In inventory management, what characterizes a pull system?

A pull system in inventory management is characterized by replenishing inventory based on actual consumption. This approach focuses on producing or ordering only what is needed at the moment, rather than forecasting demand and building up inventory in anticipation. By doing so, a pull system minimizes excess inventory and reduces waste, as it directly aligns inventory levels with customer demand.

In practice, this means that when a customer purchases a product or when a part is consumed in production, a signal is sent to replenish that specific item. This strategy often leads to more efficient inventory management, as it helps prevent overproduction and ensures that resources are allocated where they are needed most.

The focus on actual consumption allows organizations to be more responsive to changes in demand and enables them to maintain lower inventory levels, which reduces carrying costs and increases overall operational efficiency.