The third principle - pull instead of push!

Today's view of optimal mass production is often based on the idea that the more you put into a system, the more you will get out. That was partially true in times of low variation and high volumes, but nowadays it's obsolete.

We need to reassess the conventional meaning of productivity and interpret it differently. In the past, the focus was on accelerating and increasing throughput at single points (machines or operators) in the production sequence (economy of scale: high capacity utilization improving average unit costs), now it is much more important to consider the overall value stream. Doing this often reveals that local optimisations have negative effects on the overall operation.

The individual work stations work and produce - often at piecework rates - only to find at the end of the day that they have built up excess inventories. The market is not (or at least not yet) demanding the products. But that's not really a problem, right? Value has still been produced as a result of work! And the balance sheet counts this inventory on the positive side. So you might think everything's fine. But you'd be wrong. From the Lean focus inventories are pure non value adding waste! And nothing gets better while storing if the physical transformation is already done. Just vice versa goods and services actually deteriorate! They spoil, rust, age, information becomes outdated etc. etc....

But inventory gives a feeling of security?!

That may be, but it's a false sense of security. You rely on inventories when you believe they are in perfect condition. Unfortunately, this is often no longer true after days and weeks of storage. And the security you trusted on has vanished...

But another economic fact is even more serious: As a company you have to pre-finance this inventories, which are expensive. Usually, customers only pay after delivery of a perfect product. As long as the product is not shipped to the customer, you don't get any money. And maybe you have to invest extra money for the storage!

So how can you minimise and ideally eliminate inventories?

This is another question that's easy to answer. You have to switch from "put in all you can" to "only produce on demand". We like to sum it up as: "If something's gone, replace it. If nothing's gone, don't add to it!"

It's much more difficult in practice to change from a push system to a pull system. But you're not alone - we're here to help you!

What are the benefits changing over to a pull system?

Economywise there is a positive business impact onto your company. Prefinancing rates will drop, inventory risks will be minimised, and storage costs will be reduced drastically. We call it the introverted or the inbound principle, benefits are mainly focusing on the supplier side, not on the customer side. Therefore its important to survive for the long term.

Pull consultation