The traditional replenishment model may cause either accumulation of inventory or shortage of inventory or even, ‘out of stock’. In order to solve this issue Eliyahu Goldratt proposed the new replenishment model of ‘pull-system’. Establishment of warehouse and integrating a new and appropriate technology may improve the company’s total distribution system. This paper tries to explain my company’s current distribution system and a solution that would help to improve its distribution system efficiency.
In the traditional supply chain system, the manufacturers or the upstream suppliers focus on meeting the customer demand as well as reducing the inventory to the minimum; at the same time customers expect goods to be delivered on time without any defects. The biggest challenge in distribution is to supply/deliver the right product at the place in the right quantity. More often, customers have minimal or zero tolerance towards product unavailability or ‘out of stock’. The …show more content…
In this theory, Goldratt explains throughput is determined by few factors. They depend up on the environment of the production system, sometimes internally or externally. Internal problems are related to production, purchasing, warehousing, company policies etc and external issues are related to distribution system. Traditionally “push system” was used to increase the consumption level, but Goldratt’s view point on “Pull System” focus on the small replenishment of product demand based on the customer order. Another focus point he mentioned in his theory is, the need to build a warehouse, then only replenishment time can be shortened by transportation time. In addition, some cases there will be “inaccurate forecast” in the system and TOC suggest implementing the concept of aggregation in the distribution system. Fluctuations will reduce after equal