Demand Driven Flows

Customer oriented organisations

One major task for all organisations is to become more efficient in terms of usage of resources, time and cost. One of the most popular methods is demand driven flows, also called Just-In-Time or PULL. As with many other ways to achieve operational excellence it does not always render the results whished for. Basically because the philosophy is not fully understood. It is important to understand that the first thing to achieve with demand driven flow thinking is customer satisfaction in an efficient way. By doing so revenue is kept high or even increased when the cost at the same time is kept low or decreased. When this is done in harmony with the organisation revenue and customer satisfaction is increased as well as delivery precision, co-worker work moral is improved and cost are reduced.

The basic idea of flow thinking is that it should be demand driven. That means that it is the demand of the customer that should drive all processes and activities in the operations. The customer could be the end customer as well as an internal customer as long as the link of demand is not broken from the end customer. The demand is the exact demand of the next station in the flow. This way of thinking is very profound to a successful organisation and have some very distinct impacts on how to organise work. It is important to understand that a demand driven flow is one of the most motivating systems to work in for anyone. To really feel that the effort you as an individual do is fulfilling a real and important need for the organisation is drives the performance in an extraordinary way.

“If everyone is moving forward together, then success takes care of itself.”

– Henry Ford

One famous example of demand driven flow is the Toyota Production System but was used by Henry Ford and is used by Ikea. The basis of the demand driven flow is that each station in a flow is connected in an unbroken tight chain. It doesn’t matter if the flow consist of physical products, services or other things. Toyota have explained the fundamentals to create such a flow in the Toyota Production System. These fundamentals should be used as the problem solving takes place in all levels of the organisation.

If demand driven flow between any stations in a flow means that the delivering station should deliver exactly what is needed and when it is needed to the receiving station there are some more things that needs to be fulfilled. First the two stations have to agree on some sort of signaling system. Toyota used the famous Kanban card as well as visual buffers. What is important is that the signal between the receiving and sending station is visual and in real time and is controlled by the people actually doing the work, i.e. no delays and no hiding (often in computer systems). Secondly the stations need to agree on some sort of TAKT. TAKT means that work is done in a pace so that the work in the two stations harmonise. The TAKT may change meaning the extra resources need to be added or removed in either station but the TAKT has to be agreed upon. If either station works faster or slower than the other station then the demand driven flow is ruined. The sending station also have to send things that are free of defects or right from me. If something with a defect is sent forward then the flow will be ruined in the next station. Another effect of a demand driven flow is that the things flowing have to be levelled. If there is a lot of heavy work passing one station at one time then the flow will be in that station.

As Henry Ford stated success will come by itself if everything in the organisation moves forward together. A demand driven flow means exactly that everything should move forward together. Henry Ford also stated that a business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large. To achieve this the best way is to create an unbroken demand driven flow that starts with the demand of the customer. Such a flow is possible in any kind of operations ranging from manufacturing of goods over supplying services to designing products or services.