An excellent example of restocking/reorder points (with pull or kanban systems) is your car’s gas tank. Here’s why.
There’s a maximum amount of product you can stock – when the tank is full you don’t add any more. Do you know anyone who sees super cheap gas one day and decides to buy eight portable gasoline jugs just to store in a garage or even a back seat? I don’t. However, this is akin to buying large quantities of stock items simply because you found them at a low price.
There’s also a minimum amount of product you can stock – the tank goes empty. To prevent this…
We have a simple device for specifying how close we are from having to restock or reorder – your car’s fuel gauge. When you start getting close to empty, the gauge might have an alert system to let you know to get more – in the picture above, the “close to empty” zone is indicated in red, and some cars have visual alerts like lights or sound alerts like beeps.
When you reorder, you have a set reorder amount – topping off your fuel tank, and no more. You don’t revert to the stocked portable gasoline jugs as mentioned earlier.
When your gauge falls to 3/4 full, you don’t flip out and quickly go top the tank off. You know you have sufficient fuel left and you shouldn’t worry about quickly restocking what you’ve used until you’re closer to empty. Refilling often when it’s not necessary is wasteful of time.
You know how long it takes to restock your fuel tank – drive to the station, fill tank, pay, leave. In kanban and pull systems, you know how long it takes to restock – time between placing the order and when the order is delivered and put into place.
A pull system using visual indicators is a lot like having a whole bunch of fuel gauges that you check regularly but restock only when those gauges indicate low levels. Each gauge will indicate quantity for an item that is consumed at a different rate than the rest of the items, so each gauge would be calibrated differently.
Pull systems and reorder points are really simple concepts to understand – if you can read a fuel gauge, you can manage a pull system.