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Push and Pull Strategy in Supply Chain Management - A Comprehensive Guide

This document discusses push and pull strategies in supply chain management. It defines push strategy as one based on forecasts, where production is determined by estimated demand rather than immediate customer demand. Push strategy is better for items with predictable demand and high SKU volumes. It allows more planning but less flexibility. Pull strategy, in contrast, is defined as producing based on actual customer demand signals from downstream in the supply chain.

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Sakshi Thapliyal
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63 views

Push and Pull Strategy in Supply Chain Management - A Comprehensive Guide

This document discusses push and pull strategies in supply chain management. It defines push strategy as one based on forecasts, where production is determined by estimated demand rather than immediate customer demand. Push strategy is better for items with predictable demand and high SKU volumes. It allows more planning but less flexibility. Pull strategy, in contrast, is defined as producing based on actual customer demand signals from downstream in the supply chain.

Uploaded by

Sakshi Thapliyal
Copyright
© © All Rights Reserved
Available Formats
Download as RTF, PDF, TXT or read online on Scribd
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Push-Pull based supply chain

Push And Pull Strategy In Supply Chain


Management – A Comprehensive Guide
Supply chain management is undoubtedly one of the significant and core operations in the
portfolio of a business. You can come across various components in your supply chain
management approach with a profound impact on business and bottom lines. Therefore, many
business owners look forward to opportunities in selecting the ideal alternative among push and
pull strategy in supply chain. 
Even people without any idea about the importance of supply chain strategy can vouch for
selecting ideal supply chain strategies. Almost all businesses, ranging from giants like Walmart
and Amazon to small businesses, depend largely on supply chain management. So, let us take a
deep dive into a comprehensive understanding of push and pull strategy in supply chain
management. 

Importance of Supply Chain Strategy


First of all, it is important to know that various businesses don’t feel the need to create supply
chain strategies. However, clarity regarding the approaches for working with customers, vendors,
and distributors could help them achieve different benefits. The term ‘supply chain strategy’
might seem like the fitting choice for large corporations only. 
On the contrary, a supply chain strategy could support companies in working effectively with
different product vendors and distributors. Therefore, you need to find out what is push and
pull strategy in supply chain for understanding their value. So, what is exactly involved in a
supply chain management strategy? Let’s understand.
1. Decisions regarding the structure of the supply chain and activities throughout different stages
of the supply chain
2. Selection of particular location alongside with different capacities of facility
3. Identification of products to be manufactured alongside the location of the storage facility
4. Determining the modes of transportation alongside the sources for collecting information
With all these important traits, a good supply chain strategy could help businesses in achieving a
competitive advantage in target markets. Here are some of the notable benefits of selecting a
comprehensive supply chain strategy for your business.
1. Properly planned supply chain strategies could help in supporting your business goals.
2. Supply chain strategy gives you the opportunity to establish an ideal infrastructure to evaluate
and analyze your historical data for insights.
3. Effective supply chain strategies could offer clarity regarding position of raw materials and
finished inventory in the supply chain. 
4. Ideal supply chain strategies could feature optimized designs to cope with modifications in
internal product design. As a result, businesses could maintain parallels with rapid innovation.
5. Markets are evolving consistently at a radical speed, and your supply chain strategy helps
identify changing demands and adapt accordingly.
The characteristic traits and benefits of a supply chain strategy clearly showcase the importance
of reflecting on the debate of push vs pull strategy in supply chain. Generally, supply chains
are responsible for dictating the timing of manufacturing products, delivery to storage and
warehouses, followed by delivery to retail stores or shipping to customers. In the conventional
sense, supply chains have been focused on using the massive collection of historical data for
predicting the seasonal trends of the future. 
Furthermore, the COVID-19 pandemic has introduced massive disruption across supply chains
throughout the world. Therefore, we were able to identify the various fragilities in our supply
chains with the arrival of a global pandemic. As customers all over the world experience the
impact of radical shifts in supply chains, businesses have to choose supply chain strategies that
can provide an ideal definition of best practices for their procurement department. 

What is Push and Pull Strategy in Supply Chain?


The simplest approach for evaluating the differences between push and pull strategy in
supply chain management is understanding the definitions. With a clear impression of the
definitions of push and pull strategies, you can find how they are relevant for different use cases.
Different organizations have different requirements from their supply chains, with a particular
emphasis on providing the best customer experience. 
The primary requirements of supply chains either involve adaptability with immediate consumer
demand or coping up with future projections. Therefore, businesses have to work on meeting
customer demand or the long-term customer forecasts in determining whether they need a push
or a pull strategy. 
What is Push Supply Chain Strategy?
The first entry in the comparison between push and pull strategy in supply chain is the
push strategy. The push strategy in the supply chain is ideal for a scenario in which the estimated
demand defines the inputs of the process. Basically, it is reasonable to consider push supply
chain strategy as an approach based on forecasts. Organizations using the push strategy depend
on forecasts for determining the amount of stock they have to order. 
One of the most common entries among push and pull strategy examples related to the
former refers to the manufacturing of seasonal items. For example, a manufacturer in China
would not start producing Christmas decoration products when customers start visiting stores for
purchasing holiday decorations. On the contrary, it would make decisions about producing the
products at a time prior to the holiday season according to the estimates of product quantity that
consumers would demand. 
The advantage of push strategy in the battle of push vs pull strategy in supply chain is also
evident in the form of the high volume of SKUs. The push strategy takes each product into
account irrespective of the varying demands associated with them. The push strategy in the
supply chain also involves aggregate forecasts such as weekly forecasts from distribution centers
to the retail stores. Subsequently, the manufacturer can distribute products to different stores on
the basis of forecasts rather than the demands of individual stores. 
Here is an outline of the notable traits of push strategy that make it unique in the comparison
of push and pull strategy in supply chain.
1. Businesses with better predictability in their supply chains are more likely to choose the push
strategy.
2. Push supply chain strategy has the primary trait of demand that could be forecasted easily.
3. Businesses opting for a push supply chain strategy are likely to have better feasibility of
planning production for coping with estimated needs.
4. Push supply chain strategy presents the mandatory requirement of a large, accessible inventory
or committed storage space.
5. Retailers can get an adequate amount of time for ensuring effective preparation of facilities for
storing inbound inventory. 
6. Businesses do not have desired flexibility for adapting to consistently fluctuating demands with
the push supply chain strategy. 

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