Material Planning in Push and Pull Systems

Software that streamlines production is a boon to business. The right technology can reduce overhead costs by minimizing manpower and preventing excess inventory. Once the excess is trimmed and controlled, revenue builds. Central to the discussion of how is material planning.

Many materials requirement planning (MRP) programs emphasize a push system. In a push system of inventory control, forecasting and lead times drive production. MRP software analyzes current inventory levels, production orders, purchase orders, sales orders, forecasted orders, bill of materials, and lead times and minimum stock levels to make recommendations both for what to purchase and what to produce.

A push model ensures that enough inventory will always be on hand to meet customer demand. It allows a company to satisfy orders quickly.

A pull system is a make to order model. Production sequences are triggered when orders are placed. While it succeeds in eliminating excess inventory, this model has other drawbacks. Depending on lead times, it is likely to take significantly longer to fulfill customer orders. For some larger products–like automobiles–the pull system may be impractical.

Manufacturers seek to maximize revenue by minimizing excess, a feat that requires straddling the needs of the company with the demands of the customer base. To this end, many find a combined push-pull system as the most practical, efficient, and effective system.

A combined push-pull system of inventory control may happen in multiple ways. Some begin with a push style forecast and then adjust based on actual demand. Others use a push system early in the production line to create an adequate inventory of resources. Later points in the production sequence are triggered by customer orders–pull.

When considering a combined push-pull system, it is important to employ flexible software. SAP Business One’s design automates when needed and gives manual analysis when beneficial. Rather than automatically placing orders, they arrive as recommendations and may be adjusted based on actual demand.

Our software and team of experts can help you maximize revenue by minimizing excess. Contact us for more information.