Inventory Control – Inventory control as name suggest it is process of managing the Inventory levels. An Inventory control system Tracks the movement ,storage and usages of inventory. Here we will talk about inventory control by push and pull methods.
To handle client demand, an inventory manager must be able to build an effective inventory control system. Push and pull inventory control systems are the two most common types. we will know here the definitions, benefits, and drawbacks of each system .
Push system in Inventory Control
Inventory control with the push system involves forecasting of inventory requirements to satisfy customer demand. Companies must forecast which things customers will buy as well as the quantity of goods they will buy. The company will then make enough product to meet anticipated demand and sell, or push, the goods to consumers.
Materials Requirements Planning, or MRP, is an example of a push system. MRP blends financial, operational, and logistics planning calculations. It’s a computer-based data system that manages scheduling and ordering. Its goal is to ensure that raw materials and other production-related items are available when they are needed.
Disadvantages in the Push System
Forecasts are frequently wrong with the push inventory control approach since sales are uncertain and vary from year to year. Another issue with push inventory control systems is when there is an excessive amount of items in stock. This raises the costs of storing these commodities for the company. The push system has the advantage of assuring the company that it will have enough product on hand to fulfil client orders, avoiding the product’s incapacity to meet demand.
Pull System in Inventory Control
A customer’s order is the starting point for the pull inventory control system. Companies use this method to just produce enough merchandise to fulfil client demand. One benefit of the method is that it eliminates the need to hold extra inventory, lowering inventory levels and the cost of transporting and storing goods.
The just-in-time, or JIT, inventory management system is an example of a pull inventory control system. The idea is to maintain inventory levels low by only keeping enough inventory to match consumer demand, not more or less. The JIT approach decreases waste by minimising the quantity of inventory storage space required and the costs associated with holding items.
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Disadvantages in the Pull System
One key downside of the pull approach is that it is more probable for a company to run into ordering issues, such as a supplier’s inability to deliver on time. As a result, the company is unable to complete the order, which leads to consumer discontent.
Right system in inventory control
Some companies have developed a push-pull inventory control method that incorporates the finest features of both push and pull strategies. Push-pull inventory management is also known as lean inventory management. It necessitates a more precise sales prediction and modifies inventory levels in response to actual sales. The goal is to stabilise the supply chain and reduce product shortages. Planners employ complex tools to generate guidelines for managing short- and long-term production needs with the push-pull inventory control system.
It’s critical to maximise your company’s resources while eliminating waste if you want to accomplish your profit targets and achieve long-term success. Although increasing productivity is critical for resource optimization, finding a balance between productivity and efficiency is typically the key to success.–
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