One of the trickiest aspects of running a production plant is determining exactly how much to produce, when to produce it, and what supplies need to be ordered and when. Failure to have the product to fulfill orders erodes buyer confidence, but having too much supply on hand is risky for a variety of reasons. As a business leader, consider the various strategies to determine your best course of action when it comes to production planning and scheduling.
Chase Strategy: Production Matches Demand
The chase strategy refers to the notion that you are chasing the demand set by the market. Production is set to match demand and doesn't carry any leftover products. This is a lean production strategy, saving on costs until the demand – the order – is placed. Inventory costs are low, and the cost of goods for products sold is kept to a minimum and for a shorter length of time.
The chase strategy is common in industries where perishables are an issue or with a company that doesn't have a lot of extra cash on hand and doesn't want the added risks of loss, theft or unsold products. The production schedule is based on orders and immediate demand.
Frequently Asked Questions
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