Complete definition There are several definitions on the distinction between push and pull strategies. Liberopoulos (2013) identifies three such definitions: • A pull system initiates production as a reaction to present demand, while a push system initiates production in anticipation of future demand. • In a pull system, production is triggered by actual demands for finished products, while in a push system, production is initiated independently of demands. • A pull system is one that explicitly limits the amount of WIP (works in progress) that can be in the system, while a push system has no explicit limit on the amount of WIP that can be in the system. Other definitions are: •
Push: As stated by Bonney et al. (1999) control information flow is in the same direction of goods flow •
Semi push or
Push-pull : Succeeding node makes order request for preceding node. Preceding node reacts by replenishing from stock that is rebuilt every fixed period. •
Pull : Succeeding node makes order request for preceding node. Preceding node reacts by producing the order, which involves all internal operations, and replenishes when finished. •
Semi-pull or
pull-push : Succeeding node makes order request for preceding node. Preceding node reacts by replenishing from stock that is rebuilt immediately. There are several levels of semi-pull systems as a node can have stock at several layers in an organization.
Information flow With a push-based supply chain, products are pushed through the channel, from the production side up to the retailer. The manufacturer sets production at a level in accord with historical ordering patterns from
retailers. It takes longer for a push-based supply chain to respond to changes in demand, which can result in overstocking or bottlenecks and delays (the
bullwhip effect), unacceptable
service levels and product obsolescence. In a pull-based supply chain, procurement, production and distribution are demand-driven rather than to forecast. However, a pull strategy does not always require
make to order production.
Toyota Motors Manufacturing is frequently used as an example of pull production, yet do not typically produce to order. They follow the "supermarket model" where limited inventory is kept on hand and is replenished as it is consumed. A supply chain is almost always a combination of both push and pull, where the interface between the push-based stages and the pull-based stages is sometimes known as the
push–pull boundary. However, because of the subtle difference between pull production and make-to-order production, a more accurate name for this may be the
customer order decoupling point. An example of this is
Dell's
build to order supply chain. Inventory levels of individual components are determined by forecasting general demand, but final assembly is in response to a specific customer request. The decoupling point would then be at the beginning of the
assembly line.
Use of pull, push, and hybrid push-pull strategy Harrison summarized when to use each one of the three supply chain strategies: • A push based supply chain strategy is usually suggested for products with low demand uncertainty, as the forecast will provide a good indication of what to produce and keep in inventory, and also for products with high importance of
economies of scale in reducing costs. • A pull based supply chain strategy, usually suggested for products with high demand uncertainty and with low importance of
economies of scales, which means, aggregation does not reduce cost, and hence, the firm would be willing to manage the supply chain based on realized demand. • A hybrid push–pull strategy, usually suggested for products which uncertainty in demand is high, while
economies of scale are important in reducing production and delivery costs. An example of this strategy is the furniture industry, where production strategy has to follow a pull-based strategy, since it is impossible to make production decisions based on long-term forecasts. However, the distribution strategy needs to take advantage of economies of scale in order to reduce transportation cost, using a push-based strategy.) are pull systems if K <∞ and are push systems otherwise. • POLCA systems proposed by Suri are pull systems because, like
kanban and CONWIP, WIP is limited by cards. • PAC systems proposed by Buzacott and Shanthikumar are pull systems when the number of process tags (which serve to limit WIP) is less than infinity. • MRP with a WIP constraint (as suggested by Axsäter and Rosling) is a pull system. Liberopoulos (2013) also classifies common systems according to different definitions on the distinction between push and pull. == Marketing ==