Taiichi Ohno is the engineering genius behind the famed Toyota Production System (TPS), known under various names: Lean Manufacturing, Just-In-Time Manufacturing, and Pull Manufacturing.
I like the term "pull" because it's very simple and easy to understand in contrast to "push" manufacturing. Ohno describes it using a hill and gravity as a metaphor. In a push system, it's as if the factory sits at the top of a hill, producing cars as fast and efficiently as possible. As cars leave the factory, they roll downhill to dealers. When demand is unlimited this is not a problem, because customers buy the cars as quickly as they are made. This was the case in the days of the Ford Model-T: The demand for affordable, functional cars was virtually unlimited. But when demand shrinks, cars pile up at the dealership, and dealers have to reduce prices to the point where they, and the manufacturer, lose money.
The U.S. has a large enough population that American car-makers could survive with a push manufacturing system for many years. And in the 1950s U.S. car makers were feeling no pain.
But Japan's much-smaller post-war population had much more variable demands. A factory might need to rapidly switch from making one kind of car to another, or from making cars to trucks, or ambulances, depending on the demand.
This is why Ohno and his fellow engineers at Toyota developed the pull production model, which was driven not by the factory but by customer demand. In pull manufacturing, the dealership sits at the top of the hill, and when a customer buys or orders a car, the dealer orders a car from the factory which delivers it "just in time."
In our increasingly service-oriented economy, customer demands are increasingly variable. We are moving from a push-oriented world, where manufacturers set the agenda, to a pull-oriented world, where the agenda is set by customers.
This has profound implications for the way companies organize and manage work; implications that are only beginning to be understood in many industries.