Push System

Definition

A push system is a production strategy where goods are produced based on forecasted demand, and then pushed through the supply chain to the customer. This approach relies heavily on demand predictions and often leads to excess inventory, as products are made ahead of actual customer orders. By producing in advance, companies aim to maintain consistent product availability, but this can result in inefficiencies and waste, which are key concerns in lean principles.

5 Must Know Facts For Your Next Test

1. In a push system, production schedules are based on forecasts rather than actual customer orders, which can lead to overproduction.
2. This approach often results in higher inventory levels, increasing holding costs and the risk of obsolescence if products become outdated.
3. Push systems can create bottlenecks in the supply chain if demand forecasts are inaccurate, leading to delays in delivering products to customers.
4. Lean principles advocate for minimizing waste, making push systems less desirable compared to pull systems that align production with real-time demand.
5. Companies utilizing push systems may implement strategies such as safety stock to cushion against demand fluctuations, though this adds complexity and cost.

Review Questions

• How does a push system differ from a pull system in terms of inventory management and production efficiency?
  • A push system differs from a pull system primarily in how inventory is managed. In a push system, production is based on forecasts, often leading to overproduction and excess inventory. In contrast, a pull system aligns production with actual customer demand, which helps minimize waste and improve overall efficiency. This fundamental difference impacts how companies manage their resources and respond to market changes.
• Discuss the implications of using a push system for a company’s overall efficiency and waste reduction efforts.
  • Using a push system can significantly hinder a company’s efforts toward overall efficiency and waste reduction. Since products are produced based on forecasts rather than actual demand, there is a higher likelihood of excess inventory and associated holding costs. This approach can create waste not just in terms of physical products but also in labor and time, as resources may be allocated inefficiently. Lean principles advocate for pull systems precisely because they allow for better alignment with customer needs, thereby reducing waste.
• Evaluate the potential challenges a business might face when transitioning from a push system to a pull system within lean manufacturing.
  • Transitioning from a push system to a pull system presents several challenges for a business. One major hurdle is changing the mindset of employees accustomed to producing based on forecasts rather than actual demand. Training and cultural shifts are essential for fostering an environment conducive to lean practices. Additionally, establishing robust communication channels along the supply chain is critical to ensure real-time data on customer demand is available. Finally, businesses may face initial disruptions in operations as they adapt their processes and inventory management strategies, requiring careful planning and execution.

Related terms

Pull System:

A production strategy that responds to actual customer demand by pulling products through the supply chain only as they are needed.

Just-in-Time (JIT):

An inventory strategy that aims to reduce waste by receiving goods only as they are needed in the production process.

Inventory Management:

The process of overseeing and controlling the ordering, storage, and use of a company's inventory to minimize costs while meeting customer demand.