In Quick we tell you about it.
Inventory control and product demand management play a decisive role in the supply chain, from there, transportation or launching costs and therefore, inventories are derived. This type of process can be developed through a push or pull system.
What is the push system?
The push system is in charge of gathering all those products for which it is known that there is already a sufficient demand in the market, products that can be categorized as "generic", which are known, from the beginning, that they are going to leave the warehouse. Also, in this case, you can add products that require a more complex manufacturing process, which requires a previous production stage, in order to meet the demand on time.
What is the pull system?
On the other hand, the pull system is one that can be adjusted at any time to market demand, i.e., under this system, it can NOT be produced until there is a real demand for the product. This type of process is very common in products that are created on demand or customized according to the customer's request.
As you can see, in the first case, production dominates over the market and in the second, the market dominates over production. A system that sets the pace of production and, more than anything else, of warehouse inventory.
Although it is true that both systems(Push and Pull) have followers and opponents, most companies have a common factor: the constant search for the least possible shortage of products in the warehouse. However, it is necessary to make it clear that, in the face of such shortages, one could be exposed to the risk of NOT being able to meet the customer's demand at the right time and that the customer will look for another supplier instead.
What are the advantages and disadvantages of the push system?
Advantages:
- Production costs are lower because it can be produced on a larger scale.
- It is a faster and more flexible production system that can adapt to possible peaks in product demand.
Disadvantages:
- Your breaking point may occur when the forecasts made to buy the demand are not correct.
What are the advantages and disadvantages of the pull system?
Advantages:
- Storage costs are minimal, since we do not work with stock. stock.
- No production planning is needed, since it is developed when demand requires it.
- The ability to manage and produce a product according to each of the customer's specifications.
- It is a more sustainable logistics practice, minimizing costs, time and space in the operation.
- The cost of the product may be higher.
Disadvantages:
- It requires a longer production time, which translates into a longer waiting time for the customer.
- In the face of strong demand, it may not be possible to meet full production, resulting in a stockout. stockout and significant economic losses for the company.
- Production may generate raw material cost overruns.
Is it possible to have a combination of these two systems?
The answer is YES. Some companies make use of both systems in such a way that they obtain a VERY accurate demand forecast and, at the same time, adjust their production levels to the sale of inventory (just what is needed). However, it is necessary to clarify that NOT ALL products are adapted to the same production system, for example, in the automotive sector, the pull system predominates , while the push system is used in sectors where the exact demand is not so well defined or the supply for the same product is very wide.
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