“There is a high opportunity in most high-mix environments to dramatically improve customer

fulfillment and reduce in-process inventories (and thus, slash operating costs) by better managing
the way products are produced—from assembly cell creation to employee engagement to quick
changeover capability,” Penkala points out.

“In a high-volume, low-mix environment, opportunities improving process and equipment

reliability and measure performance using overall equipment effectiveness,” says Penkala.
“Asset reliability and efficiency are the key cost drivers, so kaizen activities are targeted at here
to improving throughput and increase
profitability. Automated systems are more commonly found in these environments, so
maintaining and improving uptime is essential.

“The concept of kaizen remains the same [no matter the volume],” says Sammy Obara, president
of Honsha Associates, an alumni association of former Toyota Motor Corp. engineers and
managers. “If you eliminate waste, you do it at the root cause. Then you standardize so it doesn’t
come back. Then you do yokoten (horizontal deployment) so other processes, product families
and production sites can all benefit from that kaizen.

A high volume / low mix manufacturer producing consumer electronics for a broad global market has different
leverage points within the supply chain than does a low volume / high mix manufacturer who builds specialized
technology products for a narrower market. When comparing supply chain metrics between these two types of
manufacturing companies a huge contrast becomes readily evident as shown in Figure 1. Each metric is defined and
measured on a scale of 1 to 5 in a metrics scorecard where rating of 5 is the optimal score relative to the industry.
The criterion for the ratings is listed below in Table 1.

A high volume / low mix

manufacturer producing standard PC
motherboards, for example, can be
expected to have relatively stable and predictable end-product demand. It will have a smaller supply base providing
many standard ship-to-stock components and materials. High volumes can be leveraged to reduce the ordering
frequency and subsequently run a more efficient supply chain operation with high inventory turns and little exposure
to excess and obsolete inventory.

In contrast to the generally robust supply chain performance in the well established high volume / low mix
businesses, the same is not true for the fiber optic components and subsystems manufacturers. They operate in a
very low volume / very high mix environment, facing constant demand volatility as product forecasts oscillate. This
type of manufacturer relies on a large supplier base, each providing unique components for specialized products
making the supply base and internal operations management unwieldy and exposure to excess and obsolete
inventory a big challenge.

For the low volume / high mix manufacturer, supply chain optimization requires innovative approaches to match the
performance demonstrated in high volume / low mix environments.

PUSH VS. PULL

INVENTORY
MANAGEMENT
STRATEGIES 33
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november 13, 2014 by brian sutter 0 comments

Most companies have a better chance to profit and satisfy

customers when inventory managers develop an effective and
efficient inventory management strategy. The right strategy
ensures access to the right products, and it also helps control
costs associated with buying and storing goods. Understanding
the difference between push and pull inventory management
models can help you develop the right system for your own
unique business.
PUSH, PULL & HYBRID
MODELS
Push inventory strategy should have backed by excellent
forecasts;. Normal apprel industry like jeans manufacturer are
either manufactured or ordered in advance to meet anticipated
demand. For that one must have accurate, historical sales
records and hope prior sales will predict future demand where as
Pull strategy (JIT) fits well where products are customized and typically require
personalization at the consumer level. These products are mostly branded (Zara)and consumers place
high emphasis on personalization aspects, examples being custom handbags, custom shoes, computers,
and even some cars.(Panit in case of BMW)

Now a days we can see hybrid approach in case of sporting goods like Nike ,Adidas where they are main
sponspor of major sports (NBA ,NFL) where they have to have to wait till some team or team players
will come out as star durinfg that particular season .They prepare T-shirts and Jerseys haf way and
than those comes at USA centre and here they complete with remaining stuff like putting current hot
player or Team name.

high-volume, low-mix companies examples are medical companies such as disposable syringe
assembly, medical hand gloves,bandages and consumer electronics companies ,like statandard
keybords for PC
low-volume, high-mix operation oriented companies are specialized proucts for narrow markets
diagnostic equipment manufacturing companies like bp machine, and Aerospace

The pull inventory model simply relies upon the ability to order or
make products as they are requested by customers. This
inventory method is also called just-in-time or JIT.  Advantages of
a pull system include the fact that businesses aren’t spending
money ordering or storing finished products until after customers
have already purchased. However, this model is only effective
when every link in the company’s supply chain operate according
to this model rather than the more traditional pushing of stock in a
top-down approach.
Some businesses use a hybrid push-pull method to properly
manage inventory. To be successful, companies require a
sophisticated inventory control system to track products and
supplies currently in stock with the ability to properly forecast
future demand. This model is also known as a lean inventory
strategy—companies rely heavily on forecasting and constantly
adjust inventory levels based on actual sales.
The pull system was identified as a crucial tool to decrease the level of inventories and improve the availability of
the components for assembly. The components are produced by machining department and provided to the
warehousing

The second context in which a push/pull concept can be seen is the point in a supply chain where
demand is fulfilled through orders on suppliers (replenishment) and beyond which demand is fulfilled
through stock (inventory) in the supply chain. For example, consider a typical retail operation. Should
the company directly replenish the stores as the stocks on the shelves deplete? Or, should the company
replenish the stores from a warehouse that stocks inventory and then replenish its warehouses by
placing orders on suppliers? In the first case, when stores are directly replenished by orders placed on
the suppliers, the company saves on the warehousing expense altogether, though it may carry higher
inventories as it manages several hundred stores, each individually carrying inventories to avoid the
risk of stock-outs. In the second case, the company can build a warehouses to optimize inventory to
hedge against the stock-out risk, but adds the cost of creating and maintaining a warehouse. 

In both of these scenarios as well, the company is dealing with balancing the cost of inventory against
the cost of resources and fulfillment-time. 

Therefore, in making the push-pull decisions, companies are primarily balancing the cost of inventory,
resources, and fulfillment cycle-time. The factors that generally affect these conditions are as
following. While no generic determinations can be made, understanding the concept of balancing these
costs and the factors governing them provides an objective method for making such decisions. 

 Demand Variability: When the product demand is certain, stable, and can be forecasted with
relatively high accuracy, then a push strategy may work well. But when demand uncertainty is high,
consider pull strategies for managing demand. Low demand variability provides an opportunity to
create highly efficient manufacturing or distribution processes that may not be very flexible but
minimize the cost of unit production. High demand variability works against such efficiencies. 
 Product Variability: The products that are customized and typically require personalization at
the consumer level, will do well with a pull strategy for effective demand management. These
products are typically branded and consumers place high emphasis on personalization aspects,
examples being custom handbags, custom shoes, computers, and even some cars. Some industrial
products like rolled steel can fall in this category as well. However, the fulfillment lead-time must be
managed to be competitive. When the products are utilitarian, they lend themselves to push strategies
for manufacturing as well as supply chains. 
 Economies of Scale: The product characteristics described above generally also describe
the economies of scale. With manufacturing based on large economies of scale (and hence no or low
customization), push strategies are generally compatible, otherwise consider pull strategies. 
 Manufacturing Setup Changes: When the manufacturing setup changes are expensive and time-
consuming, a push-based strategy should be evaluated. Consider pull strategies when setup changes are
quick and do not affect the manufacturing efficiencies substantially. 
 Lead-time: Lead-time in this context means the lead-time to fulfill demand. This can be a
replenishment, manufacturing, or distribution lead-time or a combination of these, depending on the
specific situation. Higher lead-time generally favor push-systems to build inventory so that end-demand
can be fulfilled relatively quickly. 

The push/pull decisions afford a balance between the responsiveness (agility) and cost (lean). Pull
systems must be responsive to be effective, push systems are generally more cost effective though they
not have the same amount of flexibility as the pull-systems may have. Of course, all systems are
generally a combination of the push & pull strategies to be most effective. We will discuss these
aspects of push/pull concepts in the next post. 

Want to know more about supply chain processes? How they work and what 
Push type" means Make to Stock in which the production is not based on actual demand. "Pull type" means Make To Order in which the
production is based on actual demand. In supply chain management, it is important to carry out processes halfway between push type and
pull type or by a combination of push type and pull type.

Supply Chain Management (SCM) is to create a solution i.e. "supply" for a goal or issue, i.e. "demand". Supply chain models of "Push
type" and "Pull type" are opposite in terms of a demand and supply relationship. "Push type" is represented by "Make to Stock" (MTS) in
which the production is not based on actual demand and "Pull type" is represented by "Make To Order" (MTO) in which the production
is based on actual demand.

One of the major reasons why supply chain management currently receives so much attention is that information technology enables the
shifting of a production and sales business model from "Push type" to "Pull type". Pull-type supply chain management is based on the
demand side such as Just-in-Time (JIT) and CRP (Continuous Replenishment Program) or actual demand assigned to later processes.
Therefore, unlike the Push-type method it is not Make to Stock, which is based on demand forecast. While inventory is kept to a
minimum, products can be supplied with short lead times and at high speed. At the point where "Pull type" starts to supply operations
triggered by actual demand, it is like an elevator. An elevator starts when a button is pressed even if there is only one passenger. On the
other hand, the "Push type" can be considered as an escalator. An escalator continues to supply (push) regardless of whether there is
actual demand (passenger). In addition, "Push type" corresponds to a model for trains, buses, and airplanes for which supply (push) is
based on demand forecast by time period and route. There may be various forms between "Push type" and "Pull type" depending on
inventory forms of materials, work in progress (WIP), and finished items and how to deal with the actual demand in supply chain
management.

In the case of sushi, there are boxed sushi sold in a shop, sushi ordered at the counter in a sushi restaurant, and sushi for which an order
starts from purchasing live fishes. The place and form which fish for sushi are held in varies from downstream to upstream in a supply
chain. An extreme example of a pull-type supply chain sushi restaurant that is unconcerned about lead times is the one that goes fishing
when an order is received.

Push starte

Value stream mapping :focus on both information and materials flowgy