Tuesday February 23, 2016
In the previous blog, the mechanics of the channel replenishment “push” system were investigated in detail. This blog continues the discussion by look at the pros and cons of the push system and what types of company/products would deploy inventory push replenishment.
The advantages of a "push" system are described as follows:
Disadvantages of a push system center on organizational issues. An effective push system requires a professionally trained central planning staff that can work with aggregate data and demand forecasting techniques. In addition, inventory accuracy and timely transaction record posting normally requires a computer system that enables the networking of the historical demand resident at each channel location. Another serious problem is possible inventory imbalances in the supply chain as sales at local supply points deviate from plan. Finally, the introduction of a push system requires changes in operational roles. As central planning is now responsible for resupply planning and execution, branch management's role migrates from a focus on detailed inventory replenishment management to ensuring transmission of accurate stock status and sales usage information to the channel's central planning functions.
While the level of variation is very high depending upon the business environment, companies/products using a push system would mostly likely fall under the following categories:
In the next blog I will be exploring the nature and function of “Pull” systems of inventory replenishment.
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