Pull-Through Production

AAA

DEFINITION of 'Pull-Through Production'

A method used in just-in-time manufacturing processes to order production inputs and schedule manufacturing at the time a customer places an order. By basing purchase orders and manufacturing schedules on actual, rather than anticipated, orders, pull-through production helps control inventory costs.


Pull-through production also facilitates product customization. Since products are made as they are ordered, it may be possible to cost-effectively tailor an order to a customer's specific needs, instead of only offering a generic product.

INVESTOPEDIA EXPLAINS 'Pull-Through Production'

Using pull-through production means that companies are less likely to purchase excess inventory, are able to reduce their inventory storage costs, and are able to reduce the opportunity costs of tying up in inventory money that could be used elsewhere. The downside is that the company must conduct multiple, smaller production runs instead of one or two large production runs, which can be more expensive if not managed properly.

RELATED TERMS
  1. Make To Order - MTO

    A business production strategy that typically allows consumers ...
  2. Inventory

    The raw materials, work-in-process goods and completely finished ...
  3. Just In Time - JIT

    An inventory strategy companies employ to increase efficiency ...
  4. Supply Chain Management - SCM

    Supply chain management is the streamlining of a business' supply-side ...
  5. Supply Chain

    The network created amongst different companies producing, handling ...
  6. Do It Right The First Time - DRIFT

    A theory from managerial accounting that relates to just-in-time ...
Related Articles
  1. Vital Link: Manufacturing And Economic ...
    Fundamental Analysis

    Vital Link: Manufacturing And Economic ...

  2. This ETF Will Deliver Upside With Downside ...
    Chart Advisor

    This ETF Will Deliver Upside With Downside ...

  3. Industrials And Cyclicals Back in Focus
    Chart Advisor

    Industrials And Cyclicals Back in Focus

Hot Definitions
  1. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  2. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  3. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  4. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  5. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
  6. Earnings Multiplier

    An adjustment made to a company's P/E ratio that takes into account current interest rates. The earnings multiplier is used ...
Trading Center