Push–pull strategy

The business terms push and pull originated in

logistics and supply chain management,[2] but are
also widely used in marketing,[3][4] and is also a
term widely used in the hotel distribution business.
Wal-Mart is an example of a company that uses the
push vs. pull strategy.

Contents
Supply-chain management
Complete definition
Information flow
Use of pull, push, and hybrid push-pull
strategy
Examples in push and pull The original meaning of up and pull, as used inoperations
management, logistics and supply chain management. In the pull
Marketing
system production orders begin upon inventory reaching a certain
Hotel distribution level, while on the push system production begins based on
See also demand (forecasted or actual demand). TheCONWIP is a hybrid
References between a pure push and pure pull system.

Supply-chain
management

Complete definition
Push: As stated by Bonney et al. (1999)
control information flow is in the same
direction of goods flow
Semi push or Push-pull : Succeeding node
makes order request for preceding node.
The image shows a technology push, mainly driven by internal
Preceding node reacts by replenishing
from stock that is rebuilt every fixed research and development activities and market pull, driven by
period. external market forces.[1]
Pull : Succeeding node makes order
request for preceding node. Preceding
node reacts by producing the order, which involves all internal operations, and replenishes when finished.
Semi-pull or pull-push : Succeeding node makes order request for preceding node. Preceding node reacts by
replenishing from stock that is rebuilt immediately
. There are several levels of semi-pull systems as a node can have
[5]
stock at several layers in an organization.

Information flow
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, procurement, production and distribution are demand-driven rather than to forecast. However, a pull
strategy does not always require make-to-order production. Toyota Motors Manufacturing is frequently used as an example of pull
production, yet do not typically produce to order. They follow the "supermarket model" where limited inventory is kept on hand and
is replenished as it is consumed. In Toyota's case, Kanban cards are used to signal the need to replenish inventory
.

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 sometimes known as the push–pull boundary.[6] However, because of the subtle difference between pull production
and make-to-order production, a more accurate name for this may be the decoupling point. An example of this is 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 decoupling point would then be at the beginning of the
assembly line.

Applied to that portion of the supply chain where demand uncertainty is relatively small
Production and distribution decisions are based on long term forecasts
Based on past orders received from retailer's warehouse (may lead to bullwhip fect)
ef
Inability to meet changing demand patterns
Large and variable production batches
Unacceptable service levels
Excessive inventories due to the need for large safety stocks
Less expenditure on advertising than pull strategy
In a marketing pull system, the consumer requests the product and "pulls" it through the delivery channel. An example of this is the
car manufacturing companyFord Australia. Ford Australia only produces cars when they have been ordered by 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 is helpful when shared with supply chain partners
Decrease in lead time
Difficult to implement

Use of pull, push, and hybrid push-pull strategy

Harrison summarized when to use each one of the three supply chain strategies:

A push based supply chain strategy is usually suggested for products with low demand uncertainty , as the forecast
will provide a good indication of what to produce and keep in inventory , and also for products with high importance of
economies of scale in reducing costs.
A pull based supply chain strategy, usually suggested for products with high demand uncertainty and with low
importance of economies of scales, which means, aggregation does not reduce cost, and hence, the firm would be
willing to manage the supply chain based on realized demand.
A hybrid push–pull strategy, usually suggested for products which uncertainty in demand is high, while economies of
scale are important in reducing production and delivery costs. An example of this strategy is the furniture industry ,
where production strategy has to follow a pull-based strategy, since it is impossible to make production decisions
based on long-term forecasts. However, the distribution strategy needs to take advantage of economies of scale in
order to reduce transportation cost, using a push-based strategy .[6]

Examples in push and pull

Hopp and Spearman consider some of the most common systems found in industry and the literature and classify them as either push
or pull

Material requirements planning(MRP) is a push system because releases are made according to a master
production schedule without regard to system status. Hence, no a priori WIP limit exists.
Classic kanban is a pull system. The number ofkanban cards establishes a fixed limit on WIP
.
 The classic base stock systemis a push system because there is no limit on the amount of work in process in the
system. This is because backorders can increase beyond the basestock level.
Installation stock is also a push system as are echelon stock systems because neither imposes a limit on the number
of orders in the system.
CONWIP is a pull system because it limits WIP via cards similar tokanban. An important difference from kanban
from an implementation standpoint is that the cards are line specific rather than part number specific. However
, from
a push-pull perspective, CONWIP cards limit WIP in the same manner as kanban cards.
(K, S) systems (proposed by Liberopoulos and Dallery) are pull systems if K <∞ and are push systems otherwise.
POLCA systems proposed by Suri are pull systems because, likekanban and CONWIP, WIP is limited by cards.
PAC systems proposed by Buzacott and Shanthikumar are pull systems when the number of process tags (which
serve to limit WIP) is less than infinity.
[7]
MRP with a WIP constraint (as suggested by Axsäter and Rosling) is a pull system.

Marketing
An advertising push strategy refers to a situation when a vendor advertises its product to gain audience awareness, while the pull
strategy implies the aims to reach audiences which have shown existing interest in the product or information about it. The difference
between "push" and "pull" marketing can also be identified by the manner in which the company approaches the lead. If, for example,
the company were to send a sales brochure, that would be considered pushing the opportunity toward the lead. If, instead, the
company provided a subject matter expert as a speaker for an industry event attended by targeted leads, that could be one tactic used
as part of a strategy to pull in a lead by encouraging that lead to seek out the expert in a moment of need for that expertise.

Hotel distribution
The online world has brought thispull push decision to the hotel distribution business

Push strategies in the hotel distribution business imply that hotel inventory is placed for the distributors or resellers
outside the hotel system in one or several extranets that belong to these distributors (online travel agencies, tour
operators, and bed banks). The inventory must be therefore updated in these extranets. The hotel servers receive
less traffic preventing server crashes but booking must be transferred to the hotel system.
Pull strategies are based on distributors interfacing with the hotel property management system. In this case the
inventory is "pulled" from the hotel (or hotel chain) system. This method provides a much more precise picture of the
real availability and saves time loading the bookings but, requires more IT development and a bigger server
(dedicated one).

See also
Technology push
Supply and demand
Digital marketing
Publish/subscribe
Lean thinking

References
1. Martin, Michael J.C. (1994).Managing Innovation and Entrepreneurship in e
Tchnology-based Firms(https://books.g
oogle.com/books?id=fnE7R732COMC&printsec=frontcover#PP A44,M1). Wiley-IEEE. p. 44. ISBN 0-471-57219-5.
2. Edward G. Hinkelman & Sibylla Putzi (2005).Dictionary of International Trade – Handbook of the Global Trade
Community (https://books.google.com/books?id=vylCkqTg7H0C&printsec=frontcover#PP A144,M1). World Trade
Press. ISBN 1-885073-72-0.
3. Peter, J. Paul; James H. Donnelly (2002).A Preface to Marketing Management(https://books.google.com/books?id=
KhQjP6KZ9GQC&printsec=frontcover#PP A132,M1). McGraw-Hill Professional. p. 132.ISBN 0-07-246658-8.
4. Dowling, Grahame Robert (2004).The Art and Science of Marketing(https://books.google.com/books?id=DFduJaZ4
1MUC&printsec=frontcover#PPA266,M1). Oxford University Press. p. 266.ISBN 0-19-926961-0.
 5. J., Ashayeri; R.P., Kampstra (2005). "Demand Driven Distribution: The Logistical Challenges and Opportunities"
(Department of Econometrics and Operations Research iTlburg University).
6. Terry P. Harrison, Hau L. Lee and John J. Neale (2003). The Practice of Supply Chain Management(https://books.go
ogle.com/books?id=xT8_GAaVl4YC&printsec=frontcover#PP A17,M1). Springer. ISBN 0-387-24099-3.
7. Hopp, Wallace J.; Spearman, Mark L."To pull or not to pull: what is the question?"(https://dx.doi.org/10.1287/msom.
1030.0028). Manuf Serv Oper Manage. Retrieved 13 June 2014.

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