The trend toward "pull" systems where the product is "pulled" in response to demand (as opposed to being "pushed" in advance of demand) increases inventory levels, which can increase total logistics costs even though production costs may decrease.

Pull Systems

A method of inventory control in which production is based on customer demand rather than forecasted demand, thereby reducing waste in the system.

Inventory Levels

The quantities of goods and materials kept on hand by a business to meet demand, production, and operational needs, essential for effective inventory management.

Total Logistics Costs

This term refers to the combined expenses associated with logistics activities, including transportation, warehousing, inventory management, and order processing.