What is a push and pull strategy in supply chain management? Which is better than the other? Which strategy to adopt? (2024)

FAQs

What is a push and pull strategy in supply chain management? Which is better than the other? Which strategy to adopt? ›

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. While Coca-Cola uses a push strategy, companies like Toyota use a pull strategy in supply chain management.

Consider the following factors while choosing a supply chain strategy for your product: 1. Customer Demand: A push strategy could be effective if your product has stable and predictable demand. However, a pull strategy would be more suitable if demand is volatile.

The original meaning of push and pull, as used in operations management, logistics and supply chain management. In the pull system production orders begin upon inventory reaching a certain level, while on the push system production begins based on demand (forecasted or actual demand).

If your business experiences predictable demand patterns, a push strategy could be effective. It allows for accurate forecasting, efficient inventory planning, production scheduling, and engaging with distributors.

An example of a push strategy is a company using aggressive sales tactics and trade shows to sell its products. A pull strategy example is using targeted advertising campaigns on social media to create consumer demand and brand awareness.

If you have a new brand or your business is just starting to grow, pull marketing may be your best answer to increase brand awareness and boost your reputation. You can expect to see a higher level of engagement with pull marketing because it's broader, but there are fewer conversions to sales.

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.

A pull system can offer several advantages to your supply chain performance, including lower inventory costs, higher quality, greater flexibility, and improved flow. By producing only what is needed, you can save on cash and space, while reducing the risk of obsolescence, damage, and theft.

What is the main strategy of supply chain management? ›

SCM involves the flow of information and products between and among supply chain stages to maximize profitability. The major functions involved in SCM are the procurement of raw materials, product development, marketing, operations, distribution, finance, and customer services. Customers are an integral part of SCM.

The ”efficient” supply chain model

Efficiency-focused supply chain modeling is best suited to industries that exist in highly competitive markets with several producers, and customers who may not readily appreciate their different value propositions.

The main four types of supply chain strategies are client-centric, predictive business, visibility and smart automation.

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. While Coca-Cola uses a push strategy, companies like Toyota use a pull strategy in supply chain management.

In a hybrid or push-pull strategy, the initial stages follow a push strategy and the remaining stages follow a pull strategy. The location or stage at which the focus of the supply chain changes is called the push-pull boundary (PPB). Location of the PPB is an important element for a successful supply chain strategy.

The push-pull model is a framework that is best used when organizations are looking to introduce a new product or solution to the market but are unsure of the enablers and barriers that customers see when thinking about switching solutions.

A successful supply chain strategy is made up of sourcing, logistics, demand planning, inventory optimization, sales and operations planning, and workforce management.

Push marketing strategy is more effective in the short term because it has immediate results with fewer costs associated with it compared to pull marketing. Pull methods are more effective over longer periods of time due to their ability to build up loyalty among consumers over time (and therefore increase sales).

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.

Disadvantages of the Pull System

Because a pull system keeps inventory levels low, there is a risk of stockouts, especially if demand suddenly spikes, there are production delays, or there is a supply chain disruption.