What Is Pull Inventory?

A pull inventory is an approach to inventory management based on needs, rather than a push inventory, which focuses on forecasting and sending out anticipatory inventory. This approach can be seen in lean manufacturing, where the goal is to increase efficiency while a company maintains flexibility. A number of firms use pull inventory as part of a just in time production method, and it is perhaps most famously employed in car manufacturing. Japanese car companies in particular have refined approaches to lean manufacturing to cut 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 it fills the order by pulling items from its inventory and shipping them. The parts may be delivered in a just in time system, where the company gets only the parts it needs for production, when it needs them. It does not need to maintain a store of inventory at the factory, which can consume resources and add to the costs of production.

Companies with this system receive only the parts they specifically need and can time the order to ensure that the parts arrive when necessary. 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 may use an electronic ordering system to facilitate the speed of ordering, and the supplier may rely on robots to pull the parts for speed and accuracy.

One advantage to pull inventory is the lack of need to store parts at the facility. This does not just cut production costs, it can also eliminate waste. The company does not order parts it won't need, and doesn't have to spend money on the disposing of parts it didn't require. With push inventory, warehouses may receive unnecessary parts they have to store and eventually discard. This can be inefficient and generates waste that the consumer will have to cover in the price of the finished good.

Transition to a pull inventory system can be difficult or easy, depending on the existing setup at a company. A consultant can provide assistance with the process. Companies need to think about how they plan to meet supply needs, fill orders, and deal with potential shutdowns and slowdowns that might interfere with production or the successful delivery of parts. Strategists accustomed to inventory management may be able to assist with the development of a cohesive plan.