Monday, January 5, 2009

'Push' and 'Pull' systems of controlling resources in Inventory planning

'Push' and 'Pull' systems of controlling resources in Inventory planning

The push system pushes the resources in to manufacturing based on resource planning. It is also more commonly known as the Materials Requirements Planning (MRP) system. This system is based on the Planning Department setting up a long-term production schedule which is then analysed to give a detailed production schedule for making or buying parts. This detailed schedule then pushes the operations team to make or purchase a part and push it forward to the next work station. The biggest weakness of this system is that it is based on guessing/forecasting the future customer product demand to develop the production schedule that production is based on and estimating the time it takes to produce each part. Over-estimation and under-estimation may lead to excess inventory quantity or part shortages, respectively.

A Pull system is a method of controlling the flow of resources in which replacement of products is based on consumption of the item quantity. A pull system is completely based on customer product demand. Whatever is consumed is only ordered on sources of supply. Since here the resources are pulled from the supply sources, it is called 'Pull' system. A Kanban system of Inventory planning is a Pull system that uses color-coded cards attached to parts or part containers to regulate the upstream production and delivery flow.

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