The push system of inventory control involves forecasting inventory needs to meet customer demand. Companies must predict which products customers will purchase along with determining what quantity of goods will be purchased. The company will in turn produce enough product to meet the forecast demand and sell, or push, the goods to the consumer.
One of the disadvantages of the push system is that forecasts can often be inaccurate. Amongst other things, this can be due to unpredictable sales which can fluctuate from one year to another.
The other main disadvantage of a push system can be that too much product can be left in inventory, thereby tying up too much capital.
An advantage to the push system is that the company is fairly assured it will have enough product on hand to complete customer orders, preventing the inability to meet customer demand for the product.
An example of a push system is Materials Requirements Planning, or MRP. MRP combines the calculations for financial, operations and logistics planning.