Push production planning involves producing goods in advance and then using this stock to meet demand. Pull production planning involves producing goods in direct response to demand. As pure versions of either system have significant benefits and drawbacks, most manufacturers use a blend of the two, with the specific balance of push and pull depending on the product and market.
Push Production Planning
Push production planning involves deciding how many units to manufacture by working from historical data, such as past sales levels or orders from retailers. The manufacturer decides in advance how much to make and then hopes that this proves sufficient without leading to oversupply.
Pull Production Planning
In its purest form, pull production planning means no work is done on production until the manufacturer has received a specific order. When pull production is taken to this extreme, and distribution is organized perfectly, the company will never have inventory.
Pros and Cons
Push production offers economies of scale as the manufacturer can theoretically produce a full year's worth (or a full season's worth) of stock of one product at a time. This can offer savings as staff won't have to switch back and forth between products, and disruption caused by changing machinery is minimized.
The main drawback of push production is that it requires much more storage space for unsold stock. It also risks either a shortfall of stock or an oversupply, depending on how demand varies from predictions.
Pull production's main advantage is that there is no danger of stock being wasted. There is also less expense involved in storing unsold stock.
The main disadvantage of pull production is that it can increase the time between a retail customer order and receiving the product.
In reality, few companies adopt a pure push or pull strategy. For example, companies that use a largely pull-based strategy may still maintain a low level of stock and replenish it in line with sales: this allows the company to respond to demand in quicker fashion.
On the other hand, a company that uses a largely push-based strategy may still have some elements of responsiveness to demand. For example, a car manufacturer may build the chassis of a car on a push basis, but then finish the vehicle in line with the specific requirements of each buyer.