By Steve Lander Updated March 05, 2019
A company's supply chain stretches from the factory where its products are made to the point the products are in customer hands. Supply chain strategy determines when product should be fabricated, delivered to distribution centers and made available in the retail channel. Under a pull supply chain, actual customer demand drives the process, while push strategies are driven by long-term projections of customer demand.
Understanding Supply Chains
Push and pull strategies both work within the supply chain. A typical supply chain has five different steps. Products start out as raw materials. In the second step, the manufacturer takes raw materials and turns them into products.
The third step occurs when the finished products get shipped to the distribution facility. In step four, the distribution facility uses the products to stock a retail store or, in the case of an e-commerce business, a fulfillment center. In the final step, the products get delivered to the hands of the consumer.
Push Supply Chain Strategies
A push-model supply chain is one where projected demand determines what enters the process. For example, warm jackets get pushed to clothing retailers as summer ends and the fall and winter seasons start. Under a push system, companies have predictability in their supply chains since they know what will come when – long before it actually arrives. This also allows them to plan production to meet their needs and gives them time to prepare a place to store the stock they receive.
Pull Supply Chain Strategies
A pull strategy is related to the just-in-time school of inventory management that minimizes stock on hand, focusing on last-second deliveries. Under these strategies, products enter the supply chain when customer demand justifies it. One example of an industry that operates under this strategy is a direct computer seller that waits until it receives an order to actually build a custom computer for the consumer.
With a pull strategy, companies avoid the cost of carrying inventory that may not sell. The risk is that they might not have enough inventory to meet demand if they cannot ramp up production quickly enough.
Push/Pull Strategies
Technically, every supply chain strategy is a hybrid between the two. A fully-push based system still stops at the retail store where it has to wait for a customer to "pull" a product off of the shelves. However, a chain that is designed to be a hybrid flips between push and pull somewhere in the middle of the process.
For instance, a company may choose to stockpile finished product at its distribution centers to wait for orders that pull them to stores. Manufacturers might choose to build up inventories of raw materials – especially those that go up in price – knowing that they will be able to use them for future production.
FAQs
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.
What is the push and pull strategy in supply chain? ›
Push and pull strategy refers to two different approaches to managing the flow of goods in a supply chain management. A push strategy aims to keep products in stock even before the customers order them. A pull strategy produces goods in accordance with the demand of the customers.
What is the difference between a push strategy and a pull strategy? ›
A push strategy targets intermediaries who can distribute and sell a product or service, while a pull strategy focuses on end consumers who need or desire the product or service. Furthermore, a push strategy is more outbound and product-oriented, with the goal of generating immediate sales.
What are examples of push and pull strategies? ›
Comparative Table: Push Strategy vs Pull Strategy
| Parameters | Push Strategy | Pull Strategy |
|---|
| Examples | Trade shows, direct mail, sales promotions | Advertising, social media marketing, public relations, influencer marketing |
4 more rowsDec 13, 2023
A push system relies on market demand and forecasting to dictate production levels. A pull system, however, uses current customer demand to dictate what to produce and when. Push systems are standard in industries that produce a wider variety of products and longer lead times.
What is an example of a pull strategy in supply chain? ›
For example, your company might choose a Push-based system, but it stops at the Retail store waiting for the customer to “pull” the product off the shelves. Manufacturers might decide to create inventories of raw material, wait until the price goes up, and then release it (at least, he can use it later.)
What is an example of a push supply chain? ›
A push-model supply chain is one where projected demand determines what enters the process. For example, warm jackets get pushed to clothing retailers as summer ends and the fall and winter seasons start.
What is an example of a push strategy? ›
Examples. A push strategy tries to sell directly to the consumer, bypassing other distribution channels. An example of this would be selling insurance or holidays directly. With this type of strategy, consumer promotions and advertising are the most likely promotional tools.
What is pull strategy with example? ›
Pull marketing may also use marketing tactics that the company has not previously used, which can expand advertising even further. For example, if a furniture company uses a pull marketing strategy to create a social media page, the social media page may present new product exposure opportunities.
Is Coca Cola a push or pull strategy? ›
Coca-Cola: Coca-Cola is one of the most recognizable brands in the world. The company uses a pull strategy by creating a strong brand identity and by making its products widely available. Coca-Cola also uses advertising to create positive associations with its brand.
Unlike a “push” system, where work is given to a person and put onto a massive “to-do” list, pull systems allow the person doing the work to pull in tasks as they are ready. This prevents people from feeling overloaded and forces teams to prioritize.
Why use push and pull strategy? ›
As a marketer, you must create product demand and develop the sales pipeline. Initially, push marketing spawns the demand or need, while pull marketing offers a way for users to satisfy that need.
What is Apple's pull strategy? ›
Apple had been following a product strategy that can be thought of as a pull system. The company was most aggressive with the products capable of making technology more relevant and personal. One way of conceptualizing this product strategy is to think of every major Apple product category being attached to a rope.
Is Amazon push or pull strategy? ›
Amazon is the most famous example of using both push and pull strategies. They place their warehouses close to metropolitan areas and major cities. This makes them a pure push marketing company because they meet customers' demands when selling their products.
What is a pull system in supply chain management? ›
The Pull System is a lean manufacturing method that uses the Just-in-Time strategy of not producing goods until an order is received. Instead of forecasting demand, the pull system produces 'as needed'.
What is the push pull theory? ›
Push factors are things that are unfavourable about the home area that one lives in, and pull factors are things that attract one to another host area. Push factors: Not enough jobs or opportunities. Famine or drought. Political fear of persecution.
