Push and pull inventory replenishment
Push and pull inventory replenishment are two popular strategies used by businesses to manage their inventory levels effectively.
Push strategy: In a push strategy, the manufacturer or supplier decides when and how much inventory to produce and send to retailers. This is based on forecasts and predictions of future demand. The retailer has little control over the inventory levels and must accept what is sent to them. This method is often used for products with stable and predictable demand.
Pull strategy: In a pull strategy, the retailer or customer controls the inventory levels by placing orders based on actual demand. When inventory levels drop below a certain threshold, the retailer places an order with the manufacturer or supplier to replenish the stock. This method is more responsive to changes in demand and reduces the risk of overstocking.
For example, a clothing retailer may use a push strategy for basic items like t-shirts that have consistent demand throughout the year. On the other hand, they may use a pull strategy for seasonal items like winter coats, where demand can vary depending on weather conditions.
Benefits of push and pull strategies:
- Push strategy can help reduce lead times and production costs.
- Pull strategy can prevent stockouts and reduce excess inventory.
Both strategies have their advantages and disadvantages, and the choice between push and pull inventory replenishment depends on the nature of the business and the products being sold.
For more information, you can visit the Wikipedia page on inventory management.