Push Or Pull?

Push Or Pull

Before you do, it is important to understand what it means & how it affects the supply chains. Understanding what it means depends a whole lot on the context. It also changes the question from push or pull to a question of where should the inflection occur.

Push or Pull as a Business Model:

Looking at an extended supply chain that cuts across individual companies and simply represents the supply chain for a product, the push/pull looks something as shown in the exhibit below. Depending on the number of links in the extended supply chain, the boundary of push and pull processes can be established. Setting up the boundary at 1 represents a fully pull-based supply chain that illustrates that the planning for a product starts when customer places the order and creates firm demand. Moving this all the way to the last link at 4 represents a full push-based supply chain that illustrates that the products are built, distributed, and ready for the customer demand. There are two other intermediate positions 2 and 3 that are possible in this illustration with five distinct nodes. These can represent the intermediate scenarios where the final product may be assembled when the customer order is placed to distribution scenarios where products are ready but distributed or shipped in response to demand.
Analyzing the push/pull decisions in this context generally allows the companies to understand how their extended supply chain works and what might work best for them as a business strategy. Of course, this decision depends on a lot of other factors such as the attributes of the product & demand itself. For example, detergent is not the likeliest candidate for a pull-based scenario and luxury yachts would probably not fit the bill for a push-based scenario. However, understanding the overall supply-chain and analyzing the product and demand characteristics within that context does help companies understand their options and even opens new segments in an industry that may not have existed till then. Dell is a great example where they identified a niche and developed a pull-based industry supply chain for personal computers where none existed prior to that.

Push or Pull in a Single Enterprise Supply Chain:

The same concept, when seen in the context of a single enterprise supply chain, can be understood more as an inventory-order interface. Supply chains are modeled as a a series of processes that are connected through inventory buffers. Within a retail supply chain, for example, the supply chain can be simply modeled as shown below. In the case of a conventional brick-and-mortar retailer, the positions 1 and 4 will be impractical — after all, they must have products physically available in the stores when the customers walk-in. The inventory-order interface at links 2 and 3 will be perfectly valid as the retailer can either choose to replenish their regional warehouses or their distribution centers or both. In that sense, the processes to the left of points 2 and 3 will represent push-based processes & those to the right will be pull-based.

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