When you’re planning and monitoring production of real goods, you have two options. You can push production out, making as many of your products as possible with the resources available, and rely on sales and marketing people to move the stock you’ve created. Alternatively, you can use the pull strategy, where you respond to demand by producing more goods — “Just in Time,” if you do it right, so that customers get their goods when they need them and you don’t build up much stock.
Push strategies have traditionally been the norm. You make what you can and sell what you make. This method allows you to work on efficiency with a stable workforce, to use predictable raw materials needs to negotiate the best prices on those materials, and to be confident that you can get your products to your customers fast.
The downside to the push strategy is that you can also overproduce and end up with a lot of investment in inventory. In today’s fast-paced market, this can mean you end up with inventory you can’t sell. It can also mean that you don’t have the resources to respond to changes in demand as quickly as you’d like to.
Pull strategies allow you to respond to actual demand rather than forecasting. You maintain agility that allows you to make changes and customize products. You can avoid stockpiling either completed goods or raw materials, and you can adjust your labor force (and therefore your labor costs) to meet actual needs.
The downside to the pull strategy is that you have to rely on your supply chain to make up in speed for the fact that you don’t keep goods in stock and ready to ship. Capacity can be an issue, and you may have to lay workers off and hope to be able to hire them again when an order arrives and they’re needed.
A popular metaphor for the two strategies looks at a pull strategy as an elevator. If there is no one on the elevator, the elevator doesn’t move. It doesn’t consumer resources when they are not actually needed. On the other hand, one person can step into the elevator and start the process. You can’t wait for ten people to serve. Nine may be waiting outside an elevator door while one early bird travels to the top of the building and the elevator travels back down.
The push system is more like an escalator. The escalator continues to operate even when there is no one on it. The process uses the same resources when no one is using it as when one person is using it. But it can accommodate more people immediately and usually no one will have to wait.
Since both approaches have significant advantages and disadvantages, many facilities combine the two. You can set a certain inventory level to maintain in your facility or in warehousing. Products can be completed to a certain point and kitted for assembly when an order comes in. Raw materials can be ordered based on forecasts of need, while workers are brought in based on real-time demand.
Whichever approach you take, you must have your machinery ready to go at a moment’s notice. If you use Rexroth electric motion control systems, we can help you keep them in great condition. From legacy parts to the newest versions, we specialize in Rexroth electric drives, controls, and servos.