Identifying theAppropriateeSupplyChain StrategyDemanduncertaintyPullHII1FurnitureComputerIVⅢIBooks&GroceryCDsPushIEconomiesof scaleLHPullPushFIGURE6-9:Push-pull supplychains6-11
6-11 Identifying the Appropriate Supply Chain Strategy FIGURE 6-9: Push-pull supply chains
Impact of Demand Uncertainty andEconomies ofScaleDemandUncertaintyHigher demand uncertainty leads to a preference forpull strategyLower demand uncertainty leads toan interest inmanaging the supply chain basedon along-termforecast:pushstrategyEconomiesofscale:The higher the importance of economies of scale inreducingcostThe greater the value of aggregating demandThegreaterthe importanceof managingthe supply chainbasedonlong-termforecast,apush-basedstrategyEconomies of scale are not importantAggregationdoesnotreducecost·Apull-basedstrategymakesmore sense6-12
6-12 Impact of Demand Uncertainty and Economies of Scale ⚫ Demand Uncertainty: ⚫ Higher demand uncertainty leads to a preference for pull strategy. ⚫ Lower demand uncertainty leads to an interest in managing the supply chain based on a long-term forecast: push strategy. ⚫ Economies of scale: ⚫ The higher the importance of economies of scale in reducing cost ⚫ The greater the value of aggregating demand ⚫ The greater the importance of managing the supply chain based on long-term forecast, a push-based strategy. ⚫ Economies of scale are not important ⚫ Aggregation does not reduce cost ⚫ A pull-based strategy makes more sense