E - IV.5. Pull Planning v23mar06

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Approach based on Information Systems (check the Bullwhip Effect), not an integrated approach to both Materials and Information Flow across the totality of the supply chain.
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Definition of Logistic Loops
MTO: Make To Order, the product does not exist in the FP Warehouse when the Order is entered. The Production Order is started and the customer has to wait the production Lead-time. The Picking Cycle can only start after receipt in FP Warehouse. Usually the Picking is simplified because the Product is Customer specific and can be stored in a customer Bin in the FPW. PTO=: Pick To Order, the product exists in the FP Warehouse when the Order is entered. The Picking cycle can start immediately
• Demand and Leadtime Variation; • Total Pull Planning; • Total Flow Management Targets and Results.
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Introduction
• After applying Pull Planning in internal logistics, Total Pull Planning is the extension of this model to all Logistic Loops of a Supply Chain;
7 2 4 3 7 3
6
5
2
1
1 2 3 4
Outsourcing or hiring by request Flow meter (production data) Just in Case stock Bottleneck
5 6 7 8
Former production line (shut down) Rework loop Muda, Losses
20%
Tempo
• Most of the ERP systems are modeled with rules that increase this effect;
Procura
• Only Pull Planning and Leveling can strongly reduce this effect.
Consumer
Procura
5%
• This phenomena is the main direct cause of Muda of Stock and Muda of Excess Production;
• Causes:
• Order Grouping to increase lot size (low leveling); • Using data from the immediate customer, instead of data from the final customer; • Excessive reaction to small changes in demand (safety non standardized stock building);
Pull Planning is based on:
MRP stock and push
Order forecast and real Orders
Physical supermarkets
Real orders and stock replenishment
High safety stock
Quantity unreliablebased on MRP figures
• Bringing a breakthrough in Inventory reduction; • Achieving 100% OTD – On Time Delivery; • Enabling big increases of Productivity in Production and Logistics.

Raw Materia Supplier
40%
Tempo
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The Bullwhip Effect: weekly production vs. weekly customer delivery
PRODUCED 2 500
DELIVERED
2 000
Stockouts
capacity loading
Buying Decision Process Scheduling and Order Release
Receive, Check, Move to Picking Point
Picking, Packing, Dispatch
Receive, Check, Move to Picking Point
Orders Entry Customer Order
Production Order Requirements
Picking Order Requirements
Scheduling and Order Release
MTS: Make To Stock, a Production Requirement Algorithm plans the Production in advance, responding to a consumption sign (BTR, reorder point type).
Plant
Supply Chain MRP / DRP
Suppliers
Wholesalers
Distributors
Retailers
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Supply Chain Traditional Operations Planning
Traditional Supply Chain is based on:
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Supply Chain Traditional Operations Planning
• Traditional Supply Chain tools “appeared” in the 90´ s to answer the following question:
– How to deliver the required products in the shortest delay possible at a level of 100% customer service, minimizing at the same time the overall stock of the complete logistics chain
• Introduction;
• Supply Chain Traditional Operations Planning;
• Muda Elimination is Needed in the Supply Chain; • A Main Cause of Muda: The Bullwhip Effect; • Definition of Logistic Loops;
External Transport
Customer Warehouse
Production
Distribution
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Definition of Logistic Loops
Logistic Loop 2: - Production to Order (MTO strategy), or; - Build To Replenish (E-Kanban, MTS strategy)
• Supply Chain Seen as a Chain of Logistic Loops;
• What is a Pull Planning Loop; • How to avoid the Bullwhip Effect; • Kaizen Pull Planning;
• A Pull Algorithm For MTS and MTO;
IV. 5. Total Pull Planning
IV. External Logistics Flow
5. Total Pull Planning 4. Outbound and Delivering 3. Inbound and Sourcing 2. Milkrun 1. Warehouse Design
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A Main Cause of Muda: The Bullwhip Effect
• Small changes in the Final Customer Demand will generate demand increases in every step of the Supply Chain;
Picking, Packing, Dispatch
Receive, Check, Move to Picking Point
Picking, Packing, Dispatch
Production Internal Transport Supplier Materials Warehouse Internal Transport Supplier Finished Product Warehouse