Pull-BasedSupplyChainsProductionanddistribution demanddrivenCoordinated with true customer demand rather thanforecast demandfirm does not hold any inventory and only responds tospecificordersIntuitively attractive:Reduced lead times through theabilityto betteranticipate incoming ordersfromtheretailersReduced inventory sinceinventory levelsincreasewithlead timesLessvariability inthesystemDecreased inventory at the manufacturer due to thereductioninvariability6-6
6-6 Pull-Based Supply Chains ⚫ Production and distribution demand driven ⚫ Coordinated with true customer demand rather than forecast demand ⚫ firm does not hold any inventory and only responds to specific orders. ⚫ Intuitively attractive: ⚫ Reduced lead times through the ability to better anticipate incoming orders from the retailers. ⚫ Reduced inventory since inventory levels increase with lead times ⚫ Less variability in the system ⚫ Decreased inventory at the manufacturer due to the reduction in variability
ImplementationofPull-BasedSystemsOften difficultto implementwhen lead times are longimpracticaltoreacttodemandinformationmore difficult to take advantage of economies of scaleAdvantages and disadvantages of push and pullsupplychains:new supply chain strategy that takes the best of bothPush-pull supply chain strategy6-7
6-7 Implementation of Pull-Based Systems ⚫ Often difficult to implement ⚫ when lead times are long ⚫ impractical to react to demand information. ⚫ more difficult to take advantage of economies of scale ⚫ Advantages and disadvantages of push and pull supply chains: ⚫ new supply chain strategy that takes the best of both. ⚫ Push–pull supply chain strategy
Push-Pull StrategySome stagesof the supplychainoperatedinapush-basedmanner·typically the initial stagesRemainingstagesemployapull-basedstrategy.Interfacebetweenthepush-basedstagesand the pull-based stages is the push-pull boundary6-8
6-8 Push-Pull Strategy ⚫ Some stages of the supply chain operated in a push-based manner ⚫ typically the initial stages ⚫ Remaining stages employ a pull-based strategy. ⚫ Interface between the push-based stages and the pull-based stages is the push– pull boundary
Supply Chain TimelinePush-pullboundaryPushstrategyPullstrategyRawEndMaterialsCustomerSupplychain time lineFIGURE6-8:Push-pullsupplychains6-9
6-9 Supply Chain Timeline FIGURE 6-8: Push-pull supply chains
General StrategyMake a part of the product to stock -genericproductThe point where differentiationhas to beintroduced is the push-pull boundaryBasedonextentofcustomization,thepositionoftheboundary on thetimelineisdecided6-10
6-10 General Strategy ⚫ Make a part of the product to stock – generic product ⚫ The point where differentiation has to be introduced is the push-pull boundary ⚫ Based on extent of customization, the position of the boundary on the timeline is decided