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What is the push strategy?

What is the push strategy and any example can provide? URGENT, TKS!

1 Answer

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  • nicole
    Lv 7
    1 decade ago
    Favorite Answer

    The business terms push and pull originated in the marketing and advertising world, but are also applicable in the world of electronic content and supply chain management. The push/pull relationship is that between a product or piece of information and who is moving it. A customer "pulls" things towards themselves, while a producer "pushes" things toward customers.

    Content

    In a "push" system the consumer does not request the product to be developed; it is "pushed at" the end-user by promotion. An example of this is a perfume product. Women do not request to smell a fragrance they never smelled before; it is simply "pushed" at them, through the right advertisement.

    Applied to that portion of the supply chain where demand uncertainty is relatively small

    Production & distribution decisions are based on long term forecasts

    Based on past orders received from retailer’s warehouse (may lead to Bullwhip effect)

    Inability to meet changing demand patterns

    Large and variable production batches

    Unacceptable service levels

    Excessive inventories due to the need for large safety stocks

    In a "pull" system the consumer requests the product and "pulls" it through the delivery channel. An example of this is the car manufacturing company Toyota. Toyota only produces cars when they have been ordered by the customers.

    Applied to that portion of the supply chain where demand uncertainty is high

    Production and distribution are demand driven

    No inventory, response to specific orders

    Point of Sale (POS) data comes in handy when shared with supply chain partners

    Decrease in lead time

    Difficult to implement

    Supply chains

    Main article: Supply chain management

    With a push-based supply chain, products are pushed through the channel, from the production side up to the retailer. The manufacturer sets production at a level in accord with historical ordering patterns from retailers. It takes longer for a push-based supply chain to respond to changes in demand, which can result in overstocking or bottlenecks and delays (the bullwhip effect), unacceptable service levels and product obsolescence.

    In a pull-based supply chain, production and distribution are demand driven so that they are coordinated with actual customer orders, rather than forecasted demand.

    A supply chain is almost always a combination of both push and pull, where the interface between the push-based stages and the pull-based stages is known as the push-pull boundary. An example of this would be Dell's build to order supply chain. Inventory levels of individual components are determined by forecasting general demand, but final assembly is in response to a specific customer request. The push-pull boundary would then be at the beginning of the assembly line. At this point on the supply chain timeline, it is typically coordinated through a buffer inventory.

    See also

    Supply and demand

    Retrieved from "http://en.wikipedia.org/wiki/Push-Pull_strategy%22

    Categories: Supply chain management | Strategic management | Marketing

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