PUSH SYSTEM vs. PULL SYSTEM
Generally, just-in-time (JIT) manufacturing is an example of a "pull" system because production is determined by specific need and triggered by signals corresponding to that need. Conversely, a push system relies on production schedules that are determined in advance by the projected need for the product well in advance of specific need. In principle, JIT manufacturing and other versions of pull production systems are advantageous primarily because they allow manufacturers to greatly reduce the various costs associated with maintaining inventory, an expense that adds substantially to cost at various points in the manufacturing and distribution chain.
Push systems require manufacturers, distributors, wholesalers, and retailers to store inventory based on projected rates of sales. Maintaining inventory requires physical space as well as human resources in multiple respects. Beyond the direct costs attributable to inventory maintenance, the process of producing large numbers of units and storing them for subsequent sales also reduces the flexibility necessary to adjust to factors such as design improvements and, more importantly, to any situations requiring the recall of goods after their manufacture and distribution. Once manufactured, inventory must be sold before being replaced by newer models and in the case of product recalls, inventory must be written off as a total loss within the "pull" framework.
Perhaps one of the best examples of the difference between the push and pull production models and the advantages of the former is the recent change in the book publishing industry. Specifically, advances in computer equipment and processes in the last decade have made print-on-demand (POD) book publishing a viable (push) alternative to the traditional book publishing (pull) model, especially for unrepresented, unsigned, and first-time authors. The traditional publishing model required minimum production runs in the thousands of units, meaning that every new prospective book would have to be determined to be likely to turn a profit to justify the cost of financing thousands of copies up front. The POD format obviates the need to print any copies in advance. The author simply finances the nominal cost of setting up the final draft and no books are actually printed unless or until customers actually order them. Unlike the traditional model in that industry, POD publishing means that no book needs to be pre-sold to bookstores and no publisher or distributor ever needs to incur the costs associated with maintaining any inventory of printed books.
