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How do you manage inventory in a pull-based manufacturing system?

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Inventory management is a crucial aspect of any manufacturing system, as it affects the efficiency, cost, quality, and customer satisfaction of the products. In a pull-based manufacturing system, inventory is managed by responding to the actual demand of the customers, rather than forecasting or planning ahead. This means that production is triggered by customer orders, and inventory levels are kept low to avoid waste and overstocking. In this article, you will learn how to manage inventory in a pull-based manufacturing system, and what benefits and challenges it can bring to your business.

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Ravi Shrivastava

LinkedIn Top Voice | Blue Yonder Fellow | Senior Director | Cognitive Supply Chain Planning | Strategic Transformation…
Syed Safiullah - MBA, CBAP

Strategic Procurement | Supply Chain & Logistics Manager | Two Decades of Diverse Expertise in Business Conglomerates
Iuri Pinto

Executivo da Cadeia de Suprimentos | Conselheiro de Empresas | Especialista em Supply Chain | Mentor de Negócios |…

1 What is a pull-based manufacturing system?

A pull-based manufacturing system is a type of lean production method that aims to eliminate waste and optimize the flow of materials and information. It is based on the principle of pull, which means that production is driven by the actual demand of the customers, rather than by the supply of the materials or the capacity of the machines. In a pull-based system, inventory is seen as a source of waste, as it ties up capital, space, and resources, and increases the risk of obsolescence, damage, or theft. Therefore, inventory levels are kept low, and replenishment is triggered by customer orders or signals from downstream processes.

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Syed Safiullah - MBA, CBAP

Strategic Procurement | Supply Chain & Logistics Manager | Two Decades of Diverse Expertise in Business Conglomerates
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In a pull-based manufacturing system, inventory is managed through principles like Just-In-Time (JIT) production. Customer demand dictates production levels, and a Kanban system with WIP limits ensures a continuous flow of materials. Smaller batch sizes, strong supplier relationships, and demand forecasting help prevent overproduction and reduce inventory. Continuous improvement practices like Kaizen are employed to enhance system responsiveness and efficiency, ultimately aligning production with actual demand.

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Iuri Pinto

Executivo da Cadeia de Suprimentos | Conselheiro de Empresas | Especialista em Supply Chain | Mentor de Negócios | Melhoria Contínua
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O sistema de manufatura baseado em tra??o é uma abordagem eficiente que visa eliminar desperdícios e aprimorar o fluxo de materiais e informa??es. Ao ser impulsionado pela demanda real dos clientes, minimiza estoques, reduzindo amarras de capital e espa?o. Essa estratégia, centrada na reposi??o acionada por pedidos, mitigando riscos de obsolescência, dano e roubo, destaca-se pela otimiza??o dos recursos e maior responsividade às necessidades do mercado.

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2 How to implement a pull-based manufacturing system?

To implement a pull-based manufacturing system, you need to adopt a customer-centric approach and align your production processes with the customer demand. This requires a high level of coordination and communication between different departments, suppliers, and customers, as well as a flexible and responsive production system. To achieve this, you should analyze customer demand patterns and segment your products according to their variability and volume. Additionally, design your production processes to be modular, scalable, and adaptable to changing demand levels and customer preferences. Furthermore, implement a pull mechanism such as kanban which signals when inventory needs to be replenished or when production needs to be started or stopped. Lastly, it is important to monitor and measure your inventory levels, lead times, cycle times, and customer satisfaction; then use feedback loops to continuously improve your performance.

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Iuri Pinto

Executivo da Cadeia de Suprimentos | Conselheiro de Empresas | Especialista em Supply Chain | Mentor de Negócios | Melhoria Contínua
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Implementar um sistema de manufatura baseado em pull demanda uma abordagem centrada no cliente, alinhando processos com a demanda real. Essa transi??o exige coordena??o entre departamentos, fornecedores e clientes, além de uma produ??o flexível. A análise detalhada dos padr?es de demanda e a segmenta??o de produtos s?o cruciais. A concep??o de processos modulares e adaptáveis, junto com mecanismos pull como o kanban, garante respostas ágeis às mudan?as na demanda. Monitorar estoques, prazos e satisfa??o do cliente, com feedback contínuo, é essencial para aprimorar constantemente o desempenho do sistema.

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3 What are the benefits of a pull-based manufacturing system?

A pull-based manufacturing system can provide several advantages to your business, such as reduced inventory costs, improved cash flow, enhanced quality, increased customer satisfaction, and greater flexibility and agility. By only producing what is needed and avoiding overstocking or understocking, you can free up capital and space that would otherwise be tied up in inventory. This can reduce the chances of defects, errors, or rework due to excess inventory or outdated products and enable you to deliver products faster, more accurately, and more customized to their needs. Additionally, it allows you to respond quickly and effectively to changing market conditions and customer demand.

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4 What are the challenges of a pull-based manufacturing system?

A pull-based manufacturing system can also present challenges for your business, such as increased dependency on suppliers for timely delivery of materials and components, higher risk of stockouts due to lack of buffer inventory, and a greater need for coordination and communication between production processes, customers, and suppliers. Furthermore, there is a heightened need for training and empowering employees in decision making and problem solving, as well as fostering a culture of continuous improvement.

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5 How to overcome the challenges of a pull-based manufacturing system?

To overcome the challenges of a pull-based manufacturing system, you need to adopt a proactive and collaborative approach and leverage the tools and techniques of lean production. Building long-term, trust-based relationships with suppliers and negotiating mutually beneficial contracts and terms is essential. Additionally, safety stocks, buffer inventories, or contingency plans can be implemented to deal with demand and supply uncertainties and fluctuations. Information technology such as ERP, RFID, or cloud computing can also be used to facilitate data sharing and visibility across the supply chain. Lastly, training and empowering employees to identify and eliminate waste, improve quality, and enhance customer value can prove invaluable.

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Ravi Shrivastava

LinkedIn Top Voice | Blue Yonder Fellow | Senior Director | Cognitive Supply Chain Planning | Strategic Transformation Advisory | New Product Incubation | Product Management-Industry Solution | SaaS Value Realization
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To ensure effective proactive planning in pull based planning, the role of scenario planning to identify demand and supply risk & opportunity is important. Performing multiple demand scenarios to identify different demand upward & downward trend as well as simultaneously analyze supply related scenario's to identify and mitigate potential supply risk & bottleneck to meet potential demand. To maximize opportunity & minimize risk with right trade off decision within the organization, a collaborative cross functional S&OP process across demand, supply, finance etc is required to ensure all functions are aligned towards one decision and execute it effectively.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do you manage inventory in a pull-based manufacturing system?

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1 What is a pull-based manufacturing system?

2 How to implement a pull-based manufacturing system?

3 What are the benefits of a pull-based manufacturing system?

4 What are the challenges of a pull-based manufacturing system?

5 How to overcome the challenges of a pull-based manufacturing system?

6 Here’s what else to consider

Inventory Management

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How do you manage inventory in a pull-based manufacturing system?

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4

5

6

1 What is a pull-based manufacturing system?

2 How to implement a pull-based manufacturing system?

3 What are the benefits of a pull-based manufacturing system?

4 What are the challenges of a pull-based manufacturing system?

5 How to overcome the challenges of a pull-based manufacturing system?

6 Here’s what else to consider

Inventory Management

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