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woodstack26498420.jpgKeeping up with customer demands can be frustrating for any business. One way to keep up with customer demands is to introduce a pull-production system. Pull-production works by corresponding the different departments together so a product can be made to fit the needs of the customer. Pull production systems save companies money because you do not keep inventory. Warehousing inventory not only costs you money on rent, it also takes away money from your cash-flow and ties it up until you sell the products in your inventory.

Pull-production is called "kanban". Kanban uses visual control to inform employees that a particular process has been completed or that a particular process needs some work. Kanban is often associated with the Toyota Production System. In the Toyota Production system, Kanban is identified as 2 different types:
1. Production kanban - the need to purchase more parts.
2. Conveyance kanban - the need to withdraw parts from one work center and deliver them to the next work center.

It is called a kanban system because most companies will use a card and pull it when a product needs work or when something (like parts) need to be pulled from one area and sent to another. This reduces the use of manufacturing equipment and wasted time because employees only pull the parts and send them to workstations when they are requested. Once the material has been moved, they can then produce another one to replace the missing part.

Since most companies are not making auto parts, they use a different approach to kanban from the Toyota Production System. This method entails stimulation of the pull-production with different cycle times, lot sizes, and inventory size. The rule for most kanban companies is only to keep one or two items in inventory, the rest will be made to order.

With modern technology, the kanban system is able to indicate that a product needs to be pulled though an automated system. QuickBooks is one computer program that uses a system similar to this. Once your inventory level reach a low point, it will send you a warning so you know how many raw materials you need to order to keep up with the customer demands.

Your inventory cycles need to reflect your vendor cycle times. If you sell bookmarks and brochures, you need to find out how long it will take your printer to print additional copies before you can sell the product, unless you take backorders. Since printer demands tend to fluctuate, it is a wise decision to keep at least 3-6 months worth of printed inventory on stock. This is an integral part of kanban because you need to have accurate forecasting to correspond with the computer system. A pull system uses forecasting to turn a cycle time into a targeted inventory level. It is a unit forecast versus a gross forecast. A unit forecast allows for a specific time period to determine when an item will end.

When you are dealing with inventory, there is phrase known as "buffer stock". Buffer stock will create a balance in the system by permitting products from being shipped before your final assembly cycle time. A buffer stock will protect your company from losing money thanks to a fabricated cycle time. If you reach your buffer stock, it's a good time to order more materials.

The nice part about a pull-production system is that it pretty much controls itself once you take the initial steps to get it set up. Since it is all automated, you only need to have skills to order more products and make accurate forecasts so you don't have problems with back-ordering.

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