Pull inventory is a needs-based approach to inventory management, used in lean manufacturing to increase efficiency and reduce costs. Suppliers receive orders based on current needs, eliminating the need for inventory storage and reducing waste. Transitioning to a pull inventory system may require consulting and strategic planning.
A pull inventory is a needs-based approach to inventory management rather than a push inventory that focuses on forecasting and shipping inventory ahead of time. This approach can be seen in lean manufacturing, where the goal is to increase efficiency while maintaining flexibility. Several companies use pull pull as part of a just-in-time production method, and it is perhaps most famously employed in automobile manufacturing. Japanese auto companies, in particular, have honed lean manufacturing approaches to reduce costs and pass the savings on to consumers.
In a pull inventory system, the supplier receives an order from a warehouse based on its current needs and fills it by pulling items from its inventory and shipping them. Parts can be delivered in a just-in-time system, where the company gets only the parts it needs for production, when it needs them. It is not necessary to keep inventory in the factory, which can consume resources and increase production costs.
Companies with this system receive only the parts they specifically need and can time the order to ensure parts arrive when needed. This requires meticulous monitoring of production along with streamlined systems for manufacturing. The company can immediately determine which parts it needs for specific production tasks. It can use an electronic ordering system to facilitate ordering speed, and the supplier can rely on robots to pull parts for speed and accuracy.
An advantage to extracting stock is the lack of need to store parts in the facility. Not only does this reduce production costs, but it can also eliminate waste. The company doesn’t order parts it won’t need, and it doesn’t have to spend money disposing of parts it doesn’t need. With push inventory, warehouses can receive unnecessary parts that they need to store and eventually dispose of. This can be inefficient and generate waste that the consumer will have to cover in the price of the finished good.
Transitioning to a pull inventory system can be difficult or easy, depending on a company’s existing setup. A consultant can provide assistance with the process. Companies need to think about how they plan to meet supply needs, fulfill orders, and handle potential stoppages and slowdowns that could interfere with the successful production or delivery of parts. Strategists accustomed to inventory management may be able to help with developing a cohesive plan.
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