Even if a chosen business model establishes some preference for one technique over another, at different points in the value chain, different techniques may be appropriate to plan and manage the demand, the production activities, the resources, and the supply of materials. Knowing when and where to apply each of the different techniques is critical.
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Push Versus Pull -Perception Versus Realityby Daniel Araujo and James Correll
Introduction"Push" and "Pull" are terms that have become synonymous with specific supply chain designs. In recentyears, these words also have come to characterize the "quality" of said supply chains. The preconceivedimpression is that "Push" is inappropriate, while "Pull" is the preferable or acceptable methodology. In addi-tion, Push and Pull have been relegated to certain inappropriately pre-assigned techniques. As an illustra-tion, Push is typically aligned with Material Requirements Planning (MRP), while Pull is placed alongsideKanban. This, by extension, transfers these techniques (practices) to the corresponding level of appropriate-ness.
In the market, we see many professionals and organizations making decisions on which techniques to useand how to structure the management of their supply chains influenced only by those preconceived judg-ments. Few, however, actually base their decisions on a sound analysis of their business practices andrequirements. This paper explains why Push and Pull cannot be automatically associated to one or anothertechnique and describes other factors that have a critical influence on how to configure the supply chain. Push: The Concept and the PracticePush is typically defined as the model in which the delivery of materials, the production of goods and/orthe shipment of goods to customers, is done according to a predefined schedule. In fact, Push means toprocure or produce some material or product without an immediate demand to use it. As the materialor product shows in inventory, there will be efforts to "push" it to the next stage of the supply chainand ultimately to the consumers. Poorly-managed schedules tend to create many conditions to pushmaterials and products without a true demand for them. For example:Š Schedules tend to accommodate "waste" (safety stock, safety lead time, lot sizing, queues, set-ups,Daniel Araujo and Jim Correll are etc.), which makes schedules exceed the expected demands;principals of Oliver Wight Americas. Š Supply chain is often slow to react to the true demands;Both work with senior managementof client companies in the areas of Š Demand management and supply chain management are not coordinated, leading to inefficiencymanufacturing planning and behav- and the failure of meeting demands, resulting in higher inventories. This further decouples theior changes required to obtain bot- supply chain from the true demands;tom-line results. They have many Š Personnel are not sufficiently trained and, combined with inaccurate data, produce inappropriateyears of international experience schedules. The mismatch between the formal schedules and the real execution erodes theguiding companies to Class A per-formance. credibility of the whole model.As a result, where these distortions happen, the schedule-driven model presents low efficiency, slowresponse, high inventories and low customer service levels. However, we can attest that, for almost 40years, Oliver Wight clients have demonstrated that the schedule model can be operated in the Pullmode supporting high customer service levels, low inventories, fast response to changes, and the abilityto synchronize actions throughout the supply chain.
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Pull: The Concept and the Practice techniques of the standard business to the customization businessis wrong. In a business where, for an extended time overallPull is the determination to produce exactly what the customers demand will by far exceed overall capacity to supply, manage-need, in the quantity and time closest to when they need it. The ment will probably choose a strategy of maximizing the use ofconcept, admittedly, has been one of the most important factors of supply resources in detriment to some demands. The best strate-competitiveness in industry. Toyota is considered the most success- gy for this business may not be a pure Pull, at least in the fore-ful applicant of the Pull concept. It uses Pull principles to condition seeable future.its corporate culture, strategy, value chain configuration, and itsday-to-day operations. This consistency from culture and strategy to The Choice of Techniquesday-to-day operations ma... [download for more]
