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Pull Model Improves Control in Distribution Center

The strategy is called the theory of constraints, and it has been embraced by Random House, adidas, and other manufacturers and retailers as a way to manage inventory.

(Boonton, NJ, February 6, 2014) — An inventory management approach with a clunky name has yielded big results for some distribution centers.

The strategy is called the theory of constraints (TOC), and it has been embraced by Random House, adidas, and other manufacturers and retailers as a way to manage inventory.

“It’s been applied in literally thousands and thousands of companies very successfully,” says Gerald Kendall, a consultant and author of several books about the theory of constraints.

Kendall explained the theory and its applications in the February issue of Distribution Center Management.

The typical inventory approach is a “push” model — factories and DCs shove products at stores and hope it sells. TOC preaches “pull” — replenishing inventory as demand dictates.

For Random House, the theory of constraints drove a shift to more frequent ordering. The company now replenishes smaller quantities based on actual demand.

Random House also automated location changes, the process of moving slow-selling books to smaller locations or to bulk storage. Before, location changes were manual, and therefore took a long time.

As a result of applying TOC to its inventory, Random House saw many improvements including a reduction in its emergency replenishment rate from 38 percent to 1.7 percent.

Details on the use of TOC at Random House and adidas appears in the February issue of Distribution Center Management.

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