Pull-Through Production


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.

BREAKING DOWN '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.

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