PUSH VERSUS PULL METHODS OF PRODUCTION

(Courtesy : Prof Arvind Alvis)

Push Method – In this method, production commences before buyers order the firm’s goods. Thus, the manufacturer forecast demand and produces to meet this projected requirement. The success of the firm depends to a large extent on the accuracy of the demand forecast.

Pull Method – Here, buyer’s demand activities the production cycle. The method is suited for processing mass-produced goods which are highly repetitive in nature – set-up & set-down times and process times are low and the flow of material is well defined.

Firms that tend to have highly repetitive manufacturing processes and well defined material flows can use the pull method, which allows closer control of inventory and production at the workstations. Other firms that produce a large variety of products in low volume with low repeatability in the production process and long production cycles, tend to use the push method.

An underlying philosophy of the pull method is that it is preferable to idle a work station than produce an item that has not yet been ordered by customers.

Advantages

Push Method – Production starts before customer orders, based on demand forecasts. Their philosophy is, there will be no loss on account of dead inventory.

Pull Method – (Taichi Ohno) - Customer order activates the production cycle, customer deadline is met by firm. Their philosophy is, it is preferable to idle facilities rather than produce what has not been ordered.

PUSH METHOD	PULL METHOD
Simple to plan – RM, manpower, funds…	Low inventory carrying costs
Can even out production schedules	Low floor space required
Caters to surges in demand	Quality problems immediately noticed
Production continues despite minor problems	High labor cost (because of idle time of workers), High capacity/capital cost (Might need to install new machine in peak demand, due to uneven demand)

PUSH METHOD	PULL METHOD
Risk of holding inventory - Unsold, obsolete - Damage or deterioration - Rejection of large lot - Theft - Fire	Risk of missing out on surges in market demand (opportunity cost)