What Is Pull Inventory?

Pull inventory management is based on the specific needs of each warehouse to fill the inventory with a certain order in batches; each storage point is independent of all other warehouses in the channel, predicting demand, and considering only local factors when determining replenishment volumes Instead of directly considering the impact of different replenishment volumes and replenishment times on procurement costs or production costs in each warehouse.

Pull inventory management

The pull management model considers that each warehouse is relatively independent. Therefore, when making demand forecasts and replenishment decisions, the local market situation is mainly considered, and the demand for supply points at different levels and at different times in each region is ignored

Analysis of Push-Pull Inventory Management and Dynamic Inventory Management and Their Advantages and Disadvantages

The pull inventory management method considers that each storage point (such as a warehouse) is independent of all other storage points in the channel.

Correspondingly, when forecasting demand and determining replenishment volume, only local factors are considered, and the impact of different replenishment volume and replenishment time of each storage point on factory costs is not directly considered. Although this method can be used to precisely control the inventory of each storage point, if the inventory of each place is individually determined, the replenishment batch and replenishment time may not be well coordinated with the production batch and economic purchase batch of the enterprise .

In order to overcome the shortcomings of the pull-type inventory management method, many domestic air-conditioning manufacturers use the push-type inventory management method. They allocate the products produced to each storage point based on past experience, sales of each storage point, available space, and other factors. Among them, the setting of inventory level is determined uniformly according to the situation of the entire warehouse system. Generally speaking, when the economies of scale of procurement or production exceed the benefits of the minimum total inventory level achieved by the pull inventory management method, a push inventory management method can be adopted.

Moreover, air-conditioning manufacturers often use the typical MTS production method, and the push-type inventory management method is more suitable for air-conditioning manufacturers whose production exceeds the short-term demand. If, due to lack of storage space or other reasons, products cannot be stored at the production site, the remaining products need to be allocated to each storage site in order to achieve a certain cost savings. To do this, we need to determine the following questions: How much inventory needs to be maintained at each storage point? How much inventory should a batch of production distribute to each storage point? How is excess capacity or product supply distributed among storage points?