Do you design your business without thinking about efficiency for a second? Of course not. Whatever the sector of activity in which one works, efficiency is an essential point in production. To respond to this, two methods exist, namely high-flow or pull-flow production. These two strategies meet different needs. In this case, which one should you choose for your business? Which will be most effective for you? Let's discover the characteristics of each strategy together in this article. We will also show you some examples to help you make your choice.
Let's start by going into the details of each of these strategies. The production method known as”at high flow” or also called”Push” is a production system in which one produces without worrying about customer demand. In other words, even if at the time of production, the customer has not yet formulated a particular need, we still produce. In high flow, the company makes a lot of estimates. She must Anticipate expectations and needs to estimate the volume of production. Based on this, the company makes calculations for the stock of raw materials, intermediate products, and finished products. In this high flow system, the company has always in stock. This is interesting because the customer will not have to wait weeks or even months to receive the ordered product. However, the company incurs money and cash flow with the purchase of raw materials, the payment of employees ensuring the production and the use of production equipment. It must make calculations as accurately as possible in order not to fall into a large volume of raw materials or into overproduction which could cause significant losses.
If on the one hand, we have the strong flow, on the other hand, we have the pull flow. This production method, on the other hand, starts when a new customer order is placed. In this draw-flow system, the company starts from the Actual demand customers to buy raw materials needed to design the product. The company is therefore limited to the quantity of raw materials needed to supply the quantity of products requested. For this production at the request of the customer, the company benefits from numerous advantages. If you adopt pull flow, no need to build up stocks. In fact, storing a large number of raw materials or finished products is inefficient for this production method that works on demand. This thus presents a reduction in production costs. It should be noted, however, that there is a stock in this method. The reason is that there are enough, but very few, which allows production.” Just in time ”. It allows optimized inventory management and a minimization of production time while avoiding overproduction and wastage. The company will therefore only operate if there are orders, which is still risky. In this case, we can opt for just-in-time.
“Pushed” or “pulled” are both production process. They are distinguished by the moment when production is started.
They are two very different systems that each have advantages and disadvantages. If a business has succeeded by adopting high flow, the result may be different, if you adopt it. Indeed, you may have different targets, and the expectations of your product are certainly specific to your business. Before deciding on the best strategy, you need to take into account these advantages and disadvantages of push and pull flow.
Source: sxe-consulting.com
With the high flow, we produce Large volume. This means that the cost of producing a unit is really reduced to a minimum. For example, the company can afford to order raw materials in large quantities and negotiate a good price with the supplier. Afterwards, it can adapt its production system. In this way, it will be able to ensure the satisfaction of the demand from its customers. Moreover, they will not have to wait for the products to be delivered, because there are always some in stock. Even if the advanced strategy seems interesting to you, you should take into account its disadvantages. Indeed, a calculation error in the estimates can lead to Out of stock. In other words, the company will face higher demand than its sales forecasts. The risk of overproduction is also very real, as it may happen that the volume of production is greater than the estimated demand.
Also discover: How can I reduce the risk of running out of stock?
If you are really afraid of this overproduction, turn to the pulled or just-in-time system. However, you must understand that with this strategy, we can no longer really talk about reducing manufacturing costs. However, you can take advantage of a reduced storage costs. This strategy makes it possible to meet the real needs of the customer. Indeed, it allows the customization of the product, which represents a significant advantage over the competition. It is this pull flow that is also the best strategy for companies wanting to reduce their environmental impact in the production system. You should understand that with this system, the production time is longer. On the customer side, this is not always understandable, as they need the product in the days following their orders. This strategy is therefore complex to manage, because the company is obliged to inform the customer. This can push the customer to the competition. As you don't produce en masse, you can't make economies of scale either, which is one of the drawbacks of just-in-time flow.
If you choose to set up the push strategy in terms of your logistics, you must provide more storage space. This also means good organization in the warehouse. In fact, remember to optimize each square meter to avoid having to take up an additional warehouse to store your finished and semi-finished products and your raw materials. Logistics just-in-time flow requires good order preparation. The latter must be both fast and efficient so as not to make the customer or the production line wait an extra day. To avoid getting lost, use warehouse management software.
Also discover: Order preparation: how to make it a key success factor?
As we mentioned earlier, the type of products has a strong influence on decision making. Indeed, for some products, it is preferable to adopt The push system. This is the case of goods, whose production takes longer, for example. In this case, responding in time to the demand that is instantly formulated on the market is more difficult. For example, it is this high flow that the actors of agricultural production. They need several weeks or even months to develop. Faced with the cycle of nature, they cannot do anything and when the product is ready, they must reach out to customers. Adopting the high flow system is also wise for products with high seasonality. That's what chocolate makers do during events like Easter or Christmas.
Also discover: How to meet the challenges of transporting chocolates?
Conversely, for a large number of service businesses, it is the pull strategy that we prefer. Thus, they only create the service when there is a demand. This is the case with health services, for example. For a product with a high production cost, we can afford to stay on the system pulled in order not to increase this production cost even more and to be responsible for Customized way to customer requests. It should be noted, however, that some businesses are exceptional cases. This is the case of public transport companies for example. Indeed, these businesses operate more with advanced production. They announce a planned itinerary in advance, and even if not all seats are taken, they complete the itinerary.
In view of these situations, one wonders if it is possible to mix the two strategies. The answer is yes, you can combine push flow and pull flow in the same production. In this case, we are talking about hybrid production. That's what some people do furniture manufacturers. They prefabricate furniture and it is only when an order arrives that production is completed by assembling the panels, covering them or painting them. In a short period of time, this production system allows the company to meet the specific needs of the customer.
Although hybrid production has its advantages, oscillating between pull and high flow can make organizing production complex. To make the right choice and adopt the best production strategy, it is essential to refer to the product as well as to its demand. The search for efficiency in the supply chain is happening all the time. To help you identify possible improvements, conducting a logistics audit is very beneficial. To do this, find How to do an optimal logistics audit in this guide.
