“Pull” Manufacturing

By Brad Hahn, ATLANTA TREND™

Today’s lesson from Tom Knight, Founder and Chief Executive Officer of Invistics, is to learn it, adapt it, try it, and apply it. Indeed, he has made an entire career of exactly this. Let me explain.

While earning his B.S. in Mechanical Engineering from MIT, Tom Knight was also an intern with General Motors where he learned a great deal about optimization and “pull” or “lean” manufacturing. In 1990, he was awarded a fellowship at MIT to research best practices for improving U.S. manufacturing competitiveness which he, of course, did. He wrote his thesis, Inventory Reduction in a Large Job Shop, about how to apply “lean” manufacturing to industrial applications where there was custom manufacturing or significant variability in products. In these industries, “lean” manufacturing had not been previously employed.

In 1992, he graduated MIT with a Masters in Mechanical Engineering AND a Masters in Management Science (MBA). But the really amazing thing is that, upon graduation, he went to work for Alcoa (a very large “job shop”) to directly execute on his research! So he practiced “lean” manufacturing in the automotive industry where “lean” was invented. He learned more about these manufacturing techniques at MIT. He postulated that “lean” could be used in other types of industries. Then he set out to actually make that happen. Brilliant!

Push vs. Pull Manufacturing

Many of us think of traditional manufacturing as a “push” process. Here are the steps at a very high level:

· Step 1: you figure out what you think you can sell.

· Step 2: you make a bunch of them and put them into inventory.

· Step 3: you try to sell what you’ve made.

· Step 4: someone buys what you have to sell.

Research and practice have shown this system to result in excess production. For presumed efficiency in “push” manufacturing, subsequent steps in a production line must produce the same quantities. At the end of the line, you may end up with a huge stock of product for which there is no demand. To sell these products, sales and marketing must create the market via advertising or increase the demand by dropping prices. In the end, after the advertising campaigns, discounts etc…, there is no guarantee that the product can be sold.

“Lean” manufacturing works on pull strategies. Nothing is produced until the next process really needs it. The term “lean” comes from all of the reductions generated by this method including less need for inventory, less physical space required, less cycle time to complete the production process, etc… Externally, the manufacturer does not produce anything unless there is a customer demand. Demand pulls the products from the manufacturing facility. Internally, the first operation will create the product only when the second step in the production process needs it. The second step pulls the production from the first step. Pull manufacturing reduces over-production and increases customer satisfaction. In addition, it allows the system to work with significantly less inventory or work-in-process. “Just-in-time” is a key component of a “lean” system that strives to reduce in-process inventory and associated carrying costs. “Lean” or “pull” manufacturing is a better way to make things.

From Autos to Pharmaceuticals

“I learned ‘lean’ theory at MIT and how to implement it when I worked at GM”, noted Tom Knight. After a couple of years at GM, Tom left to focus on pursuing joint Masters degrees in Mechanical Engineering and Management Science at MIT. “I was very intrigued about how to apply lean manufacturing to different types of industries,” said Knight. “Lean’s really great for traditional, repetitive, high volume manufacturing operations. But how would it work in pharmaceuticals, consumer packaged goods, or other high-mix manufacturers where there is a good deal more variability in the outputs.” Tom Knight wrote his Masters thesis on how to apply lean manufacturing at these types of companies. Upon graduating MIT, he then joined Alcoa to put his research into practice.

“For the first few years at Alcoa, I was part of a ‘firefighter’s’ team from headquarters,” noted Knight. “We assisted local managers with turnaround situations. This experience was great as it exposed me to many different challenges at 6 or 7 different facilities per year.” In his third year with Alcoa, Tom Knight was moved to a line position at the North American Rolled Products Plant in Davenport, Iowa. The Davenport works is over 1 mile long and houses 128 acres of high-tech manufacturing. When implementing change at this plant, Tom took the approach of executing pilot test projects before rolling out the changes to other areas. “It’s important to find and partner with innovative middle managers who can help implement the pilots and generate excitement for the changes,” said Knight.

Within the first 30 days of being at the Alcoa plant in Davenport, Tom Knight had generated over $1 million in benefits. By the end of three years at this facility, his projects and changes had accounted for $60 million in inventory reductions, significant improvements in customer service, and record plant throughput levels. As a result of his success at Alcoa, he was asked to share case studies and presentations at industry conferences and symposiums. One of his conference presentations generated interest from Siemens and soon Tom Knight was applying “lean” manufacturing at the Siemens factory in metro Atlanta. “Within two years, we cut inventory by 75% and increased on-time delivery performance from 60% to over 95%,” related Tom. Success at Siemens added still more case studies to Tom Knight’s conference repertoire.

“So over the years, I had been sharing case studies and presentations of what we had accomplished with ‘lean’ at Alcoa and Siemens,” noted Knight. “There was always a ton of interest in what we had done from companies who didn’t necessarily look like GM or Toyota. But they also wanted to cut inventory and raise customer service. So I started Invistics in 1999.” Invistics provides services and software to extend ‘lean’ to companies such as DuPont and Bristol-Myers Squibb. “We’re currently rolling out a new online service we call PMP for Pull Management Platform,” said Knight. “PMP allows companies to quickly implement pull to reduce inventory and raise customer service. We’ve included integration components in the service to accept company data and turn it into the information needed to help them run more ‘lean’.” Despite a difficult economy, Invistics is actually growing and adding software development staff.

Apply today

As I mentioned, Tom Knight has made a career out of understanding a great idea and applying it in new ways. He’s driven change which resulted in financial and customer service gains. Few of us can sit, rest on our laurels, and coast into retirement. And if you are one of the few of who can coast, you most likely did not get there by coasting. Therefore, we all need to continue to find better, smarter, more efficient ways to do our jobs every day. To take a page out of Tom’s playbook, we all need to:

1. Continue to LEARN every day. Great ideas are everywhere. If it’s difficult to recognize new ideas, then perhaps a change of venue, perspective, etc… may help.

2. Consider how to ADAPT an idea to suit your needs. If this is difficult to think through, then you may want to get some help.

3. TRY it, test it, and see if it works. Give it a shot. Typically, there is a great deal to gain and little to lose in conducting a pilot or trial.

4. APPLY successful new processes and procedures to your entire operation.

ATLANTA TREND™ expresses its thanks and deep appreciation to Tom Knight for sharing his thoughts with us.

 

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