Is Pull Production the final word?
Typically when we talk about improvements on the shop floor, we hear a lot about Pull Production. Originating from the Toyota Corporation, pull production is a process that aims to arrange an organization so that customer preference or orders are what cause materials to be "pulled" through a system.
Well this may work well in case of a new manufacturing plant provided there is same kind of discipline on the shop floor, this type of production runs into roadblocks in case of remanufacturing where salvaged components go into the final assembly.
What makes remanufacturing unique is the variability of the Bills of Material structure. In one of my earlier blogs, I had introduced the concept of ‘Replacement Factor’ which is a measure of the quantity of new components for manufacturing the final assembly. With an ever changing Bills of Material structure owing to the usability percentage of the salvage component, a pull production will lead to over/under issue of components for each job. Issuing more percentage of salvage components in a bill where the replacement factor is high will lead to a favorable material variance while the exact opposite case is going to give a hard time to the accountants trying to explain the variance. And to add to this misery is the changing price of the new components on the Purchase Order.
In light of the above circumstances, it makes business sense to move to a Push kind of scenario where the floor issues the material to the job based on what is issued from the store. A typical problem arises because shop floor operates on a Kanban system and does not care to which job the material is issued to. At the end of the day we only need to ensure that all the issued material hit the books of the same product line.
Standard ERP packages expect issuing a component manually for WIP Supply Type ‘Push’. Due to resource constraints it may not be always possible to do this transaction at the shop floor. A workaround for this is to develop a custom component which will take all the issued components and issue it to the first open job of the day automatically. It does not matter if there are more open jobs because ultimately at the end of the day when the jobs are closed, it should hit the appropriate WIP accounting class.
There are certain shortcomings of this solution viz. this is going to cause problems if some components are pull while others are push. And on the shop floor, Joe the tugger should know exactly where to drop the material on the shop floor.
