there. From a financial point of view, you will always optimize the return on investment of a system when the Constraint is located at your most expensive asset. I often call this the Big Machine. Drum Buffer Rope provides some advantages over Capped FIFO Lane systems: Disturbances, variations, etc at Non-Constraint processes are less likely to starve the Constraint and limit Throughput. The system is more tolerant to normal ebbs and flows caused by processing variations and changes in product mix. Only one process has to adhere to any Scheduling Rules. The Single Scheduling Point process may not start new orders unless an authorization has been received from the Constraint (this can be a simple card, chip, container, etc). All other processes can work as long as there is product to work on. In a Capped FIFO Lane system, every process has to monitor and adhere to the caps in the downstream FIFO Lane.
WIP Cap WIP Cap Pull Systems are similar to Drum Buffer Rope systems except that the cap extends to the last process in the system, instead of ending at the Constraint. TOC practitioners often call this method Simplified Drum Buffer Rope. I generally find this Pull System approach to be the easiest to implement and to be effective in more applications that any other.
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Customer Order
End Customer
Figure 12
WIP Cap systems provide some advantages over DBR systems and Capped FIFO Lane systems: Disturbances, variations, etc at Non-Constraint processes are unlikely to starve the Constraint and limit Throughput. Only one process has to adhere to any Scheduling Rules. A fixed Constraint is not required. Identification of the current constraint is easy. This system will also give less false reads than the Capped FIFO Lane system. Implementation is easy. In fact, a frequent starting point is to cap the WIP wherever it happens to be right now, and then methodically reduce it over time. This takes away the majority of the excuses raised by the people who will be affected by the implementation.
I consider WIP Caps to be the best Pull System for most Work-In-Process applications. They are very effective, easy to setup, and easy to maintain. If you are thinking about implementing a WIP Cap Pull System, take a look at my E-Book on this subject. This E-Book gets into the nuts and bolts of how to design and implement systems based on the experience of someone who has been in the trenches applying them for a long time.
Combination Pull Systems Most value streams will contain a combination of two or more pull systems. In general, at least one Supermarket will be used for raw materials and / or finished goods. WIP will usually be controlled by Capped FIFO Lanes, Drum Buffer Rope, or a WIP Cap.
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Vendor
Replenishment Order
End Customer
Replenishment Order WIP Cap = 13 Process 1 FIFO Process 2 FIFO Process 3 FIFO
Customer Order
Process 4
Process 5
Figure 13
Figure 13 shows a typical Combination Pull System. This combines many of the concepts we have reviewed. This system can easily schedule and control work from the ordering of raw materials to the delivery of finished goods.
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High
High
Low
Medium
All N Where choices are required and / or customer desired LT demands a stocking point
One N
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Lean Cost Accounting Littles Law Manufacturing Lead-time (LT) On-Deck Pull System
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