Certified Supply Chain Professional (CSCP) Practice Exam

Which best describes a pull system in distribution?

1. Pushes inventory based on forecasted needs

2. Allows for balance between supply and demand

3. Relies solely on historical sales data

4. Distributes inventory to all locations simultaneously

The correct answer is: Allows for balance between supply and demand

A pull system in distribution is characterized by its focus on responding directly to actual demand rather than relying on forecasts or predetermined schedules. In this system, inventory is replenished only as needed, which helps maintain a balance between supply and demand. This means that products are produced or distributed in response to customer orders or actual consumption, thereby minimizing excess inventory and reducing storage costs. This approach contrasts with a push system, where inventory is distributed based on forecasted needs, leading to potential overstock and waste if demand does not meet expectations. Similarly, it goes beyond simply relying on historical sales data, which may not accurately predict future needs due to changing market dynamics. Lastly, a pull system is not about simultaneously distributing inventory to all locations; instead, it focuses on ensuring that each location receives inventory tailored to its current demand. Thus, the essence of a pull system lies in its reactive nature to demand, which is aptly captured by the concept of maintaining a balance between supply and demand.