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. Just In Time - JIT

    An inventory strategy companies employ to increase efficiency ...
  3. Inventory

    The raw materials, work-in-process goods and completely finished ...
  4. Do It Right The First Time - DRIFT

    A theory from managerial accounting that relates to just-in-time ...
  5. Supply Chain Management - SCM

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

    The network created amongst different companies producing, handling ...
Related Articles
  1. Fundamental Analysis

    Vital Link: Manufacturing And Economic Recovery

    Manufacturing output is one of the clearest signs that an economy is recovering from a recession.
  2. Economics

    What is Industrialization?

    Industrialization is the process of a society, usually a country, transforming itself from an agricultural-based economy to one based on manufacturing. Even then, agricultural output grows as ...
  3. Chart Advisor

    This ETF Will Deliver Upside With Downside Protection

    With markets near all-time highs as naysayers warn of a coming correction, how can you stick around for more gains and still limit downside risk? The answer could be industrials.
  4. Chart Advisor

    Industrials And Cyclicals Back in Focus

    A strong week for the equities saw the S&P 500 SPDR (ARCA:SPY) to a new high, with the Industrial and Cyclical sectors leading the market. With the overall uptrend in equities still in full swing ...

You May Also Like

Hot Definitions
  1. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  2. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  3. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  4. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  5. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  6. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
Trading Center