What is pull? And what is a can ban? Or is it kahn-bahn? Or does it matter what we call it?
Hi, I’m Nate Barber. Welcome to the 7th video in our 10-part series celebrating Opgrade’s 10th anniversary. Thanks for watching, and thanks for celebrating with us!
Last week we talked about Flow, and how perfect Flow is that perfect assembly line that works for any process, manufacturing or not. With perfect flow, value creation does not stop because we have eliminated all the waste. Surely, we can create perfect flow in all of our processes, right? No? And don’t call you Shirley? Yeah, well, you must be like my wife. You’re right yet again and you don’t like to be called Shirley.
So in Lean, how do we reconcile our recognition that flow is best with our obvious inability to achieve perfect flow? Well, the first way is through Pull, and the other way is to incessantly pursue Perfection. Conveniently these are the 4th and 5th principles of Lean. Since today’s video is about Pull, I think it might be a good idea to focus on that.
So what is Pull? Pull is a way of producing or procuring things based on actual demand, without the need for a schedule or forecast. Considering production forecasts are as accurate as weather forecasts, as in I have never seen an accurate production forecast, there are lots of places that would benefit from pull.
Here’s how Pull works, with an over-simplified example: How do you eat your snacks, like this bag of pretzels? I would imagine you take the bag, open it up, pull out one pretzel at a time, and consume them as you’re ready to consume them. Believe it or not, that is a pull system.
I would also imagine you don't have is somebody standing there throwing pretzels at you, telling you to eat them. That’s the opposite of a pull system; that’s a push system.
Pull says make only as your customer is ready to consume. Push says make, make, make, make, make and throw everything we have in inventory. Pull is just in time. Push is just in case. If you’ve ever heard somebody say that what we really sell is time, meaning that we always need to be making something, then they are an advocate of push systems.
But back to our pretzel example. As ideal as it would be to have one pretzel magically appear in front of us right as we're ready to consume it, we know that's not practical. Instead, we want to have some level of inventory, yet too much inventory is clearly waste. How do we strategically match our inventory to the customer’s demand, whether that customer is internal or external? The answer is often Kanban.
Let's say your job was to eat pretzels. Of course, as enticing as that might sound, you would probably be very sick of pretzels very quickly. Regardless, if your job were to eat pretzels, how would you want those pretzels supplied to you? You would probably want one bag of pretzels open in front of you, and maybe another bag ready to go next to you. Or perhaps more than one bag, depending on how long it took for the bags of pretzels to be supplied to you. You only have enough pretzels to cover however long it takes for another bag of pretzels to get to you. That’s basically Kanban.
The benefit of Kanban is that it is visually managed. In this simple example with only two bags of pretzels, if my job were to supply you with pretzels, I would know you needed pretzels simply if there is an empty space next to you. No empty space? No pretzels for you. Two empty spaces, meaning you’ve also polished off the open bag in front of you? Then you get two bags.
Kanban works well for mid-volume, mid-variability products and services. The B products or “Repeaters” in an ABC or Runner/Repeater/Stranger Demand analysis. Kanban can often work for your A, or Runner products, and sometimes even your C, or Stranger products, but not as often and with much more difficulty. Since Kanban is the Lean way to handle batches, if your Runners are always running, that’s not really a batch, and Kanban can be sub-optimal. Similarly, for Strangers, if you only ever produce infrequent, small quantities in a single batch, that’s not really best for Kanban either. We don’t want those small quantities just sitting around, just in case.
Clear as mud? Clearly. Well, to describe this in a way that’s more understandable, let’s talk about how my wife Shirley, I mean Marisa, and I manage our supply of salad dressings. Our runner dressings are simple oil and vinegar. Because we use vinegar for many things in our house, we buy a giant jug and keep a small refillable bottle for use in the kitchen. For frequent-use dressings, like ranch and Caesar, we use Kanban. When we use up a bottle of ranch dressing from the refrigerator, we pull the one from the pantry and start using it. The act of pulling it from the pantry is the signal, Kanban means signal, to put it on the shopping list. For our much less used dressings, like French dressing, we don’t keep any extra on hand, and we only buy a new bottle when the one we have goes empty.
This is pull from the procurement side. Bulk for the runners, Kanban for the repeaters, and buy-to-order for the strangers. Pull with procurement works well if you have stability in your supply chain, which we sort of have today. During the pandemic, well, let’s just say this system didn’t work quite as well and there were weeks we didn’t have ranch dressing.
Let that make the point. Kanban works well with stability and clear rules. If everyone follows the rules, everything works. If the rules aren’t followed at any point, things can fall apart. That’s why Kanban is best for your internal replenishing strategies because you have the most control over your internal processes. Well, I hope you do at least.
It’s also not a coincidence that I’m using a supermarket analogy. When visiting the United States, Taiichi Ohno was amazed that he could go to any supermarket, buy all the bread from the shelf one day, and come back in the next day to see it was all replenished. How did they do that? Ohno understood it was through a pull replenishment system, where only what is pulled is replenished, and he saw how that could be applied in business.
Ok, Nate, if Pull is so great, how do we implement it? Well, from what we’ve already discussed, I hope you already get that you first need to understand demand through a demand analysis, both the demand volume and the demand coefficient of variation, or CoV. You need to know what your runners, repeaters, and strangers are because you treat them differently in a Pull system.
From there, pilot it. Give it a try. Set up a visually managed Kanban for a repeater in a small area, create the rules and perhaps Kanban cards, and then work to ensure everybody follows the rules. See how it goes, adjust your levels as necessary, and work to expand it from there. We originally had French dressing on Kanban in our pantry, but we use it so little that it went bad before we opened it. We realized French dressing is a stranger in our house, so it’s no longer on Kanban. Follow the same process in your business and you'll find you have much lower inventory levels and yet find you’re also running out of much less.
Well, that's it for Pull and Kanban. Just like everything else in Lean, it's simple but not easy. The concepts are simple, but it's not easy because people are involved. Business would be great except for the people!
Next week, we're going to talk about the pursuit of perfection, and how perfection must be our target benchmark. Until then, thanks for watching, and thanks for celebrating with us.