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Cycle View of Supply Chain Process (The processes in a supply chain are divided into a series of cycles,
each performed at the interface between two successive stages of a supply chain).
Manufacturing Cycle
Push/Pull View
The processes in a supply chain are divided into two categories depending on whether they are executed
in response to a customer order or in anticipation of customer orders.
Pull processes are initiated by a customer order, and push processes are initiated and performed in
anticipation of customer orders.
The push/pull boundary in a supply chain separates push processes from pull processes.
Supply chain processes fall into one of two categories depending on the timing of their execution relative
to customer demand. FMCG supply Chain, automotive supply chain, IT supply chain industries fall under
Pull or Push supply chain (both hybrid puss and pool).
What is Pull Supply Chain?
Under pull supply chain, products are manufactured or procured based on specific customer requests. We
also know it as “Built to Order” or “Configured to Order” model. We often see this model operating in
IT/High Tech Industries, where customization is the competitive advantage. Briefly, we have seen this
model in automotive industry and it is being used in high end luxury market segment. The objective of
this model is to minimize the Inventory carrying and optimize supply. Pull model are is as a response to
growing uncertainty in demand and short product cycle. Some of the characteristics of this model include:
1. Volatile demand situation;
2. High rate of Customization;
3. Minimal Inventory Carrying;
4. Not a off the shelf product;
5. Highly dynamic and effective distribution network.
Even though there are many challenges in implementing a pull supply chain in a globalized environment,
converting a push supply chain into a pull supply chain is considered as next frontier of innovation and
lean thinking. Particularly if we are able to implement pull process for procurement activity and take
advantage of Point of Sale information to provide the demand visibility to suppliers, it would be a great
innovation. However, if we can implement, the business would be saving costs (warehousing, inventory
carrying; capital costs etc.) and also could introduce JIT or Cross Dock Operation which are again cost
efficient models.
What is Push Supply Chain?
Under Push model, products are manufactured or procured based on anticipated customer orders
(speculative). This model is also known as Built to Inventory or Built to Sock. The name itself reveals its
functionality. Products are manufactured in anticipation of customer needs. There are no prizes for
identifying industries that use push model, it is obvious that retail heavily uses push model. Even though
direct to store or cross docks are implemented, overall retail supply chain is based on push model. Some
of the big names in the retail industry are trying to adopt the hybrid model which is a combination of pull
and push. Some of the key challenges and characteristics could include:
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• By its ability to move large volumes of data. They realized that data should be
transferred directly and not be transformed or translated on arrival. This avoids
miscommunication.
• The ability to establish connections quickly on demand if necessary within hours.
• Enhance backup and recovery strategies for all systems.
P& G has developed private e- market place for customers and suppliers. This
means that they are able to perform real time transactions on web-enabled front
end systems. Enabled inventory savings across the whole supply chain, allowed
other improvements such as automatic invoice processing. This helped improve
quick responses to events which enabled the company to have more promotional
events leaving it with less inventory after the promotions.
It’s also experimenting with early pilots to help reach demand capabilities. These
include superimposing real time signals onto production plan and integrating real
time shop floor and warehouse data. A dynamic distribution planning system, in
which the planning cycle is automatically triggered by major events like demand
and inventory and can be controlled at any time. Though the pilots are still in early
stages incorporating these ideals will cut costs and improve customer satisfaction.